TM Lutas

Productivity

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crossposted from Northwest Indiana Politics

There are two, and only two, reasons why somebody should get a raise. The first reason is that the money that is being used to pay the salary is being devalued (inflation). But that sort of raise is just getting you to tread water in a rough sense. You’re not really getting ahead because inflationary price rises eat up the entire salary increase and usually more. The second thing is that productivity has risen and you’re creating more goods or services for the same inputs. This is labor productivity. It is the one thing that allows for real sustainable rises in wages.

An increase in labor productivity means we have to work less to get the same lifestyle or the same work earns us a better one. The initial gain goes to the capitalist. He’s the risk taker who made a bet to pay wages in advance of production and he’s gotten a better deal than he bargained for. But if he doesn’t quickly distribute those gains, he’ll lose out because his competitor capitalists can offer better wages and disrupt his operations by hiring away his best, most productive workers.

For workers, a fluid labor market that makes worker poaching easy is vital to distributing labor productivity gains and helps keep the balance between labor and capital healthy. But there are forces that have been hardening the labor markets, and it’s costing us all.

While unions sense the importance of increasing labor productivity to some extent by creating training and certification programs their approach to labor contracts does not take it into account. Instead of promoting labor fluidity, rigid classifications are in vogue. This makes it easier for the union to negotiate salaries because they’re negotiating categories, not people. But it doesn’t serve the workers well.

Another productivity problem is that there’s a persistent gap between public productivity and private productivity growth. Private sector productivity growth has persistently exceeded public sector productivity growth. This creates a growing gap between what an individual worker can accomplish in each sector and a drain of talent away from the public sector.

This persistent gap in labor productivity improvement rates is a key reason why socialism doesn’t work and capitalism does. Literally billions of people have worked over the course of the 20th century to fix this. Nobody’s come close. That’s unlikely to change anytime soon.

The cure for this is to try to get as much as possible into the faster improving private sector and keep as little as possible in the slow improving public sector. If the public sector is small enough, public spirit/public service in the population will be enough to get the small jobs that can’t be privatized done in a reasonable fashion. But stuff too much into the public sector and look out.

Prerequisites I

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One of the basic pre-requisites of seriously dealing with government competency in a large, multi-sovereignty federal state is to possess an updated list of all the various governments. It can be quite a big list. In the US it includes
50 state governments
3000+ county governments
tens of thousands of municipal governments
intermediate government institutions like Indiana’s township governments.

I have been looking for such a list in the US for some time and have come up empty. There are a lot of sources that do part of the job but nobody seems to be doing the full list.

So here’s an offer. $20 for a maintained source of all US governments. That should be simple enough. At least I thought so when I started looking for it myself…
Edit:I apologize for omitting that the offer is good for the first submission only.

Judging 9/11

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One of the things that even the right seems to have forgotten about 9/11 is that these attacks, all of them, are the enforcement of judgments of religious courts. The US came to grips with the Taliban, ejected Saddam from power, reworked world finance to track terrorist finance but we’ve never seriously come to grips with the Islamic judges who condemn us to death and invite all Muslims to enforce those judgments by way of violent jihad.

Nine years after 9/11/2001 do we even have a list of who are these judges? How many of them have condemned us? Which ones of those have followings of sufficient size as to be a problem?

For all the good that the Bush administration did, it shrank away from doing this basic analysis and educating the public how Islamic courts are a serious problem. The Obama administration is no better and, in fact, considerably worse.

This is depressing.

Instapundit’s “Save The Country” Challenge

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Instapundit’s got a great challenge for his readers:

Staggering deficits. Exploding national debt. Grossly underfunded public pensions. Aging populace. Social Security on track for insolvency. Investors running for precious metals. Higher education bubble. Stagnant economy. Massive new government healthcare program. Words like “unsustainable” in CBO reports.

I have racked my brain and debated with anyone who was willing. I can’t come up with a way out of this that doesn’t involve printing vast amounts of cash, double-digit inflation and interest rates, and the end of the dollar as a global currency because we “soft default” trillions of the national debt. What productive capacity we have left would be gutted by the tax increases needed to honestly pay what we are going to owe. And the people we owe (China, seniors, public pensioners, etc) aren’t going to just write off the debt like a bank short-selling a beach house.

So my challenge to your readers is this: “How do we get out of this WITHOUT printing money?”

Too much national debt can be cured by more national income (GDP). If we had an economy that was four times our present size, the current level of spending would be sustainable. While it’s unrealistic to fix it all through economic growth, we certainly can make it better so that the necessary spending cuts don’t bite so hard or have to come so fast.

We need to identify and reduce our outflow and maximize economic growth. If we do this better than any other 1st world nation, we remain the world’s premier flight to quality country and we will have the money needed to get our fiscal house in order. Our interest rates will stay low because all the rich members of the rest of the 1st world will want to continue to park a good chunk of their money with us.

The top priority is to understand that we’re in this mess because collectively we’re misinformed. The wrong amount of money’s being created, spent, and it’s being spent on the wrong things. The next big priority to realize is that nobody knows the answers and that nobody, individually, will ever know the answers. We have a great system for relatively efficiently getting the answers. They emerge from the interplay of the free market. This system is currently working sub-par because we’ve used the law in complex ways that nobody understands to “tweak” things and the system’s gotten away from anybody’s control.

The people of the USA need to (yes, starting with me) take inventory of all the institutions that they’re supposed to be overseeing and start taking the job seriously.
1. Undo the tweaks (and yes, this one line could be expanded out to book length)
2. Create a fair deal for everybody instead of special deals for the politically connected
3. Promote entrepreneurship by getting out of the way
4. Pursue public sector productivity. It will never match private sector productivity but we certainly can do better.

Paying for Health Care

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I have found a lot of confused thinking on the right lately regarding how to pay for health care. The left is hopeless but items like this, complaining about the FDA taking Avastin off label for stage four breast cancer don’t get to the heart of the matter. What is the right process to figure out whether you’re going to undergo a medical treatment?

Even if you are independently wealthy and have no insurance to complicate things you would not limit your consideration of treatment to just the medical discussion with your doctor. Your financial team would come into play as questions of bankruptcy, how much this is going to impact your estate, etc. are going to affect your decision. And in that discussion, if your sole heir starts getting creepy and talking down all the expensive treatments, you have a problem.

Putting insurance into the equation doesn’t change the conversation. It just adds a large cast of characters to the discussion and some extra money that you don’t control. The possibility of somebody going creepy and acting in their own best interests but not yours is still there. In fact, the more distant the 3rd parties, the more likely it’s going to happen. Add in the government and the chance explodes.

The FDA and Medicare are acting like the creepy heir on the make and there are a lot of people who sense it without being able to articulate it. Nobody can *prove* anything, but the vibe is not good.