Help, please

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Endovelico
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Help, please

Post by Endovelico »

While doing some research on the Portuguese economical and financial crisis I decided to compare output per worker (productivity) in the EU with salaries and found out that workers in less productive countries produced more for each euro earned than workers in the more productive countries. For instance, Portuguese workers produce almost more 40% than German workers, for each euro earned. Of course, per capita productivity and per hour productivity in Portugal is much lower than in Germany.

The point I was trying to make is that lower productivity and competitiveness is not, contrarily to what some people seem to think, a result of workers earning too much. According to my research - and common knowledge - low productivity is mainly the result of too low capital stock per worker. Increase capital stock and you increase productivity, with almost perfect correlation.

My call for help is the following:

I couldn't find anywhere reference to this wage productivity, i.e. measure of output per euro/dollar earned. All I could find was reference to comparison of rates of change between wages and productivity, and reference to the classical idea of real wages being equal to marginal productivity.

Am I on to something new, or at least to a different way of analyzing this data? Am I the first person to compare for different countries, output per euro/dollar earned? Have I found a different way to assess whether salaries are out of line with productivity? I find it hard to believe I would be the first person to think along these lines, but I haven't found anything, so far.

Can any of you be of assistance? Thank you in advance for your contribution.
noddy
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Re: Help, please

Post by noddy »

low productivity is mainly the result of too low capital stock per worker. Increase capital stock and you increase productivity, with almost perfect correlation.

this is the nutshell and the core of the reason i dont understand your fixation on industrial production - it is a last century attitude to the state of the world and prosperity from my perspective.

china+korea+japan+germany (with some outsourced others) produced more "stuff" than the world could ever deal with and in japan and germany's case this production was highly automated and very low on employment by historical standards... even they are struggling to maintain outputs and profits in the new deleveraging normal.

you will not make portugal prosperous focusing on widget production - with low taxes and cheaper high skilled staff that maintain the robots you may get some benefit from it but the broad spectrum employment is a thing of the past.

make sure that food and housing are available to all and then take advantage of the cheap widgets the worlds factories are producing with the money you get from your viable exports, which appear to be foods and tourism.

encourage invention of software and electronics - you dont need to make the widgets, you only need to think of them.

reduce all the entitled government layers which take from the people and dont give much back except debt - they should live like the rest of us and the tax intake should be spread much more evenly.. its bad enough that the capitalist big boys are selfish exploiters, its unacceptable our social infrastructure is likewise.
ultracrepidarian
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Miss_Faucie_Fishtits
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Re: Help, please

Post by Miss_Faucie_Fishtits »

Chan Akya feels that making widgits and stuff certainly can help, if you do it while you can...'>.......
The solution is more jobs - as the Fed targets unemployment rates now, rather than just inflation, there is a possible way out if the US generates enough employment to keep the economy chugging along: and future tax revenues (e.g. from the current illegal aliens and those who will be immigrants in future) are broadly sufficient to pay down the deficit over time.
She irons her jeans, she's evil.........
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Enki
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Re: Help, please

Post by Enki »

The 3D printing business i am working on is going to utterly destroy your widget export business before you even bring the product to market. I hate to say this, but it's true. Manufacturing is about to be totally altered. Sending widgets overseas unless they are fancy widgets like microprocessors will be a thing of the past. China is the last cheap plastic crap boom economy.

The best example was Kodak who employed like 14,000 people and Instagram which employed 8 at the time of purchase by Facebook.
Men often oppose a thing merely because they have had no agency in planning it, or because it may have been planned by those whom they dislike.
-Alexander Hamilton
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Nonc Hilaire
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Re: Help, please

Post by Nonc Hilaire »

Endo, Henry Ford doubled worker pay which eliminated highly expensive turnover. Then he shortened their workday from 9 hours to eight, which let him run three shifts on the assembly lines. Some of that money came back to him when the workers found out they could afford to buy the cars they were building.

Perhaps there are other factors in your model you are missing?
“Christ has no body now but yours. Yours are the eyes through which he looks with compassion on this world. Yours are the feet with which he walks among His people to do good. Yours are the hands through which he blesses His creation.”

Teresa of Ávila
noddy
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Re: Help, please

Post by noddy »

its always hard in these conversations beacuse they always quickly degrade into EVERYTHING VERSUS NOTHING and people start plucking historical extremes out of their ringholes and call them facts.

its not so much that widget production wont have come backs or wont still have its place in the economic mix of society - its more that its increasingly irrelevant to the bulk of the population.

hobby farms and small scale market gardens are making a comeback due to the organic/locavore trends but noone is seriously suggesting that we are going back to the iron age of mass population employment in these.

the factory that used to employ 10,000 and then got outsourced overseas to employ 1000 foreigners can certainly come back due to changes in the wage ratios and shipping costs but it will probably only employ 200 when it does.

which is nice for the 200, helpful to the government tax intake but not going to have a massive effect on the unemployment problems in the industrial heartlands.

as for noncs point, sure its most likely that over time the society will restructure to create new and different types of employment and we will restablise again - that has happened many times now over history and is going to happen again this time.

the only problem with this big picture analysis is thatwe live in the small picture and these adjustments can take a century or two which is not much comfort to those who live during them.
ultracrepidarian
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