Australian Politics Forum - The Share Of The Pie For Workers Is Going Down

crocodile

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Re: The Share Of The Pie For Workers Is Going Down
Reply #45 - Apr 26^th, 2015 at 8:05pm

John Smith wrote on Apr 26^th, 2015 at 7:23pm:

crocodile wrote on Apr 26^th, 2015 at 5:54pm:

John Smith wrote on Apr 26^th, 2015 at 2:31pm:

Swagman wrote on Apr 26^th, 2015 at 11:52am:

rhino wrote on Apr 26^th, 2015 at 11:35am:

crocodile wrote on Apr 25^th, 2015 at 2:20pm:

rhino wrote on Apr 25^th, 2015 at 1:15pm:

Swagman wrote on Apr 25^th, 2015 at 12:56pm:

Productivity is declining.

Wrong. productivity is increasing and has done enormously since the 1980s.

Don't think so. You've been reading fairy tales.

http://www.ampcapital.com/AMPCapitalGlobal/media/contents/Blog/olivers-insights/...

In fact this is the primary reason for the shrinking pie. Productivity, especially capital productivity has been in serious decline for over fifteen years now with nary a word from our political geniuses. Multifactor has been in negative territory for seven long years now. Don't expect the share of the pie to grow any time soon.

Lol, your chart doesnt show productivity in decline. Idiot.

Go on?

What does it show then?

...and without pissing in his pocket, I might not agree totally with him all the tim but Croc is far from being an "idiot" and is one of this place's more 'balanced' and 'informative' posters. Particularly on the subject of 'productivity'. Huh

it shows a decline in the rate of growth of productivity ... productivity growing at 1% might be growing slower than the 3.5% it was growing at 10 yrs ago, but it is still growing. (I'm limiting my comment to labor productivity because the thread is about the share for 'WORKERS')

John, unfortunately you have fallen into the same trap as Bam. Labour productivity, despite it's name is not a measure of personal effort. It is the measure of production per man hour. The main driver of this is the uptake of technology. It has little to do with personal effort.

You can't simply ignore capital productivity since it relates to the cost of the provision of technology and fixed operating costs.

so you're saying productivity is down because employers are spending to much money on technology, and not enough on labour? Cheesy

No John, Labour productivity is measured by dividing the production output by the man-hours worked. The cost of labour is not part of the equation.

Capital productivity is calculated by dividing the production output over the life of the equipment by the capital cost of the fixed assets used in producing the goods.

A large chunk of the capital costs is associated with asset classes that actually aid production. They have a limited life due to depreciation and the advancement of technology. The turnover of these assets for more productive ones is what drives up labour productivity.

What I have said is that the capital cost of asset replacement is outstripping the gains made to labour productivity. This is the reason why multifactor productivity is now in negative territory and the reason that the pie slice is getting smaller.

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Very funny Scotty, now beam down my clothes.

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Dnarever

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Re: The Share Of The Pie For Workers Is Going Down
Reply #46 - Apr 26^th, 2015 at 8:08pm

crocodile wrote on Apr 26^th, 2015 at 8:05pm:

No John, Labour productivity is measured by dividing the production output by the man-hours worked. The cost of labour is not part of the equation.

Capital productivity is calculated by dividing the production output over the life of the equipment by the capital cost of the fixed assets used in producing the goods.

A large chunk of the capital costs is associated with asset classes that actually aid production. They have a limited life due to depreciation and the advancement of technology. The turnover of these assets for more productive ones is what drives up labour productivity.

What I have said is that the capital cost of asset replacement is outstripping the gains made to labour productivity. This is the reason why multifactor productivity is now in negative territory and the reason that the pie slice is getting smaller.

You seem to have successfully shown that productivity has nothing to do with productivity.

If you are correct it would seem to be fact that the worse productivity gets the greater that business profits rise.

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crocodile

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Re: The Share Of The Pie For Workers Is Going Down
Reply #47 - Apr 26^th, 2015 at 8:25pm

Dnarever wrote on Apr 26^th, 2015 at 8:08pm:

crocodile wrote on Apr 26^th, 2015 at 8:05pm:

No John, Labour productivity is measured by dividing the production output by the man-hours worked. The cost of labour is not part of the equation.

Capital productivity is calculated by dividing the production output over the life of the equipment by the capital cost of the fixed assets used in producing the goods.

A large chunk of the capital costs is associated with asset classes that actually aid production. They have a limited life due to depreciation and the advancement of technology. The turnover of these assets for more productive ones is what drives up labour productivity.

What I have said is that the capital cost of asset replacement is outstripping the gains made to labour productivity. This is the reason why multifactor productivity is now in negative territory and the reason that the pie slice is getting smaller.

You seem to have successfully shown that productivity has nothing to do with productivity.

If you are correct it would seem to be fact that the worse productivity gets the greater that business profits rise.

Please elucidate.

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Very funny Scotty, now beam down my clothes.

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John Smith

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Re: The Share Of The Pie For Workers Is Going Down
Reply #48 - Apr 26^th, 2015 at 8:28pm

crocodile wrote on Apr 26^th, 2015 at 8:05pm:

Labour productivity is measured by dividing the production output by the man-hours worked. The cost of labour is not part of the equation.

crocodile wrote on Apr 26^th, 2015 at 5:54pm:

You can't simply ignore capital productivity since it relates to the cost of the provision of technology and fixed operating costs.

if you are exchanging man hours and increasing capital expenditure on equipment, it's hardly surprising that the operating costs and cost of provision of equipment are on the increase.

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Bam

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Re: The Share Of The Pie For Workers Is Going Down
Reply #49 - Apr 26^th, 2015 at 9:19pm

crocodile wrote on Apr 26^th, 2015 at 5:17pm:

Bam wrote on Apr 26^th, 2015 at 12:31pm:

Swagman wrote on Apr 26^th, 2015 at 11:34am:

Bam wrote on Apr 26^th, 2015 at 11:17am:

Dnarever wrote on Apr 25^th, 2015 at 1:57pm:

Swagman wrote on Apr 25^th, 2015 at 12:56pm:

.....a bigger share for doing less is increased productivity. Productivity is declining. If it was increasing, the workers pie (everyone's piece) would be getting bigger.

Yes the pie is increasing the problem is that one group are taking virtually all the increases. They are pie pigs.

Indeed ... if we were to measure income by quintiles in the past 50 years, the bottom quintile has gone backwards (fewer jobs) and the top quintile has increased their share massively, far greater than their productivity.

...obviously the more one contributes to the pie then the bigger the piece one earns.

Not true.

The workers' productivity has increased in the past 50 years, yet their share of income is smaller.

The average CEO income has increased by a large amount - as much as 20 times the amount that average earnings have increased by in the past 50 years - but there's no way that their productivity has increased by 20 times as much as that of their workforce. A CEO can earn as much in an hour as their workers each make in a month but there's no way they are doing a month's work in an hour.

Unfortunately it is too true. There is no measure of 'Workers' productivity'. Just because one of the descriptors happens to be Labour Productivity doesn't equate it to productivity of personal effort. Labour productivity is the measure of output per man hour worked. The substantial contributor is the uptake of technology that the workers use to do their jobs. Increases in labour productivity are a direct result of the provisions of technology. In other words, the business owners are updating equipment.

This is why capital productivity cannot be ignored and labour productivity cannot be treated in the singular. Declining capital productivity indicates that the cost of providing new technology is increasing at a faster rate than utilisation can match. Add the two components together and derive multifactor productivity. This is the one that matters. With this in decline it simply means that any productivity gains brought on by availing the workforce of new technology is more than wiped out by the cost of doing so.

That is why the pie is shrinking.

Why have those in the top quintile - especially the top 1% - ended up with more? I doubt that the CEOs' productivity is 400 times that of the average worker, in line with their extravagant salaries.

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You are not entitled to your opinion. You are only entitled to hold opinions that you can defend through sound, reasoned argument.

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Dnarever

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Re: The Share Of The Pie For Workers Is Going Down
Reply #50 - Apr 26^th, 2015 at 10:12pm

crocodile wrote on Apr 26^th, 2015 at 8:25pm:

Dnarever wrote on Apr 26^th, 2015 at 8:08pm:

crocodile wrote on Apr 26^th, 2015 at 8:05pm:

No John, Labour productivity is measured by dividing the production output by the man-hours worked. The cost of labour is not part of the equation.

Capital productivity is calculated by dividing the production output over the life of the equipment by the capital cost of the fixed assets used in producing the goods.

A large chunk of the capital costs is associated with asset classes that actually aid production. They have a limited life due to depreciation and the advancement of technology. The turnover of these assets for more productive ones is what drives up labour productivity.

What I have said is that the capital cost of asset replacement is outstripping the gains made to labour productivity. This is the reason why multifactor productivity is now in negative territory and the reason that the pie slice is getting smaller.

You seem to have successfully shown that productivity has nothing to do with productivity.

If you are correct it would seem to be fact that the worse productivity gets the greater that business profits rise.

Please elucidate.

Graphs are being peddled showing that productivity has been supposedly in decline for well over a decade yet we know that profits have been largely increasing the entire time. Showing a negative correlation between productivity and profitability (if it were correct).

A lot of technical gobbledygook like this has little real meaning.

The fact is that in terms of profit statements etc we know that the pie is in fact getting bigger and we know where the division of the pie is increasingly going. Your insistence that productivity is on the decline shows a disconnect between profits business success and productivity if it were really correct.

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crocodile

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Re: The Share Of The Pie For Workers Is Going Down
Reply #51 - Apr 26^th, 2015 at 10:21pm

John Smith wrote on Apr 26^th, 2015 at 8:28pm:

crocodile wrote on Apr 26^th, 2015 at 8:05pm:

Labour productivity is measured by dividing the production output by the man-hours worked. The cost of labour is not part of the equation.

crocodile wrote on Apr 26^th, 2015 at 5:54pm:

You can't simply ignore capital productivity since it relates to the cost of the provision of technology and fixed operating costs.

if you are exchanging man hours and increasing capital expenditure on equipment, it's hardly surprising that the operating costs and cost of provision of equipment are on the increase.

Trading capital for increased production has historically been the main driver of wages growth and living standards. The problems of the last decade and a half is that the increased production is requiring a higher ratio of output to capital than it once did.

This is a long term problem. There is plenty of capital around but poor government policy makes the option of investing capital in non productive asset classes irresistible. Couple that with diminishing investment in R&D, public infrastructure and education and it is not hard to see why the pie is getting smaller.

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Very funny Scotty, now beam down my clothes.

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crocodile

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Re: The Share Of The Pie For Workers Is Going Down
Reply #52 - Apr 26^th, 2015 at 10:36pm

Dnarever wrote on Apr 26^th, 2015 at 10:12pm:

crocodile wrote on Apr 26^th, 2015 at 8:25pm:

Dnarever wrote on Apr 26^th, 2015 at 8:08pm:

crocodile wrote on Apr 26^th, 2015 at 8:05pm:

No John, Labour productivity is measured by dividing the production output by the man-hours worked. The cost of labour is not part of the equation.

Capital productivity is calculated by dividing the production output over the life of the equipment by the capital cost of the fixed assets used in producing the goods.

A large chunk of the capital costs is associated with asset classes that actually aid production. They have a limited life due to depreciation and the advancement of technology. The turnover of these assets for more productive ones is what drives up labour productivity.

What I have said is that the capital cost of asset replacement is outstripping the gains made to labour productivity. This is the reason why multifactor productivity is now in negative territory and the reason that the pie slice is getting smaller.

You seem to have successfully shown that productivity has nothing to do with productivity.

If you are correct it would seem to be fact that the worse productivity gets the greater that business profits rise.

Please elucidate.

Graphs are being peddled showing that productivity has been supposedly in decline for well over a decade yet we know that profits have been largely increasing the entire time. Showing a negative correlation between productivity and profitability (if it were correct).

A lot of technical gobbledygook like this has little real meaning.

The fact is that in terms of profit statements etc we know that the pie is in fact getting bigger and we know where the division of the pie is increasingly going. Your insistence that productivity is on the decline shows a disconnect between profits business success and productivity if it were really correct.

I haven't mentioned any correlation between profit and productivity. Profits are entirely possible with falling productivity. It is wages growth that falls with declining productivity as each increment in production is no longer a linear function of capital.

It is disappointing that you see this as gobbledygook. It really isn't hard once the concepts are understood. The famous Nobel Prize winning economist, Paul Krugman noted way back in 1994:

"Productivity isn't everything but in the long run it is almost everything. A country's ability to improve its living standards over time depends almost entirely on its ability to raise its output per worker".

These are very prophetic words and gets to real driver of wages growth.

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Very funny Scotty, now beam down my clothes.

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Vuk11

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Re: The Share Of The Pie For Workers Is Going Down
Reply #53 - Apr 26^th, 2015 at 10:56pm

If you talk of only productivity you are ignoring all other factors that contribute to stagnant wages and more importantly stagnant real wages in terms of purchasing power and goods & services accessible with those wages.

In a free market productivity has a massive effect on wages but we live in a controlled distorted market with many other factors. Such as the lower supply of unskilled work vs the amount of people fighting over those jobs which drives wages down faster than gradual increases in productivity can account for.

Though I'd be curious how they come up with productivity figures I haven't looked at that myself.

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ImSpartacus2

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Re: The Share Of The Pie For Workers Is Going Down
Reply #54 - Apr 27^th, 2015 at 9:02am

crocodile wrote on Apr 26^th, 2015 at 5:54pm:

John Smith wrote on Apr 26^th, 2015 at 2:31pm:

Swagman wrote on Apr 26^th, 2015 at 11:52am:

rhino wrote on Apr 26^th, 2015 at 11:35am:

crocodile wrote on Apr 25^th, 2015 at 2:20pm:

rhino wrote on Apr 25^th, 2015 at 1:15pm:

Swagman wrote on Apr 25^th, 2015 at 12:56pm:

Productivity is declining.

Wrong. productivity is increasing and has done enormously since the 1980s.

Don't think so. You've been reading fairy tales.

http://www.ampcapital.com/AMPCapitalGlobal/media/contents/Blog/olivers-insights/...

In fact this is the primary reason for the shrinking pie. Productivity, especially capital productivity has been in serious decline for over fifteen years now with nary a word from our political geniuses. Multifactor has been in negative territory for seven long years now. Don't expect the share of the pie to grow any time soon.

Lol, your chart doesnt show productivity in decline. Idiot.

Go on?

What does it show then?

...and without pissing in his pocket, I might not agree totally with him all the tim but Croc is far from being an "idiot" and is one of this place's more 'balanced' and 'informative' posters. Particularly on the subject of 'productivity'. Huh

it shows a decline in the rate of growth of productivity ... productivity growing at 1% might be growing slower than the 3.5% it was growing at 10 yrs ago, but it is still growing. (I'm limiting my comment to labor productivity because the thread is about the share for 'WORKERS')

John, unfortunately you have fallen into the same trap as Bam. Labour productivity, despite it's name is not a measure of personal effort. It is the measure of production per man hour. The main driver of this is the uptake of technology. It has little to do with personal effort.

You can't simply ignore capital productivity since it relates to the cost of the provision of technology and fixed operating costs.

A link for the claim you make that I highlighted please.And in particular for the claim you made earlier that the growth in labour productivity is more to do with technology and "little to do with personal effort".That's what I want a link to. And while you're at it why dont you tell us why you're first year economics lecturers are saying that all Australia's ills come back to productivity and lets deal with this tripe you keep repeating here like a trained parrot.

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« Last Edit: Apr 27^th, 2015 at 9:09am by ImSpartacus2 »

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Swagman

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Re: The Share Of The Pie For Workers Is Going Down
Reply #55 - Apr 27^th, 2015 at 10:27am

John Smith wrote on Apr 26^th, 2015 at 7:31pm:

Grappler Deep State Feller wrote on Apr 26^th, 2015 at 7:28pm:

The idea that perpetual growth to maintain an economy is a necessity fails against the brick wall that the Earth can only sustain so many people at a level which will permit them to buy finished goods.

some may call it perpetual growth, others call it greed.

....and others might call it 'serviceability of procreation' Huh

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John Smith

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Re: The Share Of The Pie For Workers Is Going Down
Reply #56 - Apr 27^th, 2015 at 10:41am

Swagman wrote on Apr 27^th, 2015 at 10:27am:

John Smith wrote on Apr 26^th, 2015 at 7:31pm:

Grappler Deep State Feller wrote on Apr 26^th, 2015 at 7:28pm:

The idea that perpetual growth to maintain an economy is a necessity fails against the brick wall that the Earth can only sustain so many people at a level which will permit them to buy finished goods.

some may call it perpetual growth, others call it greed.

....and others might call it 'serviceability of procreation' Huh

so you agree that chasing perpetual growth leaves you screwed!

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Our esteemed leader:
I hope that bitch who was running their brothels for them gets raped with a cactus.

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Swagman

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Re: The Share Of The Pie For Workers Is Going Down
Reply #57 - Apr 27^th, 2015 at 11:25am

John Smith wrote on Apr 27^th, 2015 at 10:41am:

Swagman wrote on Apr 27^th, 2015 at 10:27am:

John Smith wrote on Apr 26^th, 2015 at 7:31pm:

Grappler Deep State Feller wrote on Apr 26^th, 2015 at 7:28pm:

The idea that perpetual growth to maintain an economy is a necessity fails against the brick wall that the Earth can only sustain so many people at a level which will permit them to buy finished goods.

some may call it perpetual growth, others call it greed.

....and others might call it 'serviceability of procreation' Huh

so you agree that chasing perpetual growth leaves you screwed!

Nope. On the contrary, it's totally necessary unless the population is decreasing.

Advocating (forcing) pay increases over and above the rate of GDP (something the ACTU always advocates) is economic suicide. More so these days than it's ever been. Why?

On a macro level, Australia at the moment has a problem which I have posted many times. The ratio of tax payers to tax dependents is declining. To maintain current levels of social services we (the nation) have to start producing more for less (AKA increase productivity) just to stay at the same level otherwise we will just spiral into debt. (which is exactly what's happening now)

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Grappler Deep State Feller

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Re: The Share Of The Pie For Workers Is Going Down
Reply #58 - Apr 27^th, 2015 at 11:42am

Swagman wrote on Apr 27^th, 2015 at 11:25am:

John Smith wrote on Apr 27^th, 2015 at 10:41am:

Swagman wrote on Apr 27^th, 2015 at 10:27am:

John Smith wrote on Apr 26^th, 2015 at 7:31pm:

Grappler Deep State Feller wrote on Apr 26^th, 2015 at 7:28pm:

The idea that perpetual growth to maintain an economy is a necessity fails against the brick wall that the Earth can only sustain so many people at a level which will permit them to buy finished goods.

some may call it perpetual growth, others call it greed.

....and others might call it 'serviceability of procreation' Huh

so you agree that chasing perpetual growth leaves you screwed!

Nope. On the contrary, it's totally necessary unless the population is decreasing.

Advocating (forcing) pay increases over and above the rate of GDP (something the ACTU always advocates) is economic suicide. More so these days than it's ever been. Why?

On a macro level, Australia at the moment has a problem which I have posted many times. The ratio of tax payers to tax dependents is declining. To maintain current levels of social services we (the nation) have to start producing more for less (AKA increase productivity) just to stay at the same level otherwise we will just spiral into debt. (which is exactly what's happening now)

**sighs** - BOTH sides the Workers's Unions and the Employer's Unions - follow a negotiating process - they come in with a high figure on the one hand and a low figure on the other and the arbitrator finds somewhere in the middle...

'Advocating' above GDP rises is par for the course, as is advocating for lower than GDP rises - it is the OUTCOME that counts.

You know better than that, Swag.

As for 'growth is necessary as long as population grows' - indeed it is - but not just some cancerous and out of control growth that consumes everything in sight eventually - and part of that growth is wages growth to keep up.

I've argued long and hard that a focus on lowering costs and wages at the one time is necessary - nobody in the business of adding costs wants to lower costs = income into their own pockets.....

You know full well by now that privatisation is one of the main culprits with multiple cost additions.

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“Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence.”
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Dnarever

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Re: The Share Of The Pie For Workers Is Going Down
Reply #59 - Apr 27^th, 2015 at 11:57am

crocodile wrote on Apr 26^th, 2015 at 10:36pm:

Dnarever wrote on Apr 26^th, 2015 at 10:12pm:

crocodile wrote on Apr 26^th, 2015 at 8:25pm:

Dnarever wrote on Apr 26^th, 2015 at 8:08pm:

crocodile wrote on Apr 26^th, 2015 at 8:05pm:

No John, Labour productivity is measured by dividing the production output by the man-hours worked. The cost of labour is not part of the equation.

Capital productivity is calculated by dividing the production output over the life of the equipment by the capital cost of the fixed assets used in producing the goods.

A large chunk of the capital costs is associated with asset classes that actually aid production. They have a limited life due to depreciation and the advancement of technology. The turnover of these assets for more productive ones is what drives up labour productivity.

What I have said is that the capital cost of asset replacement is outstripping the gains made to labour productivity. This is the reason why multifactor productivity is now in negative territory and the reason that the pie slice is getting smaller.

You seem to have successfully shown that productivity has nothing to do with productivity.

If you are correct it would seem to be fact that the worse productivity gets the greater that business profits rise.

Please elucidate.

Graphs are being peddled showing that productivity has been supposedly in decline for well over a decade yet we know that profits have been largely increasing the entire time. Showing a negative correlation between productivity and profitability (if it were correct).

A lot of technical gobbledygook like this has little real meaning.

The fact is that in terms of profit statements etc we know that the pie is in fact getting bigger and we know where the division of the pie is increasingly going. Your insistence that productivity is on the decline shows a disconnect between profits business success and productivity if it were really correct.

I haven't mentioned any correlation between profit and productivity. Profits are entirely possible with falling productivity. It is wages growth that falls with declining productivity as each increment in production is no longer a linear function of capital.

It is disappointing that you see this as gobbledygook. It really isn't hard once the concepts are understood. The famous Nobel Prize winning economist, Paul Krugman noted way back in 1994:

"Productivity isn't everything but in the long run it is almost everything. A country's ability to improve its living standards over time depends almost entirely on its ability to raise its output per worker".

These are very prophetic words and gets to real driver of wages growth.

Profits are entirely possible with falling productivity..

Yes must be if anything you say is correct productivity clearly has no relationship to profit, in fact low productivity seems a good thing.

It is wages growth that falls with declining productivity

Wages growth has not declined only the bottom half of wages have declined. This has been driven largely by external forces with no relationship to the economy or performance.

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