Give This Guy A Cigar.

May 5, 2009 at 10:09 am | Posted in Economy, health | Leave a comment
Tags: , , , ,
Detroit, Michigan. Chrysler girls shopping for pocketbooks following a style show presented by the Chrysler Girls Club of the Chrysler Corporation at Saks Fifth Avenue store.  Fall 1942

Detroit, Michigan. Chrysler girls shopping for pocketbooks following a style show presented by the Chrysler Girls' Club of the Chrysler Corporation at Saks Fifth Avenue store. Fall 1942

The media coverage of the auto bailouts has focused on the need for union autoworkers to take big pay cuts, causing them to once again miss the real story. The Fiat-Chrysler deal shows that the pay problem is at the top, not the bottom. At the end of the day, the new Chrysler is still likely to be producing most of its cars in the United States. What the new company will be getting from abroad is technology and top management.

This big story was so easily missed because it runs against one of the main myths that our elites have cultivated about the US economy: that the country has a “comparative advantage” in highly skilled labor. In this story, the United States will continue to lose manufacturing and other “less-skilled” jobs as its economy becomes more concentrated in highly skilled sectors. This story was convenient for our elites because it meant that the decline of manufacturing was a necessary, if sometimes painful, part of a natural economic progression.

It also justified the growing inequality in US society that benefited not just Wall Street bankers and CEOs, but also millions of doctors, lawyers, economists, and other highly educated workers. These people took their six-figure salaries as a birthright, even as the pay of less educated workers stagnated or declined.

Not only is the current way of operating unfair but, lest we forget, “workers” are “consumers” and “consumers drive the economy.”

Go read the whole thing here. It’s not long.

And while you are at it, take a look at this brief paper by David E. Bloom and David Canning of the Harvard School of Public Health:

Group of federal employees waiting for treatment at the Public Health Service Dispensary #32, which has recently been opened for the exclusive benefit of government workers (between 1909 and 1932)

Group of federal employees waiting for treatment at the Public Health Service Dispensary #32, which has recently been opened for the exclusive benefit of government workers (between 1909 and 1932)

A great deal of the literature on economic growth has been devoted to studying the impact of education on aggregate economic performance and comparing the results with the rate
of return to education identified by the Mincer (1974) log wage equation. We believe that ours is the first study to compare the estimates of the macroeconomic effect of health on output with the
microeconomic estimates of the effect of health on wages now available.

We estimate that a one percentage point increase in adult survival rates increases labor productivity by about 2.8 percent, with a 95 percent confidence interval of 1.2 to 4.3 percent.

All emphasis mine.

(Cross-posted at FromLaurelStreet)

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