CONTENTS
There are real limits in this world, accept and work for solutions
The principles
The business limits
The fixed budget limits: The case of government
Dealing with reality now, rather than suffering later (at least our kids)
The enemy: the lack of understanding and taking responsibility for solutions
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THERE ARE REAL LIMITS IN THIS WORLD
There are real limits in this world.
Those who protest often think that there are no limits, that somehow things will be paid for. To the extent they are only complaining and blaming, they will only be creating friction and harm.
Only when they learn and understand and see the problem can they begin to solve it.
Our leaders must assure that the public is informed and lead them to consensus and problem solving and not encourage dissension and making others wrong. Leaders encourage personal responsibility and a solution finding orientation - a poor leader is indicated by the signs, by the results: blaming, dissension, complaining, poor decisions.
(Unfortunately, despite having voted for Obama, I find that objective criteria applied to his leadership show harmful leadership. This is not political but based on reasoning, which you may want to contribute to. See Evaluation Of The Obama Presidency.)
THE PRINCIPLES
If wages are "forced" up, they will hit an upper limit. And hiring will halt and/or layoffs will occur. Or businesses will have to go overseas to lower their costs.
THE BUSINESS LIMITS
In the case of business, higher wages means higher costs. And the prices received by businesses are determined by the buyer. Once the wages reach a certain level, there will no longer be a profit - and then no one will be hired and at some point the workers will be out of a job. (If the companies kept on producing where their costs were greater than the prices, they would lose money and go out of business - and everyone would lose their jobs. It is fallacious reasoning to think that companies must pay workers more as a moral duty - the reason is that such practices cause layoffs and/or the loss of jobs because companies can't stay in business. It is remarkable that people do not think far enough down the line to see the consequences and that they therefore are stuck with just emotional reasoning that is invalid and ultimately harmful.)
THE FIXED BUDGET LIMITS: THE CASE IN GOVERNMENT
Yes, we can increase taxes which gives the government more to spend, but let's assume the taxes are fixed (not changeable) for the short term. [Or down the road that people will object to higher and higher taxes and that taking the money away from investment will cause fewer companies to expand and fewer jobs so that we are overall less well off financially. The issue of poverty is separate, though it must be deal with.
Cities, counties, and states have alot of limits, while the national government doesn't quite understand that it also does. Anything that costs them more or makes them less efficient has an impact.
It is often stated, with scientific proof, that unions will put so many restrictions on operations that they have a harmful operating impact. Also, in some cases, unions may have so much power that they push wage costs so high that with a fixed budget, the government entity must lay off workers and/or hire less. If a budget drops suddenly, as is the case with the 2008 property tax collapse along with other reductions in tax receipts, then layoffs will likely occur. There will be more layoffs if the cost per worker is higher given the fixed budget than if the cost is lower. (Duh!)
And whenever their are inefficiencies forced on the governments, they are less effective in delivering their services so the citizens are hurt and/or the same services cost more to deliver - and that causes layoffs in order to balance the budget.
THE FACTS ABOUT WHY WAGES HAVEN'T RISEN FOR DECADES
It is not strictly true that no wages have risen, as the high value knowledge worker has received large increases. However, the economic realities of having other countries being more organized and adopting the technologies causes them to offer lower costs, so that the less skilled or the manufacturing jobs go overseas, leaving an inadequate demand for those jobs here, which drives down demand and wages here.
See Income And Wealth Disparities and understand why the cause is not what many people think it is. (People have simply inserted a reason without reasoning it out. They have done the typical "if I don't know, I'll make up a reason and settle for that".
IF THERE WERE NO SUCH LIMITS...
If there were no such limits, then we could just go along our merry way and keep things as they are. We could also continue to live in obliviousness to the long term effects of pensions and future costs - not realizing that eventually they are incurred, and if there is not enough money to pay, we'll have a problem or we'll have to overtax future generations to pay for them. Greece is a great example - it couldn't afford to pay the pensions so the pensioners were "screwed" because Greece was not realistic about the costs of the commitments they made for the future.
DEALING WITH REALITY NOW, RATHER THAN SUFFERING LATER
Now government entitities must do proper accounting and build in the costs RIGHT NOW of what future pensions and benefits will cost. And then they have to put the money into the accounts so that there will be enough for the future. They are mostly short, out of ignorance of long term effects, so they are forced to have government employees cover more of their pensions costs, as the government doesn't have enough money to do so.
One question here is, that if deficits cannot be continued, is it fair that some governors have passed legislation that limits some government unions from restricting effective management and from exerting power to increase costs to a level that is unsustainable and will necessarily cause layoffs and probably a reduction in services?
The outcry is "unfair!" Unfair to whom? Them, of course. But they do not see the bigger picture and the bigger effect. They are essentially fighting for taking away from others, while advocating fairness and charity. They fail to see the harm that they are creating.
The question of fairness can only be answered from the bigger perspective, asking and answering: what creates the greatest good overall for the people involved? (Note that this is also the criteria for Ethics. Reading that could be helpful to better decision making.)
THE ENEMY: LACK OF UNDERSTANDING AND OF TAKING RESPONSIBILITY FOR SOLUTIONS
It could be amusing, but it is tragic in its impact, to see "smart" people who are ignorant of the facts in economics be so sure of their moral rightness and the wrongness of the "other side". (Of course, in the piece in Rational Thinking, these indicators are sure signs of lack of rational thinking! And that is not "smart" to do in life. Smartness in one area does not imply smartness in another area and trying to convince others of one's rightness where the person has not used Rational Thinking lacks Ethics, as it is downright harmful!)
Professors and teachers at all levels often advocate the moral right to higher pay, the moral wrong and/or harm of capitalism, and the belief that there is no limit to taking from others, etc. Then they teach the kids to believe the same. They were raised in an academic environment, but they fail to apply the standards of academia - to use reasoning based on sound knowledge. They do not have the sound knowledge. They do not have experience in business, so they look at things from the point of view that there is some entity that coughs up the dollars, rather than practical economics and reality. (I would challenge those people to engage in constructive dialogue.)
It should be a required subject for professors, teachers, legislators and indeed all citizens to learn about capitalism and socialism, about basic economics (simple enough to understand and not too complex), and about personal responsibility. And while we're at it, it should be a part of every curriculum to teach problem solving, rational thinking, good decisionmaking, and emotional intelligence.
We must no longer try to move forward in blindness. We must move forward with understanding and reasoning to create effectiveness in our society so that we can serve the greater good of all stakeholders!
A POLITICAL COMMENT
"Those Republicans are awful and just trying to ruin the unions. They are against unions." Saying that is a bit like accusing Democrats of trying to ruin the country through excess spending. It fails to look deeper and to think it out rationally.
Just as with any situations where the use of power causes abuses or adverse effects, it is appropriate to make considered decisions. But generalizing those decisions into characterizing it into a some negative assumption is not appropriate.
The Republicans are just acting in accordance with their beliefs in free economies, but, from what I've seen they are not all "against unions" but are actually against the abuse and negative effects of unions when they step over the line. I think they are against the bad effects (the sin, so to speak) and not the unions (the perpetrator of the "sin").
