Raise the Hammer

"It's true that large, established corporations have been shedding jobs for the past couple of decades, but it's important to note the sector that has been most impressive at creating new jobs: young, small businesses."

Anecdotally, I'm inclined to echo that sentiment, although I do wonder about finer points such as the lifespan of these jobs and the sectors in which the job creation is taking place. (Restaurants, for example, would certainly qualify as young, small businesses, but they are also a service sector entrepreneurial venture that has a knack of high turnover and marginal wages. Call centers might also qualify if measured against traditional monolithic corporations or public sector employers.) Do you know if this sort of information is being tracked? I can imagine it's not straightforward, but I can also imagine an official rationale for simply identifying broad trends without disclosing specifics.

This is part and parcel of selling ourselves out to wholesale corporatism.

It's hidden inflation. Inflation statistics include "hedonic" adjustments for so-called productivity improvements (a modern computer is considered to have an economic value of hundreds of times that of the old 486, hence it is considered to decrease the overall inflation rate).

Meanwhile, the goods and services received from corporations are debased. Service is removed for all but the highest price items, shopkeepers hire minimum wage help instead of knowledgeable support.

If inflation statistics were calculated honestly, it would be clear that North America has been in an economic slump of low or no real growth since the 70's.

Government so often gets the blame for this inflation, but government (taxes) continue to take up a shrinking share of the economy, while corporate profits take on an ever-larger share.

The other thing that has changed is that employers now expect job applicants to arrive with all of this additional training under their belt, as well as very specific kinds of working experience, besides a degree or diploma. Used to be that employers would provide and pay for specific types of training once they hired a person. What I see now is employers looking for a specialized degree or diploma, plus various additional certifications, all for positions that pay, say, 25 - 35,000 a year. Not great if you've got rent to pay and student debt to manage, never mind your car or transit pass as well as whatever wardrobe you are expected to wear (even a job as low on the totem pole as retail clothing sales will often require that you wear clothes from that store, and the employee discount usually isn't that great). No wonder there are so many young adults living at home.

The only solution is higher corporate taxation. Corporations make the marketplace inherently uncompetitive, and should be penalized with higher taxation. It's proven that trickle down effect economics simply do not work, mainly because one very rich upper class individual doesn't contribute anywhere near as much to an economy as several middle class individuals due to a mixture of hoarding cash and that their markets tend to be very exclusive ones where money doesn't change hands nearly as often.

As far as being given no incentive to succeed, for followers of Ayn Rand, your incentive to succeed if that fact that you are still rich even if you are getting penalized with higher taxation and you always have the option of lowering your income rate through charitable donations for causes you support.

I think this is a valuable, if pessimistic comment. Look at Canada Bread, how often do you hear them trotted out as an example of economic development success. 375,000 sq foot factory! For 300 jobs. Must be lonely in there, unless the robots tell jokes.

But the other side is we got a 300 job solar panel factory recently with much less fanfare. I bet Neil Everson poured money and time into the first, but did he do anything about the second?

@Ryan, I remember you linking in twitter something a comment by a successful start-up that spoke to me: the Ontario corporate culture has no interest in courting start-ups. There is no VC here. Toronto's corporations reflect the Canadian inferiority complex... it's full of massive, old companies that are straight-laced and tight-lipped and Very Serious. There is no youth and excitement in that.

That's a place where the Hamilton future-fund could come in - focus on getting start-ups into Hamilton, where they will grow. Court McMaster grad-students and tell them straight up "We want to see Silicon Valley here in Hamilton". Get some cheap office space downtown to lease to these start-ups - it's not like we have some kind of a shortage of buildings.

As I think you mentioned before, it is not small businesses that drive job-growth, but young businesses.

So make some.

Comment edited by Pxtl on 2010-11-26 08:31:52

Red baiting, that's helpful. :P

We are in adjustment phase. Great danger exists for wrong debt laden policies. PIIGS is proof. Folks do not want to recognize this truth and still promote big spending on top of huge unavoidable maintenance. Startups need cheap inputs and a free hand. Big spenders, big gummerment and big taxes is the enemy but the change requires complete change of thinking. Most folks are not ready, including some here.

The adjustment will not be avoided. My own bet is the buck rises against USD but drops against World - therefore inflation roars (including oil), biz sucks, tax revs dry up and all sillinesses and faux dreams die. Practicality is reborn. Real non-subsidized operations spring up like mushrooms in garages and basements. Localism returns, burbs shrink, doubling up increases, dropouts compete with Chinese labour which fortunately is rising (albeit squeezed by Vietnamese etc.)

Canadians must tighten belts, avoid debt, increase savings, become more entrepreneurial which means we must make serious changes to school er brainwashing system. Etc. Etc.

I'm just impressed he posted a second time to correct his spelling mistakes!

"Tearing apart Alberta to get at the tar sands is "driving our economy" - and pushing the Canadian dollar so high that more manufacturers are shutting down or "reducing their workforce"."

You really hit it there for me...

Recently, my kids came home from school talking about how "in Brazil, they're cutting down the rain forests" and I have to tell them Canadians don't get an opinion since we are literally boiling the earth to get at petty oil. And we can boast one of the top-pollution site on the planet too...

Yeah-- I think you hit on a lot,
Jeff Reid

Comment edited by wentworthst on 2010-11-26 12:13:12

"Court McMaster grad-students and tell them straight up "We want to see Silicon Valley here in Hamilton". Get some cheap office space downtown to lease to these start-ups - it's not like we have some kind of a shortage of buildings "

Good idea to invest in young and energetic. Help them settle in some kind of Novelty village by the lake and see them transforming all around. Let them create their own market to sell and promote their products and services.
Next, extend the idea to energetic seniors. Many are very talanted.
And here we go with our Venetian Plate mosaic by the lake.

Bobinnes said "...Canadians must tighten belts, avoid debt, increase savings, become more entrepreneurial which means we must make serious changes to school er brainwashing system. Etc. Etc...." I agree! The education system is failing us all. Hardly changed focus in 50 years. Too many kids traipsing to university for 4 years, coming out with horrendous debt and no job prospects, so then to college for 2 years for a trade diploma. It's all backwards and mostly propelled by image rather than career prospects. Self employment could save us. Finding start-up money is the barrier for a lot of talented people, (those of us who are not in the same league as high-tech, million dollar businesses, but just want to make a decent income). In return, profits would be spent locally, therefore boosting the local economy. When we shop at big outlet stores we continuously support foreign manufacturing and none of the corporate profits stay in Hamilton. Can Hamilton embrace small business? Are there any Hamilton 'Angels' that are willing to invest and mentor local talent? Can landlords get empty stores 'open' maybe on a low rent until profitable? We have a Food market. How about a Antique market, Flea market, Craft market....International cities such as Paris and London thrive on these sort of anti-establishment retail outlets, plus they attract visitors and provide local pride.

@Ryan

Nononono, when I said "So make some", I'm not saying "go start one"; I'm saying the city should fund some. If the biggest driver for job growth is young businesses, and we have trained high-tech professionals coming out of a world-class Engineering school, why don't we use the Future Fund to loan them the money to start their own businesses here in Hamilton?

Kill two birds with one stone - keep Mac students here instead of having them flee South or to Mississauga or Waterloo. And create jobs.

The other side of the coin is what Henry Ford did, which was pay his employees enough so that they could afford to buy his products! Was he a socialist?

Pay your staff well and treat your staff well and you'll have little staff turnover. This leads to building up experience, which means that when things go wrong they get dealt with quickly instead of having inexperienced or unskilled staff panicking and exponentially increasing the effect of the problem.

Pure capitalism is all about paying the least to get the most. Like posting a job offer 50 jobs at $20/hr, but when 200 people show up you ask who's willing to work for $10/hr. There's more to business than just the bottom line.

Brandon, if I paid you $20/hr to do a job that returned $10/hour output, I would lose $10 for every hour you worked. If I did that long enough and for every employee, I would eventually run out of money and have to close the business.

Alternatively, if I paid a wage that made you happy as possible, while also providing a profit margin to expand the business, we both win. You keep your job, and I can invest in new ways of making money.

In the third scenario, I pay my workers peanuts and try to make as much profit as possible. Because my workers are unhappy, they quit and I have to waste money retraining workers.

What these three scenarios tell us is that the best business model is the one that makes business owners the highest profits. However, because we know that means striking a balance between owners self interest and workers self interest, the best companies will do just that. If a company gets too greedy, their labour costs (including retraining) will exceed the higher wage business and they will lose market share due to higher costs. The market will force business owners to do the right thing.

If you don't believe how important it is to have wages reflect reality, rather than government fiat, read the first article about the Great Depression...

http://mjperry.blogspot.com/2009_08_01_archive.html

First off, as someone who's known Don for a long time, as well as most of our town's notorious communists, I certainly wouldn't characterize him as one of them. I don't know exactly how he feels about the subject, but in years of activism I've never once heard him make an issue of it. Rather, he's fought hard for years for basic democratic and environmental justice. For those who don't think he's done anything since Red Hill, have you heard of CATCH? Publicizing transcripts of council meetings and under-reported staff studies hardly sounds like a diabolical communist plot to me. Red-baiting fail.

Since good ole' Karl has been brought up, though, I think it would be valuable for some of the people posting on here to actually crack open a copy of Das Kapital before spouting off about it. I'm not a Marxist, but his critiques make a lot of very valid points about why the type of arguments advanced by A Smith just never quite work out in real life. Capital is written largely in response to the work of scholars like John Locke, Adam Smith and others, and he's actually (comparatively) fond of Smith in a lot of ways (in comparison, he's none too fond of Thomas Malthus). It has nothing to do with communism, and everything to do with things like supply and demand.

The issue is not that workers are being paid $20 for creating $10 worth of "value" for a company, it's the other way around (take Temp Agencies for a blatant example). And when that "surplus value" gets taken as profit then reinvested as capital, it gets used to justify the ongoing ownership and control of the business, even if the initial investment was repaid years before. More profits and more capital don't mean more wages for workers - real wages haven't grown in Canada or America since the 1970s, despite an unbelievable blossoming of profits and productivity (the computer revolution, etc). It isn't that Marx is (just) against market competition, he's illustrating why capital itself distorts and destroys market competition.

For those who are actually interested, I highly reccomend David Harvey's online course "Reading Marx's Capital". It's long and painful (so is the book, believe me), but does it some actual justice without really getting much into communism and that whole can of worms. http://davidharvey.org/

if I paid you $20/hr to do a job that returned $10/hour output, I would lose $10 for every hour you worked.

Typical 2-dimensional thinking from our original Troll. If your thinking went beyond grade school arithmetic you would maybe think about market size and about fixed vs variable costs and that there are lots of balance points for a corporation to become profitable. Please people, I don't know where zookeeper went off to but please stop feeding this troll.

Hey Z, read again through A Smith's comments - he's just articulating a position you don't agree with. Plenty of others are trolling, but notice that they've been successfully ignored. You also used a personal attack. And now here I go feeding you.

If both A Smith and Undustrial are correct (i think so), how can that be? Simple, Undustrial's system box is bigger - includes China, etc. Some thing happened to Britain in 18/19th century. These stresses are unavoidable, but we can choose our response. Many want to erect trade barriers, others want China to revalue its currency which amounts to the same thing, more or less. I suspect a majority think we can still compete because China is still seen as backward copiers. I've heard much that debunks this myth - advanced solar, trains, air conditioners, etc. A crashing USD will help by choking off cheap oil driven trade. Then local production can increase, at least some products.

Both Don and Undustrial also point to corporatism/ globalism as a key problem. I agree, as this is what can make A Smith's logic go from true to unworkable. We have let go of the reins of restraint and regulation on corporations and banksters at the same time as we have decreased the freedom of (increased the regulation on)individuals. Maybe Hamilton can change its mentality so as to protect individuals from gummermint instead of what they do now but doubt this can happen as long as the Spectator vomits elitist thinking into peoples' unthinking heads. People are getting the gummmermint they deserve.

Comment edited by bobinnes on 2010-11-27 12:55:16

A Smith,

You're funny. You actually seem to think that the people making decisions to drive down employee costs actually care about little things like how much knowledge the staff in question have, why they're making as much as they're making and how much it's going to cost the company in the long run. Those people will be promoted for saving the company money long before the chickens come home to roost. Those chickens are the next guy's problem.

If more corporations worked the way you describe we'd have a lot less problems. Instead we get WalMart, who drive down prices not only for the consumer, but for what they pay employees and suppliers as well.

Your description only works if the world is run by owner operated businesses, by people who have something invested in the process, not hired managers with target numbers handed down from on high. Right now the marketplace most corporations are concerned about is the share price. Drive down immediate expenses to bring up the current quarter's net numbers.

First off, I'd miss A Smith if he wasn't around. He posits an unpopular position (around here), but he always does the work to source it and elaborate on it. I don't agree, but that's what makes this a discussion rather than a sermon.

Despite my affection for Marx, I'm actually quite a fan of free markets. And to echo Ryan's initial comments, I'm all in favour of small firms. I don't, however, think that investors should be privileged above workers, customers and the environment. It creates a system where wages, environmental considerations and product quality are all costs to be minimized in favour of management, advertising and interest on debts. When we pay people enormous amounts of money mainly because they have more money than us, all we're doing is continuing the cycle.

The only solution to these problems is employee ownership. Or to put it in a local context - North Hamilton is always going to be poor until the massively productive workplaces are owned in North Hamilton, not Ancaster, Toronto or Pittsburgh. Until factories are owned locally, decisions made will continue to show crass indifference for the communities in which they operate. And as long as industries are run by people trained to manage money with little specific knowledge of their field (ie: making steel), they're always going to make questionable decisions when it comes to on-the-ground operations.

Interesting about North Hamilton, it is one of the very few places in the Golden Horsehoe that provides fairly inexpensive homes in some locations that are in the middle of the most densely populated part of this country.

Maybe I missed something but, somehow, I'm having trouble getting my head around the proposition that eliminating minimum wage and paying our most poorly paid workers even LESS is the solution to our problem. That theory could best be summed up as "the closer more people move to slavery the better we are".

It never ceases to amaze me how people continue to parrot the outdated, cottage industry economic theories of Adam Smith as if, somehow they fit into today's, absentee-owned, multi-national, oligopolic environment. The "free" market of which Smith wrote is based in the free entry and exit into the marketplace by workers, consumers and producers alike. Try finding that in today's world especially in North America.

In fact, the best example of the real free enterprise that many, mostly anonymous, contributors to this sight seem to revere is professional sport. There, players put their services on the market to the highest bidder, owners compete for those services and spectators are totaly free to purchase a ticket or not. And when that system works as it should, what do we hear; "Salaries are exhorbitant", "ticket prices are too high"? No, it's just capitalism and free enterprise left to their own devices.

t

The ideal "free market capitalist" utopia isn't hard to find. Low taxes, few laws, undervalued currencies and cheap and plentiful labour and resources. Just go to Honduras, or Indonesia, or Mexico.

Smith's vision fails for exactly the same reason Marx's did. Both had a very keen understanding of economics and exchange, neither seemed to grasp human nature very well. Both establish a vast managerial bureacratic class, as well as a powerful state to back it up. And in both cases, those power structures tend to lose sight of goals beyond their immediate needs - at great expense to workers, consumers and the rest of the economy.

Any system which creates unchecked power structures like these is bound to fail. Benevolent dictators are a fantasy, and represent a very half-hearted theoretical shortcut. It's very easy to say "we'll make a rule" or "we'll put someone in charge, and he'll make sure it works". What isn't easy is thinking through what a new power structure like that might actually do in the real world. Other writers, activists and politicans made very dire warnings around the time of Marx or Smith that corporations or "Red Bureaucracies" would come to dominate society in ways the Feudal Lords had never dreamed of. And when those warnings weren't heeded, they came true.

Most of the jobs you mention are actually pretty boring and tedious. Pumping gas? Ringing in groceries? Checking out library books? Manning the steel mills? All of those jobs suck.
Thankfully, through the magic of the 21st century, we've created robots that can do those crappy jobs for us. The problem now is we need to find a way to reorganize society so that the people who would have been doing those crappy jobs in the past can do other things rather than be unemployed.
We can't look back nostalgically to the days when everyone had a really crappy job to look forward to going to everyday. Instead we need to think about new ways to evolve our entire social structure. We need a system which incorporates technological advances that eliminate the need for tedious work, and one in which everyone benefits from those advances rather than just an elite few.

It's interesting that you categorize a job as "sucking".

I went to the dump a few months ago and asked the guy manning the recycling how he was doing. He said "I'm perfectly content right now." He enjoyed his job. Could I do it? Not a chance. I'd be bored stupid within half an hour. Could he do my job? I doubt it.

Regarding the grocery line, it's far faster to have someone at the checkout than it is to have me scanning my items. Believe it or not, there is a skill to it. It's also better customer service.

Automation for the sake of automation isn't always best, nor is making your customer do more work because you don't want to pay someone to do it.

I'm in total agreement Centrist. The problem with robots (as a metaphor for technology in general) is that we compete with them for jobs. If robots replaced every one of our jobs today, we'd all simply be unemployed tomorrow. The day after that, there'd be massive hiring in service-sector jobs such as toilet flushers, sidewalk sweepers and shoe-shiners (likely at pennies an hour). We already see a lot of this with China, where people are literally paid to play the boring parts of video games for wealthy Americans.

Boring jobs are a problem, especially when we're expecting entire sectors of the population to spend the majority of their lives doing them, and when those jobs aren't really accomplishing everything (Telemarketing, etc).

For decades, a larger portion of a larger population has been working more hours and producing much more in each one of those hours. We've acquired a global workforce that's too cheap to meter, computers, and the internet. Yet wages haven't risen in real terms, debt's higher than ever at every level, the environment is in serious peril, and progress in combating global poverty has actually slowed down. More work isn't the solution. Better work is (useful, safe, enjoyable etc).

There is no skill in scanning barcodes and using debit or credit card machines. I use it all the time at the bank(as it only takes practice, not skill). I get it done shopping more quicker at the automated machines over a cashier. I never wait 5-10 minutes in line, because I don't have to wait for the 5 people in front to process their orders. That's why they created computers and machines to get jobs done quicker. Like it or not. It is inevitable. Internet is replacing jobs more quicker than you realize. It is the norm, it is our reality. Businesses will continue to be competitive to survive, and tech. is the the key. The internet has made people famous as young as 6 overnight. At one point it use to take years in the making to become an artist. You need to face this reality, and evolve with the times.