CAPITAL vs LABOR

[rffrydr]

Of course this the oldest and fundamental cyle when it comes to econmics--and it precisely because of this that the answers to questions of it's twists and turns cannot fully or finally be answered within its confines.

The ultimate direction will come, I think, from the greater worLd of politics and culture. While, doubtless, there are times when economics has held both within it's grip, i.e. the rise of japan in the 70's or, say, the french love of "hollyvooood." Ultimately, culture will decide.

Presently, in regards to the latest newsletter, we have the GM Chairman and his open "letter" to america. This may be dismissed as a Chrysler-like appeal for Washington to bail GM's fast ailing ass out (I, incidently bought their bonds a few weeks back) but it is framed in cultural terms, what we want as a society and how those values will (or can) be expressed our society's companies.

I would agree with you, Henry, that the american autos mark an ending in the cycle of cap vs labor. But I would say just the opposite. The Unions have been running GM for a long time: production has been set for at least these last years on employment balance rather to any regard for efficiency or profitability. GM and the american autos represent union power in its deaththroes. GM, for instance, allows for smoking on assembly lines and "ghost-workers." For christ's sake! the same company responsible for these guy's long-term (spiraling) health care!! The notion of an "economy" of the american auto has long-since collapsed under the weight of its own bloated worker. No amount of "offshore outsourcing" will save the Corvette (unlike the "american flyer" red wagon), captial and labor are bound by time, geography and scale. All things that "market-economies" don't handle well, if at all.

But yes, the cycle is turning, it is turning back in the direction of labor and it is turning exactly at the lowest rung in labor, where you would expect it to begin. The pinnacle of captial power is not GM but WalMart/Microsoft. The change is well underway. You mention the movies, the PR (Walmart now HAS to sponsor NPR, Katrina etc) on our side. But labor is reasserting itself where it wasn't supposed to exist: China.

Walmart doesn't site new manufacturing in coastal china anymore: good help is hard to find and even the assemblylines are not only not cheap anymore; they are beginning to cost. Agricultural reform, ironically price liberalization, is keeping more peasants on the farm and off the streets in Gunangzhou.

The first hint of this change was there for those who wanted to look 5 years ago when the 1billion plus dreamt cellphone distribution topped out at 250 million and China Mobile, the "darling" of "class A" shares went flatline. China now, as always, is bifurcated place, a land of those who can and those who will never be allowed to try. Those chinese who can make it work, make China the factory to the world, are in shorter supply than we imagine, and it's now becoming clear that limits are being pressed and costs going higher.

"Environmentalism" has come late and come by necessity in china. But it is now becoming a badge of western standards--a cultural marker. The proof is in the money: they are now hiring Vancouver companies to clean their water, for example. The most powerful symbol of all now driving China, the 2008 Olympics, is really all about acceptence, admittance, as western power--albeit a la japan! Can the transformation of labor from the country writing the greatest transformation of labor in the modern world be far behind?

It was in the concept of "shareholder" that chinese communism and western capitalism were united. Is there a more "communist" idea than this??? As capital has now found its resurgent power through this concept it has also, I think we are beginning to see, opened the door to its complement and opposite, labor.

And what of the "market," the ultimate driver of this capital investment. It takes more than a belief to fully exploit the labor/capital dynamic. It takes a complete infrastructure, all the little things that we in thw west now take for granted: the ability and right of transfer for real property, stable and fair legal framework for righting economic wrongs, a neighbor who wnats what you understand he wants etc. etc. etc. IN RE: Sachs vs. Soviet Empire

Take advertising (please!), the mother's milk of captialism, how much can you sell to those who can't read or write, what does "deoderant and tampons" mean to household without hot water?

It hasn't taken long for a generation of "little emporers" to appear in China. How much longer for a "fair and decent living."? Having a lot of poeple doesn't necessarily mean having and endless supply of labor. A means of production matching the modern needs of consumption I think will be self-limiting. --And come sooner than labor.

The pinacle for Capital in this cycle may have been marked by Microsoft and Yahoo selling out its represented western value of "free spreech" opening the door to cold Chinese cellblock for a few of its "customers." The reaction is already here (rembering Dow 1968-1982).

Next up: ROBOTS.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

[rffrydr]

Just like ol' times:

http://www.railwayage.com/breaking-news/blet-atda-say-no-to-cooling-off-period-3760.html

Maybe Buffett should have kept his lucre-laced gloves off this "little Rosebud." He's getting things all confused.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

"Class Warfare"...hangin' in there:

http://www.npr.org/templates/transcript/transcript.php?storyId=140874613

[rffrydr]

Of course the first to "jump on board" the Occupy Wall St. was the very Teamsters Union whose buses were commandeered to haul protesters away. It's now become a rallying cry for a new generation, out of college, all loaned up, and nowhere to go.

There right here in this post, scorned when first put up here in '06.

Most forget that Debt, the 8% guaranteed to company bondholders through thick or thin, was the key dogma behind those those evil Mr. Burns'. The cycle continues.

http://www.bloomberg.com/news/2011-10-27/anthropologist-graeber-turns-radical-side-loose-in-zuccotti-park.html

[rffrydr]

Speaking of irony, leave it to the wellspring of all insidious things Union, Italy, to take on the UAW (which has just stepped into the 99% movement).
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Bill Gross raises the Capital vs. Labor specter today as protests, laughed off by media last week, spread to isolated points across a half-dozen cities. "We are the 99-percenters. We are too big to fail."
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Oddly, yet appropriately enough, the supermarket is on the front line:

http://www.economist.com/node/18710280

[rffrydr]

Republicans now fully committed:

http://www.bloomberg.com/news/2011-05-05/republicans-rally-behind-boeing-over-u-s-labor-board-complaint.html

[rffrydr]

From IKEA of all places!

http://www.latimes.com/business/la-fi-ikea-union-20110410,0,5341610.story

Far from the evil portrayed I see this a living breathing proof there are local economies that can be maintained at $15/hr. $8/hr is only a base rate as the article takes no pains to mention. There's competitive structure right at the bottom. That all but four of the vacation days are pre-determined shows just how far just-in-time is embedded in modern manufacturing. Yet there it stands, untrained manufacturing for inexpensive goods right here in the US of A.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Capital vs. Labor, played out on a much grander stage. The '08 story reemerges with a new twist--scraping the bottom of the barrel:

http://ftalphaville.ft.com/blog/2011/02/17/491041/richard-koo-goes-unconventional-on-china/

There will for the foreseeable future be a mass of rural poor ready to move where the money is. I need to see more demographics to convince me otherwise. However, mercenary cultural (dare I say, buddhist?) tendencies to sell out company loyalty for the next renminbi and the huge "FDI" from coastal east to west over the global depression--all combined with the winnowing of quailified laborers needed for ever higher skill base makes the china short intriguing. Food inflation is the icing on the "cake." Is that not the compound problem of "developing" investment in Brazil, India et. al.? Russia, E.E. stands out here. Back to education--by that I don't just mean memorization.

Still, this nation-body is driven by this very knowledge. That this is "their" time and that they have one generation to make the "great leap." And, maybe as an individual there is "no" savings--but health and savings (they go hand-in-hand) I suspect still runs deep in china. In the city as well as the country. And this should be measured by the "family." If you didn't dare bet against 'em in '08 I'm sure you better your chances now. Chanos is learning that.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Revolution turns on the crony capitalists--and with it, so does the government trying to save its own head.

http://www.nytimes.com/2011/02/07/world/middleeast/07corruption.html?_r=1&hp

[HenryTo]

U.S. hiring picks up dramatically:
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Poll: Hiring plans top layoffs by most in 12 years
Survey: Industry economists more optimistic about recovery; jobs outlook is best in 12 years

WASHINGTON (AP) -- Industry economists say the U.S. economic recovery is gaining strength, with more firms expressing positive hiring plans than in over a decade.

A new survey from the National Association for Business Economics finds that economists are more hopeful about overall economic growth, the job market and demand for companies' products and services by many measures than they have been since the start of the Great Recession.

The survey found that business decisions are now "being driven by the fundamentals of an improving economy," said Shawn DuBravac, an economist with the Consumer Electronics Association who analyzed the findings.

The quarterly survey includes the views of 84 economists for private companies and trade groups who are NABE members. The data are reported by broad industry group. Many results are expressed as Net Rising Index, or NRI -- the percentage of panelists reporting better outlooks minus the percentage whose outlook is bleaker.

The number of economists who saw hiring by their firms increasing over the next six months was 42 percent, compared with 7 percent who expected to lay off workers. The NRI of 35 was the highest in the 12 years that the question has been asked.

However, more layoffs were expected in the transportation, utility, information and communications sectors.

That optimism followed increased hiring by the economists' firms during the quarter ended Dec. 31. About one-third of those surveyed said hiring had improved at their companies, compared with 6 percent who said workers were laid off. The NRI of 28 represented a 10-point increase over the previous quarter.

All major industry groups saw more demand for their products and services, the sixth straight quarter of positive results. Demand grew by slightly less than in the previous quarter, but has held relatively steady since last spring, the NABE said.

Eighty-two percent of the economists expected the nation's economy to grow by two to four percent in 2011, up from 54 percent in October. The latest government data had the economy growing at a 2.6-percent annual rate in the July-September quarter.

Economists who saw their companies' profits grow in the final quarter of 2010 outpaced those who saw margins shrink by an NRI of 21 percent -- the largest spread since 2005.

Only 6 percent expected their firms to cut back on capital spending, the long-term investment that creates crucial demand for big-ticket manufactured items. Most expected to invest more in the next 12 months.

More than half of those surveyed said they were selling to overseas markets. Within that group, 97 percent said foreign sales were increasing or unchanged.

The survey was conducted between Dec. 17 and Jan. 5.

[rffrydr]

America's self-appointed ambassador of world labor relations makes its pitch to the man building Angola with prison labor.

http://detnews.com/article/20110121/AUTO01/101210343/1148/rss25

[rffrydr]

With a friend in the White House UAW goes double-or-nothing.

http://detnews.com/article/20110118/AUTO01/101180338/1148/rss25


"Here's the terrible position we're in (with) autos," King said. "Because we've fallen so far in the percent of workers represented by the UAW in autos," the union can't demand big increases because of non-union competitors.

"So if we go in, we dramatically raise fixed costs for Ford, General Motors or Chrysler, we're shooting ourselves in the foot…. We don't want to disadvantage the (Detroit 3) companies."

"Buy American"....UAW forced to eat its own cooking.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

On the flipside, where unions run deep--and wild:

http://washingtonexaminer.com/blogs/beltway-confidential/2010/12/power-unions-average-stagehand-lincoln-center-nyc-makes-290k-year