RE: Re: [Pen-l] The fundamental crisis response. was Ecologicalcreditcrunch

["Perelman, Michael" <MPerelman@xxxxxxxxxxxx>]

Making labor more expensive can spur technological innovation, which can
potentially make things better for both classes.  The consequences of
making labor cheap are less uncertain: cheap labor means less
innovation, less productivity, and, in the long run, fewer potential
profits.

Of course, making labor too expensive can make a market economy unable
to function. I don't know example where that has happened, although this
outcome is often claimed. claim is common.

-----Original Message-----
From: pen-l-bounces@xxxxxxxxxxxxxxxxxx
[mailto:pen-l-bounces@xxxxxxxxxxxxxxxxxx] On Behalf Of David B. Shemano
Sent: Friday, October 31, 2008 10:25 AM
To: Progressive Economics
Subject: RE: Re: [Pen-l] The fundamental crisis response. was
Ecologicalcreditcrunch

Eugene Coyle writes:

>> No austerity program!  If we cut working time -- going to a four day
>> week of 8 hour days, for example -- WITH NO CUT IN PAY -- that is not
>> austerity.  People's pay remains the same, they are actually
>> financially better off because of a significant drop in expenses.  I
>> can elaborate on that.
>> 
>> So what happens here?  Profits drop -- the income distribution could
>> be significantly improved.  But the income taken from the owners is
>> distributed to the workers as time, not money.

Are businesses, on average, less profitable today than they were in
1850?  Is there any standard and relatively noncontroversial study of
the economic consequence of the imposition of the 8-hour work day (or
other similar limiitions) that examines the effect on profits?  My
intuition is that profits would drop in the short run, but the effect
would dissipate over time.  

David Shemano

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