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Quote:
Originally Posted by foolonthehill
Mr. Tarmac!!
You are now a Hyperwager! You post below captures the essence of the hyperwage theory.
Welcome to the club!
How to implement? The Hyperwage says, one ways is 14th month law, the 15th monthly 16th month law. (slow but in the right direction).,
We can also spread out the increase in over 5 years (20,000 in REAL wage not nominal wage)
but bentulan says he will be happy if we are all convinced that increasing wages should be desired not avoided.
and that is how we go from here: change our mindset.. if there's a will, there's a woowwoweee.
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I told you from the start questioning Hyperwage is not the same as rejecting it. Asking questions about Hyperwage is not the same as not understanding it. On the other hand, understanding it is not the same as accepting it either. Because I still have lingering questions on some points. But for the sake of moving the discussion forward...
Believe it or not, my introduction to the concept of Hyperwage predates my reading of Bentulan. It was something already discussed as far back as my college macroeconomics class circa 1987, although we didn't have a name for it. Our professor asked the not-so-simple question, "How do we eliminate poverty?" and it engendered a lively discussion that stretched over the entire week. Of course, the flippant solution of "killing the poor" was good for a few laughs but nothing came of it.
One of the solutions put forward was raising wages to increase the citizenry's purchasing power. Hyperwage, if you allow. We all agreed that increased purchasing power was key. This is not new, of course. It is already axiomatic in Keynesian thought.
The primary objection was, of course, inflation and the need for government to step in to stabilize the monetary situation Keynesian-style (at least in the interim). There would be a need to increase the money supply by printing money which must be matched by an output increase to forestall currency devaluation or inflation, or borrowing through T-Bills, which could raise interest rates. We ran out of time because we had to go back to our Samuelson and Sicat textbooks and the lesson plan.
My issue with boosting wages to the levels Bentulan specified is the ability of businesses to sustain the increases over X period of time without going out of business. The five years you mentioned is too short and will be certainly fatal. As a business owner, I know what my particular business can sustain and it certainly cannot sustain a 10-fold increase in wages over 5 years.
We are not in any way related to Henry Sy or Lucio Tan although Mr. Bentulan seems to think all employers are. Speaking for ourselves, we do not have massive savings locked up in a private vault somewhere deep within the bowels of a mansion and most of our income actually goes back into the business in the form of investment.
In effect, in implementing Hyperwage would there be a net increase in purchasing power? Would there be a net increase in aggregate demand? The employer's money has simply been transferred to the employees. I know that employees supposedly have a higher propensity to consume than the employers, and consumption rather than investment spending forms a larger part of aggregate demand, but what happens to our ability to reinvest in our business and make it grow? And because we cannot grow our business, neither can we grow our employees' wages on a sustained basis.
Even accepting that domestic demand is boosted and demand for our business's products and services does go up, our ability to meet the increased demand is directly tied in to our ability to invest. But alas, our hard-earned corporate savings have now been depleted by the requirement to boost our employees' salaries.
Again, we are not Henry Sy or Lucio Tan. We do not spend our money buying luxury cars, yachts, vacation homes in Aspen or expensive watches and we do not have factories or businesses in labor-cheap China to cushion the consequences of the suddenly-increased cost of doing business in the Philippines. And most business owners do not either.
In essence, employers are going to be out of pocket at the initial point of implementation of Hyperwage.
Is government going to step in to help us out? Should it? Or more importantly, can our perennially cash-strapped government even do so?
Remember we are talking about early implementation. And from there, even more questions arise. But a few issues at a time.
07-09-2009, 06:57 PM
that having tons of money makes you and intelligent person
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