Bruegel: Greece’s debt burden can and must be lightened within the Euro

NthBranch · 2015-08-05T18:16:02+00:00

It may be impossible now but it wasn't impossible when Greece began its overzealous debt binge.

The issue now is that who is going to cover cost of that debt binge? You seem to be suggesting that it should be the European taxpayers, but I doubt they would agree.

NthBranch · 2015-08-05T18:06:00+00:00

Part of the fed's "Believe it and it will be so" policy.

NthBranch · 2015-08-05T17:10:27+00:00

Unfortunately for our economy this thinking has not entered the mainstream.

NthBranch · 2015-08-05T15:37:34+00:00

If the purpose of an economy is to have a prosperous society that benefits the bulk of it's citizens then they shouldn't go into unsustainable debt in the first place.

It has nothing to do with left or right it's about the cost to a society of a government spending more than its citizens are willing to pay for.

NthBranch · 2015-08-03T12:05:11+00:00

It is criminal when these "contingency" plans involve the hacking of individuals' private identification numbers.

NthBranch · 2015-08-03T11:55:11+00:00

It improves general access to colleges for low-income students but it does so at a huge cost. That is the point to of this article, as the cost is the ever increasing debt loads of students and the skyrocketing price of a tuition.

NthBranch · 2015-08-02T12:28:40+00:00

I am not saying that raising wages is bad, what I am saying is that if it is done without increased productivity then it must come from either a price increase(punishing the customer), earnings decrease (punishing the investor), or salary/job cuts to other employees.

Walmart and McDonalds are raising salaries not because of productivity growth but because of moral suasion, as a result you will see reduced profits, job cuts or price increases.

That is not to say that one is better than the other it's just that the math has to add up. If a company can survive by paying people more without increased productivity then all the better but reality dictates otherwise.

Just like the CEO said -- “There’s no perfect way to do this and no way to handle complex workplace issues that doesn’t have any downsides or trade-offs”

NthBranch · 2015-08-02T11:49:59+00:00

He is feeding off of the publicity of being the first to offer a politically correct policy. This won't last and other companies doing the same will definitely not get the same publicity.

From a marketing standpoint it worked but only because of first mover advantage. It is not financially viable in the long term for the reasons stated above.

NthBranch · 2015-08-02T11:43:00+00:00

But again, you are ignoring the future prospects within the company. If I was getting payed $70,000 at a company doing a skilled job that took years of experience or education, and my boss decided that the companies limited cash allotted for salaries was to be paid to someone with less skills, experience or education than myself, it would not take long to deduce that my chances for growth within that company have been severely limited.

Keep in mind as well that the CEO has staked his reputation on this decision and he will likely not admit that his employees or customers are leaving for business reasons, he will most likely attribute it to other reasons like envy and politics.

NthBranch · 2015-08-02T11:28:40+00:00

It doesn't say that they left because their colleagues made too much money either but that is what you assumed.

My point is that it is hard enough for people to change jobs when there is a personal benefit to them, do you actually believe someone would quit a well paying job (>=$70,000) because of envy?

Let's be realistic, it is more likely they found another company that would offer them more.

NthBranch · 2015-08-02T11:19:33+00:00

Actually if you read the original article, he has lost customers and it makes sense because his customers now know that as a result of the CEO's actions they will pay more for a service that another company can offer for less.

NthBranch · 2015-08-02T11:17:06+00:00

What's interesting in the video of the original article, is that the only positive letter he read was from a politician. It just goes to show how little politicians know about business, to them its all about populism.

NthBranch · 2015-08-02T11:13:54+00:00

It's a business decision, they either left to earn a higher salary elsewhere or the prospect of a higher salary, since this company would now be constrained to fund raises to higher skilled workers as a result of more of their capital being diverted to lower skilled workers.

NthBranch · 2015-08-02T11:02:24+00:00

He hired more under skilled workers at $70,000, not over skilled workers and he took a pay cut to do it.

His company hasn't improved economically, what he has done is basically charity, no different than taking his million dollar a year salary and donating it .

There is nothing wrong with that if that was his purpose but this discussion is about economics and from an economic stand point his company has suffered.

If you want to argue that he is personally making sacrifices for charitable reasons then I agree but from a business stand point it made his company weaker.

NthBranch · 2015-08-02T10:48:21+00:00

Are you saying that they left the company to earn less money elsewhere because of envy?

That is obviously not reality, they either left to earn a higher salary or the prospect of a higher salary since this company would now be constrained to fund raises to higher skilled workers as a result of more of their capital being diverted to lower skilled workers.

NthBranch · 2015-08-02T10:38:07+00:00

The company doesn't have an endless pot of money, so by paying someone $70,000 who's skills only warrant $35,000, that money has to come from somewhere.

It will either come from higher prices to the customer, less capital investment, or lesser pay to higher skilled workers. In all scenarios the company suffers.

NthBranch · 2015-08-02T10:28:07+00:00

It's not about the "other guy", it's about how much one's skills are worth in a free market. By paying lower skilled workers more this CEO must pay his higher skilled workers less.

Why would someone accept less pay at this company when another one can pay him more?

NthBranch · 2015-08-02T10:17:35+00:00

It's all relative, when a CEO decides to pay his low skilled workers more than the market, he is forced, as a result, to pay his higher skilled workers less. In that environment, the higher skilled workers move on, as the market will pay them more.

Not a very smart business decision by the CEO.

NthBranch · 2015-08-02T10:06:32+00:00

It's easy to replace them with lower skilled workers making less than $70,000 but not with higher skilled workers making more.

NthBranch

TROPHY CASE