Are Western governments purposely driving down living standards?

Was reading this about the heralding of the end of Capitalism as we know it, and something cropped up which I hadn’t noticed before, apparently Western Governments are driving down living standards to the level of their middle class Chinese and Indian counterparts. Is this true or is it just hokum, if not, why in the world would we do this? Why not just spend money to be highly specialised manufacturers or whatever is needed (Not driving down living standards) To remain competitive?

I see no compelling evidence this is happening, nor can I fathom and compelling motive for the people running “Western” governments to do this.

So why would people buy into that theory? The guy who wrote that article is a respected reporter on economics.

Because it meets his obvious political and economic slant on the world would be my guess. Just the title of the article pretty much sets off my BS meter: The end of capitalism has begun. DundunDUN! He talks about ‘postcapitalism’ a lot, but never defines his terms. He states, without cites a lot of assertions about things, but goes into no details about them beyond asserting stuff. Without even looking I can say that wages in The West™ might be going up slowly or even stagnating in some cases, but wages in India and China are rising a lot faster to meet the west than they are dropping to wallow at the bottom.

Well, people buy into lots of theories. Many people buying into a theory does not lend it credence. A lot of people think vaccinations are bad for you and Kennedy was shot from the grassy knoll. They’re wrong, no matter how many of them are, because ignorance isn’t a valid argument no matter how much of it there is.

As to the gentleman who wrote the article, I would point out

  1. Mr. Mason isn’t an economist,
  2. He’s a pretty hard core socialist and likes to see the world through that lens, and
  3. There isn’t much in the way of economics in his article.

Articles like “Things Will Probably Carry On Much The Same Way As They Have Before In Most Respects, But A Few Things Will Surprise Us” and “The Truth Is, Really, I Have No Idea At All What The Future Holds And Neither Does Anyone Else” don’t make for good clickbait. They would be much more honest, but you have to pay the bills.

The implied reason seems clear to me: to make sure more money is kept in the hands of the wealthy business owners. Isn’t that always the motive when it comes to capitalism?

That would be the purpose of what many governments do, but not necessarily to drive down the living standards specifically. But that is the effect and they do it on purpose.

Why would businesses want to drive down the ability of their consumers to buy their products?

Funny, I was just reading an essay about how capitalism is on its last legs and thought by many to be on the verge of being replaced by something more planned and scientific. The author disagreed and made the usual strong arguments in favor of capitalism surviving and driving growth and change in the world.

There might be something in what he says… since it was H.L. Mencken and he was writing in 1935.

The motive behind capitalism is to make money. One generally doesn’t make a lot of money if your customers are poor. Draw the line for me between “government is deliberately reducing its citizenry’s quality of life” to “capitalists.”

But that’s not a definition of capitalism, or even unique to it. I think it’s needlessly divisive to imply (even in a supportive statement) that all feelthy keppitalists want is to make money and [all other economic systems] somehow lack that motivation.

In those terms, isn’t the dreaded Socialism “make all the money you want… but share it”?

Yes, but one does not need every single person to be a customer. If one can get away with paying one’s workers next to nothing because they have no other choice but to accept the job, and produce things that are sold to the few people that actually have a significant amount of money, it’s a total win-win situation for everyone but the workers. General economic theory is predicated on the premise that people will make rational choices about how to sell their labor, when in reality most people are forced to sell their labor at whatever price they can manage to get. For most people, there just isn’t an option of withholding labor until they get paid enough, and capitalism is all about exploiting those people so that the top of the food chain gets richer.

Walmart and Apple haven’t suffered from a low standard of living but most of the biggest businesses are buying and selling to businesses, and also buying and selling businesses. Retailers are the base of the pyramid, consumers are merely fodder.

What is the average income of a worker in, say, Canada? Germany? Is it “enough”?

What is the evidence that the governments of those countries are attempting to drive down the quality of life of their citizens?

In a free labor market, a worker faces some number of employers willing to hire. The worker can choose to accept an offer from one employer, or no offer at all. Generally the worker will evaluate options based on salary, benefits, number of hours, pleasantness of work, etc…

An employer who wishes to attract quality laborers in such a situation must make his job offers more attractive than those of other employers. Usually this means higher pay and benefits. Competition drives wages up. That’s why life in capitalist countries gets better. Compare the average standard of living in the USA or Canada today to 200 years ago.

I’m sure someone will be along to lecture you that capitalism isn’t a zero sum game.

I think the most you could say is that it’s in a corporation’s interest if workers are insecure. Insecure workers don’t join unions, strike, or ask for more benefits. They’re just happy with they get get and keep their head down.

Seems to me the exact opposite is true. Employers want their employees to feel secure, confident, and happy. In the USA, they invest considerably to make that happen. Strikes occur precisely when the workers are unhappy. More importantly, secure and happy workers are less likely to bolt to a rival employer.

The way I understand it, based on stuff that includes previous posts in this thread, is that it’s a side effect of what the big bad CEOs are doing to keep wages and benefits as low as possible, which does directly affect company profits. I see plenty of complaints about companies seeing employees as an unfortunate but necessary liability.

Workers can choose from different jobs and choose what is most profitable for them. At the same time employers want to satisfy investors, and that means maximizing profits. That is done, among other things, by lowering wages, maintaining them but increasing productivity, or increasing them but also increasing productivity further.

Competition among businesses also means keeping prices low while maintaining profits by increasing productivity, etc.

The implication, then, is that higher pay requires more work, either through automation, longer hours, or higher targets. In all cases, the goal is productivity, which ultimately means more goods and services available.

The problem is that if wages stay the same or do not rise at the same rate as goods produced, then more goods are unsold. It gets worse when profits and returns on investment are put back into the system to create or expand more businesses, which means more jobs but also more goods and services that have to be produced and sold.

That means consumer markets have to be expanded, especially in poorer countries, and this is likely because most people worldwide are poor and want to earn and spend more. But in general more workers have to earn more so that they can buy more of what they produce. Businesses want more profitability, and that means combinations of controlling expenses (which includes wages) and increasing productivity.

Also, businesses generally want to produce “improved” products especially to established markets, and that usually involves combinations of marketing and planned obsolescence. But how do they sell when wages might not increase at a rate as fast as what wage earners produce?

That’s where the financial industry comes in: it can only earn more money by lending more money, and it lends not only to businesses (which uses investments to expand) but also to the same workers, who can avail of easier credit to buy expensive things, and to government, which can use some of the funds to develop infrastructure to support greater economic activity.

Thus, we have increasing borrowing and spending, production, and consumption, all of which are part of continuous economic growth. And as processes also lead to more pollution, we also see more environmental damage and problems like global warming.

When the financial industry is deregulated sufficiently, there may be more financial speculation, which in turn leads to crashes. At that point, governments if not people may become more concerned, especially when debt levels are too high. That may prompt austerity measures, but probably not in the long run if governments, like people and businesses, are reliant on increased earnings which are made possible only through increased spending. Thus, the system of growth must continue.

Finally, because the biosphere is limited, then that growth is ultimately not sustainable.

Yes. They’re organized under a bankrupt economic philosophy. But the end result is driving down living standards for people who work, while maintaining or driving up the living standards of people who live off the work of others.