Entries Tagged 'Economics and Investing' ↓

German workers have considerable job security (See Upjohn Institute’s Labor, Business, and Change in Germany and the United States, 2001). Not only do German workers have labor unions, they also have labor union representatives who make decisions right along with management. When the financial crisis hit, many German companies, with the approval of their unions reduced overall work hours for each employee rather than resorting to layoffs.

And German banks did not have a mortgage mess. Mortgage problems in Germany were mostly due to foreign banks.

Business and economics journalists point to Germany’s “surplus” or lack of government debt as the reason it survived the financial crisis so well. Could there be another reason? Could the reason for Gemany’s success actually be the job security of its workers? Continue reading →

Recently at one of the local city pools, a woman began loudly complaining about the young staff not caring much about their work. She zoomed in immediately on all 20 million government workers in the US. All government workers, she said are overpaid and don’t work. The government is run by “fat cats,” she ranted.

Well, let’s look at that claim. Do you agree government employee salaries are too high? The President of the United States gets paid $400,000 a year to run the biggest economy in the world. And he pays taxes on that amount! This is the man who decides whether he should push the button if that red phone (that we saw so much of in the ads during the last Presidential election) rings in the middle of the night.

$400,000 for a job guaranteed to turn your hair gray in four years? Continue reading →

Gillian Tett had a very good op ed piece in the Financial Times last December called “Let’s not forget the reality cheques in cyberspace games.” Tett speculated about whether the invisibility of money transfer (via cards, online transfers, and bill payments) makes us all less aware of what money really means.

A money transfer that’s performed at the behest of a third-party is called a wealth redistribution. “Wealth redistribution” is a straightforward term. It means just what it says. Wealth as a whole doesn’t grow when part of it is transferred; it  simply passes from one hand to another.

Wealth redistribution is what Bernie Madoff did. He took money from new clients, paid old clients, and kept a lot of their money for himself. All ponzi schemes involve illegal wealth redistribution.

But there are legal ways to redistribute wealth too. Continue reading →