Foundation for Better Government

The goal of this non-partisan Foundation is to present and invite ideas for improving the structure and the quality of government performance on a continuous basis. Every government must be responsive, responsible, efficient, economical, and free of corruption.

Wednesday, August 21, 2013

Non-Competitive Wages and Profits By T.S.Khanna,August 21, 2013




Foundation for Better Government
(www.bettergovt.blogspot.com)

August 21, 2013.

Non-Competitive Wages and Profits
By T.S.Khanna, August 21, 2013.


Quite often, societies are blinded by axiomatic truths without re-examining them re their applicability in the changed times or circumstances.  Some of the US Government’s policies are still based on “Laisez Faire”----economic non-interference with individual freedom of choice or action. 

This economic principle assumes that individual choice and action will always be adjusted to the forces of open competition.  Where open competition is eliminated, highest quality of product cannot be produced for the lowest price.  Under such conditions, non-interference by government is an implicit permission to the dominant forces to hijack the economy.

This is happening in the US.  Unions eliminate open competition and fix wages according to their political force, not in accordance with their competitive contribution.  High wages forced by the unions have driven many jobs out of America.

The unions of essential services public employees (police, firefighting, postal, air traffic control, heath, public transportation) have the maximum leverage to force their demands at the non-sustainable public expense.  Some cities are being bankrupted by them.

A recent threat of the BART union is mindless of the weak economy and high unemployment and forcing its demands.

On the other side, some corporations are also swallowing non-competitive profit by smart collusions, circumventing the ineptly enforced weak, ambiguous laws.  Look at the Health Industry in the US: the runaway prices are keeping it out of reach of the common man.  Captive patients (cancer/heart) are ruined to their bankruptcy by merciless, astronomical profits without competition.  This well illustrated in an article, “The Bitter Pill”, by Steven Brill in March 4, 2013 issue of TIME magazine.

Non-competitive wages and profits are hijacking the US economy.  The US Government must abandon the idiosyncratic policies and act afresh.

Recommendations:
  1. Establish two commissions, a) Fair Wages Commission, and, b)Fair Profit Commission with adequate powers to regulate wages and profits at competitive levels;
  2. Public employees may not be allowed unions and may be governed by the civil service rules.
  3. The unions may not be allowed to go on strike and may be required to resolve their differences with employers through the Fair Wages Commission with powers of binding decisions.
  4. Fair Profit Commission may enforce existing laws for competitive profit, identify loop holes, and recommend adoption of additional laws, if necessary.

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