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Cutting costs by firing the most skilled and loyal (and therefore well paid) employees. Could this be the wave of the future? Well, the desire to get rid of skilled labour is as old as business itself; this may just be the newest manifestation of that desire in the age of globalization.

http://www.counterpunch.com/sharon04042007.html

April 4, 2007

The Latest Trend in Corporate America

Circuit City's Guinea Pigs

By SHARON SMITH

In January, Circuit City employee Bobby Young received a certificate of excellence for his twenty years of loyal service at the company's Roanoke, Virginia store. On March 28th, he received a pink slip.

When the 47-year old father of two arrived at work that morning, he was handed a letter inexplicably addressed "to whom it may concern," explaining that the company had terminated his employment, effective immediately. That same day, 3,400 workers at Circuit City stores across the country were greeted with the news that they had been fired before management quickly escorted them out of the building. Company spokesman Bob Cimino bluntly announced that the mass firings targeted the most experienced and highest paid in-store workers as part of a "wage management initiative" to replace them with low-wage new hires. "It had nothing to do with their skills or whether they were a good worker or not," Cimino said.

Those who were fired made up roughly 8.5 percent of the 40,000 workers at the 650 retail outlets of the nation's second-largest electronics retailer, which trails only Best Buy. But these workers, the company explained, were being paid "well above the market-based salary range for their roles."

According to Bloomberg News, however, Circuit City pay averages $10 to $11 an hour-precisely the market average. After twenty years, Young was earning $18.90 an hour, with healthcare benefits. His replacement will earn less than half that amount, without benefits. The company will graciously allow its allegedly overpaid former workers to reapply for their old jobs at starting wages after they endure 10 weeks of grueling unemployment. Fired Los Angeles worker Richard O'Neal was told he could eventually reapply for his job if he is willing to work for $7.50 per hour, California's minimum wage.

But the company would discuss no further details of the terminations. Company spokeswoman Jackie Foreman, for example, told reporters she did not know when the fired workers' healthcare coverage would run out. This information might have helped Pennsylvania worker Jim Hammon-who had surgery for rectal cancer just three months ago-adjust to his new unemployed status. "I can't afford to not have a job," Hammond said, since he and his wife are ''over our heads'' in credit-card debt from medical bills.

As recently as September Circuit City was awash in profits, and management had nothing but praise for its workforce. "Thanks to the hard work and focus of Associates throughout the company, we delivered strong growth in net sales, stable gross margins and expense leverage," crooned Philip J. Schoonover, president and chief executive officer.

But the last six months have not been kind to Circuit City profit margins, as big box retailers Wal-Mart and Target undercut prices on prized flat-panel televisions during the holiday season. The company reported its first loss in six quarters in December while bracing investors for more gloom to come after the unexpected holiday debacle. The mass firings are the centerpiece of a restructuring plan expected to save the retailer $250 million over the next two years.

Perhaps the fired workers would be less bitter if Circuit City's top executives showed the least inclination to share the burden of controlling costs. After all, management bears far more responsibility for the company's recent slippage than employees barely eking out a living. Yet Schoonover and Chairman W. Alan McCollough together raked in nearly $10 million in total compensation last year-including nearly $96,000 for Schoonover's use of a company jet. Schoonover undoubtedly expects another raise this year for his daring "cost containment" scheme.

"I'm just lost right now. I'm lost. I don't know what I'm going to do," a desperate Bobby Young said after learning he was fired. "What they did as a company to me, it's not the American way." Indeed, the ruling elite has long since transformed the "American way" of doing business. Decades of union busting have resulted in a downward spiral in union membership, falling to just 7.4 percent of private sector workers last year. Labor unions fought to establish the expectation that a life of hard work will be rewarded by workplace seniority and higher pay. But as union membership plummets, that expectation is on a collision course with a new corporate reality that seeks to dispose of its most loyal and productive workers. Since 1973, productivity has grown by more than 70 percent in the U.S., yet the median wage is worth less today than in 1973.

The 3,400 fired Circuit City workers are the guinea pigs of the latest experiment in aggressive wage reduction. Corporate America has become impatient with two-tier wages, which reduce the salaries of the newest generations of employees but still allow veteran workers to maintain higher wages until they retire. If Circuit City increases its profits by firing its highest-paid workers, this will become yet the latest corporate trend in slashing working-class living standards. If not, perhaps Wal-Mart's more subtle method will do. Last summer, Wal-Mart simply stopped granting wage increases for its long-standing employees, sending the clear message that their services are no longer wanted. These days, management prefers a revolving door of "entry-level" workers to a loyal workforce.

Left unchallenged, expect this trend to hasten. IRS data show that class inequality accelerated significantly in 2005: the richest 1 percent of Americans, with incomes of more than $348,000, received their largest share of national income since 1928, immediately preceding the Great Depression. Then, as now, union organization provides the only vehicle for turning the balance of class forces, for corporate greed apparently knows no bounds.

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3 branches:

- Their top salaries should have been permitted to go back down to competitive level.

- The present state of things is correct, given that it simply shows that the employers have made the move considering how hardly the rest would move. It "could" have moved before doesn't fit as an argument, since it just shows that it didn't.

- The employers should have brought benefits and so on, the employees being those they are to care for.

Is there a fourth? Something like "They were more productive, so the point is to evaluate the value of this higher productivity and find them a place. Then do the same for the young ones too." But oups... this is utopian, right? Or if we don't find those to do all that fine, is it dystopian...

PS: 10021 posts Acriku? Go, go Acriku!! You'll be a 10050++ member!

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But the company would discuss no further details of the terminations. Company spokeswoman Jackie Foreman, for example, told reporters she did not know when the fired workers' healthcare coverage would run out. This information might have helped Pennsylvania worker Jim Hammon-who had surgery for rectal cancer just three months ago-adjust to his new unemployed status. "I can't afford to not have a job," Hammond said, since he and his wife are ''over our heads'' in credit-card debt from medical bills.

That's pretty nasty. That sort of thing wouldn't happen in the Dutch social security system.

Anyway, his job isn't specified so I assume he was a desk clerk or something. This sort of thing occurs to varying degrees in any sector, but working for 10+ years on a blue-collar, uneducated job is particulary risky. The days that it was common to work from adulthood to retirement for a single employer is a thing of the past.

To earn some cash besides my study I have a part time job in a grocery distribution centre. Dutch minimum wage varies per age, earning little when you're sixteen and rising a little each year till you're 23, after wich it remains fixed. Obviously the idea is that this makes it more attractive to hire young people, and it works in that regard. Older people work there as well, but administrative personel aside they're mostly qualified forklift drivers or other specialized jobs.

The job that I, and the vast majority of other people has is to print out orders and to fill containers with various grocery articles and deliver them to the proper doorways where they're loaded into trucks. It's not the most mindnumbing job imaginable, but it's close. Anybody can do it so younger people are preferred unless your productivity is high. My elder brother, who did the same line of work as I, was recently sacked because lately he didn't meet the productivity quota most of the time.

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This information might have helped Pennsylvania worker Jim Hammon-who had surgery for rectal cancer just three months ago-adjust to his new unemployed status. "I can't afford to not have a job," Hammond said, since he and his wife are ''over our heads'' in credit-card debt from medical bills.

There's a good chunk of the problem right there. Medical bills from a healthcare system that is... very strange to me. Overdrawn credit cards from companies that encourage overspending. Complete reliance for both upon employment, which is clearly not as reliable as believed. Perhaps this is an isolated incident, and certainly the medical system is more to blame than usual, but generally it is a good idea only to spend money that you already have, no? Not money that you expect to have, or money that you can make up later (overdrafts are a bitch).

Additionally, it's generally a good idea to play dirty with jobs. Don't just do it, do it so that the people in power like you. Also it's a good idea to make yourself indispensable. In my job that meant being the only person available at all possible opening hours, and sticking with it while one by one my co-workers were driven away by the unpopular manager. Some of the people I worked with secured themselves by taking on many different jobs, or by organising things so that only they really knew what was going on in some areas. Very good.

But all this is just side talk. The point is that you can't expect to just keep a job, not without some form of security. If you can't secure your job, make sure there are alternatives. Write a novel, paint a picture, make friends with rich people, do what you can to take precautionary measures. And finally, save money. You don't need to be so frightened of unemployment when you have a window of six months or so to find a new job.

So, the trend in general. It's silly, really. Firing good workers means a loss of quality, it just does. Paying good workers less encourages them to move elsewhere. As far as long-term strategies go, it's not a winner. Unless of course all the other employers are doing the same, and after all what's to stop them?

Though they don't deserve what happened to them, I find myself rather short on sympathy for these people. It's not a matter of trying harder, it's a matter of not planning ahead. The situation is bad, that's true, but given that the unions appear to be falling apart, I don't see much to change it.

Well, there are alternatives. Sensible ones. But that's not the issue at hand.

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Company spokesman Bob Cimino bluntly announced that the mass firings targeted the most experienced and highest paid in-store workers as part of a "wage management initiative" to replace them with low-wage new hires. "It had nothing to do with their skills or whether they were a good worker or not," Cimino said.

A statement like that in the UK would win everyones employment tribunal for them, leading to compensation and reinstatement but then our employment legislation is obviously better than Mad Americas.

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A statement like that in the UK would win everyones employment tribunal for them, leading to compensation and reinstatement but then our employment legislation is obviously better than Mad Americas.

You have no idea.  I know nothing of UK employment leigslation, but it is most certainly better by default because the American equivalent is almost literally nonexistent (though it varies by state).

Current US law features employment at will, meaning you can be fired at any time for virtually any reason without notice (summary dismissal) and have no legal recourse to sue your employer for false dismissal or payment in lieu of notice.

Keep in mind, the higher the level of skill, experience and education a job requires, the less companies can do this kind of thing, but a case like this highlights the need for easily replaceable American workers to unionize so they have the power and means to negotiate contracts with more favourable term clauses or guarantees for termination compensation packages.  At least until the laws change, that is.

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While I understand that the article makes a very sympathetic case for those who lost the jobs but here in North America this is how things go. Europe and Asia have different organisation, where in some parts of Asia and in Europe things are more socialistic in this area.

It is not clear from the article what position did those employees had but it sounds that they had entry-level positions. In this case the action of the corporation is not surprising if they can get a high school student to stand behind cash regester and push buttons for minimum wage than why would they want to keep a guy who is paid 3 times more to do same job. And experience, well the high school and university students are very well educated in technological side of things so they will fit in quickly.

In my opinion this low-level service jobs should be occupied by highschoolers and university students as a way to finance their education and get some experience not by 45 years olds.

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You have no idea.  I know nothing of UK employment leigslation, but it is most certainly better by default because the American equivalent is almost literally nonexistent (though it varies by state).

Current US law features employment at will, meaning you can be fired at any time for virtually any reason without notice (summary dismissal) and have no legal recourse to sue your employer for false dismissal or payment in lieu of notice.

Keep in mind, the higher the level of skill, experience and education a job requires, the less companies can do this kind of thing, but a case like this highlights the need for easily replaceable American workers to unionize so they have the power and means to negotiate contracts with more favourable term clauses or guarantees for termination compensation packages.  At least until the laws change, that is.

Hey ACE, long time no see.

There are some companies in the US that fire any worker affiliated to a union, i.e. Walmart. Such practices don't have my approval but strong unions are just as wrong in my book - look at France and how unions have consistently stifled reformist legislation over the past decades (I predict Sarkozy will have a tough going)

Risking one's job is sadly always a possibility- expecting a company in bad times to keep its entire workforce is unrealistic. I think it's fair for contracts to contain clauses that bind the employer to carry part of the costs of reintegrating the affected into the market or short/medium term compensations, but employment should not be turned into de facto inalienable right.

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"look at France and how unions have consistently stifled reformist legislation over the past decades"

Thank goodness. These "reforms" generally just increase precarity.

The problem is that unions are permanently on the back foot, by their very nature as workers' organisations within capitalism. They're stuck with fighting for compensation and defending what rights they do get. They get a lot of stick when they take a stand, whereas most 'pioneering management strategies' when questioned are dismissed as necessary or justified as natural.

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The problem is that unions are permanently on the back foot, by their very nature as workers' organisations within capitalism. They're stuck with fighting for compensation and defending what rights they do get. They get a lot of stick when they take a stand, whereas most 'pioneering management strategies' when questioned are dismissed as necessary or justified as natural.

"On the back foot"

Care to elaborate?

About France, let's look at the CPE law that cost Villepin's career. France has an abysmally high youth unemployment rate and CPE would have changed that, as employers would hesitate less to hire young people. However it would decrease job security for those below 26 who already did have jobs, and thus who could count on union support...

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About France, let's look at the CPE law that cost Villepin's career. France has an abysmally high youth unemployment rate and CPE would have changed that, as employers would hesitate less to hire young people. However it would decrease job security for those below 26 who already did have jobs, and thus who could count on union support...

The CPE law would have decreased job security for everyone under 26, including the previously-unemployed young people who might have been able to find a few new jobs thanks to it. The law would have encouraged companies to hire young people only for limited periods of time, and fire them after two years.

By the way, what is the youth unemployment rate in France? The total unemployment rate for the country is 8.7% - pretty high by Western standards, true, but let's look at it from another angle: 91.3% of workers do in fact have a job. So when you are talking about something that may help the unemployed at the expense of harming people who already have a job, you are talking about something that may help 8.7% of the working-age population at the expense of the other 91.3%. I would call that a bad law.

Furthermore, there is something fundamentally wrong with the idea that we must appease capitalists and give them all sorts of advantages, perks and tax cuts in order to persuade them to invest more in a certain country. It is a race to the bottom for workers' living standards. It is a contest to see who can give more power and wealth to the rich, in exchange for their benevolent decision to give workers access to the means of production. Because, after all, that is what it means to "create jobs": the capitalists own the means of production, and the workers need access to them in order to work and earn a living. This access is what we call a "job", and the only reason why it is not provided openly to all is because a small minority of people maintains ownership and control over the means of production.

So we come to one of the fundamental contradictions of the social democratic welfare state: The government wants to improve living standards for the people, but this causes the capitalists to leave the country and invest somewhere else. Thus the social democratic government, which tried to combine elements of capitalism and socialism, is faced with a choice: Either surrender to capitalism and roll back living standards to attract investment, or move towards socialism and start nationalizing companies to prevent their owners taking wealth out of the country.

I think it's fair for contracts to contain clauses that bind the employer to carry part of the costs of reintegrating the affected into the market or short/medium term compensations, but employment should not be turned into de facto inalienable right.

Employment - that is to say, access to the material resources necessary in order to work to sustain one's own life - should be an inalienable right.

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The CPE law would have decreased job security for everyone under 26, including the previously-unemployed young people who might have been able to find a few new jobs thanks to it. The law would have encouraged companies to hire young people only for limited periods of time, and fire them after two years.

By the way, what is the youth unemployment rate in France?

The point is that a high degree of job security limits the willingness of companies to hire new workers. A reasonable ballance must be found.

France has a youth unemployment rate of about 23%, wich is absurdly high for a developed country.

Having reread about the CPE, I concede that it goes to far - it would have allowed employers to fire young workers without giving any reason. Now

Now I fully approve of flexible labour laws for really young people (say, 21 or even less) as these generally will go for temporary, low-skilled labour and nobody would hire them if they were entitled to the same level of protection as people who've been doing the work for years. However 25 years old includes college graduates, and the law doesn't seem to make a distinction between different sorts of labour.

...in exchange for their benevolent decision to give workers access to the means of production...

That's a fundamentally wrong characterisation. An employer/employee relationship is simply a contract between two people, where one agrees to pay and another to do something.

"Capitalists" are out for their own gain but frankly, so are "workers" (who said anything about the two being mutually exclusive?), wether either would admit it or not.

Either surrender to capitalism and roll back living standards to attract investment, or move towards socialism and start nationalizing companies to prevent their owners taking wealth out of the country.

Reaching a good ballance between social security (in the broad sense) and a good investment climate is perfectly possible. Hugo Chavez keeps on nationalizing the oil industries without promising compensation for the people who built these industries in the first place- the consequenses of Venezuela in the future remain to be seen, but it should be fairly obvious that investors will be hesitant to make further investments in Venezuela or indeed most Latin-American countries.

Employment - that is to say, access to the material resources necessary in order to work to sustain one's own life - should be an inalienable right.

I would say that everybody should get the opportunity to work for his life sustenance, or reasonable compensation should there be no work available.

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"Care to elaborate?"

Certainly. In the normal capitalist mode of production, businesses are run directly or indirectly by investors and shareholders (there is a variety of nuances within this, but that's the basic model) - not by the people who work there. As having a job is necessary to eating and living, and as jobs are scarcer than labour, the employer's power to fire means the employer is in a stronger position than the worker, both because they can replace them more easily than the sacked workers can find a job, and because going without one worker is usually less of a problem for most workplaces than going without a job is for most people.

Unions were set up to try to rectify this, and to bargain collectively (though the above problem is not fully solved even if every ordinary worker is a member). But they have many obstacles to overcome, not least is the threat of disinvestment. If the workplace or business becomes comparatively less profitable than others, investment is likely to be withdrawn, and everyone loses their job, a threat that employers make and sometimes act on, often in preference to management pay cuts (they usually get golden handshakes and speedy re-employment).

If, however, the workers themselves ran the workplace and business democratically (thus making the union obsolete), neither this, nor any of the many other nasty tricks managers tend to play on the unions come into play, and the business is only wound up if it's unsustainable (and in those circumstances, workers get the choice to take a pay cut instead, unlike the current system where it's forced on them even when not necessary).

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"Care to elaborate?"

Certainly. In the normal capitalist mode of production, businesses are run directly or indirectly by investors and shareholders (there is a variety of nuances within this, but that's the basic model) - not by the people who work there. As having a job is necessary to eating and living, and as jobs are scarcer than labour, the employer's power to fire means the employer is in a stronger position than the worker, both because they can replace them more easily than the sacked workers can find a job, and because going without one worker is usually less of a problem for most workplaces than going without a job is for most people.

Unions were set up to try to rectify this, and to bargain collectively (though the above problem is not fully solved even if every ordinary worker is a member)

I beg to disagree, in most countries and economic sectors the above problem has been solved, in some cases unions have become to powerful. The teachers' union in the state of New York is a good example - rather then firing underperforming teachers, they're relegated to offices where they do practicly nothing or minor administrative chores- this is cheaper then going through the judicial hazzle to actually sack them. (in other states though, the situation can differ remarkably)

But they have many obstacles to overcome, not least is the threat of disinvestment. If the workplace or business becomes comparatively less profitable than others, investment is likely to be withdrawn, and everyone loses their job, a threat that employers make and sometimes act on, often in preference to management pay cuts (they usually get golden handshakes and speedy re-employment).

In the private sector overhead-costs are fairly low, actually - CEO salaries and golden handshakes are almost always a miniscule fraction of the company budget. You could certainly take issue with CEO's who've performed badly and still receive huge bonuses, wich make it a good idea to give shareholders more power.

If, however, the workers themselves ran the workplace and business democratically (thus making the union obsolete), neither this, nor any of the many other nasty tricks managers tend to play on the unions come into play, and the business is only wound up if it's unsustainable (and in those circumstances, workers get the choice to take a pay cut instead, unlike the current system where it's forced on them even when not necessary).

If a sufficiently large group of people decided to initiate their own company that's indeed viable. Indeed some people use part of their salary to buy stocks, or agree to be "paid" for their services in shares or options to buy them.

I fail to see, however, why I should get a say in company policy just because I've done work for them in exchange for money.

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"rather then firing underperforming teachers, they're relegated to offices where they do practicly nothing or minor administrative chores"

Actually, it sounds suspicioulsy like a common tactic used to force 'troublemakers' to resign. If there really was such a surplus, why then hell not reduce class sizes? Or why not spread the teaching load so each teacher has more time to prepare classes and mark? If it is a genuine problem, then the fault definitely lies with the management on that one.

"If a sufficiently large group of people decided to initiate their own company that's indeed viable. "

It's called, a co-operative, and they do exist, but they're difficult to set up, because of the whole 'capitalism' thing.

"CEO salaries and golden handshakes are almost always a miniscule fraction of the company budget"

Salaries make up the most they've been in decades, not to mention perks. In the US, 411 workers to the CEO in 2005 is what a quick Google search has given me. And that's just the one person at the top, never mind the rest of the management put together.

"I fail to see, however, why I should get a say in company policy just because I've done work for them in exchange for money."

Do you also fail to see why you should get a say in a government that rules the country just because you happen to be born or live there?

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"rather then firing underperforming teachers, they're relegated to offices where they do practicly nothing or minor administrative chores"

Actually, it sounds suspicioulsy like a common tactic used to force 'troublemakers' to resign. If there really was such a surplus, why then hell not reduce class sizes? Or why not spread the teaching load so each teacher has more time to prepare classes and mark? If it is a genuine problem, then the fault definitely lies with the management on that one.

I don't think that by underperforming teachers it is meant surplus teachers I think it mean teachers who really bad at teaching. So rather than fire them and hire news ones who would be better at teaching they are kept as paper pushers for burecratic machine of the school boards.

"CEO salaries and golden handshakes are almost always a miniscule fraction of the company budget"

Salaries make up the most they've been in decades, not to mention perks. In the US, 411 workers to the CEO in 2005 is what a quick Google search has given me. And that's just the one person at the top, never mind the rest of the management put together.

The more money CEO is payed the higher is the incentive not to screw up because all that could just dissappear if the board of directors will decide that recen t downturn in stock price was due to CEO's bad decision. Same goes for the rest of management, the moment they screw up stock goes down and heads roll.

"I fail to see, however, why I should get a say in company policy just because I've done work for them in exchange for money."

Do you also fail to see why you should get a say in a government that rules the country just because you happen to be born or live there?

Well I pay the governmnet taxes to do their job thus they are on my payroll sort of. But I don't pay the company for giving me a job, they pay me. If i was a shareholder or a bond holder than I have more case to influence company policy because it is me who gave them money to use and I don't want them to blow it on something pointless. I want to get the money back with some gain.

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"rather then firing underperforming teachers, they're relegated to offices where they do practicly nothing or minor administrative chores"

Actually, it sounds suspicioulsy like a common tactic used to force 'troublemakers' to resign. If there really was such a surplus, why then hell not reduce class sizes? Or why not spread the teaching load so each teacher has more time to prepare classes and mark? If it is a genuine problem, then the fault definitely lies with the management on that one.

Surplus? I was talking about lousy teachers.

"CEO salaries and golden handshakes are almost always a miniscule fraction of the company budget"

Salaries make up the most they've been in decades, not to mention perks. In the US, 411 workers to the CEO in 2005 is what a quick Google search has given me. And that's just the one person at the top, never mind the rest of the management put together.

I read about that, it comes from an investigation by the Institute For Policy Studies, it's the average CEO:employer ratio for American CEO's. It probably doesn't surprise you that the differences are particulary high in the USA, the highest for Dutch firms is "merely" 285.

However for a company wich has a 10 or 11 digit revenue, that's not particulary much. It should be fairly obvious that hundreds of thousends of employees who earn on average 1/285 of the CEO is a much more significant expense.

"I fail to see, however, why I should get a say in company policy just because I've done work for them in exchange for money."

Do you also fail to see why you should get a say in a government that rules the country just because you happen to be born or live there?

A government upholds domestic order; it mantains an environment where people's rights (life, liberty and property) are reasonably guarded. Since nobody can be excluded from the "use" of public goods, everybody benefits, and therefore everybody is expected to contribute. The other side of the coin is that every affected person should have an equal say in government policy. I'm sure you're familiar with the various theories of the "social contract" - elections are just a way of renegotiating it.

Now explain how any of this applies to employer/employee situations.

EDIT: What Colonel_here said ;)

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"Surplus? I was talking about lousy teachers."

Point still stands. If they're being stuck in a pointless job (as you describe it) rather than put in front of children, they're being wasted, 'lousy' or not.

"It should be fairly obvious that hundreds of thousends of employees..."

Yep, and the one statistic was only a small part of my point. In an organisation that large, you have a commensureately large layer of overpaid managers... ah, go read the bit you quoted again.

"A government upholds domestic order; it mantains an environment where people's rights (life, liberty and property) are reasonably guarded."

Some do, to an extent, others don't. When governments do nice things like that, it's precisely *because* they're democratic; what you're saying suggests you only want democracy where governments are already good, which makes no sense.

"Since nobody can be excluded from the "use" of public goods, everybody benefits, and therefore everybody is expected to contribute."

State sectors vary in remit, and public goods are found to a greater or lesser extend in most everything bought and sold, and a number of other things, too. Hence, yes, this applies very directly to all businesses.

"The other side of the coin is that every affected person should have an equal say in government policy."

And workers aren't affected by a business' policy?

"I'm sure you're familiar with the various theories of the "social contract" - elections are just a way of renegotiating it."

And I'm sure you're familiar with this little notion of an "employment contract" (and its various incarnations undr different names) - elections would be a way of renegotiating them.

Colonel, some of the above also applies. But your own arguments...

"The more money CEO is payed the higher is the incentive not to screw up"

And the bigger buffer they have when they do get fired. Also, their jobs tend to be less precarious, and dropping down a notch doesn't mean any serious . Plus you're practically assuming that their superiors are omniscient and benevolent gods who always know when it's the CEO who's not earning them enough money, and will see through any fudges. Whereas on the factory floor, heads roll not due to poor individual performance, but due to market pressures. Or because some guy at the top messed up.

"Well I pay the governmnet taxes to do their job thus they are on my payroll sort of. But I don't pay the company for giving me a job, they pay me."

Well, no, you're paying them in labour, which has a certain financial value. In fact, they normally get more out of you than you get out of them (pretty much by definition of capitalism).

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"Surplus? I was talking about lousy teachers."

Point still stands. If they're being stuck in a pointless job (as you describe it) rather than put in front of children, they're being wasted, 'lousy' or not.

Probably - though you'd probably still need extra classrooms in order to spread pupils among more (smaller) classes.

That's a point of policy, wich is not the point here. The point is, it's cheaper for them to have those workers they've deemed incompetent (that is, they perform below the norm and have to be replaced by new ones for actual teaching duties) do nothing and hope they leave, then fire them for their incompetence.

"It should be fairly obvious that hundreds of thousends of employees..."

Yep, and the one statistic was only a small part of my point. In an organisation that large, you have a commensureately large layer of overpaid managers... ah, go read the bit you quoted again.

More statistics then, please? Prove that management costs are comparable (or larger) in size with other salary costs in such corporation, an assertion wich you have avoided to back up thus far. Since corporate enteties will strive to minimize especially the biggest costs, this seems counter-intuitive.

In any case, these "overpaid" managers are also employees. The difference is that they have gone through the effort of getting a better education, thus have skills that are a lot scarcer then the bulk of the employees.

"A government upholds domestic order; it mantains an environment where people's rights (life, liberty and property) are reasonably guarded."

Some do, to an extent, others don't. When governments do nice things like that, it's precisely *because* they're democratic; what you're saying suggests you only want democracy where governments are already good, which makes no sense.

Read on.

"Since nobody can be excluded from the "use" of public goods, everybody benefits, and therefore everybody is expected to contribute."

State sectors vary in remit, and public goods are found to a greater or lesser extend in most everything bought and sold, and a number of other things, too. Hence, yes, this applies very directly to all businesses.

"The other side of the coin is that every affected person should have an equal say in government policy."

And workers aren't affected by a business' policy?

Mordern day workers are not slaves, they can quit and find another employer if they want. I can't chose not to be affected by what my government decides except by emigrating, wich is hardly fair- and not allowed by regimes that are "not so nice". Consent in a labour contract lies in signing and keeping it, consent to be governed can only be accomplished by democracy (and even that's problematic)

"I'm sure you're familiar with the various theories of the "social contract" - elections are just a way of renegotiating it."

And I'm sure you're familiar with this little notion of an "employment contract" (and its various incarnations undr different names) - elections would be a way of renegotiating them.

Elections aren't necessary since you can quit, and not desirable because a company is not public but private property.

Well, no, you're paying them in labour, which has a certain financial value. In fact, they normally get more out of you than you get out of them (pretty much by definition of capitalism).

The amount of labour is of equal value to the wage paid as the latter is a result of a supply-demand equilibrum. It's only in consort with capital and natural recources that additional value is generated.

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