Friday, February 7, 2014

Economist: Strong unions needed for prosperity to return

Watch Heiner Flassbeck argue that strengthening labor unions will prevent economic collapse. He is an influential German economist who has taught at the University of Hamburg, a Vice Minister at the German Ministry of Finance, and a director at the United Nations Conference on Trade and Development.

If you don't have time to watch the whole video, his main point is this:
...all over the place, the high unemployment that we have is putting pressure on wages so that we have never--in no country, we have not seen a normalization of wage expectations, of income expectations of the average people. And as long as we do not have that, as long as we rely on a cut in savings ratio or new credit or new credit card bubbles, then the whole thing is extremely dangerous, too... 
The labor market is not functioning at all. We have--as I said, we have high pressure on wages that are low. Formerly, you had a situation where you had high pressure on wages that were high. And now, 30 years after the neoliberal counterrevolution, it is the other way around, that this is destabilizing the whole economy, that that is why you need intervention. You need re-unionization. You need more power on the labor side. Or you need direct intervention of the government.
Shorter version: Strong unions are needed for prosperity to return.