Why Cutting Public Sector Pay Is Always a Bad Idea

At the moment the government is trying to negotiate a deal to best cut public sector wages. However, any such deal will only make the recession worse without reducing the deficit. Here is a guest blog I wrote on the topic.

Irish Student Left Online

– Robert Nielsen discusses the ongoing dispute over the Croke Park II proposals, and why cutting wages is always a bad idea.

At the moment there is a great deal of controversy over the Croke Park Deal. In essence the government is trying to cut the wages of public sector workers while the public sector unions are opposing this. Regardless of the politics of the agreement, cutting wages is bad economics. It depresses the economy, worsens the recession and doesn’t even achieve its objective of reducing the deficit. The union membership was absolutely right to reject the Croke Park Deal and the government must completely reconsider its plan of action, because the current one isn’t working.

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United We Stand, Divided We Fall

On Monday students of UCD will vote on whether or not they want to remain affiliated with the Union of Students in Ireland (USI). As we are the largest college in Ireland our decision will have a huge impact on the future of the student movement. I want to ask everyone who reads this to please vote yes to the USI. The simple fact is that we are far stronger united than we are divided. The USI means all students have a voice in the national debate, whereas if we disaffiliate we will splinter into insignificance. A divided movement won’t be able to achieve anything. The USI certainly has flaws but disaffiliation will make things worse not better. Continue reading “United We Stand, Divided We Fall”

Challenging Economics – Marginal Productivity Of Labour

Whenever there is a great debate over wages, be it the minimum wage or unions effect on wages, opponents cite the marginal productivity of labour. They argue that this prevents businesses from paying higher wages and if they did, it would only lead to higher unemployment. This theory is unquestionably stated as fact in all textbooks and the impression is given that there is an iron law of economics that fixes wages. Despite its wide use, it is completely false. The vast majority of workers do not have a marginal productivity of labour and those that do are not paid it. It is a theory that has long outlived its day and continuing adherence to it means the wrong decisions are being made. Continue reading “Challenging Economics – Marginal Productivity Of Labour”