I did not realize we had steel mills in the interior of BC.

Maybe it is time to get rid of industry related names …. time to merge or join with UNIFOR.

Unions would do a lot more for their members if they pushed for ‘lower prices’ rather than ‘higher wages’.

It is an undeniable fact that the ‘labor’ cost component of virtually every product made is FALLING in ratio to the ‘capital’ cost components of it.

Even an increase in wages and benefits, while temporarily of seeming benefit to the recipients, does not alter this fact.

Both cost components flow through into prices at the point of final retail. Prices that are charged the public, including Union workers as members of that general public, to enable the consumption of what has been produced. Or its exchange through export. But only the CURRENT ‘labor’ cost is distributed in the form of personal incomes and available to liquidate BOTH ‘labor’ and ‘capital’ costs.

This is a mathematical impossibility. And the only way the present set-up manages to keep going at all is if there is a constant increase in the production of ‘capital’ goods, which then distribute enough incomes in general to enable the sale of ‘consumer’ goods at prices sufficient to meet their costs. Or a constant increase in our exports over our imports.

Unfortunately, though, in the first instance, the costs of producing these ‘capital goods’ have to flow through into the prices of FUTURE ‘consumer goods’, and be recovered from them.

This has some effects which are extremely detrimental to Union members, Unions themselves, and to the general public as a whole. Especially a public that thirsts after ‘full employment’, and elevates the having of a ‘job’ as being the same, or even more important, than having an adequate ‘income’. Observe what happens.

When ‘capital goods’ production, (and this includes all private AND PUBLIC spending on mega-projects, amongst other things), distribute wages and salaries IN ADVANCE of their being any increase in ‘consumer goods’ on the market, the price of those ‘consumer goods’ already on the market rises. And will continue to rise until those prices have taken back ALL the incomes distributed in respect of those ‘capital goods’.

Workers see these price increases as reason for further wage increases. Which, when granted, push prices up further. If we’re depending, as we are, on export sales to generate a surplus over what we are purchasing in imports, we begin to “price ourselves out of the market”. And our export sales fall off, as other countries move their business to cheaper suppliers.

Companies, faced with ever rising wage costs, seek ways to further automate to reduce the ‘labor’ component costs of their products, and remain internationally competitive.

‘Labor’ costs are an immediate charge against a company’s bottom line. ‘Capital’ costs can be deferred through depreciation allowances, and are not.

But reducing overall ‘labor’ costs this way, also reduces overall ‘incomes’. And the spending therefrom. And in the face of ‘capital costs’ that are increasing and are going to be coming forward INCREASINGLY into FUTURE prices. Which can only, as a general matter, go UP.

True, there are some improvements in process which enable the costs and prices of SOME products to be reduced. But countering that, are the ‘costs’ of keeping those who have been displaced by those improvements. Who now no longer have any incomes at all, or, if placed into some other jobs, have incomes which are now OTHER ‘costs’ of some OTHER product or service.

Financially, we are working ourselves into a situation which is going to be virtually impossible to deal with in the manner we’ve been doing. Time to look back, at the ORIGINAL ideas of ‘Social Credit’, (not what was done while a political party of that name long governed BC, but the ideas that were NOT put into practice then, but caused the founders of that party to adopt that name.)

“It is an undeniable fact that the ‘labor’ cost component of virtually every product made is FALLING in ratio to the ‘capital’ cost components of it.”

I would say there is absolutely no undeniable fact about that at all.

Give me some examples of “capital” goods which do not include a virtual 100% labour content when fully analyzed from raw commodity extraction to eventual user of the finished product.

The other real world situation is that one can have some control in how much one is paid as well as the working conditions of the labour that is paid.

Tell me how you propose to control the cost of the products/services which are being sold?

gus: “Tell me how you propose to control the cost of the products/services which are being sold?”

The answer to that is, you can’t.

You can’t control the cost of the products/services which are being sold as much as you can control the price that they can be sold. An example would Venezuela gas, which sells for 18 cents a gallon.

The cost of producing that gas is much higher, but government policy sets the price lower. They own their own oil and gas,s o they can do this, wish we could.

So many questions. ‘Capital costs’ are simply PAST ‘labor costs’, Gus.

Look what happens when they are incurred, as they are incurred every time a government ‘stimulus spends’ to lift an otherwise moribund economy out of recession.

The 2010 Winter Olympics was a perfect example, and I only use it as such because what happens is much more readily apparent when we look at a large, publicly funded project like that than with a plethora of smaller privately funded ones being funded in more ‘normal’ economic periods. Though the effects are exactly the same.

All through the construction period of all the things built under the aegis of the Olympics money from borrowing was distributed into the BC economy.

And all through that period the prices of consumer goods, in general, including residential real estate in the lower mainland, rose.

This money was taken back in ‘prices’ AT A FASTER RATE than the ‘costs’ of the Olympics “came on the market”, so to speak.

Now we have those ‘costs’ to pay. But where are the ‘incomes’ to pay them? For the most part, aside from a miniscule, (and also falling), portion that were ‘saved’, they’ve been SPENT.

And the ONLY way those ‘costs’, otherwise unliquidatable can be met? Create some MORE ‘capital spending’, and borrow some MORE money to do it.

But eventually, just like what happened in Italy under Mussolini, and Germany under Hitler, and even the USA under Roosevelt, you start to run out of sensible capital projects you can keep spending on, and then you HAVE TO have a war.

I say ‘sensible’ capital projects because to try to make the system work we do spend on a lot of capital projects that are far from being ‘sensible’ in terms of the ACTUAL benefits they’re going to bring to our own citizens.

Many of them will result in our having to pay increasingly higher prices for our own products far in excess of what we ‘have to’ try to sell those same products abroad for, simply to try to get enough foreign ‘money’ by so doing to enable us to live.

“So many questions. ‘Capital costs’ are simply PAST ‘labor costs’, Gus.”

In other words, you are agreeing that capital costs are actually labour costs.

So, now tell me what is considered past?

I figure when one sells a product or service for $1,000 then, by your definition, that price is 100% labour because it was added not only prior to the sale, but also projected costs fro processing afterwards, such as returns, accounting, taxation, etc.

I see no sense in discussing your notion any further. Entirely outside the realm of the real world.

People#1 lower fuel prices that you advocate for, would that not increase fuel usage along increased so called evil c02?

gus: “Tell me how you propose to control the cost of the products/services which are being sold?”

Johnny Belt:- “The answer to that is, you can’t.”
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All ‘costs’ flow through and enter ‘prices’. At each stage of production, considering that most production nowadays is multi-stage, each participating business has to fully recover both his costs plus a sufficient inducement in the form of a profit to make it worthwhile continuing to do what he is doing. Right through until the product passes into final consumption at the point of retail sale, where the retail merchant has put his mark-up on whatever he’s paid wholesale for his stocks.

Now in Gus’s question above he say’s “cost” where I think what he really means is “price”.

The two words are used interchangeably by most of us, but in reality they are actually two different things. Like ‘jobs’ and ‘incomes’.

‘Cost’ for example, can be related to something ‘physical’ ~ it is what we actually “use up”, primarily in ‘energy’ of some form or another, in the transformation, or ‘production’, of some materials as we find them in nature into some other form which is needed or useful to us for our actual ‘consumption’.

We ‘produce’ to ‘consume’, and, as the old saying goes, “Consumer demand is the origin of all economic activity.” And it is. Sane economic activity anyways.

‘Price’ on the other hand, is purely ‘financial’, it is the addition of all the money figures we use to numerically reflect ‘cost’, plus additions for profit sufficient to induce continued production.

Now if Gus did mean ‘price’, which I think he did, what “controls” the price of anything now? Why is the price of bread what it is? Why isn’t it twice that much, or half as much? And the answer is?

Well, I’ll spare you having to ponder it. It is what the merchant thinks he can get for it relative to his costs, and expectations of profit. If he prices it too high relative to his competitors, it sits and goes stale. Too low, and he’s giving his profit away, makes too little a return for his efforts, finally gets discouraged and quits.

But beyond individual considerations unique to every merchant’s own circumstance, there are actually TWO ‘limits’ to prices in any so-called “free-market” economy. An upper and a lower.

The upper limit of price is governed, roughly, by what is known as the “quantity theory of money”. In other words, if the amount of money available in the hands of the general public increases, prices will also increase. And keep increasing until they have ‘taken back’ all the increase in money in prices.

The lower limit of price, which by far the majority of goods and services for sale in a ‘competitive market’ where the capacity to produce always exceeds the ability or desire to consume, is the ruling limit, is always governed by COST.

When all costs, plus a sufficient profit to continue production and final sale, can’t be recovered in price, production ceases.

Now if we look beyond the ‘financial’, the TRUE, or actual physical ‘cost’ of any and all PRODUCTION, is any and all CONSUMPTION over one and the same time period.

It cannot be more than that, because no one can ‘consume’ something which has not yet been ‘produced’. And there is no such thing as a ‘debt’ in nature. Debt is purely a human financial construct, as is its alter ego ‘credit’ ~ which is what all ‘money’ really is, or on which it is based.
Money, credits and debits are, therefore, simply facets of accounting.

Our current methods of accounting do an excellent job, by and large, in fixing ‘prices’ (determining them) relative to ‘costs’. But the accounting we use is only two-dimensional. Whereas the world in which we all operate is three. And therein lies a problem.

‘Money’, being, or being based on, ‘credit’, does not just involve a ‘debit’ on one side of the ledger and an opposing ‘credit’ on the other, but also TIME. And time, as they say “is of the essence”.

We currently have no accounting mechanism to properly relate the RATE that ‘prices’ are generated to the RATE that ‘incomes’ needed to liquidate those prices are distributed, considering the economy as a whole OVER THE SAME PERIOD OF TIME.

As ‘capital costs’ continue to increase relative to ‘labor costs’ in EACH AND EVERY ‘cycle of production’ the RATE at which costs flow through into prices continually exceeds the RATE that incomes to worker/consumers are distributed. This prevents the overall economy from being fully ‘financially’ self-liquidating in EACH successive cycle of production.

Exponential increases in overall indebtedness to try to bridge this widening gap are the results. So long as they can be sustained. Periodic and successive ‘recessions’, are indications of the difficulty in continuing to do this.

The means for correcting the problem are relatively simple. What is necessary is to ‘augment’ earned incomes by the amount of the difference between the rates of flow of total costs into prices at the point of final retail and flow of incomes into the hands of consumers in any and every same given fiscal period.

We can determine the appropriate level of augmentation from existing statistics that record our overall ‘production’ and overall ‘consumption’ over successive same time periods.

Simply put, it involves the government establishing a proper set of National Accounts along the same lines as the accounts kept by every business now, and through a technique of credit all retail prices as presently computed could be ‘rebated’ to consumers by the same percentage that overall ‘production’ exceeds overall ‘consumption’ in any same given previous time period. There is no ‘taxation’ of anybody, or ‘re-distribution’ of anyone’s existing incomes, involved in this. It involves an expansion of credit, but in a way that LOWERS prices to every consumer instead of as now, where each expansion of credit raises them.

The effect is to enable the consumer to PAY the TRUE ‘cost’ of production, which is generally going to be quite a bit less than the ‘financial’ cost of that production charged in prices as they’re now determined. And this ‘cost’ will continue to fall with each increase in EFFICIENCY. Which does, and can only mean, more product output for less ‘labor’ input. It may sound impossible to you, but look at the alternatives. We’ve been trying them for a lot of years now, are we satisfied with ALL the results?

gus:-“So, now tell me what is considered past?”

“I see no sense in discussing your notion any further. Entirely outside the realm of the real world.”

——————————————-
I would think that anyone capable of exercising even minimal mental capabilities would recognise that there is a ‘past’, a ‘present’ and a ‘future’ in the “real world” . But perhaps you can’t relate to ‘time’, and believe it doesn’t exist? But then ignorance is bliss, isn’t it?

A ‘capital cost’ is a PAST ‘labor cost’. It was paid out as an ‘income’ to someone at some time PRIOR to the period in, or over, which the ‘price’ of the article it’s been ‘costed’ into will be fully recovered from the public through price or taxes.

Such ‘costs’ as ‘incomes’ are largely SPENT WHEN RECEIVED. On ‘consumer goods’ on the market now, in the ‘present’. Which will generally rise in price, if ‘capital goods’ production is expanding in the ‘present’.

When it’s spent, it returns to the bank from which the ‘money’ which enabled its payment in the first place originated. As a loan repayment. On the books of the bank, that ‘money’ is then cancelled out of existence. For it originated on their books as ‘credit’ ~ “out of nothing”, and on repayment it returns to being just that ~ “nothing”. Their profit, of course, will be taken from interest received, which is enabled by the ongoing flow of reciprocal spending by the banks themselves and overlapping loan maturities, as the whole system is ‘dynamic’ like production and consumption themselves.

If it is NOT a loan repayment, but is instead re-invested by the business, it then creates ANOTHER set of costs, while the price values of the first set of costs for the original ‘capital good’ remain unliquidated.

A ‘labor cost’ involved in the production of some strictly ‘consumer’ good or service, and distributed and available as an ‘income’ in the SAME period that good or service comes onto the market, is more closely related as an ‘income’ to ‘prices’.

recommendation to opinion 250. Limit comments to 1,000 characters. Or start charging socredible a fee for all the space he’s using…….

I bet hardly anybody reads socredible’s comments because they are boarderline novels…..

“I would think that anyone capable of exercising even minimal mental capabilities would recognise that there is a ‘past’, a ‘present’ and a ‘future’ in the “real world” . But perhaps you can’t relate to ‘time’, and believe it doesn’t exist? But then ignorance is bliss, isn’t it?”

What a condescending and given the circumstances under which the statement was made idiotic statement!!!!
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In the world of socredible “A ‘capital cost’ is a PAST ‘labor cost’.”

In everyone else’s world a capital cost is a fixed, one-time expenses incurred on the purchase of land, buildings, construction, equipment, and so on used in the production of goods or in the rendering of services.

Remember, you started off by stating that “It is an undeniable fact that the ‘labor’ cost component of virtually every product made is FALLING in ratio to the ‘capital’ cost components of it.” It is that statement I took issue with by implying that capital goods are made of virtually 100% labour content.

With that I was also implying that one cannot take a ratio of one thing to another thing when the one thing is the same as the other. It will always be 100%, so why bother?

Your statements, socredible, are scripts written for the theatre of the absurd.

People: “The cost of producing that gas is much higher, but government policy sets the price lower. They own their own oil and gas, so they can do this, wish we could.”

Gas is heavily subsidized by the government. The money that goes to cheap gas gets taken away from other things, like the general standard of living. Venezuela is hardly a place we should be aspiring to be. Unless you happen to like Hugo Chavez types…

People pay what people can afford. If you can afford it you buy it, if you can’t afford it then you don’t buy it. There will always be people who can afford it and those who can’t.

13% over 5 years with cash payment of 3400.00? Now the teachers are going to want that! Plus 2.50 per/hr for trades people???!!!

“People pay what people can afford. If you can afford it you buy it, if you can’t afford it don’t buy it.”

If this was the case, Northland Dodge Chrysler wouldn’t be the largest volume dealer. No money, no credit, no problem….you can still drive a brand new sheep.

Gus:-“In everyone else’s world a capital cost is a fixed, one-time expenses incurred on the purchase of land, buildings, construction, equipment, and so on used in the production of goods or in the rendering of services.”
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That is the ‘price’ that any business pays for all those things, and is recorded on their books as their ‘capital costs’. Disregarding land itself, which will be carried on the books at the costs of its acquisition, buildings, construction, equipment, and so on, all had ‘labor’ involved in their creation at some or various points in the PAST, did they not?

Is that under 1,000 words, mwk?

JohnnyBelt:- “Gas is heavily subsidized by the government. The money that goes to cheap gas gets taken away from other things, like the general standard of living. Venezuela is hardly a place we should be aspiring to be. Unless you happen to like Hugo Chavez types…”
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I don’t. But tell me, how is “..the money that goes to cheap gas gets taken away from other things, like the general standard of living.” You mean to tell us that if every Venezuelan paid OUR prices for gas they’d somehow all have a higher standard of living?

Told you before, that’s the big problem with people on the ‘right’. They keep making the ‘left’s’ case, which is really without foundation, look plausible.

Who wants to drive a sheep?

Bo Peep.

“Who wants to drive a sheep ?”

I don’t know, maybe a shepherd, or a goat rancher. Or people whose “Momma won’t lend them money”.

This also explains why you see so many of these vehicles being driven like they are trying to outrun the repo man.

Anyway, the point was that you don’t need to have money to buy things in todays easy credit crazy world.

middle finger, I think you just supported socredible’s point … easy credit is just people selling their future for a current asset that will only depreciate to nothing by the time they pay for it … unlikely to be producing a cash flow with that Ram 1/2 ton so in essence giving themselves into a lifetime of servitude ( a politically correct term for voluntary slavery )

Socred: “You mean to tell us that if every Venezuelan paid OUR prices for gas they’d somehow all have a higher standard of living? “

I hope you didn’t hurt yourself jumping to that conclusion. No, the point I was making, as I have many times, is that there’s no ‘free lunch’ and the money always comes from somewhere. Something many lefties can’t grasp.

or in other words, the Venezuelans are actually paying the same for gas as we are, just not at the pumps. As the gas is heavily subsidized, there is nothing left for education or health care. Choices.

I doubt very much that the price of gasoline in Venezuela is “heavily subsidized.” Likely its price is based on the cost of its production in Venezuela, which is an oil rich country with extensive refining capacity, and a large oil exporter.

I think what Johnny is trying to say, without actually wanting to admit it, is that if Venezuela’s government followed Gordon Campbell’s ideology and charged all their own citizens ‘world price’ for their own gasoline, or even more, it would have all kinds of money to spend on education and healthcare. Just like we do here, right Johnny? ;)

If it were not for “easy credit” in the present world, most of those who preach that we all must “live within our means financially” would have little or no “means”. They’d be laid off, for a lot of what they’re currently producing couldn’t be sold. Certainly not at the costs of its making.

Observe the irony of the present situation, as expounded by all the well-heeled financial gurus.

Christmas time comes, and they’re all predicting economic doom and gloom for the coming year unless way more consumers max out the credit card. For it’s their spending that drives the whole economy.

Consumers take the message to heart, and do just that.

Then a month or two later it’s RRSP time, and the same prophets are all bleating in unison that unless Canadians spend less and save more we’ll all starve to death in our old age.

That we’re all a bunch of profligrate wastrels, compulsive shopaholics ~ as if our reigning in the spending will have no effects on future production. And the much cherished ‘jobs’.