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Labour shortages
A Free exchange column expressed some scepticism about whether there could be any such thing as a “labour shortage” (March 15th). This might depend on the interpretation of that term. The consensus in economic theory is that the demand for labour in competitive conditions is the marginal value product (MVP), that is, the market value of the additional production that results from adding an additional employee at going prices. In a labour shortage, the wage is less than the MVP. To use Alfred Marshall’s terms, the demand price of labour is above its supply price.
There are a few ways that this might occur. Wages might be “sticky”, so that they simply do not adjust to market conditions. This explanation, more often used to explain labour surplus (unemployment), leaves many questions unanswered and may merit your scepticism. Also, wages may be less than the MVP in conditions of monopoly power and monopsony power, that is, the pricing power in output and labour markets respectively. In these cases, although an expansion of employment and output would be profitable at going prices, firms may hesitate to expand for fear that prices would shift unprofitably as a result. They may then devote resources to attempt to recruit labour at the going prices, with success only in unusual cases.
And finally, although it is little discussed in most economics, there is the case of increasing returns to scale. This means that the factors of production complement and enhance the productivity of one another so strongly that output increases more than in proportion to increasing inputs. In such a case, payment of inputs according to their MVPs would more than exhaust the total output, and so is impossible.
This was discovered in about 1890 by Friedrich von Wieser and is readily demonstrated mathematically. Since there is not enough to pay each input its MVP, and assuming the non-human inputs, such as capital and materials, receive no less than their respective MVP, we might expect that the wage would be below the MVP of labour. Thus a labour shortage, in one sense, is unavoidable. I suspect that this is the circumstance that we face in modern production. Whether we use the term “shortage” or not, employers will be frustrated in their attempts to recruit more employees, and are likely to perceive this as a shortage.
Professor Roger McCainSchool of EconomicsLebow College of BusinessDrexel UniversityPhiladelphia
Stealing ideas at work
Bartleby set out an impressive number of virtuous responses to counter someone who takes credit for your ideas or creations (March 8th). Another riposte comes from “The Red Shoes”, a film released in 1948.
When a young composer becomes distraught at discovering that his professor has stolen his music for a new ballet and confronts him about it, the professor simply says, “It is better to be the one who is stolen from, than to be the one who has to steal.” J.M. INNESAdelaide, Australia
Bonnie Garmus got the ideas for her novel, “Lessons in Chemistry”, from sitting in meetings at the ad agency she worked for. When she came up with a creative suggestion she was ignored, but later in the meeting some man would present her proposal and everybody would agree that it was great. It led to her departure from the ad industry and her bestselling book, which was made into a TV series. That’s no consolation for others with similar experiences, but it is a source of Schadenfreude for women (and junior men) who can relate to her experience.
Noel TurnbullPort Melbourne, Australia
Indira Gandhi said her grandfather told her there were two kinds of people, those who do the work and those who take the credit. He told her “to be in the first group; there was much less competition.”
Pendexter MacdonaldBoston
Too few female executives
Reports suggesting that Britain is on track for gender parity in the workplace (Graphic detail, March 5th) are easily debunked when you dig a little deeper into the data. The number of women on company boards in Britain may be creeping closer to equal representation, but is that really a fair reflection of gender parity? Other studies, such as the Women Count report, show that when it comes to executive committees, which are the engine rooms of a business, female representation is falling.
More women on boards is good news, but we also have to recognise that we are a long way from true equality for women in the workplace. Non-executive director roles should not be used to meet boardroom quotas. It cannot be a case of ticking a box and allowing women to sit at the table, without taking the lead.
The fall in female executives is serious cause for concern. Women make up over half of Britain’s workforce, so it’s not down to a lack of talent. Businesses and legislators have a duty to tackle this. More needs to be done to remove biases and promote female talent to the top. After all, investing in women’s success can pay dividends.
Professor Geeta NargundChairThe PipelineLondon
Why Syria isn’t Yugoslavia
You laid out the stark alternatives facing Syria: either move towards federalisation, or risk a balkanisation of the kind seen with the break-up of Yugoslavia in the 1990s (“Playing the odds”, March 8th). The ethnic and sectarian tensions exacerbated by territorial claims in Syria are a haunting echo of the disintegration of Yugoslavia. Syria’s fate could be much worse. At least before its break-up Yugoslavia boasted a thriving tourist industry, an excellent sporting pedigree (it hosted the Winter Olympics in 1984), functioning energy and transport infrastructure, and a well-run state apparatus across its constituent elements.
Syria, by contrast, already meets the criteria of a failed state. It has poor provision of public transport, crippled infrastructure, poor digital networks with half the population offline, 7.4m internally displaced people, and economic inertia brought on by years of crippling sanctions.
And unlike the disintegration of Yugoslavia, Syria’s neighbouring countries and regional players are almost exclusively concerned about their own geostrategic interests. Syria needs multilateral intervention that lays out the groundwork for a federalised constitution favourable to all Syrians.
Jordan ScottNewcastle
The West should consider appointing a UN-funded anti-corruption inspector-general to Syria. The International Commission against Impunity in Guatemala, or CICIG, is a good model for this, though its success depended on executive and international support.
Luke ZakedisWashington, DC
Preparing for the afterlife
Sceptical as one might be of the truthfulness of famous dying words (“The babble and the beyond”, March 1st), there is one tale that is too fun to forget. Voltaire believed in God but was known for his stance against religious intolerance and fanaticism. Asked on his deathbed by a priest to renounce the devil, he replied, “This is no time to make new enemies!”
Yacov ArnopolinNew York