Posted on 05/21/2015 6:46:16 PM PDT by Olog-hai
Vegetable farmers in Brandenburg are worried about the future of the famous Spreewald gherkins, as the new national minimum wage has driven prices up.
Spreewald gherkins aren’t just any old gherkins. They hold a certain status in Germany, to the extent that they are designated by the EU as a Protected Geographical Indication, designed to protect local specialties. And yet the greatest threat to their survival isn’t coming from international competitors, but from German politicians.
Producers say that the national minimum wage introduced by the Social Democratic Party (SPD) as part of the coalition agreement is forcing prices up.
“More than 200 years of tradition will come to an end if consumers don’t carry on buying our gherkins,” conserve producer Konrad Linkenhell told the Berliner Morgenpost. “Because of higher wages, the raw ingredients have become massively more expensive—by more than a half. It’s a disaster,” he said. …
(Excerpt) Read more at thelocal.de ...
You’re either blind, deliberately obtuse, or stupid.
Labor is a commodity.
L
So, labor is a commodity. The firm was aware of the risk that the cost to the firm of the commodity would be increased by government mandate. The firm needed to manage that risk. If the firm manages poorly, it fails.
No. The "market" is driven by economic activity. Over time, as wages increase and economic activity expands, producers raise prices to compensate for inflationary pressure. Inflationary pressures increase demand (measured by consumers having greater income) to balance with supply as increased revenue compensates for greater costs of production.
What is happening here is the opposite of the market. Here, the government has stepped in to inflate the cost of labor to the point that the costs of production will be greater than consumer demand. When this happens, there is an imbalance as demand falls due to the inflated price while the producer doesn't receive the benefit of the inflated price to compensate for the cost of production. Choice: as mentioned in the article... out of business.
Margins are very thin in the food industry.
Spreewald Pickles were prominently featured in one of my all-time favorite movies, “Goodbye Lenin!”
Quit while you’re behind. With every post you demonstrate you have no understanding of the situation.
As said in other posts above, the firm is charged with knowledge of the risk that the cost to the firm of the factors of production, such as labor, will increase. If they calculated poorly, the miscalculation is on them. I don’t want taxpayers in Germany or here to bail them out.
Good try. Firms make calculations daily concerning the risk that government actions will increase their costs. If they miscalculate, they may fail. Too bad.
No one has even mentioned a bail out. And why would US taxpayers be involved in a bailout anyway? You make no sense.
Your first post on this thread was that this situation was market-driven. You are wrong and continue to dig deeper into absurdities. This is the government shutting down economic activity with inane fiscal policies.
I'm done with you. Good night and God bless.
The market set wages low enough that the business could exist.
The government imposed wages that destroyed the jobs and the industry.
Blessings to you as well. If this unfortunate firm did not calculate accurately the risk of government overreach, it is on them.
Firms make calculations daily concerning the risk that government actions will increase their costs. If they miscalculate, they may fail. Too bad.
You appear to be on the wrong forum. You do know there are other forums where you can spew such rhetoric without challenge, right? DU and Huffington Post are two that come to mind. I honestly get the impression you would be more at home at one of those.
No man’s life, liberty or property are safe as long as congress is in session. (Or obama has a pen).
Tell me, in your own business can you predict what the government will impose next week, and what plans have you made to mitigate that risk?
You expect the Kraut pickle farmers to do it, show us you can do it yourself!
I agree with you that the government imposed high wages. But every firm or household must assess for itself the risk of a government power-grab. And I think you and I might agree that the risk is high.
I'm still posting, after 16 years, NSA notwithstanding.
You are stupid.
L
What is your busy ness, n&v?
Thank you. Have a good evening. P.S. I have no sympathy for a firm that miscalculated the probability that the government would act against the firm’s interest through government mandate of a wage subsidy (which I do not endorse).
I disagree. Firms and households are responsible for their choices. This pickle-producer miscalculated the risk of government mandate. That (mis)calculation, including the assumptions that grounded it, was the firm’s own choice.
They raised it to €8.50/hour last year; that was over $10/hour until recently (about $9.60/hour now).
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