The recent expectations, widely discussed on radio talk shows
and elsewhere with respect to the national budget would have
been formulated by virtue of the rational expectations hypothesis,
according to one school of thought.
This hypothesis puts forward the idea that people know,
on average, how the countrys economic model works, and
this knowledge is based upon rational thought.
Such knowledge allows them to then form reasonable expectations
about what will happen in the future, and it informs their
According to others, however, the rational expectations
model falls flat because it expects householders to know too
much about economic matters.
In fact, they view it as unrealistic that the average person
would have even a sufficient knowledge to make rational predictions.
But in truth, we go through life making decisions on financial
and economic matters based on our individual understanding
of how things will flow.
The difference in the exactness of our predictions really
lies with the difference in the amount of information we seek
out with respect to our various interests, and on our ability
to make sense of the information.
What complicates the matter further is that there are powerful
interest groups in modern society who have a formulated agenda
to deliberately influence the thought processes.
For example if I tell you often enough, using various media,
that there will be another violent earthquake within the next
few weeks, enough people will take actions that reflect such
So if I tell you that worldwide, more workers are being
denied standard employment compensation benefits, as a result
of the new contract work ethic, what action would you take?
It has been the standard for more than 40 years, that collective
bargaining, and human resource sensitive employment practices
delivered to workers the most attractive and comprehensive
compensation benefits packages.
What exactly is a compensation package? It includes all
the benefits front-end and back-end, that employees and workers
in general get in return for their labour hours, from employers.
A comprehensive compensation package will start with a pay
cheque directly related to the volume of work rendered over
a short period-a fortnight or a month typically.
In addition there will be provision for long term service
to the employer: bonus pay and pension plans. There will also
be a health plan designed for the group of workers, at best
expanded to include dental and vision care, and foreign medical
Further there can savings plans, executive pension plan
above the standard plan, travel grants, study allowances,
uniform and travel benefits, company cars, and housing allowances.
There may also be cash incentive awards, and employee recognition
awards. There may be exercise rooms, jogging tracks, day care
centers, personal business leave, employee assistance programmes
and trips abroad.
The movement towards contracting consultants and specialists
is a movement away from the most comprehensive compensation
The movement towards contract labour in construction and
maintenance is a movement away from the system that provided
basic health care benefits and pension plans.
Many populations have been led to believe that social security
benefits will take up the slack but that is not happening
It is our understanding of how the economy works that will
develop in us expectations of what will occur in the future.
How we allow ourselves to be conditioned by the communications
that come from the agenda driven directorate, will determine
what actions we take.
If those who oppose the Rational Expectations hypothesis
are correct, it would appear that we really need the collective
bargaining process and that trade unions are vitally important
in our future economic welfare.