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Delegate

Delegate

A delegate is an individual (or a member of a group called a delegation) who represents the interests of a larger organization (e.g. a government, a charity, an NGO, or a trade union) at a meeting of some kind (e.g. trade talks, an environmental summit, aid negotiations, or an industrial dispute). In order to avoid the principal-agent problem, it is generally important to the organization to take steps to ensure that the delegate or delegation does not have a conflict of interest. Failure to do so may reduce the chances of the organization's viewpoint being represented as well as possible. Delegates from the major political parties are involved in the selection of candidates for President of the United States. Some of the officials involved in the process are called superdelegates. Delegate is also a title given to individuals elected to the lower legislative bodies of the states of Maryland, Virginia and West Virginia (see House of Delegates). Delegate is also the title of a person elected to the United States House of Representatives to serve the interests of a organized United States territory. Delegates have powers similar to that of Representatives, including the right to vote in committee, but have no right to take part in floor votes. See: Delegate (United States Congress). Delegate is also a small town in the Bombala Council area of New South Wales Australia. It was the start for the well known Men from Snowy March during WW1 and also WWII.Delegate is an Aboriginal word meaning one big hill.

Government

A government is the body that has the power to make and enforce laws within an organization or group. In its broadest sense, "to govern" means to administer or supervise, whether over an area of land, a set group of people, or a collection of assets. The word government is derived the Greek Κυβερνήτης (kubernites), which means "steersman", "governor", "pilot" or "rudder".

Definitions

One approach is to define government as the decision-making arm of the state, and define the latter on the basis of the control it has over violence and the use of force within its territory. Specifically, the state (and by extension the government) has been considered by some to be the entity that holds a monopoly on the legitimate use of force within a territory. This view has been taken by the political economist Max Weber and subsequent political philosophers. The exact meaning of it depends on what is understood by “legitimate”. If we use the term in an ethical sense, then this definition would suggest that an organisation might be considered a state by its supporters but not by its detractors. An alternative definition is to take "legitimate" violence to be simply that which has active or tacit acceptance by the vast majority of the population. In this view, the presence of insurrection or civil war against an entity would jeopardise its claim to be a state, provided the insurrection enjoyed significant popular support. Similarly, an entity that shared military or police power with independent militias and bandits could be considered to have a monopoly on “legitimate” violence but to be failing to enforce it, reducing its claim to statehood. In practice, such situations are often described as "failed states". Government can also be defined as the political means of creating and enforcing laws; typically via a bureaucratic hierarchy. Under this definition, a purely despotic organization which controls a territory without defining laws would not be considered a government. Another alternative is to define a government as an organisation that attempts to maintain control of a territory, where "control" involves activities such as collecting taxes, controlling entry and exit to the state, preventing encroachment of territory by neighbouring states and preventing the establishment of alternative governments within the country. In Commonwealth English, the word "Government" can also be used to refer only to the executive branch, in this context being a synonym for the word "administration" in American English (e.g. the Blair Government, the Bush Administration). In countries using the Westminster system, the Government (or party in Government) will also usually control the legislature. The French use of the word gouvernement covers both meanings, whereas Canadian French generally uses it to mean the executive branch. The German word Regierung refers only to government as the executive branch; the wider meaning of the word, government as a system, can be translated as Staatsgewalt.

Forms of government

Various forms of government have been implemented. A government in a developed state is likely to have various sub-organisations known as offices, departments, or agencies, which are headed by politically appointed officials, often called ministers or secretaries. Ministers may in theory act as advisors to the head of state, but in practice have a certain amount of direct power in specific areas. In most modern democracies, the elected legislative assembly has the power to dismiss the government, but in those states that have a separate head of government and head of state, the head of state generally has great latitude in appointing a new one.

Theories

There are a wide range of theories about the reasons for establishing governments. The four major ones are briefly described below. Note that they do not always fully oppose each other - it is possible for a person to subscribe to a combination of ideas from two or more of these theories.

Greed and oppression

Many political philosophies that are opposed to the existence of a government (such as Anarchism, and to a lesser extent Marxism), as well as others, emphasize the historical roots of governments - the fact that governments, along with private property, originated from the authority of warlords and petty despots who took, by force, certain patches of land as their own (and began exercising authority over the people living on that land). Thus, it is argued that governments exist to enforce the will of the strong and oppress the weak.

Order and tradition

The various forms of conservatism, by contrast, generally see the government as a positive force that brings order out of chaos, establishes laws to end the "war of all against all", encourages moral virtue while punishing vice, and respects tradition. Sometimes, in this view, the government is seen as something ordained by a higher power, as in the divine right of kings, which human beings have a duty to obey.

Natural rights

Natural rights are the basis for the theory of government shared by most branches of liberalism (including libertarianism). In this view, human beings are born with certain natural rights, and governments are established strictly for the purpose of protecting those rights. What the natural rights actually are is a matter of dispute among liberals; indeed, each branch of liberalism has its own set of rights that it considers to be natural, and these rights are sometimes mutually exclusive with the rights supported by other liberals.

Social contract

One of the most influential theories of government in the past two hundred years has been the social contract, on which modern democracy and most forms of socialism are founded. The social contract theory holds that governments are created by the people in order to provide for collective needs (such as safety from crime) that cannot be properly satisfied using purely individual means. Governments thus exist for the purpose of serving the needs and wishes of the people, and their relationship with the people is clearly stipulated in a "social contract" (a constitution and a set of laws) which both the government and the people must abide by. If a majority is unhappy, it may change the social contract. If a minority is unhappy, it may persuade the majority to change the contract, or it may opt out of it by emigration or secession.

Operations

Governments concern themselves with regulating and administering many areas of human activity, such as trade, education, medicine, entertainment, and war.

Enforcement of power

Governments use a variety of methods to maintain the established order, such as police and military forces, (particularly under despotism, see also police state), making agreements with other states, and maintaining support within the state. Typical methods of maintaining support and legitimacy include providing the infrastructure for administration, justice, transport, communication, social welfare etc., claiming support from deities, providing benefits to elites, holding elections for important posts within the state, limiting the power of the state through laws and constitutions (see also Bill of Rights) and appealing to nationalism. Different political ideologies hold different ideas on what the government should or should not do.

Territory

The modern standard unit of territory is a country. In addition to the meaning used above, the word state can refer either to a government or to its territory. Within a territory, subnational entities may have local governments which do not have the full power of a national government (for example, they will generally lack the authority to declare war or carry out diplomatic negotiations).

Scale of government

Main articles: government ownership, government spending The scale to which government should exist and operate in the world is a matter of debate. Government spending in developed countries varies considerably but generally makes up between about 30% and 70% of their GDP.

Non-governmental organization

A non-governmental organization (NGO) is an organization that is not part of a government and was not founded by states. NGOs are therefore typically independent of governments. Although the definition can technically include for-profit corporations, the term is generally restricted to social, cultural, legal, and environmental advocacy groups having goals that are primarily noncommercial. NGOs are usually non-profit organizations that gain at least a portion of their funding from private sources. Current usage of the term is generally associated with the United Nations and authentic NGOs are those that are so designated by the UN. non-profit organizations against Esso/Exxon Mobil in March 2003.]] Because the label "NGO" is considered too broad by some, as it might cover anything that is non-governmental, many NGOs now prefer the term private voluntary organization (PVO). A 1995 UN report on global governance estimated that there are nearly 29,000 international NGOs. National numbers are even higher: The United States has an estimated 2 million NGOs, most of them formed in the past 30 years. Russia has 65,000 NGOs. Dozens are created daily. In Kenya alone, some 240 NGOs come into existence every year.

History

Kenya NGO's.]] Though voluntary associations of citizens have existed throughout history, NGOs along the lines seen today, especially on the international level, have developed in the past two centuries. One of the first such organizations, the International Committee of the Red Cross, was founded in 1863. The phrase non-governmental organization came into use with the establishment of the United Nations in 1945 with provisions in Article 71 of Chapter 10 of the United Nations Charter ^{[http://www.un.org/aboutun/charter/chapt10.htm]} for a consultative role for organizations that neither are governments nor member states – see Consultative Status. The definition of international NGO (INGO) is first given in resolution 288 (X) of ECOSOC on February 27, 1950: it is defined as 'any international organisation that is not founded by an international treaty'. The vital role of NGOs and other "major groups" in sustainable development was recognized in Chapter 27^{[http://habitat.igc.org/agenda21/a21-27.htm]} of Agenda 21, leading to revised arrangements for consultative relationship between the United Nations and non-governmental organizations.^{[http://www.un.org/documents/ecosoc/res/1996/eres1996-31.htm]} Globalization during the 20th century gave rise to the importance of NGOs. Many problems could not be solved within a nation. International treaties and international organizations such as the World Trade Organization were perceived as being too centered on the interests of capitalist enterprises. In an attempt to counterbalance this trend, NGOs have developed to emphasize humanitarian issues, developmental aid and sustainable development. A prominent example of this is the World Social Forum which is a rival convention to the World Economic Forum held annually in January in Davos, Switzerland. The fifth World Social Forum in Porto Alegre, Brazil, in January 2005 was attended by representatives from more than 1,000 NGOs. ^{[http://www.globalpolicy.org/ngos/role/conf.htm]}

Types of NGOs

There are numerous possibilities to classify NGOs. The following is the typology the World Bank uses :

Operational NGOs

Their primary purpose is the design and implementation of development-related projects. One categorization that is frequently used is the division into relief-oriented or development-oriented organizations; they can also be classified according to whether they stress service delivery or participation; or whether they are religious and secular; and whether they are more public or private-oriented. Operational NGOs can be community-based, national or international.

Advocacy NGOs

Their primary purpose is to defend or promote a specific cause. As opposed to operational project management, these organizations typically try to raise awareness, acceptance and knowledge by lobbying, press work and activist events.

Acronyms

Nongovernmental organizations are an heterogenous group. A long list of acronyms has developed around the term 'NGO'. These include:
- [http://www.massfoundation.org/ Movement and Action for Social Services (MASS)]
- INGO stands for international NGO, such as CARE;
- BINGO is short for business-oriented international NGO;
- RINGO is an abbreviation of religious international NGO such as Catholic Relief Services;
- ENGO, short for environmental NGO, such as Global 2000;
- GONGOs are government-operated NGOs, which may have been set up by governments to look like NGOs in order to qualify for outside aid;
- QUANGOs are quasi-autonomous non-governmental organisations, such as the W3C and the International Organization for Standardization (ISO), which is actually not purely an NGO, since its membership is by nation, and each nation is represented by what the ISO Council determines to be the "most broadly representative" standardization body of a nation. Now, such a body might in fact be a nongovernmental organization--for example, the United States is represented in ISO by the American National Standards Institute, which is independent of the federal government. However, other countries can be represented by national governmental agencies--this is the trend in Europe.

Evolutionary stages of development NGOs

Three stages or generations of NGO evolution have been identified by Korten’s (1990) Three Generations of Voluntary Development Action. First, the typical development NGO focuses on relief and welfare, and delivers relief services directly to beneficiaries. Examples are the distribution of food, shelter or health services. The NGO notices immediate needs and responds to them. NGOs in the second generation are oriented towards small-scale, self-reliant local development. At this evolutionary stage, NGOs build the capacities of local communities to meet their needs through 'self reliant local action'. Korten calls the third generation 'sustainable systems development'. At this stage, NGOs try to advance changes in policies and institutions at a local, national and international level; they move away from their operational service providing role towards a catalytic role. The NGO is starting to develop from a relief NGO to a development NGO. ¹

Purposes

NGOs exist for a variety of purposes, usually to further the political or social goals of their members. Examples include improving the state of the natural environment, encouraging the observance of human rights, improving the welfare of the disadvantaged, or representing a corporate agenda. However, there are a huge number of such organizations and their goals cover a broad range of political and philosophical positions. This can also easily be applied to private schools and athletic organizations.

Methods

NGOs vary in their methods. Some act primarily as lobbyists, while others conduct programs and activities primarily. For instance, such an NGO as Oxfam, concerned with poverty alleviation, might provide needy people with the equipment and skills they need to find food and clean drinking water.

Networking

The International Freedom of Expression eXchange (IFEX), founded in 1992, is a global network of more than 60 non-governmental organizations that promote and defend the right to freedom of expression.

Public Relations

Consulting

Many international NGOs have a consultative status with United Nations agencies relevant to their area of work. As an example, the Third World Network has a consultative status with the UN Conference on Trade and Development (UNCTAD) and the UN Economic and Social Council (ECOSOC). In 1946, only 41 NGOs had consultative status with the ECOSOC, but this number had risen to 2,350 in 2003.

Activist events

ECOSOC) in December 2004.]]

Project management

There is an increasing awareness that management techniques are crucial to project success in non-governmental organizations.

Management of non-governmental organizations

Two management trends are particularly relevant to NGOs: diversity management and participatory management. Diversity management deals with different cultures in an organization. Intercultural problems are prevalent in Northern NGOs that are engaged in developmental activities in the South. Personnel coming from a rich country are faced with a completely different approach of doing things in the target country. A participatory management style is said to be typical of NGOs. It is intricately tied to the concept of a learning organization: all people within the organization are perceived as sources for knowledge and skills. To develop the organization, individuals have to be able to contribute in the decision making process and they need to learn.

Relations

The relationship among businesses, governments, and NGOs can be quite complex and sometimes antagonistic. Some advocacy NGOs view opposition to the interests of Western governments and large corporations as central to their purpose. But NGOs, governments, and companies sometimes form cooperative, conciliatory partnerships as well.

Staffing

Not all people working for non-governmental organizations are volunteers. Paid staff members typically receive lower pay than in the commercial private sector. Employees are highly committed to the aims and principles of the organization. The reasons why people volunteer are usually not purely altruistic, but self-serving: They expect to gain skills, experience and contacts. There is some dispute as to whether expatriates should be sent to developing countries. Frequently this type of personnel is employed to satisfy a donor, who wants to see the supported project managed by someone from an industrialized country. However, the expertise these employees or volunteers may have can be counterbalanced by a number of factors: the cost of foreigners is typically higher, they have no grassroot connections in the country they are sent to and local expertise is often undervalued. The NGO-sector is an important employer in terms of numbers. For example, by the end of 1995, CONCERN worldwide, an international Northern NGO working against poverty, employed 174 expatriates and just over 5,000 national staff working in ten developing countries in Africa and Asia, and in Haiti.

Funding

Large NGOs may have annual budgets in the millions of dollars. For instance, the budget of the American Association of Retired Persons (AARP) was over $540 million dollars in 1999.[http://www.jewishsf.com/content/2-0-/module/displaystory/story_id/12687/edition_id/245/format/html/displaystory.html] Human Rights Watch spent and received US$21,7 million in 2003. Funding such large budgets demands significant fundraising efforts on the part of most NGOs. Major sources of NGO funding include membership dues, the sale of goods and services, grants from international institutions or national governments, and private donations. Several EU-grants provide funds accessible to NGOs. Even though the term 'non-governmental organization' implies independence of governments, some NGOs depend heavily on governments for their funding. A quarter of the US$162 million income in 1998 of the famine-relief organization Oxfam was donated by the British government and the EU. The Christian relief and development organization World Vision US collected US$55 million worth of goods in 1998 from the American government. Nobel Prize winner Médecins Sans Frontières (MSF) (known in English as Doctors Without Borders) gets 46 percent of its income from government sources.

Legal status

NGOs are not legal entities under international law, like states are. An exception is the International Committee of the Red Cross which is considered a legal entity under international law, because it is based on the Geneva Convention.

Notes

¹ Korten, D. Getting to the 21st century: voluntary action and the global agenda. West Hartford, CT: Kumarian Press, 1990, p. 118.
[http://docs.lib.duke.edu/igo/guides/ngo/define.htm World Bank Criteria defining NGO]
[http://www.lse.ac.uk/collections/CCS/pdf/int-work-paper4.pdf Mukasa, Sarah. Are expatriate staff necessary in international development NGOs? A case study of an international NGO in Uganda. Publication of the Centre for Civil Society at London School of Economics. 2002, p. 11-13.]
Campbell, P. Management Development and Development Management for Voluntary Organisations, Occasional Paper No. 3, International Council of Voluntary Agencies, Geneva, 1987.
[http://www.intractableconflict.org/m/role_ngo.jsp Intractable Conflict Knowledge Base Project of the Conflict Research Consortium at the University of Colorado]
[http://www.civilsoc.org/resource/sins.htm Sins of the secular missionaries. in: The Economist. January 29, 2000.]

References

[http://www.lse.ac.uk/collections/CCS/publications/iwp/Default.htm London School of Economics International Working Paper Series on NGOs]
[http://docs.lib.duke.edu/igo/guides/ngo/define.htm World Bank Criteria defining NGO]

External links

- [http://www.staff.city.ac.uk/p.willetts/CS-NTWKS/NGO-ART.HTM What is a Non-Governmental Organization? City University, London]
- [http://www.class.uidaho.edu/martin_archives/conflict_journal/ngo.htm NGOs' role in peace-building] Category:Lists of organizations Category:Organizations Category:Political science terms ja:NGO simple:NGO th:องค์การสาธารณประโยชน์ zh-cn:非政府组织

Trade union

A union (labor union in American English; trade union in Commonwealth English) is an organisation formed by workers. Most typically, a single union will represent workers in a particular industry (industrial unionism) or craft (craft unionism), within all or part of a country, and will be organised to improve and defend wages, benefits, and working conditions. Unions are often divided into "locals" and united in national federations. Such examples could, depending on the country, be all the assembly workers for one employer, all the teachers in a local school district, or all the workers in a particular industry. In many countries, a union may acquire the status of a legal entity (called a "collective bargaining agent" in the USA) with a mandate to negotiate with employers to maintain and improve wages and working conditions for the workers it represents. In such cases, unions have certain legal rights, most importantly the right to negotiate collectively with an employer (or employers) over wages, working hours and other terms and conditions of employment — meaning that such things are not set unilaterally by management, but must be agreed upon by both parties. In many circumstances, unions do not have such rights and workers may typically threaten strikes or other collective action to pressure employers to negotiate. Unions may also engage in broader political or social struggle; unions in some countries are closely aligned with political parties. Unions often use their organizational strength to advocate for social policies and legislation favorable to their members or to workers in general. Although their political structure and autonomy of varies widely from country to country, union leaderships are usually formed through elections.

History

The concept of trade unions began early in the Industrial Revolution. More and more people left farming as an occupation and began to work for employers, often in appalling conditions and for very low wages. The labour movement arose as an outgrowth of the disparity between the power of employers and the powerlessness of individual employees. The 18th century capitalist economist Adam Smith noted the imbalance in the rights of workers in regards to owners (or "masters") in The Wealth of Nations. In chapter 8, Smith wrote: :We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate… :[When workers combine,] masters… never cease to call aloud for the assistance of the civil magistrate, and the rigorous execution of those laws which have been enacted with so much severity against the combinations of servants, labourers, and journeymen. As indicated in the preceding quotation, unions were illegal for many years in most countries. There were severe penalties for attempting to organize unions, up to and including execution. Despite this, unions were formed and began to acquire political power, eventually resulting in a body of labour law which not only legalized organizing efforts, but codified the relationship between employers and those employees organized into unions. Even after the legitimisation of trade unions there was opposition, as the case of the Tolpuddle Martyrs shows. Many consider it an issue of fairness that workers be allowed to pool their resources in a special legal entity in a similar way to the pooling of capital resources in the form of corporations. The right to join a trade union is mentioned in article 23, subsection 4 of the UDHR, which also states in article 20, subsection 2. that "No one may be compelled to belong to an association". Prohibiting a person from joining or forming a union, as well as forcing a person to do the same (e.g. "closed shops" or "union shops", see below), whether by a government or by a business, is generally considered a human rights abuse. Similar allegations can be levelled if an employer discriminates based on trade union membership.

Origin of unions

Unions are sometimes thought to be successors to medieval guilds, though this is still being debated by historians. Medieval guilds existed to protect and enhance their members' livelihoods through controlling the instructional capital of artisanship and the progression of members from apprentice to craftsman, journeyman, and eventually to master and grandmaster of their craft. Guilds exhibited some aspects of the modern trade union, but also some aspects of professional associations and modern corporations, so the comparison between medieval guilds and modern organised trade unions, while somewhat helpful, must be seen in widely different social contexts. Additionally, guilds, like some craft unions today, were highly restrictive in their membership and only included artisans who practiced a specific trade. Many modern labour unions tend to be expansionistic, and frequently seek to incorporate widely disparate kinds of workers to increase the leverage of the union as a whole. A labour union in 2005 might include workers from only one trade or craft, or might combine several or all the workers in one company or industry. Since the publication of the History of Trade Unionism (1894) by Sidney and Beatrice Webb, the predominant historical view is that a trade union "...is a continuous association of wage earners for the purpose of maintaining or improving the conditions of their employment" (Webb). A modern definition by the Australian Bureau of Statistics states that a trade union is "...an organisation consisting predominantly of employees, the principal activities of which include the negotiation of rates of pay and conditions of employment for its members". Yet historian R.A. Leeson, in United we Stand (1971), said: "Two conflicting views of the trade-union movement strove for ascendancy in the nineteenth century: one the defensive-restrictive gild-craft tradition passed down through journeymen's clubs and friendly societies,...the other the aggressive-expansionist drive to unite all 'labouring men and women' for a 'different order of things'..." Recent historical research by Dr Bob James in Craft, Trade or Mystery (2001), puts forward that trade unions are part of a broader movement of benefit societies, which includes medieval guilds, Freemasons, Oddfellows, friendly societies and other Fraternal organizations.

Shop types

Companies that employ workers with a union generally operate on one of several models:
- A closed shop (US) employs only people who are already union members. The compulsory hiring hall is the most extreme example of a closed shop—in this case the employer must recruit directly from the union.
- A union shop (US) or a closed shop (UK) employs non-union workers as well, but sets a time limit within which new employees must join a union.
- An agency shop requires non-union workers to pay a fee to the union for its services in negotiating their contract. This is sometimes called the Rand formula. In certain situations involving U.S. state government employees, for example California, fair share laws make it easy to require these sorts of payments.
- An open shop does not discriminate based on union membership in employing or keeping workers. In the UK a series of laws were introduced during the 1980s by Margaret Thatcher's government to restrict closed and union shops. All agreements requiring a worker to join a union are now illegal (except for the case of British Actors' Equity Association which still operates a closed shop for actors). The Taft-Hartley Act outlawed the closed shop in the United States in 1947, but permits the union shop in most states.

Criticism

Trade unions are often accused of benefiting the insider workers, those having a secure job and high productivity, at the cost of the outsider workers, consumers of the goods or services produced, and the shareholders of the unionized business. The ones that are likely to lose the most from a trade union are those who are unemployed or at the risk of unemployment or who are not able to get the job that they want in a particular field. The so-called insider-outsider theory analyses this problem. Usually, the marginal benefit of an additional worker decreases as the number of workers increase. This implies that the lower the minimum wage, the more workers a company can profitably employ. Thus, while an increase in the minimum wage benefits the insiders, as a result fewer new workers are recruited and fewer retiring workers replaced. This effect is more pronounced in a work-intensive service company. The economic analysis of a cartel applies completely to most unions, to those that try to fix the (minimum) price of work, to limit supply (e.g., by some criteria on membership or education) or to limit competition. On the other hand, unions often have also other functions than those of a cartel: they may advise the workers, warn about disadvantageous contracts or terms of employment etc. These latter functions are usually considered as beneficial for both the workers and for the society as a whole (though not necessarily for corporations or shareholders), whereas the opposite applies to cartel-type minimum terms. Often the union of a particular industry puts pressure on politicians to subsidize the industry concerned. This benefits both the workers, companies, shareholders and consumers of the product of that industry at a cost to other people. Thus, it depends on the question whether the interests of a trade union are for or against the interests of the companies, workers, unemployed, tax-payers or the society as a whole.

The problem of international comparison

As labour law is very diverse in different countries, so is the function of unions. For instance in Germany, only open shops are legal, that is, all discrimination based on union membership is forbidden. This affects the function and services of the union. On the other hand, German unions have played a greater role in management decisions through participation in corporate boards and co-determination than have unions in the United States. In addition, unions' relations with political parties vary. In many countries unions are tightly bonded, or even share leadership, with a political party intended to represent the interests of working people. Typically this is a left-wing or socialist party, but many exceptions exist. In the United States, by contrast, although it is historically aligned with the Democratic Party, the labour movement is by no means monolithic on that point; the International Brotherhood of Teamsters has supported Republican Party candidates on a number of occasions and the Professional Air Traffic Controllers Organization (PATCO) endorsed Ronald Reagan in 1980 (the following year, Reagan effectively destroyed PATCO, breaking a strike by bringing in permanent replacement workers). The AFL-CIO has been against liberalising abortion, consistent with a Republican position, so as not to alienate its large Catholic constituency. In the United Kingdom the labour movement's relationship with the Labour Party is fraying as party leadership embarks on privatization plans at odds with what some perceive as workers' interests. In Western Europe, professional associations often carry out the functions of a trade union. Notable cases of these are the German Verein deutscher Ingenieure. In these cases, they may be negotiaing for white collar workers, such as physicians, engineers or teachers. Typically such trade unions refrain from politics or pursue markedly more right-wing politics than their blue-collar counterparts. Finally, the structure of employment laws affects unions' roles and how they carry out their business. In many western European countries wages and benefits are largely set by governmental action. The United States takes a more laissez-faire approach, setting some minimum standards but leaving most workers' wages and benefits to collective bargaining and market forces. Historically, the Republic of Korea has regulated collective bargaining by requiring employers to participate but collective bargaining has been legal only if held in sessions before the lunar new year. In totalitarian regimes such as Nazi-Germany and the Soviet Union, unions have typically been de facto government agencies devoted to smooth and efficient operation of enterprises.

Trade unions in the United Kingdom

Labor unions in the United States

Unions in other countries

lunar new year]Some countries such as Sweden, Finland, and the other Nordic countries have strong, centralized unions, where every type of work has a specific union, which are then gathered in large national union confederations. Usually there are at least two national union confederations, one for academically educated and one for branches with lower education level. The largest Swedish union confederation is Landsorganisationen, or LO. LO has almost two million members, which is more than a fifth of Sweden's population. Finland's equivalent is SAK, the Central Organisation of Finnish Trade Unions, with about one million members out of the country's 5.2 million inhabitants. In addition, there are two other Finnish union confederations for more educated workers with combined membership of circa one million. In comparison, France is thought to have one of the lowest union densities in Europe, with only about 10% of the workers inside unions. Union membership, however, tends to be concentrated in some specific areas, especially the public sector. Unions in some sectors, such as public transportation (SNCF and RATP...) are likely to enter well-publicized strikes. The Australian labour movement has a long history of craft, trade and industrial unionism. While unions have sometimes been very strong, as of 2005 they are relatively weak and in decline, due in part to the actions of Prime Minister John Howard and his Liberal government.

International cooperation

The largest organization of trade union members in the world is the Brussels-based International Confederation of Free Trade Unions, which today has 231 affiliated organisations in 150 countries and territories, with a combined membership of 158 million. Other global trade union organizations are the World Confederation of Labour and the World Federation of Trade Unions. National and regional trade unions organising in specific industry sectors or occupational groups also form global union federations, such as Union Network International and the International Federation of Journalists.

News

There are several sources of current news about the trade union movement in the world. These include LabourStart and the official website of the international trade union movement [http://www.global-unions.org Global Unions].

References

- Clarke, T. and Clements, L. (1978) "Trade Unions under Capitalism", Atlantic Highlands, NJ: Humanities Press, ISBN 0391007289

External links

- [http://www.unionmillwright.com/history.html Millwright History]
- [http://unionmillwright.com Union Millwrights]
- [http://www.taterenner.com/weingarten.htm Weingarten Rights]
- [http://www.workplacefairness.org/index.php?page=retaliationunion NLRA rights]
- [http://www.eiro.eurofound.eu.int/2004/03/update/tn0403105u.html Trade union membership 1993-2003] - European Industrial Relations Observatory report on membership trends in 26 European countries
- [http://www.che-lives.com/home/modules.php?name=News&file=article&sid=143 Breaking Away from True Unionism]
- [http://mill-valley.freemasonry.biz/mutual-aid-through-collective-bargaining.htm Mutual Aid Through Collective Bargaining]
- [http://mill-valley.freemasonry.biz/examples-labor-festivities.htm Public Activities and Festivities of Organized Labor in Marin County, California]
- [http://www3.sympatico.ca/n.rieck/docs/unions.html New analysis of economic data shows that unionization could maximize productivity]
- [http://www3.sympatico.ca/n.rieck/docs/unions2.html American Labor Unions Under Stress] Category:Labour relations Category:Organizational studies and human resource management ko:노동조합 ja:労働組合

International trade

International trade is the exchange of goods and services across international boundaries. In most countries, it represents a significant share of GDP. While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance has been on the rise in recent centuries. Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact. Increasing international trade is the usually primary meaning of "globalization". International trade is also a branch of economics, which, together with international finance, forms the larger branch of international economics.

Regulation of international trade

Traditionally trade was regulated through bilateral treaties between two nations. For centuries under the belief in Mercantilism most nations had high tariffs and many restrictions on international trade. In the 19th century, especially in Britain, a belief in free trade became paramount and this view has dominated thinking among western nations for most of the time since then. In the years since the Second World War multilateral treaties like the GATT and World Trade Organization have attempted to create a globally regulated trade structure. Communist and socialist nations often believe in autarky, a complete lack of international trade. Fascist and other authoritarian governments have also placed great emphasis on self-sufficiency. No nation can meet all of its people's needs, however, and every state engages in at least some trade. Free trade is usually most strongly supported by the most economically powerful nation in the world. The Netherlands and the United Kingdom were both strong advocates of free trade when they were on top, today the United States, the United Kingdom and Japan are its greatest proponents. However, many other countries - including several rapidly developing nations such as India, China and Russia - are also becoming advocates of free trade. Traditionally agricultural interests are usually in favour of free trade while manufacturing sectors often support protectionism. This has changed somewhat in recent years, however. In fact, agricultural lobbies, particularly in the United States, Europe and Japan, are chiefly responsible for particular rules in the major international trade treaties which allow for more protectionist measures in agriculture than for most other goods and services. During recessions there is often strong domestic pressure to increase tariffs to protect domestic industries. This occurred around the world during the Great Depression leading to a collapse in world trade that many believe seriously deepened the depression. The regulation of international trade is done through the World Trade Organization at the global level, and through several other regional arrangements such as MERCOSUR in South America, NAFTA between the United States, Canada and Mexico, and the European Union between 25 independent states. There is also the newly established Free Trade Area of the Americas (FTAA), which provides common standards for almost all countries in the American continent.

Risks in international trade

The risks that exist in international trade can be divided into two major groups:

Economic risks

- Risk of insolvency of the buyer,
- Risk of protracted default - the failure of the buyer to pay the amount due within six months after the due date, and
- Risk of non-acceptance
- Surrendering economic sovereignty

Political risks

- Risk of cancellation or non-renewal of export or import licences
- War risks
- Risk of expropriation or confiscation of the importer's company
- Risk of the imposition of an import ban after the shipment of the goods
- Transfer risk - imposition of exchange controls by the importer's country or foreign currency shortages
- Surrendering political sovereignty
- International trade de-humunizes the economy.

Famine relief

Origins

Charity work to aid the starving has developed from religious alms in previous centuries to organised charities in the modern day. Originally rich and poor were less starkly defined than today. The balance of wealth in the world has changed, largely as a result of European colonisation of the rest of the world and subsequent Eurocentric hegemony. Even the United States of America, born of ex-European colonies, continues to spread and reinforce the value systems of the Europeanization of the world. This Europeanization has played a major part in polarising the world into rich and poor regions often referred to as the 'first world' and the 'third world'. The missing 'second world' would, theoretically refer to the communist countries, of which there are a lot less than there were when these terms were first coined.

History

At the height of the European empire period in the 19th century the inadequacy of existing government or religious organisations to deal with famine was clearly seen when a potato blight combined with trade restrictions led to a large-scale famine in Ireland. The Irish Potato Famine, as it came to be called, saw inadequate attempts at famine relief from both government and private sources. Poverty and starvation were widespread in parts of India and Africa throughout the 19th century and this continued to be the case in the 20th century. Communist countries claimed to be concerned with redistributing world wealth to help the poor and starving but, in fact, failing harvests in the Soviet Union in 1932 led to famine there too. A major factor the Irish and Soviet famines have in common is the impact of enforced economic philosophical systems limiting the possibilities for a solution. The 1930s New Deal reforms of American President Franklin D. Roosevelt by which he had tried to relieve the suffering of the American poor and starving were limited in their effect by a philosophical system imposed by the Supreme Court but, in spite of this, he was still able help millions back into work. In 1942 a British charity, the Oxford Committee for Famine Relief (later called Oxfam) was set up to high-light the problems created by the Nazi occupation of Greece, and to request that relief be sent to those in most urgent need. Since then Oxfam has developed into an international organisation helping to relieve poverty and starvation on a large scale. In 1948 American President Harry Truman signed into law the Marshall Plan, granting economic and technical assistance toward the recovery of 16 European countries in exchange for the acceptance of economic liberalism (or the rejection of Communism). The Cold War had begun. On August 1 1971 Ex-Beatles member George Harrison enlisted the aid of fellow musicians Ravi Shankar, Bob Dylan and many more in a Concert at Madison Square Garden to raise money for Bangladesh famine relief. More than 40,000 people attended. In 1984 Irish musician Bob Geldof and Scottish Ultravox member Midge Ure organised a charity fundraiser record for the starving of Africa. Under the name of Band Aid, they collected together most of the singers then making the British pop charts and got them singing together on one record for charity. The ensemble was: Adam Clayton & Bono (U2), Phil Collins, Bob Geldof, Steve Norman, Martin Kemp, Tony Hadley, John Keeble & Gary Kemp (Spandau Ballet), Chris Cross & Midge Ure (Ultravox), John Taylor, Simon Le Bon, Roger Taylor, Andy Taylor & Nick Rhodes (Duran Duran), Paul Young, Glenn Gregory & Martin Ware (Heaven 17), Simon Crowe, Marilyn, Keren Woodward, Sarah Dullin & Siobhan Fahey (Bananarama), Jody Watley, Paul Weller, James Taylor, George Michael, Peter Briquette, Francis Rossi & Rick Parfitt (Status Quo), Robert 'Kool' Bell, Dennis Thomas, Jon Moss & Boy George (Culture Club), Sting, Johnny Fingers, David Bowie, Holly Johnson (Frankie Goes to Hollywood), Paul McCartney. The song was called "Do They Know It's Christmas?" The following year, 1985, Geldof and Ure followed up their success with a large-scale concert: Live Aid. This led to other fundraising famine relief projects such as Sport Aid and Comic Relief.

Modern Relief

Today, the Peace Corps, Christian groups, and charities feed hungry people all over the world, especially in countries hardest hit by famine. In addition to giving them food, they teach the hungry to grow their own food crops, so that they can feed themselves. This makes them independent of the USA and other countries that donate food for famine relief. In some environments (such as the desert, rocky areas, or cold wastelands) farming is difficult to impossible. Such land is called unarable. This is why famine repeats in those areas. New methods have been invented to grow food crops in these difficult areas. These new methods include: nitrogen fertilizer, hybrid food crops, digging wells, reverse osmosis water processors to turn salty ocean water into fresh water, greenhouses, hydroponics, canal digging, dirt hill walls stacking for protection against wind and dust, mylar insulation, and sustainable agriculture.

External links

- [http://www.oxfam.org.uk/ Oxfam Home Page]
- [http://www.oxfam.org Oxfam International]
- [http://www.reliefweb.int/w/rwb.nsf Reliefweb]
- [http://www.tutorgig.com/encyclopedia/getdefn.jsp?keywords=Band_Aid_(band) Band Aid]
- [http://www.herald.co.uk/local_info/live_aid.html Live Aid commemorative webpage]
- [http://live-aid.chez.tiscali.fr/ Unofficial Live Aid website]
- [http://www.comicrelief.org.uk/ Comic Relief]
- [http://www.rednoseday.com/ Red Nose Day]
- [http://www.comicrelief.org/ Comic Relief America]
- [http://www.oneworld.net/ Oneworld]
- [http://www.fairtrade.org.uk/ Fairtrade]

Principal-agent problem

In economics, the principal-agent problem treats the difficulties that arise under conditions of incomplete and asymmetric information when a principal hires an agent. Various mechanisms may be used to try to align the interests of the agent with those of the principal, such as piece rates/commissions, profit sharing, efficiency wages, the agent posting a bond, or fear of firing. The principal-agent problem is found in most employer/employee relationships, for example, when stockholders hire top executives of corporations.

Overview

In economics, the problem of motivating one party to act on behalf of another is known as ‘the principal-agent problem’. The principal-agent problem arises when a principal compensates an agency for performing certain acts which are useful to the principal and costly to the agent, and where there are elements of the performance which are costly to observe. This is the case to some extent for all contracts which are written in a world of information asymmetry, uncertainty and risk. Here, principals do not know enough about whether (or to what extent) a contract is or has been satisfied. The solution to this information problem – closely related to the moral hazard problem – is to ensure (as far as possible) the provision of appropriate incentives so that agents act in the way principals wish them to. In terms of game theory, it involves changing the rules of the game so that the self-interested rational choices which the principal predicts the agent will make, coincide with the choices the principal desires. Even in the limited arena of employment contracts, the difficulty of doing this in practice is reflected in a multitude of compensation mechanisms (‘the carrot’) and supervisory schemes (‘the stick’).

Employment contract

In the context of the employment contract, individual contracts form a major method of restructuring incentives, by connecting as closely as is optimal the information available about employee performance, and the compensation for that performance. Because of differences in the quantity and quality of information available about the performance of individual employees, the ability of employees to bear risk, and the ability of employees to manipulate evaluation methods, the structural details of individual contracts vary widely, including such mechanisms as “piece rates, [share] options, discretionary bonuses, promotions, profit sharing, efficiency wages, deferred compensation, and so on.” (Prendergast 1999, 7) Typically, these mechanisms are used in the context of different types of employment: salespeople often receive some or all of their remuneration as commission, production workers are usually paid an hourly wage, while office workers are typically paid monthly or semimonthly (and if paid overtime, typically at a higher rate than the hourly rate implied by the salary). The way in which these mechanisms are used is different in the two parts of the economy which Doeringer and Piore called the “primary” and “secondary” sectors (see also dual labour market). The secondary sector is characterised by short-term employment relationships, little or no prospect of internal promotion, and the determination of wages primarily by market forces. In terms of occupations, it consists primarily of low or unskilled jobs, whether they are blue-collar (manual-labour), white-collar (e.g. filing clerks), or service jobs (e.g. waiters). These jobs are linked by the fact that they are characterized by “low skill levels, low earnings, easy entry, job impermanence, and low returns to education or experience.”

Non-financial compensation

Part of this variation in incentive structures and supervisory mechanisms may be attributable to variation in the level of intrinsic psychological satisfaction to be had from different types of work. Sociologists and psychologists frequently argue that individuals take a certain degree of pride in their work, and that introducing performance-related pay can destroy this “psycho-social compensation”, because the exchange relation between employer and employee becomes much more narrowly economic, destroying most or all of the potential for social exchange. Evidence for this is inconclusive – Deci (1971), and Lepper, Greene and Nisbett (1973) find support for this argument; Staw (1989) suggests other interpretations of the findings.

Team production

On a related note, Drago and Garvey (1997) use Australian survey data to show that when agents are placed on individual pay-for-performance schemes, they are less likely to help their coworkers. This negative effect is particularly important in those jobs that involve strong elements of ‘team production’ (Alchian and Demsetz 1972), where output reflects the contribution of many individuals, and individual contributions cannot be easily identified, and compensation is therefore based largely on the output of the team. In other words, pay-for-performance increases the incentives to free-ride, as there are large positive externalities to the efforts of an individual team member, and low returns to the individual (Holmstrom 1982, McLaughlin 1994). The negative incentive effects implied are confirmed by some empirical studies, eg Newhouse (1973) for shared medical practices (costs rise and doctors work fewer hours as more revenue is shared), and Leibowitz and Tollison (1980) find that larger law partnerships typically result in worse cost containment. As a counter, peer pressure can potentially solve the problem (Kandel and Lazear 1992), but this depends on peer monitoring being relatively costless to the individuals doing the monitoring/censuring in any particular instance (unless one brings in social considerations of norms and group identity and so on). Studies suggest that profit-sharing, for example, typically raises productivity by 3-5% (Jones and Kato 1995, Knex and Simester 1997), although there are some selection issues (Prendergast).

Empirical evidence

There is however considerable empirical evidence of a positive effect of compensation on performance (although the studies usually involve “simple” jobs where aggregate measures of performance are available, which is where piece rates should be most effective). In one study, Lazear (1996) saw productivity rising by 35% (and wages by 12%) in a change from salary to piece rates, with a third of the productivity gain due to worker selection effects. Paarsch and Shearer (1996) also find evidence supportive of incentive and productivity effects from piece rates, as do Banker, Lee, and Potter (1996), although the latter do not distinguish between incentive and worker selection effects. Fernie and Metcalf (1996) find that British jockeys perform significantly better when offered prizes for winning races compared to being on fixed retainers. McMillan, Whalley and Zhu (1989) and Groves et al (1994) look at Chinese agricultural and industrial data respectively and find significant incentive effects. Kahn and Sherer (1990) find that better evaluations of white-collar office workers were achieved by those employees who had a steeper relation between evaluations and pay. Nikkinen and Sahlström (2004) find empirical evidence that agency theory can be used, at least to some extent, to explain financial audit fees internationally.

Four principles of contract design

Milgrom and Roberts (1992) identify four basic principles of contract design:
- the Informativeness Principle,
- the Incentive-Intensity Principle,
- the Monitoring Intensity Principle, and
- the Equal Compensation Principle.

Informativeness Principle

In the absence of a world of perfect information, Holmstrom (1979) developed what became known as the Informativeness Principle. This essentially states that any measure of performance that (on the margin) reveals information about the effort level chosen by the agent should be included in the compensation contract. This includes, for example, Relative Performance Evaluation – measurement relative to other, similar agents, so as to filter out some common background noise factors, such as fluctuations in demand. By removing some exogenous sources of randomness in the agent’s income, a greater proportion of the fluctuation in the agent’s income falls under his control, increasing his ability to bear risk. If taken advantage of, by greater use of piece rates, this should improve incentives. (In terms of the simple linear model below, this means that increasing x produces an increase inc b.)

Incentive-Intensity Principle

However, setting incentives as intense as possible is not necessarily optimal from the point of view of the employer. The Incentive-Intensity Principle states that the optimal intensity of incentives depends on four factors: the incremental profits created by additional effort, the precision with which the desired activities are assessed, the agent’s risk tolerance, and the agent’s responsiveness to incentives. According to Prendergast (1999, 8), “the primary constraint on [performance-related pay] is that [its] provision imposes additional risk on workers…” A typical result of the early principal-agent literature was that piece rates tend to 100% (of the compensation package) as the worker becomes more able to handle risk, as this ensures that workers fully internalize the consequences of their costly actions. In incentive terms, where we conceive of workers as self-interested rational individuals who provide costly effort (in the most general sense of the worker’s input to the firm’s production function), the more compensation varies with effort, the better the incentives for the worker to produce.

Monitoring Intensity Principle

The third principle – the Monitoring Intensity Principle – is complementary to the second, in that situations in which the optimal intensity of incentives is high correspond to situations in which the optimal level of monitoring is also high. Thus employers effectively choose from a “menu” of monitoring/incentive intensities. This is because monitoring is a costly means of reducing the variance of employee performance, which makes more difference to profits in the kinds of situations where it is also optimal to make incentives intense.

Equal Compensation Principle

The final principle is the Equal Compensation Principle, which essentially states that activities equally valued by the employer should be equally valuable (in terms of compensation, including non-financial things such as pleasantness) to the employee. This relates to the problem that employees may be engaged in several activities, and if some of these are not monitored or are monitored less heavily, these will be neglected, as activities with higher marginal returns to the employee are favoured. This can be thought of as a kind of “disintermediation” – targeting certain measurable variables may cause others to suffer. For example, teachers being rewarded by test scores of their students are likely to tend more towards teaching ‘for the test’, and de-emphasise less relevant but perhaps equally or more important aspects of education; while AT&T’s practice at one time of rewarding programmers by the number of lines of code written resulted in programs that were longer than necessary – i.e. program efficiency suffering (Prendergast 1999, 21). Following Holmstom and Milgrom (1990) and Baker (1992), this has become known as “multi-tasking” (where a subset of relevant tasks is rewarded, non-rewarded tasks suffer relative neglect). Because of this, the more difficult it is to completely specify and measure the variables on which reward is to be conditioned, the less likely that performance-related pay will be used: “in essence, complex jobs will typically not be evaluated through explicit contracts.” (Prendergast 1999, 9). Where explicit measures are used, they are more likely to be some kind of aggregate measure, for example, baseball and American Football players are rarely rewarded on the many specific measures available (e.g. number of home runs), but frequently receive bonuses for aggregate performance measures such as Most Valuable Player. The alternative to objective measures is subjective performance evaluation, typically by supervisors. However, there is here a similar effect to “multi-tasking”, as workers shift effort from that subset of tasks which they consider useful and constructive, to that subset which they think gives the greatest appearance of being useful and constructive, and more generally to try to curry personal favour with supervisors. (One can interpret this as a destruction of organizational social capital – workers identifying with, and actively working for the benefit of, the firm – in favour of the creation of personal social capital – the individual-level social relations which enable workers to get ahead (“networking”).)

A linear model

The four principles can be summarised in terms of the simplest (linear) model of incentive compensation: :: w = a + b(e + x + g×y) where w stands for the wage, e for (unobserved) effort, x for unobserved exogenous effects on outcomes, and y for observed exogenous effects; while g and a represent the weight given to y, and the base salary, respectively. The interpretation of b is as the intensity of incentives provided to the employee.

Nonlinearities

The above discussion on explicit measures assumed that contracts would create the linear incentive structures summarised in the model above. But while the combination of normal errors and the absence of income effects yields linear contracts, many observed contracts are nonlinear. To some extent this is due to income effects as workers rise up a tournament/hierarchy: “Quite simply, it may take more money to induce effort from the rich than from the less well off.” (Prendergast 1999, 50). In addition, the marginal return to effort may increase: it is more important for a CEO to work hard than for a shop floor worker (eg Murphy 1998 highlights the importance of bonuses for executives). Similarly, the threat of being fired creates a nonlinearity in wages earned versus performance. Moreover, many empirical studies illustrate inefficient behaviour arising from nonlinear objective performance measures, or measures over the course of a long period (eg a year), which create nonlinearities in time due to discounting behaviour. This inefficient behaviour arises because incentive structures are varying: for example, when a worker has already exceeded a quota or has no hope of reaching it, versus being close to reaching it – eg Healy (1985), Oyer (1997), Leventis (1997). Leventis shows that New York surgeons, penalised for exceeding a certain mortality rate, take less risky cases as they approach the threshold. Courty and Marshke (1997) provide evidence on incentive contracts offered to agencies, which receive bonuses on reaching a quota of graduated trainees within a year. This causes them to ‘rush-graduate’ trainees in order to make the quota.

Objective and subjective performance evaluation

Objective performance evaluation

The major problem in measuring employee performance in cases where it is difficult to draw a straightforward connection between performance and profitability is the setting of a standard by which to judge the performance. One method of setting an absolute objective performance standard - rarely used because it is costly and only appropriate for simple repetitive tasks - is time-and-motion studies, which study in detail how fast it is possible to do a certain task. These have been used constructively in the past, particularly in manufacturing. More generally, however, even within the field of objective performance evaluation, some form of relative performance evaluation must be used. Typically this takes the form of comparing the performance of a worker to that of his peers in the firm or industry, perhaps taking account of different exogenous circumstances affecting that worker in particular (x in the linear model). Sometimes, the performance in the previous period is used as a standard. The problem with this is that there is potential for a ratchet effect, with standards being raised by employers over time. The threat of this may lead to severe negative consequences as workers respond to this by reducing output levels. A good example is the reluctance of Soviet managers to try to push output levels up, as this frequently resulted in “punishment” for having been lazy or corrupt in earlier periods, by even higher standards (targets) being set for the future (Milgrom and Roberts 1992, 233). It is often suggested that one of the reasons for the general union opposition to piece rates stems from the potential for a racket effect (where piece rates drift down over time as incentives make workers more productive, leaving them little better off). Where piece rates have been successful, for example at the Lincoln Electric Company, it has typically been through the establishment of a credible policy of only changing them due to new equipment or new work methods (Milgrom and Roberts 1992, 236).

Subjective performance evaluation

Subjective performance evaluation allows the use of a subtler, more balanced assessment of employee performance, and is typically used for more complex jobs where comprehensive objective measures are difficult to specify and/or measure. Whilst often the only feasible method, the attendant problems with subjective performance evaluation have resulted in a variety of incentive structures and supervisory schemes. One problem, for example, is that supervisors may under-report performance in order to save on wages, if they are in some way residual claimants, or perhaps rewarded on the basis of cost savings. This tendency is of course to some extent offset by the danger of retaliation and/or demotivation of the employee, if the supervisor is responsible for that employee’s output. As an example, there have been numerous cases where net profits were apparently underreported on successful Hollywood films, where actors or writers had been promised a percentage of net profits – Cheatham, David, and Cheatham (1996). Another problem relates to what is known as the “compression of ratings”. Two related influences – centrality bias, and leniency bias - have been documented (Landy and Farr 1980, Murphy and Cleveland 1991). The former results from supervisors being reluctant to distinguish critically between workers (perhaps for fear of destroying team spirit), while the latter derives from supervisors being averse to offering poor ratings to subordinates, especially where these ratings are used to determine pay, not least because bad evaluations may be demotivating rather than motivating. However, these biases introduce noise into the relationship between pay and effort, reducing the incentive effect of performance-related pay. Milkovich and Wigdor (1991) suggest that this is the reason for the common separation of evaluations and pay, with evaluations primarily used to allocate training. Finally, while the problem of compression of ratings originates on the supervisor-side, related effects occur when workers actively attempt to influence the appraisals supervisors give, either by influencing the performance information going to the supervisor: multitasking (focussing on the more visibly productive activities – Paul 1992), or by working “too hard” to signal worker quality or create a good impression (Holmstrom 1982); or by influencing the evaluation of it, eg by “currying influence” (Milgrom and Roberts 1988) or by outright bribery (Tirole 1992).

Incentive structures: alternatives to direct pay for performance

Tournaments

Much of the discussion here has been in terms of individual pay-for-performance contracts; but many large firms use internal labour markets (Doeringer and Piore 1971, Rosen 1982) as a solution to some of the problems outlined. Here, there is “pay-for-performance” in looser sense over a longer time period. There is little variation in pay within grades, and pay increases come with changes in job or job title (Gibbs and Hendricks 1996). The incentive effects of this structure are dealt with in what is known as “tournament theory” (Lazear and Rosen 1981, Green and Stokey (1983), see Rosen (1986) for multi-stage tournaments in hierarchies where it is explained why CEOs are paid many times more than other workers in the firm). Workers are motivated to supply effort by the wage increase they would earn if they win a promotion. Some of the extended tournament models predict that relatively weaker agents, be they competing in a sports tournaments (Becker and Huselid 1992, in NASCAR racing) or in the broiler chicken industry (Knoeber and Thurman 1994), would take risky actions instead of increasing their effort supply as a cheap way to improve the prospects of winning. These actions are inefficient as they increase risk taking without increasing the average effort supplied. A major problem with tournaments is that individuals' are rewarded based on how well they do relative to others, co-workers might become reluctant to help out others and might even sabotage others' effort instead of increasing one's own effort (Lazear 1989, Rob and Zemsky 1997). This is supported empirically by Drago and Garvey (1997). Why then are tournaments so popular? Firstly, because – especially given compression rating problems – it is difficult to determine absolutely differences in worker performance. Tournaments merely require rank order evaluation. Secondly, it reduces the danger of rent-seeking, because bonuses paid to favourite workers are tied to increased responsibilities in new jobs, and supervisors will suffer if they do not promote the most qualified person. Thirdly, where prize structures are (relatively) fixed, it reduces the possibility of the firm reneging on paying wages. As Carmichael (1983) notes, a prize structure represents a degree of commitment, both to absolute and to relative wage levels. Lastly when the measurement of workers' productivity is difficult, e.g. say monitoring is costly, or when the tasks the workers have to perform for the job is varied in nature, making it hard to measure effort and/or performance, then running tournaments in a firm would encourage the workers to supply effort whereas workers would have shirked if there are no promotions.

Deferred compensation

Tournaments represent one way of implementing the general principle of “deferred compensation”, which is essentially an agreement between worker and firm to commit to each other. Under schemes of deferred compensation, workers are overpaid when old, at the cost of being underpaid when young. Salop and Salop (1976) argue that this derives from the need to attract workers more likely to stay at the firm for longer periods, since turnover is costly. Alternatively, delays in evaluating the performance of workers may lead to compensation being weighted to later periods, when better and poorer workers have to a greater extent been distinguished. (Workers may even prefer to have wages increasing over time, perhaps as a method of forced saving, or as an indicator of personal development. eg Loewenstein and Sicherman 1991, Frank and Hutchens 1993.) For example Akerlof and Katz 1989: if older workers receive efficiency wages, younger workers may be prepared to work for less in order to receive those later. Overall, the evidence suggests the use of deferred compensation (eg Freeman and Medoff 1984, and Spilerman 1986 – seniority provisions are often included in pay, promotion and retention decisions, irrespective of productivity.)

Summary

In conclusion, the reason that employees are often paid according to hours of work rather than by direct measurement of results is that it is often more efficient to use indirect systems of controlling the quantity and quality of effort, due to a variety of informational and other issues (eg turnover costs, which determine the optimal minimum length of relationship between firm and employee). This means that methods such as deferred compensation and structures such as tournaments are often more suitable to create the incentives for employees to contribute what they can to output over longer periods (years rather than hours). These represent “pay-for-performance” systems in a looser, more extended sense, as workers who consistently work harder and better are more likely to be promoted (and usually paid more), compared to the narrow definition of “pay-for-performance”, such as piece rates. It should also be noted that this discussion has been conducted almost entirely in terms of the analysis of self-interested rational individuals. In practice, however, the incentive mechanisms which successful firms use take account of the socio-cultural context they are embedded in (Fukuyama 1995, Granovetter 1985), in order not to destroy the social capital they might more constructively mobilise towards building an organic, social organization, with the attendant benefits from such things as “worker loyalty and pride (...) [which] can be critical to a firm’s success...” (Sappington 1991,63)

References

- Alchian, Armen A., and Demsetz, Harold (1972), "Production, Information Costs, and Economic Organization", American Economic Review 62 (5), p777-795
- Doeringer, P. B. and M. J. Piore. 1971. Internal Labor Markets and Manpower Analysis. Lexington, Massachusetts, Heath Lexington Books.
- Eisenhardt, K. (1989) Agency theory: An assesment and review, "Academy of Management Review", 14 (1): 57-74.
- Fukuyama, Francis, Trust: The Social Virtues and the Creation of Prosperity, Hamish Hamilton: London, 1995
- Granovetter, Mark, 1985, “Economic Action and Social Structure: The Problem of Embeddedness”, American Journal of Sociology 91:3, p481-510
- Green, J. R. and N. L. Stokey. 1983. "A Comparison of Tournaments and Contracts", Journal of Political Economy, 91, 349-364.
- Milgrom, Paul, and Roberts, John, Economics, Organization and Management 1992, London: Prentice-Hall
- Nikkinen, Jussi and Sahlström, Petri (2004): Does agency theory provide a general framework for audit pricing? International Journal of Auditing, 8: November, 253-262.
- Prendergast, Canice, “The Provision of Incentives in Firms”, Journal of Economic Literature 37 (Mar. 1999), 7-63
- Rosen, S. 1986. "Prizes and Incentives in Elimination Tournaments", American Economic Review, 76, 4, 701-715.
- Sappington, David E.M., “Incentives in Principal-Agent Relationships”, Journal of Economic Perspectives 5:2 (Spring 1991), 45-66
- Williamson, Oliver E., Markets and Hierarchies: Analysis and Antitrust Implications, NY: The Free Press, 1975

Political party

A political party is a political organization that seeks to attain political power within a government, usually by participating in electoral campaigns. Some parties are not permitted to or choose not to seek power through elections and so may turn to other forms of pressure, sometimes terrorism. Parties often espouse a certain ideology, but may also represent a coalition among disparate interests. In parliamentary systems of government, most political parties have an elected leader who, if his or her party is elected, becomes head of government. In presidential systems, especially those with full separation of powers, there may not be a formal leader. In certain electoral situations, more common in elections using proportional representation than First Past the Post, a government may be formed of more than one party, called a coalition government. Partisanship is the tendency of supporters of political parties to subscribe to or at least support their party's views and policies in contrast to those of other parties. Differentiation is essential to most political parties: they must be different at least in some ways to other parties to compete in politics and win elections. Extreme partisanship is sometimes referred to as partisan warfare.

Nonpartisan, Single-party, two-party, and multi-party governments

In a nonpartisan system, no official political parties exist, or the law does not permit political parties. In nonpartisan elections, each candidate for office runs on her or his own merits rather than as a member of a political party. In nonpartisan legislatures, there are no typically formal party alignments within the legislature; even if there are caucuses for specific issues. Despite being nonpartisan, most members have consistent and identifiable voting patterns. Historians have frequently interpreted Federalist No. 10 to imply that the Founding Fathers of the United States intended the government to be nonpartisan. The administration of George Washington and the first few sessions of the US Congress were nonpartisan. The unicameral legislature of Nebraska is the only nonpartisan state government body in the United States. Many city and county governments are nonpartisan. Unless there are legal prohibitions against political parties, factions within nonpartisan governments generally evolve into political parties. In single-party systems, only one political party is legally allowed to hold effective power. Although minor parties may sometimes be allowed, they are legally required to accept the leadership of the dominant party. This party may not always be, however, identical to the government, although sometimes positions within the party may in fact be more important than positions within the government. In Dominant-party systems, opposition parties are allowed, and there may be even a deeply established democratic tradition, but other parties are widely considered to have no real chance of gaining power. Sometimes, political, social and economic circumstances, and public opinion are the reason for others parties' failure. Sometimes, typically in countries with less of an established democratic tradition, it is possible the dominant party will remain in power by using patronage and sometimes by voting fraud. In the latter case, the definition between Dominant and single-party system becomes rather blurred. Examples of dominant party systems include the People's Action Party in Singapore and the African National Congress in South Africa. Also, one party dominant systems existed in Mexico with the Institutional Revolutionary Party until the 1990's, and in the southern United States with the Democratic Party from the 1880s until the 1970s. Two-party systems are states such as the United States and Jamaica in which there are two political parties dominant to such an extent that electoral success under the banner of any other party is extremely difficult. One right wing coalition party and one left wing coalition party is the most common ideological breakdown in such a system but in two-party states political parties are traditionally catch all parties which are ideologically broad and inclusive. The relationship between the voting system used and the two-party system was described by Maurice Duverger and is known as Duverger's Law. Duverger's Law Multi-party systems are systems in which there are multiple parties. In nations such as Canada and the United Kingdom, there may be two strong parties, with a third party that is electorally successful. The party may frequently come in second place in elections and pose a threat to the other two parties, but has still never formally held government. In some rare cases, such as in Finland, the nation may have an active three-party system, in which all three parties routinely hold top office. It is very rare for a country to have more than three parties who are all equally successful, and all have an equal chance of independently forming government. More commonly, in cases where there are numerous parties, no one party often has a chance of gaining power, and parties must work with each other to form coalition governments. This has been an emerging trend in the politics of the Republic of Ireland.

Parties and directions

Political parties are often considered on a political spectrum. One typical spectrum has the Left associated with radical or progressive policies and the Right with conservative or traditional policies. Other analyses include other dimensions such as the political parties' acceptance of parliamentary democracy as opposed to authoritarian or totalitarian attitudes, and economic policies, the Left favoring social-democracy, socialism or communism, while the Right tends to favor laissez-faire economics or Fascism. Centrist parties often adopt a collection of policies that defy easy placing on the political spectrum. Many parties will have (formal or informal) factions within them that have differing views on policy direction.

Colors and emblems for parties

:Main article: see political colour Generally speaking, over the world, political parties associate themselves with colors, primarily for identification, especially for voter recognition during elections. Red usually signifies leftist, communist or socialist parties. Conservative and Christian democratic parties generally use blue or black. Recently in the United States, this trend has been reversed. Pink sometimes signifies socialist. Yellow is often used for liberalism. Green is the color for green parties and Islamist parties. Orange is sometimes a color of nationalism, such as in The Netherlands, or is a color of reform such as in Ukraine. In the past, Purple was considered the color of royalty, but is rarely used in modern-day political parties. Brown is generally associated with fascist or neofascist parties, going back to the Nazi Party's brownshirt security guards. Color associations are useful for mnemonics when voter illiteracy is significant. Another case where they are used is when it is not desirable to make rigorous links to parties, particularly when coalitions and alliances are formed between political parties and other organizations, for example: Red Tory, "Purple" (Red-Blue) alliances, Red-Green Alliances, Blue-Green Alliances, Pan-green coalitions, and Pan-blue coalitions. The emblem of socialist parties is often a red rose held in a fist. Communist parties often use a hammer, a sickle, or both.

International organizations of political parties

During the 19th and 20th century, many national political parties organized themselves into international organizations along similar policy lines. Notable examples are the International Workingmen's Association (also called the First International), the Socialist International (also called the Second International), the Communist International, (also called the Third International), and the Fourth International, as organizations of Working class parties, or the Liberal International (yellow), and the International Democrat Union (blue). Worldwide green parties have recently established the Global Greens. The Socialist International, the Liberal International, and the International Democrat Union are all based in London.

External links

- [http://www.presidency.ucsb.edu/platforms.php U.S. Party Platforms from 1840-2004 at The American Presidency Project: UC Santa Barbara]
- [http://www.electionworld.org/parties.htm Political parties around the world]
- [http://www.politicalresources.net/ Political resources on the net]
- [http://www.broadleft.org/ Leftist political parties of the world] Category:Elections Category:Political parties ko:정당 ja:政党 simple:Political party

President of the United States

The President of the United States (unofficially abbreviated "POTUS") is the head of state of the United States. Under the U.S. Constitution, the President is also the chief executive of the federal government and Commander-in-Chief of the armed forces. The full title is President of the United States of America. Because of the superpower status of the United States, the American President is widely considered to be the most powerful person on Earth, and is usually one of the world's best-known public figures. During the Cold War, the President was sometimes referred to as "the leader of the

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