Neo-Liberalism Again

(I have been planning for some time to do more writing on this over the next year).

Please do. I have seen this phenomenon mentioned on wonk blogs like rortybomb & Krugman’s once or twice, but never laid out for general audience. Mike Konczal recently claimed that rent collection on patents is now, like, the dominant form of wealth extraction. I for one don’t understand how that is, or who benefits. I even heard an NPR segment on patents w/r/t/ Google’s acquisition of Motorola Mobility that managed never to articulate how patents work or why Google would want them. Maddening! Anyway, I for one would be very interested.

For a good insiders view of the patent fiasco, especially wrt software patents, listen to the recent This American Life investigation: http://www.thisamericanlife.org/radio-archives/episode/441/when-patents-attack. What it underlies is the fact that every single major software company is built on a business model of stealing good, patented ideas from other companies, while amassing a large enough patent arsenal of their own to use against any of the other companies unwise enough to actually sue them for patent violations.

To put it another way: I think that Matt sometimes adopts neo-liberal language, and is surely friendlier to neo-liberal ideas than, for example, someone like me. But I also think that his agenda – if he were really to draw out its implicit politics – is rather more radical than he is usually prepared to let on.

I think my agenda is more radical than my critics are usually prepared to let on. I think I have an extremely left-wing, very egalitarian agenda. Many people, many of whom write for or comment at this blog, disagree with that assessment. But that’s their problem, not mine. I think a lot of people who dislike my writing style will find Dean Baker’s approach more appealing, but I think his points are very similar to mine.

I for one am tired of vague references to an “open information agenda.” You don’t have to be a follower of Hayek to see a difference between a monopoly by fiat and a natural monopoly, and even if you don’t see a difference there, you don’t have to believe in underpants gnomes to see that deciding not to grant a monopoly does not cause information to run downhill. Someone is engaging in fuzzy thinking somewhere.

A union should have monopoly power; for example the CWA should be able to set uniform wages and conditions for all communication workers, at all communication companies. If the CWA did have monopoly power, then advocating monopoly power for AT&T wouldn’t make sense for the CWA; it’d just make communication services more expensive. But unions in the US don’t have monopoly power, and so their incentives are skewed. So, give them monopoly power, and see what happens then.

The question was whether we ought, as a pro-labor position, to side with the Communications Workers of America in their quest to help (unionized) AT&T to obtain monopoly power.

Uh, I’d have to say no, we oughtn’t. And also that this question is way different than the one in the post about considering pro labour benefits independently and giving them their own weight alongside other issues. Is it a plus on AT&T’s ledger that they are the only unionized shop in teh industry? Sure, absolutely. Is it the determinative factor? No. Private enterprise with monopoly power is just too undesireable.

If we strip it down to option A being moar competition but no union shops and option B being unionized monopoly – ugh, both seem liek bad choices and teh specifics certainly make teh difference. I suppose in an industry with an active and powerful regulatory body, option B is moar palatable. But then again, this seems liek teh anti-neoliberal position of favouring gubmint meddling ovar teh markets. OTOH, in this specific case, I’m leaning towards letting competition win out over greater union membership – so there’s that.

Either way, it does not boil down to Generic Industry Workers Union says “x” and thus “x” we must do.

re: “a union should have monopoly power”
Agreed. A union without a monopoly on labour isn’t going to be very effective. But teh question is whether or not AT&T should have monopoly power by virtue of their being union-friendly.

Actually reading the link Yglesias put up, it sounds like AT&T’s recognition of the union bought them the AFL-CIO’s support for what they want to do. This is 1950s era “Establishment” stuff, and somehow I’d been under the impression that a good-sized portion of the left considered it the unions’ just deserts for pulling these things that they had lost so much power by the 1970s. On the other hand, I’m not entirely sure why I have that impression. Is it a better thing to have 100K non-union jobs or 50K union jobs? That sounds like a reasonable question. Does it matter whether we have 50K more union jobs given the state of unions today? I think that’s another reasonable question.

The distributional issues can come “first”: a strong safety net and human capital (education and training, healthcare, environmental well-being) are considered public goods.

What’s missing is your account of how that came to be so in Denmark. Here’s a hint toward a possible answer: % of employees who are union members is in the 70s, as in other Nordic countries. Discuss.

Just to emphasize a particular point, it’s possible to have two radical-in-comparison-to-the-status-quo agendas (one oriented around consumers, the other around workers) and have them have different policy outcomes that need to be compared according to the hierarchy of values of people trying to choose between them. Historically, you could argue that the contemporary approaches of say, a Croly versus a Brandeis, or Social Democracy versus Progressivism more broadly, are examples of this.

But while Yglesias is here, I’d say this: to the extent that you have a radical agenda, and certainly you do in many areas, surrounding it with rhetoric that cuts against radical egalitarian interventions is counter-productive. Creating a coherent rhetorical framework for one’s actions reinforces political coalitions in support of them.

On the merger itself:

I don’t think it’s as easy as lower prices versus union jobs. I think we have to ask ourselves a series of questions to see the full impact:
– how robust is the regulatory regime? Once a monopoly is created, do sufficient public controls exist to keep prices within the realm of reasonability, to maintain pressure for efficiency and quality, and not least, to ensure that the monopoly keeps its word on spreading the wealth via jobs?
– to what extent is firm size needed to maintain unionized status? Are we dealing with such a hyper-competitive, low-entry-barrier, easily-mobile industry that we’ll see a rush to the “least conscientious”?
– what’s the relation of jobs to price? For example, 5,000 call center jobs in return for a massive merger doesn’t sound like a great deal; but if we’d saved the Big Three through a merger instead of a bailout, three million jobs would probably be worth a merger.

Cheap advertisement: I’ve been doing a bit of work on a rent-based approach to rising income inequality with my colleague David Grusky. Our argument is that the relatively high and rising levels of inequality in liberal market economies is not just due to the decline of rent-generating institutions that benefited workers close to bottom of the income distribution (e.g., unions, the minimum wage, arguably internal labor markets); it’s also due to the strengthening of institutions that generate rent at the top of the income distribution, often turning quasi-rents (generated by skill-biased tech change, globalization, what have you) into permanent rents. We’re focusing on four types of “top-end” rents (and here our sociological heritage becomes clear) — occupation rents, education rents, managerial rents, and capital rents.

The logical implication is that efforts to reduce inequality in LMEs should focus on repairing markets as on redistributing after the fact. As we see it, the problem with post-market redistribution as the go-to fix is that it tends not to be politically sustainable. Reconfiguring markets to make them both more competitive and less inequality generating, though, should have broad-based support in a country where market-based ideology seems to be embedded in our contemporary cultural blueprint.

Much work still to be done, but it’s fun to think about.

I don’t think it’s as easy as lower prices versus union jobs.

Especially since the nominally more competitive status quo, with more players and fewer union jobs, isn’t particularly consumer-friendly in its pricing or its policies.

Don’t know how those strike-throughs got there :)

@ Henry

Matt has listed his perspective before, here it is verbatim.

— More redistribution of money from the top to the bottom.
— A less paternalistic welfare state that puts more money directly in the hands of the recipients of social services.
— Macroeconomic stabilization policy that seriously aims for full employment.
— Curb the regulatory privileges of incumbent landowners.
— Roll back subsidies implicit in our current automobile/housing-oriented industrial policy.
— Break the licensing cartels that deny opportunity to the unskilled.
— Much greater equalization of opportunities in K-12 education.
— Reduction of the rents assembled by privileged intellectual property owners.
— Throughout the public sector, concerted reform aimed at ensuring public services are public services and not jobs programs.
— Taxation of polluters (and resource-extractors more generally) rather than current de facto subsidization of resource extraction.

We can talk about Foucault and Marx all day, but when it comes down to relieving human suffering this is what a left agenda looks like. Sorry to mock, but I’m on Matt’s side with this.

@ b9n

I certainly agree with you here, although the critiques of notionally free market policy run the risk of swerving fast towards libertarianism, and then you’re left with little support for social programs…

Henri, that would mean CWA would lower the output of communications work. You look to industry wide bargaining in Europe ignoring the involvement of governments and the complicity of unions in cutting wages. Unions are firms that sell labor.

Full employment through industrial policy (not monetary policy alone), more government funding for education — especially early childhood, as well as elementary and higher (not charters or vouchers), redistribution through taxation, unions, and more not less welfare — all are proven to work in every other industrial country that Matt admires. The dumb things you advocate do not work.

As far as “breaking up of privileged rent seekers” — you mean barbers? Give us a break.

@ Harold. I meant doctors actually (which I am training to be). No need to be bellicose just trying to talk. Jeez.

Yglesias is a pratt who sat in on an economics course one semester

“Throughout the public sector, concerted reform aimed at ensuring public services are public services and not jobs programs” is actually a deeply troubling statement. To begin with, using public services as job programs is actually a good thing – much of Scandinavian social democracy is built on using the state as a permanent employer to build a large and stable number of middle class jobs. Moreover, this kind of language can be used as cover to Taylorize the public sector and its pesky unions in the name of a narrowly-conceived “efficiency.”

This. The heart of the problem with Yglesias-style liberalism lies precisely here. It reflects precisely the poverty of thought and language that the late Tony Judt was concerned to diagnose in Ill Fares the Land.

The left should always be deeply suspicious of calls for “efficiency” in government; efficiency is never a politically and morally neutral concept. The question should always be, efficiency as defined by whom, and serving whose interests?

HAH! Totally subconscious, I assure you. I’m rarely that funny when I try to be.

On a similar vein, I highly recommend Robert Caro’s Power Broker- Robert Moses was one an “efficiency” reformer too.

Our federal workforce is actually too small for the size of our population and ought to be increased forthwith. Furthermore, they are not paid comparably to the private sector, as they are supposed to be. Malicious laws, set in place under the Reagan administration, also prevent them from hiring the most qualified people. At this moment, we desperately need more not less FDA, Social Security, air traffic controllers, internal revenue, and other personnel. It is very frustrating to see these neo-liberals who have swallowed the cool aid and, instead of countering, are contributing to the toxic propaganda that makes Americans believe that civil service jobs are somehow inferior — “jobs programs” not worthwhile functions that help everybody. The reason I may sound bellicose — and I feel bellicose — is that my gorge rises at the sorry spectacle of apparently well meaning and intelligent young people, recipients of the very best education money can buy, end up enabling the poisoning of our political atmosphere and the paralysis of our government and decline of our country in this way.

Why would a government jobs program be preferable to a general redistribution program? Relative to a broad redistribution program, a jobs program helps those who get the jobs at the expense of those who don’t. That seems less egalitarian than using the money for a large negative income tax or a universal healthcare system.

Bruce,

What did I say to incite you? I just simply asked how we know the federal workforce is too small.

Best,

Simon

Matt has never said that we don’t need more federal workers. His argument is that the purpose of government services should be providing services, not providing jobs for government workers. This claim is not countered by arguing that “we desperately need more not less FDA, Social Security, air traffic controllers, internal revenue, and other personnel.”

Kim Weedon @ 21:

Sorry about this, but, well, duh! That the entirely privatized, supposedly “free market” economy is actually an oligopolistic rent-seeking economy, a “toll booth economy”, should be fairly obvious, empirically speaking, notwithstanding the long-running propaganda campaign promoting it under contrary auspices. Though, on the other hand, saying that economic rents were formerly exacted from the “bottom” is a misprision, if not a matter of bad faith. Rather, under the old “Fordist” mass production paradigm, oligopolistic quasi-rents were available to be targeted by unionized semi-skilled mass production workers, to gain a functional “fair share”, whereas nowadays, due to a synergy of technological change and globalization/financialization, corporate rents have been re-structured through successive waves, such that they are no longer available as a target for unionization and functional mass distribution. But then to claim that a restoration of “competitive markets” would amount to a “solution” or a countervailing tendency misses the dynamics and “efficiencies” involved in oligopolistic concentration. But perhaps still worse, it amounts to a “capture of the good will”,- (I forget the Latin tag for this rhetorical move),- in which one’s appeal might itself become entrapped in the very dynamic it would ostensibly oppose.

Rather stop neglecting the whole dynamic of Wall St./MNC globalization/financialization in generating the wage and employment deficit via CA deficits. Though that might be a harder, more difficult slog, unavailable to the earnest efforts of academics.

Simon, to whom much is given, much is expected. I hope you know more about chemistry and diagnosis than you do about the civil service. Almost all growth in government in the last decade has been in the area of security — TSA and the like. And things like this:
http://www.washingtonpost.com/world/national-security/cia-shifts-focus-to-killing-targets/2011/08/30/gIQA7MZGvJ_story.html
The CIA’s Counterterrorism Center, which had 300 employees on the day of the [9/11] attacks, now exceeds al-Qaeda’s core membership around the globe. With about 2,000 on its staff, the CTC accounts for 10 percent of the agency’s workforce, has designated officers in almost every significant overseas post and controls the CIA’s expanding fleet of drones…..bout 20 percent of CIA analysts are now “targeters” scanning data for individuals to recruit, arrest or place in the cross­hairs of a drone. The skill is in such demand that the CIA made targeting a designated career track five years ago, meaning analysts can collect raises and promotions without having to leave the targeting field.–Washington Post
****
I would also suggest that if you can’t stand the heat of people’s righteous wrath, then you should get out of the kitchen (or spin business as the case may be).

Harold:

But we need more FDA, OSHA, EPA, IRS, SSA, and ECT…employees because we need more services from them. If we want jobs programs, we don’t want to merely drive up the wages of highly educated professionals, we want to serve those hardest hit by the Great Recession and the labor-substitution developments in manufacturing.
Nor do we want a jobs program to be permanent. My vision of utopia is too easily threatened by entrenched party bosses who can rely on a dependent class of workers to keep them in power.

Maybe the institutions that foster economic democracy are those that free workers from obligations to corporate fealty and political patronage alike. This is not an argument for fewer government jobs per se. It’s an argument against adding more entrenched interests who are provided incentives to seek parochial ends from the collective.

Yes we do want the jobs program to be permanent. For one, public sector jobs are some of the few living wage jobs open to many groups – look at what the collapse of the post office will do to the black middle class, for example. Second, we have a long-term weakness in private sector labor demand – we need the public sector to carry some of the load. Third, we have an undersupply of public sector goods that public sector workers provide.

One tires of the assumption that “government” work is make work. It would be far, far more valuable for the seasonal fire fighters, either federal or state, to be regular full time all year employees than anything ninety percent of the jobs the so-called private sector will produce. Maybe Rick Perry will figure that out.

By the way, I may be the only Crooked Timber commenter ever to have worked in a CWA represented customer service center. Back when we were allowed to give good service the proper term for the office was phone company Business Office. Call Center is a more recent usage, and it is a term of abuse, stemming from scum like Sammy Ginn who despise both the largely female office staff and the customers who no longer have a fighting chance at getting billing errors corrected.

StevenAtwell:

I agree with 90% (by my calculations) with what you’re saying. We need to expand public employment in any number of areas.

Having everyone employ their abilities to meet the undirected goals of our society is preferable to permanent make-work programs that keep a permanent underclass employed.

Right now, make-work is preferable to no work.

Though I am accustomed to insincere Jesuitical rhetorical games from the neo-liberals, the argument that the existence of jobs with living wages is unfair to the unemployed takes the cake.

Simon, if you want to learn, try reading a book.

By the way, I may be the only Crooked Timber commenter ever to have worked in a CWA represented customer service center

I’ve been fired from a non-union call centre for hanging my jacket on the back of my chair.

Harold : “Simon, if you want to learn, try reading a book.”

I’m going to stop posting, but this is totally unwarranted. I may not be as knowledgeable as you, but I care about the issues you care about, and all you have for me is scorn. I wish we could all just be a nicer to each other.

In 1962, with a government that did much less for a much younger population with a richer economy where lifetime employment and secure health care and pensions were widespread, the rate was 13.3 per 1000.

This is only federal employees. My impression is that the growth in government employment has been largely in staate and local roles.

I don’t see any sign that Simon has learned that we have fewer government workers now per 1000 population than we did in 1962. Or that Matt has learned what was affirmed in a NYT editorial this Sunday – that monetary incentives have been shown not to improve performance. Or that charter schools perform worse than ordinary public schools. Even Steve Brill has learned some of these facts — hats off to him!

By the way, Simon, how’s your mother? I hope that you spent a relaxing labor and have finally beat that nasty cold you were complaining about all summer. Too bad about the White Sox.

Labor Day, I mean, sorry.

France has a category of “social jobs” for the mentally handicapped or ill — a friend of mine knew a schizophrenic who was employed as a part-time forest ranger. Such jobs are not necessarily a waste of money as they provide a better quality of life and dignity for the impaired, as well as improving their prognosis.

temp at 58:
1. The problem with just relying on fiscal and monetary policy to get the job done is that the result depends very much on private labor demand – i.e, what if employers respond to increased spending by demanding higher productivity, mechanizing, offshoring, or casualizing their workforces, instead of expanding their workforce? With a planned expansion of the public sector, you backstop that from happening at a far lower cost than trying to push it all through growth.
2. Allow me to be clearer – let’s say we have a certain amount of money and we’re trying to reduce unemployment in a recession either by hiring more government workers or by providing a subsidy to employers to hire. These two strategies have different outcomes for the mix of public and private goods, so what I’m saying is that treating the government as a jobs program has the advantage that you get more public goods with your jobs program than you would if you did a private sector jobs program.
3. Depends on your examples in your polling, doesn’t it? People are more likely to respond to hiring more teachers and cops than providing a guaranteed minimum income to people who don’t work.

b9n10nt – just to amplify my previous comments. Here’s the thing about make-work; it turns out to be pretty productive when viewed in hindsight. The 30s equivalent of Fox went berserk over the WPA, but it created the basic infrastructure we rely on today, an almost incalculably high value.

The issue remains one of perceived advantage. I expect that I’m not the only active union member on this thread. I’ve no idea whether tenured profs belong to unions. In my own case, I’ve joined unions for two reasons: as a condition of employment and because I perceived that my individual situation would only improve by strengthening the hand of the union in place. I voluntarily chose to join only after I perceived I had no other option, short of leaving.

There isn’t a problem with unions, as such. Too few people feel that their individual and collective situations will improve by attaching themselves to a larger group. Until unions are an attractive alternative for people already capable of negotiating good terms of employment individually, we aren’t likely to see a jump in numbers.

Had this specific discussion with a young teacher recently graduated. He was paid 25 dollars an hour plus benefits to work as clerk swiping bottles at the check out of a government monopoly liquor store in Ontario, Canada. We both believe that our work situation is much improved thanks to our union. We also agree that tax-payers can reasonably question the cost benefits of paying adults hefty wages that seem to be far too high for the actual work done. Until unions start taking a leadership role in improving efficiency and the dollar value for taxpayers, unions are going to continue to win a bad name. And, yes, he was told to slow down and not work too hard.

*allow us

Hi Simon,

Just off to lunch. Don’t know. I’ll see him on the weekend and see if I can get more details.

Cheers

@ Kidneystones 86. Especially relevant here is Jerry Muller’s piece “Us and Them: The Enduring Power of Ethnic Nationalism” here http://www.tfasinternational.org/iipes/academics/mullercm.pdf

Provocatively: “The left, for example, has tended to embrace immigration in the name of egalitarianism and multiculturalism. But if there is indeed a link between ethnic homogeneity and a population’s willingness to support generous income-redistribution programs, the encouragement of a more heterogeneous society may end up undermining the left’s broader political agenda. And some of Europe’s libertarian cultural propensities have already clashed with the cultural illiberalism of some of the new immigrant communities.”

Temp –
1. “the choice should be made based on the relative social value of the product of that person’s labor in either sector.” But shouldn’t that valuation be informed by the relative supply of public versus private goods, or the willingness of employers to hire?
3. No I haven’t – I’m saying that I believe that direct job creation has strong democratically-legitimate credentials. We are absolutely at a stage were job creation programs are needed, because we have incredibly high unemployment that “democratically-legitimate broad-based social programs” cannot compensate for. Again, what is the problem with saying that the state should employ people at a living wage because leaving them unemployed is wrong?
4. So what happens when the public sector worker is a category of oppressed working class – as happened throughout the public sector prior to unionization? Do we leave them alone because it violates your sense of administrative efficiency, or do we pay them a living wage because to do otherwise in a democracy is to make each of us complicit in exploitation?

kidneystones – “Borrowing money to extend UI benefits is real mistake. People who have been paid to stay home need to be paid to work. That’s a basic. But this incarnation of the Democratic party is not about to risk alienating big public service unions by sharing out the work to the un-employed at less than union wages.”

That’s totally incoherent. We have 9 unemployed per job opening in this country – UI benefits are needed because otherwise millions of people who will not find a job no matter what they do are going to be destitute otherwise. Public sector unions have been loudly calling for direct job creation for years now, but work-sharing programs are pissing in the wind when you’re dealing with the layoff of 200,000 workers per year.

People need to be working for their money.

Yeah, it’s a terrible thing when some poor slob gets to receive $300/wk, his unemployment insurance benefits.

The bastard should be working for his money. Working hard. Well, come to think of it, not real hard: about 0.0000003 as hard as that hedge fund manager who was making $100 million per week (yes, per week) in 2010. I reckon John Paulson, the $5 billion/yr guy, being the superman that he obviously is, could perform all the work that needs to be done by all the unemployed in a matter of mere seconds.

I’m not quite understanding why kidneystones is so insistent that, in a rich country which was able and willing to spend ungodly sums bailing out the foolish bets of the financial-industry casino, any direct hiring of the unemployed MUST be done at poverty wages. I would welcome an explanation of his thinking on that point.

Any direct hiring of the unemployed MUST be done at poverty wages.

I think he’s making a different argument, and one I’d share.

Unemployment and long-term unemployment (now) is concentrated among people without college degrees. Among the people I know, it’s concentrated among the lower-skills end of the construction trades. In 2006, they had good jobs (in their estimation) making $12-$15 an hour–no benefits and no job security. If the government creates lots of jobs that pay $40K a year, with benefits and job security, they won’t get them–jobs like that will go to people further up the skill ladder, among whom unemployment is right now less of a problem. If the government creates lots of $10/hour jobs, they will get them, and they will be benefitted (that’s more than UI pays).

The fact that Yglesias thinks he is extreme left highlights the horrendous state of the Overton window at the moment.

It highlights Isaylegs’ pig-ignorance. Meanwhile, I can remember (it wasn’t long ago) when Paul Krugman was considered dangerously shrill and extreme. There was a reason it seemed amazing that he was given the Nobel Prize.

Apart from all that, what do you all think of the other idea Kidney stoned mentioned, that our lack ethnic and cultural solidarity may be standing in the way of more social democratic practices? http://www.tfasinternational.org/iipes/academics/mullercm.pdf

While it is true that “our lack of cultural and ethnic solidarity” may be standing in the way of more social democratic progress, this is not a purely natural condition but has been hugely amplified by the constant hateful propaganda from people like Rush Limbaugh, Fox News, and the Tea Party, and co, who are practically piped into the homes of poor people — and into the barracks of soldiers abroad — not by popular demand, but through the deliberate policy and large infusions of cash from wealthy billionaires and right-wing weapons manufacturers who active oppose anything they see as threatening their privileges.

But there does seem to be an analogous situation in Europe :-/.

StevenAttewell@91:

Again, I agree that job programs are justified during a recession. Government hiring people at market wages, particularly in high-unemployment sectors, is entirely sensible fiscal policy until we return to full employment. I do not think this justifies permanent government programs as job programs unless the value produced by the hired workers is greater than the value they could produce in the private sector.

“So what happens when the public sector worker is a category of oppressed working class – as happened throughout the public sector prior to unionization?”

Hire public sector workers at market wages, then give them the same social benefits given to all other workers (which progressives should focus on expanding). Why should any worker by deprived of benefits simply on account of the sector they work in?

Steve @ 102
Is this really how you view the world? The other half of the country is not immoral, uncaring, corrupt, unpatriotic, etc. etc. etc simply for disagreeing on the invasion of Iraq, abortion, and the current economic crisis.

Re: the need to work. People need to be working because most people are most content working towards some achievable goal. There are, of course, a few who really do want to sit at home “living large” on the government tit. But very few of those currently on extended UI would prefer to stay home, I suspect. 4.4 million people have been un-employed and un-productive for more than a year. The last thing they need is another Friedman unit on the couch. The reason that the temporary wages are going to have to be relatively low is because local and state governments are going to want to grab as much federal cash as they can to cover their own budget shortfalls. That was the ‘trickledown theory of two years ago.

I’ll close by noting that during the health-care reform debacle, it was virtually impossible to find any slightly left of center pundit questioning the wisdom of focusing so much energy on the public option, etc. while ignoring the unemployed. The so much smarter and more discerning were too busy manning the ramparts and holding feet to the fire to note the train wreck taking place in plain view. Two years later the NYT offers stories about the Invisible Unemployed and Did We Drop the Ball on Unemployment? Now we learn that this signature piece of legislation may not even survive SCOTUS. What a colossal waste of time, energy, and political capital.

Is this really how you view the world?

It’s how I view the people I described, who constitute something like 20% of the US electorate. (There are plenty of people beyond that lunatic fringe with whom I can disagree in an agreeable way.) Pretending that I said that constitutes “the world” seems to be a deliberate and rather baffling act of misreading on your part.

I quite agree that focusing so much energy and political capital, in the midst of a dire labor-market crisis, on tinkering around the edges of a broken health-care system. The error, however, was on the part of Obama and the mainstream Democrats, not “slightly left of center pundits” who were making the quite reasonable point that IF you were going to make health care your priority-again, not my choice but Obama’s- then it was a waste of time and a mistake to pretend to reform the system rather than taking meaningful steps toward real reform. But my preference, and I know I’m not alone, would have been to address the economic crisis in a much more serious way rather than diverting energy to other projects.

@ Henri

I think its CERTAINLY more pleasant, but in terms of adding to societies wealth, and thus, wellbeing…?

SamChevre doesn’t seem to realize that once upon the US ran by hiring the people his kind label “low skilled,” training them, and seeing what they can do. My experience is that twenty to forty percent of the people HR departments would label as lacking the appropriate skills end up performing a lot better than fifteen to thirty percent of those who have the skills on paper, and the second figure may be an underestimate.

No, I realize all that. I just doubt that anyone is going to hire unemployed construction laborers as financial regulators. I would be entirely unsurprised that some of them would be good at it, but I’m fairly sure that no one is going to hire them for the job.

If you want a jobs program, it ought to be a jobs program that helps the low-skilled unemployed–the factory workers, construction laborers, and people whose last job was at McDonalds. There may be good reasons for the government to hire more college-educated professionals; that’s just not a solution to an unemployment problem that’s much much worse for the non-college-eduacted.

How many government workers makes a government agency a “works program”? Matthew Yglesias’ formulation suggest that some government programs are works or jobs programs. Which ones? Why?

If he and you actually care about l “right sizing” the budget, why not go after defense?
as it is the case, the US of A spends more than half of its budget on military matters, the Pentagon routinely runs over its budget, and there is more waste, fraud, and abuse in that government agency, why not shut it down, or halve it? Why, in other words, when considering efficiencies is the focus on workers who represent a small part of the government’s outlay?

Henri @112 writes…

Henri, I’ve often enjoyed your thoughtful comments here. Unfortunately, in my experience very few people under the age of sixty want to spend any part of their day painting landscapes. With respect, I have to say that if there’s post on this thread reeking of “paternalistic bullshit,” I’m afraid yours wins the prize.

You seem utterly unaware that every job can be done right and that there’s merit and honor in doing all the jobs conscientiously, with care, and with an eye to improving one’s skills. I’ve done some of these jobs and I’ll allow that learning/improvement curve can occur over a very short time. In my experience, however, demonstrating exceptional talent in preparing and folding mailers for envelope stuffing, for example, almost always wins an invitation to supervise and teach others at a higher wage. I completed my undergraduate degree doing this kind of work, on occasion, to supplement scholarships and grants. I was extremely grateful to have that work and knowing that I can do this kind of work well relieves me of almost all anxiety about job security.

To be clear: I’d actually argue that your very public and enthusiastic contempt for anyone who would willingly work as a greeter is a key component of why some Americans refuse to work. Not because they are afraid of the work. But because they are afraid of the stigma and contempt that their work will bring down upon them from the likes of you.

I spend about fifteen percent of my professional life teaching unemployed people how to acquire new skills for employment. The first suggestion on our list is: take any part-time job, do it well, and don’t quit. We also advise the newly hired to keep as far away from people like you as possible as they rebuild their employment and credit histories. Because Henri, thoughtful as you sometimes are, your vitriolic contempt for certain kinds of work makes doing sometimes difficult jobs that much more difficult and unpleasant. The last thing people working to rebuild their lives need is a sneer from a neighbor, a family member, or somebody like you.

All work is honorable. Internalize that and the world (or my world) looks a whole lot brighter. I see no useful distinction between the work the janitor does and that of the lecturer. I’ve done both and the sense of accomplishment is almost identical.

@121

I have a theory of politics.

It’s, know your enemy. First, know that you have an enemy. Then, know who actually is your enemy.

Your disagreement with Henri Vieuxtemps isn’t so much about about the value of work, as its about who is the enemy, who is to blame, who should be held responsible.

Personally, I am not enthusiastic about promoting low-wage employment as a primary remedy for the problems caused by making billionaires richer through unchecked economic predation, despite my sympathy for much of what you have written.

However “honorable” low-wage work may be, it takes up precious time, and its psychological benefits may well be offset by oppression and exploitation. And, materially, you cannot make much money. Denying this reality, or ignoring it, or minimizing it doesn’t even make for a good fairy tale, let alone decent public policy.

Let me add federal workers to the list of people who are neo-liberals’ object of contempt.

This discussion- in which my little bourgeois heart is with kidneystones but my head is with Bruce, Harold and Henri- is a perfect example of the way that runaway finance capitalism, with its brazenly unfair reward system and its transparent “heads I win tails you lose” parasitic relationship to the state, has worked to undermine the very bourgeois values, like the dignity of work, on which capitalism itself depends. It’s no accident that there has been a lot of Intertubes discussion lately, in some pretty unexpected quarters, of the rightness of Marx’s diagnosis in that regard.

Why is it that $300/wk flowing to a recipient of unemployment insurance is a moral outrage, but $100,000,000/wk flowing to the pockets of a hedge fund manager or someone with last name ‘Walton’ a mere curiosity?

I’m asking you if you understand that capitalism rewards risk and innovation rather than simply “labor” (whatever that means in a service economy I don’t know)

And we’re asking you to understand that a very great deal of the reward currently is going to people who have engaged neither in taking risks (certainly not with their own money, anyway- other people’s is a different story) nor in innovation.

@130

“capitalism rewards risk and innovation”

And, predation. Capitalism rewards predation.

Bruce. You can write snarky quotes like that all day. I said capitalism can reward rent seeking, and everyone knows it rewards predation. But it also rewards risk, thats the whole basis of investing. If you don’t have an alternative, then you’re not contributing.

And in an economy that produced, what, zero jobs last month the unemployed are unemployed whether anyone likes it or not. You or your Wall Streeters can invest till you’re blue in the face absent people able to buy what investment in the use of labor produces, there will be zero return on your investment.

And why, exactly, “should” people work for less than a living wage? If you’ve no alternative to the current system that rewards unproductive investments and fails to create living-wage jobs you’re not contributing.

Tom Bach @119:

It’s not the number of workers, but whether the workers are producing more valuable social goods than they would in the private sector. Yglesias’ post titled “What Does It Mean To Have An Overpaid Public Sector” elaborates on his position:

It seems to me that if we cut MPDC officers’ compensation by ten percent, that this would end up having a deleterious impact on the crime situation. So I don’t think the cops are overpaid. By contrast, though I have absolutely no idea what the eight manicure licensing enforcement officers employed by the state of Kentucky are paid, I’m certain that it’s too much. What bad consequences will flow from cutting their pay? Nothing. But the issue here isn’t “overpaid” manicure inspectors, it’s that Kentucky doesn’t need to be employing these people at all.

As for defense, I agree completely. It would be of massive social benefit to drastically reduce military spending and replace it with spending on services providing genuine public goods. Even though it would take away good jobs from some people. If your objection to Yglesias is that he’s right, but doesn’t apply his principles broadly enough, I can agree.

How are people who churn stocks on Wall Street, and get a nice fee for every sale whether it results in profit or loss, engaging in “risk”?

It’s not even the ignorance so much as the willful ignorance- the pissy, close-minded reaction whenever facts that contradict the paradigm are pointed out.

By contrast, though I have absolutely no idea what the eight manicure licensing enforcement officers employed by the state of Kentucky are paid, I’m certain that it’s too much.

That’s the same simple-minded pissiness you get from the Tea Party.

My objection would be to the nonsense about manicure inspectors. He admits that he has no idea of the cost but insist that unregulated manicurists can do no harm despite what we know about the public health dangers of that particular profession.

OK, I have no interest in discussing the particular case. But your objection is still in line with the general principle (public services as services not job programs); you just disagree with this particular application because you think the service is actually valuable.

Well, in our current system the risks have been borne by holders of 401Ks and small stock portfolios which they had saved up for their old age, or to help out their children and less fortunate relatives in times of crisis, and not by the capitalists.

Henri @ 126 “All work is honorable” is a bit nebulous and archaic, but I suspect you do actually get the point. I understand, I think, your frustration with preaching the purifying virtues of hard work. I simply object to the notion that sitting around waiting for a government check for a year or two helps people prepare to re-enter the work force and succeed. Ideally, we all work in jobs we love. Ideally.

Bruce @123 writes…I agree that putting people to work at low-wage jobs isn’t as desirable as putting them to work at high wage jobs. There are two problems with direct hire at higher wages, however. First, federal agencies are already financing existing programs on borrowed money. Second, people need to be able to do the work with a minimum of experience and training. Few people seem to want people paid high wages for work is essentially manual labor.

All these solutions are stop-gap and imperfect. Roubini and Stiglitz both point to the invasion of Iraq as the principal drain on the US economy. The argument make sense to me. An associate claims that pretty much all US debt can be eliminated with a VAT. Is this correct? I don’t know if that’s actually true. Krauthammer, however, argued last year that Dems were driving up the debt to justify the imposition of the VAT.

Nobody seems to have a clue how to fix this mess. Those without jobs, imo, need to be doing more than simply waiting for the cavalry to come riding to the rescue.

Simon 32: “breaking up of privileged rent seekers etc seems pretty good to me” –

Simon 148 “Additionally, what’s wrong with gaining income from rent? If you have money and want to fund investments, isn’t that good for improving our standard of living.” –

In the pre-Looking Glass World when up used to be up, it was also considered good for the standard of living to raise wages. (And am I dreaming or did a neo-lib above attempt to brand wages and pensions as a form of “semi-rents”? )

@Harold: those people are capitalists. A 401k consists of stock, which is shares of capital. Its not like there is some small cabal of real capitalists directing the economy.

Simon risk is one thing; success is another. It’s not particularly risky to open a McDonald’s and yet the likelyhood of profit is high. Born rich enough you could open one. Scrap together the money to open Simon’s House of Pies and fail, you lose even though your level of risk is much greater than Sam Walton Jr. purchase of five hundred McDonald franchises.

Nobody seems to have a clue how to fix this mess. Those without jobs, imo, need to be doing more than simply waiting for the cavalry to come riding to the rescue.

What? Open up barbershops and cut one another’s hair? Or, as in Player Piano become one another’s handimen and dressmakers?

Seriously, what is it you think out of work people ought to do other than try to find work? Create the next App? Develop a line of loungewear?

Simon, your contention that the deficit is “due to the stimulus, decreased revenue, UI insurance” is incorrect.

The deficit is due almost entirely to the Bush administration’s misguided spending and tax policies and the 2008 collapse of the financial system and subsequent bail out, also under the Bush administration. Repeal of the Bush tax cuts and reining in health costs could take care of the deficit.

Regarding living wage from Paul Krugman http://www.pkarchive.org/cranks/LivingWage.html.

People don’t work at minimum wage jobs their entire life. If they do, they should get EITC, and they do. But over the lifespan people generally move up the ladder from the bottom, am I wrong? Yes, as Steve said, I’m an econ amateur, but it seems to me like doing too much to artificially leave wage rates leads to a broken labor market and job flight.

It depends on why you mean by “lifespan” and it depends on what jobs are available, and it depends on how much the “risk takers” have gamed the system to keep wages low abetted while the proponents of the dignity of labor, provided laborers aren’t “overpaid.”

If the only jobs available are at Walmart, most folks will work for peanuts for the rest of their lives, assuming no unions of course.

Tom Bach:

So Yglesias says he wants to spend money hiring more cops rather than manicure regulators because he values the services of cops and doesn’t value the services of manicure regulators. You say you want to spend money on education and public infrastructure rather than defense because the former are valuable public goods and the latter is not (which Yglesias also agrees with). I genuinely do not see a contradiction on principle here. You are both evaluating public services on the value of those services, not on the number or quality of jobs they create.

Defense spending really does create a substantial number of good middle class jobs. People really do defend defense spending on the grounds that eliminating it will remove those jobs. Diverting the money to education will disrupt the lives of millions of people working in the industry. Nevertheless, it should be done, because in the long run, we are all better off with a government that provides public services which are actually socially valuable. This is a neoliberal argument, and you seem to agree with it.

@ Tom re: semophores afraid I dont understand you.

No it’s not a “neoliberal” argument to insist that I want the state to invest in things I think will have the greatest positive effect on my fellow citizens. It’s a neoliberal argument to base your judgment of what works and what doesn’t on an ideological committment rather than a discussion of the facts of the matter.

Look, there’s a real debate as to how to evaluate government programs. Some people argue that the government should act to preserve or create middle class jobs without regard (or with only some regard) to the value those jobs create. The people who oppose this argument on efficiency grounds tend to be labeled “neoliberals.” Forgetting labels, we can just note that you are on the same side as Matt and myself when it comes to defense spending, and for the same reason (“short term badness [for] long term health” is basically the neolib motto).

Its a rather amoral system that has brought people out of poverty. Whether you can blame a lot of other bad stuff on it is open to debate

I guess I’d apportion credit and blame differently. I’d say that the system (ie, the relations of production, or to be non-Marxist about it, the structure of ownership) has done nothing whatever for ordinary people without their organizing themselves to fight it furiously. What has brought ordinary people out of poverty, besides technological progress and their own productive labor, is determined and persistent self-organization, usually in the teeth of violent opposition from capitalists and the state.

Yes, of course we have large obligations to people in the less-rich countries. But there as here (and even more successfully), owners and managers will bitterly oppose the efforts of ordinary people to organize themselves to bargain for a fair share of wealth. I don’t see any solution short of worldwide self-organization by ordinary working people. Sounds utopian, I know, but the capitalists have managed it.

I’d say its more important to build a broad coalition for things that will relieve the tremendous amount of suffering in the world, rather than vague concepts such as “getting a share of the wealth.” Affordable health care, nuclear disarmament, long commutes, abuse and violence etc…

Simon, your phrase “Deficit “explosion” under Obama is right-wing sloganeering. It is true that congress’s refusal to repeal Bush’s tax cuts, which erased Clinton’s budget surplus have increased the deficit. Nevertheless, explosions applies only Bush’s reckless policies.

Facts:
Obama:
Payments Out: $1.413 Trillion
Revenue Cuts: $288 Billion
Total Cost of Initiatives: $1.701 Trillion

Bush:
Payments Out: $1.544 Trillion
Revenue Cuts: $2.485 Trillion
Total Cost of Initiatives: $4.029 Trillion

Harold. I don’t think we are arguing over anything but a statistics and misunderstanding. Bush is absolutely the cause of our deficit problem.

@ Bruce. I think we agree. I’m not arguing we live in a Panglossian world where all salaries are deserved. In fact, as Dean Baker has argued our market is rigged in favor of the rich. All I’m saying is that risk generally correlates with reward in textbook model, and that is why the successful small buisiness owner makes more than his plumber even though the latter job is much more terrible.

Simon: “I’m saying is that risk generally correlates with reward in textbook model, and that is why the successful small buisiness owner makes more than his plumber even though the latter job is much more terrible.”

The whole point was that the textbook model isn’t correct, and frequently isn’t even a poor approximation of reality.

“Harold. I don’t think we are arguing over anything but a statistics and misunderstanding. Bush is absolutely the cause of our deficit problem.”

I am not arguing with you and I didn’t misunderstand what you said. You didn’t say that Bush is the cause of our deficit, you said the deficit exploded under Obama. Perhaps you meant to say that Bush’s misguided and foolish policy was the cause of our deficit, but misspoke and said or implied that Obama was the cause. However that was a miscommunication on your part, not a misunderstanding on mine. I am not a mind reader. I shouldn’t have to look up statistics for you, either.

-(OT):

What I’ve affirmed in this thread: Right now the marginal US$ spent on increasing employment is vital. That’s more a function of what time it’s at in the system than it is the system we’re stuck in.

What I want to learn from this thread: What limitations are imposed upon labor welfare by the contemporary sociopoltical system and what are fundamental limitations to any sociopoltical labor system?

Anyone have a pithy response before I go back to work on Monday?

There’s nothing wrong with taking the government check; after all the government never hesitates taking your checks and spending them on things you don’t care for.

Whatever employers want, it wouldn’t matter, if workforce was unionized. Arranging your life around employer-appeasement seems quite undignified, and it won’t work. It’s a race to the bottom. Should you choose this path, you (and others) will be accepting higher degree of exploitation every day, and eventually you’ll starve.

Incidentally, in many European countries (at least two, that I know, anecdotally) unemployment benefits include occupational training, a year of training, perhaps. Wouldn’t this make more sense?

It sounds pretty, but what does it mean? How can you “restructure the market” without using “the state”? And in the meantime, are you just going to let people die on the street? Or in the huge prison system we have here?

For the last 30 years we have taken a different path than other industrialized countries, which do use “the state” rather than “the market” to redistribute income, and look where has it gotten us. The income has been redistributed to the a-moral billionaires, leaving the rest of the country high and dry.

@kidneystones
Not an excuse not to think about how to get skilled people back to work, or even how to find worthwhile things to do that will show they can still work at the same level as before. Not an excuse to start telling people after two weeks of unemployment (as rumor has it) that it’s already time for them to start looking for work as a greeter (why a greeter, anyway, why not an ordinary retail job, why a job that screams “I’m no longer in the regular workforce”?). Not an excuse to tell people their only choice is “retraining” and getting into those job-search channels so they can start a new career path as an entry level employee.

> That’s the problem with taking the government check over the greeter
> job. We can discuss the “fairness” of the choice, but that’s the core
> issue as I see it. Employers want people who want to work.

The obverse of that coin is the “you can only do what you did last” rule of hiring. If you are an MSEE laid off from the General Motors Technical Center through no fault of your own and you take a low-level hourly job to help pay the mortgage while you search it is possible that you will _never_ get another engineering job in your life. At the entry level an employer might like to see a new graduate who worked retail during college, but once past 25 or so any non-professional experience on the resume makes it very difficult to even get in the door for an interview (no matter what the employers claim in public).

Cranky

What’s missing from that story, anyway, is who is going to fill the jobs when the recession is over. Unless you live in Detroit you didn’t get laid off from General Motors. If the downturn lasts five years, the people who were laid off at the beginning of it will probably be out of work five years. If the recovery lasts five years, all those high-level jobs will need to be restaffed. With experienced people. What could change this story so those people will not be needed?

“You can only get the last job you had” also means you don’t move from Google to Cisco.

Respectfully bianca I am going to have to disagree with you. I have observed the technical labor market as both a seller and buyer for many years and also studied what theoretical material is available from time to time. Regardless of what is said in the open literature, at presentations at the Association of HR Professionals, etc behind closed doors there is tremendous discrimination against anyone older than 40, anyone not currently employed, and anyone currently working at a job below the level of their previous job (for some definition of “below”). None of this is ever written down, and certainly never revealed to any academic researcher, but it is the way it is in many if not most large organizations. Just witness the perplexity of many employers who were recently “caught” advertising jobs with a requirement that the currently unemployed need not apply: they didn’t think they were doing anything wrong.

Cranky

Warning: this post contains reference to concepts explored in an Economics 101 textbook. Incentive , for instance, is used in verb form.

Harold:

distracting trivialities such as laws regulating barbers or nail clippers in LouisvilleI

I think Yglesias’, and likely Baker’s (e.g. w/r/t licencing of medical professionals) , perspective would be:

1) thousands of these trivialities proliferate at the local level and, to the point,

2) the direct effect of such regulations is a redistribution toward the wealthy: the $ and effort to pay licensing fees and comply with certain regulations goes from the petit bourgeoisie who are trying to start a business -often in depressed urban zones- to middle class, college educated govt employees (pointy-headed beaurocrats!). That’s as it should be where the social cost of negative externalities exceeds the social cost of compliance. But that cost/benefit analysis then leaves arguments for many of these licensing rules wanting. It’s clear that they were imposed by the lobbying of local actors with dominant market positions , who likewise gain from burdens imposed upon less-wealthy, less-well connected entrants into the market. In areas where health and safety negative externalities are really quite mild, less-onerous certification markets may be sufficient to meet the public’s need for health and safety.

Is this not the exact mode of analysis that we use to excoriate our broken patent system? I mean, such a patent regime does provide jobs for lawyers and jobs at the patent office while increasing the rest of our marginal cost of goods protected under patent law. As with health and safety certification markets, less-regulated markets would likely be sufficiently incentivised to meet the public interest (encourage the “useful arts”).

I mean, as I learned it, this is part of the radical critique of capitalist accomodationism: the regulatory state isn’t always some countervailing force to market predation, often it’s an extention and legitimation of market predation. Thus, from such a radical critique, you can either have a smash-the-state agenda or a let’s-get-it-right-this-time accomodationist agenda. It’s not obvious the latter is merely a sellout, especially if you’re simultaneously working for a more robust safety net and other means that use the state for the good of the people, not the wealthy. Yes, market-based critiques of rents symbolically (hat tip: Berube) legitimates capitalist discourse about efficiency, but it also legitimates a leftist critique of inequaltity and actually-existing capitalism as a lever for undemocratic privilege.

b9, this has nothing to do with state bureaucrats. Apart from safety issues, this is about regulating the amount of supply, in order to make sure that small businesses (barbers, nail clippers, cab drives) can survive and earn livable income; that excessive competition doesn’t drive them into poverty, and the quality of these services into the ground. It’s not that complicated. It’s common and uncontroversial.

It’s common and uncontroversial that public policy should be geared toward managing markets solely for the security of the suppliers and quality of their services? Without any regard towards lowering costs for customers? Or giving customers the option of a lower quality, but much cheaper good? Or allowing a wider share of suppliers to make a living in the market? Why are these not also important variables?

Simon @ 205: He’s specifically referring to small businesses.

To go all libertarian on that argument, why should we be deciding that barber services should necessarily be done outside the home?

bianca steele 09.10.11 at 3:57 pm

” What’s missing from that story, anyway, is who is going to fill the jobs when the recession is over. Unless you live in Detroit you didn’t get laid off from General Motors. If the downturn lasts five years, the people who were laid off at the beginning of it will probably be out of work five years. If the recovery lasts five years, all those high-level jobs will need to be restaffed. With experienced people. What could change this story so those people will not be needed?”

Five years of people who had such jobs.

” “You can only get the last job you had” also means you don’t move from Google to Cisco.”

Incorrect, and foolishly so. It means that if you were mopping the floors at Google you aren’t getting a programming job at Cisco.

To a large extent, we are all intellectual victims of economists, dead and otherwise, who really do not know what they are talking about.

The main problem with the standard analysis of the “market economy”, as well as many variants, is that we do not live in a “market economy”. Except for financial markets and a few related commodity markets, markets are rare beasts in the modern economy. The actual economy is dominated by formal, hierarchical, administrative organization and transactions are governed by incomplete contracts, explicit and implied. “Markets” are, at best, metaphors.

The elaborate theory of market price gives us an abstract ideal of allocative efficiency, in the absence of any firm or household behaving strategically (aka perfect competition). In real life, allocative efficiency is far less important than achieving technical efficiency, and, of course, everyone behaves strategically.

In a world of genuine uncertainty and limitations to knowledge, incentives in the distribution of income are tied directly to the distribution of risk. Economic rents are pervasive, but potentially beneficial, in that they provide a means of stable structure, around which investments can be made and production processes managed to achieve technical efficiency.

In the imaginary world of complete information of Econ 101, where markets are the dominant form of economic organizations, and allocative efficiency is the focus of attention, firms are able to maximize their profits, because they know what “maximum” means. They are unconstrained by anything.

In the actual, uncertain world, with limited information and knowledge, only constrained maximization is possible. All firms, instead of being profit-maximizers (not possible in a world of uncertainty), are rent-seekers, responding to instituted constraints: the institutional rules of the game, so to speak. Economic rents are what they have to lose in this game, and protecting those rents, orients their behavior within the institutional constraints. Those constraints are in the nature of a public good, and if that public good is well-provided, the behavior is socially beneficial and technically efficient.

It is within this context, that risk and innovation (aka, changing institutional structure) can pay off.

So, yes, licensing barbers can make perfect sense. It creates a small economic rent, and if that rent is tied effectively to barbers being scrupulous about safe and healthy technical practice, that’s a economic benefit. The gain is in technical efficiency, not allocative efficiency.

> bianca
> On the other hand, in my experience and that of my acquaintances,
> while HR often performs a valuable service in winnowing out resumes when
> there are a large number of them, and while I would not wish to disparage
> the valuable theoretical knowledge imparted in to such HR professionals,
> they find it difficult at times to recognize the equally important knowledge
> possessed by the managers and senior professionals in the groups into
> which they hire.

I was simply using the (AFAIK fictitious) “Association of HR Professionals” as a shorthand for the stated, written, audited, discoverable-during-a-lawsuit personnel policies, procedures, and documentation of any organization of significant size. Fortunately most of the organizations where I have been involved in hiring have had a policy of having business managers involved in all phases including writing the ads and screening the resumes, but even in those organizations where HR does provide a screening function it generally isn’t really involved with either the real decision or more importantly with the overall culture of who is considered a viable candidate. [1]

A problem with applying academic analysis (‘the plural of anecdote is not data’) to personnel transactions, particularly for higher-end and professional employment, is that anyone with any skill in the game on the hiring side knows what to write down, put in e-mail, report to the EEOC, etc, and what to discuss only verbally and never reveal to a stranger. Essentially all employers and hire-es have a strong cultural incentive to lie about everything to anyone who asks, and the factual data that would describe what really goes on simply does not exist.

> Barry
> Incorrect, and foolishly so. It means that if you were mopping the
> floors at Google you aren’t getting a programming job at Cisco.

Correct. Not even if he was a programmer at pets.com and took the mopping job to pay the rent while looking: the perception will be that he is damaged goods.

Cranky

[1] I am aware that there are some firms, particularly in high-tech, that have good HR groups that are directly involved with the process and competent at doing so. Personally I have only run across two in [mumble mumble] years but YMMV.

Just to add to the living wage argument:

Wages are not determined by supply and demand as there is no quantifiable marginal product of labour, which effectively means neoclassical models tell us nothing about the labour market. Wages are almost entirely determined by bargaining power (and guess who has the upper hand most of the time).

I’d recommend a book called ‘economics for the rest of us’ where they explore this in some detail.

@ bianca

I agree that lay-offs usually say more about the economy than the worker. In a normal economy waiting to be rehired again makes sense. I don’t work in those jobs anymore, but I take your point.

However, the “wait to be rehired” logic makes sense only for that subset of workers in jobs where periodic lay-offs are the norm, where the jobs do not compel workers to upgrade their skills in a fast changing environment, and in an economy that can be reliably predicted to re-create demand for labor.

The rising tide may lift all boats. It doesn’t appear that either the tide is coming in anytime soon. My current fear is that this administration or the next will rely on “non-kinetic military action” of some sort to revitalize the economy.

I’m not an economist and the discussion has drifted far from my initial claim that the government should be paying for more “clean up our libraries and streets” campaigns. The taxpayer is getting some limited return on the investment and local communities are improved. You make the key argument: that getting another job is a full-time job, or should be. To that I’d add: maintaining employment should be our first priority.

Don’t worry, Bianca.

@216: This is my hobbyhorse, I’m afraid; I tend to see its relevance to every discussion of economics. Economics goes off the rails in two common ways, imho. One is the moral tale, where the “market economy” becomes a place of the magic of “competition”, where virtue is naturally rewarded, and vice punished. The other is more subtle; it is the focus on markets and allocative efficiency, while ignoring hierarchy and institutions and bureaucracy and technical efficiency.

“Economic rent” has become a pejorative in the moral tale. That’s particularly unfortunate for the second derailment, because “economic rents” are essential to the incentive structures of institutional and technical control. In a bureaucracy, if you want the employees under you to follow the rules, then firing them for not following the rules has to have a large cost to the employee. In other words, you have to pay them a premium against the “market wage” that they could get by switching to another employer and job. (That’s obviously an oversimplified way to put it, but this is only a blog comment, work with me.) Put another way, economic rents are the source of stable structure in the economy; an economic rent is the margin of factor income, which must be exhausted before the factor switches to another use (and the structure built around it, falls apart). In a world where technical efficiency gains are to be had primarily from sunk-cost investments, the ability to realize a return on investment is the ability to earn an economic rent. (Licensing professions might have something to do with making the investment in training pay off.)

Neoliberal economic policy relies heavily on the conventional acceptance of economics as authoritative, and on the blindness to technical efficiency considerations. The moral tale, of course, is the fetish of their interlocuters, the libertarians. It makes for a pathological dialogue, between neoliberals and libertarians, dominating the discussion of public policy. They “agree” on the need for ineffective or nonexistent regulation — something that serves their common paymasters, I suspect.

When Yglesias goes off on the licensing of manicurists or barbers — aside from the triviality — I see what neoliberals and libertarians did to the U.S. financial sector. It all started as an attack on the de minimus “rents” enjoyed by savings and loans, from a regulation, which limited the interest rates banks and thrifts could pay on savings deposits, giving a small advantage to the savings and loans. How could competition among banks and thrifts (and other innovative financial institutions) for savings be bad? Shouldn’t people have a right to seek a better return?

Now, thirty years later, the big banks have located a new source of rents, in enormous, wildly dysfunctional size, and the financial sector complains to Congress that its profits depend on being able to fleece the American public with usurious rates and deceptive terms.

The institutional rules that constitute the games of market and hierarchy are public goods. Good public policy would promote a benign stability by tying private enjoyment of economic rents to good behavior, and would tax private economic rents heavily to prevent runaway pursuit. Natural monopoly would be acknowledged and regulated directly, but conglomeration and networking would be regarded with the utmost suspicion. Resale price maintenance is the devil’s work.

@216, again

Regarding Pharma, I would think it would be obvious that the incentives of a private, for-profit drug company are perverse. Cheap-to-produce and addictive are properties of a profitable line. Anti-biotics and vaccines are nightmares for the capitalist. Heroin would be the ideal product.

When I was a kid, my father was afflicted with ulcers, a common and then increasingly common malady. The major U.S. drug companies spent hundreds of millions inventing new antacid “treatments”, the results of which are just now falling off patent. In the meantime, some physicians in Australia investigate the actual cause of common ulcers, and found a bacteria, which could be treated with a course of ntibiotics. The physicians were vilified for their trouble by the paid representatives among the medical community of the drug companies, and, of course, they do not advertise.

Steven,

Could you speak a little bit more about direct job creation in the Scandinavian countries? I guess I’m just trying to get past the meme that many government jobs are simply welfare checks that require people to sit in an office, and that the security offered by these programs moves people away from more productive employment in the private sector. Curious for your insights.

I can’t imagine.

I guess I’m just trying to get past the meme that many government jobs are simply welfare checks that require people to sit in an office

Are you indeed.

Why are we still using the private-productive public-wasteful dichotomy given the wildfires in the American West? Is giving the hotshot crews full time all year employment really more wasteful than moving school teachers to selling real estate, the dominant paradigm of expanding the private sector in my adult years in California?

Also if we’re going to extract tax revenue to pay for living wage jobs, why only in America? Why don’t we supply living wage jobs in Africa, or Mexico?

@232 Could we drain the private sector of the resources they need to create financial crises that devastate employment and incomes?

@233 I suppose we could let the private sector enslave the Mexicans and Africans. Oh, wait . . .

@ Steven. Thanks for the info. I’ll be checking out your site!

b9n10nt: “retail price stability the devil’s work”?
Bruce: “Resale price maintenance is the devil’s work.”

Evidence that a Crooked Timber thread is a thinly disguised game of Rumour.

Resale price maintenance is a term for a set of practices, by manufacturers or wholesalers, aimed at setting, or placing a floor or ceiling on, the retail price of a product. It was considered a per se violation the antitrust laws for many years, but was a particular target of Chicago school law and economics types, and the Supreme Court has reduced considerably the legal barriers to resale price maintenance, recently.