Neo-Liberalism Again

by Henry on September 6, 2011

Matt Yglesias, after complaining about the “endless Internet circle jerk over “neoliberalism,”” tries to be a little more conciliatory.

I think when I tried to raise this issue as it pertained to craft beer, I wound up coming across as unduly accusatory and prompted a lot of unproductive responses. So to put the issue as clearly as possible, I wonder if adherents to an anti-neoliberal theory of progressive politics believe the right thing for President Obama to do is to consider the pro-labor benefits of the merger to be an independent argument in favor of the merger that deserves weight alongside other issues. The CWA has an argument on the merits about this that I think isn’t crazy, but the question that I think is philosophically interesting is whether the labor angle deserves consideration apart from the “official” argument about anti-trust economics.

I think the answer to this question is a no-brainer: yes. If you believe, as Jacob Hacker and Paul Pierson, Paul Krugman etc believe, that the decline of the US labor movement is an important explanatory factor for the rise of inequality in the US, and if you believe that inequality is a problem, then of course you want to think about the consequences of anti-trust policy for union strength. Weakening unions can plausibly further increase inequality, by weakening actors who used to serve as an important counterweight to e.g. financial interests. But I am not at all sure that Matt himself has any deeply rooted philosophical objections to this way of thinking. In a more recent post he quotes a Dean Baker argument that patents and intellectual property contribute to inequality, and concludes:

The general idea is that we shouldn’t accept the view that a world of parasitic finance, asymmetrical globalization, government-sponsored intellectual property monopolies, and Fed engineered wage-suppression constitutes a “free market” outcome relative to which the left wants redistribution.

This seems absolutely right to me – but also to call for an emphatically non-neoliberal approach to politics. As Matt is saying in this post, profound political inequalities are baked into the cake of our current market economy. But if this is right, then it is implausible that we can let markets do their thing, and then worry about the distributional issues later, since inequalities, the power of financial interests, etc not only are part of the system as it is, but also make it very unlikely that we will ever get to the stage of doing substantial redistribution. While Dean Baker (whom Matt is relying on in this post) depicts his reform agenda as a set of pro-market measures, they are not by virtue of this, neo-liberal measures (which would suggest that we should let the market organize itself, and then worry about distribution later). Instead, Dean wants to restructure markets from the get-go so as e.g. to rein in the political power of finance by taxing certain transactions, getting rid of the ‘too big to fail’ problem etc. This political program (like all political programs) emphasizes some problems and de-emphasizes others. But it is, emphatically, a political program, with a theory of what is wrong with the US political economy, and how to fix it.

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. If he is uncertain about whether Chicago-style anti-trust thinking should sometimes be trumped by political considerations, then he should look again at the arguments around the Microsoft trial, which connect directly to the intellectual property questions that he worries about (as a lot of post-Chicago people argued, monopolies tend to stifle innovation in a variety of ways). It isn’t only pro-labor people who would like to see other arguments than George Stigler-style reasoning play a role in anti-trust decisions. If he believes (as he seems to) that inequality is a bad thing, and that current IP policy helps to foster inequality, then he should draw political conclusions from these causal connections.

For what it’s worth, I think that the open information agenda, and the political inequality agenda have a lot more in common than most people think (I have been planning for some time to do more writing on this over the next year). I think it would be a lot more useful to frame the argument as one between different ways of restructuring markets so as to tackle problems of inequality at their source than as one between neo-liberalism and its critics. For one thing, even while different ways of thinking about markets and inequality might point in different directions in specific instances, it would be easier to figure out the trade-offs, especially as they are trying to reach the same end-goal. For another, it would be easier to identify the possible political actors and coalitions that might support the one, or the other, set of reforms, and possible points of agreement or disagreement between them. Both of these would conduct towards better debate.

{ 240 comments }

1

Dave 09.06.11 at 4:22 pm

(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.

2

Rob Hunter 09.06.11 at 5:10 pm

Seconding Dave’s (#1 above) observations and interest.

3

Darin London 09.06.11 at 5:34 pm

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.

4

Matthew Yglesias 09.06.11 at 5:52 pm

I apologize for my ignorance, but I don’t know in this context which side “Chicago-style anti-trust thinking” is on. 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.

Does “Chicago-style” thinking say the union is right or that the union is wrong?

5

Matthew Yglesias 09.06.11 at 5:58 pm

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.

6

John Quiggin 09.06.11 at 6:08 pm

@4 At least as I was taught it, Chicago-style thinking would see the CWA’s position as evidence that the merger is anti-competitive and undesirable, whereas a merger between nonunionised firms in an unregulated industry would be, at least prima facie and for hardline Chicagoans invariably, beneficial (at least in the sense that government shouldn’t interfere with the process).

7

bianca steele 09.06.11 at 6:32 pm

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.

8

Barry 09.06.11 at 6:42 pm

Matthew Yglesias 09.06.11 at 5:52 pm

” I apologize for my ignorance, but I don’t know in this context which side “Chicago-style anti-trust thinking” is on.”

In short, that antitrust law is teh Evul. IIRC, the Chicago School (through their Law & Economics program) was prominent in trashing antitrust law in the 70’s, 80’s and 90’s.

9

Henri Vieuxtemps 09.06.11 at 6:47 pm

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.

10

Henry 09.06.11 at 6:52 pm

Matt – by Chicago style thinking, I mean arguments on behalf of an anti-trust policy that is focused on consumer benefits. As developed e.g. by Stigler, this suggests that anti-trust enforcement should be rare at best – but this seems to me not necessarily to follow from the prior. Many of the criticisms of the Stigler approach by information-focused legal scholars, have focused on the dynamic costs to innovation of powerful monopolies that can squash disruptive innovators, and use their innovations themselves, hence providing disincentives to non-monopolies to engage in research etc.

And I’m willing to be convinced that you have a radically egalitarian agenda as stated above – but I think it would do a lot of good if you actually stated that agenda, and talked more explicitly about the politics of getting it implemented. It may be “their” problem that they don’t understand you, but this misunderstanding clearly annoys you, given your repeated posts, and an explicit statement of what your extremely left wing agenda is, and how it might be achieved, would go some considerable way towards addressing this misunderstanding. This is what I was trying to push you to articulate with the “theory of politics” stuff – but if it’s easier to think of it as agenda and means to implement it, that works too.

11

Dragon-King Wangchuck 09.06.11 at 6:53 pm

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.

12

Dragon-King Wangchuck 09.06.11 at 7:29 pm

Also too, is repatriating 5,000 call centre jobs teh going price of merger approval? That’s teh same number as when AT&T acquired BellSouth.

13

bianca steele 09.06.11 at 7:48 pm

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.

14

b9n10nt 09.06.11 at 8:08 pm

Henry in the OP:

If you believe, as Jacob Hacker and Paul Pierson, Paul Krugman etc believe, that the decline of the US labor movement is an important explanatory factor for the rise of inequality in the US, and if you believe that inequality is a problem, then of course you want to think about the consequences of anti-trust policy for union strength.

Unless you think strengthening labor is, now, a very inefficient, politically hazardous route towards egalitarianism. One could acknowledge the prior strength of unions was an engine for equality, but posit it won’t be in the future.

As Matt is saying in this post, profound political inequalities are baked into the cake of our current market economy. But if this is right, then it is implausible that we can let markets do their thing, and then worry about the distributional issues later

They are baked into the cake of this market economy, but needn’t be baked into the cake of a market economy. I think Denmark is supposed to be the example here. The distributional issues can come “first”: a strong safety net and human capital (education and training, healthcare, environmental well-being) are considered public goods. And then neoliberalism comes “later”: engender market competition amongst fundamentally economically secure actors, remove subsidies for non-public goods. Not sure where finance fits into this systemic approach. gotta go.

15

Steve LaBonne 09.06.11 at 8:13 pm

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.

16

Henry 09.06.11 at 8:26 pm

What Steve says. The best account of Denmark’s flexible labor market policy that I’ve seen is Toby Schulze-Cleven’s dissertation. Toby argues that the reason why Denmark has been successful in adopting a flexible-social-democracy-for-all high skills approach is because of its very high unionization rates.

17

StevenAttewell 09.06.11 at 8:34 pm

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.

18

Hidari 09.06.11 at 8:42 pm

Not really relevant but I think it’s funny

19

StevenAttewell 09.06.11 at 8:45 pm

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.

20

john c. halasz 09.06.11 at 8:56 pm

Well, I got slapped down here a while back for saying it’s not nearly enough to attempt to correct for market outcomes by post hoc redistributive policies alone, without first addressing the structure of production that results in the distribution of income (and power) in the first place. Though that’s actually a very old point…

21

Kim Weeden 09.06.11 at 10:00 pm

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.

22

Harold 09.06.11 at 10:27 pm

This is the only thing I could find on Dean Baker’s site about schools:
http://www.cepr.net/index.php/blogs/beat-the-press/why-is-it-relevant-that-epi-gets-money-from-teacher-unions-but-its-not-relevant-that-erskine-bowles-gets-350000-a-year-from-morgan-stanley

The above does not resemble Matthew Yglesias’s counter-intuitively “radical egalitarian” postings. I couldn’t find anything about teachers’ unions constituting an oppressive and progress-blocking “status quo” on the cepr site. Nor did I notice anything there about the supposed need to add density to central cities with one-person luxury studio apartments in high rise condominiums (rather than, say, multi-bedroom, family oriented middle class housing.) I say this more in sorrow than anger.

23

mds 09.06.11 at 10:50 pm

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.

24

b9n10nt 09.06.11 at 11:50 pm

15, 16 thx.

Sufficient unionization to create all those juicy external improvements to non-labor workers seems a dream. So does the “neoliberal” alternative, or course. But the latter, where our energies go towards universal labor market interventions, seems to have more promise:

-I’m always very pursuaded by free-market critiques of notionally free-market political programs (“The Conservative Nanny State”, Dean Baker). This is a jujitsu-like rhetorical move wherein you can use all that pro-market rhetoric that saturates the media against the Elites who so selectively employ it. I think there’s ideological traction.

-Perhaps there’s even momentum: is it not intrinsically conceded by the mainstream that universal health care, educational opportunity, and retirement security is a worthy goal?

-There’s a wedge between workers and consumers, unionized and nonunionized, that’s ripe for exploitation in any pro-union campaign. But a campaign for universal social programs, at least potentially, unites a broad middle class and lower class against the top.

I’m really projecting from my own experience, of course. When my (teacher) union tried to organize for better wages, benefits, and working conditions, I couldn’t really shake the feeling that we were all pretty damned priveledged all ready. Looking out for me and my kind (educated professionals with uniquely secure job status): that’s not what gets me involved in politics.

25

b9n10nt 09.06.11 at 11:50 pm

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

26

KCinDC 09.07.11 at 12:00 am

Darin London, your talk of patent suits being about “stealing ideas” seems odd when you’re recommending that This American Life episode, which made it clear that the problem is software patents on obvious things that should never have been allowed in the first place. Companies are being sued for independent “invention” or use of perfectly ordinary things, not stealing.

27

Simon 09.07.11 at 12:05 am

@ 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.

28

Simon 09.07.11 at 12:12 am

Sorry that was unnecessary. I just believe that whatever you call Matt’s perspective neo-liberalism or not, its certainly a left wing one that aims towards egalitarian ends broadly defined. It may lack a theory of politics in the grand sense, but were these goals adequately communicated it would be a good platform.

29

Simon 09.07.11 at 12:15 am

@ 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…

30

Harold 09.07.11 at 12:32 am

“more money directly in the hands of the recipients of social services.” Vouchers?

The enemy are the workers’ cartels? Unions?

Greater equalization of opportunities in K-12? Charter schools?

Oh, and where is this paternalistic “welfare state” of which you speak?

As a radical leftist program this is an epic fail.

31

Watson Ladd 09.07.11 at 12:35 am

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.

32

Simon 09.07.11 at 12:42 am

@ Harold

Full employment, redistribution, breaking up of privileged rent seekers etc seems pretty good to me. Not radical, no. But what is? Is it betteR?

33

Harold 09.07.11 at 12:59 am

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.

34

StevenAttewell 09.07.11 at 1:10 am

Simon – it is radical, but it’s a distinctively “New Liberal” radicalism. We can see this in the emphasis on social services as being a commodity enjoyed by individuals, as opposed to a collective good collectively consumed, the emphasis on clearing away barriers and distortions of a classical liberal market (rents, subsidies, licensing), etc.

I think what some people (as myself) are saying is that this is just one variety of radical agenda, and that there are alternatives we might find preferable. Some of us would be satisfied with 1909 Lloyd George, others of us prefer 1945 Clement Attlee; but even that’s a bit too broad of a comparison. Let’s put it this way, even within liberalism, we have a choice between the NRPB or Leon Keyserling or Walter Heller (on full employment, for example), and all of those options are (in their own way) radical, but they have incredibly consequential differences.

And I think that list actual distorts Yglesias positions on some important issues. “Macroeconomic stabilization policy that seriously aims for full employment” should read “monetary stabilization poverty” – which Yglesias emphasizes much more strongly than fiscal policy. Likewise, “More redistribution of money” tends for Yglesias to be on the distribution side, not as much on the taxation side. Not that these things are a sign of moral turpitude – but they’re important policy choices that have to be talked about openly rather than breezed over.

“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.”

35

Simon 09.07.11 at 1:28 am

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

36

Simon 09.07.11 at 1:29 am

@ Steven. Very helpful comments, thanks.

37

Eli Rabett 09.07.11 at 1:38 am

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

38

StevenAttewell 09.07.11 at 1:46 am

@ Simon. De nada.

39

Steve LaBonne 09.07.11 at 1:47 am

“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?

40

Steve LaBonne 09.07.11 at 1:54 am

“Macroeconomic stabilization policy that seriously aims for full employment” should read “monetary stabilization poverty”

Not to give you a hard time, Steven, but I just wanted to admire the superb Freudian slip. ;)

41

StevenAttewell 09.07.11 at 2:12 am

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.

42

Simon 09.07.11 at 2:17 am

Long book! Worth it?

43

Harold 09.07.11 at 2:20 am

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.

44

Simon 09.07.11 at 2:40 am

How do we know that? I’m not challenging you, its just we’re so bombared with waste in government that I need a way to know.

45

temp 09.07.11 at 2:49 am

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.

46

Bruce Wilder 09.07.11 at 2:51 am

How do we know what? How do we know that the American economy is dominated by predatory rentiers?

47

Simon 09.07.11 at 2:53 am

Bruce,

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

Best,

Simon

48

Harold 09.07.11 at 3:03 am

How do we know?

http://www.wwnorton.com/college/polisci/spitzer/ch10_review.htm

Despite the general belief that the federal bureaucracy has grown too large and unresponsive, the size of the federal bureaucracy has remained stable over the past 25 years, and has actually declined when compared to the size of the civilian workforce or the increase in federal spendind

49

temp 09.07.11 at 3:15 am

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.”

50

Bruce Wilder 09.07.11 at 3:18 am

You did not incite me, Simon.

Like Harold, I’m angry. Why aren’t you?

51

john c. halasz 09.07.11 at 3:25 am

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.

52

Simon 09.07.11 at 3:40 am

@ Bruce

Because everyone is angry, left and right, and its overwhelming me emotionally. Can’t figure out the way to go when everyone is so indignant.

53

Harold 09.07.11 at 3:57 am

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).

54

StevenAttewell 09.07.11 at 4:19 am

Simon. – yes, it’s worth it. Power Broker is a book I’d make every progressive read as a primer on urban politics and political economy.

Regarding the size of government (which people should be educating, not excoriating about), the key metric here is public sector workers per capita as a guide to the size of the government relative to the rest of the economy and society. Currently, the rate is 8.4 per 1000. 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. The need has gone up – see Harold at 43 – but the workforce has gone down.

Temp – the advantages to jobs are threefold. First, there’s the issue of production – if we merely hand out cash at a time of high unemployment (and soft labor markets even in good times), then the labor of the unemployed gets wasted – which is a huge benefit forgone by society as a whole. Second, there’s the issue of public goods – handing out checks floods more money through existing channels, but doesn’t do anything to address the disparate availability of public and private goods (GMI won’t bring more schools, for example). Third, there’s the issue of political legitimacy – Americans who are deeply suspicious of government handouts tend not to support naked transfer systems, but do support giving people jobs.

55

b9n10nt 09.07.11 at 4:20 am

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.

56

StevenAttewell 09.07.11 at 4:26 am

Finally, I’d add that in addition to a narrow Tayloristic consideration of how much services we get for each dollar in Federal pay, there is also a strong moral component to public sector employment. The Federal government/public sector more broadly functions as a yardstick for other employers – should workers get bathroom breaks?Should workers have an eight hour day? Should they have maternity leave?

By answering yes, we challenge the assumption that any worker should not be treated this way. And historically, many of these rights were granted first in the public sector before being extended into the private.

In other words: we could save a lot of money by treating government workers like Walmart workers or by privatizing key functions. Is it progressive to do so?

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StevenAttewell 09.07.11 at 4:31 am

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.

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temp 09.07.11 at 4:50 am

StevenAtwewell, on your three points:

On your first point, the government should ensure full employment through an appropriate combination of fiscal and monetary policy. Hiring unemployed people during a recession to do productive work–with the understanding that they will return to the private sector after the economy improves–makes a lot of sense. This is different than what Matt is arguing against, which is long-term government employment as a welfare program for government employees.

As for your second point, I don’t see how it contradicts the proposition that the purpose of government programs should be to provide public services. If we are deficient in public goods, we should hire public sector workers to provide public goods, because of the value of those goods. That is Matt’s main argument.

On your third point, I’m not convinced. Americans see medicare and social security as legitimate. On the other hand, I don’t think most Americans see government make-work as fair or appropriate, and the right seems to get a lot of mileage out of the caricature of the parasitic bureaucrat. If you polled Americans on whether they’d rather have their tax dollars go towards new broad-based public services (e.g. more public provision of education and health) or towards increasing the salaries of government employees which do you think they would choose?

59

Gene O'Grady 09.07.11 at 5:01 am

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.

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temp 09.07.11 at 5:01 am

“In other words: we could save a lot of money by treating government workers like Walmart workers or by privatizing key functions. Is it progressive to do so?”

But this gets back to what I said earlier: Sure, government jobs are great for those that get them, but what about those that don’t? Walmart still treats its workers like Walmart workers. If conditions of Walmart workers are bad, isn’t it better, from an egalitarian perspective, to improve those conditions on all workers through regulation, rather than providing a better job for 20% of their employees and leaving the rest in the same position? Or, my favored “neoliberal” position: provide everyone enough income that they don’t need to work at Walmart. Then Walmart will need to improve its conditions if it wants anyone to work for them.

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b9n10nt 09.07.11 at 5:20 am

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.

62

Simon 09.07.11 at 5:26 am

Thanks Steven for your civility. Harold, I guess I will get out of the kitchen, as apparently you are too angry to teach someone eager to learn.

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Harold 09.07.11 at 8:13 am

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.

64

mds 09.07.11 at 1:18 pm

Sufficient unionization to create all those juicy external improvements to non-labor workers seems a dream.

More precisely, it seems a nostalgic dream, because such external improvements happened. Union-won benefits found their way to the general workforce, especially in the case of wage levels. But I would agree that climbing back to those lofty heights is a daunting task.

look at what the collapse of the post office will do to the black middle class, for example.

In a long list of vicious crimes against the working class and the general welfare, the Postal Accountability and Enhancement Act of 2006 remains an impressive accomplishment, not least for its stealth. The USPS had demonstrated a distressing recent record of moderate success with their bottom line, despite the lack of taxpayer subsidies, restrictions on postage rate increases, and their universal delivery mandate. So they were forced to pre-fund over ten years their pension program 75 years out, to the tune of $5.5 billion a year. Without those additional mandated payments, the USPS wouldn’t be in crisis and facing a winter shutdown. But the postal service is a government program, and one that does its job pretty well [Spare me the petty anecdotes about your anaconda dying in its shipping crate], while offering union jobs that don’t require advanced degrees. So it has to be destroyed. (Thankfully, the New York Times is on the case, blaming the crisis on the high costs of a unionized workforce where no one can be fired, so I’m sure we’ll see the tricorner-wearing Tea Party charging to the rescue of Ben Franklin’s legacy any day now.)

65

Alex 09.07.11 at 1:21 pm

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.

66

Steve LaBonne 09.07.11 at 1:34 pm

(Thankfully, the New York Times is on the case, blaming the crisis on the high costs of a unionized workforce where no one can be fired, so I’m sure we’ll see the tricorner-wearing Tea Party charging to the rescue of Ben Franklin’s legacy any day now.)

For those of us who are from the NY area and who grew up on the NYT when it was still a great newspaper, its devolution into a genteel version of Fox News has been one of the most depressing things about our depressing era.

67

Simon 09.07.11 at 2:44 pm

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.

68

Harold 09.07.11 at 3:09 pm

I am not going to be “nice” to a bogus theory based on bogus ideas that cause real suffering to real people.

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SamChevre 09.07.11 at 3:53 pm

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.

70

Bill Benzon 09.07.11 at 5:03 pm

@Harold #68: Perhaps you could be nice to a person?

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Harold 09.07.11 at 5:16 pm

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!

72

Steve LaBonne 09.07.11 at 5:28 pm

Samchevre, try looking it up rather than giving us your “impression”. There’s this amazing new Intertubes invention called the “search engine”. Do try it and let us know what you discover.

73

Harold 09.07.11 at 5:29 pm

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.

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SamChevre 09.07.11 at 5:52 pm

Steve Labonne,

As your first chart makes exactly the point I was making, I’ll just re-post the link: Government employees as a percentage of population has gone up by about 20% since 1962 , although federal executive branch employees per capita have gone down by about 30%. I conclude that state and local government employment has gone up as a percentage of popualtion.

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Harold 09.07.11 at 5:53 pm

Labor Day, I mean, sorry.

76

Steve LaBonne 09.07.11 at 5:59 pm

SamChevre, that’s a remarkably dishonest way of spinning data that show 1) total government employment as % of population hasn’t gone up since around 1970, and 2) it has actually been declining steeply since 2008. But I’m sure when you prated about “growth” you only meant “growth that occurred decades ago and has long since halted”. Yeah, right.

77

Harold 09.07.11 at 6:53 pm

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.

78

Henry 09.07.11 at 7:15 pm

Harold – you can express strong disagreement without simultaneously trying to give as much offense as you possibly can. Try it please. Thx.

79

StevenAttewell 09.07.11 at 7:56 pm

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.

80

StevenAttewell 09.07.11 at 8:04 pm

60
temp at 60 –

My whole point is that government jobs aren’t necessarily good – that’s a choice we have to make.

As for those that don’t have government jobs, the question is whether we’re more likely to improve the conditions for all workers if we treat government workers like WalMart workers or if we treat them better. I don’t see how the latter precludes general improvement – in fact, given that better-paid unionized workers can provide enormous resources to low-wage non-union workers through unionization drives, support for progressive legislation, multiplier effects, I think it helps by itself.

As for your favored neoliberal position, the problem is people HATE it. GMIs poll horribly in the U.S, pretty much since the beginning of polling. You know what polls really well? Direct job creation by the Federal government.

81

StevenAttewell 09.07.11 at 8:07 pm

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.

82

Harold 09.08.11 at 2:24 am

It may be that someone who reacts with anger makes other people feel bad, but it is a strange tactic in an internet discussion to say that — rather reminiscent of the way people who opposed the Iraq war used to be referred to as “shrill.” Frankly, I find it very hard to believe that Simon is really genuinely upset at anything I have said. He and Matt appear upset that neoliberal positions provoke strong and usually very cogent disagreement — but if a hundred people strongly disagree with you and only a few people agree, then it would appear to be in order to go back and check one’s data (using google or books or whatever).

83

kidneystones 09.08.11 at 3:10 am

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.

84

Simon 09.08.11 at 3:21 am

@ Harold. I was a little upset actually, although maybe I’m a little thin skinned. I don’t hold any strong “neoliberal biases”, I just want all world citizens to have lives where essential needs such as food, housing and healthcare are met, and where they have job and economic security in careers that allow them to feel fulfilled. I also want to avoid violence if at all possible. Any way that will allow me to bring that about works.

@ Kidney- Why was he told to slow down?

85

Simon 09.08.11 at 3:21 am

*allow us

86

kidneystones 09.08.11 at 3:29 am

Follow up to the discussion of high unionization rates in Denmark. I’d be interested to see if the Denmark example is scalable. My guess, just that, is that there’s a correlation between shared social identity and willingness to join unions. This sense of shared identity is most probably rooted in geography and history. Denmark, as a community/nation/kingdom or economic ethnic entity has been around a lot longer than the any individual state in the US, for example. Has been subjugated several times as memory serves and does not suffer from any particular virulent ethnic or religious divisions of the sort we see elsewhere. I take Henry as a reliable authority on the literature. Given the level of tribalism we see on this board and elsewhere, however, I can’t see many here rushing out to build bridges or collective solidarity with the local Palin voters. Which is, of course, the core of union work: respecting and setting aside individual differences to work together for mutual benefit. The key is building those initial bridges and then identifying areas for agreement. Might work in Denmark, can’t see it happening anywhere in the US no matter how smart Matt may or may not be.

87

kidneystones 09.08.11 at 3:31 am

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

88

temp 09.08.11 at 3:44 am

StevenAtwell@79:

We are not normally in a recession, but it seems to me that the basic calculation is the same. If the choice is to employ an unemployed person in the public sector or private sector, the choice should be made based on the relative social value of the product of that person’s labor in either sector. Then broad-based redistribution programs can distribute on the basis of wealth and not sector of employment. I don’t think this contradicts your point 2.

I think you have basically conceded point 3. There are broad-based redistribution programs that are seen as legitimate. We are not at a stage where we need job programs to redistribute wealth due to a lack of prospective democratically-legitimate broad-based social programs. Even hiring more cops and teachers counts, as long as you hire them for the services they provide (which is why people support hiring cops and teachers) rather than to provide them with good employment.

@80: If you have a dollar to be used to promote social welfare, you can give it to government employees, or you can use it to help people in a class-based sector-neutral manner, whether through regulation or redistribution. Given the choice, I would always prefer to latter, rather than hoping that the benefits to government workers trickle down to the working class generally. If your only objection is that sometimes this choice doesn’t exist, and it’s more politically practical to help government workers, then we have no argument–I’d rather a teacher get the money than some rich person.

89

Simon 09.08.11 at 4:00 am

@ 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.”

90

kidneystones 09.08.11 at 4:32 am

Hi Simon @89,

Thank you. Twas a good short paper. I enjoyed especially the concluding paragraphs. There will be people here who are following developments in Holland and Belgium closely. My understanding, however, is that Geert Wilders is enjoying new found support from constituencies that only recently accused him of being Holland’s Hitler. I just googled him and it turns Mr. Wilders is on his way to Australia, with the assistance of a senior Australian liberal politician. http://www.abc.net.au/news/2011-09-06/geert-wilders-coming-to-australia/2872928. John Cleese, I believe, found himself in hot water recently for declaring that London is no longer an “English” city.

My own view is that there are real limits regarding what governments can do when voters decide to vote against their own interests. Reagan took an axe to the union movement in the US. But was able to to do so, in part, because a sufficient number of Reagan democrats favored his chest-thumping patriotism and and anti-communism. In the last three or four years, only Russ Feingold has provided the kind of thoughtful and informed response to divisions of this kind. He caved to the WH on health care, when he was one of the few to call a national system un-workable. He abandoned his own position for that of the WH and paid the price. There’s a lesson there, I think.

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. Nor are Dems, at the national level, about to trim the fat. The FDA wants to start a new registry for women who’ve had breast implants. Participants are required to complete a 25 page document and be monitored for ten years. This is the kind of ill-timed program that makes wining support for government borrowing extremely difficult.

Democrats have, in a two and a half years, convinced many Americans that Dems can’t provide the leadership Republicans can. Food for thought, yes?

Cheers

91

StevenAttewell 09.08.11 at 4:52 am

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.

92

kidneystones 09.08.11 at 5:37 am

Steven Attwell writes

You’re reading skills need a tweak, I’m afraid. Extending UI benefits so that people remain without work for up to two years is something very different from “ending UI benefits.” You fail completely to grasp the essential point. People need to be working for their money. Going on UI isn’t a desirable outcome any more than a broken leg and a stay at a hospital is. You similarly confuse: hiring more government workers with hiring the un-employed to do union work at below union wages. I just spent a short time googling “public service unions demand direct hire” and came up with nothing that comes close to supporting your unfounded assertion.

You’ll need to clarify your remarks. I’d actually be pleased to learn that public service unions have been demanding the direct hire of the un-employed to non-union low wage paying temporary jobs for years. Looking forward to your links.

Cheers.

93

Henri Vieuxtemps 09.08.11 at 6:54 am

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.

94

Hidari 09.08.11 at 7:05 am

@65

I too have worked at a call centre (that’s not what it called itself but that’s what it was). And oh for the good old days of being ‘fired’! Nowadays they all have zero hour contracts and no one gets fired: they just never call you again and you never find out why. All nice and legal. Also enables them to wildly overstate the amount of ‘permanent’ staff they have and the amount of ‘jobs’ they contribute to ‘the economy’. Let’s the ‘Government’ massage the unemployment stats too. Colleges use zero hours contracts too now. Universities will be using them in 5 years time, I guarantee it.

95

Steve LaBonne 09.08.11 at 11:18 am

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.

96

Cahal 09.08.11 at 11:46 am

The fact that Yglesias thinks he is extreme left highlights the horrendous state of the Overton window at the moment. I saw Scott Sumner refer to Krugman as ‘extreme left’, too. Krugman & Yglesias are 60s Republicans.

97

SamChevre 09.08.11 at 12:25 pm

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).

98

Steve LaBonne 09.08.11 at 12:35 pm

What those guys were making in 2006 represents the endpoint of decades of squeezing the working class dry. Once again, I reject the idea that the same government that can bail out the banksters on a trillion-dollar scale has to be as miserly when hiring workers workers as the most miserly private employers. An argument as to why that’s good public policy is needed, not just an assumption.

99

Alex 09.08.11 at 12:41 pm

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.

100

Steve LaBonne 09.08.11 at 12:43 pm

Having said that, I will also admit that in some parts of the country union scale for unskilled laborers may well be considerably out of hand, and in such places the unions might indeed have to bend substantially on the conditions of a government direct hiring program. I’m not sure why this would be perceived as an impossible agreement to reach if the government negotiated in good faith, given all the concessions that both public and private unions have been making the last few years to save jobs.

101

Simon 09.08.11 at 1:34 pm

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

102

Steve LaBonne 09.08.11 at 1:45 pm

Simon, I think that’s pretty obviously the case in a country where “Obama is a socialist” is clearly just a cleaned-up version of “Obama is a n*****”, and where elderly racists ride to teabagger rallies in their Medicare scooters but claim they don’t benefit from government programs whereas “those people” are living high on the hog at their expense. I think that any honest social democrat will admit that this is a big problem whose solution is not obvious.

103

Harold 09.08.11 at 2:29 pm

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.

104

Simon 09.08.11 at 2:32 pm

Now we can agree Harold.

105

Simon 09.08.11 at 2:35 pm

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

106

E.D. Kain 09.08.11 at 3:39 pm

This is an excellent post, Henry.

107

temp 09.08.11 at 5:08 pm

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?

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Harold 09.08.11 at 6:03 pm

First of all, it is not a “jobs program” to staff (or rather to restore after the Bush, Clinton, and Reagan cutbacks, outsourcing, and deregulation) the civil service with competent people at the levels needed for effective operation, especially in areas having to do with public safety and financial regulation. Contracting out — which may have worked in some situations, has not been effective in all and should be reassessed. Temps’s prescription: “give them the same social benefits given to all other workers (which progressives should focus on expanding)” seems to conceal the meaning “don’t give them more benefits than [non-unionized] private sector workers.” This is a mischievious attempt to further destroy the permanence, effectiveness, and moral, of the government. Putting off implementation of decent working conditions until everyone can have them is the same as pie-in-the-sky-when-you-die does not constitute a genuine “radical” “leftist” position, but falls into the category of Voodoo and deceptive rhetoric.

109

kidneystones 09.08.11 at 6:43 pm

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.

110

SamChevre 09.08.11 at 6:51 pm

First of all, it is not a “jobs program” to staff the civil service with competent people at the levels needed for effective operation, especially in areas having to do with public safety and financial regulation.

No, it isn’t; for one thing, it would do absolutely nothing to help the lower-skilled unemployed.

111

Steve LaBonne 09.08.11 at 6:52 pm

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.

112

Henri Vieuxtemps 09.08.11 at 6:55 pm

Paternalistic bullshit, kidney. There’s nothing unproductive in being unemployed. It’s much more productive to paint sunsets at home, than working 40 hours/week as a walmart greeter, or, for that matter, building yachts and private jets for hedge fund managers.

113

Simon 09.08.11 at 7:00 pm

@ Henri

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

114

Simon 09.08.11 at 7:01 pm

Some jobs will always suck, we just need to make sure they’re no more than a springboard to bigger and better things.

115

Gene O'Grady 09.08.11 at 7:04 pm

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.

116

temp 09.08.11 at 7:07 pm

Harold:

I don’t know how many times I have to say this. Matt’s original position, which I agree with, was that public services should be public services rather than jobs programs. The claim that we should “staff (or rather to restore after the Bush, Clinton, and Reagan cutbacks, outsourcing, and deregulation) the civil service with competent people at the levels needed for effective operation, especially in areas having to do with public safety and financial regulation” is in agreeement with this position. It is not an argument against it. Socially beneficial regulation is a valuable public service.

And no, my prescription to expand benefits for workers in a sector-neutral manner conceals nothing. I genuinely believe progressives should focus more on building an effective universal healthcare system and a more progressive tax structure than on expanding benefits for government workers. I don’t think either of these goals are pie-in-the-sky, considering that every other industrialized nation has managed to attain them.

117

SamChevre 09.08.11 at 7:23 pm

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.

118

Harold 09.08.11 at 8:09 pm

“I genuinely believe progressives should focus more on building an effective universal healthcare system and a more progressive tax structure than on expanding benefits for government workers.”

Of course we should focus on achieving a universal health care system and a progressive tax structure.

No one has ever proposed to “expand” benefits for government workers. It is existing benefits “Cola” increases, retirement age, that are being cut back. Accusing non “neo-libs” of wanting to “expand” government benefits, because they wish to preserve these benefits (which exist because of the otherwise rather low salaries government workers receive) is a divisive red herring. Preserving government benefits and expanding hiring is not inconsistent with the goals you purport to seek.

119

Tom Bach 09.08.11 at 8:29 pm

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?

120

Harold 09.08.11 at 8:54 pm

Defense and homeland security are the elephants in the room.

121

kidneystones 09.09.11 at 1:22 am

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.

122

Simon 09.09.11 at 2:29 am

Bravo.

123

Bruce Wilder 09.09.11 at 3:23 am

@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.

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Harold 09.09.11 at 3:33 am

It is not the lecturers who “sneer” at low wage labor — having stuffed envelops, waited tables, and done much low-level clerical work myself, I can vouch for this, but the would-be billionaires from business schools — who also, by the way, sneer at “lecturers”, teachers, and professors.

125

Harold 09.09.11 at 3:37 am

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

126

Henri Vieuxtemps 09.09.11 at 7:36 am

Sorry, I shouldn’t have called it ‘bullshit’.

I don’t know what “honorable” means, and I don’t understand this weird moralistic insistence that “people should work for their money”.

Are you a communist? He who shall not work shall not eat? Is that it? If not, why should people work for their money? Most of the money in the system are not received by those who do the work.

127

Steve LaBonne 09.09.11 at 11:23 am

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.

128

Simon 09.09.11 at 1:38 pm

“Most of the money in the system are not received by those who do the work.” Is this a rehash of the labor theory of value or something? Rent seeking is a problem, but profit in a capitalist system can flow heavily to those who risk capitol, supervise the process of production, create new means of production, organization, or distribution etc. Its not just labor.

129

Henri Vieuxtemps 09.09.11 at 2:03 pm

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?

130

Simon 09.09.11 at 2:26 pm

You’re putting words into my mouth. I have no problem with UI. 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)

131

Steve LaBonne 09.09.11 at 2:31 pm

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.

132

Henri Vieuxtemps 09.09.11 at 3:09 pm

So, then, to those who “risk capital” the virtues of hard work do not apply? They are no dishonored by spending their days, instead of greeting walmart shoppers, in posh restaurants and bordellos, by the virtue of their risking their capital?

So, how come someone who can’t find a well-paid and fulfilling job doesn’t qualify for an exception too?

133

Bruce Wilder 09.09.11 at 3:17 pm

@130

“capitalism rewards risk and innovation”

And, predation. Capitalism rewards predation.

134

Simon 09.09.11 at 3:19 pm

@ Henri

No one is saying that UI is a “moral outrage.” Stop putting words in our mouth. And of course people should work for their money under normal circumstances (when they’re not disabled, sick old etc). Now you can argue that some kinds of work are wrong, but people on wall street are employed and working whether you like it or not. If you would just calm down for a second maybe you would see that.

135

Simon 09.09.11 at 3:20 pm

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.

136

Walt 09.09.11 at 3:52 pm

Simon, I missed where you had been put in charge of the comment section.

137

Tom Bach 09.09.11 at 3:57 pm

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.

138

Tom Bach 09.09.11 at 4:26 pm

One other thing, the current economic system doesn’t reward “risk.” Ask anyone who risked it all and opened a new, let’s say, restaurant that closed two months later how much their risk got rewarded.

139

temp 09.09.11 at 4:34 pm

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.

140

Bruce Wilder 09.09.11 at 4:35 pm

Simon @135: “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 “everyone” knows that capitalism rewards predation, and I say so, why is that considered “snarky”, instead of a commonplace?

And, why are you getting angry?

If capitalist predation is forcing large numbers of people into unemployment and lower-wage work, where they produce less of material value for themselves and others, why shouldn’t I say so? What’s snarky about telling the truth?

141

Harold 09.09.11 at 4:35 pm

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”?

142

Tom Bach 09.09.11 at 4:45 pm

Temp:
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.

Why does he do this? Neoliberalism’s commitment to the “free” market despite the abundant evidence that “free” markets don’t work as Neoliberals claim they do.

It’s not just the consistency as it the ignorance.

143

Steve LaBonne 09.09.11 at 4:52 pm

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.

144

Tom Bach 09.09.11 at 4:53 pm

Steve LaBonne:
Exactly.

145

Substance McGravitas 09.09.11 at 4:53 pm

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.

146

geo 09.09.11 at 4:57 pm

Simon @128: Rent seeking is a problem, but profit in a capitalist system can flow heavily to those who risk capitol, supervise the process of production, create new means of production, organization, or distribution etc

My impression is that the bond market is much larger than the stock market, which I assume means that most wealth comes from rent rather than entrepreneurial risk-taking or creative management. It would be nice if someone who knows something about the contemporary US economy would address that question.

147

temp 09.09.11 at 5:06 pm

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.

148

Simon 09.09.11 at 5:13 pm

@Geo good point, although bonds can default too so there is risk involved there. Additionally, whats 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.

@Walt,Tom and Bruce: My comment was stupidly phrased. But just because a restaurant fails doesn’t that capitalism doesn’t reward risk. Were the restaurant to have succeeded, the owner would have gained more income than he would have by working as a waiter.

149

Harold 09.09.11 at 5:20 pm

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.

150

Steve LaBonne 09.09.11 at 5:21 pm

Simon, the people reaping most of the rewards are risking investors’ money, not their own, and the taxpayers kindly ride to their rescue whenever even the investors’ money is lost in stupid bets. And the biggest incomes now go in CEO compensation, not as returns to investment (you could, as Yogi Berra would say, look it up.) Please put down the damn Econ 101 textbook and open your eyes to the real world.

151

kidneystones 09.09.11 at 5:43 pm

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.

152

Steve LaBonne 09.09.11 at 5:50 pm

kidneystones, by your own description you work with a subset of the unemployed who do need to work on their employability. Do you really suppose that the bulk of the people who have lost their jobs since 2008 fall into this category? Many had quite solid employment records before the banksters blew everything up. I’m not sure that sanctimonious advice is high on the list of things they need.

153

Harold 09.09.11 at 5:54 pm

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”? )

154

Simon 09.09.11 at 5:58 pm

@ Kidneystones: I think we could close the deficit pretty easily with good tax reform, ideally eliminating loopholes so that we can see lower nominal rates but increase revenue. Or RObert Franks idea of a progressive consumption tax. I find Krauthammer’s hypothesis hard to believe. The debt “explosion” under Obama is due to the stimulus, decreased revenue, UI insurance etc.

155

Watson Ladd 09.09.11 at 6:41 pm

@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.

156

Tom Bach 09.09.11 at 6:43 pm

Temp:
No my objection is the phrase is meaningless. Yglesias insists that some state jobs are jobs programs but I would need someone to show me one that is not simply insist that some might be. Secondly, my objection to defense etc isn’t that it’s a works or jobs program but, rather, that it is wasteful in two senses. One lots of money goes to waste through corruption and cupidity and two investing the same money into education, infrastructure and related etc would have a positive effect on the economy and the world more generally.

To focus on some narrow ideologically driven notion of “value” instead of focusing on the obvious waste and futility of spending 50% or nearly so of the annual budget is to a sign of a lack of seriousness.

Sort of like insisting that the dignity of labor demands that people work even if there are no jobs or those jobs that there are don’t pay a living wage.

It’s ideologically driven nonsense all the way down.

157

Tom Bach 09.09.11 at 6:46 pm

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.

158

Steve LaBonne 09.09.11 at 6:49 pm

Give me a fucking break, Watson. Being forced to gamble one’s life savings in the Big Casino does not make one a capitalist. (Not that the croupiers are capitalists either- they’re rentiers.)

159

Tom Bach 09.09.11 at 6:50 pm

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?

160

Tom Bach 09.09.11 at 6:55 pm

Few people seem to want people paid high wages for work is essentially manual labor.

Actually those of us who think that the laborer is worthy of his and/or her hire have no problem with paying high wages to manual labor, especially those of us who have done manual labor. It’s the lout-like people who preach the dignity of labor in theory but reject it’s practical application, which is, to paraphrase Harlan Ellison, pay the f@cking worker.

161

Harold 09.09.11 at 6:56 pm

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.

162

Simon 09.09.11 at 6:58 pm

@ Harold: I said the explosion of the deficit under Obama, not in general. This was in reference to Krauthammers accusation that democrats are intentionally running up spending.

163

Simon 09.09.11 at 7:15 pm

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.

164

Steve LaBonne 09.09.11 at 7:19 pm

But over the lifespan people generally move up the ladder from the bottom, am I wrong?

Pretty much, and you’re more wrong with every passing year. We lag farther and farther behind most other industrialized countries in standard measures of social mobility. Unfortunately for our politics, our Horatio Alger self-image has not caught up to this reality.

165

Tom Bach 09.09.11 at 7:24 pm

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.

166

Tom Bach 09.09.11 at 7:26 pm

Simon re K-thug on the living wage, any time anyone anywhere writes, says, or uses semaphores to make a claim based on “econ 101″ ignore them.

167

temp 09.09.11 at 7:27 pm

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.

168

Tom Bach 09.09.11 at 7:35 pm

Temp:
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.

You are, of course, right that some money from defense spending finds its way into the workers pockets and that the loss of working class jobs at, for example, Boeing would be bad. At the same time, military spending, unlike spending on education and infrastructure, produces stuff we hope never to have to use, bombs, tanks, bullets, etc, unless, of course, you’re a warmongerer. Short term badness over long term health, say I.

YMMV.

169

Simon 09.09.11 at 7:56 pm

@ Tom re: semophores afraid I dont understand you.

170

geo 09.09.11 at 8:29 pm

Simon @164: doing too much to artificially leave [raise?] wage rates leads to a broken labor market and job flight

Not to pile on, old fellow, but the idea that a functioning (ie, “flexible” or, in your terms, “non-broken”) labor market is one in which (to simplify a bit) employers can pay whatever they like and outsource jobs (“job flight”) whenever they like seems to beg the question, ideologically. What — or better, who — is “the economy” for, after all?

171

temp 09.09.11 at 8:34 pm

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).

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Simon 09.09.11 at 8:40 pm

Geo-I don’t think its FOR anyone really. 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. We could restrict capital flows, engage in industrial policy etc to raise the wages of American workers as you seem to suggest, but then I’m worried about poverty in undeveloped countries. What options do we leave those people? I’m not saying the only way to bring people out of poverty is to allow huge MNCs to run wild, but I’d like to see as many people with as much money as possible. What do you think?

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geo 09.09.11 at 8:59 pm

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.

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Simon 09.09.11 at 9:09 pm

But who are the ordinary working people ? I feel like in a service based economy the delineation between capital and labor is incredibly hazy, and more importantly, fluid. One of my closest friends worked waiting tables for about six years, trained as a sous chef, then took over as executive chef. Now he supervises other people rather than being supervised, and he loves it. I know the labor movement was incredibly important when workers were being handcuffed to their machines and burned alive in buildings, but what about now. Can we really still call it wage slavery or something and say they need to organize against it?

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Simon 09.09.11 at 9:11 pm

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…

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geo 09.09.11 at 9:25 pm

Can we really still call it wage slavery?

The short answer is yes. I suspect others here will be happy to elaborate.

I’d say its more important to build a broad coalition for things that will relieve the tremendous amount of suffering in the world

Go to it!

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Harold 09.09.11 at 9:27 pm

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

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Bruce Baugh 09.09.11 at 9:37 pm

A simple test of whether the kind of capitalism we have now is reliable with regard to risk:

#1. Has executive compensation in fields demonstrably capable of getting federal bailout and subsidy regardless of the harm they’ve done gone down?

#2. Has executive or worker compensation in organizations in sectors known to be the target of fraudulent abuses by the likes of Andrew Breitbart gone up? That is, for instance, in the wake of ACORN’s destruction by a panicked Congress, are others doing any sort of basic civic mobilization more likely to demand increased compensation? And to get it?

I will be happy to discuss the relevance of risk in earning when the answer to both these questions is “yes”.

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Simon 09.09.11 at 9:48 pm

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

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Simon 09.09.11 at 9:48 pm

Although those numbers are a very good thing to have in my arsenal, so thanks.

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Simon 09.09.11 at 9:51 pm

@ 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.

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Harold 09.09.11 at 10:00 pm

Plumbers are small businessmen. It is a highly skilled and not a terrible job.

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Barry 09.09.11 at 11:34 pm

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.

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Tom Bach 09.10.11 at 12:49 am

Temp:
No, to be blunt. The Neoliberal argument as embodied in Yglesias’ “I have no idea how much this costs but I am against it because it is a regulatory regime I can mock because I know nothing about it” is the problem. Clearly, there is more waste, fraud, abuse, and badly distributed public investment in the defense side of things. However, to do this he would have to reject the notion that the states sole legitimate purpose is defense and a policing function. Those of us who want to create something different, or I should so those of me, are more interested in dealing with concrete cases instead of ignorant rejection of things about which we, which is to say Yglesias, know nothing.

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Harold 09.10.11 at 2:20 am

“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.

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b9n10nt 09.10.11 at 4:17 am

OT:

Simon @67:

“I’m going to stop posting, but….”

Harold @ 73:

“By the way, Simon, how’s your mother? “

For very different reasons, 2 hilarious posts on CT

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b9n10nt 09.10.11 at 4:37 am

-(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?

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kidneystones 09.10.11 at 7:45 am

Steve Labonne @152 writes….

You’re correct about the subset: folks needing to rebuild credit histories, etc. The problem is that many of the people you describe believe they belong to subset A (those prepared to return to the same jobs at roughly the same wages), when in the eyes of many potential employers, these people belong to subset B (those whose credit and employment histories have been shredded by two years waiting for the economy to recover).

When employers ask: “what have you done in the last two years?” many miss the un-stated part of the question, as in: “what have done in the last two years that would make you a more attractive candidate than all the other people applying for this position.” Stayed home on extended UI isn’t the response most employers want to hear first.

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. I agree the banksters write their own rules, but twas ever thus. The last two and a half years should have forced the scales from the most ardent Democrat.

Those without a solid employment history in the last two years belong, in many cases to group B, not group A, and best start thinking about starting from scratch. There’s a good chance the economy will tank even further. If that occurs, many of the currently unemployed may well find themselves on the street or worse. Hard times.

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Henri Vieuxtemps 09.10.11 at 8:45 am

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?

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Dean Baker 09.10.11 at 12:30 pm

I’ve been traveling and therefore missed this discussion, but I am glad to see the direction of the original post and many of the comments. I hope that progressives will increasingly focus their attention on how to restructure the market to generate progressive outcomes rather than accepting market outcomes as given and relying on the state as redistributive mechanism. I think this is both better policy and much better politics.

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Harold 09.10.11 at 2:19 pm

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.

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Barry 09.10.11 at 2:43 pm

Kidneystones: “these people belong to subset B (those whose credit and employment histories have been shredded by two years waiting for the economy to recover).”

Since there are more applicants than jobs, it’s not so much ‘waiting for the economy to recover’ as ‘not being able to get a job’.

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bianca steele 09.10.11 at 2:44 pm

@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.

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Harold 09.10.11 at 2:54 pm

My very cursory reading of Dean Baker reveals that Kidney Stones and Simon do not represent his viewpoint, which is pro- rather than anti- union. Nor does he mention distracting trivialities such as laws regulating barbers or nail clippers in Louisville. My impressions is that where laws and regulations regulating labor exist, he would like to see them strengthened not abolished.

Excerpt:
The government has … adopted anti-union policies in labor relations whereby breaches of the law by management leads to a wrist slap. By contrast, unions that take actions in violation of the labor law can expect to see massive fines, with union officers facing jail time, as happened in the PATCO strike in 1981.

There has also been a massive strengthening of patent and copyright laws in this period. As a result of patent protection, we pay almost $300 billion a year for prescription drugs that would sell for about $30 billion a year in a free market. The difference of $270 billion is more than 5 times as large as the amount at stake with the Bush tax cuts.

These government policies . . . have the effect of redistributing income upward. Yet, they are virtually never mentioned in political debates.

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Cranky Observer 09.10.11 at 3:04 pm

> 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

196

bianca steele 09.10.11 at 3:11 pm

Cranky,
I know engineers who worked second jobs in retail, and I doubt a part-time job at a lumber store taken during a layoff would worry a hiring manager.

197

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?

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

198

Harold 09.10.11 at 4:24 pm

When there is need for labor people will be hired regardless. In any case changing the patent laws is not incompatible with strong effective and inclusive unions that do not exclude middle and lower level management, and worker and public health protections, such as regulating beauticians. I see no evidence whatever that Dean Baker opposes public worker unions, on the contrary. I don’t know what motive people would have for implying that he does.

199

Cranky Observer 09.10.11 at 6:26 pm

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

200

kidneystones 09.10.11 at 6:39 pm

bianca steele and barry write…

You’re right. I am suggesting that taking any job is better than going on UI. Indeed, I’d at least like to think I’ll be able to see a lay-off or a sacking coming. As for the not enough jobs meme. There aren’t enough well-paying jobs. But there are jobs, but there is no denying the entire mess is a lot less than ideal. I have cleaned toilets and I’d do so again rather than take the government check.

Once/if the economy picks up people may well be able to return to their careers and make that big money again. From what I read, however, the long-term unemployed see the likelihood of obtaining work diminish dramatically overtime. That fact(?) alone tells me, at least, that work available is work worth taking. I can certainly understand that others disagree. The people who decide to stay on the dole until the last extension check is cashed are still going to have get a job. Any job. My guess is that their prospects will be much grimmer because they elected to defer employment. I should note, too, that relocating is all part of the fun. Two years ago, I felt that committing all that time, energy, and political capital to a highly flawed health-care plan wasn’t the best use of the majority and the mandate. I don’t care who wins as long as the unemployment rate comes down.

201

b9n10nt 09.10.11 at 6:41 pm

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.

202

bianca steele 09.10.11 at 7:02 pm

Cranky,
To some extent I agree with you. It is often not a good idea to drop to a less-skilled job in the same line as a stopgap until the market gets better, if you hope to get back to your previous level. 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. (Those jobs that asked for 8+ years of C++ experience, 2 years after the language was invented? That ad was almost certainly written by an HR rep. The hiring manager probably said “8+ years in a C-like language, at least 1 year of C++,” and after three go-arounds with HR the ad said “8++ yrs C++” anyway. But they are helpful in telling hiring managers what’s out and out illegal.

@kidneystones
You seem to be assuming even more than what you seemed to assume earlier. In a normal economy, you absolutely should not take anything that comes along rather than take unemployment. Layoffs happen all the time and usually say more about the company doing the layoff than about the employee laid off. Looking for work is itself a full-time job.

203

Henri Vieuxtemps 09.10.11 at 7:08 pm

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.

204

StevenAttewell 09.10.11 at 7:34 pm

Sorry it took me so long to reply; work got in the way.

kidneystones – I’m all in favor of direct job creation in favor of unemployment insurance; have been for some time. But until Congress actually bites that bullet, we have a situation in which people need UI because they’ve been unemployed for two years, employers are openly discriminating against them, and there are nine applicants for each job opening.

Public sector unions have certainly been calling for direct job creation for some time – as a member of a Central Labor Council, I can tell you it’s been a part of the AFL-CIO candidate questionnaire since 2009. EPI (which is backed by SEIU, UFCW, UAW, AFSCME, etc.) has been doing direct job creation stuff for a long time. SEIU is on record as being for direct job creation. So is AFSCME.

temp – I think permanent job programs are needed due to a secular weakness in labor demand. After all, “the value produced by the hired workers is greater than the value they could produce in the private sector” assumes that these workers would be employed otherwise, which is becoming less true as U6 ratchets up over time.

I don’t think you’re actually answering my argument here – should public sector workers be paid a living wage or not? Should they be provided benefits or not? Neither of these things are secured by the market anymore either in the public or private sectors – they are very much a matter of organization on the one hand and the law on the other.

The problem with “government as services” is that it tends to push the efficiency line in the direction of ever lower wages and benefits at a time when there are precious few living wage jobs being created, without really thinking through the moral implications of the state treating workers as disposable.

205

b9n10nt 09.10.11 at 7:35 pm

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?

206

Simon 09.10.11 at 7:39 pm

“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?”

Was news to me too. Taken to the logical conclusion we would just eliminate the price system and set supply directly. Or am I misinterpreting Henri.

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b9n10nt 09.10.11 at 7:53 pm

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

208

Henri Vieuxtemps 09.10.11 at 7:54 pm

No, the goal to provide the optimal level of supply and guarantee some minimal quality for these no entry barrier/no skill services. Otherwise, the industry is likely to be destroyed; competent barbers will not be able to compete against hordes of housewives cutting hair in their kitchens for 5 bucks a pop. It’s an example of market failure. Nobody benefits from that.

209

Simon 09.10.11 at 7:57 pm

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

210

b9n10nt 09.10.11 at 8:23 pm

Ummm…poor housewives would benefit. And so would customers who want bad haircuts for cheap, where they can save money on the haircut and transportation to the salon.

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Barry 09.10.11 at 8:28 pm

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.

212

Henri Vieuxtemps 09.10.11 at 8:54 pm

Housewives would benefit marginally. In fact, they will probably oscillate in and out of it, as the clearing price oscillates around the threshold. I suppose those customers who only care about the price would benefit, yes. But that’s probably a small minority.

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Bruce Wilder 09.10.11 at 8:58 pm

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.

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Henri Vieuxtemps 09.10.11 at 9:04 pm

…I guess the question really is: does the community want something like this or not? Do Londoners suffer from their expensive license-protected black cabs; would they prefer to do away with them? Would they rather be taking chances with unlicensed cheap drivers, who may or may not know what they are doing? Somehow, I doubt it.

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Cranky Observer 09.10.11 at 9:25 pm

> 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.

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b9n10nt 09.10.11 at 9:30 pm

Bruce @ 212:

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.

I agree. The corollary of course is that if the rent is not tied effectively…that’s not an economic benefit.

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.

This sounds like an argument for public investment in infrastructure, capital-intensive r&d, education, etc…These provide the stable structure and are potentially under democratic control (whereas private investment, by definition, is not). So what you’re arguing for is not rents per se. Rents are probably then an allocatively inefficient way of doing this?

For example, isn’t it preferable for a public agency to conduct applied pharmaceutical research rather than grant monopoly rights to Big Pharma to do the same? The rents will allow the research to go forward (technical efficiency?) but will have unnecessary secondary effects that are negative.

Or did I go off the rails here?

217

Cahal 09.10.11 at 9:57 pm

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.

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Simon 09.10.11 at 10:27 pm

@ Cahal thanks for the recommendation.

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kidneystones 09.11.11 at 12:44 am

@ 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.

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bianca steele 09.11.11 at 12:57 am

@Barry
I’m not sure I understand how you think industry works, but I also don’t know how much I’m going to have to explain to try to put across my point of view, or at what point someone will kick in with “everybody lies about what they do and you didn’t get far enough along to know what’s really going on.”

Beside, there are some rather large differences between companies that work “by the book” and companies that pride themselves on people actually working, between Very Large Corps and some kinds of smaller firms.

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Barry 09.11.11 at 3:14 pm

Don’t worry, Bianca.

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Barry 09.11.11 at 3:15 pm

Kidneystones: “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.”

You seem to feel for some reason that unemployed workers are in general waiting to be (re-)hired, rather than trying and failing.

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Bruce Wilder 09.11.11 at 7:06 pm

@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.

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Harold 09.11.11 at 7:16 pm

Consequences of undermining and shrinkage/ corruption of Civil Service under Gore and Clinton’s “reinventing government” and incompetent / venal Bush/Cheney regime /coup. Hiring more government inspectors, far from being a “jobs program” as alleged above, could potentially would save huge amounts of money (not to mention lives) by averting disasters. The savings achieved by paring eight more-or-less hypothetical barber inspectors in Louisville pales compared to this not-hypothetical, but, like the multi-billion giveaways to Pharma, all too real and documented.

from current NYRB article on BP oilspill (behind paywall):

What Happened at the Macondo Well?
September 29, 2011
Peter Maass

Excerpt:
“The truly maddening story took place offshore. The Interior Department’s Minerals Management Service (MMS)was responsible for overseeing offshore drilling yet its staff was too small for the job—just fifty-five inspectors for three thousand facilities in the Gulf. Worse, there was evidence that many inspectors were industry puppets. Even before the blowout, a federal investigation found that MMS staffers accepted golf and ski trips from the industry, had sex with industry representatives, and used illicit drugs with them. Surprise inspections of rigs were almost never conducted, though required by law. These inspections might not have done much good anyway—Steffy notes that a federal investigation concluded that some inspectors “had so little understanding of what they were inspecting that they simply asked company representatives to explain it to them.” …

“According to the Associated Press, which in July obtained previously withheld documents from the agency formerly known as MMS,

About 1 of every 5 employees involved in offshore inspections in the Gulf of Mexico has been recused from some duties because they could come in contact with a family member or friend working for a company they regulate. “

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Bruce Wilder 09.11.11 at 7:17 pm

@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.

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temp 09.11.11 at 8:11 pm

StevenAtewell@204:

“I don’t think you’re actually answering my argument here – should public sector workers be paid a living wage or not? Should they be provided benefits or not?”

In my ideal system all workers, regardless of sector, would be paid market wages subsidized by a very high level of direct redistribution and social services–so they would be provided a living wage and benefits, but from the state as service-provider rather than from the government as employer. My disagreement is with the proposition that the government should create some number of middle class jobs to bolster the middle class rather than raising up the bottom by expanding the welfare state. I think wealth redistribution would also go a long way towards solving the demand problem.

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Simon 09.11.11 at 8:21 pm

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.

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Simon 09.11.11 at 8:29 pm

I’ve seen L. Randall Wray from the Roosevelt foundation approve of guaranteed living wage job program, but then why would anyone work in the private sector?

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ejh 09.11.11 at 8:33 pm

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.

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Bruce Wilder 09.11.11 at 9:12 pm

Simon @226 “the security offered by these programs moves people away from more productive employment in the private sector”

More productive for whom? Is that an issue?

I find myself troubled by the non-chalance toward the irrecoverable losses associated with prolonged unemployment, and the unwillingness to acknowledge that there is simply insufficient aggregate demand to employ them, without fiscal policy intervention (meaning: government buying stuff that requires increasing employment to produce it).

The U.S. and the world face significant and salient economic challenges in terms of energy and ecological sustainability. There’s global warming, peak oil, on-going ecological collapse in the oceans, population pressures on food supply, etc. The U.S. should be getting busy, dismantling its bloated and dysfunctional financial sector, moving the energy sector rapidly away from fossil fuels, restructuring transportation and housing, offices and factories to be far more energy-efficient. Public infrastructure in the U.S. is aging rapidly, and is far more aged and decrepit than the general run of private structures. There’s plenty of work to do, that clearly needs doing.

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Gene O'Grady 09.11.11 at 9:56 pm

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?

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Simon 09.12.11 at 2:50 am

@ Bruce

“The U.S. should be getting busy, dismantling its bloated and dysfunctional financial sector, moving the energy sector rapidly away from fossil fuels, restructuring transportation and housing, offices and factories to be far more energy-efficient. Public infrastructure in the U.S. is aging rapidly, and is far more aged and decrepit than the general run of private structures.”

Well, I agree with many of those things, but people like you and me could expand that list almost indefinitely if we sat around thinking of things we think “ought to be done”. The problem I originally brought up was that if we guarantee living wage, almost impossible to eliminate stable public employment to accomplish these never ending goals, then we slowly drain the private sector of the labor resources it needs to provide goods that maybe you and I didn’t think of, but that the other 99% of the non CT public happens to want. This is the purpose of the private sector, and where the libertarian stuff about the price system coordinating different individuals subjective preferences is valuable.

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Simon 09.12.11 at 2:53 am

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?

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StevenAttewell 09.12.11 at 3:12 am

temp – I think we’re just going to have to agree to disagree on whether one is more likely to get redistribution in an economic order dominated by market wages or by living wages.

Simon – the traditional beredskaparbete were organized through local Labor Market Boards, which were tripartite organizations with local businesses and labor unions as well as government representatives. The traditional wheelhouse of these programs were “socially useful works” – lots of infrastructure, building public buildings, and health and welfare work.

The issue with “more productive employment in the private sector” is that: first, you’re usually dealing with people who would be unemployed, underemployed, or in low wage/low productivity labor – much less likely to be dealing with skilled workers, let alone professionals; second, you also need to consider the mix between private goods and public goods – if there are substantial areas of underserved public goods and private production is robust, the maths can cut against the private sector in a Galbraithian way.

Regarding L. Randall Wray, whose intellectual home is actually the Center for Full Employment and Price Stability at University of Missouri – Kansas City, here’s why. Firstly, his definition of living wage isn’t that extreme – at its highest, he’s talking about $10-12 an hour (i.e, enough to keep a family out of poverty). Most people earn more and would prefer their old jobs. Secondly, the DJC we talk about usually operate on temporary periods with required job searches in-between – they’re not long-time careers. (As opposed to my proposal here which is talking about growing the permanent public sector over time) Third, people also want to do interesting and challenging work – djc work is usually manual labor or in any case rather routine; it’s designed to be something that anyone can do.

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Bruce Wilder 09.12.11 at 3:13 am

@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 . . .

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Simon 09.12.11 at 3:40 am

@ Bruce.

It’s easy to refute an argument with a sneer, but I’d still like a real response.

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Simon 09.12.11 at 3:45 am

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

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b9n10nt 09.12.11 at 4:36 am

Bruce: thanks. A few phrases of yours I didn’t understand (“retail price stability the devil’s work”?) but everywhere else am in complete agreement.

Simon: re: “things we think ‘ought to be done'”

These public goods aren’t akin to choices we make as individual consumers. There’s no 99% who would argue that $ for the civil service should be spent on their own private enjoyments. Sure, there’s libertarians, but almost their entire project is to recast public goods as private one’s. Your statement concedes far too much to this ideology.

Relatedly, isn’t there a corresponding relationship between triviality and the benign effects of capitalist markets? Take any set of goods that is objectively of value to ourselves: food, housing, healthcare: the price system coordinating individual preferences has been either a disaster or a fiction.

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Bruce Wilder 09.12.11 at 6:31 am

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.

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b9n10nt 09.12.11 at 5:24 pm

Re: “Rumour”: In my day we called it “telephone”.

Anyway, got it, thx.

Old news for you of course, but these discussions never fail to expose how pernicous the term “free market” is. 99.99% of markets in various classes of goods are necessarily managed, maintained, cultured (as in, intentionally grown). The fundamental question is “in whose interest are markets managed?”

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