Markets and Freedom: Common Mistakes

by Henry on July 6, 2012

Matthew Yglesias has a post responding to my post below. My original intention was to roll it into an update – I then decided it was worth responding to on its own because it exemplifies a number of common mistakes in thinking about markets. In order:


(1) Arguments about freedom do not equate to arguments about economic efficiency.

Libertarians (not all of them, but rather a lot of them), weave back between arguments about how markets maximize economic efficiency, and arguments about how markets realize human freedom. This leads to more general confusion about what markets are good for, especially because there is no very good reason to believe that libertarians are right in their assumption that social affairs are so happily arranged that the most efficient social arrangement available is just that which maximizes human freedom. I don’t know of any better statement of this than this old post by Cosma Shalizi.

On the one hand, the sanctity of private property and private contracts is held to be a matter of inalienable natural right, guaranteed by the fundamental facts of morality, if not a basic part of Objective Reality; capitalism is the Right Thing to Do. On the other hand, much effort is devoted to arguing that unfettered laissez-faire capitalism is also the economic system which will produce the greatest benefit for the greatest number, indeed for all, if only people would just see it. Natural right therefore coincides exactly with personal interest. A clearer example of wishful thinking could hardly be asked for. It’s not hard to see what function this plays, rhetorically. Many people who are not persuaded by the natural right argument can be lead to go along with libertarian proposals by considerations of economic efficiency. (I imagine the number of people who are unpersuaded of the economics, but buy the sanctity of property, is much smaller.)

Thus, when Matt starts off his criticisms of a post about libertarians’ dubious understanding of workplace freedoms, by suggesting that it’s actually about ways to ‘enhance productivity,’ he’s making a category error, but one which is encouraged by a way of thinking which systematically confuses the two. As Cosma notes in his post, the best source by far on the actual benefits and weaknesses of markets is Charles Lindblom’s book on the market system (Scialabba review), which is one of those books that every literate person ought to read or have read.

(2) Market outcomes are not ‘natural’

Matt treats the differences between professors’ rather nice work lives, and low-paid workers’ rather less pleasant work lives as the result of the fact that ‘some people are better off in general than others,’ and that the former tend to have skills that are in high demand, and the latter skills that are easily replaceable. His very strong implication is that it just plain growed that way as a result of natural market processes. And if those market processes result in some workers getting body searches and being denied use of the bathroom, and others not, all it tells us is that people are “better off having math skills and advanced educational credentials than not having those things.” Matt says nothing about whether being obliged to put out for your boss if you want to keep your job is another of those unfortunate yet inevitable forms of differentiation between the work conditions for people with low skilled and high skilled jobs. I’d hope that he doesn’t think this – but if he doesn’t, it fits very badly with the rest of his argument.

The underlying problem here is that his underlying suggestion that this is a process of choice on the part of workers, where they decide whether they are better off by taking the job with more pay and shittier work conditions, or with less pay and better work conditions – is incredibly naive. Adapting Marx, human beings make job choices – but not in circumstances of their choosing. This isn’t consumer choice in some idealized marketplace – it’s the product of an underlying political struggle. And it’s a political struggle that workers have been losing over the last few decades. Even apart from rotten work conditions, the evidence on the changing distribution of the proceeds of cooperation within firms is emphatic.

(3) Market outcomes have no inherent normative weight

Really. The very strongest claim that you can make for markets is that they can provide Pareto optimal outcomes. But this both (a) assumes an awful lot of hopelessly unrealistic conditions, and (b) isn’t very much good in any event. As Ariel Rubinstein points out their weakness is demonstrated by the fact that one can obtain very similar results if one starts from the assumption that powerful actors exploit weaker ones. The normative case for markets depends crucially on initial allocation of resources. Rubinstein again:

Overall, the relative comparison of the jungle [HF – exploitative] and market mechanisms depends on our assessment of the characteristics with which agents enter the model. If the distribution of the initial holdings in the market reflects social values which we wish to promote, we might regard the market outcome as acceptable. However, if the initial wealth is allocated unfairly, dishonestly or arbitrarily, then we may not favour the market system. Similarly, if power is desirable we might accept the jungle system but if the distribution of power reflects brutal force which threatens our lives we would clearly not be in favour.

Or, to approach the problem from a slightly different direction, one can make a good normative case for markets and contractarian mechanisms if and only if there is relative equality of resources and bargaining power among the relevant actors. When there isn’t such rough equality, the normative outcomes are likely to suck. And this is exactly the situation in work relations. Saying that some workers are high skilled, and some are low skilled, and that the former are likely to obtain better work conditions than the latter is an empirical observation. But it relies for its force on an implicit theory of bargaining power, in which the former are relatively strong, and the latter are relatively weak. This undercuts all but the most brutalism-meets-Panglossian claims about the normative attractiveness of working all of this out via contracts. People who want to have the best of both worlds by granting normative absolution to grossly unequal bargaining relations because they are market driven are liable to get people who care about power and politics deeply, deeply fucked off. Contracts in their majesty …

(4) Actually existing markets do not clear by magic

And this applies with especial force to academic job markets. When Matt claims that:

At the end of the day, GMU professors wouldn’t react to a lower-quality work experience with “sputtering, semi-coherent outrage.” What they’d do is quit and go work elsewhere because they have skills that are in demand in the labor market.

it suggests that he hasn’t read the post particularly carefully (he actually quotes, but doesn’t seem to notice, the bit about GMU economics professors “put[ting] up with it until they could find a job at some more enlightened institution,” which would seem to belie his interpretation). But it also suggests he doesn’t know much about how academic job markets work. Usually, there is at least a year’s gap between someone (a) starting an academic job search, and (b) moving to a new position, and, very often two or three. And even this is decidedly optimistic: the prospects of a sudden surfeit of GMU economics professors in a decidedly thin market (not many economics departments see any great need to hire Austrians, for better or worse) would at best be uncertain.

The specifics are trivial – but the broader point is anything but. This particular mode of rhetoric assumes markets that clear perfectly and more or less instantly. Such markets appear in the opening chapters of introductory economics textbooks but are fleeting and rare in the real world. Where one can’t sprinkle Walrasian pixie-dust on labour markets, one has to pay attention to the real, substantial human costs that people have to pay, e.g. where they have to quit a job with lousy references because they refused to blow their supervisor. Which brings us, finally, to

(5) Neo-classical economics, as it is usually deployed by policy technocrats, tends systematically to obscure rather than to enlighten

In his closing sentences, Matt makes the rather remarkable claim that:

The in-the-clouds conceptual argument about libertarianism, freedom, and coercion is semi-interesting in an academic sense, but as policy analysis it doesn’t show much.

I’d have said quite the opposite. Matt’s alternative – which is to come up with a bunch of just-so stories about how we oughtn’t regulate work rules, because there’s a hypothetical high paying firm that searches its workers to stop theft and then there’s a hypothetical low paying firm that doesn’t, and we shouldn’t be punishing the hypothetical high paying firm because it might hurt workers is about as up-in-the-clouds as you can get. It abstracts away the shitty conditions that people have to endure, the politics of why they have to endure them, and any possible politics of collective action and reform. Albert Hirschman’s The Rhetoric of Reaction is right on target here – it deals at length with the bogus standardized responses (it will only make things worse) that people come up with in response to reform. There’s a more general sound principle here. One should always be very suspicious when someone proposes that others endure nasty sounding conditions for their own good, which the someone proposing would never dream of countenancing for himself or herself. The proposal may not be made in bad faith, but it’s not likely to be made with any very great imaginative sympathy for its intended subjects.

{ 185 comments }

1

LFC 07.06.12 at 4:30 am

Yes. Yglesias’s post is just an exercise in missing the point.

2

David Moles 07.06.12 at 4:54 am

I stopped listening to Yglesias when he came out in favor of whippings in the public square. It’s a shame everyone else to the left of — oh — Thomas Friedman, say,  didn’t do the same, or we wouldn’t still have to pay attention to him.

3

temp 07.06.12 at 4:59 am

Since Yglesias isn’t actually a libertarian (he blogged for ThinkProgress for a few years) I’m pretty sure he’d agree with points 1, 2 and 3. He definitely wouldn’t claim that markets have “inherent normative weight” and nothing in his post suggests so. This isn’t an argument over whether people should have to “endure nasty sounding conditions for their own good,” but rather over how best to improve people’s conditions.

The argument is that good working conditions are a form of employee compensation. And it’s better to increase employee compensation than to specify how it should be allocated.

Point 4 and 5 say that the market Yglesias describes is unrealistically mobile–workers can’t actually switch between wages and and other forms of compensation as easily as he implies. That’s true, but you’re advocating making an imperfectly mobile market into a immobile one, where workers have no choice at all whether to take the higher wage or protection against search. So this doesn’t really address the point.

4

chrismealy 07.06.12 at 5:13 am

Fun fact: F1 drivers pee in their jumpsuits.

I’m not going to defend his particulars, but I had the same general reaction as Yglesias, why not full employment? Labor standards are necessary but not sufficient because employers will always come up with new legal ways to be sadistic. A labor market actively structured to give employees the power to exit (Hirschman again) would give employees the power to punish offending employers.

5

LFC 07.06.12 at 5:19 am

He definitely wouldn’t claim that markets have “inherent normative weight” and nothing in his post suggests so.

Hello? The smug title of his post alone — “Life is Good for Skilled Workers” — implies that this is as it should be. Yglesias’s implication is that people with math skills and advanced educational credentials should enjoy better wages and working conditions. Nowhere does he say “why should a GMU econ prof make more money than a minimum-wage employee? Is it fair? Is it just?” He simply assumes that skills = desert, and that skilled workers deserve to be paid more, deserve their market rewards. He never says this explicitly, but it’s implicit in the post, at least as I read it.

6

Marc 07.06.12 at 5:31 am

Yglesias is a master of the faulty analogy coupled with the idea that he is Plato and can solve problems by pure thought. This isn’t a happy combination.

7

RobW 07.06.12 at 5:36 am

This entire debate has turned into two sides each adopting the most wild of propositions to support their prior belief systems. Examples from this latest post (leaving aside the insentient discussion of the apparently rampant problem of workers having to “blow their supervisor”) include:

…one can make a good normative case for markets and contractarian mechanisms if and only if there is relative equality of resources and bargaining power among the relevant actors.

This is a total red herring. Or take this

This isn’t consumer choice in some idealized marketplace – it’s the product of an underlying political struggle. And it’s a political struggle that workers have been losing over the last few decades.

A fine question to ask here would be is the life of the average American worker better than it was several decades ago? It is hard to understand how anyone can argue yes.

While this entire thread may have been interesting for a post or two, it has certainly lost that value. CTers clearly do not believe in markets and they will not change their opinions. BHLers are not going to become stateists. All that’s left is collective back-slapping as each side high-fives itself for a “slam dunk.” Let’s just admit that the point here is not to change anyone’s mind and move on….

8

temp 07.06.12 at 5:37 am

LFC: I know Yglesias doesn’t believe that markets have “inherent normative weight” because I’ve read other stuff by him. I think his post in response to BRG makes this pretty clear:

http://www.slate.com/blogs/moneybox/2012/07/04/labor_market_regulation_freedom_and_property_rights_are_red_herrings.html

9

RobW 07.06.12 at 5:41 am

Re comment #7. Here are the second and third links, respectively in my first comment. Apologies for the coding error.

10

JW Mason 07.06.12 at 6:01 am

Everything you say here is absolutely right on. But I think you are letting MY off a bit easy on the skills part of his argument.

It is not obvious that the reason professors have better work lives than poultry processors is because the former are in possession of scarcer skills. Not at all. In fact, the ability of universities, including top ones, to shift a large portion of teaching to adjuncts and graduate students without any evident effect on the desirability of their “product,” points rather strongly in the opposite direction. It would be much more reasonable to say that the combination of large rents from higher ed, plus non-proit-maximizing management (at most schools), plus a very strong culture, identity and capacity for collective action on the part of faculty, results in professors getting a larger share of the surplus from their employment than most other workers do.

You touch on this a bit, but it’s worth emphasizing: To the extent that the employment relation involves a surplus to be bargained over — which is almost always, at least in formal employment and in rich countries — outcomes are the result of power and norms, not the distribution of skills or other “endowments.”

11

JW Mason 07.06.12 at 6:03 am

leaving aside the insentient discussion of the apparently rampant problem of workers having to “blow their supervisor”

Haha, stupid CT liberals! There is no sexual harassment in the workplace! I know because RobW says so.

12

RobW 07.06.12 at 6:05 am

@JW Mason #11

Oh man did you ever help me make my point!

13

Freshly Squeezed Cynic 07.06.12 at 6:39 am

which is to come up with a bunch of just-so stories about how we oughtn’t regulate work rules, because there’s a hypothetical high paying firm that searches its workers to stop theft and then there’s a hypothetical low paying firm that doesn’t

Which, again, is a hypothetical that seems to be somewhat out of touch with the real world, since it is often the lowest-paying companies that treat their workers like shit; a company that is not treating its workers well in one area of compensation is not especially likely in the real world to treat its’ workers well in others. Respect for workers’ dignity and improved wages generally seem to go hand in hand. I’m not sure why many people are suddenly leaping to “it must be a trade-off!” when “it is easy to be a shit to the poor” is an equally valid explanation.

Fun fact: F1 drivers pee in their jumpsuits.

Fun fact: F1 races last about an hour and a half. Work shifts do not.

CTers clearly do not believe in markets

Since when did “do not believe markets are inherently a superior form of exchange process” become “do not believe in markets”?

RobW’s third link is the standard libertarian argument that we have DVDs now so everything is better. It is hard to understand how anyone can argue.

His second link has this gem:

(One common misconception is that Big Corporation with a capitalized value of billions of dollars necessarily has more bargaining power than does an individual worker whose net worth is, say, only five figures. But if that worker has skills that are bid for by two or more big corporations – or, indeed, by two or more any sized employers – then it’s untrue that Big Corporation’s power to bargain with this worker is greater than this worker’s power to bargain with Big Corporation.)

It is strange how CafeHayek notes, quite correctly, that there is more than one Big Corporation willing to bargain for skills, then fails to note that there is not likely to be just One Worker with the kinds of skills they’re willing to bargain for; quite a lot more, actually. Actually, it’s not strange, because that is the only way you can say with a straight face that workers have the upper hand in bargaining situations.

14

Curmudgeon 07.06.12 at 6:43 am

#4:

Full employment is a better than nothing response but leaves a large corner case uncovered for employees with skills that are only useful to a small number of local employers. Exit is only a credible threat if similar work for a similar wage is available without a high opportunity cost for the employee. If you’re a retail worker in a full employment city with many retail employers, then exit is credible. If you’re a miner in a one industry town and exit means moving to the other end of your country, exit isn’t credible unless things get very ugly.

15

greg 07.06.12 at 6:51 am

The way I read their rhetoric, such as I’ve read, what I think Libertarians really want, certainly the extreme ones, are slaves. One person’s servitude is another person’s liberty. Granted, they profess the ‘absolute right’ of self-ownership. But that is useless without a commons, and this they seek to minimize, and privatize. And granted, the Universal Basic Income advocated by the Bleeding Heart Libertarians would be a barrier, but I believe this marginalizes them from the mainstream of Libertarian thinking. Political rights are useless without economic rights, without the right to make a reasonable living. Libertarians are bright enough to know this. Economic rights have been gradually eroded for most workers, and the Libertarians are not satisfied. These losses to the working man have not been enough for them. Libertarians cry out for more. When will they be satisfied? When they have slaves, and I think they are willing to destroy the Republic to get them.

JBTW, even if you started with absolute equality of assets for all, by pure market mechanisms you would gradually end up with the inequality we now experience, in which the corruption at the top is merely an expression of that inequality. What we see as corruption is merely market forces having taken over the government. The Right’s complaints about over-regulation are just window-dressing. And we will eventually end up with worse, in which all power is concentrated in the hands of a few.

16

Data Tutashkhia 07.06.12 at 6:55 am

CTers clearly do not believe in markets and they will not change their opinions.

Markets, in general, are fine, no problem there. It’s selling your labor to the highest bidder among those who somehow get to own the tools, that’s the issue.

17

mcarson 07.06.12 at 6:59 am

A large factor in the exploitation of workers is how public the job is. Farm workers and poultry processing workers are exploited more than university professors in part because there are fewer ‘random bystanders’ in those jobs. Without witnesses some human beings become tyrants. When you add in some sort of productivity measure – so many pounds of chicken or produce per hour, you give the boss a focus for his tyranny. They’re always “Just trying to speed up the line” , and it never occurs to them to bring people drinks of water or add 10 minutes to the afternoon break if the crew is on schedule. It’s always finding the person who is a step behind, playing “What’s wrong with this picture?” all day long on the factory floor. From there it’s a small step for the boss to believe he “knows who is screwing off and who really needs to pee”.
People behave badly more often in private than in public, and the modern work world is becoming more private all the time. In a lot of offices you can’t even drop in to say hello to a friend, you must call in to get a pass into the building.

I personally think the best way to deal with the ‘idiots with ideas’ problem is to tell them to stop making things universal. Just figure out, if we’re a world that’s going to buy our chickens already dead and wrapped in plastic, how to ensure that the chicken packers earn enough to buy their kids shoes and put gas in the car, and make sure they are treated as well as one of the stupider members of the elites own family. Even upper class intellectuals have marginal family members, being upper class they can shelter those people from the worst of the world, but if they couldn’t – if Susan, and her 3 kids, were dependent on the income she made plucking chickens, how much should chicken-pluckers get paid, and how often should they get yelled at, groped, slapped, sent home early, worked late without pay, that sort of thing.

The problem with elites is they think the working poor want their jobs. Most of us don’t, we just want to do our job reasonably well and go home at the end of the day with enough energy to play a quick round of monopoly with the kiddies before everyone goes to bed. The current management style of squeezing the last little bit of productivity out of each worker each day isn’t conducive to that.

This week I went to the dentist and noticed the receptionists were on the phone constantly. I found out their dental corporation had decided to take advantage of the down time between checking in patients by running some sort of call center through the front desk. Each receptionist was supposed to answer a certain number of calls per hour based on how many people she checked in at the desk – If she had 9 patients this hour she had to answer 12 calls, if she had only 6 patients check in the next hour she must answer 16 phone calls. The calls were related to some sort of cosmetic dental practice – caps and whitening, I think. They were scheduling people in for ‘consultations’ at another office. We were in the low-income dental clinic, the corporation had a high-end office across town. If they didn’t make their quota they stayed on the phone during their lunch or after work, until they had logged their 80 to 100 phone calls for the day. It was incredibly irritating, they had no time to talk to me about scheduling follow-up care for my daughter, they just handed us a slip and said that was our next appointment and if we didn’t like the date and time we could call the 800 number when we got home, they no longer had time to look at a calendar and let you pick a day or time for your next visit. A regular dentist couldn’t get by with this, but this is the only authorized provider for kids on the low-income insurance plan, so they can do as they please.

18

afinetheorem 07.06.12 at 7:15 am

I find this post a bit strange. What would Yglesias disagree with? I think his point is pretty clear: a tighter labor market gives workers the de facto ability to switch jobs, and the ability to do so would really restrict the ability of firms to harass/impose dumb rules/etc. on their workers. If a secretary being sexually harassed could easily get another job, then she would find it much easier to file a complaint against her boss. If a miner noticed unsafe working conditions, the existence of other mines hiring in his (apologies for the gendered pronouns) area would force, in a sense, the unsafe mine to improve things or risk having their workers leave. Imposing fixed rules against shitty bosses is always going to leave enough wiggle-room for bosses to screw their workers in new and unimagined ways. Hence, if you care about workers’ rights, you ought care first and foremost about full employment, which is a pretty effective guarantor of said rights.

He is absolutely not suggesting that full employment and a ready availability to shift jobs is, in fact, the state of the world. He is suggesting that such market conditions would solve many workers’ rights problems, and giving examples (like university faculty) of where we do see the threat of exit as a way of improving working conditions.

19

John Quiggin 07.06.12 at 8:00 am

@chrismealy (and others) Full employment makes a big difference to the argument, but I didn’t see it raised in the Yglesias post, or in the bits of the BJL stuff I’ve looked at. Links?

20

Data Tutashkhia 07.06.12 at 8:04 am

The ‘full employment’ idea seems to be the same as the ‘universal basic income’ idea. Only more complicated (what kind of employment?), and more difficult to achieve.

21

tempo 07.06.12 at 8:30 am

@ temp #3: I repeat my question to you from the previous post http://crookedtimber.org/2012/07/04/coercion-vs-freedom-bhl-vs-brg-happy-4th-of-july/ :

Can you provide us with some real world examples of countries that have gotten there, or closer to there than most others, by systematically skipping the kind of regulations under discussion and instead opting for cash distributions? One could argue that the countries that are least inegalitarian in the prosperous west are the nordic model welfare states where regulations are extensive and unions even more extensive.

You in that thread replied: “I think the Nordic nations are actually a good example. I’m not an expert, but my understanding is that labor regulations are weaker than in other Western European nations, while redistribution is stronger. See “flexicurity”, for example.”

I don’t agree that the Nordic model societies exemplify what you seek to exemplify. First, there is definitely ample working life regulations on health and safety, working hours, vacation, anti-discrimination and parental leave. Second, it is true that the nordic model have relative to other european welfare state relatively little DIRECT regulation in certain regards (minimum income). But that fact must be understood in the wider context of the general nordic model which include VERY strong labor unions and unionized bargaining and a support system designed to enhance and help general (sector or system wide) bargaining between labor market organization. Such a system is in effect INDIRECT labor regulation.

Upshot: A propertarian-libertarian that support much, much stronger legislative and institutional support for unions, unionizing and centralized union bargaining on the labor market in the US might present the nordic model as a desirable alternative to direct labor regulation in debats with liberal egalitarians. But are there any such propertarian-libertarians?

Here are links on the situation in Sweden. (Keep in mind that the last two decades have seen neo-liberal policy attacks on the model that have modified the processes and output in important and, from a point of view of justice, often detrimental ways.)

http://www.av.se/inenglish/lawandjustice/workact/
http://www.mi.se/other-languages/in-english/the-swedish-model/
http://www.forsakringskassan.se/omfk/publikationer/publications_in_english ( social insurance including a right to parental leave from the workplace )

22

afinetheorem 07.06.12 at 8:44 am

@John Quiggin: “Low-skill workers’ lot in life could be greatly improved through full employment, so a person will at least have a range of different job opportunities available to him” is in the Yglesias post.

23

Bruce Wilder 07.06.12 at 9:10 am

Roughly half the U.S. labor force is employed in organizations with over 100 employees. The employment relationship is one of accepting authority and following rules prescribed by authority. The basic form of the “contract” is: do as we, the bosses, tell you, or get fired, and there are significant losses or costs entailed by being fired. If the cost of getting fired is reduced or eliminated, it reduces the ability to enforce the rules, and, potentially, the technical efficiencies and productivity of bureaucracy are lost.

“Full-employment” of sufficient degree that it actually reduced the costs of job switching — of getting fired for not following the rules — would undermine the whole basis of bureaucratic employment, and the efficiencies and productivity it can entail.

That’s not intended as an argument against full-employment on a macro basis, but it is an argument against supposing that the dilemmas and challenges of establishing fair wages and working conditions can be achieved solely on a macro basis.

We use authority, and power, to marshal labor and other resources, to achieve high technical efficiency and productivity, but such uses does pose dilemmas. Throwing around loose metaphors, such as “labor markets” and the execrable “skills” just seems to obscure the issues.

I used to like reading Ygelesias. Now he just seems like another wilfully ignorant dick.

24

Anon. 07.06.12 at 9:13 am

>This isn’t consumer choice in some idealized marketplace – it’s the product of an underlying political struggle. And it’s a political struggle that workers have been losing over the last few decades.

Yes it is, no they haven’t. If you take the political angle here you HAVE to mention how western workers use their cartels to maintain the brutal and immoral immigration restrictions we have today. These low-paid workers are the ONLY people who benefit from them and they have no qualms about hurting millions upon millions of foreign workers.

Unskilled labour is GROSSLY OVERPAID in the west because of this restricted competition.

They haven’t just been winning, they have been fleecing us and shitting on those poorer than themselves in the process.

25

Data Tutashkhia 07.06.12 at 9:20 am

“Full-employment” of sufficient degree that it actually reduced the costs of job switching—of getting fired for not following the rules—would undermine the whole basis of bureaucratic employment, and the efficiencies and productivity it can entail.

Not necessarily. It would probably force them to introduce (or, rather, to expand) a different set of intensives, like those based on ‘seniority’. Which is better than ‘fear of losing medical insurance and becoming homeless’.

26

John Quiggin 07.06.12 at 9:20 am

@affine theorem Thanks, I missed it. Even on rereading, it just seemed like an aside, though the link expanded it a bit

27

yabonn 07.06.12 at 9:34 am

One should always be very suspicious when someone proposes that others endure nasty sounding conditions for their own good, which the someone proposing would never dream of countenancing for himself or herself.

I can find nearly no trace of this suspicion in hipsterweblogoland. Yet I’d expect it to be a basic hurdle to cross for anyone writing about work conditions. Going through the moves, at least. But no, look at the optimathingy instead.

I confess having some irrited mental gestures about it along these lines : the suspicion is indeed a basic, evident thing to have and all the marketobabble is about trying to start the conversation without it, to not-think it.

28

Scott Martens 07.06.12 at 10:40 am

Anon@23: I’m – I think – the most liberal pro-immigration person who comments on CT. I think everyone not actually currently under judicial supervision should have the right to live wherever they want to, subject only to the restriction that income support should require a minimum residency time. But I think your approach is just wrong. It makes just as much sense to say that unskilled labour outside the west is grossly underpaid. You have to think western workers deserve to live like people in the third world to come to that conclusion. Some of us grew up in working class homes, and don’t think justice would have been better served by growing up with nutritional deficiencies. I think instead the workers of the rest of the world deserve to have regular meals, homes, cars and decent schools.

Besides, it is hardly the power of the working class that keeps existing immigration restrictions in place. It’s pretty disingenuous to think somehow the evil Joe Six-packs are so powerful that politicians have to give in to them on immigration when those same politicians find it very easy to pass so much manifestly anti-working class legislation in every other way.

29

Patrick Nielsen Hayden 07.06.12 at 10:40 am

“[W]estern workers use their cartels to maintain the brutal and immoral immigration restrictions we have today. These low-paid workers are the ONLY people who benefit from them and they have no qualms about hurting millions upon millions of foreign workers…Unskilled labour is GROSSLY OVERPAID in the west because of this restricted competition.”

Dean Baker’s The Conservative Nanny State makes short work of the idea that our immigration restrictions benefit less-skilled workers rather than trained “professionals.” As it turns out, the planet we live on is full of doctors, dentists, and lawyers, trained every bit as well as our domestic crop, who would happily move their practice to the US if the regulatory regimes let them do so.

There are a bunch of other ways in which that passage from commenter “Anon” is clearly coming from an alternate reality, of course.

30

UnlearningEcon 07.06.12 at 11:07 am

Anon,

Yes, capitalism causes brutal races to the bottom without intervention. The solution, of course, is obviously to let the races to the bottom occur instead of having international enforcement of labour standards (or abolishing capitalism, of course).

31

Roger Gathman 07.06.12 at 11:53 am

Actually, I like to think that the ancien regime was right about one thing – skills are their own reward. If you have high math skills, you should enjoy math. Intellectual delight should be your reward. It may be nice that somehow, you find a way to make money at what delights you intellectually, but you don’t merit reward. Of course, a test and vocation oriented educational system sorta obscures this. Intellectual delight has been roundly rejected in favor of one sort of deligh only: the delight in making money. But the latter, I suspect, is much rarer than the former. And really, why should we form our entire society around those who delight in making money? Let’s, instead, lessen the power of money, and raise the profile of other forms of delight. The delight in making money, which may have been helpful at a certain stage in the development of the economy, has become positively damaging now.

32

Jason 07.06.12 at 12:10 pm

Mcarson’s anecdote about the low income dental office is chilling. It reminded me of the section on social distance in Chris Hayes’ new book (social distance being the fact that all manner of depredations occur out-of-sight of the upper middle class).

33

chris 07.06.12 at 12:16 pm

If a miner noticed unsafe working conditions, the existence of other mines hiring in his (apologies for the gendered pronouns) area would force, in a sense, the unsafe mine to improve things or risk having their workers leave.

And if he didn’t notice them until after they killed him, then everything’s hunky-dory? Acting as your own safety inspector all the time is not as easy in the real world as it is in libertarian fantasyland — even aside from the fact that the miner has an actual job to do and inspecting the safety conditions isn’t it, inspecting safety conditions is difficult skilled work that the miner may not be qualified for in the first place.

Granted, some of the specific abuses mentioned in this family of threads can’t be hidden, but *at best* an exit option will only help employees avoid the nonconcealable abuses, and even then only if there are no social consequences to switching jobs a lot *and* if the abuse in question isn’t an industry-wide standard.

34

Barry 07.06.12 at 12:53 pm

Bruce Wilder @23: ““Full-employment” of sufficient degree that it actually reduced the costs of job switching—of getting fired for not following the rules—would undermine the whole basis of bureaucratic employment, and the efficiencies and productivity it can entail.”

Another way to put it is that the distribution of profits would shift towards workers.

35

William Timberman 07.06.12 at 12:55 pm

Bruce Wilder @ 23

We use authority, and power, to marshal labor and other resources, to achieve high technical efficiency and productivity, but such uses does pose dilemmas. Throwing around loose metaphors, such as “labor markets” and the execrable “skills” just seems to obscure the issues.

I don’t know that Matt Yglesias is a dick, but it does seem to me that he’s young, by which I mean that he hasn’t had the experience yet to work through all the implications of what an optimist might call the rationalization of the human spirit, or a pessimist like Marx did call the social relations of production which are necessary to run a large-scale productive enterprise, or indeed any enterprise at all that isn’t strictly familial or tribal.

As many old geezers have, I’ve been on a number of sides of this, from fetch-and-carry wage slave working for a sadistic bully to middle-manager in a slightly incompetent, slightly hysterical bureaucracy, to shop steward tasked with defending the indefensible.

We’re trying to stir human beings in all their bewildering complexity into a productive system which claims to be the embodiment of rationality. It’s amazing that it’s worked as well as it has, which, frankly, is not very. Whatever ameliorations we broadly social democratic folks come up with will have to be equally complex, it seems to me, and then, of course, we’ll have to cobble together a politics which can defend them.

No wonder we’re frustrated. No wonder we think libertarians are nuts, and Mitt Romney is a nasty joke on all of us.

36

Hidden Heart 07.06.12 at 12:57 pm

Another problem with this “be your own safety inspector and everything else” argument is that it’s a direct denial of the reality of the benefits to be had from the division of labor, which is what’s used by the same people to justify treating so many workers so badly.

If it makes sense to break down complex jobs in ways that leave a lot of people doing pretty boring things under greatly constricting circumstances, then equally, it makes sense for a bunch of people to go hire someone who specializes in, say, safety inspecting or negotiating and maintaining health care systems or even negotiating pay and working conditions, and authorize the specialist to work on their behalf. And conversely, it’s obviously not efficient in the terms presented to deny people the right and/or to do that and insist that they do it all themselves, in field and after field.

A skeptical observer might well conclude that a lot of libertarians neoliberals, and conservatives only believe blather about comparative advantage when the advantage is their own.

37

Barry 07.06.12 at 1:00 pm

(adding on) I find it interesting the the problems of a deflationary economy with a slack labor market are considered to be ‘natural’ and not highly problematic, while the problems of a full-employment economy are considered to be bad.

Frankly, if I were running a business, I’d prefer a market with high demand and a tight labor market to the opposite. In the first case, I’ll either make a lot of money, or go out of business and get a job. In the case of a bad economy, success could well mean just survival, while failure means going out of business and looking for a job in a bad job market.

38

Jim Henley 07.06.12 at 1:11 pm

They haven’t just been winning, they have been fleecing us and shitting on those poorer than themselves in the process.

This is a pretty common trope among even pretty mainstream libertarians, and the mood affiliation is instructive.

* The only wealth inequality that enrages them is between those who have relatively little and those who have even less.

* As Patrick points out, the only barriers to trade they decry are the ones that provide some measure of protection to the relatively disadvantaged.

* The only method of ameliorating the condition of some poor people they can countenance is the one that lowers costs to rich people.

When I say relatively common, I have seen it expressed by a poster on one of the GMU blogs (by one of the indistinguishable troika of Caplan, Tabarrok and Hanson), by Will Wilkinson (IIRC), and as recently as the MR threads on this topic, where a commenter opined that so long as American workers refused to support open borders they deserved no rights or consideration whatsoever.

39

Jim Henley 07.06.12 at 1:21 pm

I should add that I think this outrage isn’t fake exactly, just convenient. I’m sure Michael Jordan really believed, when psyching himself up for games, that the opponents he insisted had insulted him but hadn’t really had insulted him.

It is very satisfying for libertarians – and I am afraid I know this with certainty – to super-identify with a group of poor people who really would be helped by libertarian policies. Frex, ending the wicked folly that is the War on Drugs really would benefit poor people and people of color enormously. So you can let yourself really feel the injustice of the drug war, because it aligns with your beliefs. But you end up fetishizing that outrage. It becomes a talisman against charges that you are heartless toward the poor, or people of color, because of your political-economic priors. What comes to matter is the performance of the stance – exactly the accusation of “political correctness” right-wingers make against liberals and leftists.

The whole time you really are against the War on Drugs, or nativism. But you love the fact of your opposition too much for your own sake.

40

Rob in CT 07.06.12 at 1:26 pm

…it suggests that he hasn’t read the post particularly carefully

You don’t say!

41

Belle Waring 07.06.12 at 1:29 pm

Wow, that his some bad argument and some worse question-begging from MY on this one. I hope he improves on this point. It was always a shame Slate hired him to write about something that’s not his best area.

42

Turbulence 07.06.12 at 1:30 pm

One very very slight defence of Yglesias. Lately, he seems to be completely and totally fixated on the idea that the Federal Reserve is destroying the lives of millions of Americans by sacrificing economic growth for sub-2% inflation. This shows up over and over in his posts these days. He’s become so engrossed that I think he’s started to look at all problems through the lens of “how is this issue another way that the Fed’s inflation phobia is destroying us all?”.

Now, that doesn’t change the fact that, as a result of his idée fixe, he’s written a dumb post that fails to engage with the debate in a serious way. That’s bad. But damn is it nice to have one of our news-elite being fixated on how the Fed is ruining lives on a vast scale for nothing.

43

SamChevre 07.06.12 at 1:38 pm

My experience matches pretty well with Yglesias “hypothetical.”

I worked one summer loading boxes on trucks at FedEx. Start at 4AM, finish whenever the trucks were all loaded (sometime between 8 and 10), in a non-air-conditioned warehouse, working at a crazy pace, and they searched everyone on entry and exit. And all that was explicit up front.

The advantage? They hired people every week and you started work immediately, and they paid about twice the hourly rate that any other unskilled job paid.

44

Freddie 07.06.12 at 2:00 pm

Given stuff like this, it’s amazing that he still flips out when people say that he’s no longer on the left in any meaningful sense.

45

Manoel Galdino 07.06.12 at 2:24 pm

Afine Theorem, I think you’re missing something. I live (and work, as a boss, though I have a boos too, i.e., I’m not the owner of the firm where I work) in Brazil, which has a regulated market (you can’t fire people without reasonable cause or you pay a fine, there is a law against moral harassment etc. ) and we have full employment right now. And yet, it’s clear to me (though I don’t have quantitative evidence on this) that these laws improve worker’s condition in Brazil. In fact, there are some news once in a while about workers making the case (judicial case) against sexual harassment, moral harassment etc.

46

David Moles 07.06.12 at 2:28 pm

I’m for open borders and against the drug war and for freedom to organize and for taxing the shit out of the rich to spend the money on the poor. What else you got, libertarians?

47

politicalfootball 07.06.12 at 2:29 pm

Rebutting Yglesias can be laborious because so much of his argument is contained in his assumptions. Yglesias’s assumptions are widely shared, though, so it’s worth the effort, and this was nicely done.

I’ll only add that the “gotcha” around which Yglesias builds his piece is based on a complete misreading:

Henry Farrell says it would enhance productivity to start mistreating economics professors … But then in the next paragraph, he says it wouldn’t be productivity-enhancing:

Even the quotes provided by Yglesias don’t back this up. In the first quoted paragraph, Henry is actually discussing the shortcomings of Cowen’s (inferred) view on productivity. Yglesias, however, assumes that Henry is adopting Cowen’s view.

The second quoted paragraph isn’t really about productivity, but if it had been, Yglesias draws the wrong conclusion. Cowen’s view (again, by inference) seems to at least allow for the possibility that GMU’s productivity would improve if the school shed its well-paid professors who take so many unregulated bathroom breaks. Moreover, the Cowen view has a lot going for it, as we’ve seen with the increase in the use and abuse of adjuncts. Yglesias, however, assumes this is inconceivable, and that the Cowen argument must be the reverse, apparently because the market is necessarily and correctly generous with high-status workers, and punitive to low-status workers. (To be fair to Yglesias, I think that would actually be the thrust of Cowen’s argument in real life.)

And that’s all entirely beside Henry’s point, which I take to be: improvements to productivity aren’t the only consideration. Yglesias isn’t able to grapple with this at all.

48

Donald A. Coffin 07.06.12 at 2:31 pm

This got mentioned briefly in one comment, but deserves to be expanded upon. Even within higher education, there is a “caste” system composed of several distinct castes:

Managers and administrators
Tenured faculty members
Tenure-track facutly menbers
Contingent faculty members
Professional staff
Clerical staff
Maintenance workers

I have not intended that as a hierarchy, although it may come close.

At many universities, clerical staff and maintenance workers are unionized, and thus have at least some level of protection. Tenured faculty members have tenure. Tenure-track faculty are wish-casting their futures.

But I want to talk about contingent faculty, particularly adjuncts, whose plight has been discussed occasionally (thank you, Michael Berube) here. Let’s look at their position.

1. They are highly-educated and highly skilled.
2. They can be dismissed (or, if you prefer kinder language, not re-hired) for any reason.
3. They are paid very poorly. In fact, in real terms, the per-course pay for adjuncts is essentially unchaged from 1976 (when I was adjuncting at $750 per course) to today (when that same institution is paying around $3000 per course; the CPI in 2011 was 3.95 times as high as it was in 1976), and includes no benefits. That institution had–and has–a two-course per semester limit for adjuncts, or about $12,000 per year, with no benefits.
4. They can be hired on extremely short notice (I know people who have been hired *after* the semester started; I know others who were hired less than a week before the semester started to teach courses they’d never taught before–and then were not re-hired because they didn’t do a “good job”).
5. They almost never have even individual cubicles in which to work, but rather share an adjunct office with a large number of others, with no private secure space to keep work or personal possessions. (At the institution from which I recently retired, our 12 adjuncts–in business–shared a 8’x12′ room, with two desks without lockable drawers and 1 five-drawer, not-lockable file cabinet.)
6. The amount of clerical assistance they get is as close to zero as you can imagine.
7. They tend to teach at the least desirable times and generally in the least desirable classrooms.
8. If full-time positions become available, even if they can get some consideration, they are extremely unlikely to be hired (in my 25 years at my former institution, the business school hired exactly one adjunct into a full-time position, and that was as a lecturer, not into a t-t position).

I was in one of the top two castes (tenured faculty member), and, as a result, had a pleasant, and reasonable well-compensated, work like. But I was always aware that my position was, incresing, an anomaly within higher education. And adjunct faculty members have things *much* easier than many workers in the private sector.

49

faustusnotes 07.06.12 at 2:38 pm

Wow, this effort by Yglesias is genuinely stunning:

At the end of the day, GMU professors wouldn’t react to a lower-quality work experience with “sputtering, semi-coherent outrage.” What they’d do is quit and go work elsewhere because they have skills that are in demand in the labor market.

As far as I can tell, MY has no qualifications of any kind, except the ability to spout bullshit on a couple of blogs. He’s got no professional experience or accreditations: he’s the journalistic equivalent of a 21 year old graduate who couldn’t get a job in America so shipped off to Japan to teach English for a few years: at some point those people suddenly realize they have nothing to offer the labour market. Who is he to say that if the creeping cost-cutting of the media industry reaches him, he’ll be able to up and leave for another job? He’s a waste of space sucking up air in an industry that has existed for no more than 10 years, and will probably get sucked up its own arsehole once the internet economy rationalizes. Will people like him float to the top? I sincerely doubt it.

WTF is a useless journalist who splutters for online tabloids like the Atlantic doing referring to himself as a “skilled worker”? He’s a practiced bloviator, not a “skilled worker.” That honour goes to people who can actually do something useful. I mean, ffs, this little skidmark can’t even spell.

The same, of course, applies to GMU professors, aka useless hacks who’ve been languishing in the Cock Bros International Institute for Plagiarism, earning money by being curmudgeons. At some point reality is going to catch up with that pack of jockstains, and no amount of spluttering is going to save them from a rational labour market that is suddenly only interested in economics professors who, like, understand shit and stuff.

Finally, Yglesias proves what a “skilled worker” he is by producing this cascade of unmitigated shite:

I’m open to persuasion. But you have to make the argument that tighter regulation of permissable work rules will in fact benefit the intended beneficiaries in a world where labor market regulation isn’t going to suddenly increase employers’ benevolence.

Gee, I wonder whether there’s any evidence anywhere in the world that “labour market regulation” might “suddenly increase employers’ benevolence”? And since when is a boss telling you when you can pee an example of a “permissable work rule”?

MY isn’t “open to persuasion” because his entire employment future depends on being able to recite this useless libertard crap for whatever nasty little capitalist will pay him. No one who writes crap like that post is open to anything except the next fat paycheque.

I know it’s often said around here that CT posters shouldn’t engage worthless spammers like MY because they’re not left wing, but I would like to take a different tack: why do CT posters engage a worthless spammer like MY who has no qualifications, no life experience, no skills and no brains? This is an academic blog, and he’s a journalistic hack.

50

Tom Bach 07.06.12 at 2:49 pm

Belle,
What do you think is his best area?

51

temp 07.06.12 at 3:41 pm

tempo@21

Do you have a response to this? Apparently Denmark has a freer labor market than Sweden. In Denmark, parental leave is paid for by the state.

I think “much stronger legislative and institutional support for unions, unionizing and centralized union bargaining on the labor market in the US” is exactly what we should be aiming for. I support anything that will increase the power of labor, not limited to cash handouts. I think strong labor unions, high levels of redistribution through the state, full employment, and a highly mobile labor market will tend to produce the best outcomes. Do you agree that the evidence from the Nordic nations supports this position?

52

faustusnotes 07.06.12 at 4:06 pm

temp, perhaps you didn’t check the source for that ludicrous post, but the Heritage foundation’s “labor freedom” index is actually an index of employer freedom. Its indices are (from the Heritage Foundation website):

Ratio of minimum wage to the average value added per worker,
Hindrance to hiring additional workers,
Rigidity of hours,
Difficulty of firing redundant employees,
Legally mandated notice period, and
Mandatory severance pay.

Do you see how most of these conditions (except “hindrance to hiring additional workers”) have nothing to do with labour freedom? Do please try to keep up: we are talking about the rights of workers here, not the right of employers to hire and fire at the drop of a hat.

Also, Denmark has 7.2% unemployment. Japan has 4.1 and Australia 5.2, but they both have lower “labour freedom” scores than Denmark. This kind of undermines your argument, don’t you think? Furthermore, I have a strong suspicion that (ssshhh, don’t tell anyone!) the worthless hacks at the Heritage Foundation have not a single clue about what’s happening in Australia if they think its labour freedom score (by their metrics) is one of the highest in the world. Australia has strong unions, they have been around for 100 years and were stronger previously, and the previous government was resoundingly kicked into the gutter when it tried to make hiring and firing easier.

Also, if you support stronger support for unions, loss of “labour freedom” as defined by the (worthless idiots at) the Heritage Foundation is inevitable. As evidence by supposedly 91% “free” Australia’s experience, the first thing labour unions do when they get genuine power is reach for the regulatory lever. For good reason …

(ah, the Heritage Foundation – now there’s another example of bloviating idiots posing as “skilled workers” if ever there was one).

53

faustusnotes 07.06.12 at 4:07 pm

Damn, I got moderated replying to temp, possibly because I said too many insulting things about the Heritage Foundation.

54

Harold 07.06.12 at 4:15 pm

In the Nordic countries and Germany there is no Taft-Hartley law to weaken the unions: all managers except the very top belong to the same union as the workers.

55

chris y 07.06.12 at 4:22 pm

too many insulting things about the Heritage Foundation.

Not logical, Captain.

56

anon/portly 07.06.12 at 4:42 pm

In his closing sentences, Matt makes the rather remarkable claim that:

The in-the-clouds conceptual argument about libertarianism, freedom, and coercion is semi-interesting in an academic sense, but as policy analysis it doesn’t show much.

I’d have said quite the opposite. Matt’s alternative – which is to come up with a bunch of just-so stories about how we oughtn’t regulate work rules, because there’s a hypothetical high paying firm that searches its workers to stop theft and then there’s a hypothetical low paying firm that doesn’t, and we shouldn’t be punishing the hypothetical high paying firm because it might hurt workers is about as up-in-the-clouds as you can get. It abstracts away the shitty conditions that people have to endure, the politics of why they have to endure them, and any possible politics of collective action and reform.

Of couse Yglesias isn’t saying “we shouldn’t be punishing the hypothetical high paying firm because it might hurt workers,” he’s saying “you have to make the argument that tighter regulation of permissable work rules will in fact benefit the intended beneficiaries.” (In other words, HF left out a “maybe.”)

But that aside, why is his point “up in the clouds?” It seems to get right at the point. Should (SamChevre’s at 43) FedEx be allowed to search their employees or not? Would the employees be paid less if the searches were discontinued? What would they choose?

I guess HF might say we’d be better off if certain choices are simply taken away – via “the possible politics of collective action and reform” – and I think that’s true. But then which choices? Does acknowledging that market outcomes “are not natural” or “have no specific normative weight” lead us in the direction of certain policy recommendations? Or does a focus on those kinds of points “abstract away” from the very real choices that (unsentimentalized) working class people have?

As an added point, even if John Quiggin missed the bit about full employment, why would it not be obvious to him that Matt Yglesias was/is not in full comprehension of the connection between labor market slack and the ability of firms/government entities to exploit their workers?

57

Scott Martens 07.06.12 at 4:43 pm

More narrowly targeting the idea that it’s the high skill level of profs that gets them easier working conditions than line workers in chicken processing plants, I have my doubts that’s true in the developed world now and historical is demonstrably false.

One of the best jobs I ever had in terms of working conditions was in a Pizza Hut call-centre in the early 90s. It was a job with a time-clock and a schedule, but I sat at a computer and took orders for pizza. The skill set was, by some standards, fairly high: fluency in two languages was required, along with 40 words a minute typing. But in that place and time, that skill set was not rare at all. It paid about a dollar over the minimum wage. No one checked my bathroom and smoke breaks.

And, the whole story of Russian serfdom is about how Russia had lots of land and not enough farmers. Serfdom did not come about because serfs were unskilled, it came about because they were skilled.

Taking Yglesias’ example about “employee theft” to old Russia: There are two farms: One has an owner who does not discipline the serfs very harshly, but as a result they work less than on some other farms, so food is sometimes scarce in winter. The other has a petty tyrant of an owner who beats the serfs, rapes their daughters, and generally keeps them in a state of terror. The farm is very prosperous and the owner makes a lot of money, leaving plenty of surplus each fall to feed the serfs. Sometimes, people get hungry enough to run away from the first farm to the second, accepting the discipline in return for regular meals. Sometimes, people get sick enough of the abuse at the second farm to run away and work at the first, accepting the hunger for some modicum of dignity.

Does anything in this example imply that it would be wrong to criminalize beating serfs and raping their daughters?

58

anon/portly 07.06.12 at 4:44 pm

Sorry, the first three paragraphs in the above comment should be italicized – quoting from the OP.

59

Dan 07.06.12 at 4:47 pm

As Patrick points out, the only barriers to trade they decry are the ones that provide some measure of protection to the relatively disadvantaged.

It seems to me that the poor would-be immigrant has a bit of a better claim to being “relatively disadvantaged” than his American counterpart. But maybe that’s just because I’m a heartless libertarian with fetishized outrage over this issue.

60

temp 07.06.12 at 4:53 pm

faustusnotes@52:

First, I didn’t cite the BHL article as endorsement. I accept that the index may be inaccurate, which is why I asked tempo for a response.

Second, what we are talking about is whether Denmark represents a success story for a relatively unregulated labor market. Everything on that list is relevant here.

Third, I can’t tell what you’re trying to say in the rest of your post. Do you agree or disagree that Denmark has a freer labor market than Australia? Denmark has union density 3x higher than Australia, so if they also have a more open labor market, that would seem to indicate something about the compatibility of strong unions and a relatively unregulated labor market.

61

Marc 07.06.12 at 5:08 pm

@59: And yet exactly the same thing could be said about white-collar professionals in poorer countries; a dentist or doctor in a third world country is unconditionally poorer than one in a first world country. Oddly enough, it’s only the “unskilled” workers who are deemed to require the tonic of third world earning power.

62

Data Tutashkhia 07.06.12 at 5:08 pm

What the heck is a “freer labor market”? Easier/cheaper to fire an employee, is that it? Under what circumstances?

63

temp 07.06.12 at 5:15 pm

A freer labor market is a labor market with fewer restrictions on contracts between employers and employees.

64

mdc 07.06.12 at 5:19 pm

A little Yglesiology:

Yglesias thinks of himself as a hard-nosed realist, so I think the best tack to take with him is to point out that non-humiliating working conditions are actually a real demand made by real workers speaking out of real self-interest. If they lack the bargaining power to extract satisfactory results (because their unions have been broken), what is wrong with them and their allies using political avenues to enforce what they want through the state? He’s not going to object “No! Freedom!” because he’s said that’s just nonsense on stilts. He’s not going to say that such rules destroy growth because because he knows that’s not generally true– besides, such a response would require arguing that workers are deluded about their own self-interest.

If the labor movement– including its political agenda– is cast as ruthless interest group which tends in fact to promote egalitarian outcomes, one might count on Yglesias’ support, or even solidarity.

65

LFC 07.06.12 at 5:26 pm

faustusnotes:
why do CT posters engage a worthless spammer like MY who has no qualifications, no life experience, no skills and no brains?

The problem is not that MY has “no brains”. He’s intelligent enough. The problem is that, from my admittedly limited experience of reading him, his blogging is rather dull, boring, predictable. That’s a main reason I rarely read him.

So why do CT posters engage him? First, MY produces a large quantity of posts — he has to, b/c he makes his living by blogging, unlike most bloggers for whom it is a sideline or avocation or purely a means of promoting one’s ‘serious’ work, or whatever. Moreover, and significantly, MY started blogging early, in c. 2003 or ’04 I believe, if not before, and CT was also early into the field. As has been noted often before, if you started blogging early you have a built-in advantage in terms of audience. Those who started blogging after c.’o4 have a harder row to hoe. Of course it’s not impossible to get an audience if you started blogging late, but in general the later one started blogging, the more of a disadvantage one labors under.

66

Dan 07.06.12 at 5:27 pm

And yet exactly the same thing could be said about white-collar professionals in poorer countries; a dentist or doctor in a third world country is unconditionally poorer than one in a first world country. Oddly enough, it’s only the “unskilled” workers who are deemed to require the tonic of third world earning power.

Well, I certainly agree that it’s an injustice in both cases. I don’t, however, see why there’s anything wrong (nor inconsistent) with finding the injustice against the unskilled — i.e. poorer — worker to be more outrageous than the injustice against the doctor or dentist.

67

Cranky Observer 07.06.12 at 5:41 pm

= = = A freer labor market is a labor market with fewer restrictions on contracts between employers and employees. = = =

Say, for example, no government interference in an employment contract [1] where I receive 3 years work, salary, and bonus at a Wall Street firm as long as I agree to donate one of my kidneys to the CEO at his request?

Cranky

[1] noting for the 837th time that other than union members essentially zero USians have or could ever get an employment contract.

68

Jim Henley 07.06.12 at 5:41 pm

@Dan:

It seems to me that the poor would-be immigrant has a bit of a better claim to being “relatively disadvantaged” than his American counterpart. But maybe that’s just because I’m a heartless libertarian with fetishized outrage over this issue.

Conceivably! As it happens, the poor would-be immigrant is relatively disadvantaged versus the wealthy American too. You could choose to get outraged over that. You could look for ways of helping the poor would-be immigrant that don’t come at the expense of the native poor. You could get outraged on behalf of the native poor in re the barriers to professional immigration, since for instance lots more doctors in the US making lots less money apiece would benefit the would-be immigrant professional – now making more than he would have at home – and lower-income Americans – who now have to pay less on average for medical care. Instead, a few messages later, you slough the moral dimension of protectionism for professionals right off.

So odds are reasonable on the fetishized outrage.

69

Bruce Wilder 07.06.12 at 5:49 pm

Barry @ 34: “Another way to put it is that the distribution of profits would shift towards workers.”

Well, actually, no, that’s not another way to put it. Because it is not a simple two-dimensional, necessarily zero-sum game.

Libertarians screw with our heads by using a very loose “market” metaphor to analyze a situation, where there is no actual market to denote or observe. The analytical idealization of a competitive market forms an important touchstone for common ideas of both fairness and efficiency, for balancing conflicting interests in a way that achieves a positive-sum outcome. So, those associations get imported into the argument, but only made explicit, when tactically convenient to trip up the liberal mind, even while the libertarian, so-called, is arguing relentlessly for a propertarian freedom of authority, which entails what is likely to be a negative-sum “bargain” of oppression. “Skills”, another loose metaphor with good psychological associations to the virtues of labor, qua “craftsman”, but no actuality in a world in which craft production methods disappeared more than a century ago, are used as an explanatory factor, to obscure the critical importance of capital and property and economic rents in the actual systems of production.

The actual systems of organization in which most of us labor scarcely feature anything even resembling a market. Variations in “market” wages or salaries are not used to regulate or coordinate the economy in which we live, which is a clear indication that considerations of allocational efficiency are secondary or even tertiary. In fact, most “market” prices — not just wages — are held more or less fixed, and administered. Our economy is organized, primarily, not by Hayekian market prices, but by administrative, managerial bureaucracy, making and enforcing rules. This is reality. Meanwhile, we are arguing out the politics and ethics of this system, as if it were The Matrix of a counterfactual, imagined Market economy, where the prime goal was allocative efficiency.

Full-employment, on a macro basis, is not nothing, but it is not anywhere near everything. And, it is brought up, I suspect, because it tends to reinforce this false vision of a market economy, where none exists. We cannot escape the necessity of an institutional framework in which to bargain, workplace by workplace.

The actual workplace, where authority has an economic function and can be used to improve technical efficiency (reduce error and waste) and improve productivity, poses real dilemmas. If the subordinate employees have no power, then the bargain that results is likely to be a negative-sum one, not a positive-sum one. Those with the power of authority will arrange things so that their own status is enhanced and they can shirk, undermining the efficiency of whole enterprise, even as they enhance their own share of a smaller pie. But, giving up authority altogether is not a feasible alternative, since it would require sacrificing the productivity and efficiency it can achieve.

Trying to analyze this situation as a simple Market relationship, where the possibility of Exit redeems the lost power of the subordinate, obscures the reality. Trying to discuss the subject in The Matrix world constructed by the libertarian economists is just giving an opportunity for folks (I guess I shouldn’t say, “dicks”) like Yglesias to show us how to “bend spoons” with counterfactuals like his imagined high-wage sweatshop.

His “full-employment” gambit is just another instance of “bending a spoon”, Matrix style.

70

Krishan Bhattacharya 07.06.12 at 5:51 pm

Cosma Shalizi: “Natural right therefore coincides exactly with personal interest. A clearer example of wishful thinking could hardly be asked for. “

I agree with this, but there is always the possibility that its NOT wishful thinking, but a consciously deceptive conflation by libertarians.

71

hartal 07.06.12 at 5:55 pm

Trying to catch up on the debate here.
Been so long since I read Lindblom’s book on markets; remember a very interesting analysis of the complexity of interdependence and his bewilderment that democratic states did not rein in private market power.
More interesting to me is Kaushik Basu’s critique of why markets are not likely to reach Pareto optimal conditions and of why Pareto optimality is a retrograde moral standard anyway and his argument for why interference with freedoms of private contract making can be justified in terms of welfare and freedom. See Beyond the Invisible Hand.
Still I think this is the book that people are looking for in this discussion
Freedom in the Workplace?
Gertrude Ezorsky
Cornell University Press
It’s short and stimulating. Read it several years ago.
Finally it’s important to remember that Marx reasons that the expansion of value is the goal of production and that the value in circulation in the system as a whole can only be increased by the exploitation of labor and that the need to increase the exploitation of labor is structurally imposed as a result of competition and the need to extract increasing sums of surplus value even as the valorization base shrinks relative to the total investment.
Marx thus enters the abode of production as he says in the famous passage of Part II of Capital I.
Working conditions are central to his analysis; the economist however is focused on the market and exchange where quantities and prices are contractually determined.
That means economists and their students have little understanding or interest in the actual conditions of the market.
One can even be a Ph.D. in economics and not know the first thing about working conditions as described brilliantly in Steven Greenhouse’s Big Squeeze.

72

hartal 07.06.12 at 5:56 pm

oops have little interest in the actual conditions of production

73

js. 07.06.12 at 5:57 pm

faustusnotes,

Your comment at 49 pretty much made my day. cheers.

74

Bruce Wilder 07.06.12 at 5:57 pm

Cranky: “essentially zero USians have or could ever get an employment contract”

Yep.

We have an argument that ping-pongs back and forth between “labor markets” and “labor contracts”, with occasional detours to “skills”, none of which have much of any correspondence to reality.

Markets and Freedom: Common Mistakes, indeed.

75

QS 07.06.12 at 6:06 pm

How about a more basic insight: markets are neither a person nor a thing but are relations between people. As such, “the market” cannot “be wary” of Greek debt nor can it “look for the next sign of weakness” nor can it be “on the hunt”. This type of talk completely hides the actual institutions and people who themselves are on the hunt, are wary, etc. It totally elides the holders of power and any notion of responsibility. Until we eliminate the personification-reification of the market, it will be very difficult to make lasting arguments against notions of market “freedom”.

76

temp 07.06.12 at 6:06 pm

Bruce Wilder@69:

Yglesias has a toy model to describe what would occur if a law preventing employee search were enacted. I’m curious where your model actually differs, in its prediction in the particular case under discussion. If employee search were prohibited, what would happen to wages? If workplace authorities decided to respond by reducing employer wages, what would prevent them from doing so?

77

William Timberman 07.06.12 at 6:30 pm

temp @ 75

Back in 1985, in the midst of the lesser Dark Ages, the Reagan Administration was doing one of those periodic executive branch Kabuki dances about security leaks, and decided that all the members of the administration were to submit to lie detector tests. George Schultz, then the Secretary of State, famously decreed that the President could either accept his word as a gentleman, or his resignation.

I remember thinking at the time, how nice to have that luxury. Somehow I don’t think it was Schultz’s irreplaceable skills that kept him from getting canned. People who joined unions used to understand how such things worked, and all the current blather about contractual employment would have been seen for the bullshit that it is.

78

Anon. 07.06.12 at 6:42 pm

@28

Your naïveté is astounding. You seem to believe that politicians pass anti-worker legislation because they themselves are anti-worker, or that they wouldn’t pass pro-(local )worker anti-immigration laws because they’re somehow anti-worker. That is not how things work.

I highly recommend taking Public Choice Theory 101 at your nearest college if you have the time.

79

temp 07.06.12 at 6:45 pm

William Timberman:

I apologize, but I’m too stupid to interpret 76 in a way that answers the questions I asked in 75.

80

Data Tutashkhia 07.06.12 at 6:52 pm

What are these “anti-immigration laws” you speak of, Anon.? Is it, like, having a state? With borders, citizenship, residence and work permits?

81

MPAVictoria 07.06.12 at 6:53 pm

“I highly recommend taking Public Choice Theory 101 at your nearest college if you have the time.”

And I highly recommend you get a clue. Go sell crazy someplace else. We are all stocked up here.

82

RobW 07.06.12 at 6:53 pm

@mcarson #17

A regular dentist couldn’t get by with this, but this is the only authorized provider for kids on the low-income insurance plan, so they can do as they please.

So by all means, let’s remove the market competition from healthcare.

83

MPAVictoria 07.06.12 at 6:58 pm

“So by all means, let’s remove the market competition from healthcare.”

Or maybe have more than one dentist who takes the government insurance plan?

84

Wonks Anonymous 07.06.12 at 7:10 pm

85

gman 07.06.12 at 7:13 pm

“MY isn’t “open to persuasion” because his entire employment future depends on being able to recite this useless libertard crap for whatever nasty little capitalist will pay him. No one who writes crap like that post is open to anything except the next fat paycheque.”

Sounds like Krugmans recent dustup w/ CFR..or “the Hank Greenberg(of AIG failure fame) bankrolled subsection on economic at CFR.

86

Bruce Wilder 07.06.12 at 7:14 pm

Here’s what Yglesias wrote: “Maybe there are two companies in town running roughly similar businesses that require the use of some unskilled labor. Both firms are concerned about the problem of employee theft, and both firms are also interested in paying their workers as little as possible. At one firm, they’re offering the federal minimum wage of $7.25 an hour, and they’re losing some product. At another firm, they’re offering $8.25 an hour but searching employees and experiencing less loss to theft. Sometimes people get so fed up with that bullshit that they quit and go across town to the lower-paid, less pleasant job. Other times people get fed up with trying to make ends meet on a minimum wage job, so they quit and go across town and subject themselves to humiliating searches in exchange for more money. Sad stories all around, but telling the higher-paying firm that its business model is illegal and it has to switch to the lower-paying one isn’t going to make the stories any less sad.”

It doesn’t analyze “a law preventing employee search” as far as I can tell. There’s no such law, here; there’s one firm with searches and one firm without.

It does involve some rhetorical and logical sleight of hand, which I call “bending the spoon”, above. As the boy in The Matrix says, there is no spoon, and it is not the spoon that bends, but only yourself.

The workers, of course, are “unskilled” — code intended to signal condescension toward the alien underclass, I suspect, but ymmv. The overall thesis (not quoted above) is: “some people are better off in general than others” and, therefore, I guess, laissez faire, as inequality is its own explanation; the mechanisms of predation, oppression and exploitation do not need examination and regulation of them is futile and self-defeating.

That one firm has to pay more in order to have both employees and mandatory searches is simply asserted. It is not clear, what kind of equilibrium, if any exists. Employees, in Yglesias’ just-so telling of the tale, bounce back and forth between high wages + humiliation, and low-wages and freedom-from-harassment. There’s a little slip up in language, where he refers to “the lower-paid, less pleasant job”, but the idea would seem to be that the higher-paid job is “less pleasant” because of the searches, and employees are indifferent between higher wages and “more pleasant” (no searches). It doesn’t seem to occur to Yglesias that this is a single equilibrium, with sorted strategies. Employees, who are willing to supplement their wages with theft but not very skilled at concealing theft, will settle at the firm without search. But, I digress.

The actual effect of a government regulation limiting whether and when and how a firm can search their employees is likely to be to empower the employees in negotiating the terms under which searches take place. If management makes this choice, unimpeded by any consideration of the costs to the subordinate employees, the subordinate employees will be screwed. By the standards of a deal for exchange arrived at in an imaginary competitive market, the outcome will be suboptimal, a negative-sum game.

The idea that labor market exit is always sufficient to force management to sufficiently consider the costs and waste imposed on subordinates is a fantasy, that runs counter-factual to the prime fact of the typical “contract”: “do as I say, or you’re fired”, where doing as instructed is expected and economically valuable. (“Skills” also obscures the centrality of authority making and enforcing rules to the organization of production.)

“Do as I say, or you’re fired” is the basic bargain, but it is ripe for abuse.

Beyond that potential for abuse, though, lies the possibility of greatly enhancing productivity and technical efficiency. Presumably, what we want to facilitate is the minimal-cost search and higher wage combo. Giving all the political power, in this political situation, to the bosses is going to get us that high-cost seach, low-wage combo, which is bad, a negative-sum outcome, where the bosses have made their own lives easier and higher status, but at the expense of lower overall output and a large immiserated underclass.

87

Data Tutashkhia 07.06.12 at 7:17 pm

The thing about doctors and dentists is that they are organized. If not for that, you’d have quacks on every corner pulling teeth with pliers for 5 bucks a piece. Market competition. Don’t need any immigration for that to happen.

88

Tom Bach 07.06.12 at 7:22 pm

The reply strikes me as stunningly incoherent, but all of Yglesias work strikes me as stunningly incoherent.

89

Harold 07.06.12 at 7:28 pm

Yglesias strikes me as a train wreck.

90

LFC 07.06.12 at 7:29 pm

js.:

“faustusnotes,

Your comment at 49 pretty much made my day. cheers.”

I don’t think that simply denouncing MY, as faustusnotes did, as lacking brains, qualifications, life experience, and skills serves any purpose except the venting of spleen. The problem is not that he’s stupid — it’s something else. Denouncing MY as “a little skidmark,” a “practiced bloviator,” and a “waste of space” (all quotes from 49) is amusing to some (apparently) but that’s about all that can be said for it.

91

William Timberman 07.06.12 at 7:41 pm

temp @ 78

Nothing to do with your mental capacity at all. I wasn’t trying to address your questions, I was making an observation about who is trusted by employers and who isn’t, and why. If George Schultz was too oblique an example, try this: Andy Grove wouldn’t get searched on the way to the parking lot at an Intel fab, not because he can’t be replaced at the same or lower cost, or because he’s earned the right to be taken at his word, but because he can hurt people if he’s subjected to an indignity.

The point is that Yglesias’ toy model is irrelevant in a sane world, i.e. a world in which the assumption that the minimum-wage working class and the criminal class are identical isn’t simply a matter of administrative convenience. The law may be a blunt instrument for achieving this purpose, but in its current extremity, the working class might be forgiven for looking longingly in that direction.

As for a direct answer to your questions, it seems to me that Bruce has done a bang-up job of that in his reply at 85.

92

Data Tutashkhia 07.06.12 at 7:41 pm

He always sounds to me like an adorable, very serious 6 year-old. “Poor people need more money.”

93

Tom Bach 07.06.12 at 7:42 pm

Yglesias’s career is based on a kind of glib contrarianism wrapped in the fiction that he is on the left. That, I think, explains the “something else.”

94

temp 07.06.12 at 8:03 pm

Bruce Wilder:

Yglesias does have a model. It’s clear from his post that he thinks that if you make the search + higher wage business illegal, all businesses will adapt the no search + lower wage model; that is to say, prohibiting search through regulation will lower wages. That’s his reason for opposing the regulation.

My understanding of your response is that government regulation can enable a kind of best-of-both-worlds system, where the firm gets to search and the employees aren’t bothered by it. The natural Yglesian response would be, if such a system were possible, why hasn’t it already been adopted? Such a system would make worker recruitment and retention easier without causing any loss to theft, so firms should want to enact it on their own.

From what I understand, in your view the reason this doesn’t happen is that management is essentially parasitic on the firm: they could raise profits if they chose, but for reasons of status maintenance they choose to subject their workers to arbitrarily abusive treatment to raise their relative standing. If this is indeed what you’re saying, it has some interesting implications (for example, the interests of capital and labor would seem to be aligned here), but I just want to be sure I’m reading you right.

95

Marshall 07.06.12 at 8:06 pm

Yeah, this wasn’t one of MY’s finest efforts. I don’t agree with the posters who’ve said he’s incompetent–he’s a talented writer and one of the better ideologues out there, for which his philosophy background probably deserves some of the credit. And he’s admirable to the extent he’s made his new career by thinking “I don’t know much about economics, so I’ll learn more about it, become qualified to write about it in public, and then do that.” That bespeaks a basic curiosity which is seriously lacking among most of the professional media.

But it also deserves some of the blame for his descent into libertarianism, as this little dialogue has shown to be nearly fatal. He’s assimilated the standard libertarian boilerplate to the extent that when instances of its massive failure are pointed out by the writers here at CT and Brad DeLong, he’s left sputtering incoherence like this.

96

bianca steele 07.06.12 at 8:15 pm

One should always be very suspicious when someone proposes that others endure nasty sounding conditions for their own good, which the someone proposing would never dream of countenancing for himself or herself.

Why is the second part of the sentence necessary?

If someone is spending millions of column-inches making very hard to refute arguments in favor of others’ enduring nasty sounding conditions and in favor of these conditions’ being for their own good, I’m not sure I care what is going on in the writer’s head about how s/he’d feel about enduring those conditions his/herself. Sure, maybe s/he has a gun to the head. What’s the ethics about human shields in front of machine-gun nests?

OT, sorry.

97

Freddie 07.06.12 at 8:21 pm

@ Marshall 94

The true sadness is that this assumption of the superior seriousness of the more libertarian is exactly the kind of blinkered perspective Matt used to criticize in the old media.

98

tempo 07.06.12 at 8:28 pm

temp: “I think strong labor unions, high levels of redistribution through the state, full employment, and a highly mobile labor market will tend to produce the best outcomes.”

Yes; yes; maybe; of the right kind yes.

I’d argue that the relatively high social mobility in nordic countries is caused by the traditional systemic features of the nordic model. Relatively low economic inequality, universal social protection, universal health care and a wide array of workplace regulations concerning safety, health, non-discrimination and very high degree of centralized union influence on the labor market. Those social democratic features over time generate a system with relatively high social mobility among other good outputs. The exact causal links are of course debated. I’d argue that widespread justified trust in a solidaristic system is a big explanatory factor. If people have (experientially justified) trust in solidaristic institutions then they are more motivated to generate positive externalities, change career or city and retain and update their education level. (Historically relative low social segregation spatially and in schools are also very important.)

The last two decades has seen a systemic shift in the neoliberal direction in the nordic region. That can today at a distance give the impression of a more deregulated and neoliberal system that still generates impressive outputs in certain regards. I think that causality is mostly illusory. Some scores are still high despite, not due to, the neoliberal injections because solidarity and high degrees of social trust both builds and breaks slowly. The increasingly negative symptoms in the form of nontemporary mass unemployment, radidly increasing economic inequality, decreased union influence and sadistic (“activating”) workfare policies indicate that system changes are taking effect.

In short, the nordic right wing parties who have gained more influence in the last two decades have tried to (or at least claimed to try to) engineer a system with social democratic outcomes but with systematic trim down of core social democratic institutions. But it does not seem to work that way.

99

James Choy 07.06.12 at 8:30 pm

What’s the difference between regulating bathroom breaks and sexual harassment? It seems to me that sexual harassment derives from an unjust and illegitimate preference. We think that the sexual gratification that the employer gets from harassing his workers is not valid, and should not be counted as part of the social welfare. Thus, we ban sexual harassment, which seems to me to be a totally valid position. In contrast, for the most part employers do not regulate bathroom breaks because they get sadistic pleasure from watching their employees pee in their pants. Rather, they have found that regulating bathroom breaks is the best way to run a profitable business, and the desire to make a profit is a legitimate preference that should be counted as part of the social welfare. So although passing laws requiring bathroom breaks might benefit workers, they also come at a real, albeit small, cost. And once we recognize that cost, it seems like there are cheaper ways to benefit workers.

100

Hidden Heart 07.06.12 at 8:40 pm

Let’s construct a simple model for the evolution of a pundit’s career. Here are our starting asumptions.

#1. I, the pundit, am a reasonably talented writer, a fairly quick study, and I have a style that is widely seen as charming by people willing to pay me enough to let me do this for a living.

#2. I am not especially well informed about matters outside my social station, nor deeply driven to become more so. Nor am I well prepared for any line of work requiring additional knowledge or skills, nor interested in becoming so.

#3. I would like to be as faithful to the truth as I can be while maintaining my station, but I am not impelled to sacrifice. Where there is tension between my best understanding of the truth and the sustainability of my station, I will try to tell as much truth as I can without alienating my patrons and sponsors.

I think that these suffice to cover Matt’s career pretty well. The third one in particular leads to an evolution that’s easy to judge when others do it, easy to forgive when we do it ourselves. When you’re surrounded by and dependent on people with a mix of ideas, some you feel are true and some hideously loathsome, and you don’t feel it’s appropriate to ditch the scene for a more moral one, you have…well, a bunch of options. But one of them is to look for whatever elements you can find to agree with in the views of those with authority over your situation. You talk those points up, for several reasons:

* Feuding with people who can fire you and dim your prospects forever after isn’t nearly as much fun as feuding with distant bloggers who have no sway over you.

* If you feel that the folks around you aren’t moral monsters – and given how much fun you’re having with them in other ways, they sure don’t seem to be – you ‘re probably thinking that you can use this as a starting point. Earn credibility with them, and then use that to apply some pressure for change later.

* If you feel that the people around you aren’t idiots – and given how successful they are, they sure don’t seem to be – you want to be willing to learn from them, and to be seen as willing to learn, and you think that the points you share so far may make a good fondation to probe at what seems wrong.

Say that you’re blogging along about labor issues, and you read something by, oh, Nathan Newman or Corey Robin that seems moral, sensible, and supported by facts, but that is strongly contrary to the prevailing ideas of the people you work with and for, and socialize with. What would happen if you were to take a strong stand in favor of that idea? Nothing good. It’d hurt your career. And that would hurt the chances for doing your bit of good in the midst of a social situation that excludes people like Newman and Robin. You tell yourself, this isn’t just self-defense, this is a sensible appraisal of your own competitive advantages. You set that piece aside and work on something more palatable in your own context.

What happens over time, of course, is that you drift. You get used to the ideas you’re surrounded by. Personal contacts make it plausible to believe that people with success you admire and enjoy (and benefit from!) got there thanks to good ideas and good character. You may inwardly think “eh, not so fast”, at first, when they denounce the excluded as wrong and dangerous, but the more you get set where you are, the easier it is to join and think that, yes, outsiders got where they are because of bad ideas and bad characters. They chose poorly, to swipe from Indiana Jones and the Last Crusade, and while of course there are problems with ideas and values where you are, they’re nothing that can’t be fixed with patience and cleverness by people who have the chance to be there on the inside doing their part for the good of all.

Then, sooner or later,you end up writing the equivalent of “I used to be a liberal, but since Democratic rejection of the Bush tax cuts I’m outraged by the Sherman Anti-Trust Act”. And very likely you’ll think and feel that the left abandoned you, while you have sensibly stayed the sort of person in the part of the ideal political spectrum you’ve always been on.

It seems like for people on that kind of route, personal tragedy is the most plausible way out of it – suffering a kind of loss that’s awful, and could have been prevented if the people you’d been ignoring, dismissing, or undermining had gotten more of their way and your friends and colleagues had gotten less of theirs. I wish other means worked more reliably, because I genuinely don’t want anyone to suffer horrible things.

101

David Kaib 07.06.12 at 8:48 pm

James – the ‘we’ in your comment is unclear, but I’m confident that neither the bulk of us here nor most people would analyze the problem that way. As far as I’m concerned you should be free not to be sexually harassed and you should be free to use the bathroom when needed. It’s wrong to describe arbitrary power of an employer over workers (whether it be to subject them to harassment or denial of peeing) as freedom, just as it’s wrong to suggest that laws preventing murder are denials of freedom (as the only thing being asserted is a desire to wield power over someone else).

I’d also say that anyone who forces their employees to go without using the toilet is in fact a sadist, and speculation that it’s driven by the demands of the market is just that.

And yes, workers would benefit if they didn’t need to soil themselves on the job because they were protected by law – no need for the word ‘might.’ Using the bathroom is not fungible.

102

RPM 07.06.12 at 8:54 pm

Yglesias: “I completely agree that the orthodox libertarian conception of freedom is nonsense….”

@Marshall 94: “his descent into libertarianism”
@Freddie 96: “this assumption of the superior seriousness of the more libertarian”

Clearly Yglesias is the kind of crypto-libertarian who pretends to call it nonsense to gull the unsuspecting.

103

Professor Coldheart 07.06.12 at 9:02 pm

In contrast, for the most part employers do not regulate bathroom breaks because they get sadistic pleasure from watching their employees pee in their pants. Rather, they have found that regulating bathroom breaks is the best way to run a profitable business, and the desire to make a profit is a legitimate preference that should be counted as part of the social welfare.

… whereas the desire to urinate is not?

104

UnlearningEcon 07.06.12 at 9:10 pm

@RPM 101

He may say that about libertarianism, but given the rest of what he says he’s clearly pulling something of a Cowen.

105

L2P 07.06.12 at 9:18 pm

“What’s the difference between regulating bathroom breaks and sexual harassment? It seems to me that sexual harassment derives from an unjust and illegitimate preference. We think that the sexual gratification that the employer gets from harassing his workers is not valid, and should not be counted as part of the social welfare.”

The hell?

No. Most of us think that workers have a right to work without being groped by their co-workers, or constantly asked about their junk, or whatever other jackassery people think up in their constant struggle to not be cool to each other. What the harasser wants isn’t something we’re worried about; he can go pound sand.

I hate to make this personal, but it’s like you don’t even look at this from the worker’s perspective. It’s like they don’t even exist for you. Economics is only a dismal science if you forget it’s about people, ultimately, and finding ways to make them happy.

106

Marshall 07.06.12 at 9:25 pm

“It seems to me that sexual harassment derives from an unjust and illegitimate preference. We think that the sexual gratification that the employer gets from harassing his workers is not valid”

Yeah, this is pretty revealing. Our objection to sexual harassment has nothing to do with the legitimacy of the employer’s preference; it’s because the employee is also a person and as such has rights, notably the right not to be harassed, groped, or whatever… to be more specific, we think that the right not to be harassed is not legitimately surrendered upon entry into a worker-employer match, and any such arrangement under which the right is compromised is therefore impermissible. The same goes for bathroom breaks, as should go without saying.

The problem with libertarianism (or one of the problems, I should say) is the repeated failure to apprehend that _____ are people too, where “______” can be filled in with anyone not demographically and/or socio-economically similar to nearly all self-described libertarians. Nobody who actually takes rights seriously would contend that this is about which of the employers’ desires are legitimate, and whether his profit motive deserves consideration or not.

107

RPM 07.06.12 at 9:27 pm

@UnlearningEcon 103

I don’t think he’s pulling a Cowen at all, but maybe that phrase means different things to different people. He says that some government regulation is good and some is bad, and he’s using an admittedly simple model to make a rough distinction between the two.

Maybe by “pulling a Cowen” you mean that he spends very few words disagreeing with libertarians, and very many words disagreeing with the straw-man lefty position that every workplace regulation is good, and that from this we can infer that he really sides with the libertarians and against the lefties. I don’t think that’s right, but it would be consistent with other bloggers’ rhetorical strategies.

108

Tom Bach 07.06.12 at 9:30 pm

It is worth pointing out that people who work the floor in call centers talk for nearly their entire shift. Talking for 4 or 6 or 8 hours drys the through. In order to maintain “efficiency” call center workers are encouraged to drink fluids. This can run to 3 or more liters per 8 hour shift for some. Limiting bathroom breaks in this situation is especially barbaric.

109

Data Tutashkhia 07.06.12 at 9:37 pm

He says that some government regulation is good and some is bad, and he’s using an admittedly simple model to make a rough distinction between the two.

Doesn’t this make him adorable, though? Am I the only one who is touched by this?

110

js. 07.06.12 at 9:47 pm

LFC @89,

You’re right of course that Yglesias is no idiot; indeed, he’s quite sharp. You’re also right that faustusnotes’ rhetoric may not accomplish much more than the “venting of spleen”. But after a whole week (or more?) of watching the libertarian crew’s “ostentatiously extended exercise in refusing to get the point” (as Henry put it), I’ve come to take a dim view of what reasoned argument can accomplish here. As another commenter put it on one of these threads, it feels like repeatedly banging your head against the wall. I guess that’s where my last comment was coming from.

111

RPM 07.06.12 at 9:55 pm

Apropos of Yglesias “pulling a Cowen,” his response to Cowen’s response to the original post was, LOL. Glib: yes. Glibertarian: no.

112

Bloix 07.06.12 at 10:14 pm

Matt Yglesias is an extremely bright, curious, productive young man. He was born in New York in 1981 to parents whoe were both successful writers, attended the Dalton School and then went straight to Harvard, where he graduated magna cum laude and wrote or edited several campus publications. He began blogging in 2002, when he was 21 years old and still in school, and was picked up upon graduation by The American Prospect. Since then he has moved his blog around to different venues, winding up at Slate.

In other words, he grew up in a household headed by two successful, self-employed parents. He never had a parent lose a job or work for a hated boss. He has never had to apply for a job and has never worked other than as a blogger, which has long hours but virtually total control over conditions and almost nothing in the way of direct supervision. He has never quit or been fired from a gig without having the next one lined up. By virtue of his early entry into blogging (a combination of extraordinary luck, hard work, and precience) he has built himself into a brand that will last him for life as long as doesn’t damage it. He doesn’t know what a workplace is or what working for a boss is like. And from his writing, I strongly suspect that he doesn’t really know anyone who actually has an ordinary job.

113

Marc 07.06.12 at 10:19 pm

@106: His most recent post assumes libertarian economics as axiomatic. He equates economic efficiency and social welfare. He asserts that frictionless markets are useful analysis tools, and then in the remainder of his post he assumes that they are completely correct. In his point #5 , “Pollution regulations, by the same token, really do hurt not only the owners of pollution-intensive industries but also the workers in said industries. ” The idea that pollution is an actual cost, borne by others and the workers, is absent from his economics; instead, regulating pollution is the equivalent of civil rights (moral, not economic.) His points 6 – 10 then assume that regulations always cost poor people money, that the only reason to adopt them is moral, and that even the moral benefit can be negative. It’s the most crude market fundamentalism imaginable, and his wording on pollution makes it clear that he doesn’t even understand externalities in an economic context.

If you prefer “adopts simplistic market fundamentalism as obviously true” instead of libertarian, I suppose that you might have a more precise description of Yglesias. It doesn’t make his weak arguments strong ones.

114

Marius 07.06.12 at 10:32 pm

I love how Yglesias parenthetically notes that full employment would be nice. Yes, and a pony. The content of his contrarianism is almost always, “assuming we can put in place politically unfeasible policy X, there’s no need for feasible liberal proposal Y.”

Agree with Belle, too, that his current specialization in business and economics is unfortunate. I’ve become a much less frequent reader since he moved to Slate.

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RPM 07.06.12 at 10:38 pm

@Marc 112

I think every single sentence in the first paragraph of your post is wrong, except for the one where you only quote Yglesias. To pick just one , it is beyond obvious that Yglesias understands that pollution has costs (to pick just one example I found in about ten seconds using Bing, look at this). His point here is that forcing an industry to internalize pollution costs it is otherwise foisting on the rest of us will be bad for the workers in that industry as well as the capitalists. This doesn’t mean that pollution isn’t a cost: It means that when we try to advance social welfare by regulating pollution, we sometimes find the workers to be opposed to this, because they have weighed their costs and benefits.

Maybe I have some sympathy for Yglesias because I am a non-economist in a line of work where I apply “economics 101″ often, even as I realize that it is a simplistic tool which can be used for ill in the hands of the wrong kind of fundamentalists. When Yglesias refers to its “analytic utility,” it does not mean that he agrees with every libertarian who has ever used a little economics to defend the interests of the wealthy. I’m not sure why you think he does.

From his post, what form of government workplace do you support that you think he rejects, and why do you think he rejects it?

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Henry 07.06.12 at 10:44 pm

A quick note since I have spent the day herding children at the beach. Matthew Yglesias wrote a post that imo was highly annoying and wrongheaded. He did not, however, kill your dog. Not even accidentally. Nor does he cackle insanely as he gets millions from the Kochtopus in order to fund his campaign against the left. Criticism of Matthew Yglesias’ ideas, including harsh criticism is fine, as of course are counterarguments in support of him. Further comments describing Matthew Yglesias as a skidmark etc are not, and will be dealt with severely. My tolerance for criticism of MY, and other people whom I do not agree with, but who are not actively malign, should more or less be at the same level as my tolerance of criticism of me or other CT bloggers. Go after ideas all you like, But personal insults are likely to be disemvoweled or deleted, and amateur psychology, unless supported strongly by external evidence, is strongly discouraged.

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Marc 07.06.12 at 10:46 pm

@114: His entire post assumes the strict validity of market fundamentalism. His discussion of pollution didn’t have any of the caveats you mentioned: it’s a simple comparison of costs without considering the costs being inflicted on others. His discussion is sloppy, full stop: he implies that pollution costs inflicted on others *are not economic*, which is simple nonsense. It’s not too much to ask writers to pay attention to the words that they use.

For another example, look at his point #7: it asserts that banning political coercion is an economic cost to workers because they could sell their votes to their employers. Jesus. I hope you can’t see the problem with this chain of logic. And the entire thing is a chain of assertions like this. It’s a train wreck.

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chrismealy 07.06.12 at 11:04 pm

Thanks Henry, and just in time. I was about to start defending Yglesias.

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Both Sides Do It 07.06.12 at 11:07 pm

“herding children at the beach” actually sounds like a good description of moderating a comment thread

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RPM 07.06.12 at 11:08 pm

@Marc,

I share your disagreement with the “Yglesias” you have created, and Yglesias would too.

When MY says a model has “analytic utility,” to me that is a very different thing than saying that it is strictly valid. What he’s saying is that applying the model is useful even though it isn’t strictly valid.

On pollution, he says: The general schema of a sound proposal here seems to me to be that you’re asking businessmen to put up with some annoyance in order to advance a policy goal that isn’t narrowly economic in nature. Pollution regulations, by the same token, really do hurt not only the owners of pollution-intensive industries but also the workers in said industries. Nonetheless, limiting pollution is important.

I’m not sure why your “Yglesias” believes pollution doesn’t impose costs on others. You and he (and I) obviously agree that pollution imposes externalities and should be regulated.

On his #7, you have omitted and ignored the word “plausibly” in what he said. Pay attention to the words he uses. His point there is that even if someone applying simplistic libertarianism could make an argument that allowing bosses to coerce workers’ votes was worth having, it is nonetheless a bad idea. He is disagreeing with the view you think he espouses.

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Tom Bach 07.06.12 at 11:27 pm

RE pollution and its cost. Take, as an example, unregulated dumping of dangerous chemicals, which hurts in the normal meaning of hurts workers, their families and everyone else in the vicinity. Forcing industries to stop doing that might increase their cost but it doesn’t hurt them, in the normal meaning of the word. Indeed, by forcing those industries to stop hurting people the regulations help those industries by seeing to it that their consumers don’t die off. The same, of course, is true of safety regulation, increased fuel usage efficiency and so on. By conflating increased costs for doing business with hurting Yglesias muddies the water.

There is more to life than economic efficiency and framing debates about lives and health of workers and others as essentially or importantly economic issues is intellectually sloppy.

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Plume 07.06.12 at 11:50 pm

I think one of the basic problems in any exchange with conservatives and right-wing libertarians is that they view each issue with a very narrow lens.

Recently, I discussed the existence of major imbalances, injustices and inequalities in capitalist economies with some conservatives, showing that most exchanges are necessarily win/loss. That is someone wins, someone or many someones have to lose. In fact, the bigger the win, the bigger the loss. Because that’s the way the math must work, given finite worlds.

The response was that both parties in every capitalist exchange win. No one loses. The example given was the sale of a laptop. Person X has $2000 to spend. He finds a laptop for just that amount. Voila!! Everyone wins!!

First off, even if we just stick to two people, this isn’t true. There is still a winner and a loser there. But the bigger issue is that no exchange is limited to just buyer and seller, and it’s absurd to think of capitalism in those terms. The layers and the bureaucracies and the repercussions involved are myriad. That laptop is built largely by people who work at Foxconn, for instance, or places like it. They are hidden from us, but they exist. We couldn’t purchase said laptop for $2000 if there wasn’t that “race to the bottom” for cheap labor, which helps the developed world tremendously, but costs the developing world dearly. We win, they lose, big time.

Of course, their losing, and their terrible working conditions, send ripples throughout the world, reducing our own salaries and leverage in turn.

Think food. A conservative would see it as buyer and seller. They would remain oblivious to the migrant workers who gather our food for pennies so that our costs are kept down. We win, they lose. Their loss makes our win possible. If they were paid a decent wage, our prices would have to go up. Someone, somewhere along the line, would have to take a hit.

Capitalism, or any for-profit system, requires losers. It creates leverage, bargaining power and the lack thereof. Mostly, this is arbitrary, and we know this because we’ve seen this change for a multitude of careers even in recent decades. Most bankers, fifty years ago, made solid middle-class wages. Today, they’re paid the moon and the stars.

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Jim Henley 07.06.12 at 11:54 pm

Tom, what you say is true as far as it goes. But if I only listen to you I will be completely dumbfounded when, as happens over and over again, workers oppose regulating their own industries’ dumping practices. If I take note of Matt’s actual point, I won’t be. Earnestly pretending that workers won’t identify with their industry on these matters won’t help us shape policy approaches that overcome that resistance and regulate pollution. Earnestly pretending that Matt’s a monster for noting an observable fact as part of the political picture won’t help either. I was alive in the 70s, man. I saw this happen.

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temp 07.07.12 at 12:09 am

Tom Bach:

In the scenario you describe, a maximalist approach (complete banning of dumping) may be optimal, but in practice, there are many situations where regulators face real tradeoffs between many competing values (health, environmental protection, productivity, convenience) and the maximalist approach is unfeasible. How should we set speed limits, or the amount of CO2 we allow into the atmosphere? I can’t see how you set policy if you truly believe these values are incommensurable.

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Tom Bach 07.07.12 at 12:32 am

Jim,
I am not pretending that some workers don’t act as y0u suggest they do. I am, however, arguing that they are wrong to do so. I too was alive in the 70s and a functional, or at least semi-functional, adult and do not see what this has to do with anything. As I recall the automobile industry has opposed every State safety regulation from safety glass to increased fuel efficiency. They, whether management or labor, were and are wrong to do so. Given that the increased safety standards led to fewer deaths and, go figure, an effective sales pitch.

It seems to me that the proper approach to providing positive cover for necessary regulation isn’t to insist that the issues are not narrowly economic. But, of course, I could be wrong.

Temp,
Let me see if I understand your position, the events in Bhopal don’t show that the first consideration of regulations of poison ought to be the protection of workers and citizens more generally because of economically, in the sense of profit maximalization, necessity? This seems, to me in any event, to insist that life here on earth needs to bend itself to the desires of capital.

I mean really you seem, but I am not sure if you do, to be suggesting that while in the long run we, our progeny, and all else may well be dead but in the short run there will be badly paid and inherently dangerous jobs for some.

Ideally I have misunderstood.

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faustusnotes 07.07.12 at 12:38 am

I’m sorry if it was over the top, Henry, but my point stands: people with no skills of any relevance outside of a very very small space on the internet should be a little more circumspect when bragging about how good life is for skilled workers and how wonderful laissez faire capitalism is. It’s just like some callow youth from the ruling class cheering the joys of war.

If ever “there but for the grace of god go I…” were to be applied, it’s to people with limited or very specialized skills from wealthy families who praise the mistreatment of their social inferiors. Especially if they see that mistreatment as an inevitable consequence of the social order that saw them born lucky and saved from ever having to do real work.

My entire family grew up on the breadline, and I got to witness the effects of being at the bottom of the labour market for much of the first half of my life – including my family going bankrupt and my parents moving countries because an entire industrial sector disappeared. My brother was offered a job for a pound an hour that that social security laws obliged him to accept. I don’t have any sympathy for the cheerful kids of the ruling class who defend that social order, and who think being born lucky makes them smarter or better than those of us who were born in amongst the proles. I also don’t appreciate them recasting the greed and cruelty of bosses and rich managers as somehow necessary for the social welfare – it’s patently not, and their cute just so stories are IMO a cheap and tatty facade over a genuine desire to maintain an unjust and unfair system.

They deserve some harsh language sometimes.

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temp 07.07.12 at 12:41 am

Tom Bach,

You offer another scenario (Bhopal) where there may have been a feasible maximalist approach. But this is not the typical case. What do you think of the actual examples I offered? How should we set speed limits? How should we regulate CO2? Surely your answer to these questions isn’t “zero”, right?

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Tom Bach 07.07.12 at 1:03 am

Temp,
You know, I assume, of the Triangle Shirtwaist fire, of the the Cayuga River, mining disaster too numerous to count, the need for the pure food and drug law, and related etc. To say nothing of the misery of being Black or Irish at earlier points of this or some other countries’ histories. Which is another way of saying the burden of proof isn’t on the “maximalists” but rather on the minimalists to show some, or really any, example of un- or lightly regulated industries behaving in a socially responsible manner. Surely in response to these and a host of other examples of the misery and death resulting from un- or lightly regulated industries isn’t please sir hit me baby one more time.

In other words, the whole of the history of unregulated industry points towards the need to regulate in the interest of workers and citizens health, well being, and stopping things like the most recent economic disaster of un or lightly regulated financial shenanigans.

But, again, I no doubt misunderstood your solidly grounded realistic approach.

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temp 07.07.12 at 1:09 am

Do you have an answer for how we should set speed limits or regulate CO2?

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faustusnotes 07.07.12 at 1:27 am

temp, I think if you look around the world you might see some answers to those thorny questions…

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Freddie 07.07.12 at 1:30 am

RPM, I have read everything Matt Yglesias has written for the last six years. There is no meaningful distance between his politics and those of Will Wilkinson. That’s just true. I’m sure it will invoke Henry’s wrath for criticizing someone who is of the Tribe, but that’s the reality.

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Tom Bach 07.07.12 at 1:30 am

Temp:
Do you have an answer for the endless number of market failures that led and lead to death and misery for innocent citizens?

To restate my point you are the one who needs to develop a defense for the necessity of minimalism. What you call the maximalist case is proved by the repeated failures of industries, as it were, to heal themselves.

If you can’t or won’t I fail to see why I should dance to your tune. No doubt, of course, I miss some how or another the hard-headedness of minimalism realism.

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Curmudgeon 07.07.12 at 1:37 am

Marius, #113:

I don’t think that criticism is entirely fair in this case. Since this depression started, full employment, a guaranteed minimum income, and/or any increase in labor regulations requiring respect for human dignity are all equally infeasible politically.

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temp 07.07.12 at 1:56 am

Tom Bach:

I’m in favor of tough environmental and safety regulation. I just think values like health and environmental protection need to be expressed in comparable terms to each other and to narrowly “economic” values like productivity. Otherwise I don’t see how you can do policy. How many lives are we willing to lose each year to traffic accidents to obtain a given level of convenience in travel? You need some common measure to make this judgement, whether implicit or explicit. You seem to believe that health and “economic” values are fundamentally incomparable, but haven’t explained yet how to do policy under this assumption.

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faustusnotes 07.07.12 at 2:18 am

temp, what you’re suggesting is a recipe for policy analysis. We have good metrics for measuring health outcomes – things like DALYs, for example – and for measuring the effectiveness of interventions. Sadly, economics hasn’t caught up and doesn’t yet have the ability to quantify things like “convenience in travel.” Given economists are still unable to come up with an acceptable way of measuring growth and can’t agree amongst themselves on pretty much anything, why wait for them to pull their fingers out?

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Tom Bach 07.07.12 at 2:26 am

Temp:
I don’t seem to believe anything. I will be as clear as I can be the lived history of actually existing people shows that failing to regulate industries in the interests of our fellow citizens and the environment leads to both being destroyed. To the extent that you and Yglesias have an argument it is that regulations are burdensome because of the resultant or potential economic inefficiencies.

My argument is that this framing of the debate gets the basic issue wrong by insisting that economic efficiency is the appropriate measure. This is, I insist, wrong because purpose of humanity in a social situation is about profit. I don’t see it that way. And, as by the way, to the extent that “economic” values are about profit, as opposed to social utility, they are “fundamentally” incompatible with humanistic values.

Just to be clear, productivity mean fewer people doing more with less and benefits only those who profit from the work of those doing more with less, which is great if you are Mitt Romney or his fellows, but does little to nothing for the rest of us.

Take your example of traffic deaths. The Romneys of the world rejected safety glass, seatbelts, crumple zones, air bags, and so forth. The only way we reduced traffic deaths was by rejecting and ignoring arguments about productivity and profitability.

We don’t, in other words, need to discuss issues of fair treatment and fair play as if the the bottom line is the most important line to develop both thriving industries and, oddly enough, decent societies.

To the extent you and yours thinks the opposite is true you need to show how the last 30 years of pursuing profits and increasing productivity led to an increase in human happiness. Inasmuch as it hasn’t you can’t. Consequently, or so it seems to me, you have to insist that all human relations need to be thought of economic, in a narrow neoliberal sense.

As to how to do policy. My case would be that anyone who insists that profits would fall if we do X ought to be ignored and anyone who insists on the logic of markets be ignored.

You claim that safeguarding our future, environmental protection, has to be expressed as productivity is insane because it assumes that profit and loss and loss of life and the destruction of the environment are comparable They aren’t.Productivity is a short term gain or loss and the destruction of lives and the environment are permanent. Increased productivity benefits, as we see no today in fact, benefits the few, while its attendant misery affect the vast majority.

You still haven’t explained how or why we need to continue to do or think about policy choices under assumptions that have made most of us poorer, sicker, and less able to enjoy the material benefits of system in which our labor creates.

But again, no doubt my framing of the issues is insufficiently realistic because, after all, realistic realism.

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LFC 07.07.12 at 2:58 am

From MY’s “Ten Theses” post I was struck by this (the italics are mine):

You can’t fire a woman for being pregnant both as a matter of gender equity and because we conceive of American society as a multi-generational enterprise that aspires to endure.

In other words, one reason you can’t fire a woman for being pregnant is that there is a societal interest in encouraging (or at least in not discouraging) pregnancy and childbearing. This does not resonate much with me: I think the gender equity reason is enough. Also note the “we”: We “conceive of American society as a multi-generational enterprise that aspires to endure.” Stylistically, this is the kind of simultaneously banal and somewhat olympian-sounding pronouncement one might find in a Supreme Court opinion or a work of philosophy (I think, say, of Rawls’s style, or perhaps of Burke’s famous line about society as a contract betw. past and future generations). The line, in short, is rather out of place in a post about the costs and benefits of labor regulations written in an otherwise pretty informal style, or so it seems to me. (I suppose this is what blogging for a living can do to even a talented writer.)

Btw, Bloix @112: yes, although it’s speculative, I think you might be onto something there. One’s personal history has to affect one’s general outlook on things. However, it’s sometimes possible to transcend those limits…whether MY sometimes manages to do that, I don’t know.

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Bloix 07.07.12 at 4:02 am

122 – “That laptop is built largely by people who work at Foxconn, for instance, or places like it.”

Matt has written, IIRC, that Foxconn is a good thing because the alternative for its workers is to be peasants farming rice like their ancestors for generations, which is a much less desirable life.

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Yarrow 07.07.12 at 4:55 am

Another quote from Yglesias’s “Ten Theses” piece: “If bosses were given greater freedom to coerce their employees’ political behavior, that would almost certainly increase incomes at the bottom end (in effect you’d be letting poor people sell votes) but corruption is bad and economic elites have too much rather than too little sway over the political system.”

This is deeply weird. First of all, bosses in all but four states have essentially every possible freedom to coerce their employee’s political behavior, on or off the job (except for interference with the secret ballot) — you can be fired for being a Republican, say, except in California, Colorado, New York, and North Dakota. (Smokers, on the other hand, are protected in 29 states.)

Second, this has not produced a lack of income for folks “at the bottom end” in California, Colorado, New York and North Dakota, compared to the rest of the country: they are ranked 9th, 13th, 15th, and 27th respectively in median income. Now this is probably because laws protecting workers’ outside activity are a symptom of a slightly less powerful economic elite and a slightly more powerful bottom group — but why in world would we expect bottom incomes to go up if those laws were repealed? Repeal would be a symptom of an increase in elite power, which generally has a negative effect on bottom-group incomes.

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Zifnab25 07.07.12 at 5:06 am

Matt has written, IIRC, that Foxconn is a good thing because the alternative for its workers is to be peasants farming rice like their ancestors for generations, which is a much less desirable life.

In some respects, he’d be right. The folks working at Foxconn are, by and large, rural peasant farmers or unemployed urban youths who consider Foxconn a step up from their personal status quos. Picking on Matt for noting that Foxconn employee beats Chinese peasant villager doesn’t really move the ball on the whole issue with China. China is a deeply corrupt and heavily plutocratic society where virtually every low-level employee is a victim of abuses of management. Foxconn simply got a lot more limelight than any of the random farming communities in the boonies.

The core of the argument is that industrialization has had a positive effect on Chinese citizenry. That’s debatable, but only to a degree. China’s economic rise has dragged large numbers of citizens out of poverty, and that much is undeniable. That rise came in no small part at the expense of the American middle class. And that’s what has Americans so worked up. But the idea that Joe Six Pack actually gives two farts about the working conditions of a Chinese citizen that didn’t just take his job would suggest that maybe they’d do something about it by not shopping at Walmart so much. :-p Let me know when that happens.

In the mean time, maybe we can stop the concern trolling over Chinese labor conditions. The generic American doesn’t have control over Chinese labor policy. And crusading against one particular firm ignores the far more general problem of a country overwhelmed by labor abuse. Matt was savvy enough to note the relative benefits of Foxconn employment to the status quo for the Chinese citizen. That doesn’t make him some kind of monster. Merely realistic.

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faustusnotes 07.07.12 at 5:39 am

that’s yet another example of disingenuous argument by Yglesias, Yarrow. The smooth way that he conflates coercing the vote (“vote Repub or I’ll sack you”) and vote buying, which is completely different. It’s the same oily trick he used in conflating repressive contracts with “permissible work.” A trick also used by the Heritage Foundation (linked by temp above), whose “labour freedom” index is actually an “employer freedom” index.

These people have no shame.

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Watson Ladd 07.07.12 at 5:44 am

faustusnotes, somehow the equivocation by supporters of banning the employment of illegal immigrants escapes those immigrants themselves who would be jobless.

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The Fool 07.07.12 at 5:58 am

Just a point about “narrowly economic”: I’m pretty sure that by “narrow” he’s talking about the effects on that industry, not the economy as a whole. That is, regulation of pollution may cost jobs in certain industries, but the broader health benefits outweigh the impact on employment by far. In addition there are all the moral considerations and the like, but that’s not what he’s talking about with “narrowly economic”.

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Down and Out of Sài Gòn 07.07.12 at 6:05 am

Henry: faustusnotes’s comments at 49 needed to be said. Yglesias’s career is basically a demonstration of Gresham’s law using blog posts.

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temp 07.07.12 at 6:17 am

faustusnotes: you realize his point is that employer coercion of political behavior should be illegal, right? What purpose do you think the alleged conflation is serving? Anyways, how is “vote Repub or I’ll sack you” and “vote buying” completely different? I can think of some similarities.

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faustusnotes 07.07.12 at 6:23 am

I’m aware of that temp, but in Yarrow’s quote he’s deliberately implying that “employer coercion of political behavior” = vote buying. This is implicit in his suggestion that allowing employers to coerce behavior would “increase incomes at the bottom end.”

And since you asked, in general paying someone to do something and coercing them to do something are not the same thing. This is why you don’t get charged with robbery every time you buy

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faustusnotes 07.07.12 at 6:23 am

… groceries.

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Roger Gathman 07.07.12 at 9:01 am

MY moved out of his field when he went to Slate, and this has proved to be a bad, rather than a good, thing. Good business journalists are totally admirable – Felix Salmon, for instance, understands his field. But MY has never been a journalist – he doesn’t interview or hang with businessmen,nor with workers.
A case in point is his weird idea that a business that coerces its workers in certain ways – for instance, by searching them after work – feels so bad about it that they pay a premium to the workers.
In fact, coercion is a cost. It isn’t cheap to search the work force every day. And the best way to recoup that cost – which is not a cost of production – is to recoup it from the wages of the workers. It is like the inverse mathew effect: exploitation breeds exploitation. Thus, a business in which workers are coerced in an extra-productive manner is likely to be a business where the workers are paid less, not more. The power demonstrated by the coercion shows that no countervailing force – organized labor, the state, and the historical norms that are the legacy of countervailing force- is in operation here. Employers don’t pay a premium to workers they exploit beyond their productive role, but pay less.
This is why sexual harrassment could be predicted from the pay differential for women. Women largely came into the marketplace when unions were shrinking. Plus, of course, unions had historically been vehicles for sexism. So, what happens is that women are subject to sexual harrassment and lower wages. Nobody feels like they have to raise the wages of women because they are, in aggregate, more subject to sexual harrassment than men. That’s a crazy vision of enterprise, like it is all your dad paying you a bigger allowance even if he sends you to bed early.
Incidentally, one of the reasons that unions, at the margin,aren’t fatal to businesses is that they relieve businesses of these non-productive costs. A self-enforcing norm that allows businesses not to have to do surveillance lowers a business cost. However, businesses at a certain point -especially in a free (of taxes) trade environment, might decide it was still better to surveille, to take on mass turnover of workers, and bust unions, with the resulting freeze and then lower of wages.
In this regime,the neo-liberal response has been to substitute the state for organized labor as the intermediary for workers, as unions decline. But there are vast problems with this. One of them is that states are run by elites, and elites are the people who are most sensitive to the whinges of the plutocrats and least sensitive to the traumas of the sexually harrassed secretaries. The state might pass laws against sexual harrassment, but will be much less active in what really cures sexual harrassment – creating equality in the male/female compensation.

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Peter T 07.07.12 at 11:20 am

Libertarianism and its variants may be a disease of male adolescence, but it has close affinities with much economic reasoning – a kind of very simple picture in which everything can be counted out for each person, and then moved around, and the game will be solved if everyone gets what they should according to the rules (which no-one can quite agree on, but never mind that). The truth is that we don’t know what most stuff really costs, and who produces how much, because it’s embedded in a tangle of relationships, histories, unwritten understandings, unconsciously-absorbed mental formulae and so on. Cost-benefit can never be much more than a first rough guess. But then I guess if we acknowledged that, whole faculties would disappear, Treasury Departments around the world would colapse in nervous hysteria, and lots of people would have nothing much to say on blogs.

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bianca steele 07.07.12 at 4:35 pm

The folks working at Foxconn are, by and large, rural peasant farmers or unemployed urban youths who consider Foxconn a step up from their personal status quos. Picking on Matt for noting that Foxconn employee beats Chinese peasant villager doesn’t really move the ball on the whole issue with China.

That is totally reasonable and kind of misses the point. Is there some kind of ChinaSoccer team that bloggers try out for? To “move the ball” on China, or other issues, requires writing lots of in-depth posts on each field (something MY seemed to have time to do in the past). Not applying the same economics-focused argument to each in turn. Sure, writing so many blog posts a day limits how in-depth someone can get. On the other hand, though the piling on does get out of hand, IMHO, when I think of posting an excuse, I’m reminded of what a coworker used to say when people arrived looking for his officemate, who was rarely there: which is, “It’s not my turn to watch him today.”

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Data Tutashkhia 07.07.12 at 5:31 pm

Matt has written, IIRC, that Foxconn is a good thing because the alternative for its workers is to be peasants farming rice like their ancestors for generations, which is a much less desirable life.

I believe this is an example of the fallacy called “excluded middle”. There is no law of nature that dictates them to either be peasants farming rice like their ancestors or to assembly ipads for merkins 90 hours/week for 30c/hr.

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Plume 07.07.12 at 5:42 pm

It is highly unlikely that the people working at Foxconn are better off than they were when they worked their own land (or even did sharecropping**). The conditions inside the Foxconn plant are abysmal, driving many to suicide. The hours are horrendous. Workers, as is well known by now, are woken at all hours of the day or night to meet quotas for multinational corporations. They are slaves, for all intents and purposes, and have no freedom on the job — the main topic of recent CT discussions about libertarianism, etc.

A person who sweats and bleeds on their own land lives a very tough live, indeed. I’ve done a little farm work meself and I know it’s very difficult. But their freedom quotient is far higher than in any assembly plant, and they receive more for their work. IOW, the gap between what they produce and what they receive is far, far smaller, though still not fair in either case.

Psychologically, there is no comparison between the two. Life on the land is superior for one’s mental state, even if it’s the epitome of “hard scrabble.” It’s even better for the body, though that may sound counter-intuitive.

**Working someone else’s land brings in a huge set of negatives, including anxiety over being kicked off the land by owners, etc. But it is still preferable, unless there are agents of the owner driving the work.

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chris 07.07.12 at 6:03 pm

There is no law of nature that dictates them to either be peasants farming rice like their ancestors or to assembly ipads for merkins 90 hours/week for 30c/hr.

And yet, if I might play Yglesias’ advocate for a minute, until the latter came along, millions and millions of them were in fact stuck in the former. Aren’t you letting the imagined best be the enemy of the marginally-less-shitty?

If some third alternative actually comes along then I’m fairly sure Matt would support the freedom of Foxconn workers to leave Foxconn for the other thing, in droves (for whatever his support is worth, which isn’t much). Or if he doesn’t, that would certainly be a valid basis for criticizing him *then*. But until the promised land actually does arrive, why let it intrude into the analysis of the alternatives that actually do exist?

P.S. The law of the excluded middle is an actual valid principle of logic which applies when there really are only two alternatives. I think you mean “false dichotomy” — but you haven’t shown that the dichotomy actually is false!

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Bruce Wilder 07.07.12 at 6:09 pm

temp @ 94: “. . . if such a system were possible, why hasn’t it already been adopted? Such a system would make worker recruitment and retention easier without causing any loss to theft, so firms should want to enact it on their own.”

This is the best of all possible worlds; if it could be any better, it would be better already? Doesn’t that sound more than faintly ridiculous to you?

The model of perfect competition is used in economics to define basic concepts of allocative efficiency. Though useful for the definition of concepts, it is a wholly unrealistic model, in which there’s complete information, no uncertainty, and no strategic behavior. Output is a function of inputs, and no one makes mistakes. In the first tiny deviation from perfect competition considered — the model of monopoly — one sees that even a tiny bit of power will be used to depart from the ideal: prices will rise, and output decrease.

So, why anyone would cultivate an intuition that says that assigning all power to the capitalist bosses of firms will naturally result in maximum efficiency escapes me. I just don’t get it. Why would you suppose that the bosses, facing no opposing power, no constraints from a vigilant government, would arrange things perfectly and optimally, from the points of view of all concerned?

You are correct that I am arguing that well-designed government policy intervention could be, as they say in the economics biz, pareto-improving. I honestly do not understand, though, why you would suppose that bosses, left to their own devices, would be choosing a pareto-optimal outcome? In the exchange of labor for wages, there’s a game between the workers and the bosses. From a god-like social viewpoint, we’d like that game to be a positive-sum one, where everyone is better off, but it doesn’t follow that the bosses, considering their own interests in isolation, want it to be positive-sum.

Libertarians sometimes put a great deal of weight on the voluntary nature of market transactions, and it is true that voluntary transactions in an imaginary world of complete information, where force is ruled out and fraud is impossible, are very likely to be positive-sum. But, that’s a world, without authority or uncertainty or risk, and a perfect balance or symmetry of conflicting power and interests in the exchange.

The “Do as I say or You’re Fired!” contract sets up a very particular type of continuing game, where authority, risk and uncertainty are central, inherent elements; accepting an imbalance of power and strategic scope or freedom, is part of the deal. Some on the Left immediately want to dismiss the claims of efficiency, but I think that’s stupid. We do deals of this kind, precisely because of the gains in efficiency and productivity.

The efficiency gains from such an arrangement are gains in technical efficiency, andnot gains in allocative efficiency. I think MY is tripping over that detail, trying to make up illustrative examples of allocative efficiency gains or losses, which are inappropriate to the case, as well as losing the thread on the imbalace of power in other ways, projecting it into social class, for example, or macroeconomic conditions.

Unconstrained and unopposed, authority, in my observation, tends to the expedient, self-serving, stupid and corrupt. Without conflict and constraint, there’s no reasoned deliberation in the attempts of authority to control, and it is the reasoned deliberation that gives control the intelligence to achieve technical economies. Just take the searches in MY’s example. They are termed “bullshit” searches. Why would they be anything, but useless security theatre, in practice? If the government doesn’t require it, do you suppose the company will pay employees for the time taken up by the searches? (I can show you a case, where meat-packing firms didn’t want to pay employees for the time to suit up in the company lockerroom, which went to the Supreme Court, so don’t kid yourself that this kind of nonsense does not require government policy intervention.)

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LFC 07.07.12 at 6:23 pm

Aren’t you letting the imagined best be the enemy of the marginally-less-shitty?

That is what Data T. often does. I think you will find there is little point to making the observation, since Data T.’s views are quite fixed. His comment @151 fails to advance the discussion in any way. Of course there is no “law of nature” dictating that they be either peasants or factory workers. But since we’re not dealing with “laws of nature” here, the observation is irrelevant. For a particular poor peasant, the available alternatives may in fact be continuing rural poverty or a low-wage factory job. (I’m not saying which is better, but those may be the only available alternatives at the moment.) This is bad, unfair, and regrettable, but invoking the “law of nature” will not change it. DT’s comment @151 purports to be about opening minds to other alternatives, but in fact, in the context, it is a useless, pointless comment that serves no constructive purpose.

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Data Tutashkhia 07.07.12 at 6:24 pm

The phrase I quoted (I understand that it’s not the exact quotation, but it does sound a lot like Yglesias) states that the alternative for Foxconn is farming rice. That is bullshit. There are, of course, other alternatives, infinite number of them. Unless, of course, you are a fatalist, in which case there are no alternatives.

And even if you decide to limit yourself to two shitty alternatives, say, getting kicked in the balls vs getting kicked in the ass, it still doesn’t make getting kicked in the ass “a good thing”.

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temp 07.07.12 at 7:02 pm

Bruce Wilder:

Your posts in this thread, along with Henry Farrell’s opening post and those of many other commenters, make very general criticisms of the kind of first-week-of-econ-101 model Yglesias uses. Some of these criticisms are undoubtedly correct. But no one actually thinks these basic models are perfect representations of reality. I think they can be useful to serve as a first model, and we can ask where the model goes wrong to get a clearer picture. I really think these threads would be more productive if people made specific criticisms of the models they disagree with and offered alternatives (like BRG did with the BHLs). You’ve gone further in that direction than anyone else but the picture is still not clear to me.

You’re right! The perfect competition model is an incomplete picture. But how do we apply the more complete picture to actual situations? If you throw out the simple model which says “policy X will do no good” that doesn’t imply “we should implement policy X.” You need a better model which shows how policy X actually helps people, and then you need to show it’s actually a better representation of reality in the specific case. That’s what I feel the opening post and subsequent discussion on this thread is missing, for all it’s somewhat justified criticisms of Yglesias.

For example, you ask: “I honestly do not understand, though, why you would suppose that bosses, left to their own devices, would be choosing a pareto-optimal outcome”

But Yglesias never says the optimal outcome will be achieved in the general case. He’s making a very specific argument about what will happen in a very specific case. There are many ways Yglesias believes the situation can be improved by government intervention, all he’s saying is that this specific policy won’t make things better. So this doesn’t serve as a counterargument.

So: why would bosses want an effective search of employees, while minimizing the harm to the employee? Because (according to the Yglesias model) it’s in their best interest. If they discourage employee theft, that leaves more money for them. And if they can search employees in a way that’s minimally invasive, employees will be happier to work there, which makes recruitment and retention easier, which also leaves more money for them.

Again, to be absolutely clear: I’m not saying this is a full account! There are other things going on, and bosses have other motivations besides maximizing profit. I get this. But, to defeat the Yglesias model and advance an argument that the policy in question improves worker lives, you need to explain what these other motivations are, incorporate them into your superior model, and demonstrate how the policy actually makes life better under these better-justified assumptions. Then, we not only defeat the overly simplistic model, we actually have a new model which improves our understanding and can guide policy usefully. Even if Yglesias is wrong, the particular way he is wrong may be interesting and illustrative, but instead of showing this, too many people are investing all their efforts into very broad attacks which don’t actually demonstrate how he is wrong.

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Ram 07.07.12 at 8:46 pm

If Aaron values the freedom to listen to music on the job more than Beth, his boss, values the freedom to prevent him from listening to music on the job, then I propose the following deal:

Let’s say Aaron values his freedom at $X, and Beth values her freedom at $Y, where X > Y + 0.01. Suppose Aaron agrees to cut his wages by $Y + $0.01 in exchange for his freedom to listen to music on the job. Aaron is down Y dollars and 1 cent, but he is up $X, as this is how much value he places on his freedom. Since X > Y + 0.01, this deal is a win for him. Beth is down Y dollars, as this is how much value she places on her freedom, but she is up Y dollars and 1 cent. Since this leaves her up 1 cent on net, this deal is a win for her. As long as this win-win deal is lying on the table, along with a number of others (vary the $0.01), why wouldn’t they pursue it? And if they do, who has grounds for complaint?

And if it goes the other way, with Beth valuing her freedom more than Aaron values his, the a different deal exists wherein Aaron accepts a higher wage in exchange for Beth securing her freedom. Again, why wouldn’t they pursue it? And if they do, who has grounds for complaint?

Maybe the government values Aaron’s freedom over Beth’s, and decides to interfere in the second scenario to make sure Aaron keeps his freedom. Who’s happy with this situation besides the government? How does this make anyone better off, unless the only thing we care about is people having certain kinds of options, and other people not having certain kinds of options? Talk about the perfect competition model being silly has nothing to do with the basic point that only one of these two can have the freedom in question, and that without the government interfering there is a win-win lying on the table either way which would be rather odd for them to pass up given the choice.

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Peter T 07.08.12 at 4:02 am

temp says ” But no one actually thinks these basic models are perfect representations of reality”. The point is immediately refuted by Ram’s comment.

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Michael E Sullivan 07.08.12 at 12:12 pm

Ram@158

The point of government involvement in such scenarios is when the transaction costs involved in making such a deal are *obviously* greater than a penny, and in fact quite significant, significant enough that large amounts of win-win are typically left on the table.

It’s very hard to imagine that you have ever worked (and paid attention) in a low-status work place if you can talk seriously about this kind of coasian bargain in terms of 1 cent transaction costs, as if the burden of proof should be on regulators to demonstrate that such laughably simple and uncomplicated, “assume a can opener” style negotiation is not possible in practice.

Suffice it to say that it is not, and the mere fact that you could casually suggest it might be is very clear evidence of your ignorance about labor life among the working poor and lower middle class, at least in the US.

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Michael E Sullivan 07.08.12 at 12:19 pm

To follow up my own comment…

It never ceases to amaze me that modern bloggers bringing up the possibility of Coasian bargains (whether named so or not) almost invariably fail to appreciate the whole point of Coase’s analysis, which is that *where the state/community draws the default property/rights lines has a huge affect on transaction costs and whether such bargains are feasible in practice*.

The whole utilitarian argument for hard property rights rests on this fundamental principle — that the transaction costs of Coasian deals are smaller with typical “you have a right to keep or use what you make, or duly purchase from willing and rightful sellers” property understandings.

But of course, if this understanding were fully integrated, then some obvious glibertarian dodges around things like pollution control would require getting around a lot more cognitive dissonance.

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Ram 07.08.12 at 4:23 pm

@Peter T:

I don’t follow. Where does my argument assume preference-maximizing agents with complete, transitive, and locally non-satiated preferences over the space of consumption bundles, profit-maximizing firms with constant returns to scale, price-taking, market clearing, complete markets, etc.? I suppose your eyes glaze over as soon as you see algebra in the context of social-scientific reasoning. Give it a second try.

Either Aaron is allowed to listen to music on the job, or he is not. Suppose the government says Aaron is allowed. If Aaron is willing to pay $X to preserve this freedom, and his employer Beth is willing to pay $Y to take away this freedom, and Y > X, then Beth can offer Aaron a wage increase of $Z, where X < Z Y. As you will see, regardless of who the government gives the decision-making power to initially, it can end up with the person who values it more as a result of win-win deals. I’m not assuming anything here, except that value is quantifiable, and that there exists a medium of exchange. If value isn’t quantifiable in any way, it becomes impossible to reason in this area.

@Michael E. Sullivan:

You make the good point that IF transaction costs are too high, THEN such a possible deal may not take place. That is certainly true. And since there are transaction costs, it matters who gets the rights initially. But that just reinforces my argument. If we give the worker the right to listen to music on the job, and then he voluntarily gives it away, this is because he values it less than his boss, and so his boss can make it worth his while with a higher wage offer. Clearly transaction costs aren’t important here if he undertakes this transaction anyway. What good does restricting the workers freedom to trade with his boss do for the worker? I have no problem initially giving the rights to the worker. But if he wants to trade that away, I say that’s his call, not a paternalistic professor’s call.

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Ram 07.08.12 at 5:53 pm

If someone initially has the right to make a certain decision, but sells that right to someone else in exchange for something else, then it seems to me that the seller of the right probably values her compensation more than she values her right, while the buyer of the right probably values the right more than she values her payment. Otherwise, why would they have made this trade?

Possibly, one party or both did not make the optimal trade, whether because of imperfect rationality, or incomplete information, or whatever. Or maybe the trade, though optimal for both parties, is sub-optimal for a third party. These would be compelling reasons to interfere with the trade. But I tend to think people are complex, and situations are complex, and so the burden of proof is rather hefty when one wants to argue for interfering in situations like these. And FWIW, I’m not a libertarian by any means. I just think there’s a lot of lazy reasoning going on in these discusions, and a lot of implicit paternalistic claims that are worth drawing out if we really want to assess the competing arguments on the merits.

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Data Tutashkhia 07.08.12 at 6:09 pm

Jesus, Ram. How’s life on planet Geek? How many transactions have you executed today?

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Bruce Wilder 07.08.12 at 9:03 pm

temp @ 157
I appreciate your remarks, and the opportunity to clarify my thinking.

temp @ 157: “why would bosses want an effective search of employees, while minimizing the harm to the employee? Because (according to the Yglesias model) it’s in their best interest. If they discourage employee theft, that leaves more money for them. And if they can search employees in a way that’s minimally invasive, employees will be happier to work there, which makes recruitment and retention easier, which also leaves more money for them.”

Of course, I don’t imagine that the bosses think it is in the best interests of the bosses, to minimize harm to the employee, unless the bosses are (politically) constrained or opposed. I read Ygelsias as deprecating the potential benefit of any particular constraint, with the search example just being an illustrative example used to argue the general case against constraints.

I would say, if there’s a government and a union in the picture, then, yes, the bosses may weigh the interests of the subordinate employees and seek a more positive-sum game outcome. Without such constraints, they probably won’t, though other circumstances will have some bearing on just how awful the outcome is, for the subordinate employees.

Laissez-faire made palatable by bosses, who act as supremely rational enlightened despots of the workplace, a visible hand of benign intent and calculation dealing good and best to some and all, strikes me as a bizarrely unrealistic fantasy. I don’t know how to “defeat” such as an argument, except to mock it.

I actually think that the intuitions of neoclassical economics are with me, not Yglesias, in that the optimal outcome, in the perfect competition model depends directly on the perfectly symmetric balance of Supply and Demand in conflict. The asymmetry and imbalance of the incomplete contract of the form, “Do as I say, or You’re Fired”, should be a red flag; the first analogue to domination ought to be monopoly/monopsony, which yields a decidedly suboptimal outcome, sans additional constraint.

It may be that I am misreading Yglesias, in supposing that he’s making a general argument against the necessity of political or institutional constraints for socially optimal outcomes. The search example, I thought, was chosen as illustrative of a general principle of non-intervention, but maybe that’s a misreading.

I do see where Yglesias does take the gambit of favoring macroeconomic full-employment, which is ever so (neo?)liberal of him, I guess, just as he, in other contexts, makes noises in favor of tax-and-transfer redistribution, the EITC and so on. I reject that gambit as an irrelevant distraction. The problem is micro-economic, lodged in the institution of the employment relation, not general conditions or fiscal policy, in my view.

I don’t see any basis, but assertion, for why the firm doing searches pays better, in Yglesias’s thought experiment. If employees had to be compensated for the inconvenience, due to labor market competition, then this is not a case of a “do as I say, or you’re fired” labor contract. The “do as I say or you’re fired” contract is open-ended, and carries with that open-endedness some (I would think) obvious hazards. The boss may start out requiring specific performance that’s directly relevant to controlling the production process and reducing waste and error — things like showing up on time and following established procedures — but the boss, absent political constraints, could also ask for a blowjob or start asking for unpaid overtime, or doing searches (in a way careless of employee time, dignity, privacy and welfare). Since it is an incomplete contract, negotiation over the values in exchange never stops, even though a committment was made and is essential to the operation of the “contract”.

To me, the apparent inability of Ygelesias to really grasp the nature of the “do as I say, or you’re fired” employment relation, which relation, after all, is very, very common, and something everyone has experienced, is evidence of an epistemic problem. The fact that we are trying to generalize and analyze the problem in a framework of terms and concepts, like “markets”, “contracts” and “skills”, when none of those things actually exist as concrete entities on the ground to which discusants can point and describe, contributes to the difficulty of keeping people with different viewpoints focused on a common, consensus reality. That’s a more important, interesting and general issue to me than policy design for government regulation of how and when an employer can search employees, but even if it weren’t, it seems to me you cannot really get to the latter, narrow issue, without in some wise overcoming the former, broad and general issue.

As a matter of political philosophy, bosses qua citizens might adopt a politics of enlightened self-interest, which favors, say, government regulation, which makes virtue pay and keeps fraudsters from ruining things for everyone. I am not saying that bosses have to be committed sociopaths in their politics.

I am saying that well-functioning “markets” require proper political constraints. Liberal bosses, subscribing to principles of enlightened self-interest, won’t spontaneously act like nice guys and be rewarded for their virtue by the benign God of Market Competition. The God of Market Competition is not benign. They might solicit government regulation that prevents their evil twins from winning in the Market Place, where a Gresham’s law operates, whereby evil drives out good. Or, more likely, they’ll vote Republican ;-) and work to destroy gov’t regulation in the public interest, labor unions, communities and the environment. But, I digress.

And, I’m not saying that the “Do as I say, or You’re Fired” contract is economically useless, a mere artifact of Capitalist domination, which can be discarded costlessly, come the Revolution. I think it is very common, because it is very, very useful in achieving technical efficiency and high productivity. Absolutely, I understand that the bosses might want to search employees to reduce rates of theft. That’s exactly the sort of economy or technical efficiency, hierarchies seek to achieve, and “do as I say, or You’re Fired” is a means to that end, in that it facilitates the detailed regulation of subordinate employee behavior as specific performance.

Here’s the problem, vis a vis the framework of Econ 101 (which trips up Yglesias): the perfect competition model is not just an imperfect or incomplete picture — it is not a “picture” at all. The perfect competition model is analytically useful to define concepts, but it is not descriptive at all, of anything — not a simplification or an approximation. There could never be an actual economic case, without genuine uncertainty or without strategic behavior; there could never be an economy where only allocative efficiency mattered and output was a function of inputs. It is not a matter of being an incomplete model of a more complex situation; it is a misapplication in kind: using an analytical model, where an operational model is required. At an absolute minimum for intelligent discussion, we need an operational model of the institution of the “Do as I say, or You’re Fired” labor relation, including the sources of its economic benefits or yield, as well as a realistic appraisal of the implications for how that yield is divided among labor, management and capital. (Yglesias’ whole argument consists of losing his grip on that reality though the expedient of using an analytical model that doesn’t capture, and cannot capture, the case.)

It seems to me that the concept of an “efficiency wage” goes a long way toward understanding why “do as I say, or you’re fired” is so common, as well as why countervailing policy interventions can greatly improve outcomes, including raising wages. Maybe I am unfairly misreading Yglesias in this regard, but his thought experiment seems tendentitiously pessimistic about the possibility of an intervention raising wages. The “efficiency wage” argument, though, seems to suggest that relatively powerless and low-paid workers could, with a little additional political power, impose constraints, which would achieve much higher wages, and this would be a movement toward something of a more positive-sum game.

I don’t see how the possibility of improvement in overall or “social” outcome, implied by the “efficiency wage” argument is defeated by a facially silly argument to the effect that the bosses, as supremely rational and benign despots, would have already raised wages, if it were possible. The monopolist doesn’t choose the perfectly competitive price and output. The profit-maximizing firm approaches a socially optimal result only when and to the extent it is constrained to do so. That insight doesn’t logically lead to an imperative to remove constraints, on the plane of reality I inhabit.

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Ram 07.08.12 at 10:57 pm

@Data Tutashkia:

Thanks for raising the level of the discussion.

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Roger Gathman 07.09.12 at 9:45 am

Bruce at @165, exactly! The idea that employers have to lure unskilled employees to work for them by better working conditions or by laying aside onerous security provisions is completely bogus and unwarrented – the company that puts onerous security provisions on their employees is much more likely to pay them less, to recoup a cost that is not directly related to production – the cost, say, of searching employees. The recent GQ article about the lifestyles of the poor, the near poor, the middle class and the rich – found here – http://www.gq.com/news-politics/big-issues/201207/amber-waves-of-green-jon-ronson-gq-july-2012?printable=true – is a nice illustration of this. Notice the dishwasher, Maurose Franz, whose main issue is respect. That is because, as the writer of the article says, comparing his own compensation, and that of the billionaire he interviews, to Franz’s: “Frantz washes dishes at the Capital Grille restaurant, a posh steak house near the harbor in Miami’s financial district. He nets $200 for a twenty-seven-hour week and receives no food stamps or government assistance of any kind. That means he makes in an hour what I make in five minutes and Wayne makes pretty much every time he breathes in and out.”

He has no power, nor belongs, apparently, to any labor organization that can push back against his employer. They can even steal from him (the “mysterious” fact that sometimes, when he goes to check out, he finds he has already been checked out), and they are certainly not thinking that, since they pay him less, they will hassle him less. MY’s fairy tale is an example of his lack of experience, I think. He’s never had to live like Franz. He never will.

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kharris 07.09.12 at 3:59 pm

“Or, to approach the problem from a slightly different direction, one can make a good normative case for markets and contractarian mechanisms if and only if there is relative equality of resources and bargaining power among the relevant actors.”

Would have to disagree. Markets and contractarian mechanisms are an organizing system for production. They are not the only such system, but are one such system. The absence of such a system is very bad for human material welfare. We don’t need relative equality of resources and power at the outset for the mere fact of having an organizing system to make most of us better off. The normative case is that we are better off with markets and contractarian mechanisms than with no system at all. The Mongols didn’t have much use for equality of initial endowment, but they managed to foster prosperity among their subjects till things fell apart.

The obvious response is that markets and contractarian mechanisms haven’t been show to be superior to any other system just because they are superior to no system. That response is correct.

-

By the way, I think people need to quit giving Yglesias the benefit of the doubt when he writes about economics. This is far from his first excursion into the weeds when it comes to economic issues. Evidence suggests he does not know his own limits. He is just as likely to take on an issue he cannot handle as one that he can. When he can handle an issue well, he’s quite good. (But then, aren’t we all?) When he can’t, he has all the usual pundit problems. His occupation of prime pundit real estate gives him undeserved credibility. He writes and argues for a living, so tends to be good at it in ways that make him believable when he should not be believed.

Yglesias likes the iconoclast schtick, but the case in question here shows him to be quite vulnerable to conventional argument when that argument is pretty clearly wrong. If we can’t rely on a guy who indulges in public iconoclasm to make a reasonable effort at overturning received nonsense, then what good is he?

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Bruce Wilder 07.09.12 at 6:33 pm

Are “Markets” and “contracts” the same system, or alternative systems?

In any case, “markets” and “contracts” organize exchange, and, thus, facilitate specialization in production, but they do not, strictly speaking, organize production, itself.

Specialization in production would appear critical to human material welfare, as it appears necessary to the production of good tools, and conservation in the discovery of good techniques.

Henry is wrong to assert that an equality of initial endowments — “relative equality of resources”, whatever that means — is necessary for the normative case for markets, as a way of organizing exchange. Differences in resource endowments simply add to the potential benefits of specialization and exchange. Markets and/or contracts are particularly well suited to organizing trade among “strangers” — either over long-distances, or among large co-located groups (thousands or millions, instead of dozens), and are much superior to familiar alternatives, such as gift exchange or looting and pillaging.

What is true about the normative case for markets and/or contracts as a means of organizing specialization and trade among “strangers” is that the associated political governance should be “fair”, meaning egalitarian and symmetric in its principles and operation.

The central conceit of the market failures framework, which MY makes use of, is the assumption that markets emerge naturally, meaning without political foundation, and should be assumed to be without original sin, in that state of nature, until some “market failure” is identified, and only then, is a political intervention possibly justified. (The Friedmanite argument is that even in the case of acknowledged “market failure” sullying the sacred market, even in its imperfection, with political intervention, is likely to cost more than it is worth. Absurd.) Economists get themselves into that ball of wax, by initially reasoning from an ideal case, without uncertainty (incomplete or asymmetric information, risk or strategic behavior), and not acknowledging the utter impossibility of that supposed “ideal”. It is seriously faulty reasoning; uncertainty is a necessary element in the logical derivation of a model of markets.

Markets are always and everywhere, inherently, embedded in political institutions, and cannot exist without the supporting infrastructure of a kind of political “constitution”, which, in economic terms, is a public good.

In a certain world, of complete knowledge, one could imagine markets and contracts, in which transactions were always complete and fully warranted (really they don’t need to be warranted). Committments that were made, would always be fulfilled. No one would make a mistake. There would be no risk, or the risk would be of a completely manageable kind, fully anticipated in sufficient statistics: it would be enough to know the form of the distribution, its mean and variance, and one could make a decision on that basis, which would be practically identical to decisions made on certain knowledge.

The presumptive case for laissez-faire rests on imagining markets without uncertainty and incomplete information, where ex ante committments and expectations are always correct.

In the actual world of uncertainty and limited knowledge, contracts are always incomplete and all market transactions must be warranted, and political governance, meaning ex-post correction of mistakes made in market deals, is critical. And, the normative case for markets, rests on the fairness of that political governance.

In the case of the “Do as I say, or You’re Fired” labor contract, the fairness of political governance is critical, because of the incomplete nature of the contract. Ruling out political governance, as MY appears to want to do, is borderline insane in its cruelty to the subordinates, who work under such contracts.

The extent to which the fairness of political governance can be maintained in the face of economic inequality is an open question. Financial or money wealth, in particular, seeks returns from anti-social usury; purely financial wealth (unconnected to the ownership or management of productive factors) can only maintain returns, by corrupting political governance, reducing its fairness.

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temp 07.09.12 at 7:12 pm

Bruce Wilder@165:

if there’s a government and a union in the picture, then, yes, the bosses may weigh the interests of the subordinate employees and seek a more positive-sum game outcome. Without such constraints, they probably won’t, though other circumstances will have some bearing on just how awful the outcome is, for the subordinate employees.

But the classical model doesn’t assume that bosses weigh the intersts of subordinate employees or seek a postive-sum outcome. It just assumes that bosses (owners, really) act in their own interests, and that this interest is to maximize profit. If search is unpleasant for employees, then owners should want to reduce this unpleasantness because it makes hiring and retaining employees easier and therefore enriches the owner.

To attack the classical model, you should show either that bosses do not act in their self-interest or that their self-interest is not to maximize profit.

I don’t see any basis, but assertion, for why the firm doing searches pays better

If it didn’t pay better, and there was another firm down the street which was the same in every way but didn’t do searches, why would anyone work for the firm searching employees?

Again, I think you’re making very general arguments, some of which are undoubtably true and some of which Yglesias would probably agree with. But you’re not actually showing that making searching employees illegal would help workers.

relatively powerless and low-paid workers could, with a little additional political power, impose constraints, which would achieve much higher wages, and this would be a movement toward something of a more positive-sum game.

I (and Yglesias) agree with this. What’s not clear is whether regulations of the specific type Yglesias talks about actually gives workers any additional political power. Unions would, so support unions instead.

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Bruce Wilder 07.09.12 at 9:31 pm

The classical model assumes complete information — no uncertainty or risk — and no strategic behavior, no exercise of power. None of that is true, or could be even approximately true, in any actual case; uncertainty and strategic behavior are necessary elements of any model worth discussing as an operational representation of a case.

The “do as the boss says, or you’re fired” contract pattern doesn’t exist in the classical model, under classical assumptions. So, you can’t analyze it, using classical assumptions. Whatever MY is doing in his analysis, he’s not addressing the case in question. Which is why, I, and others in this thread, have complained that he loses the thread.

The “do as the boss says, or you’re fired” contract only makes sense in a world of incomplete information, where people are following rules. In a world of complete information, you don’t have rules or management. Output is a function of factor inputs (output is at a maximum, given the inputs, because no one makes mistakes and there is no waste or error); get the allocational proportions of inputs right, and you’re good to go. Management doesn’t worry about motivating the employees, or supervising, or quality control, or scheduling. Prices clear every market, and multiply infinitely to cover every tiny variation; so, yes, the workers get compensated for the inconvenience of being searched; a ticket to a bad movie is cheaper than a ticket to good one, and the prices in a restaurant or at the barbershop may fluctuate by the second, as well as by every detail of your desired meal or how many hairs there are on your head. And, contracts are complete. Everybody commits ex ante, and that’s it. You can have risk, of a completely well-behaved kind, which can be exhaustively attenuated by complete (futures) markets, such that the actual unfolding of events disappoints relative to the expected outcomes in the distribution of income not one whit. No one makes a mistake, or to the extent that anyone does make a mistake, it has no consequence; it’s not a real mistake, because every actor is fully insured against variability.

I’m not saying that working through Pigou or Arrow-DeBreu is not useful training. I am saying it has no reasonable claim for being descriptive, or useful as an operational model.

The “Do as the Boss says, or You’re Fired” contract is an incomplete, contingent contract. Pretty much every “contract” covering transactions in an uncertain world of incomplete information is incomplete and contingent. Every trivial transaction at the supermarket is warranted, subject to political governance ex post; prices are more or less fixed, that is to say, administered and few — not varying much over time or in response to particularities.

For the “Do as the Boss says, or You’re Fired” contract, the exact nature of the specific performance required is worked out, continuously over time, after the contract is entered into. The promised wage rate or salary is more or less fixed at a level high enough that, in the circumstances of the local labor market, getting fired is very costly to the employee, so costly that the subordinate employee will, regardless of her own feelings, pretty reliably follow directions as given. (The ability of supervisors to observe specific performance, or prescribe it in detailed rules, matters, and is subject to a voluminous economics literature, but I avoid that digression.) You could contrast this labor contract/transaction with a more discrete exchange transaction for a specific labor service — like a haircut. Buying a haircut is not the same as hiring a barber to cut other people’s hair for a firm. In general, hiring people to work in a hierarchy or bureaucracy only makes sense to the extent it enables the firm to achieve technical efficiencies from managing their labor; management and “technical efficiencies” do not even exist in the classical model.

The thing about incomplete, contingent contracts is that the negotiation of their terms never really stops. They are not perfect ex ante, and all depends upon the political ex post governance or arbitration of the terms in evolving circumstances. This is how it has to be in a world of incomplete information, where your expectations are mostly mistaken or non-existent and you find out about the future, only when it happens. Entering into such a contract is a strategic behavior on the part of both parties; they’re playing a game. The behavior of the referee, and the coaches of the opposing teams, matter, in a game. MY seems to think it would be fine to take away both the ref and the coach of the subordinate’s team. I’m saying that a fair game, a positive-sum game, which benefits the subordinates to the full degree it can, requires fair political governance, which means ex post political constraints on the bosses.

Imagine for a moment, that I own and manage a small firm, say, a restaurant, where I have a crew of minimum-wage workers. In the classical model, output is function of inputs, and I add workers to increase my output, right up to the point where the workers are paid their marginal productivity. If the minimum wage rises, I have to use fewer workers, my output falls, and they lose their jobs. So sad.

In real life, in a real restaurant, there are many more dimensions to the problem, and output is not function of inputs. One could argue that under uncertainty of a well-behaved kind at least, workers are still paid their marginal product (I think Stiglitz proved this, formally), but now, I manage that: I manage the workers to make their marginal product equal their wage. If their wage rises, I will manage them in ways that increase their marginal product accordingly. Maybe, I invest more in training, and modify other practices, to reduce turnover, to keep my training costs under control. I’m more careful about how I treat them, because the cost of having someone quit is higher. Maybe, I’m just more careful with scheduling — I don’t ask an undertrained worker to stand-by just in case — a very low marginal product task. Maybe, I invest in tools and systems, as well as training, to make my workers more productive.

Now, you can ask why, if the possibility existed to increase the productivity of my workers, didn’t I do it, spontaneously? Why was the political constraint of raising the minimum wage critically important? I am profit-maximizing, right? Well, not really. “Profit-maximizing” isn’t well-defined, for a world of incomplete information and genuine uncertainty. You can’t know what “maximum” might mean. At best, I might be locally profit-seeking, which is not so global in its scope or implications. But, profit-seeking is satisfied by externalizing costs as well as minimizing costs. There’s slack in the system, error and waste, and if I can put some of that off on subordinates, to make my life easier I will. The positive-sum game of the firm, into which my subordinates and I have entered, might be a somewhat reduced-sum game as a result, but more for them, than for me, as I have the power, and I don’t care that much about their interests, which they don’t have as much political power to insist be respected.

Talking about how “skills” explain wages obscures the role of management, and capital (tools), in determining how productive labor is, as well as what claim labor can make on the output of the firm. The truth is, there can be a lot of slack, in an organization, which is able to employ people at very low wages. Management may value their own superior status, and feel that their status is enhanced by denigrating subordinates. Status competition can destroy welfare pretty reliably; the firm doesn’t value status, in the classical model, with its strict utilitarianism, but in real life, it can be a problem, that results in abuse of subordinates and a “reduced-sum game”, or pareto sub-optimal outcome.

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Cranky Observer 07.09.12 at 11:06 pm

I’d like to nominate Bruce Wilder’s 9:31 at
http://crookedtimber.org/2012/07/06/markets-and-freedom-common-mistakes/#comment-421647
as a “win the Internet” quality work that merits hoisting to the front page.

Cranky

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temp 07.10.12 at 12:54 am

Bruce Wilder:

Once again I find myself agreeing with much of what you have to say, but unconvinced that you are demonstrating that the classical model is wrong in its prediction in this particular case.

I agree, for example, that this is correct at some level:

Every trivial transaction at the supermarket is warranted, subject to political governance ex post; prices are more or less fixed, that is to say, administered and few—not varying much over time or in response to particularities.

Yet the laws of supply and demand still apply to prices at the supermarket. The classic model will give you the right answer to what will happen if production of a crop declines due to drought or disease. Most prices in most markets are “sticky”; they do not move rapidly in response to changing conditions, but nor are they actually fixed. Over time they do move more-or-less as the classic model predicts.

Labor markets are more complicated, but I think the general principle holds: there are lots of very complicated things going on, but that doesn’t mean we can ignore supply and demand entirely. It’s a part of the picture.

You talk about efficiency wages. Efficiency wages are a real deviation from simple supply/demand. But good workplace conditions are a form of worker compensation which can itself function as an efficiency wage. A rational owner who gives employees efficiency wages should want to minimize discomfort to the employees, because that means the owner can give less compensation in the form of cash. So in this case, deviation from supply/demand doesn’t relevantly change the calculation of the profit-maximizing firm; they should still pursue minimally intrusive search policies.

profit-seeking is satisfied by externalizing costs as well as minimizing costs.

Absolutely. This is why, as you explain, raising minimum wage can actually help workers (and this can be demonstrated in a fairly simple classical model). But, raising minimum wage actually increases the price of hiring workers. Specifying the form of a fixed amount of compensation–saying workers must be compensated in better working conditions rather than wages–does not. (it should be noted that Yglesias’s model doesn’t work in a firm where workers are searched and already making minimum wage, because the firm cannot respond by reducing wages. In this case, forbidding search is effectively a raise in the minimum wage.)

Management may value their own superior status, and feel that their status is enhanced by denigrating subordinates.

Yes, this is what I was asking you about in 94. I agree that to the extent that you view management as parasitic on the firm, it’s a real problem for Yglesias’s model. In this case, owners and labor should be aligned in trying to restrict such profit-reducing activity of management, and government can probably play a constructive role. The degree to which this is an accurate description of real firms I am not sure.

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faustusnotes 07.10.12 at 4:30 am

temp at 170, this is slightly off:

To attack the classical model, you should show either that bosses do not act in their self-interest or that their self-interest is not to maximize profit.

I/we don’t have to do this: it’s the assumption of the classical model that bosses act in their own self-interest and that interest is the maximization of profit. If you want to deploy such a model, then you need to justify your assumptions, rather than clamouring for anyone who doesn’t like your model to justify why. You aren’t special, you know, and neither is this precious classical model. You also need to consider balancing priorities even within that model: why is it that only bosses realize their self-interest as profit? Or do you think every labourer with no skills who is applying for a minimum wage job is doing so after a long chain of decisions aimed at maximizing their profit?

As soon as you loosen your assumptions to allow for the possibility that bosses want power or personal satisfaction, you lose the classical model. And you need to relax those assumptions, because one of the fundamental cases considered here (the backroom blowjob) is not about the boss in question maximizing profits!

Also at 170, when asked a question, you reply:

If it didn’t pay better, and there was another firm down the street which was the same in every way but didn’t do searches, why would anyone work for the firm searching employees?

Did your mother never tell you it’s rude to answer a question with a question? Also, in this case, it shows you don’t have an answer. Here’s a couple of possible scenarios to answer your question:

1. bosses consider staff who need to be searched to be untrustworthy; trustworthiness is a talent and those without it are less “skilled” – thus they will be paid less, because their lack of this talent induces an additional cost for the boss (lost product).

2. The boss who pays less tends to attract only the staff who can’t work at the other shops. Some of these staff are lazy and some are feckless, but also the staff who steal get banned from working at the other shops and end up working at the one that pays less. Thus the boss finds that he can only employ people who take long toilet breaks too often, and steal his stuff. In consequence, he implements a program of searching and restricted toilet breaks. Of course he could raise wages and attract better staff, but they’re already working at the other shop so he’d have to raise wages higher than that shop to poach staff (and do away with the searches too).

3. Or, alternatively, he would eventually observe a reduction in theft if he simply set the wages the same as at the other shops; but he has been hiring staff for a while and he mistakenly believes they are representative of the general run of his community (see e.g. asdf above on “proles”) and so he doesn’t believe it’s possible to hire better staff. Thus, he thinks his best bet is to be punitive, and to screw wages down as much as possible to make up for the lower productivity of his workers.

4.Or, alternatively, even if he does raise wages, his long history of being ripped off by workers means he isn’t going to give away the searches, and so he finds he can’t employ the better workers – they don’t like being treated as potential thieves, so they just don’t come and work for him.

You see how easy this is? There are lots of reasons why your classical model doesn’t work, and why companies that do forced searches also pay their employees less. Furthermore, these reasons have been backed up by multiple commenters here giving referenced real world examples. So unless you can come up with some real life examples of perfectly classical firms that fit your model, maybe you’re better off accepting that the model is not descriptive, and adapting a little.

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etv13 07.10.12 at 5:35 am

@faustusnotes174: Okay, so we make a rule saying our employer of the bottom-of-the-barrel workers can’t search; his workforce still contains a larger component of thieves and slackers than his competitors’ workforce. What does he do now?

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faustusnotes 07.10.12 at 8:18 am

etv13, is there some special magic about being an employer that gives you the right to infringe people’s liberty in ways that even the police can’t? If the employer thinks someone is stealing from him or her, then he or she should use the same methods everyone else does – call the cops.

If the problem is slackers -well, perhaps the employer could try earning their own higher wage by finding a way to manage the problem or encourage higher productivity? Perhaps they could start by introducing some kind of productivity-based bonus …?

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Peter T 07.10.12 at 10:04 am

Taking some simple assumptions as given and then trying to explain social outcomes is a fascinating pursuit. To this bystander, to looks like a bunch of bright people using Newtonian mechanics to explain a carnival ball (there’s lots of movement, so the the laws of motion must apply, right?). To take just one point, I believe empirical research strongly suggests that neither employers nor employees have much idea of their marginal costs or productivity. Even a nodding acquaintance with the actual production of any complex good suggests that working out any single employees contribution in any exact terms is more or less impossible. We’re talking about social relations of production, which are not reducible to any single individual (that’s why they are relations). Why not focus on the evident issues of power, hierarchy, subordination, status? A discussion of how many dollars a day is compensation for being groped is an absurd distraction.

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Michael E Sullivan 07.10.12 at 12:10 pm

Peter@177 I agree 100% with everything you write.

That said, I believe your last sentence, while obviously true, is every bit as much an absurd distraction as what it critiques. Why? because nobody except for a few Team Republican glibertarian trolls has suggested a tradeoff between dollars of compensation and being groped.

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temp 07.10.12 at 3:56 pm

faustusnotes @174:

The case being discussed in this thread is employee searches for theft prevention, not blowjobs. I think everyone involved in this discussion is supportive of laws against sexual harassment.

Your 4 scenarios:

1. This is possible, but doesn’t change the conclusion of the model: if you forbid search in the firm employing untrustworthy employees, they will be paid even less relative to employees at the firm with trustworthy employees.
2. Same as 1
3. This employer will have a problem with recruitment, since the firm next door will pay higher wages and treat employees better (by the premise of the question).
4. Seems entirely consistent with the model

I don’t think you understand what the model is used to demonstrate. The claim is not that companies which do searches will literally pay their employees more than other companies; there are all sorts of variations between firms other than search/not search which affect wages. In fact, the opposite is more likely the case: better paid workers will also tend to have better working conditions (this is indeed what Yglesias says in his post). The claim which the model is used to support, rather, is that forbidding search will reduce wages of those employees currently subject to it. The justification is that total compensation is set by supply and demand, and restricting the allocation of this compensation does nothing to supply or demand, and therefore will not change total compensation.

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Misaki 07.10.12 at 7:58 pm

For anyone still reading the comments, job creation without higher government spending, inflation, or trade barriers: /ɯoɔ˙ʇodsƃolq˙uɐlduoıʇɐǝɹɔqoɾ//:dʇʇɥ
(URL upside down to avoid spam filter in this third posting attempt)

While the article says this…
>But the managers (naturally) look a bit askance at whomever it is they deem to be the laziest worker, and the workers (naturally) are therefore reluctant to present themselves as the laziest in the office.

Working less is not about being seen as lazy, it is about being seen as lacking “drive” and motivation to succeed in a career. Compare attitudes toward time in academia: http://mikethemadbiologist.com/2009/07/27/on_work_and_time_in_science/

So all that’s necessary is a way for highly motivated people to be able to define working less as “winning”.

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faustusnotes 07.11.12 at 1:18 am

temp at 179:

The claim is not that companies which do searches will literally pay their employees more

Temp at 170:

If it didn’t pay better, and there was another firm down the street which was the same in every way but didn’t do searches, why would anyone work for the firm searching employees?

This is your explicit claim: that a company compensates employees for search by paying more. You are directly disputing the claim put by others, that companies that do searches also pay less.

Are you now admitting that companies that do searches pay less?

Also I don’t think this is true under your model:

if you forbid search in the firm employing untrustworthy employees, they will be paid even less relative to employees at the firm with trustworthy employees

Under your model, the employer will only spend as much on a search as people steal; if he or she doesn’t search, they will only reduce wages by the amount people steal. Anything else would not be an optimum profit-seeking behavior, right? Or workers wouldn’t accept the contract because (due to perfect information blah blah) they would know they were being ripped off. So, workers would not be paid “even less” if searches stopped – they would be paid exactly the same as they were being paid when searches were ongoing.

Actually there is a bigger problem in your argument, I think: implicit in your original reasoning is the idea that the searches are done capriciously, as a matter of workplace policy, with no actual underlying theft being targeted. Yet you want us to think employers are purely driven by profits and demand that we give justification for not making that assumption.

You need to try harder to make your model work.

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UnlearningEcon 07.11.12 at 8:48 pm

“Yet the laws of supply and demand still apply to prices at the supermarket. The classic model will give you the right answer to what will happen if production of a crop declines due to drought or disease. Most prices in most markets are “sticky”; they do not move rapidly in response to changing conditions, but nor are they actually fixed. Over time they do move more-or-less as the classic model predicts.”

Do you have any empirical evidence to support this claim? The classical economists (you mean neoclassical) actually believed price determined supply, whilst demand determined quantity. Your ‘laws’ are highly questionable – in any case, referring to them as laws is not justified.

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Data Tutashkhia 07.11.12 at 9:12 pm

if production of a crop declines due to drought or disease

In agriculture in particular, the supply is heavily managed. By the state.

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Sebastian 07.11.12 at 11:15 pm

“If their wage rises, I will manage them in ways that increase their marginal product accordingly. Maybe, I invest more in training, and modify other practices, to reduce turnover, to keep my training costs under control.”

Maybe you won’t hire as many people with a low marginal product leaving them unemployed…

It is interesting that the studies purporting to show very little effect of minimum wage laws on employment were done in effectively full employment situations. Can we study them say in modern Spain, now?

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Maggie 07.13.12 at 3:07 am

“, is there some special magic about being an employer that gives you the right to infringe people’s liberty in ways that even the police can’t? If the employer thinks someone is stealing from him or her, then he or she should use the same methods everyone else does – call the cops.”

Well, telling the boss he can just as soon call the cops isn’t unlike telling the worker he can just quit: that kind of nuclear option is unuseful for resolving the quotidian run of work problems. And I don’t think it’s unfair to say that seeking a job handling others’ valuables raises at least a faint aura of general suspicion, as in the case of the FedEx handlers. You can’t run a business based on discovering such things only after the fact. Much as you wouldn’t want to only find out after the fact that the pilot was coked off his gourd. Of course none of that makes a justification to search or drug-test filing clerks. And it would work very differently for workers empowered (perhaps through unions) to make and enforce highly specified agreements concerning their submission to search than under the “do as I say or you’re fired” regime.

As an aside re calling the cops, I sometimes wonder over the fact that a store will call the cops over any shoplifting, no matter how small, but if they refused to resolve an error in their own favor, no matter how large, calling the cops on *them* is all but inconceivable. I mean literally – it wouldn’t even *occur* to most people to try it. Why is that?

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