Perfect Competition and a Pony

by Henry on July 13, 2012

(probably the last post I’ll be doing on these issues for a while)

Tyler Cowen has a further response. His argument – I think I am presenting it correctly – is that regulation may not improve the lot of workers facing specific depredations, because firms will find other ways to screw them, leading to “indeterminate” outcomes, which might or might not be to workers’ long term benefit. His preferred alternative is an improved welfare state, which will enhance workers’ bargaining position vis-a-vis firms.

I think it’s right that regulations aimed at specific abuses will often have somewhat indeterminate consequences. It may also be empirically the case that for many abuses, the best we can do is to improve exit options for workers. But I also think that this is a decidedly poor basis for arguing that we should never regulate workplace conditions. There are regulations of workplace conditions (forbidding racial discrimination; forbidding sexual harassment; requiring basic workplace safety) that seem, as best as I can tell, to have worked out pretty well, to the extent that they have properly been implemented. Partial indeterminacy doesn’t say that we get rid of regulation altogether; it suggests that (a) one wants to think carefully about the tradeoffs and possible abuses, as best as one can given limited information, before introducing regulations, and (b) to be very willing to incorporate feedback ex post and to alter or abandon regulations that aren’t working.

I worry that I am beginning to sound like a cracked record, but to repeat my point again, very simple economic models don’t tell us much about regulating for worker protection, because they have nothing useful to say about asymmetric bargaining situations with radically incomplete contracts. There are more complicated and interesting economic models which might tell us more – but they are better as ways of reducing the possibility space into something intellectually tractable than at providing particular guidance about what to do across a variety of subtly different forms of power relationship. This is not, contra Tyler’s claim, ” cit[ing] a lack of perfect competition and then assum[ing] the proverbial pony.” It’s a simpler criticism – that those who start from the position of perfect competition and similar are assuming the pony, because they are assuming away problems of power asymmetry, incomplete contracts etc. There are a variety of reasonable and potentially useful ways of thinking about power relations in the workplace – but to be reasonable, they have to confront the actual problem rather than assuming that it doesn’t exist.

And there are quite a number of people who write in ways that assume it away. One striking example is Tyler’s co-blogger, Alex Tabarrok’s post of a couple of days ago, which claims that leftists like me are blinded by our assumptions, because we ignore how workers at risk of sexual harassment will seek and get higher wages in compensation for the risk.

Perfect competition and … well not just any old pony, but a fiery-eyed Death Dealing Destrier-Pony of Chaos and Destruction. To be specific, an article in the American Economics Review purporting to show that people working in industries where there was a high risk of sexual harassment demanded, and received, a wage premium in return for accepting this risk. Market competition working, just as market competition ought to work, allowing people to bargain and get what they want.

The only problem with all of this (and Alex’s post surely deserves to be read; he harrumphs and snorts very nearly as magnificently as his Death-Pony), is that the article looks to have been made from a common by-product of both ponies and horses. Again I’m repeating myself (I made these points in an update to the original post); its findings are based on the assumption that official complaints about sexual harassment are an unproblematic proxy for actual incidence of sexual harassment. This is at best a highly dubious assumption – the obvious counter-argument is that people’s willingness to report sexual harassment is likely to vary with their income level, independent of its actual incidence. Or to put it more plainly, women in industries with a lot of exploitation are more likely to worry about losing their jobs for complaining about sexual harassment and hence are less likely to complain when it happens.

One would think that this rather wonderful finding

The log wage difference between a job with zero sexual harassment risk and a job with the mean sexual harassment risk is 0.0155, or about 25 cents per hour for women, and 0.0252, or about 50 cents per hour for men. The large compensation for sexual harassment risk for men is surprising. One possible explanation is that since men infrequently file sexual harassment claims, those claims that are filed are particularly egregious, and exposure to such risk warrants a larger compensating differential than received by women.

would have caused the author, and indeed anyone even faintly connected to reality who read the article, to think again about whether the statistical findings could possibly be what they claimed to be. I can’t for the life of me think of a convincing micro-level story about how men systematically demand higher compensation for jobs that might have increased incidence of sexual harassment. Indeed, I don’t think that there is one. There is a possible explanation based on differences in willingness to report, but given the other flaws in the article (unless I am misreading it, the level of aggregation at which ‘industry’ is measured is so high as to be effectively meaningless for this kind of inquiry – ‘agriculture’ v. ‘information’ v. ‘Professional and business services’ etc) I’m now inclined to think that the finding is entirely spurious.

The point is this. There is a set of intellectual blinders (commonly although by no meansuniversally associated with both economics and libertarianism, and frequently most problematic among those who are both economists and libertarians) which precludes by fiat the possibility that regulation can do any good. These blinders are the result of a specific understanding of the implications of economic theory, which heavily emphasizes the explanatory power of free markets and contract, and correspondingly de-emphasizes power relations. This isn’t the only possible way to understand economic theory (one could – and people have done this – use the tools e.g. of game theory to analyze power relations). Still, the blinders are very common in US and UK policy discussions, and Alex’s post provides an outstanding example of how badly they can lead people astray. If he weren’t so consumed by this particular ideology, perhaps he would have seen the fundamental flaws in a paper that he instead tried to use as a bludgeon to belabor leftists. Talking about these blinders is a thankless and tedious task that has to be repeated over and over (there are many, many Augean stables worth of Death-Ponies, each its own industrious little producer). But it still needs to be done, I think.

{ 86 comments }

1

P O'Neill 07.13.12 at 4:34 pm

I get the sense their main experience of workplace sexual harassment is from Horrible Bosses i.e. with Jennifer Aniston doing the harassing.

2

SN 07.13.12 at 4:40 pm

Some kind of a priori reasoning about how people behave and how complex systems work based on one’s own intuitions as a privileged person with tragically limited life experience. You can find it everywhere, out there–in the world!

3

Marshall 07.13.12 at 4:53 pm

Congratulations to Henry and the crew on that original workplace libertarianism post for their complete and glorious victory. I believe a triumph is in order and a Senate vote of vast tracts in the provinces, of course including the contracted peasants.

BTW, if you want something that credits the profession far more than the crap Tabarrok ctied, read Acemoglu and Wolitzky (2011) “The Economics of Labor Coercion,” Ecma. The authors actually do take power relations in a principal-agent setting seriously.

4

Manta1976 07.13.12 at 4:56 pm

Applying a formalism that explicitly ignores some phenomena to conclude that such phenomena do no exist seems a bit sloppy.
Thinking that the formalism coincides with reality is nuts.

I want to add a bit by Peter Dorman from the link you quoted en passant in the previous post, because it deserved to be said more loudly (and maybe help to bridge the gap with some libertarians?).

“I agree that fringe benefits that are essentially monetary in character, such as pensions and insurance, are subject to this sort of process. Workers really do trade money in one form for money in another, and unions bargain explicitly over this. It is also true that public insurance, like workers comp, is largely financed out of wages too, no matter how the laws are written.

It is not true that nonmonetary costs and benefits of work are compensated—not fully at any rate, and sometimes not at all.”

5

MPAVictoria 07.13.12 at 5:03 pm

“Partial indeterminacy doesn’t say that we get rid of regulation altogether; it suggests that (a) one wants to think carefully about the tradeoffs and possible abuses, as best as one can given limited information, before introducing regulations, and (b) to be very willing to incorporate feedback ex post and to alter or abandon regulations that aren’t working.”

Exactly! I would love to ask these individuals where they would rather work; an iron forge in 1890 without all those pesky safety regulations or one in 2012?

6

Downpuppy 07.13.12 at 5:09 pm

It turns out that George Mason is a state school, so,

Tyler Cowen is a professor down in Fairfax
Making his living off other people’s taxes
Against regulation no matter what the facts is.

I have to stop there, because “Take the money & run” would infringe on their department motto.

Sure this may not be substantive. Cowens posts follows 4 paragraphs of pure speculation with “but come on, let’s be realistic,” then makes a vague proposal for a super welfare state. That’ll fly like an eagle!

7

Patrick Iber 07.13.12 at 5:15 pm

Did libertarians invent the Internet to move the Overton Window in their direction?

8

Shane Taylor 07.13.12 at 5:18 pm

Herny’s mentioned Samuel Bowles and Herbert Gintis on power in the workplace, but I don’t recall a link. So, here’s one:

http://tuvalu.santafe.edu/~bowles/PowerWP.pdf

9

Neville Morley 07.13.12 at 5:20 pm

One of the many reasons this debate keeps running, I suspect, is the element of interdisciplinary rivalry and claim-staking: the sense that part of the agenda is to assert the superiority of a sociological, political and/or philosophical understanding of the problem over a purely economic one. I’m entirely in sympathy with such an approach, but even so, as an economic historian of sorts, I feel slightly uncomfortable about some of your very broad statements about economics, even when you then qualify them by noting that this is a specific tradition within economics.

I also think that there is a bit more to be said about the nature of the intellectual blinders concerned, because there are actually several different sets of blinders, some of which can be worn simultaneously or interchangeably, if that isn’t mangling the metaphor too much. It can sometimes be a matter of chosing one economic approach rather than another, as you suggest by mentioning game theory, but more often it’s a matter of how economic theory is conceived and practised; in other words, game theory isn’t necessarily any better in dealing with these sorts of issues.

10

Shane Taylor 07.13.12 at 5:21 pm

Ooops, that should have said that Chris Bertram mentioned the paper.

11

Bruce Wilder 07.13.12 at 5:23 pm

Not just “power relations” in a general context of political conflict and cooperation, but the whole apparatus of command-and-control in service of achieving technical efficiency in the control of production and distribution processes, with its elaborate channels of communication and feedback, is neglected by economists. The result is a strange schizophrenia, where the statistical discovery of patterns confirming the otherwise invisible magic of the market is celebrated and touted, while the effectiveness of actual, concrete institutions and processes is sweepingly dismissed.

These are people, who can discover women negotiating wage differentials, where no negotiation has taken place, but couldn’t agree, a few years ago, on the reality of a trillion-dollar housing bubble, inflated by corrupted mortgage underwriting practices. These are people, who are extremely confident in a barely detectable if not altogether spurious “Peltzman effect”, but, simultaneously, skeptical that policy had anything to do with a massive decline in accident-related death and injury.

12

Alex K. 07.13.12 at 5:38 pm

There are regulations of workplace conditions (forbidding racial discrimination; forbidding sexual harassment; requiring basic workplace safety) that seem, as best as I can tell, to have worked out pretty well

There is a simple way to characterize those regulations: they are regulations that are defensible even if all the costs of those regulations (e.g.the cost of a safety contraption, the cost of replacing a fired abusive pervert etc.) are supported by the employees via lower wages.

In other words, they are regulations that outlaw situations where the (subjective) cost to the employer far outweigh the relatively small cost to the employers.

You don’t need to overthrow economics in order to defend those regulations — you just need to point out that there is no possible economic theory (be it neoclassical, Austrian, or Marxist) that can prove that the market economy walks on the knife’s edge of optimality. Hence, even if for the most part those laws do approximately nothing, they will in some cases save people from abuse.

On the other hand, once you go beyond defending the right to pee and the right not to be groped, you can’t argue and behave as if there is no trade-off involved in imposing strong regulations. Somewhere between no regulations whatsoever and laws mandating that employers should have a Club Med environment where they occasionally take small brakes in order to work; somewhere between those extremes there is a point where regulations become themselves abusive, where those regulations add to the disempowerment of the unemployed, and reduce employment generating business opportunities.

And if economic theory is not that good at finding that point, then that is an argument for trying to enhance the power of more general mechanisms of stopping abuse — i.e. an argument for enhancing the realistic opportunities to quit.

13

Henry 07.13.12 at 5:42 pm

Neville – as far as I’m concerned at least, I honestly think that this specific criticism doesn’t stick. I (like a couple of other CTers; certainly Harry Brighouse) are influenced by the ‘no bullshit Marxism’ of the 1980s – an effort to reconstruct arguments about power in economic and political arrangements on the basis of standard rational choice theory. In general, I’d like to see more rather than less rational choice theory in political debate, and _especially_ on the left – it is a very useful mental astringent (I have lots of posts on this going back through the years). My issue is with the _particular ways_ in which very simplistic versions of this theory are deployed for political purpose. And I actually think that game theory is significantly superior here, in that it allows you to think about bargaining relations in a reasonably systematic way, and to incorporate strategic relations. I never tire of recommending Tom Slee’s book _No-One Makes You Shop at Walmart_, which is a really first rate take on how to use game theory to think about this stuff. Also, nb the debates within public choice – Charles Rowley has an essay somewhere excoriating the Rochester folks, which I suspect has a lot to do with the Rochester folks’ use of game theory rather than other, more ideologically consonant forms of economic analysis.

Shane – I mentioned Bowles somewhere in one of these comment threads, but hadn’t seen this specific paper – it is a very nice one indeed.

14

MPAVictoria 07.13.12 at 5:44 pm

“laws mandating that employers should have a Club Med environment where they occasionally take small brakes in order to work”

Funnily enough I haven’t seen anyone call for regulations of this sort in any of the threads on this subject….

15

temp 07.13.12 at 5:55 pm

I don’t understand how Cowen’s post denies “power relations.” How can he talk about how firms abuse workers if he doesn’t accept “power relations?”

In comments in the last thread, we talked about an extension to the perfect competition model to include “power relations”, in which management abuses workers to maintain its own status at the expense of both labor and owners (Cosma Shalizi referred to it as a principle-agent problem). Alex Tabarrok’s post also discusses such an improved model, essentially agreeing that regulations against worker abuse can be good because they prevent abuse arising from unequal power in the workplace.

In such a model, management will have some restraints on the abuse they can lay on workers. To some extent they can trade profits for status, but 1) owners will have some power over management, if profits decline too far managers will be replaced 2) even in the case of complete management capture of the firm, the market will have power on management, ultimately limiting what they can extract.

When you close off one avenue of abuse, then, you restore profits to management at the expense of status (according to the model Bruce Wilder, Alex Tabarrok, and Cosma Shalizi all endorsed as a plausible expansion of perfect competition to incorporate some power relations). Given management’s preferences for abuse vs. profit, they will then seek to spend profits in other ways to regain their status, through some other method of worker humiliation, exactly as Cowen describes.

Taking consideration of power relations doesn’t seem to answer Tyler Cowen’s objections.

16

Alex K. 07.13.12 at 5:55 pm

Funnily enough I haven’t seen anyone call for regulations of this sort in any of the threads on this subject…

That’s the point — it’s supposed to be something nobody calls for.

17

politicalfootball 07.13.12 at 5:58 pm

Exactly! I would love to ask these individuals where they would rather work; an iron forge in 1890 without all those pesky safety regulations or one in 2012?

The 1890 forge would pay better. This is proved by economics.

18

Neville Morley 07.13.12 at 5:59 pm

@Henry #13: fine by me, but my reading of some of the posts and comments elsewhere is that your comments on Economics 101 thinking have been taken in these terms, hence the persistence of the attempted rebuttals. Entirely agree that game theory looks a lot more useful for this sort of problem, but I don’t think it’s any more immune to the tendency to mistake simplifying models for reality, assume that the variables you’ve discounted for the sake of the model aren’t actually important and so forth. Possibly, precisely because it offers a more sophisticated and subtle account, it’s easier to mistake for reality…

19

Will McLean 07.13.12 at 6:02 pm

I am struck by the continuing justification of greater workplace regulation by pointing to workplace abuses that are already illegal.

20

Rune 07.13.12 at 6:02 pm

If Tyler Cowen’s answer is “an improved welfare state”, I don’t think you can say that he is defending libertarianism anymore. Time to admit he’s a liberal when push comes to shove.

21

MPAVictoria 07.13.12 at 6:06 pm

“The 1890 forge would pay better. This is proved by economics.”

Notsureifserious.jpeg

22

Alex K. 07.13.12 at 6:09 pm

I don’t know what game theoretical models political scientists like to use, and those models may be exempt from my criticism bellow.

However, as a general rule, game theoretical models are far more brittle, and far more dependent on extremely strong rationality assumptions than general arguments about the power of competition.

23

Henry 07.13.12 at 6:15 pm

temp – perhaps read the post again.

bq. There are a variety of reasonable and potentially useful ways of thinking about power relations in the workplace – but to be reasonable, they have to confront the actual problem rather than assuming that it doesn’t exist. And there are quite a number of people who write in ways that assume it away. One striking example is Tyler’s co-blogger, Alex Tabarrok …

And you’re quite wrong, I think, to read Alex’s post as being about preventing abuse arising from unequal power relations. It is instead a suggestion that _shareholders_ might be better off because these shareholders, who are not currently “getting the benefits of sexual harassment” (I quote verbatim) would no longer have to pay “higher wages” to workers to compensate them for the risks of being preyed on by middle management. Ain’t nothing about protecting workers in there – they are already, in Alex’s mind, being compensated for the risk through the market mechanism.

24

politicalfootball 07.13.12 at 6:17 pm

If he weren’t so consumed by this particular ideology, perhaps he would have seen the fundamental flaws in a paper that he instead tried to use as a bludgeon to belabor leftists.

This strikes me as unduly generous. Tabarrok is more likely indifferent to, not blind to, the paper’s flaws. Those flaws are, after all, completely obvious.

But those flaws in no way detract from the paper’s key virtue, which you (and Tabarrok) correctly identify: It can be used to bludgeon leftists. Prediction: Tabarrok will neither offer a coherent defense of that paper, nor will he admit to error in having cited it. And why should he admit to error? What was his error?

Casting Tabarrok as a truth-seeker blinded by his prejudices seems incompatible with the available evidence. He’s a bullshit-seeker, motivated by his prejudices.

25

politicalfootball 07.13.12 at 6:19 pm

MPAVictoria@21: Not serious. Once again I am done in by Poe’s Law.

26

Paul 07.13.12 at 6:20 pm

Not being trained in political science or economics, I have to read pieces like these slowly and carefully. But I’m in agreement with the post that started this, the one on bleeding heart libertarians, if I understand it’s premise, that libertarianism is really an argument for contracts and corporations/vested interests against individuals. It makes the risible assumption that all parties to an agreement are equally informed and have equal power to enter into or break the agreement. Rather than arguing in defense of individual rights (to pee/not to be groped) everything is framed as an open, transparent and consensual agreement, with no coercion by either the employer or society itself (what if the only jobs available are unsafe or hostile to individual rights? Am I expected to believe university professors have personal experience with situations like that, particularly young ones who may have never worked outside the academy?).

I wonder if this super welfare state would include the ability to opt out, if one could decline a job even if one needed it and there was a suitable opening, based on a hostile or unsafe work environment. For me, the power to walk away is at the core of any market decision. I’m not arguing for the creation of a Permanent Idler class but I have my doubts that these ostensibly bright, educated people understand what a really unpleasant work environment is like. Having worked in a university setting with academics who held similar beliefs, my impression was that some of them didn’t know what an honest days work looked or felt like.

I don’t know enough about the literature to know where to look but why are these “classical liberal” economists, as they style themselves, on the side of the vested interests rather than the individual? Rather than arguing against unions or collective bargaining, why do I never hear of any support for individuals workers that might make unions obsolete? Are the right to starve or be maimed or cast aside by plant closures the only rights individuals have?

27

MPAVictoria 07.13.12 at 6:22 pm

“Not serious. Once again I am done in by Poe’s Law.”

It is more likely that my sarcasm detector is broken. :-)

28

Sherri 07.13.12 at 6:27 pm

So, an improved welfare state is supposed to give me the necessary bargaining power to overcome the power mismatch? In other words, because of an improved power mismatch, if my boss tells me to put out or he’ll fire me, I can say no and suffer no harm because the welfare state will take care of me?

Well, maybe, if all you care about is money. But you’ve still potentially suffered significant career harm, perhaps have lost the opportunity to do work that you cared about a great deal and isn’t easily found somewhere else, and even if you do find work somewhere else, may still have to interact in the future with the boss. Consider academic work, but rather than in economics, a lab science. You get your dream job, a post-doc with Professor A, the leading researcher in your field, only to discover that he likes his female post-docs to give a little extra on the side. You could quit, but now you’re damaged goods, and getting another job in your field is going to be difficult; a number of science fields these days are big science, requiring significant lab equipment. Even if you do manage, Professor A is influential enough to continue to damage your career, by badmouthing you in the community, hurting grant prospects, tenure, etc.

People do work for reasons other than money.

29

Henry 07.13.12 at 6:27 pm

politicalfootball – I think that’s a grossly unfair characterization of someone who would never, ever falsely accuse another professor of hackishly manipulating the evidence, and, if through some vanishingly unlikely misfortune he mistakenly did so, would immediately apologize in full.

30

temp 07.13.12 at 6:29 pm

Henry@23:

Tabarrok does say that shareholder rather than workers may receive most of the benefits from regulation against abuse, but he says that in the context of agreeing that power relations exist, are important, and can be beneficially regulated against! So why do you say that the problem is that he doesn’t believe power relations exist? He thinks their consequences are different, but clearly accepts that they exist.

Alex’s post as being about preventing abuse arising from unequal power relations. It is instead a suggestion that shareholders might be better off because these shareholders, who are not currently “getting the benefits of sexual harassment” (I quote verbatim) would no longer have to pay “higher wages” to workers to compensate them for the risks of being preyed on by middle management. Ain’t nothing about protecting workers in there – they are already, in Alex’s mind, being compensated for the risk through the market mechanism.

31

temp 07.13.12 at 6:29 pm

Sorry, that second paragraph is from Henry’s post.

32

Mark Field 07.13.12 at 6:35 pm

I confess to not having read all the various posts and comments on this issue, so if I’m duplicating someone else’s point feel free to ignore. But…

Has anyone pointed out to Tyler, et al. that the disparity in power relations in the workplace exists solely because of government regulation? That is, it’s the power to fire workers at will which creates the power dynamics, and that’s a presumption the law imposes.

33

dsquared 07.13.12 at 6:40 pm

His preferred alternative is an improved welfare state

Oh how priceless.

34

Henry 07.13.12 at 6:52 pm

temp – no – he is claiming that since shareholders (a) have to pay a premium to compensate for sexual harassment by managers, and (b) receive none of the “benefits” of aforementioned harassment, there might be efficiency gains to regulation. Unless the “unequal power in the workplace” involves shareholders’ inability to discipline managers effectively, this is not the kind of argument you say it is. The benefit of regulation, explicitly, is for shareholders who “would then be able to pay lower wages without losing productive workers.”

It is a very clear corollary of his argument that there would be no reason for government to regulate if the shareholders were able fully to capture the “benefits” of sexually abusing their workers by themselves demanding blowjobs in exchange for an increased wage premium to compensate the employees for the risk and trouble (e.g. in owner-managed businesses). Inequality in the workplace, and the ability of superiors to demand sexual favors from subordinates, is not the problem. The obligation on shareholders to pay the costs without reaping the sexual proceeds is.

35

dilbert dogbert 07.13.12 at 7:09 pm

“Alex Tabarrok’s post of a couple of days ago, which claims that leftists like me are blinded by our assumptions, because we ignore how workers at risk of sexual harassment will seek and get higher wages in compensation for the risk.”

Is this quote correct? The powerless will negotiate with the powers to seek and get higher wages? I know I am old and my brain is turning to mush but I can’t see how that works.

36

Data Tutashkhia 07.13.12 at 7:16 pm

@22 However, as a general rule, game theoretical models are far more brittle, and far more dependent on extremely strong rationality assumptions than general arguments about the power of competition.

I don’t think so. From what I remember from the lectures, it’s way more flexible. You can change the assumptions a little and get the opposite result. Which, I suppose, makes it more difficult to use for predictions, but easier as a description.

37

Adam 07.13.12 at 7:16 pm

Where the heck did you get that death pony? It looks exactly like the Phantom Warrior, mascot of the U.S. Army’s III Armored Corps.

38

leederick 07.13.12 at 7:36 pm

“I can’t for the life of me think of a convincing micro-level story about how men systematically demand higher compensation for jobs that might have increased incidence of sexual harassment. Indeed, I don’t think that there is one.”

Surely this make perfect sense. Person A has a choice between standing in shit, or standing in a lot of shit. Person B has a choice between not standing in shit, standing in shit, or standing in a lot of shit. You would expect Person B to charge a higher premium for standing in a lot of shit. People aren’t intrinsically compensated for the disutility of hardships, they’re compensated for their marginal disutility. You’ll get paid well for being treated like crap if you have alternative options; while if you’re going to be treat like crap whatever job you’re in, there won’t be any additional pay in it for you.

39

leederick 07.13.12 at 7:44 pm

That said I’m not sure I approve of your arguments that (a) if something isn’t a perfect proxy for what it’s measuring, then there’s no point worrying about what the data says, and (b) if you can’t think of a convincing micro-level story for a pattern found in data, then you’re safe and reality’s likely incorrect. They seems like cheap all-purpose excuses to write off statistical research. Actually looking at data – even messy data – is far more valuable than theoretical speculation.

40

Harold 07.13.12 at 8:09 pm

It’s a living.

41

Henry 07.13.12 at 8:14 pm

Leederick – This isn’t about ‘perfect proxies.’ It’s about garbage in, garbage out. We are not in the zone of ‘reasonable arguments about whether the data and assumptions might or might not be OK’ here – we’re nowhere that’s even close. If you disagree, and want to mount a serious defense of this piece, go ahead, but I think you have your work cut out for you.

Adam – they’re both based on Frank Frazetta’s “The Death Dealer.”

42

temp 07.13.12 at 8:24 pm

Henry:

You agree with Tabarrok on:

1) Perfect competition in an inadequate model for the labor market
2) We need to incorporate “power within organization hierarchies” to get a more accurate model
3) Power asymmetries between workers and managers enable manager abuse of workers

You disagree with Tabarrok on:

4) The extent to which workers are compensated in wages for their abuse by managers

I don’t understand how you can conclude from this that the problem with libertarians is that they are too attached to perfect competition models and ignore power asymmetries. Yes, Tabarrok reaches a different conclusion than you after considering the issue of power relations. This isn’t surprising; if he agreed with you on everything he wouldn’t be a libertarian. But the disagreement does not seem to arise from lack of theoretical sophistication on the part of libertarians.

43

Alex K. 07.13.12 at 8:26 pm

You can change the assumptions a little and get the opposite result.

That’s what “brittle” means in the context of models. It’s not something people should rely on when they make policy decisions.

You’re supporting my point, not disagreeing.

44

Data Tutashkhia 07.13.12 at 9:00 pm

If I’m agreeing so much the better. I don’t know about policy decisions, but surely a model that can be tuned to describe complex empirical reality is preferable to the one that doesn’t even come close.

45

Alex K. 07.13.12 at 9:43 pm

Astrology can be tuned at will to describe any complex reality — it doesn’t follow that it is better than dart throwing at reaching valid conclusions about the real world.

I am not, by the way, trying to refute game theory. Indeed, I use game theoretical models in my day-job. But the difficulty is in showing that a) the model applies to the situation and b) that the model is robust to the inevitable real-world deviations from the assumptions. In general, this is not easy to do with game theory.

Providing a model that can “prove” just about anything you want is no longer a difficult task for most graduate students in economics.

46

Steve Williams 07.13.12 at 9:57 pm

Just want to join dsquared in observing that his claim he wants an “improved welfare state” is so rich, it’s given me indigestion. I would wait with bated breath for the series of posts detailing the tax increases he thinks should pay for this, but I didn’t go to a school where your head is held down the toilet, and for lack of practice I fear I should asphyxiate quickly.

47

Barry 07.13.12 at 10:04 pm

A note – IMHO, under the same sort of economic models that result in workers allegedly being compensated for sexual harassment, shareholders are indeed not being ripped off. Either:

1) They accept the harassment in exchange for reduced management salaries,
2) They accept the harassment because it’s cheaper than spending more money/effort to monitor and control the managers.
3) They accept management because it’s more optimal than they themselves acting as management.

In short, management is a cost of doing business, and the shareholders have optimized that cost (under my understanding of the models being used).

48

piglet 07.13.12 at 10:12 pm

That AER paper exceeds anybody’s wildest dreams. Is anybody at least a little bit embarrassed?

49

Jerry Vinokurov 07.13.12 at 10:26 pm

To be embarrassed one must first know shame.

50

Harold 07.13.12 at 10:54 pm

The Koch astrological school of economics!

51

Alex K. 07.13.12 at 11:29 pm

“(b) to be very willing to incorporate feedback ex post and to alter or abandon regulations that aren’t working.”

This is not as easy to do as you make it sound. You don’t usually get to start with blank slate after certain regulations prove to be not-working. Instead, those poorly working regulations get patched-up with extra rules, rules that are more often than not the result of political compromises of dubious value. After a few iterations of this process you end up with the kind of monstrous regulatory jungle that libertarians rightly complain about.

Real world example from this week’s press, in the NYT : A bureaucratic worker’s compensation system, which made it difficult to provide care to some employees, led to the modification of those rules by allowing doctors to provide care directly to the patients.

It turns out that those new rules allow the doctors to charge the insurance provider up to ten times the price that a pharmacy has on some drugs. Since the US medical system regulated incentives for consumer choice out of existence, the patient’s insurance must pay that inflated price. As a result, ordinary citizens are subjected to financial pillaging via higher insurance premiums, as a result of bad regulation.

This is not an argument for no regulation whatsoever — but it is an argument for imposing quite stringent tests that a regulation should pass before it is made into law.
For instance, one test should be precisely that the regulation does not provide the opportunity for law-makers to make costly mistakes of implementation. I think sexual harassment laws pass those kind of tests. Most existing regulations fail them.

52

Substance McGravitas 07.14.12 at 12:12 am

Well, maybe, if all you care about is money. But you’ve still potentially suffered significant career harm, perhaps have lost the opportunity to do work that you cared about a great deal and isn’t easily found somewhere else, and even if you do find work somewhere else, may still have to interact in the future with the boss.

Yes. It’s worth it to have some job protection if you want expertise: there are only so many people and firms who do X, and the ability to exit The Only Game In Town and survive is just not enough. Moreover there’s no incentive for that sole employer to be other than a sadist if he can come up with the right masochists.

53

gordon 07.14.12 at 12:12 am

Leederick (at 38) quotes the post thus: “I can’t for the life of me think of a convincing micro-level story about how men systematically demand higher compensation for jobs that might have increased incidence of sexual harassment. Indeed, I don’t think that there is one.”

He misses the implied sexism of this remark. Are men so undiscriminatingly randy that any woman’s proposition is welcome, so that for men there is never any disutility involved in sexual harassment? I don’t think so.

54

MPAVictoria 07.14.12 at 2:21 am

“Most existing regulations fail them.”

Most?!!!????
MOST!!!!
Citation damn well required.

55

Jim Henley 07.14.12 at 2:37 am

Henry, this post proves you don’t understand what libertarians mean by freedom, or you’d agree with them. QED!

56

Alex K. 07.14.12 at 3:08 am

“Most?????
MOST!
Citation damn well required.”

I’ll just gesture in the general direction of Ronald Coase — although my claim that most regulation fails the test of not giving law-makers opportunity to make costly mistakes is actually weaker than Coase’s claim that most regulation is bad.

The following is from a Coase interview :

“Reason: You said you’re not a libertarian. What do you consider your politics to be?

Coase: I really don’t know. I don’t reject any policy without considering what its results are. If someone says there’s going to be regulation, I don’t say that regulation will be bad. Let’s see. What we discover is that most regulation does produce, or has produced in recent times, a worse result. But I wouldn’t like to say that all regulation would have this effect because one can think of circumstances in which it doesn’t.

Reason: Can you give us an example of what you consider to be a good regulation and then an example of what you consider to be a not-so-good regulation?

Coase: This is a very interesting question because one can’t give an answer to it. When I was editor of The Journal of Law and Economics, we published a whole series of studies of regulation and its effects. Almost all the studies–perhaps all the studies–suggested that the results of regulation had been bad, that the prices were higher, that the product was worse adapted to the needs of consumers, than it otherwise would have been. I was not willing to accept the view that all regulation was bound to produce these results. Therefore, what was my explanation for the results we had? I argued that the most probable explanation was that the government now operates on such a massive scale that it had reached the stage of what economists call negative marginal returns. Anything additional it does, it messes up. But that doesn’t mean that if we reduce the size of government considerably, we wouldn’t find then that there were some activities it did well. Until we reduce the size of government, we won’t know what they are.

Reason: What’s an example of bad regulation?

Coase: I can’t remember one that’s good. Regulation of transport, regulation of agriculture– agriculture is a, zoning is z. You know, you go from a to z, they are all bad. There were so many studies, and the result was quite universal: The effects were bad.”

57

Will McLean 07.14.12 at 3:18 am

Barry at #47:

No. Consider the retailer that fails to bring shoplifting to zero, because it’s too expensive. The shoplifting that does occur still involves ripping off the retailer.

58

Russell L. Carter 07.14.12 at 3:21 am

“…suggested that the results of regulation had been bad, that the prices were higher”

I think I can safely ignore the handle “Alex K.” now. Surely the transition from a pervasively discriminatory workplace to an imperfectly non-discriminatory workplace imposed costs, so that in many cases the product’s price was higher.

I think we have a measurement problem here. As we always do.

59

Alex K. 07.14.12 at 3:41 am

“Surely the transition from a pervasively discriminatory workplace to an imperfectly non-discriminatory workplace imposed costs, so that in many cases the product’s price was higher.”

The problem with the entire tenure of the argument on this blog is that some argue strongly for some regulation that is trivial to defend (like anti-sexual harassment laws) and then people act as if they’ve not only defended all currently existing regulation, but that they’ve advanced a good argument for even more regulation. This is not even close to being the case.

And by the way, the quote you provided was from Coase, not from me — but feel free to ignore him too.

60

Russell L. Carter 07.14.12 at 4:05 am

“… then people act as if they’ve not only defended all currently existing regulation, but that they’ve advanced a good argument for even more regulation. “

Some people view a statement such as this (thank you for including it):

” … —perhaps all the studies—…”

as definitive. This is not even close to being the case.

BTW, I have read Coase in the original. Accessibility and avowed distaste for baroque symbolic notation is one of his oft cited unusual qualities, right?

61

Alex K. 07.14.12 at 4:17 am

“Some people view a statement such as this (thank you for including it):

” … —perhaps all the studies—…”

as definitive. This is not even close to being the case.”

A good thing that I’m not among those people then, isn’t it? I’ve defended a weaker claim that I made about most regulation with a stronger claim made by Coase. You can knock down Coase a few notches and still find the claim that most existing regulations provide opportunities for law-makers to make costly mistakes quite defensible.

62

Russell L. Carter 07.14.12 at 4:22 am

” …opportunities for law-makers to make costly mistakes quite defensible.”

What does “costly” mean, as you write it in these comments.

I think we have a measurement problem here, as we always do.

I am now going to ignore “Alex K.” forever, and head off to see “Bagdad Cafe” on my home theatre.

63

Alex K. 07.14.12 at 4:35 am

“What does “costly” mean, as you write it in these comments.”

“Costly” as in increasing the number of the unemployed, which for some people may mean damage to most of their future career and hence their quality of life; “Costly” as in increasing the price of health care, which may mean just a financial inconvenience but it may also mean permanent damage to one’s health.

By all means do enjoy your movie — I’m not sure why you bothered in the first place. It’s unlikely that many people care about what you think that Coase thinks about baroque symbolic notation.

64

Bruce Wilder 07.14.12 at 4:38 am

Alex K @ 56 Coase: The Interview

That interview tells us everything about Coase’s monumental arrogance, and nothing of substance about the economics of regulation. He says, “I don’t reject any policy without considering what its results are. If someone says there’s going to be regulation, I don’t say that regulation will be bad. . . . I was not willing to accept the view that all regulation was bound to produce these results.” and, a moment later, “I can’t remember one that’s good. Regulation of transport, regulation of agriculture—agriculture is a, zoning is z. You know, you go from a to z, they are all bad.”

Did the man lack even a glimmer of self-awareness? Apparently so.

65

Peter Dorman 07.14.12 at 5:55 am

A few random comments I didn’t get to in my own post on EconoSpeak:

1. The Hersch piece on sexual harassment is dreadful, an example of what’s wrong with a lot of empirical micro. I can think of two defenses. One is that it’s from a Papers and Proceedings AER, so shorter and less technical. The other is that, god bless her, she actually clusters on industry. This sounds like an irrelevant detail, but it isn’t. For decades, she and her hubby, Kip Viscusi, have published article after article in which the independent variable of interest, like occupational health risk or risk of sexual harassment, is assigned to individuals based on the industry they work in. This means the number of independent observations of this risk is the number of industries, not individuals. If you don’t do something econometrically to take that into consideration — if you think you have 50,000 or so observations on risk (or however large your sample size is) and not about 100 — your significance test is going to be waaaaay off. Can you believe that this mistake was SOP for these two, and especially Viscusi, for eons? I sometimes get irritated at the left for a lack of quality control, but this was outrageous. Well, Hersch fixed it. I appreciate each little step toward enlightenment.

Anyway, if you think for a moment about the Hersch article, you see what the problem is. There are certain kinds of jobs that pay more, especially blue collar involving a strength or physical skill component, that have traditionally “belonged” to men and where women are actively resisted. Sexual harassment is an aspect of that. It’s good that she controlled for percent female in the industry/occupation cell, but this variable probably doesn’t perform the same in every context. And not controlling for stuff like percent union, K/L ratios, etc. is, in my view, simply malpractice.

She does one sample partition, men and women — although her methodology assumes that the same variables affect them both in the same ways. (I would run separate regressions or at least have a slew of interactions.) The result she gets is deeply counterintuitive, almost to the point of being disconfirming, and she ignores it.

Also, one gets no sense that she has pushed and probed her data to make stone cold sure that the result she got is really right. There is no indication that she adheres to what should be the bias in scientific research against Type 1 error. There is so much more to this than significance levels.

2. So why aren’t there compensating differentials for everything? I know most about occupational health and safety, so I’ll stick to that. (a) Wrong model of the labor market. Viscusi uses simple supply and demand models, always. He must have derived compensating differentials from utility and profit maps a hundred times. He has never derived them from a search model, nor has anyone else to my knowledge. But search is the standard framework. It’s not perfect, but it’s better than S&D. (b) Wrong model of individual choice. Think of cognitive dissonance (“denial”) and other factors in how people deal with risk. (c) Static framework. Employment is not a one-shot game; it’s a repeated game. Do you get compensating differentials from that? Maybe, but you’d have to demonstrate it, which no one has done. (d) The compensating differential argument rests on the legal doctrine of “assumption of risk”, that a worker, by taking a job, voluntarily assumes the risk attached to it. That was the legal framework in the 19th century; it’s been discarded for more than 100 years. I first learned this from P. S. Atiyah’s extraordinary Rise and Fall of Freedom of Contract, but I’ve seen it corroborated in many other places. This gets at a core problem of the kind of economics that Viscusi and Hersch represent: they don’t take seriously the scholarship of other disciplines. (And that, in a nutshell, is why there is so much hostility toward economists coming back the other way.)

3. Analysis of huge amounts of thin data (like the survey data Hersch and Viscusi use, no matter how “rich”) is not superior to collection and analysis of small amounts of thick data (direct observation and in-depth interviews), nor is the opposite true. They are both valuable sets of tools. If you think workers are being compensated for risk or abuse or something else, by all means do (sound) econometrics, but also look directly for these mechanisms in action. In my book, for instance, I point out that there is no evidence that safety managers in firms actually engage in the cost-benefit considerations that constitute the behavioral function that gives you an iso-cost curve (wages and safety) in Viscusi’s derivations. Their textbooks all have chapters on CBA for safety and health interventions, and they are quite creative in coming up with ways to convince the boss that safety pays, but not a single one mentions the notion that a safer firm can cut back on wages. Since then a large literature has sprouted on how to measure the financial benefits of safer workplaces (the Dutch government spends heavily in research in this area, with good results), and still the wage-cutting argument is nowhere to be found. In other words, the econometrics is not corroborated by evidence of actual behavior. If I had done Hersch’s study of wage compensation for sexual harassment, I would have concluded it by saying something like, this is interesting and suggestive. Here are some ideas about where we might look to see if these behavioral responses are actually taking place. For a certain kind of economist, alas, there’s no need to look.

4. Economists are too wedded to utilitarianism. Ethics is messy: I don’t think any single system gives you all the answers. Surely, however, we can recognize that there are contexts in which deontological approaches have merit, such as those bearing on personal freedom and dignity. Financial compensation may be paid to the victim of abuse, but that doesn’t mean that they are equivalents. I won’t argue it here (I’ve gone on much too long, haven’t I?), but just say that anyone who thinks they are, that there is no difference at all between having more money and having more dignity, is a moral cripple. Bentham was viewed by his contemporaries as utterly over the top, after all.

66

Walt 07.14.12 at 8:04 am

I’ve read that Coase interview. “I can’t remember one that’s good” is so over the top that you have to think that there’s either something wrong with the journal, or the methodology of the subfield of law and economics, or at the very least Coase’s memory. The only way you can get empirical result that clear on something as hard to measure as the impact of regulations is by some sort of systematic error on somebody’s part.

67

GiT 07.14.12 at 9:08 am

“The problem with the entire tenure of the argument on this blog is that some argue strongly for some regulation that is trivial to defend (like anti-sexual harassment laws) and then people act as if they’ve not only defended all currently existing regulation, but that they’ve advanced a good argument for even more regulation. This is not even close to being the case.”

Would this be the twin of the argument that some argue strongly against regulation that is trivial to decry, and then people act as if they’ve argued against not only any new regulation, but also all currently existing regulation, apart from pre-existing criminal, tort, and contract law?

Recall, the substance of the posts which set off the BRG response: at will employment should be limited only by existing law which already governs force and fraud, and apart from that nothing not contracted for is fair game:

http://bleedingheartlibertarians.com/2012/05/employee-and-employer-rights/

68

Roger Gathman 07.14.12 at 10:14 am

Perhaps this discussion can move to certain branches of industry to explore not so much the theoretical principles of libertarianism, but the way, in practice, deregulation and the substitution of the state for unions as the intermediary for the worker has worked. The best example may be meatpacking. In meatpacking, we can see the sort of Cowen triple play at work – destroying the unions, one advocates, at first, for the state to firm up welfare benefits, then use higher welfare benefits as a political issue to decry lazy worker, the poor, and (in a whisper) the blacks who must surely be getting them – then decimate the government’s welfare role and leave the worker entirely exposed to the exploitation of the manager and the corporation. It is beautiful politics, and it has worked well to create a lower wage and highly injurious working conditions for an industry that used to be unionized and well regulated. The story of meatpackers and their injury rate has been told a lot: here’s a link to an Eric Schlosser article in Mother Jones: http://www.motherjones.com/politics/2001/07/dangerous-meatpacking-jobs-eric-schlosser One notices how the agri-corporations are quite happy to sluff off medical costs on the government, which then provides meat for the politicians their PACs support to attack worker’s compensation in general. It is I think important to understand this strategic aspect, otherwise one misses the beauty of libertarianism in America. As an intellectual enterprise, it is pretty much null, as has been shown pretty exhaustively in these posts, but as a tactic, it is a pretty amazing success story, especially when it is ornamented with seeming concern with providing welfare for all. Liberals and conservatives will often agree on such things, such as the EITC, and then the right can attack it and increase their political leverage enormously, as – in fact -the state cannot, practically, politically, be the sole intermediary between worker and corporation.

69

MPAVictoria 07.14.12 at 3:07 pm

Alex K I can list hundreds of regulations that provide beneficial effects for you everyday. We could for example talk about environmental/zoning regulations that forbid someone buying the house next door to you and filling it with toxic waste. Or safety regulations that requires a certain number of fire hydrants and prevent some libertarian from parking his car in front of them. If those topics bore you we could move on to regulations governing the safety of vehicles and the hundreds of thousands of lives they have saved over the past few decades. We could also discuss public health regulations which help keep your water pure and your food safe.

Or maybe we won’t. Maybe you don’t care.

70

Nine 07.14.12 at 6:36 pm

Roger Gathman @68 makes a very interesting point. Also, quite apart from concerns about optimality etc, it seems to me to be be trivially true that extant regulation very likely stands for whatever is politically feasible & at least temporarily stable. Deregulation, a strong welfare state, the minumum wage and the like each lead very different political lives.

71

Nine 07.14.12 at 6:59 pm

Bruce Wilder @64,

To be fair to Coase, that was a throwaway line in response to leading questions from a libertarian interviewer trying to elicit red meat for the magazinbe audience. ZOMG ! THE COASE DUMPED ON ALL REGS, that’s awesome dude etc.
Excellent source material for those who like to troll blogs, but useless otherwise. I doubt he’s ever published bullshit of that sort under his own name in any scholarly venue – but i’d better leave that to the actual Coase scholars, not the ones who play them on the internetz.

72

Tom 07.14.12 at 9:04 pm

“But I also think that this is a decidedly poor basis for arguing that we should never regulate workplace conditions.” Cowen and Tabarrok never claimed this but I think it is fair to say that this is their default position. I agree with you that this sort of intellectual attitude, even if based on some economic intuition, is wrong. It is one of the reason I have sometimes a hard time reading Marginal Revolution in that it seems that “the government can’t do any good” thesis is often implicit in many posts.

I also agree with you that “Partial indeterminacy doesn’t say that we get rid of regulation altogether; it suggests that (a) one wants to think carefully about the tradeoffs and possible abuses, as best as one can given limited information, before introducing regulations, and (b) to be very willing to incorporate feedback ex post and to alter or abandon regulations that aren’t working.”

However, in the previous entries of this exchange I have never seen you or others mentioning these trade-offs when talking about labor regulations (there are quite a few posts on CT on this and so I am happy to be corrected here). I can’t speak for others, but it would be easier for me to get fully on board with people supporting unions if on that camp there was more awareness of the possible – let me repeat, possible – efficiency and equity costs that labor market regulation may have. And yet, in the same way that I can’t recall a post on MR praising unions on some aspect, I can’t recall a post on CT criticizing unions on some issue (again, I am happy to be corrected here).

73

gordon 07.14.12 at 11:37 pm

GiT (at 67): “…at will employment should be limited only by existing law which already governs force and fraud, and apart from that nothing not contracted for is fair game…”.

Why stop at existing law which already governs force and fraud? The history of the GFC (and likely other histories too) show that fraud isn’t regarded as a crime any more, and as for force, well, it’s clear that force is fine depending on who’s using it and on whom. How real is this distinction between “regulation” and “law”?

74

GiT 07.14.12 at 11:46 pm

Not very, I’d say, but I’m not advocating the BHL position.

75

Barry 07.15.12 at 12:40 am

Will McLean 07.14.12 at 3:18 am
“Barry at #47:

No. Consider the retailer that fails to bring shoplifting to zero, because it’s too expensive. The shoplifting that does occur still involves ripping off the retailer.”

So what? Remember the beginning of this whole thing, weeks and posts ago – the libertarians were blithely dismissing sexual harassment as something compensated for/expected/whatever.

76

Bruce Wilder 07.15.12 at 12:55 am

Nine @ 71: “I doubt he’s ever published bullshit of that sort under his own name in any scholarly venue . . . “

Coase, himself, in that interview, was referencing his own work as editor of the Journal of Law & Economics, where he did, indeed, publish “bullshit of that sort” — not his own work, of course, but the work of a generation of ambitious scholars, as part of a deliberate and highly organized effort to reform, and undermine, economic regulation of business. They succeeded, and the readers of Reason magazine might include representatives of an appreciative constituency. None of which seems to me to be any reason to cut the coot any slack.

77

dan 07.15.12 at 1:08 am

” workers at risk of sexual harassment will seek and get higher wages in compensation for the risk.”

I am not sure why this is harder to believe. It’s more selection rather than seeking higher wages. Working as a consultant once I put up with a lot of crap from a very bad client (including food thrown at me). I ended up getting a large bonus at the end of the project. In my current job where my pay is not sensitive, I would not put with such behavior. We had one senior partner who was very aggressive with the new female hires. There were no complaints of harassment at our firm, possibly because female workers were making six figures with the expectation of making seven figures after being made partner in several years. Coincidently he did not go after secretaries. I am not sure if secretaries without the seven figure expected pay would have put up with it.

I am not suggesting this is always what happens, but it’s not as unrealistic as Henry claims

” how men systematically demand higher compensation for jobs that might have increased incidence of sexual harassment. Indeed, I don’t think that there is one. “

Again I do not find this surprising at all. You are probably thinking of a female boss harassing a male worker. Most likely the harassment will be by another male (http://nymag.com/daily/intel/2009/12/youll_have_to_give_me_a_blow_j.html) Given the homophobia and sexual stigmas in our society, the negative perceived effects would be greater for men.

78

faustusnotes 07.15.12 at 1:21 am

Roger Gatham:

Perhaps this discussion can move to certain branches of industry to explore … the way, in practice, deregulation and the substitution of the state for unions as the intermediary for the worker has worked

Why do we have to worry about this false dichotomy of substituting unions with the state? Why not have unions and the state?

79

Russell L. Carter 07.15.12 at 3:47 am

@Tom

“I can’t recall a post on CT criticizing unions on some issue (again, I am happy to be corrected here).”

I believe that the more-or-less consensus position of the Timberites and most of the careful commenters is something close to: unions suck, as they are actually implemented. (Insert standard list of grievances ranging from seniority-always to stupidly pillaging pension arrangements to sometimes outrageous criminality).

However, it is also a given that corporations and hierarchical bureaucracies in general[1] often suck hard too; and the most efficient human devised method so far for offsetting that plague of giant-money-financed suckitude exerting itself as a downward facing absolute power is “a worker’s union”.

It’s just the way it is.

Let’s see. From the start of college onward, I’ve worked for the Georgia Tech Athletic Department, Smith-Corona, CNN, General Electric, the UF and ASU math departments, Computer Sciences Corporation, NASA, whomever was running the contract at Sandia National Lab when I was there, Conceptual Systems & Software, various DoD labs on contract, some military contractors on subcontracts, some other interesting (profitable) small firms doing large scale visualization software, a local embedded control software company, and SunEdison. Many tiny, many giant. My wife during all this time has worked for big guys and small guys too, at a fairly high professional level. Most of these companies didn’t have unions. The ones that did paid non-union workers better and seemed to be a trifle more humane in the treatment of their employees, in general. It’s just anecdotage so maybe doesn’t generalize. But that’s where I’m coming from.

[1] Study Bruce Wilder’s comments carefully if you at all dispute this.

80

Maggie 07.15.12 at 4:10 am

Unions would suck a lot less if they were a universal given rather than being historically restricted to those segments of the working class tough and unscrupulous enough to face down a legal regime hostile to their formation – and worse things than that, like Pinkertons.

81

Substance McGravitas 07.15.12 at 5:42 am

Unions would suck a lot less if they were a universal given rather than being historically restricted to those segments of the working class tough and unscrupulous enough

Teachers? Librarians?

82

Maggie 07.15.12 at 11:49 am

But those are the unions that already suck less.

83

Alex 07.15.12 at 2:00 pm

This is an example of the tyranny of interpretation, isn’t it? Even if the statistical content was sound (which per Peter Dorman at 65 isn’t necessarily so), there are a number of interpretations that can be fitted to it. Here are two more:

1) The corporate psychopath. Personalities likely to abuse others (aggressive, overentitled etc) do well in hierarchies and are unusually attracted to money. Therefore, higher-paying workplaces tend to have more of them.

2) Differential reporting. If you are being harassed, you have three options – suffer in silence, quit, or report the abuser. (These are, of course, voice, loyalty, and exit, but not in that order.) People with higher socio-economic status might be more likely to pick option 3. It’s easier to stop the poor insisting on their rights.

In fact, those aren’t mutually exclusive. What they have in common is that the direction of causality is the opposite.

84

faustusnotes 07.15.12 at 2:44 pm

You’re wasting your time, Alex. The paper’s shit. No need to apply interpretation to poor analysis.

85

eddie 07.15.12 at 8:09 pm

“His argument – I think I am presenting it correctly…”

Why should you have to try so hard to represent them fairly? They should be clear or be silent. Their being deliberately vague is an attempt to claim ground in an argument without actually occupying said ground. It’s a libertard god of the gaps argument.

86

Will McLean 07.15.12 at 10:05 pm

“I think it’s right that regulations aimed at specific abuses will often have somewhat indeterminate consequences. It may also be empirically the case that for many abuses, the best we can do is to improve exit options for workers. But I also think that this is a decidedly poor basis for arguing that we should never regulate workplace conditions.”

I don’t see any evidence that Cowen is saying anything of the sort. The rational assumption is that if you want to change regulation, you don’t start with no regulation at all, you start with current law.

Comments on this entry are closed.