Equality, freedom and wage labor

by John Quiggin on July 14, 2012

I haven’t been active in the debate between Crooked Timber members and various others (Bleeding Heart Libertarians, Matt Yglesias, Tyler Cowen) so far. Broadly speaking the claim on the BHL side has been that if only some minimal conditions (existence of a universal basic income, for example) were met, all employment contracts could be assumed mutually beneficial and there would be no need for governments to regulate their terms, for example to prevent sexual exploitation.

Most  at CT have been dismissive of these claims, but I’d like to explore the question a bit further. Is the objection that the necessary conditions aren’t likely to be met in practice, or that the employment relationship is inherently unbalanced, simply by virtue of the fact that one party gets to boss the other around.

Suppose that the following conditions were met

* Full employment, so that the cost to a worker of finding a new job is no greater than the cost to an employer of hiring a replacement

* A minimum wage adequate to allow a decent living standard without requiring acceptance of degrading working conditions

* A universal basic income sufficient to ensure that, even without working no-one need be poor

* A default employment contract, incorporating prohibitions on sexual harassment, rights to regular breaks and so on, unless these are explicitly contracted out

Would we then feel that legislative restrictions on employment contracts were needed, and, if so, which and why? Or, is the question badly posed in some way

I can think of two ways to argue that the question might be badly posed.

The first is that capitalism could not sustain such conditions, and so the question could never arise in practice.  For example, it might be argued that the tax rates required to finance a UBI would not be consistent with a high (post-tax) minimum wage, assuming that capitalists still had to earn a positive rate of return.  I’m not convinced of this, especially since developed countries seemed fairly close to meeting these conditions towards the end of the postwar boom. But, arguably, that’s why the boom ended.

A second response, which I find more appealing, is that such conditions would give workers sufficient bargaining power to demand union representation, and that union contracts would embody the standard protections.

But I’m also attracted to a third view, one which would give a little more ground to the BHL position, though at quite a high price. That is the view that, if only we had the substantial measure of economic equality described in the conditions above, we could indeed dispense with a lot of government intervention, and thereby enjoy more freedom in matters such as contracting over working conditions (or, as discussed in another thread, selling kidneys).

I’m not convinced that this is right, but I think a lot of the heat in the debate reflects the extreme inequality of current conditions, particularly in the US. The BHL side of the debate wants to believe that a modest tweak to current conditions would provide sufficient independence to make free contracting on equal terms a meaningful concept. The CT side mostly takes it for granted that the required degree of equality can’t be achieved in practice, and that it’s therefore silly to concede anything to demands for freedom of contract.

Obviously, I think CT has had the better of the debate. Still I’m attracted to the idea that a more equal society would also be one in which there was less need for detailed and prescriptive government interventions. Against this, I share the intuition that bosses will always be bossy and (at least some) will always try to abuse their position.

So, I’ll leave it there, and request civil discussion,

{ 173 comments }

1

Zamfir 07.14.12 at 11:41 am

I don’t see how it follows that full employment will necessarily equalize the cost of changes for employers and employees. In every somewhat largish organization, hiring new people will be a routine activity. Perhaps costly in money, but not in any sense painful for the people involved.

2

chris y 07.14.12 at 12:24 pm

Points 2 and 4 would appear to be legislative constraints on employment contracts. As proposed, they’re universal constraints, but nonetheless they legally require employers not to pay below minimum wage and not to include sexual favours in the job description. As I understand full on libertarians, these would constitute unacceptable state interference in the contractual process.

3

David Kaib 07.14.12 at 12:38 pm

I think the difficulty here is that there is a class of people (including but not limited to libertarians) who find all labor regulations disfavored (if not a terrible violation of freedom) and that includes minimum / living wage regulations. So this suggestion already runs afoul of the libertarian / neoliberal positions.

(I see chris y makes a similar point. Seconded).

4

EB 07.14.12 at 12:53 pm

I’m a liberal/progressive, but in what world can we assure everyone a comfortable living even if they don’t work?

5

Manta1976 07.14.12 at 12:58 pm

chris, point 4 says “default” and posits the ability to contract out certain provisions: an employer (e.g.: a porn producer) could include sexual favors in the job description, but he must do explicitly (how different is this from the real world, though?).

Anyhow, it seems to me that, while in theory the BHL Utopia as exposed by John is fine, in practice it is used to bash regulations and unions in the actual word, were the Utopian condition are not met.

6

GiT 07.14.12 at 1:07 pm

To put it another way, it seems a recurring part of the (BH)L argument is that regulations are welfare decreasing regardless of the level of inequality. Any argument that goes, “inequality, therefore regulation; equality, therefore no regulation” doesn’t seem like it will fly with them. So, sweatshops and payday loans are fine (see: Zwolinski), and should not be regulated, regardless of the huge inequality proper to the relationships behind the arrangements.

So from the BHL position, inequality seems to be, for the most part, a total non-sequitur. Decreasing inequality increases welfare; increasing regulation decreases welfare. Two separate propositions. What would be needed is something about a relationship between inequality and regulation. But if anything it seems like the position there would be that regulation increases inequality.

7

William Timberman 07.14.12 at 1:31 pm

This is an interesting question, but it’s been posed before. Fifty years ago, many liberals believed that we’d soon have Capitalist Plenty, or Social Democratic Plenty, (we could have any color, so long as it wasn’t red.) We wouldn’t require anything like full employment to produce everything we needed/wanted, so if we were smart, we should be thinking not about how to maintain full employment, but a) what to do with our increased leisure, and b) what new services we could provide each other out of the goodness of our hearts that would make for a more civilized society for all.

Well, we all know how that’s turned out. When we look out the windows of our ivory towers today, what we see looks less like Gunnar Myrdal’s utopia than it does Marx’s Hell on Earth for what is still an uncomfortably large part of the world’s population, and at the moment it appears to be getting worse rather than better.

If we were to ask ourselves what happened between then and now, we’d be closer to asking the right question, I think. Is the answer psychological, or political? Is it human nature, or is it some lingering atavism that we might reasonably hope someday to purge from our collective conscious or unconscious norms? We nibble around the edges of these questions all the time, but I don’t think we yet have anything like a simple answer to them. Given the urgency of our concerns, I wish we did. And yes, I do believe that all of the smaller questions that we’re asking, like those in this post, are part of the bigger one. What becomes of work, when not everyone is needed to do it? What does full employment mean then? Will the Malefactors of Great Wealth actually let us go on living anyway, and if not, what then?

8

Jeff Graver 07.14.12 at 1:49 pm

I really like this as a definition, not just a description: “Full employment, so that the cost to a worker of finding a new job is no greater than the cost to an employer of hiring a replacement.” Much harder to measure, but so much more on-point than the “maximum level of employment consistent with noninflationary growth” kind of definition.

9

Phil 07.14.12 at 1:53 pm

A default employment contract, incorporating prohibitions on sexual harassment, rights to regular breaks and so on, unless these are explicitly contracted out

But surely this is much, much further into Regulatopia than the BHLers would be comfortable going (let alone Tabarrok et al).

I think you may be over-thinking a very simple and straightforward point – the only reason it’s difficult and complicated to argue about with right-Libertarians is that for them it’s a simple and straightforward blind spot, something that they don’t even see they’re not seeing. Someone on the r-Lib side of the fence posted in a similar “yes-but-suppose” vein a while back; I’ve lost the link, but the argument went something like this:

“Ah, but suppose the employee is genuinely free to walk off the job any time; suppose she can have another equally convenient and rewarding job for the asking; in fact, suppose she has independent means, so she’s only doing the job for the fun of it… OK, so in this scenario we still think the boss shouldn’t ask her to put out, so it’s all about the indignity and it’s not about inequality and power relations, QED and no returns.”

It struck me then that there was a much simpler and less contorted counterfactual: suppose the employee sexually harasses the boss. Does the boss have to put up with it? I don’t think so. Does anyone think the boss should have to put up with it? I really don’t think so. What’s the difference between the boss and the employee? Absolutely bugger all, if you’re Murray Rothbard – they’re both individuals freely exercising their economic power in conditions of unequal resources and imperfect information, as are we all.

It’s all about power; the stuff about regulation isn’t much more than a smokescreen. Legalise wildcat strikes and right-Libertarians would be yelling for more regulation.

10

Anarcissie 07.14.12 at 2:14 pm

It seems to me that in normal capitalism, the employer-employee relationship is necessarily one of domination and subjugation, because capitalism must produce a surplus, which must be extracted from the employees regardless of their wills and interests. (Presumably autonomous, informed individuals and groups will stop working when they have produced enough for their consumption and savings, leaving nothing for a capitalist to exploit.) Attempts to mask or mitigate this relationship, as by subsidies or regulations, would have to be foiled or subverted for capitalism to work.

11

marcel 07.14.12 at 2:49 pm

I’ve not been following this as closely as I might because the BHL position strikes me as so utterly wrong-headed: the asymmetry between employer and employee in nearly all employment relationships is too obvious to need belaboring. Phil (at 8 above) begins to get at the point that the exchange of money for labor is quite different from the exchange of labor for money.

Marx expressed this point quite eloquently. As I said, I have not followed this as much as I perhaps should to comment, but I cannot help myself, so I hope no one has yet included the following quote from Ch.6 of Capital (v. 1):

This sphere that we are deserting, within whose boundaries the sale and purchase of labour-power goes on, is in fact a very Eden of the innate rights of man. There alone rule Freedom, Equality, Property and Bentham. Freedom, because both buyer and seller of a commodity, say of labour-power, are constrained only by their own free will. They contract as free agents, and the agreement they come to, is but the form in which they give legal expression to their common will. Equality, because each enters into relation with the other, as with a simple owner of commodities, and they exchange equivalent for equivalent. Property, because each disposes only of what is his own. And Bentham, because each looks only to himself. The only force that brings them together and puts them in relation with each other, is the selfishness, the gain and the private interests of each. Each looks to himself only, and no one troubles himself about the rest, and just because they do so, do they all, in accordance with the pre-established harmony of things, or under the auspices of an all-shrewd providence, work together to their mutual advantage, for the common weal and in the interest of all.

On leaving this sphere of simple circulation or of exchange of commodities, which furnishes the “Free-trader Vulgaris” with his views and ideas, and with the standard by which he judges a society based on capital and wages, we think we can perceive a change in the physiognomy of our dramatis personae. He, who before was the money-owner, now strides in front as capitalist; the possessor of labour-power follows as his labourer. The one with an air of importance, smirking, intent on business; the other, timid and holding back, like one who is bringing his own hide to market and has nothing to expect but — a hiding.

http://www.marxists.org/archive/marx/works/1867-c1/ch06.htm

12

marcel 07.14.12 at 2:54 pm

Oh hell, nevermind. I just noticed that CB ended his (I think) initial post that began this series with just this quote. While it bears repeating, I apologize for wasting everyone’s time.

13

Tim Worstall 07.14.12 at 3:09 pm

“It seems to me that in normal capitalism, the employer-employee relationship is necessarily one of domination and subjugation, because capitalism must produce a surplus, which must be extracted from the employees regardless of their wills and interests.”

Sounds unlikely: for if it were so then sexual harassment would not happen in decidedly non-capitalist organisations like State bureaucracies. Or pre-capitalist societies like feudalism, etc. That’s not something that stands up to real world observation I think.

14

Cranky Observer 07.14.12 at 3:10 pm

= = = hat is the view that, if only we had the substantial measure of economic equality described in the conditions above, we could indeed dispense with a lot of government intervention, and thereby enjoy more freedom in matters such as contracting over working conditions = = =

Information asymmetry alone raises serious questions about whether this state is possible even in theory. And it doesn’t even have to be at the level of sexual harassment: I have on more than one occasion participated in interviews of outside candidates to fill what Peter Drucker called “man-killing jobs”. That is to say, assignments which only a superman could fill successfully and which had already destroyed more than one person (destroyed professionally, psychologically, and/or physically). Sometimes the interview candidates figured this out, sometimes they did not, but in all cases the hiring organization knew far more than the candidate what his situation would be if he signed on, employment contract or no.

Cranky

Just noting for the record that other than C-level jobs and a very few professionals, employment contracts simply don’t exist in the US non-union workforce. I don’t see that practice changing whether or not a mythical UBI is implemented.

15

merian 07.14.12 at 3:34 pm

So is a (maybe over-)simplified version of the argument that because regulation aims at reducing or mitigating inequality in economic relationships when it becomes too large[1] a state of equality would reduce the need for regulation? It’s attractive in its symmetry and resonates with the view expressed by the one commenter (on the kidney sales thread) who found the idea of allowing trading in organs much less scary in a more equal country such as Sweden or Denmark.

Even if that would work, and I’d like it to and think for one type of regulation at a time[2], there would be a vulnerability or instability against some types of social change. Let’s say the society is seeing rapid growth in people of working age at the low-qualification end. Maybe that’s an external influx — voluntary migrants or refugees — or maybe it’s a rapid decline of a formerly large industry — mining, some types of manufacturing — or again maybe they’re paying off mistakes in urban planning made years ago, or maybe there was a change in the criminal justice system that led to a large number of prisoners being released all at once. These populations would be the first vulnerable to pressure of “contracting out”, and their very existence would be an argument easily used by right-populist to scale down social safety nets (such as the universal minimum payment), at least in case the population can be stigmatised in some way.

Whenever someone argues full employment as a solution, I wonder at the path to reach it and see too many examples of where such a path (or at least a path that aimed at reducing unemployment) has increased inequality. Germany and France have created or tried to create new forms of lesser-paid, less-protected (temporary, unilaterally cancellable), sub-standard (and in some cases, exempt from minimum wage or partly taxpayer-funded) employment contracts, some of them specific to unemployed youngsters.

My *hunch* is, and I may really be off-base here, that in a more equal society it is easier to achieve beneficial regulations, to find a broad consensus or a reasonable majority decision on what constraints to impose on employers and employees, and to debate the trade-offs and likely consequences publicly in a relatively sane environment. Also, to design such regulations in a way that keeps their complexity as low as possible and makes it possible to reform them.[3]

[1] firms extract too much of the fruits of their employees’ work to allow them a decent standard of living => regulate minimum wage
women, non-white people or workers with disabilities are treated like shit by superiors and hiring managers => regulate discrimiation
exploitative business practices towards customers => regulate loan sharks, fair pricing, monopolies…
[2] For example, the unusually (for a EU country) deregulated protection against dismissal in Denmark, which is made up by unemployment payments that really DO allow most workers to sleep without fearing existential ruin and an excellent offer of training and qualification. The smallness of the country helps — whatever course you want to take, it’s a short train ride away.
[3] My 12 years in France, which I left for purely economic reasons, have left me with the conviction that it’s not the payroll tax burden (at least for pink and white collar jobs largely compensated by lower wages) but the rather terrible regulatory thicket that employers may legitimately complain about.

16

Stephen 07.14.12 at 3:35 pm

JQ shares “the intuition that bosses will always be bossy and (at least some) will always try to abuse their position”. Many would agree. But I don’t see how this works against – as he seems to think it does – his other conclusion that “a more equal society would also be one in which there was less need for detailed and prescriptive government interventions”. Surely it is common experience that government interventions are run by government-employed bosses, who are just as likely to be bossy, and to try to abuse their positions in one way or another?

17

James Wimberley 07.14.12 at 3:53 pm

I second Cranky @13. It’s a pity Stiglitz looked at asymmetric information only from the employer’s perspective – will the prospective new employee work hard or shirk? – and didn’t study the asymmetries from the employee’s perspective – are the line managers bullies? Is top management leading the firm over a cliff?
The other aspect, developed at length by CT commenters, is power. The labour contract is not usually an exchange of defined work for money. (Where is is – day labourers in old docks or Andalusian landless peasants – it’s not usually very attractive either. Freelance interpretation (interpreters are paid a lot by the day) is a rare case of well-paid work on this basis.) The normal case is temporary homage: a promise to obey the employer’s commands and those of his deputies, in a necessarily fairly loosely defined area. It’s the Coase impossibility of settling everything by precise contracts that opens the door to the power relationship of master and servant. Note also the origin of this in the patriarchal household of antiquity: the subjection of servant to master starts out the same as that of wife, child or horse.
I can a imagine a subjection of this type that isn’t exploitative: if you are Titian’s apprentice, you put up with the old man’s foibles for a priceless education. But that’s the exception not the rule. It’s a pretty safe inference that all master-servant contracts need protective regulation, full employment or not.

18

djw 07.14.12 at 3:59 pm

The BHL side of the debate wants to believe that a modest tweak to current conditions would provide sufficient independence to make free contracting on equal terms a meaningful concept.

In modest defense of the BHL crowd, or at least some of them: I think they’d concede that a UBI sufficiently generous to accomplish the goals they need it to would be a a change to the status quo considerably more significant than a ‘modest tweak.’

19

shah8 07.14.12 at 4:33 pm

A reply to 14 and 15…

A full employment society is far more likely to have victims able to pay for lawyers, and it’s far bigger pool of victims, which makes it more likely that someone will have had enough, such that emotional and financial fortitude is gathered together for serious legal challenges.

In a sense, absent of a commitment to full employment, I’d go for making important services, such as legal, transportation, telecom, and medical, more widely available.
Remember, part of the New Deal was the revolution in things like rural electricity… I’d lower barriers to entry for people to be able to work for themselves. Inequity is perpetrated by things like the tight association between corporate employment and health care, or decreasing medical school seats, or stupid licensing/zoning barriers setup by people slightly higher up the rung…

Inequity is pretty much the same as it has always been, since the Neolithic Revolution (to the extent there ever was one). Alienate people from needed resources/training/education/security and use that alienation to align their motives to that of the ruling class one way or another. The traditional global regulator has always been voting with feet, withdraw effort to the extent you can, etc, etc, etc… To take it to the real, to the extent that regulations have always mattered, it matters when actual resources and people can be shifted easily, because that develops constituencies. Title IX actually is a pretty good example of how a regulation with some teeth works, and it has clear and defined benefits that a constituency took and ran with as far as it will go. This is a hint that for any regulation to work, they must be power in the hands of the people/aspects that the regulation supposedly supports. We have most of the regulations we need, technically, but here, and in the majority of countries, we have reduced agency to make such regulations meaningful, and the primary means by which our power is reduced, is in restrictions on our ability to associate. No unions or any other association that might diddle with TPTB’s setup. The only good jobs are those that only admits people who are ideologically aligned with the bosses. This is how the South was setup, and the only reason anything changed was because of outmigration by various waves of people upset with the rules of the game in the South. Give people more choices of employment, and you can give people greater ability to use regulations as part of Voice and Loyalty, rather than Exit.

20

Bruce Wilder 07.14.12 at 4:44 pm

“A default employment contract, incorporating prohibitions on sexual harassment, rights to regular breaks and so on, unless these are explicitly contracted out”

Legislative “restrictions on [implicit] employment contracts” essentially take the form of a default contract, combined with institutionalization of the means of arbitrating the terms, implicit or explicit. So, it seems you are asking, if we would still need legislated restrictions, if we had legislated restrictions.

I don’t think this is just an oversight. Libertarian arguments are often structured rhetorically to defend a null case, of no rules. But, there are always rules; there is never a null case of empty “laissez faire”. The question is, what will be the rule.

It is hard to say, because the libertarian typically avoids committing herself — that’s the beauty part, rhetorically, of defending a null; it leaves one very flexible. But, in this case, I think we can safely say that the libertarian affirmative of no legislative restrictions removes almost entirely the appartus of public institutions and standards for arbitrating contracts. (Not what Q assumes, here.) The subordinate employee can negotiate individually with the employer/boss, with the implicit threat of quitting, while facing the implicit threat of being fired, over whether to submit to particular imperatives. Whether it even makes sense for the subordinate and the boss to discuss general parameters of an implicit agreement, or the norms of a culturally mandated standard, when there is no public means of arbitration seems doubtful to me. The employee will have to choose whether to submit to each imperative, and the boss will choose whether to fire the subordinate, in the cases of non-compliance; end of story.

And, yes, libertarians will usually affirm that the criminal law and the law of torts still apply. A subordinate could seek relief from the courts, presumably, in the case of an actual sexual assault or rape, for example, regardless of whether a regulatory agency exists, to handle complaints in a more administrative manner. This changes the ground, again, to the question of whether a regulatory agency with quasi-judicial/administrative procedures is more or less efficient than the traditional judicial system. (Ah, the beauty of arguing from a null.)

21

UserGoogol 07.14.12 at 4:49 pm

William Timberman @ 7: The Capitalist Plenty you’re describing is a kind of full employment. Full employment means everyone who wants a job can find one reasonably promptly. (Although there’s a lot of technical nitpicking to be had regarding the exact definition of most of the words in that sentence.) If life is such a utopia that not very many people need to work, that’s the best kind of full employment.

22

Brian Weatherson 07.14.12 at 4:55 pm

I agree with most of the points made here, but I’m not sure why BHL are supposed to object to point 4. At least as I read John’s post, there’s no restriction of freedom of contract here whatsoever. Anything could be put into a contract, even sexual favours or diaperisation of the workforce.

What we have instead is a perfectly reasonable suggestion for how to interpret contracts, namely that some things are so bad that we shouldn’t assume an employee contracted to them unless there is a very explicit statement saying they did. That seems at least consistent with common law principles of contract interpretation, and the common law as applied to contracts is very libertarian friendly.

Given existing rates of unemployment, and of unemployment support, rules like 4 won’t help a lot. (As John says.) In fact, they may make things worse, since it will become standard procedure that you need to sign a contract including horrific clauses or you’ll starve. But given full employment and welfare support, I think there’s a lot to be said for principles like 4 being part of the solution. Not all of it – I’m no libertarian, especially on safety and harassment issues – but I think a combination of making sure people know what they’re getting in for, plus a real alternative to taking bad options, could solve some of the power imbalances that we’ve been discussing here.

23

mpowell 07.14.12 at 4:56 pm

The dumb thing about this whole argument is that it assumes that you can never have sexual harassment at jobs which pay better than minimum wage or that this could never be a problem worth addressing. Give me a break. Yet another example to file away of the idiocy of libertarianism.

24

Sherri 07.14.12 at 5:21 pm

Everything’s not about money, and money doesn’t solve every problem.

It seems to me that a big problem with such a system is the social norm it sets up. If you’re protected by a generous safety net, and the only constraining force on me is the threat of lawsuit, then I’m going to feel generally okay about pushing that system as far as I can. After all, we’re supposedly “equals,” each able to do the same. In the real world, though, the employee still has more to lose, and a higher burden to overcome to recover damages.

In the presence of government regulation, then I know it’s against the law to push it as far as I can, or might be. There’s a community expectation that I won’t break the law, as opposed to a community expectation that I’ll push hard to get everything I can.

I’d think the current financial crisis would provide an excellent example of this. Government regulation was removed in some cases, weakened dramatically others, not able to keep up with new inventions in finance. People pushed harder and harder against government regulation, and when nothing happened, the community belief in what was wrong shifted to “everybody’s doing it, I’d better do it too.” We can convince ourselves that something isn’t wrong pretty easily when other people are doing it and it’s to our benefit to do it as well.

25

Bruce Wilder 07.14.12 at 5:26 pm

I do not think the form of Quiggin’s “model” does a good job of posing the sharp issues. It is essentially a seeking a balance of supply-and-demand in the labor “market” as an imagined experiment, but he leaves aside the economics of why we organize in hierarchies. This is, after all, a question, not of how things are going in the part of the economy organized primarily by “markets”, however metaphorical; this is a question that arises, because so much of the economy is organized in hierarchies. So, where’s the hierarchy in the hypothetical?

Where are the economic functions of the hierarchy? This, in particular, is going to be sort of critical, as there’s implicitly — or should be — a question of whether regulations burden, if not altogether, kill the golden goose of hierarchy. That is, hierarchy is, presumably, productive (as well as extractive, in the Marxist telling, which I find plausible enough, as far as it goes). The ethical questions are easy, when the problem is something unrelated to the production production, like sexual harassment at the widget factory. It’s harder, when the negotiations are over hours, wages and working conditions, and these are tangled up with the legitimate management of the production process, and the creation of value, there.

In confronting the libertarian argument, as well as exploring the political economy of hierarchy, we are going to have to make use of the concept of economic rents. In the libertarian telling — particularly, that under the influence of the Public Choice tradition of Chicago — “rents” are a pejorative, to be wielded against all public regulation as well creating market power in a bad way. Yet, there are good arguments to the effect that (private, not tax-supported) hierarchies cannot be sustained, without securing economic rents and market power.

I don’t know if one could devise an imagined experiment, which included economic rents sufficient to sustain a hierarchy, and still made the power relation between boss and subordinate, symmetrical. I will say that this could bring into stark relief contrasting models of employee motivation. The marginal product/marginal wage argument, so beloved of those sympathetic to the Laffer curve and similar, is quite different from the natural model of a hierarchy’s contract with subordinates, as a Knightian exchange of risk-bearing capacity. If risk, and the distribution of risk, is the primary motivator, then inframarginal rents are going to figure prominently, and we are no longer in the land of the marginal revolution.

26

Jim Harrison 07.14.12 at 5:48 pm

These discussions always seem to assume that the object of the game is to come up with a set of institutions that will protect human dignity without harming economic efficiency. But we don’t know in advance the effects of a particular rules or arrangements, especially since the cultural setting is always in flux. It makes a huge difference, for example, if bosses have a generally democratic attitude or workers are willing or able to take risks to limit the prerogatives of employers. Meanwhile, the balance of power between labor and capital changes continually. It’s unrealistic to assume that there is a definitive, timeless solution to so dynamic a set of problems. It appears that decent outcomes are only possible granted an ongoing process of redefinition and struggle. As a Maoist might put it, what we have here is a need to properly handle contradictions among the people.

27

William Timberman 07.14.12 at 6:01 pm

UserGoogol @ 20

Well, yes, it’s full employment in the sense that no one need be idle in the way that people were idle in Marx’s reserve army of the unemployed, or in the breadlines of the 1930’s. Still, the problem of resource allocation remains, and the problems that Red Plenty’s central planners found insurmountable have returned with a vengeance.

How do we decide how much of what goods people get to consume if they aren’t working for some sort of monetary compensation? I suppose that if we don’t need but a relatively small number of them to work at the jobs we’re now beginning to fear may be gone forever, we could either assign everyone a sort of base compensation just for being alive, or we could wait and see what the managerial classes are willing to pay for massages, or for psychiatric and legal advice, or sexual services, or for art of various kinds.

Somehow, though, with information wanting to be free and all, and the persistence of the idea that the price of a hunk of gold or an old master should favor the seller, and the price of a chef or a musician should favor the buyer, I just don’t think that price signals, which work more or less well for commodities, will help us much in the proposed new economy where not everyone to is needed to work at traditional jobs, those which, in Marx’s terms, represent the core of socially necessary labor power.

Fifty years ago, the Triple Revolution folks thought that the capitalist leisure classes of our New Jerusalem would be willing to pay as much for poets, ballet dancers, professors of dead languages, philosophers, and sports coaches as the old capitalist classes were then willing to pay for factory managers and union workers. If you look at the people who have money today, though, they seem more likely to pay high wages for financial planners, lawyers and security guards than for symphony orchestras, avant-garde film makers, dog-walkers or nails ladies.

Because of my particular personal history, I’ve spent a lot of time over the years thinking about the politics that would be necessary to make the transition we’re talking about, but not much about the economics. When I read the economists, though, I’m not reassured that they’ve thought any more about the politics than I have about the economics, at least they haven’t come up with any solutions that I find completely persuasive. I keep looking for someone to pull the threads together in a meaningful way, but so far, despite a promising development here or there, I’m still left scratching my head….

28

PQuincy 07.14.12 at 6:42 pm

One to characterize the list of ‘requirements’ for a world in which there would be no need to regulate employment contracts is to say that you’ve left off point #5: “and a pony.”

More seriously, the preconditions seem to me (as someone who looks at history) as turning the entire question into an abstract exercise. Now, the abstract exercise of imagining the social organization of Utopia — ‘no-place’, lest we forget! — has been important to the history of social theory, over and over, so this is not a critique of the exercise, or of the list of requirements as a contribution to the exercise. Still, the contibution’s value would depend, to me, in part on acknowledging its utopian methodology.

As a side-note: excessive abstraction, detachment from a broadly included historical record and experience, and a tendency to imagine wildly unrealistic scenarios as a means of argumentation are frequent, and often debilitating characteristic of libertarian thought in particular (or perhaps, libertarian thought has its own distinctive mode of embodying these flaws, which can certainly be found in other schools, mutatis mutandis, as well).

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aepxc 07.14.12 at 7:32 pm

The problem with purely economic analyses of social relations is that money is only one kind of power. Libertarians implicitly acknowledge this implicitly by insisting on property rights (and, thus, protection from the power of explicit violence or threat thereof), but then they inexplicably conclude that once one cannot be coerced about what one owns, one cannot be further coerced (e.g. when having desperate needs and limited options). It is, thus, perhaps not surprising that many libertarians (especially among the early leading lights) ‘find their faith’ at a time when they are upper middle class or above. Own enough property/have enough money, and you are secure in your position as long as no one violently dispossesses you.

People tend to coerce other people to the degree that they can (this is the thing motivating property rights). Thus, it is the opportunity for coercion, by whatever combination of situations and means imaginable, that must be studied. The author of the post has it spot on – more natural opportunities for coercion, more regulation (the limiting of those opportunities by an even more powerful state); less natural opportunities for coercion, less regulation.

The libertarians are right about one thing – people significantly more empowered than others (e.g. government decision makers) tend to be unable to wield their power with sufficient nuance to maximise either efficiency or justice. What they seem to miss is that it is not the government affiliation that is important, but the state of being significantly more empowered. A flatter society with fewer regulations would produce by far the best possible outcomes. The only question is how can one maintain flatness without regulations – without destroying the flatness by empowering someone to (now pointlessly) maintain the flatness. Communist economies did not fail because they were too equal, they failed because the difference in power between the central planners and the average worker was even greater than between a worker and a CEO.

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Cranky Observer 07.14.12 at 7:34 pm

= = = A flatter society with fewer regulations would produce by far the best possible outcomes. = = =

Assumes facts not in evidence.

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Marahall 07.14.12 at 8:24 pm

@zamphir: You seem to be focused on the HR costs … there’s also specific training (with inevitable foul-ups) and social integration, which cause possibly equality of aggravation. But these costs are borne by other employees and not by the corporation, so the point remains that there is an inescapable inequality: the organization can ignore the human costs to any extent it wants to short of complete dysfunctionality.

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bianca steele 07.14.12 at 8:42 pm

I don’t see how the libertarian perspective, even with the modifications JQ outlines in the post, can work, unless it’s assumed that in a situation of economic equality everyone will pretty much agree. It seems to be able to handle a certain number of minor disagreements: Coke vs. Pepsi, Mac vs. Windows, emacs vs. vi, bigendianism vs. littleendianism. These are known familiarly as “religious” disagreements–because they are fought over so bitterly and for such apparently trivial reasons. They don’t mean anything much and they allow for a certain amount of necessary competition, so they can stay. But are we assuming either that everybody will agree on the more important stuff, or that it will be trivial enough that it can be handled through more or else informal means (even temporary hierarchy)? This seems to assume not only perfect, but perfectly shared, knowledge–or at least shared enough that people can act on it (I suppose)–that is for all practical purposes infallible.

Or is there a way to get around this?

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bianca steele 07.14.12 at 8:56 pm

Meaning, of course, among other things, agreeing whether it’s reasonable to permit bathroom breaks, agreeing whether it’s reasonable to have a “mankiller” job rather than hire that position an assistant, etc., as well as agreeing on how long it takes to do a given task and what a good job doing that task looks like.

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Bill Harshaw 07.14.12 at 8:59 pm

To extend zamfir@1’s comment: doesn’t specialization come into play, so the (large) employer must always be more efficient at finding new employees than the average employee is at finding new jobs? Certainly the structure of modern organizations argues that employers think there are such advantages to specialization. And if there’s no full employment, then the imbalance of market power exists.

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Patrick 07.14.12 at 10:30 pm

If protections are contracted rather than in law, a good amount of the responsibility to pursue breaches falls upon the worker. If we could have some sort of protection where the government would have standing and responsibility to pursue these breaches then your proposed setup might work.

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Maggie 07.14.12 at 10:43 pm

No mere social welfare program (UBI etc) can give the worker “equality” with the owners of capital. It can cushion the blows, and level things out socially among different strata of the working class, so that managers perhaps no longer imagine themselves to be king of the world because the owners give them a few thousand a year more than those they supervise. But that’s all.

Happily though, it’s very easy to permanently square human dignity with economic efficiency. All you have to do is reassign ownership of each firm to its employees, and let them decide among themselves how much hardship they are willing to trade for efficiency. Competition among firms for customers and labor then proceeds as usual, no central planning required, and will as an added bonus reveal which dignity/efficiency balance really does work best. Simple. (And a fair bit more likely than a world in which a representative government simultaneously ratifies both a laissez-faire labor code and a UBI.)

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Kukai 07.14.12 at 11:22 pm

Forgive me if I’m making a stupid noise here… if we are going in search of a fully employment utopia, we’re leaving the sole proprietor out of the picture, who only employs himself. A family operation subsumes into the same model. Schedule C sole proprietorships, 22,659,976 returns filed in 2009. That’s not counting Schedule F farmers.

In the current landscape, the realities of taxation, liability and capitalisation have steered us into the employer-employee model, but it’s not the only route to employment. Many recent immigrants who grow up in that landscape gravitate to sole proprietorship and franchise operations. I cannot quite put my finger on it, but there seems to be some attenuating influence at work which keeps people from striking out in their own, becoming the people who in time might become employers, once they’ve achieved some level of success.

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William Timberman 07.14.12 at 11:53 pm

…but there seems to be some attenuating influence at work…

The availability of capital, perhaps? Immigrant sole proprietorships are often set up with family backing, or are supported by informal lending in the larger immigrant community. This brings its own problems, to be sure, including, in some cases, forms of indentured servitude, but even if it didn’t, it doesn’t seem like a model that could be expanded to include a significantly greater percentage of those who are now employees, at least not under current conditions. Similar caveats apply about increasing the number of self-employed craft workers. Prior long-term community contacts are often essential in getting started.

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Maggie 07.15.12 at 12:18 am

Kukai, the very limited availability of health insurance to anyone other than corporate employees is obviously a factor. So, I think, is the fact that the highest tax bracket kicks in too low – right around where people might otherwise be able to save meaningful start-up capital from their own earnings. My pet conspiracy theory is that this is a deliberately designed barrier to entry to the ownership class.

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Bruce Wilder 07.15.12 at 12:43 am

One reason why I keep tediously harping on the necessity of bringing some concept of the economic reasons for hierarchy into the model is that it will help to reveal the boundary between employment in hierarchically organized production, and employment without.

I think there’s likely to be quite a few “attenuating influences”, which work against people organizing production in various non-hierarchical schemes, but some people will be self-employed, providing some product or service, and some economic activities are more productively and efficiently organized in that way. Which ones? Why?

It may very well be that some of the “attenuating influences” are nefarious, and ought to be the subject of regulation or policy reform. In general, though, I would expect that people are more productive in hierarchies — at least in the actually existing hierarchies organizing activities that can be effectively organized in that way — and the hierarchical firm can pay a risk-adjusted premium vis a vis self-employment, so that those employed in hierarchies earn an economic rent over market self-employment.

So, yes, I am hypothesizing a market-premium paid to work in a bureaucracy, and I suppose some part of this premium could be attributed to some of the burdens and disadvantages (net of advantages) of having someone other than your own lovely self, as a supervisor and boss.

One thing that bothers me about the libertarian economist imagining, though, is that I would expect this economic rent premium for working in a hierarchy to be in the form of an inframarginal hostage, not a marginal bonus. The “Do as the Boss Says, or You’re Fired” contract sort of implies that the whole economic rent premium paid out for working in the bureaucracy on their schedule and according to their rules, is at stake at all times, subject to forfeit, in the event that you are fired or laid off. In the event that you leave your comfy position, you have to fall back on alternatives at a market rate of compensation, not the rate padded out by an economic rent.

This is very different from the marginal incentives faced by the essentially self-employed person, who may be earning an economic rent, from a professional license or a sunk-cost investment in expertise, but is paid in proportion to product or service produced and delivered — something close to piece-work in its operation. The whole economic rent is not at stake, with each sale or invoice. Someone might not be satisfied with a handyman or a lawyer, but cannot deprive him of his whole income, but only one piece of business, even with a bad Yelp review. The boss, in a hierarchy, can say, “Come in this weekend for some unpaid overtime”, with the implied threat of throwing your entire life into turmoil, putting your lifestyle, savings, house, car, marriage in jeopardy; the self-employed person can just reschedule an appointment or two, to clear a Saturday, and no client or customer, in most cases, can veto that choice with a cataclysmic threat. The other side, of course, is that a steady paycheck from a bureaucratic firm or public entity can, and has historically, in the right circumstances, formed the bedrock of a family life.

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Kukai 07.15.12 at 12:51 am

@William Timberman

That’s all true: with the caveat which began this essay: Suppose that the following conditions were met:

Already temp workers are replacing salaried workers with no regular work hours. An indentured servant at least has a contract: the temp worker can be dismissed on a moment’s notice.

The old model of employer and employee is pretty much dead. All that remains is to give it a long overdue burial. The Newspeak of “Right to Work” has severed any ties of loyalty or common purpose which might have bound them together.

What will replace employment as we once understood it? The temp-o-serf is already emerging: Amazon’s Mechanical Turk, ODesk and the like.

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Watson Ladd 07.15.12 at 1:00 am

Kukai, the days when a worker who quit could be sued for the lost work are long since dead and buried. That’s a good thing.

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Bruce Wilder 07.15.12 at 1:06 am

I wouldn’t be so quick to cheer the death of bureaucracy. Much of the modern, developed world was the product of effective bureaucracies, public and private. Maybe Weber was right and they will die with the exhaustion of fossil fuels; that prospect is still a ways off. If America’s slide into third-world status includes disestablishing the bureaucracies, it is because disinvesting from those organizations yields the cash our greedy elites cannot get from honest work.

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Bruce Wilder 07.15.12 at 1:10 am

The Republican candidate for President made a vast fortune from that form of vulture capitalism known as “private equity”, which consists of nothing other than breaking the implied contracts that hold a bureaucratic firm together, taking the money and running.

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Kukai 07.15.12 at 1:12 am

@Bruce Wilder:

The other side, of course, is that a steady paycheck from a bureaucratic firm or public entity can, and has historically, in the right circumstances, formed the bedrock of a family life.

That may have once been true but it is not now. I could trade my software consulting practice for a full-time job at roughly one-third my current net income. There is no premium, only the ignis fatuus of long-term stability.

I began as a consultant. I got married and thought I should get a real job, you know, one with a pay cheque and health insurance and suchlike. I’d wear a good suit, climb the corporate ladder, get an MBA and move into the executive suite: such were my dreams. So I got a job. Two weeks before I was to close on a house on the strength of that job, the owners terminated half the employees and I closed on that house without a job on the advice of my lawyers and parents.

I went back to consulting and never looked back: you can love your kids and your wife and your kitty cat but do not love your job: it will never love you back. You can do what the boss says and still get fired. In the consulting world, we call employees “tree huggers”.

Maggie’s entirely correct in saying the screwed-up model of health insurance keeps many people from striking out on their own. If we wanted more entrepreneurs and sole proprietors, we’d quit punishing them via the tax code. More small businesses would employ more people.

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Bruce Wilder 07.15.12 at 1:32 am

There’s quite a wonderful rant, today, on Naked Capitalism (and on Alternet), on the horror of the modern American bureaucratic corporation.
http://www.nakedcapitalism.com/2012/07/fifty-shades-of-capitalism-pain-and-bondage-in-the-american-workplace.html

Maggie also thinks the highest tax bracket “kicks in too low”, while I think the key problems are that the highest income tax bracket isn’t 70+% and the corporate tax rate isn’t 50% and collectable.

We’re letting an elite of short-time sociopaths, in finance and the executive suite and the lobbies of Congress, destroy the society and the global economy, because they can take home millions, and tens of millions and hundreds of millions, from positions of power. You can be as smug as you want, but they’re coming for you, too.

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JP Stormcrow 07.15.12 at 1:33 am

Kukai,
I’d be interested in knowing the primary organizational characteristics of the entities for whom you do the bulk of your consulting work.

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William Timberman 07.15.12 at 1:36 am

Kukai, the thing at issue here for me, is whether or not we can — as it seems to some extent we must — separate the right to live from the necessity to work for a wage. What we’re facing, with a surplus of labor, indeed what looks like an inevitable long-term equilibrium well short of full employment, is something very like Marx’s reserve army of the unemployed, with precisely the effect on wages and working conditions which you and others have implied. This, to put it mildly, sucks.

Your proposed amelioration may not be as much of one as you suppose, not only for the reasons I’ve mentioned, but also because of something dsquared said many threads ago, in the seminar on David Graeber’s Debt. To paraphrase what I believe he was getting at, the rationalization of debt, and by extension of all economic relationships, and their separation from cultural origins, qua Graeber, in family, tribe, or custom-generated networks of incompletely specified obligations, is precisely that it freed the slaves, i.e. it freed those who felt themselves to been enslaved to that family, tribe or immemorial set of customs.

You might say that this emancipation is, or was, the essence of modernity as understood by the optimists of the Twentieth Century, and that immigrant sole proprietors of the kind you find in urban areas in the US and Europe are somewhat atavistic in the light of that understanding. In any event, they don’t look like a solution to the problem of a lousy outlook for labor, although they may certainly provide insights into what may be a solution, as Graeber has suggested, although certainly I think that dsquared’s caveat must also be taken into account as well.

To sum up, we thought we were about to become as free and universally prosperous as Francis Fukuyama, among others, was so fond of trumpeting to the world a decade ago, but now we find to our shock and dismay that capitalism may be running out of gas, and that we may instead find ourselves back in the swamp with Marx, if not Malthus. It’s a chilling thought, one which most Americans, if I read the polls correctly, are running away from as fast as the stunted legs of their economic fantasies will carry them.

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William Timberman 07.15.12 at 1:57 am

Kukai, as for your paean to software consulting, which crossed my previous post, I just wonder if you realize what the ratio of software consultants to nails ladies is, and how horribly permanent that ratio is likely to be. Your advice seems rather like Cristiano Ronaldo telling us that if prosperity is what we want, we should all become football players. In my view, Bruce Wilder is right. When they’re done with the rest of us, they’ll be coming for you as well.

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Kukai 07.15.12 at 1:57 am

My speciality is SOA architecture, machine intelligence and applications. Working forward over twenty years, there were two commodities trading concerns, a Japanese robotics firm, a retailer, a global bank, a logistics firm, a pharmaceutical firm, four franchises of a health insurance company and the central association, three government agencies and a process chemistry laboratory.

But SOA isn’t really about an internal process: how these corporations are organised is almost meaningless to me. I build external interfaces and the supporting infrastructure for them. I work at both ends of the wire, often spending time with my clients’ clients, forging up interchange mechanisms. I interact mostly with the database analysts and a handful of the client’s coders.

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JP Stormcrow 07.15.12 at 2:08 am

how these corporations are organised is almost meaningless to me.

No worries, you’re answer contains what I was looking for.

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Kukai 07.15.12 at 2:23 am

We must earn money, this much is true. You’re quite right, insofar as we cannot expect the existing employers to find a need for more worker bees in the cubicle hives. While their services were needed, they drove to work in their little cars and got mortgages on houses they couldn’t afford within driving range of those little cars and paid too much for them because all the other worker bees had created a demand for them and those mortgages were packaged and sold and options were created on those packages and well… we know how this run-on sentence ended.

And yes, it sucked. It sucked that those people got screwed by an incestuous cabal of investment banks secretly issuing insurance policies.

Amelioration? Far from it, I have no good solutions. I observe the old model of employer and employee is dead. I foresaw this decades ago, well, not so much foresaw it but had it pushed in my face, all my earnest money on the table, my first kid on the way — all these earnest little people, workin’ away in their cubicles, running up their credit cards, borrowing themselves into oblivion. They were living in a dream world.

Sole proprietorship is a horrid way to live in the USA. The risks are obvious and the payoff uncertain. My tax burden is awful. My insurance payments are killing me. I wish I could employ a few people and sometimes I do for a gig here and there, people I know and trust. But they’re all consultants, too. None of us trust our clients and all of us live like cats in a room full of rocking chairs.

Not only has capitalism run out of gas, it’s quickly running out of further targets to exploit. How much more timber is left, petroleum, bauxite, fish in the sea. The Tower of Babel we’ve erected will eventually be abandoned and we shall all walk away, tools in hand, leaving a set of splendid ruins behind us.

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Maggie 07.15.12 at 3:59 am

Bruce, I can agree with you that the rate in the uppermost tax bracket is too low *and* find it suspicious that that bracket reaches all the way down into the upper middle class. Taxing orthodontists at 70% would hardly fix anything.

And of course the real problem is that capital gains are taxed more lightly than labor.

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William Timberman 07.15.12 at 4:05 am

Kukai, namaste. It seems we share a perspective despite our different personal histories.

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Salient 07.15.12 at 4:15 am

the cost to a worker of finding a new job is no greater than the cost to an employer of hiring a replacement

This is not a possible state to achieve. Civil discussion requested, the least I can do is be patient and repeat the argument we’ve already had to spin through (for example here, paragraph 18) about why achieving this is inherently impossible. Or maybe just one reason.

tl;dr version: Given N people working in a social environment under the boss, firing a person costs the boss (and their underlings) 1 known person, and leaving the job costs the employee N known persons. You can’t balance that social asymmetry with money, and I think that we should find it disingenuous and even morally offensive for someone to argue we can.

longer version: Part of your employment contract is, inherently, become a part of this community of workers. Welcome to the team. The loss of that whole community can only be equated to the loss of one community member, under a strange and antisocial assumption that 1 person losing N people in their life is equivalent to N people losing 1 person in their life. The former is universally recognized as far more traumatic than the latter in pretty much every other context. Moving to a new place and trying to begin integrating oneself into a new work community is far more drastic a life change than losing a coworker who moved to another business. (This obviously generalizes beyond work communities.)

The antisocial assumption could be summarized as hardly anybody likes their coworkers enough to suffer a meaningful loss of community when fired. I imagine the extended version is something like well you didn’t get to choose your coworkers, so you can’t reasonably claim to have developed a social relationship with them that we should bother to assign value when assessing bargaining-power asymmetries. After all, it’s equally likely you disliked your coworkers and therefore you *benefit* socially from getting fired!

The “1 loses N = N lose 1″ equivocation’s even stranger when you consider the boss is not exactly required to solicit opinions from the other N-2 underlings, to see if everyone’s okay with losing their coworker. So when a boss fires an underling, it’s really 1 person losing 1 community member, someone they might not have been especially fond of anyway (bosses don’t tend to fire their favorite work community members). So socially speaking, a boss who is firing an employee is not losing, and might be benefiting from, the consequent change in community. But when an underling quits a job, they lose their whole work community, and their coworkers lose a potentially valued community member.

There’s no amount of money that can compensate you for losing membership in a whole community, and there’s no state-providing benefits package that can compensate you in a fulfilling and satisfactory way for the loss of what is probably your largest acquaintance network.

I suppose someone could argue that if coworker friendships are really important to the employee, then well tough, they should immediately put the extra effort into sustaining those relationships entirely on nonwork time now, and failure to do so (including possibly the failure to convince all of one’s most-liked former coworkers to invest enough nonwork time in socializing with you) just demonstrates the fired employee didn’t actually value those relationships, so they have no right to complain. Or one could argue that if coworker friendships are really important to the employee, well shucks can’t they just go find another job and find new friendships there, because possibly finding 12 brand new potential acquaintances totally makes up for losing 12 old acquaintances, amirite?

But I know you wouldn’t make the non-sarcastic versions of either of those arguments. What I do sorta want to convince you of, is that mocking (rather than civil discussion in which we adopt the requisite hypotheses and take the conclusions seriously) is what’s called for here.

I can provide like ten more reasons, but do we really need them? Eh, here’s one more. Consider a world in which the UBI is exactly equal to anybody’s wage + benefits. Total equalization. There is zero financial incentive to work. If we lived in that society, lots of us would still work. Why?

* You like what you do

* You feel your work is a valuable contribution to society

* You like the people you collaborate with and work with

* You’re impressed with what your work community is able to do, and proud to be a part of it

Probably there’s other reasons, quite a lot of which are social (including accomplishment reasons, insofar as working with others is necessary to accomplish your work goals). That suggests there is an overwhelming power asymmetry (I can fire you and push you out of this community; you can leave) that would be present even in the most extremely artificially financially equalized scenario. So anyone arguing that UBI is anywhere close to sufficient equalization of bargaining power, is reduced to arguing that most people don’t have a positive and meaningful enough social relationship with their coworkers to make this an issue.

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John Quiggin 07.15.12 at 5:40 am

As I implied, Salient, I haven’t been active in the debate so far, so thanks for restating your position on this.

With this kind of claim, it seems natural to start with introspection. What you say is broadly true of my current job at UQ, but that’s something of a special case in my life, and I expect atypical in general. I moved here 10 years ago, because I wanted to live in Brisbane, then persuaded my co-authors/friends to move here as well. So, I’d be very reluctant to leave. Even so, in the event of a serious dispute with management, I’d be prepared to move to the (somewhat less appealing) university down the river.

In all the previous job moves I’ve made (promoted to a different section of a large organization, resigned to take up a new job, fired, resigned rather than be pushed out) I can’t say the loss of the work ‘community’ was a central issue for me, let alone the kind of pearl beyond price you are suggesting. There were people I got on well with and people I didn’t but there was nothing resembling an organic community outside work, and no particular problem in keeping contact with friends I’d made in jobs I’d left.

Maybe I’m atypical – I couldn’t see much discussion of this point in the thread to which you’ve linked, so it’s not clear to me either way. What do other people think about this? Is the loss of the work community such a threat as to make any notion of symmetry between quits and fires nonsensical?

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Chris Bertram 07.15.12 at 7:27 am

I’d still want to add to your fourth point, John, a legal prohibition on discrimination in employment on grounds of sex, race, religious affiliation, or sexual orientation, except in those rare case where, say, being female, is a clear requirement of the job.

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Tim Worstall 07.15.12 at 7:28 am

“Not only has capitalism run out of gas, it’s quickly running out of further targets to exploit. How much more timber is left, petroleum, bauxite, fish in the sea.”

Speaking specifically to bauxite, in reserves (ie, what we know is there, where it is and can extract at current technologies and prices) about 300 years at current extraction rates.

Not one of the great immediate resource problems really.

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aepxc 07.15.12 at 7:43 am

@Cranky Observer, one has to reason before one can experiment, and to experiment before one can have ‘facts in evidence’. From what I know, what I was describing has never been tried and/or is not stable enough to work over the long term (the latter being my main point).

Or can you think of a counter-example?

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Salient 07.15.12 at 9:20 am

Hm, for some reason I arbitrarily restated the first point on my earlier list (stolen from CB et al’s OP), rather than sharing the ones I found most compelling.

Let me fix that by designating the item described above as ‘social asymmetry’ and then listing a couple other problems.

* Information asymmetry. When you take a job, it’s often completely unclear to you what will be expected of you, but quite clear to the employer or supervisor what will be expected of you. Any contract with that steep an information disparity is an alarming default. Except in cases where there’s a literal contract of employment, the job applicant will be signing a blank contract, going by some vision in their head about what job responsibilities are. (This vision is usually quite accurate for non-shitty jobs, but often inaccurate for shitty ones; it’s the latter we care about most.) On the other hand, most employers know exactly what pay and benefits they will be providing. So basically the employer has free reign to revise the contract terms on the fly, but the employee does not. Quite a lot of CB et alia’s original complaint rests on this: all the awful working conditions described were not clarified before the hire.

* Forfeiture asymmetry [weak]. This one’s hard to pin down. Even setting aside the information disparity, in an employment contract between boss and employee, we see empirically that an employee is automatically explicitly forfeiting many of their basic rights (the right to not be required to do stuff), and the employer is forfeiting none of their basic rights (having and/or spending money to hire people is not a basic right). Employers are buying off workers’ rights with their money; in this relationship, the boss/company tells the worker what to do. This seems to me to be a priori alarming as a default state of affairs, provided one values human rights much much more than business-entity rights.

* Exit/punishment asymmetry. Your boss can gain leverage in a dispute by threatening to send you packing. You can gain leverage in a dispute by threatening to… send yourself packing.

Quitting usually won’t cause the boss to lose their job or even suffer professional consequences. You don’t have any authority or ability to send the boss packing, so quitting won’t induce in the boss any desire to perform their administrative and managerial tasks differently. So your action won’t protect the next person to take the job.

* Consequence asymmetry. I would prefer to resolve mistreatment of myself in a way that helps prevent any similar subsequent mistreatment of anyone else. Exit/quitting is memoryless, so no environmental changes are made, and future employees won’t know what has happened previously (unless they happen to look for complaints about that company, and find your blog). On the other hand, a boss can share the story of a fired employees’ misdeeds with all future coworkers (and can embellish them).

* Ratchet asymmetry. Quitting your job in response to less severe forms of abuse or ill treatment would feel stupid, so if all you’ve got is threat of exit then you’re probably gonna “consent” to all kinds of little shit that you shouldn’t have to put up with. This connects to information asymmetry: If you knew up front that you’d have to endure A + B + C + D + E + F + G, you might be horrified and withdraw your job application, but if the A, + B, + C… are introduced over time, you might endure each additional restriction and get used to it, and might eventually end up putting up with A + B + C + D + E + F + G + H + I + J + K.

If you *do* quit, people judging you will only look at the most recent imposition. “Wait, you seriously quit because of K? Doesn’t that seem a little drastic? Sure, K is bothersome, but it’s not THAT bothersome” And if you *do* try to explain about A + B + C + …, they might think you’re a sour and bitchy person who just complains about all kinds of things for no good reason.

Exiting the contract is just too crude a mechanism (literally binary) for protecting your rights. Combined with the information asymmetry, you find yourself stuck putting up with a lot of unexpected mild mistreatment (or worse). Combined with the transition asymmetry, you realize that if you do quit, your decision could reduce your chances of finding a better job.

* Fear asymmetry. Treating quitting like it’s casual would misrepresent the experience of quitting. Quitting a job is inherently a scary life decision, even with the amelioration of basic needs that a strong UBI provides. It’s scary because you don’t know what you’ll do. Most people get some feelings of comfort and stability from having a steady job. Giving that up is scary.

On the other hand, firing someone is not inherently a scary life decision. It can be painful to do, especially if you really like the fired employee, but it doesn’t cause fear or life anxiety. Most of the time you’ll be rid of a disliked/bad underling, and your life will go on the same, with little to no ripple effect.

…There’s more, surely, but I’ve run out of steam.

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John Quiggin 07.15.12 at 9:41 am

Chris, I agree as regards discrimination. I don’t see any reason why, even in an economically egalitarian society, this wouldn’t happen. And even if the setup was such that discrimination didn’t cause substantial economic harm it should still be illegal.

Salient, there’s a big problem with the identity of the boss. On the one hand, the boss is the individual manager, who is mostly likely to abuse their position in the ways we’ve discussed, but also bears a bunch of personal costs if an employee leaves and can’t be replaced. On the other hand, there are the owners of capital, who deal in an impersonal way with an abstract labor force. They are presumably driven by profit, so my full employment condition has a straightforward interpretation – the costs of a separation to them are about equal to the costs borne by the worker.

As regards your new points, again, my experience suggests otherwise. Because academics are very specialised, it’s quite common (though not the norm) for the balance of supply and demand to be in favor of the worker. In these circumstances, it’s routine and unstigmatised to get an outside offer, with the sole purpose of forcing your current employer to match it. The outside party is usually happy to go along,, in full knowledge of what is happening, partly as a low-cost favor to a colleague, and partly in the hope that the current employer will refuse, and that the threat will be carried through.

Under the conditions of the last 30 years or so, that’s highly atypical. But that’s just to say that it’s a long time since we had anything like full employment (as opposed to NAIRU).

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sanbikinoraion 07.15.12 at 9:52 am

Out of five jobs now, I’ve left two where I was definitely integrated into a community work environment that I missed after I was gone. Those networks give you access not just to friendships but practical advice like “where can I get my car serviced? Does anyone have a spare kettle lead?” — stepping into ready-made communities can really make your life easier, and better.

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tomslee 07.15.12 at 12:07 pm

JQ: Is the loss of the work community such a threat as to make any notion of symmetry between quits and fires nonsensical?

I suspect this depends on industry. As Salient quotes in #55, “Welcome to the team”. That is, employers in white-collar industries where detailed supervision is impossible (certainly the computer software industry where I am) heavily promote “the team” as motivator, and promise that membership in it has value. How often that pans out is a matter of opinion, but employers in many industries do have a strong incentive to promote team identification as a mechanism to overcome principal agent problems.

Plus, sanbikinoraion’s pragmatic observations ring true to me.

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Kukai 07.15.12 at 3:28 pm

@Salient: you might be surprised how often an employer will hire on someone to fill a position, only to find the employee is far better utilised in other capacities. An employer has a perceived need, true, but it’s curious how often employees write their own stories within the context of the larger picture of the company, especially when the employee demonstrates initiative in that context.

As for employee abuse, I can’t speak to every sort of abuse but I can speak to the problems of outsourcing and temp-ing. The usual abuser in these situations is the middleman. The middleman doesn’t work for the employers. Overseas, he’s often the beneficiary of some government nepotism: this is especially true in China, where the grown children of government officials both leech and serve as proxies for their corrupt parents.

Thus an otherwise well-meaning employer such as Apple, who wouldn’t dream of abusing their talent in the USA, is simplistically lumped in with the actual abuser, a third party such as Foxconn, itself a subsidiary of Hon Hai. Happens everywhere, really: bullies and abusers use power granted to them by others to do their dirty work.

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tomslee 07.15.12 at 3:37 pm

an otherwise well-meaning employer such as Apple, who wouldn’t dream of abusing their talent in the USA, is simplistically lumped in with the actual abuser

Lumping Apple in with “the actual abuser” is less simplistic than attributing human qualities like “well-meaning” to a firm.

Related: Amazon “wouldn’t dream of abusing” its software architects but its treatment of warehouse employees qualifies as abuse even though both are “talent in the USA”.

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Kukai 07.15.12 at 4:25 pm

I am afraid my feeble attempt at arch humour failed. It’s a pity a sarcasm hasn’t been implemented in HTML.

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tomslee 07.15.12 at 4:33 pm

Oops. Sorry I missed that.

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dpg 07.15.12 at 4:34 pm

First of all, let me say that aepxc makes an important point regarding the substitution of private power for state power. There appears to be little difference between conditions of employment imposed by contract or custom and regulations imposed by government, with the exception that government regulation would necessarily lead to some level of national uniformity in the labor relationship. Such uniformity might arguably improve overall welfare by reducing both information and compliance costs.
Also, just a note to further roil the waters. How does the BHL position differ from the Marxist maxim “From each according to his ability, to each according to his need”. It seems to me that ensuring a minimum wage (or its alternative, a universal basic income) that meets all basic needs would necessarily satisfy the second clause. And doesn’t the unconstrained right of an employer to exploit (not in any perjorative sense) the ability of his workforce and claim rent thereon, comport with the first clause?

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Bruce Wilder 07.15.12 at 4:35 pm

Bringing us back to the boundary between independent self-employment and employment within a bureaucracy, the emergence of a “middleman” raises some interesting questions about what the structures are, which mediate the boundary, and to what effect.

Gateway rents, particularly in distribution, are very common, and are often wielded ruthlessly against those — like independent small business people — who cannot easily coordinate with one another to negotiate effectively, or are prevented by government policies from using the leverage they do have. I wonder whether, when one abstracts away from these kinds of emergent structures, when thinking about the effects of a putative full-employment economy on the balance of bargaining power, if it is possible that we are just fooling ourselves about the limits structure places on the achieveability of a full-employment economy. If income is channelled or siphoned away systematically, by structural means, which contribute little or nothing to increased production, is full-employment in any meaningful sense, possible?

It can be very difficult, for example, to place a product in a chain store, like a supermarket, and a small business seeking to do so, may well encounter a number of barriers, bureaucratic and otherwise, one of which may well be a “broker” expecting a very large share of the profit.

Hiring a professional service provider for a large bureaucracy can also involve going through a middleman, who will take a outsized share of the budgeted resources. Outsourcing becomes a lucrative source of income for the close relatives and friends of upper-middle management. It could be true, when hiring an architect for a public project, or janitors to clean a large building overnight.

Never mind such abstractions as NAIRU, if the government’s fiscal policy — as Obama’s seems to be; witness the ill-named JOBS bill — is aimed at blowing funds through such channels, can meaningful full-employment ever be achieved?

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Zamfir 07.15.12 at 5:31 pm

On the loss of community: its not even necessary that you deeply like this community, just that it helps to make you productive. A good working organization is more than the sum of its parts.

You, your coworkers and also your bosses helped to create that environment and usually share in the results. But once you quit, the bosses get to keep the organization and you can’t take your share with you.

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tempo 07.15.12 at 5:51 pm

Even if conditions in the OP are met I suggest the following mutuality rule should be implemented through regulation in a just society:

You (the boss) are only permitted to contract away bathroom breaks for your would be employees if you yourself, and your parents too, submit to a ban of going to the bathroom for the same duration of time each workday.

Should you, or one of your parents, break that rule you will be let go from the firm and from the economic resources you have up until then had control over. In short you will suffer at least as bad consequences as the average employee would.

Could any boss have any complaint against that rule?

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bianca steele 07.15.12 at 6:22 pm

kukai @ 64
You mean outsourcing but not “temping,” right? Temporary employees and temporary contractors are managed onsite by the same managers who manage “fulltime” employees. The agency only handles tax stuff, generally for contractors who aren’t self-incorporated.

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bianca steele 07.15.12 at 6:24 pm

Alas, long gone are the days when a skilled contractor could make the same or a higher hourly wage in the summer as a Schedule C sole proprietor, put 13% yearly into an IRA, and ski in the winters.

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Bruce Wilder 07.15.12 at 6:31 pm

Zamfir @ 69

You mean productivity is NOT entirely attributable to the “skills” an individual brings with her to the job?

Could it be libertarian and neoliberal economists are deliberately framing the public discourse in a way that prevents reference to anything that actually matters?

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Salient 07.15.12 at 6:35 pm

Salient, there’s a big problem with the identity of the boss.

Agreed, I made the exact equivocation mistake upthread here I had noticed and mentioned a few threads back.

And whatever points I marshal in support of my opposition, ultimately I’m motivated by something more visceral. A world of bosses and underlings is a world in which there are the rulers and the ruled, explicitly and permanently. The latter are only protected by threat of exit, and the former also have the protection inherently granted by their authority.

It’s not like the boss’s only negotiating chip is that they can leave. They can for example tell an employee, “If you quit, I’m going to assign all of your work to your coworkers, and tell them you were so sick of them that you wanted to leave them with more to do.” Or they can say, “your daughter looks up to you because you’re here. What are you going to do, lose her respect over something as minor as this?” (Both of these are paraphrases of things I’ve heard bosses say, FWIW.) And if the employee finds that kind of duress unsatisfactory, their only recourse is… to leave. That is, I think, just an awful way to organize society, even if we can mitigate the asymmetry.

Bosses have sufficient authority to make the costs and consequences of exit almost arbitrarily high. They can notify other companies that might hire you that you have recklessly left the job. They can call your family and inform them that you’ve decided to leave.

But really, the problem is not the old boss who fired you, it’s the new boss who might hire you. Who is that boss more likely to grant credence to and sympathize with, the old boss or the potential employee? Whose account of the workplace and the reasons for leaving will resonate and matter? Bosses don’t like to hire people who have a history of disputes with their bosses, so anyone applying for a job post-quitting has an additional obstacle to overcome. When a boss unreasonably fires someone, there’s no damage to the boss’s career trajectory. Even if they have a harder time hiring someone, they still have their same position and salary. When an underling unreasonably quits, they damage their résumé for life, and they forfeit any benefits they were getting for longevity (if you quit Company X after getting 8 annual raises, Company Y is not going to spot you those raises).

But notice, everything I have said and am saying and will say is built on the basic axiomatic principle that the workers I’m thinking about provide no value whatsoever to their employer. Of course what I mean is, unskilled labor, where personal individual characteristics and skills/knowledge are mostly irrelevant, and workers are basically fungible.

I guess I just don’t see any point in organizing our terms of social contract around people who have substantial bargaining power, because they provide unique value as an individual to the business that hires them. What we’re worried about, or what we ought to be exclusively worried about, are cases where the employee is in the weakest possible position, because if we’re examining the usefulness of threat of exit, we should be focused on the people whose threat of exit is least powerful, not most powerful. That’s where petty tyrant abuse is most likely to occur.

And I get that we’re envisioning a society in which nobody would work the shitty job because the UBI is so high that the meager amount of extra pay from Amazon warehouse work isn’t worth it.

The problem with this is, it’s saying, these jobs and these companies won’t exist. If we’re okay with that as an inevitable consequence of our social contract regime, why go through all these motions? If we think we are going to make it completely impossible for a company to behave badly in these ways, why not just ban their bad behavior explicitly and be done with it? It’s not like companies are like a person in a therapist’s office, needing to figure out what changes are necessary on their own in order to make them stick. A company left to its own devices will spend more time obfuscating apparent work conditions than improving them. A company left to its own devices will put a lot of effort into pressuring people to believe the work conditions really are fair and reasonable.

Consider the pressure put on the warehouse employees, that their pace is strictly necessary for the job to exist at all, and that all possible safety measures are already being taken. Sure, some folks will say “they’re lying; fuck this” and leave. But plenty of others will not understand that if they withhold their labor for another six months the work conditions will approve. They’ll take the job as-is, not because it’s fairly compensated, because their kid wants a scooter or because they’re willing to endure some awful crap to make sure their kid can afford to attend College X.

People are motivate to tolerate a lot of unfairness in order to provide their dependents and loved ones with extra things. The market won’t be responsive to unnecessarily painful working conditions because this motivation gives people a fairly high pain tolerance, so even if it’s only compensated at 110% of UBI they’ll endure a lot of unnecessary pain while fantasizing about how happy that extra bit of money will make their kid or their elderly parent.

Also, people don’t like being called unreasonable brats, and workers will endure quite a lot of shitty work conditions in order to not be labeled a bad person (whiny, spastic, bitchy, whatever). We seek social approval and approval, not only from fellow coworkers (who seem willing to tolerate the work conditions by virtue of being here), but also from the authorities in our lives, and having a boss think well of us is meaningful enough that we may be willing to endure some unnecessary suffering in order. We might even become proud of how much we put up with every day, and look down on people who are less willing to endure it. So we feel all kinds of pressure to be a good compliant worker. Whereas petty tyrant bosses are not going to feel motivated to become less tyrannous if they discover they’re getting called an unreasonable asshole behind their back. Their self-perceived social role is different; they don’t seek or want employees’ approval the way most employees want their boss’s approval.

You can’t eliminate these problems with a free money bazooka. The whole point of a UBI is to nearly eliminate the financial/survival/comfort incentive for working, so that the social and personal-identity incentives for working dominate each person’s choice of work. If the social incentives aren’t guaranteed to push heavily in the direction of better work conditions, we should rethink why we’re doing what we’re doing.

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chris 07.15.12 at 6:39 pm

Fear asymmetry. Treating quitting like it’s casual would misrepresent the experience of quitting. Quitting a job is inherently a scary life decision, even with the amelioration of basic needs that a strong UBI provides. It’s scary because you don’t know what you’ll do.

This point I disagree with. None of us have ever lived in a society with a strong enough UBI to make quitting non-terrifying, but if you look at the closest equivalent, people who have enough independent personal wealth to make quitting non-terrifying, they really aren’t terrified of it (and may even have trouble understanding why the commoners *are* — Yglesias, for example).

So theoretically in a society where the UBI made everyone’s potential nonworking fallback option as good as Matt Yglesias’s nonworking fallback option, we should probably expect that most people wouldn’t be terrified of being fired, even though it might annoy them.

P.S. If the default terms of employment were reasonably worker-friendly and could only be overridden by explicit written contracts, I would expect a lot more people to have explicit written contracts. And great strides would be made in the field of contract obfuscation, to ensure that as few as possible understood their employment contracts. Hayek wasn’t wrong about the value of localized knowledge, but he made insufficient allowances for the opportunity to weaponize it. Even having decisions made by a remote and ill-informed bureaucrat may be preferable than having them made by your superbly well informed counterparty, if your interests are adverse to theirs.

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Salient 07.15.12 at 6:48 pm

Phooey, my comment got stuck in auto-moderation; if someone has a moment to free it I’d appreciate it (with apologies in advance to JQ for my being so long winded, and please don’t feel obligated to read and reply to it since it’s probably mostly just me repeating what I already said).

Salient: you might be surprised how often an employer will hire on someone to fill a position, only to find the employee is far better utilised in other capacities. An employer has a perceived need, true, but it’s curious how often employees write their own stories within the context of the larger picture of the company, especially when the employee demonstrates initiative in that context.

I think in a lot of these cases the employee will also like the prospect of switching to a new position that better suits them. But this situation only obtains for a minority of employees, and I think we should be aiming to improve the general case. Bettering working conditions across the board won’t interrupt this storywriting process, I don’t think.

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Zamfir 07.15.12 at 7:51 pm

@Chris, I don’t think a UBI can be high enough to be comparable to being independently wealthy, not even in a vastly different economy. Because independent wealth is a highly relative thing. The comfort doesnt come from knowing that you could live without work, but also from knowing that you would still have a respectable social position if you gave up paid work. But money can only buy you that if you have more than others, which a UBI can of course never reach.

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Benquo 07.15.12 at 8:24 pm

If you’re already stipulating a universal basic income AND full employment, why the additional requirement of a minimum wage? That seems like exactly the kind of labor market regulation that UBI+full employment would obviate.

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John Quiggin 07.15.12 at 8:25 pm

@Salient I’m not quite old enough to have been a worker in an economy with full employment, but I’m not far short of it. In Australia in the 1960s, there were regularly more vacancies than workers to fill them. My recollection is that, while older workers who remembered the Depression were still pretty cautious about quitting jobs, younger workers weren’t, and (crucially to Salient’s argument) they had no trouble finding new jobs – employers couldn’t pick and choose, let alone reject people just because they had quit their last job. Once behavior of any kind becomes common enough, it ceases to be stigmatized – I made this point in relation to bankruptcy in the great Graeber event.

Reading your comments, I have two contradictory thoughts
(a) On the one hand, as I said in the OP, I have some sympathy with the intuition that bosses will always be bossy and that some will abuse that power
(b) On the other hand, you don’t really take the idea of full employment seriously. You just seem to deny that, as I’ve defined it, it can never exist, at least for workers in general. That might be right, but you haven’t made the case – you’ve just described how labor markets work in an economy that hasn’t been at full employment for decades (except maybe for a few intervals too brief to change attitudes).

On information asymmetry, I agree, which is why I proposed a default contract as one of the conditions.

@Tom Slee and teams, it seems to me that if employers need workers to work as a team in order for them to be productive, it’s going to be hard for them to also use arbitrary firing as a threat to keep individuals in line. The adverse effects of firings on the morale of remaining employees, even when ‘justified’ by economic efficiency are well documented.

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Zamfir 07.15.12 at 8:40 pm

@jq, would you have any idea how sexual intimidation at work changed since those years? I can see the argument that a tight worker market would be a good protection against this, while my gut feeling is skeptical. But i am too young to have personal experience with a noticably different time.

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John David Galt 07.15.12 at 9:02 pm

The only way the conditions in the hypothetical could exist for very long is if someone invents the technology of Stephenson’s The Diamond Age. Otherwise everyone simply retires and goes on the dole, and you’re living in Spain after Columbus, all over again.

I think it is possible to enforce better-than-market-clearing work conditions on employers, by implementing a system like Germany’s unemployment system. But that system’s long-term viability is in doubt, too, and would be so even without the present Greek crisis as a millstone around Germany’s neck.

The real difficulty in sustaining a system like Germany’s is that its workers have to compete with those in poor countries. If we’re lucky, in another century or two the leaders of all or most of the poor countries will get out of the way and let their people get rich, and then maybe it’ll be sustainable for us to offer workers the German level of protection. Until then, any country that tries it only dooms its economy and screws its people.

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Kukai 07.15.12 at 9:12 pm

@bianca steele

I do mean both. Half the time, I come in wearing someone else’s flag: IBM, CSC, SAIC, Northrop Grumman. In these circumstances, I am not directly managed by an employee but by another contracting layer above me and if an actual employee appears at the meetings, it’s rare, and he’s certainly not running those meetings and certainly not those projects. When IBM or CSC comes in, they take over everything. And though they’ll send some of that work to India, outsourcing isn’t a synonym for exporting jobs.

And when they do, the client simply gets rid of their own people. I found a few employees who hadn’t actually been terminated at my last engagement. They supported the old system while we built the new one. Quite a few of those who hadn’t been fired outright had simply left.

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John Quiggin 07.15.12 at 9:28 pm

@Zamfir That was a long time ago, in a very different world as far as gender relationships were concerned, and when women’s participation in the workforce was very much more limited. No one talked about sexual harassment, but I’m sure it happened.

I don’t think intimidation and bullying (sexual and otherwise) are necessarily based on the threat ‘go along with it or I’ll fire you’. A lot of the time, it’s a matter of bosses or co-workers exploiting the dynamics of authority. That can happen under any labour market conditions, which is why it should be prohibited by default.

The question I raised is whether, under conditions of full employment, it would be necessary to stop firms and workers explicitly contracting out of some conditions. I doubt that firms, would, even if they could, write explicit contracts allowing sexual harassment or bullying by their managers, or that workers would take them under the conditions I’ve described. So, I think the more relevant questions relate to things like meal and bathroom breaks – do these rights need legal protection, or would a strong labour market be enough to ensure that they were protected, except in some special cases where employers were willing to pay a high enough premium to induce workers to forgo or limit.

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bianca steele 07.15.12 at 9:29 pm

Kukai,
Okay, by “temping” I mean hiring individuals to work on-site in the group, though often they are called “contractors” or “consultants.” This may be to get expertise that it isn’t worth hiring long-term, or it may be to have an extra hand for a short period of time, perhaps to get expertise from someone who doesn’t want to work longterm and attend meetings and such, perhaps to do work that the permanent employees prefer not to do, perhaps just to fill a gap. I’ve heard of large numbers of “contractors” being hired and basically working onsite (IBM notably used to do this, where only the managers are longterm employees), but from the buyer’s perspective, in my experience, what you describe is people working for a vendor, not “temps.” I can see that IT is probably different from those arrangements, though.

The reason for hiring the agency isn’t to get their expertise at management, which they don’t do, or interviewing, which they don’t do, or firing, which they don’t do–they do about the same thing an HR consultant would do, filtering resumes and screening applicants, though sometimes an employer already knows who they want to hire and just hands the name to them, and then they take a check from the employer and fill out the employee’s paycheck and W2. It’s because it was considered exploitative for companies to hire Schedule C workers and not give them benefits, and the government largely prohibited the practice. So they hire agencies instead, who pay less and still don’t give benefits.

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bianca steele 07.15.12 at 9:33 pm

Since I live in Massachusetts, which has Romneycare, I could take an even greater pay cut and have a chance at employer-provided health insurance, which luckily I didn’t need. But no life insurance, no disability, no 401K, and your pay is calculated by a formula that presumes you are not a person with expertise but a “temp.” Not bitter at all, though.

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Kukai 07.15.12 at 9:44 pm

@John David Galt

I’m not sure who came up with this framework, but let us think of the world’s economies sorted out into Sellers, Makers and Thinkers. The Sellers have nothing but raw materials to export such as lumber. He sells it to the Maker, who turns it into furniture and sells chairs to the Thinkers.

The Thinkers stay on top of the heap via technology transfer. They sell the lathes to the Makers. The Makers are plotting to become Thinkers, making that technology for themselves. The Sellers are scheming become Makers, trying to build their factories and adding value every way they can.

Germany is a Thinker economy. Every little Dorf has two or three machine shops, producing hi-tek, high markup items for export: aircraft components, robots, SAP software, drill bits and the like. The Thinkers are not competing with workers in poor countries: they are selling to Makers and are completely dependent upon them for a market. The Makers are engaged in their own struggle to stay ahead of the hungry Sellers who are all-too-aware of the difference in value between a log and a chair.

The USA is both a Thinker and a Seller. Yes, we still Make many things here and we could have kept some of those jobs, but all the protectionism in the world would not have changed the long-term outcome. We remain a Seller because we export grain and other foodstuffs. As an aside, I predict the current drought will do more economic damage than any such disaster in history, including Katrina.

The USA can improve its Maker economy via the same route Germany uses: putting worker representatives on the corporate boards of directors. thus creating a feedback loop to the factory floor and the cubicle warren. Though Germany does have many trade unions, the closed union is illegal. But there’s no need for a closed union, not when workers know what goes on in the board room.

Spain after Columbus was an interesting proposition. All those ships full of gold and treasure arrived, the King wept tears of joy. Spain did two things with all that gold: it gilded the inside of its churches and spent the rest on mercenaries to wage war in the Netherlands. By 1600, Spain was bankrupt and never really recovered. That’s what happens when nations won’t invest in their own futures.

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Kukai 07.15.12 at 9:59 pm

@bianca steele

Entirely correct. “Consulting” has become a nasty bit of Newspeak. Once, consultants were professionals, who had to know something about the industry. Nowadays [ insert creaky old gent noises] they’re mostly terrified, pimply-faced young folks from Bangalore with company laptops, living six to an apartment, eating out of a common pot and paying a kickback to an agent overlord. Often, if I can, I get these kids, some of whom are bright and capable, out of their H1-Bs and into reputable consulting firms, where they can earn about four times more take home pay. I cannot overstate the seriousness of this situation. The rapacity and cruelty of these Indian contracting houses is beyond description.

One such rescued kid was going back to India to get married. He asked me if I wanted anything from India. I said I’d like a shivalingam, thinking of all those little fired clay shivalingams I’d seen in the marketplaces. He brings me back his mother’s silver shivalingam, still encrusted with incense. It now resides at the centre of an unburned CD-ROM. I had to take it to the Hindu temple in Lemont to learn how to do puja to it. I give it orange flowers every so often and pour distilled water over it.

As you say, there’s always an angle on how to screw the worker. It’s always done by proxy. The most-despised members of the antebellum communities in the South were the slave-sellers. They didn’t much seem to mind, salving their wounded pride with the money thus earned and the certain knowledge of the hypocrisy of those who despised them, buying their wares.

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Alex 07.15.12 at 11:05 pm

If you’re already stipulating a universal basic income AND full employment, why the additional requirement of a minimum wage?

Why not? I think John’s being a bit of a floppy centrist by not including the traditional pony on his list of transitional demands. More to the point, you may as well measure twice and cut once.

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Salient 07.15.12 at 11:06 pm

On the other hand, you don’t really take the idea of full employment seriously. You just seem to deny that, as I’ve defined it, it can never exist, at least for workers in general. That might be right, but you haven’t made the case

True, and also, the “as I’ve defined it” here alerted me to something. I was oblivious that I was disputing the proposed definition of full employment (which I thought meant, no unemployed people). I misread your ‘so that’ in that statement as a grammatical condensation of this statement: ‘If we have no unemployed people, then the cost to a worker of finding a new job will be no greater than the cost to an employer of hiring a replacement.’

Hence me going on about how relying on that particular ‘if P, then Q’ is dangerous, because it’s impossible to force Q using only P. But if the cost equalization of firing vs quitting is part of your hypotheses rather than part of the conclusion, that changes a lot; e.g. given that this is your definition of full employment, you’re allowing the state to take a whole suite of actions to achieve full employment; e.g. it could

* restrict bosses’ behavior and making certain forms of duress like “if you quit, I’ll…” punishable offences

* provide transitional housing and schooling assistance to anyone quitting a job and moving somewhere

* create and maintain a website where employees can publicly post their grievances that caused them to quit, with a quick and easy way for bosses to flag and protest defamation (sort of like ratemyprofessor.com?)

* enforcing the existence and bargaining power of some sort of union-like organization with the ability to publicly report working conditions

* require the first round of correspondence between a business and potential hires to be conducted online, with applicants kept anonymous

* require any business seeking an employee to post a fairly detailed standardized description of responsibilities and compensation to a readily accessible state-run website, with some minimum length of time to accept all applicants. Why states don’t do this one kinda mystifies me. Workers could see their options comprehensively, and could more easily get a new job and a new life plan lined up before they quit. “Oh hey look, this small place in Tulsa is hiring people just like me. Hmm, y’know, we could enjoy living in Tulsa. I’ll ask the kids what they think.” It’s much easier to quit a job if you have a wealth of knowledge about your other options.

* employers can’t fire or penalize their employees for conducting job searches on their own time

* employers cannot reject a hire due to their quitting prior jobs and limits their right to request information about why the person quit

etc, etc. So it’s not just UBI-money and ‘no unemployed people’ the state is offering, in such a world. UBI + a package of universal non-monetary help designed to ease a transition between jobs for anyone who quits their job is a much stronger hypothesis to take, and I can be amenable to it.

Admittedly though, it’s probably still fair to say on some level I don’t take full employment seriously. In order, from least fair to you and/or BHLs, to most fair to you and/or BHLs:

[1] Relying on threat of exit basically says, I think, that you’re willing to let a whole lot of people get pushed right up to their suffering threshold before any positive change happens. That’s not OK with me.

[Me going on about this might be redundant, sorry.] A system in which people’s only recourse is drastic, accepts non-drastic grievances as just part of the job. Even if quitting’s truly as easy as firing, this bothers me, because: the employer gets to change the employment environment as much as they want, and the employee does not necessarily get to change any aspect of the employment environment.

So, employers get to test just how much their employees are willing to put up with for their pay, and the only possible penalty the employer faces is losing too many workers and having to walk back the very last policy change they made.

Suffering-causing policies only get retracted if the company finds too many people quitting the job, and decides that eliminating the policy is cheaper than paying people a little more to put up with it. Workplace dangers are only addressed if enough workers threaten to exit unless that specific danger is fixed. An employer could keep hiring new people who don’t have a strong sense of how dangerous the job is, with everybody quitting after a short stint of work, letting threat of exit claim everybody and relying on a never-ending supply of workers. (In unskilled labor there’s no reason to prefer a current employee to a new one, and it’s pretty easy to advertise the job to new applicants in ways that obfuscate the danger, or make the quitters seem lame and weak and uncool. In a heavy tough masculine voice: “It gets to be 160 degrees in here–the hottest workplace there is. But if you can HANDLE the HEAT, then your PAYCHECK is SWEET. Are you man enough for this? Come prove it with us. Wayco Warehouse.”)

If pressuring their workforce to accept a slightly larger salary is cheaper, that’s what they do. I feel like people shouldn’t have to put up with these kinds of policies, period. People will endure a lot of intense demands if their loved ones will get a reward, sure, but why structure all commerce around maximally exploiting that fact?

And I’m testy and defensive about this. Isn’t it inherently inhumane? Why should I even consider a social framework in which employers are explicitly allowed and implicitly encouraged to squeeze their employees to their breaking point limit to extract every last bit of productivity? Why support a social framework in which, in the optimal scenario, people are getting paid e.x.a.c.t.l.y. the least amount of compensation they’re willing to take, to tolerate a job with gritted teeth?

I want people to be fairly comfortable while working productively. That’d be my goal. I just don’t see how this model ensures that will happen. Is the gain in productivity per person that we as a society get from this model, really worth sacrificing workers’ comfort? Not to me, certainly not if the employee does not stand to benefit from their own increase in productivity.

[2] I feel like if we’re going to allow arbitrarily massive state intervention for people who quit their job in order to empower threat of exit, like my list of bullets above, why exactly are we not allowing useful state intervention for restricting unacceptable work conditions? Beyond “let’s see if we can find a way to make threat of exit sufficient on the job protection,” …is there a point to this? Ok, I hate it when people ask that question in other contexts. So maybe I should ask, given that I couldn’t care less whether contracts are or aren’t the cornerstone of social infrastructure, are there reasons for me to prefer a UBI/TOE model?

[3] I feel like we shouldn’t structure society’s productivity around hierarchical employment, which strikes me as a weird organization we unfortunately inherited from the collapse of feudalism. That’s the world we live in, ok. But if we’re building a theoretical vision of a just society from scratch, and we are going to allow businesses to have substantial freedom to operate as profit-extracting entities in our envisioned world, I feel like at the very least we should ban all business-ownership structures except cooperatives, with apportionment of profits to be decided by vote, and with state regulation specifying acceptable voting procedures, etc. But eh, that’s very far away from our world, so I try to set those feelings aside.

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tomslee 07.15.12 at 11:37 pm

I’ve lost track of the arguments, but this gives Salient the win anyway:

In a heavy tough masculine voice: “It gets to be 160 degrees in here—the hottest workplace there is. But if you can HANDLE the HEAT, then your PAYCHECK is SWEET. Are you man enough for this? Come prove it with us. Wayco Warehouse.”

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mattski 07.15.12 at 11:55 pm

Way back at 18,

In modest defense of the BHL crowd, or at least some of them: I think they’d concede that a UBI sufficiently generous to accomplish the goals they need it to would be a a change to the status quo considerably more significant than a ‘modest tweak.’

I strongly agree. I see a certain lack of generosity from CT towards BHL here. That and the all too common tendency on the left to argue for an impossibly remote ideal, a world without discrepancies in power.

First of all, it seems to me that BHL’s conceptual offering of UBI is both radical and generous. I don’t see how one could deny its essentially socialistic nature. And I don’t see how their basic reasoning fails to deserve respect. If the response here was closer to, “sounds interesting, why don’t we try it,” then–right there–we’ve got the making of a coalition, maybe even a movement. Sounds constructive to me.

And concerning power and hierarchy, this is a place where the left often goes reductio. As Bruce Wilder often seems to acknowledge, hierarchies serve us in various crucial ways. They aren’t something to be frowned upon per se. In most cases they dramatically increase the productivity of the group/community/nation. Ideally hierarchies form in a natural and voluntary manner. But even where they don’t, it is often possible to tolerate a less than perfect boss with the knowledge that having no one in charge would be even worse.

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John Quiggin 07.16.12 at 12:21 am

@Bianca Employer-provided health care is one of the great policy disasters of US history.

Not being US-based, I tend to forget about it when considering general arguments like that above, but obviously any analysis that relies on freedom to quit is inapplicable if you depend on your employer for health care.

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faustusnotes 07.16.12 at 1:17 am

I said it on the last thread but I’d like to mention it again here: full employment is no panacaea. I live in a full-employment economy (Japan) and working conditions here are terrible, as is work culture generally. People work very hard, very long hours and even in industries with an excess of qualified people (such as hairdressing) they get worked to the bone and paid crap. Furthermore, there are huge barriers to entry to many industries, so that getting one of Japan’s famous “jobs for life” requires a year of continuous effort at the end of university.

It’s easy to quite a job and find a new one, but if you quit your company job you’re out for good and the system is carefully structured to ensure that you do all you can to stick it out within the company system. And just like everywhere else, people frown on you if you work at many different jobs in succession, and you’ll find yourself sliding down the work ladder.

Full employment doesn’t protect worker rights the way the libertarian dreamers think it will.

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Jason Weidner 07.16.12 at 1:59 am

I think JQ begins with the strongest general argument that the question is badly posed–“capitalism could not sustain such conditions, and so the question could never arise in practice”–but not with the strongest example. The UBI is certainly difficult to imagine taking place, but what is actually quite impossible within a capitalist system, at least as it has been organized up to this point, is full employment. In fact, on the rare occasion that any advanced capitalist economy has come close to unemployment < 5%, the central bank raises interest rates to avoid inflation. Thus economists have invented the concept of Non-Accelerating Inflation Rate of Unemployment (NAIRU), which means in practice that anything less than 5% unemployment is viewed as inflationary.
So perhaps the author could be more precise in how he is using the term "full employment."

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Yarrow 07.16.12 at 2:28 am

I think I agree with John Quiggan in the sense that in a situation where “the cost to a worker of finding a new job is no greater than the cost to an employer of hiring a replacement” and “even without working no-one need be poor”, then “we could indeed dispense with a lot of government intervention”. [OP]

And I agree with Salient believing that such a situation is not achievable (more than momentarily) — if over a period of decades the economic power of employers were so weak and that of workers so strong, I’d certainly hope we could get rid of capitalism itself, but failing that we’d at least have regulations barring things like onerous restrictions on bathroom breaks. “Once behavior of any kind becomes common enough, it ceases to be stigmatized” [80]; but once a cruel behavior becomes unusual enough, it will be stigmatized and eventually forbidden. (Possibly through union contract rather than direct state action, to be sure.)

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Katherine 07.16.12 at 9:09 am

Okay, please forgive me if I’m about to ask a Noddy question, but I really don’t understand the enthusiasm for a UBI, and I feel as if I’m missing something.

So, say everyone gets a UBI. This UBI is something reasonable, shall we say, paid for… somehow. I get a job that pays me X. My income is now UBI + X. I take out a mortgage. This mortgage is based on my income of UBI + X. I get car and acquire a lifestyle roughly predicated on UBI +X, or thereabouts. Possibly I own a pony. If I am a relatively sensible person, I probably save some money (Y), but if I am a normal person, it’s probably not as much as X, so my outgoings will probably require more than UBI.

I hate my job. My boss is a harassing b*stard who is dropping none too subtle hints that we’d better get busy or he’s going to find a way to push me out. I need to quit if I’m going to avoid either being assaulted or sacked.

Quiting my job without somewhere else to go is going to reduce my income by X. I still have my UBI of course, but my mortgage, my bills and my general lifestyle require UBI + X – Y, and that’s probably more than UBI, unless either I am an extreme saver, or X is miniscule, or the UBI is so big that any normalish value of X and Y don’t make much of a dent. None of these scenarios are likely, thus leaving my job still holds an economic penalty.

I suppose in a scenario of full employment I’m not going to worry too much about being able to find a new job. But does that not mean that UBI as a panacea also requires full employment and lots of flexibility (and none of the nastiness described by faustusnotes in Japan) to be a reasonable solution? Please do tell me if I’m missing something obvious, which I readily admit may be the case.

And also, leaving a job involves costs over and above the economic – maybe I’m leaving friends behind, a network of professional support, an easy commute, or a job I just really like (apart from the harassing boss).

Here’s an alternative scenario: there are regulations in place that make harassment not allowed and there is a workplace and social culture that disapproves of harassment, and doesn’t look askance at women who kick up a fuss about it. The harassing boss gets fired for breaching his employment contract (which includes, inter alia, the requirement to comply with law and company policy on harassment) and I get to keep my job.

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Alex 07.16.12 at 10:09 am

Why should I even consider a social framework in which employers are explicitly allowed and implicitly encouraged to squeeze their employees to their breaking point limit to extract every last bit of productivity?

Circular reasoning? If you’re certain of finding another job quickly, your “breaking point limit” isn’t what it would be in an economy with high unemployment. This is surely the point of the exercise. If quitting isn’t a big deal, it becomes a credible threat much sooner. The political aspects of full employment are that the relationship between bosses and workers is equalised. (This is Michal Kalecki calling from 1942, by the way.)

In fact, on the rare occasion that any advanced capitalist economy has come close to unemployment < 5%, the central bank raises interest rates to avoid inflation.

Not all countries at all times have strongly independent central banks or low inflation targets. And, you know, if you don’t like the central bank’s charter or inflation target you can change it! It’s legislation, not gravity.

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UnlearningEcon 07.16.12 at 10:40 am

“Sounds unlikely: for if it were so then sexual harassment would not happen in decidedly non-capitalist organisations like State bureaucracies. Or pre-capitalist societies like feudalism, etc. That’s not something that stands up to real world observation I think.”

Under capitalism, state services are run like capitalist work places: wage labour, hierarchical structures, and with outcomes as the driving force (though the latter is mitigated somewhat in public services).

Furthermore, that Feudalism was also exploitative does not change that capitalism is.

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Yarrow 07.16.12 at 12:05 pm

Katherine @ 97: I really don’t understand the enthusiasm for a UBI … I suppose in a scenario of full employment I’m not going to worry too much about being able to find a new job. But does that not mean that UBI as a panacea also requires full employment and lots of flexibility…?

Yes, I think full employment (not-a-scam, John-Quiggan approved, really-works full employment) is the team of Clydesdales in the OP and UBI is the pony.

Here’s an alternative scenario: there are regulations in place that make harassment not allowed and there is a workplace and social culture that disapproves of harassment, and doesn’t look askance at women who kick up a fuss about it.

I do think for-real full employment would do wonders to help create that culture.

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Matt 07.16.12 at 12:42 pm

Of course the question is badly posed – it’s akin to saying, “assume that everyone everywhere decided to stop being mean to each other. Would we still need police agencies and legislative restrictions on personal interactions?”

It’s perhaps worthwhile from a gedankenexperiment sort of viewpoint, but otherwise *utterly* unmoored from achievable reality.

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Anarcissie 07.16.12 at 3:33 pm

99 — regardless, I didn’t say the power imbalance between capitalist and worker was the sole source of sexual harassment and exploitation. I said that the social structure of capitalism (as we know it) requires the production of a surplus.

In regard to later comments, this could be why hierarchical organizations may seem more productive than other collections of workers. When we say ‘productive’ we may want to ask (if we don’t know already) ‘of what?’ and ‘for whom?’

Oddly, both sexual exploitation through misuse of authority and social position, and the dubious efficiencies of hierarchy over horizontality, came up in a discussion among anarchistic activists I was present at last night, not as what capitalists do but as problems in our own community. It’s not just the capitalists.

However, capitalism does require the production of surpluses, whether it requires the production of sexual exploitation or hierarchies or not. The capitalists have to have something to exploit, therefore they must make workers work more than they would if they were just producing for themselves. Once they have the surplus, they must reinvest it in order to make yet more surplus, etc. etc. etc.

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Liberty60 07.16.12 at 4:44 pm

Followed this over from Corey Robin’s site, and its an interesting discusssion.
I find the libertarians take on things problematic in that they tend to assume that all economic activity is scaleless and occuring in a vacuum; in other words, the negotiation between WalMart and a greeter is no different than the negotiation of a CEO with a prospective firm.
Which is my discomfort with critiques about the exploitation of surplus value; While it may be true, the fact is that the exploitation of my surplus value (I am an architect working for a medium sized firm) is vastly different than say, a call center employee.

Very few people in my position feel particularly “exploited” and the sweeping critique trying to prove so feels forced.

The common thread with exploitation seems less explained by economic activity than unequal distribution of power, which can occur in any economic framework.

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Will McLean 07.16.12 at 5:33 pm

Ah, the Marxist Labor Theory of Value. How 19th century.

In orthodox economic theory, capitalism itself need not be exploitive. Consider three partners who pool their own savings, buy cattle, rent grazing rights, herd the cattle themselves, fatten the cattle, and sell them at a profit. Their inputs are the cattle, the rent, their labor, and the foregone interest on their savings. The owners of the capital are justly compensated for its use, and the workers are justly compensated for their labor.

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Salient 07.16.12 at 5:39 pm

Here’s an alternative scenario: there are regulations in place that make harassment not allowed and there is a workplace and social culture that disapproves of harassment, and doesn’t look askance at women who kick up a fuss about it. The harassing boss gets fired for breaching his employment contract (which includes, inter alia, the requirement to comply with law and company policy on harassment) and I get to keep my job.

That’s what I tried to say too. But if I understand correctly (from his explanations to me) JQ’s model would likely include a strong suite of anti-harassment legislation: basically everything that a bad rogue boss would do, rather than faceless corporate policy, would be illegal and punishable as you suggest, but stuff a faceless corporation would enact as productivity-increasing policy, would be allowable. (Probably you still feel the same way I do, that that’s an unsatisfactory and weird and inadequate approach to protecting workers.)

It did occur to me overnight that a policy of “hardly any women get promotions into management positions” would probably be subtle enough to never get punished with threat of exit alone. Even if it’s easy to quit, the effectiveness of quitting seems negligible when you’re protesting a general company trend rather than a more obvious violation of individuals’ rights; quitting your job to protest a general policy trend will produce no measurable effect on policy unless lots of people do it, so ultimately not enough people will quit, and voila, 12/540813 female managers.

So, if we’re going to let ‘threat of exit’ be the sole mechanism to force policy change, I have no idea how we’re going to overcome subtle and not-explicitly-announced stuff like a pattern of discrimination in promotion policy. But if we’re also going to pass a separate law prohibiting discrimination in promotion policy, I have no idea why we would bother to studiously avoid law enforcing other kinds of restrictions. I mean, I know JQ’s goal is basically just to see if we can possibly find any compromise with the BHLers that offers what we want to see. But the BHL’s own goal seems to be, to give poor people the ‘opportunity’ to figuratively sell their kidney to their employer while getting to claim everyone will still be ‘able’ to avoid a prohibition on bathroom breaks, inviting this response:

Well that depends on how you define “able” doesn’t it. … Laws against kidney-selling, selling oneself into slavery, prostitution, baby-selling etc. function (among other things) to spare the poor certain dilemmas and to signal to them that certain solutions, even if tempting or even practically irresistible, are at least not socially expected of them.

You could replace ‘the poor’ with ‘the 99%’ there. If you craft your law specifically to allow companies to enact mistreatment policies, you’re signalling that people ~should~ be willing to endure some of that mistreatment in order to get a salary above and beyond UBI. So unless companies are so truly ravingly desperate for workers that the employer’s cost of losing someone is actually much much ~higher~ than the employee’s cost of quitting, we’re stuck with lasting problems everywhere where problematic practices are already the norm.

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mattski 07.16.12 at 5:48 pm

Oddly, both sexual exploitation through misuse of authority and social position, and the dubious efficiencies of hierarchy over horizontality, came up in a discussion among anarchistic activists I was present at last night, not as what capitalists do but as problems in our own community. It’s not just the capitalists.

Oddly, human nature seems widely distributed among humans.

For those who feel there’s something intrinsically unjust about hierarchical structures I have a question. How much experience do you have with collective decision making? I have some such experience and I found it extremely underwhelming. If you think the problem of bringing debate to a close and executing an actual decision is a minor one then I think you’re probably lacking real world experience.

Any search for excellence involving groups of people, whether it’s a group of musicians, a team of athletes or a company in business, is going to select it’s own leaders through various means. Some selection processes will be more democratic than others but without leadership excellence is an elusive goal.

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Barry 07.16.12 at 6:03 pm

Way back at 18: ” In modest defense of the BHL crowd, or at least some of them: I think they’d concede that a UBI sufficiently generous to accomplish the goals they need it to would be a a change to the status quo considerably more significant than a ‘modest tweak.’”

mattski: “I strongly agree. I see a certain lack of generosity from CT towards BHL here. That and the all too common tendency on the left to argue for an impossibly remote ideal, a world without discrepancies in power.”

That’s exactly what the BHL people are doing when they urge us to ignore possible changes, in favor of the unicorn which is what a generous UBI would be.

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Brendan 07.16.12 at 6:40 pm

How much experience do you have with collective decision making? I have some such experience and I found it extremely underwhelming.

There are many kinds of collective decision making processes. Some of them don’t work, some of them only work with certain types of groups, some groups are fundamentally dysfunctional regardless of what type of decision making process they use, etc.

Saying that you’ve had some underwhelming experiences with collective decision making is not saying much; I’m sure you’ve had plenty of underwhelming experiences with hierarchical decision making, too.

without leadership excellence is an elusive goal.

Leadership is important, but outside of hierarchical organization the word has a very different meaning.

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Hidden Heart 07.16.12 at 7:08 pm

Someone may as well say this directly: excellence is an overrated goal, and one that in practice consists of a lot of people deluding themselves about their real strengths and weaknesses and neglecting real opportunities at hand. A much better goal would be something like “a reliably good job, with good value for sellers and buyers, sustainable over time, capable of adapting to changes, with good returns for both capital and labor”. “Excellence” bullshit soaks up a lot of energy trying to squeeze out some scrap of advantage, generally at the expense of sustainability, good treatment for everyone else involved in a process, and honesty to self and hours. Competence and quality are not exclusive kinds of goods, and are within a lot of people’s reach.

Sure, if you’ve got world-class talent, go for it. Most of us don’t, and it’s damn foolish to pay much attention to systems allegedly oriented toward the few who are. Lots more of us should be giving lots more attention to what lets us do good work, reliably, and get well treated for it.

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gordon 07.16.12 at 11:46 pm

Mattski at 106: “…without leadership excellence is an elusive goal”.

Ah, the Fuhrerprinzip. From the Wikipedia article:

“The Führerprinzip was not invented by the National Socialists. Hermann Graf Keyserling, a German philosopher, was the first to use the term “Führerprinzip”. One of Keyserling’s central claims was that certain ‘gifted individuals’ were “born to rule” on the basis of Social Darwinism.

“The ideology of the Führerprinzip sees each organization as a hierarchy of leaders, where every leader (Führer, in German) has absolute responsibility in his own area, demands absolute obedience from those below him and answers only to his superiors.[2] This required obedience and loyalty even over concerns of right and wrong”.

It’s just anti-democratic, anti-ethical, anti-rights and anti-labour ideology dressed up in management jargon.

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gordon 07.16.12 at 11:49 pm

That Wikipedia article:

http://en.wikipedia.org/wiki/Fuhrerprinzip

Sorry.

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mattski 07.17.12 at 2:19 am

That’s exactly what the BHL people are doing when they urge us to ignore possible changes, in favor of the unicorn which is what a generous UBI would be.

Barry, you make a good point. I guess I would want to hear from you what are the realistic changes we should focus on?

Leadership is important, but outside of hierarchical organization the word has a very different meaning.

I think you’re quite right to point to the shades of meaning involved here. But I don’t think “hierarchical organization” is a black & white question either. I am saying that hierarchy is everywhere, it comes in infinite shades of gray, it generally serves an important purpose and it is leftism-gone-nutty which rails against it per se.

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mattski 07.17.12 at 2:52 am

A much better goal would be something like “a reliably good job, with good value for sellers and buyers, sustainable over time, capable of adapting to changes, with good returns for both capital and labor”.

Why is this a “much better” goal? Indeed, why is it in conflict with the pursuit of very good quality? Isn’t it rather wonderful to have a choice between a good product at a competitive price, and a very good product at a higher price? You’re quite right to say we’re not all extremely talented. That doesn’t make it pointless to try to be as good as possible at what we do. I think that’s one of the fundamentals of Hinduism–for example–that whatever we do we should strive to be good at it. One of the beauties of larger organizations is that it isn’t necessary that everyone be a genius in order for the company as a whole to provide an excellent service or product.

I think Will McLean is right. Capitalism (what a ridiculously overbroad and imprecise word!) is not intrinsically exploitative. What matters is the culture. Granted, ours sucks, but defeating paragons of shit-culture like Romney is a material step in the right direction.

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Timothy Scriven 07.17.12 at 3:36 am

All wage work is wage slavery because it involves alienation from control of one’s own labor and from control of the destiny of one’s own products. It involves loss of autonomy in an enormous slice of one’s life. Wage work, with a handful of exceptions, is partial slavery.

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js. 07.17.12 at 3:54 am

mattski,

You and I are quite likely coming from rather different political positions, but I’m still curious why you think that there’s common ground to be found? I mean you’ve got a bunch of libertarians—and yes some-organ-is-bleeding, or something (sorry mods–couldn’t resist!)—advocating coercive transfers,–because that’s what it would be–and effectively a living wage (without work!). I mean at least to me, it seems obvious that they’re advocating something socialist-sounding because it’s, umm, goddamn impossible!

So yes, I’m definitely not giving them the benefit of the doubt. But why should I? There’s been more than plenty documentation on these threads about Cowan et al.’s general attitude towards proposed tax increases. An attitude that’s not best characterized as “Yay!” So, again, why expect that there’s genuine common ground to be had?

(And just to be clear, the sarcasm in this is absolutely not directed at you.)

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Jerry Vinokurov 07.17.12 at 3:59 am

Isn’t it rather wonderful to have a choice between a good product at a competitive price, and a very good product at a higher price?

Not really. First off, not all products are amenable to such an ordinal ranking: I don’t know how one might rank, say, toothpaste. As far as I can tell, all toothpaste is identical except for the flavor anyway, and I highly doubt anyone’s lot in life is materially improved in any noticeable fashion from having a choice of 15 different types of it. This train of thought is easily extensible to any number of ordinary consumables.

Second, even if it is conceivably possible that in some areas such a ranking can be imposed, I hesitate to describe this as necessarily “wonderful.” In the vast majority of situations, a nicer widget is not going to make a huge material difference; not the way that, say, food security or healthcare does. In a way, this is somewhat analogous to the standard right wing refrain about how the poor aren’t really poor because they got them fancy TVs. Well, and so they do, because if you want to buy any kind of TV new today (and even most of the old ones, I’d bet), you can’t even get an old-fashioned CRT. But I don’t think it’s credible to say that poor people are any less poor, or their lives materially better, for having TVs with better image quality. By the same token, I’m not convinced that the choice between many different fancy widgets is particularly wonderful. Or rather, that choice would be nice all things being equal, but aiming at it as any kind of social goal or holding it up as a remarkable societal achievement strikes me as misguided, especially if it comes at the expense of normal people trying to live normal lives of acceptable quality.

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Katherine 07.17.12 at 9:40 am

The trouble with all this discussion of perfect UBI and perfect full employment for ever (plus a pony!) as the solution to various forms of work place coercion is that it’s still a sucky solution.

There is more than just economic cost to consider. Having to leave a job because of a crappy boss comes with other costs – to your self-esteem, your professional progress maybe, and dammit to justice!

All the talk of how it can be made easy (plus a pony!) to leave a job because of a coercive, assaulting and bigoted boss is about the victim of that coercion, assault and bigotry having to leave, at cost to themselves. How is that even approaching a fair and just solution to the situation? If that’s the best case scenario for libertarianism (plus a pony!) then it’s rubbish.

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Barry 07.17.12 at 12:38 pm

Me: “That’s exactly what the BHL people are doing when they urge us to ignore possible changes, in favor of the unicorn which is what a generous UBI would be.”

mattski : “Barry, you make a good point. I guess I would want to hear from you what are the realistic changes we should focus on?”

Every standard liberal change which has been discussed in these posts is a lot more likely than a generous UBI, so take your pick.

Which, of course, was exactly my point, as I said in rather clear language.

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Anarcissie 07.17.12 at 1:40 pm

‘Capitalism (what a ridiculously overbroad and imprecise word!) is not intrinsically exploitative.’

It depends how you define capitalism. If it’s just ‘the private ownership of the means of social production’, it is indeed overbroad. However, in history we observe what we might call normal or traditional capitalism, in which a class of owners of the means of social production require another class, a laboring class, to operate the means of production and consume its products, with the owning class deriving a surplus from this process (exploitation) which provides a living and source of power for them, as well as further capital. We also observe that this class typically becomes a ruling class or merges with an existing ruling class, so that its role in social production leads to political power. This is what I’m talking about when I say ‘capitalism’, which I think is a fairly common usage. This view of things doesn’t require the Labor Theory of Value.

One of the reasons something like the UBI will remain an idle fantasy in a capitalist polity is that most people will stop working (laboring, suffering) when they think they have ‘enough’ stuff to consume, and have saved ‘enough’ for rainy days. They will do the cool jobs for fun, true, but most of the world’s work is not cool. That is why you have to give people money, or threaten or delude them, to get them to do it. With a UBI there would eventually be little or no exploitable surplus, which is why real-live practicing capitalists would not consider such an arrangement.

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Hidden Heart 07.17.12 at 3:49 pm

Katherine@117: So true! Stress is real. So are anger and shame. So is potentially productive/enjoyable time wasted in evaluating “Is this abusive behavior bad enough that I should leave now?”, and in searching for a new job because, yes, it is time to leave.

Mattski: I believe that in practice the pursuit of “excellence” in the sense of supremacy, being #1 at whatever, and the pursuit of reliably, sustainably goo quality are competing goals because of observation. They don’t have to be, it’s just that a lot of #1-ness seekers are quite willing to slash, burn, and otherwise impair all the support systems that make the sustained reliability feasible, and a lot of them don’t respect any goals that they can’t translate into the language of #1-ness seekers.

Bernard Finel had a good comment about just this over at Balloon Juice today:

““Troubled” companies have a particular meaning on Wall Street. Sure, sometimes they refer to companies that are just muddled, have over-expanded, and are badly managed. But more often, what they are talking about is companies that do not seem to providing a large enough return to shareholders—a stagnating stock price in particular. But that does not mean a company is “troubled.” It can be quite profitable, have productive and loyal employees, have satisfied customers, and cash on hand.

“What players like Bain do is enforce a Wall Street preference. There is a bias against companies that seek a “quiet life.” They are shunned by institutional investors, which depresses stock prices and makes these companies “troubled” in the first place. It isn’t that they are not profitable, but rather than institutional investors don’t like them, and as a result they trade at dramatically lower P/E ratios. Indeed, it isn’t even clear that takeover targets do have weaker stock performance if you look at total returns, including dividends.

“Once a company goes public, it is essentially subject to “disciplinary” takeovers if it fails to act in accordance with financial sector preferences. This is often phrased as “poorly performing managers,” but what does that really mean? That is really just about enforcing a certain conventional wisdom about what a company ought to do. But these preferences are socially problematic. Consider some of the things that seem to contribute to being a takeover target: slow growth, stable revenues, cash on hand rather than debt, generous employee compensation, conservatively-funded pension or insurance plans. (Again caveats abound. There is no simply model of predicting takeover targets.)

“So, in a sense, Bain, and other buyout specialists, serve to enforce a particular type of corporate behavior that focus on expansion at the expense of predictability, risk acceptance in terms of contractual obligations to employees, and a ruthless focus on cost controls at the expense of employee loyalty and stability.

“As a practical matter, it is not clear that this sort of approach is conducive to more rapid economic growth. Certainly the rise of this consensus and expansion of “disciplinary” takeovers since the 1980s has not resulted in any noticeable improvement in U.S. macroeconomic performance. And furthermore, the evidence on whether takeover targets overperform or underperform after being bought is mixed.

“But what has happened is that as firms accept these practices, they become more dependent on the financial sector. They borrow more, become more active in raising money through equity sales, they run leaner by hedging through derivatives, and so on. In each case, they pay a cut to financial firms. The result has been that the financial sector’s share of corporate profits has risen dramatically since the 1980s.”

There are times when significant shakeup serves the long-term goal of sustained reliability. We see one of those right now in food, where changes in packaging technology are making a big difference and setting off a whole bunch of changes. But it makes a real difference whether people in charge are thinking how to assimilate new things into a new long-term pattern that will continue to serve employees, employers, customers, and others well in the long haul.

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gordon 07.18.12 at 12:25 am

Anacissie (at 119), talking about what people with a Universal Basic Income would do: “They will do the cool jobs for fun, true, but most of the world’s work is not cool. That is why you have to give people money, or threaten or delude them, to get them to do it”.

While I agree that a UBI may remain an idle fantasy, I’m not sure that people’s preparedness to do only the cool jobs without pay is a major reason. There are a lot of volunteers who do uncool jobs in many countries. If they’re volunteers, they’re not being paid.

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mattski 07.18.12 at 4:11 am

Js, I’m not sure our politics are all that different. I’m relatively new here but as a rule I like your posts. Why do I think there is common ground to be found with a bunch of libertarians? True confessions: I’m not familiar with BHL. Also, the mere word libertarian sets my teeth on edge. But here is what I know, that bargaining involves tradeoffs and that the mere act of making a proposal sets a precedent, puts you on the record. If BHL is on the record making an overtly socialist proposal that would seem to me to “bend the curve” of their possible future positions.

Is there really common ground to be found? I don’t know. As a rule I think discussion and debate with people you disagree with is healthy and potentially productive. Certainly not to be discouraged. And something I carry with me all the time: we are all human beings. Labels like ‘libertarian’ or ‘capitalist’, in the long run, don’t mean shee-it. Any conceptual trick which makes it easy to disassociate from another human being is dangerous. Really, if you think about it, disassociation is a necessary precursor to violence.

I consider myself very liberal. But at the same time I get extremely exasperated when I see lefty-types taking what appear to me absurdly counterproductive positions. Like casually dismissing ‘capitalism’ as though there was any actual useful content in such a statement. Or another example, thinking and arguing from an assumption that injustice of any sort is intolerable. See Katherine @ 117.

Or, and this REALLY makes my ass chew gum, you get the “whose shit smells the sweetest” threads where a litany CT commenters proudly tell the world they’ll “never” stoop to pulling the lever for Obama because, imperialism! or drones! or take your pick.

Hidden Heart, I didn’t use the term excellence in the sense of supremacy. I used it in the sense of quality. “Being the best you can be” is a cliche, but it isn’t silly. If you can look past the cliche for a moment there is wisdom there.

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mattski 07.18.12 at 4:21 am

Hidden Heart, one other thing. I completely agree that as it plays out today there is something deeply insidious about the typical Wall St IPO and what follows from that, ie the pressure for higher returns. But that, I believe, is a problem that can be tweaked.

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Katherine 07.18.12 at 7:43 am

<Or another example, thinking and arguing from an assumption that injustice of any sort is intolerable. See Katherine @ 117.

Well, without wishing to comment on the wider point which you claim I made, but which I did not make, I do indeed think that the injustice of requiring an employee to flee their job to escape a harasser, rather than dealing with the harasser themselves, is intolerable. It is part of a wider issue – that of the general oppression of women via apparently small acts of sexism.

The harassed woman may find herself reluctant to trust another male boss, and the women left behind sure as heck won’t feel safe either. If we wish to argue from utility, then the situation specifically is hardly conducive to work place productivity, and the situation more widely suppresses the abilities and talents of women everywhere.

I happen to find that injustice intolerable, and find it exasperating when men, unlikely to ever experience this general oppressive atmosphere, proclaim themselves exasperated that such a situation should be found intolerable.

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faustusnotes 07.18.12 at 8:57 am

What? What should we call an injustice that is tolerable? Surely it’s no longer an injustice?

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GiT 07.18.12 at 12:39 pm

Just an inconvenience.

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bianca steele 07.18.12 at 2:25 pm

the injustice of requiring an employee to flee their job to escape a harasser, rather than dealing with the harasser themselves, is intolerable

Indeed, once this is mandated as the only possible solution, we are on the slippery slope to declaring the harassment not only acceptable but admirable.

However, the rhetoric of this: The harassed woman may find herself reluctant to trust another male boss

does suggest, as I’m sure Katherine did not mean, that the woman is now “damaged goods.” Having allowed herself to be put in a situation where she felt hostility toward her boss, she’s lost the automatic trust for bosses which is necessary, I suppose, if we’re to consistently find the behavior we’d been calling harassment actually admirable.

Slippery-slope-wise, it does seem the only solution is to create a class of unemployable persons, including women who don’t like being coerced into sex, which may or may not be all women. Sliding farther, it’s only logical that working women will be required to fulfill the demands of superiors and coworkers, and since these demands will naturally include sex, that sex will be included. But normally we don’t live on a slippery slope, and recognize that this is a rationalization.

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bianca steele 07.18.12 at 2:26 pm

And thus the UBI; we can’t just let them starve.

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bianca steele 07.18.12 at 2:38 pm

Rereading the comments, especially the last couple before mine, I have a question I’d like to ask those who question whether it’s possible for an injustice to not be intolerable: Have you not ever experienced different levels of injustice, coercion, harassment, etc., in your life? Has it all been one even keel of horrific injustice, punctuated by periods of happiness?

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mattski 07.18.12 at 4:03 pm

I do indeed think that the injustice of requiring an employee to flee their job to escape a harasser, rather than dealing with the harasser themselves, is intolerable.

Katherine, I don’t mean to pick a fight with you. But I’d like to talk about this. At 117 you say that if we were to somehow achieve both UBI (impossibly utopian according to several folks on this thread) and full-employment, that this unprecedented set of circumstances would still be “sucky.” Sorry, but I think your sights are set way too high. And I think it would be better to take a more agnostic approach: maybe the incentives would work–under those admittedly unlikely circumstances–to motivate employers to a higher standard of behavior? We wouldn’t know unless we tried it.

You wrote, There is more than just economic cost to consider. Having to leave a job because of a crappy boss comes with other costs – to your self-esteem, your professional progress maybe, and dammit to justice!

I don’t think this is right. Your self-esteem? A wise woman by the name of Roosevelt once said, “no one can make you feel bad about yourself without your permission.” It is easier for me to see the case for a social safety net (no one in a wealthy society like ours should starve for want of a job) than to concede any particular person has a “right” to any particular job. I don’t think anyone has such a right.

bianca, I have a question I’d like to ask those who question whether it’s possible for an injustice to not be intolerable: Have you not ever experienced different levels of injustice, coercion, harassment, etc., in your life?

I think this much is simple and indisputable, life is filled with pain and suffering and disappointment. The problem with “injustice” in the first place is that it is mostly in the eye of the beholder. That is why, imo, it is best to focus on the BIG injustices, the ones where there is overwhelming consensus that a specific problem should be addressed.

Tolerable injustice? These are everywhere. Someone cuts in front of me and “steals” my parking spot. Should I get out of my car and start a fist fight over it? Should I silently stew over it and engage in fantasies of retribution? I’ll be a happier person if I let it go. How do we respond when we’re on the receiving end of a sharp insult? Do we pour gasoline on the fire?

Our attitudes towards concentration of wealth are of interest here. One of the reasons I have a problem with broad brush attacks on capitalism is that I think there are plenty of examples of people becoming wealthy on the basis of legitimate, ethical behavior. Otoh, there are plenty of cases where wealth is accumulated either on the basis of unethical and antisocial practices, or where wealth is inherited or otherwise transferred without ever being “earned” in any decent sense of the word. AND, there are plenty of cases which are somewhere in the middle between these extremes. Some accumulated fortunes are instances of injustice, some are not, some it really is hard to say.

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Katherine 07.18.12 at 6:23 pm

Sorry, but I think your sights are set way too high.

No, you misunderstand. I mean that UBI and full employment are a bad solution to a problem, so let’s not aim for that. I’m saying if that’s the best the libertarians have got, then their “solution” is rubbish.

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Katherine 07.18.12 at 6:27 pm

That is why, imo, it is best to focus on the BIG injustices,

You see ladies, we should just shush with all this going on about sexual harassment and potential assault and rape in the work place, it’s just not big enough to focus on.

And I’m not even going to both dealing with the inanity of that Eleanor Roosevelt quote. Yes yes yes – all oppressed people throughout time have just let themselves be oppressed.

And by the way, if a woman who is being harassed has no “right” to her job, then surely the boss who is harassing her doesn’t have a “right” to it either. By any and all standards of fairness, he is the one who should be shipping out, not her.

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Brendan 07.18.12 at 7:00 pm

One of the reasons I have a problem with broad brush attacks on capitalism is that I think there are plenty of examples of people becoming wealthy on the basis of legitimate, ethical behavior.

Every awful system has plenty of examples of people behaving well within it. Focussing on individuals (whether as good examples or bad examples) is an utter waste. Anticapitalists’ point is not that capitalists are awful people, it’s that the system produces unjust results.

And no, poverty and humiliation in a world of plenty are not equivalent to someone stealing your parking spot.

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js. 07.18.12 at 7:28 pm

Yes, there are bigger and smaller injustices, and I suppose I’d be happy to say that some injustices are more intolerable than others, but count me among those having trouble with the concept of a “tolerable” injustice. More to the point, sexual harassment is pretty damn high on the intolerable scale — seriously upper reaches of the scale. (On the other hand, I don’t think someone cutting in in front of you should be considered an injustice at all — at worst, it shows a lack of consideration.)

All this by way of saying, Katherine is surely right. It seems insane to penalize the victim of sexual harassment while letting the harasser continue on his merry way. And it doesn’t matter at all if the penalty turns out to be relatively insignificant in the bizarro-world where libertarians guarantee everyone a living wage whether or not they work (and again, just think about this for a second). The underlying principle is itself remarkably unjust.

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John Quiggin 07.18.12 at 8:13 pm

The example of sexual harassment is rather misleading, I think. It seems to me pretty unlikely that employers are going to offer employment terms that explicitly require workers to put up with sexual harassment or that (under the conditions assumed in the OP), workers would accept jobs offered on those terms. So, whatever the BHLs may think about this, I don’t see any reason to think about changes to the existing prohibitions, which I would see as part of the default contract mentioned in the OP. As I’ve said a few times now, the issue arises much more sharply with things like meal and toilet breaks – should these be legislated, or would it be better to even out bargaining power in such a way that workers could demand and get a better deal at the outset.

On the other hand, bosses and co-workers can be crappy in all sorts of ways that don’t give rise to any legal remedy now and seem unlikely to do so in the future. So, I disagree with Katherine that the ability to leave a job without incurring big economic costs is trivial or ‘sucky’.

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bianca steele 07.18.12 at 8:30 pm

JQ @ 135 It seems to me pretty unlikely that employers are going to offer employment terms that explicitly require workers to put up with sexual harassment or that (under the conditions assumed in the OP), workers would accept jobs offered on those terms.

It does seem unlikely that employers would require women to put up with what they consider sexual harassment, but–this occurred to me after reading some of the comments on the latest BHL post–what if men refused to take a job that required them to change the way they interact with women, while on the job? For instance, I have heard men say that the requirement for them to treat women in an asexual way is not only a terrible personal imposition, but makes the world a terrible place by removing Beauty and Eros from its premises. Or what if men insisted they could only treat women as quasi mothers, wives, daughters, or else scarlet women, and defended this on some sort of moral grounds (the precise nature of which I can only imagine)? If these conditions had to be written into an employment contract, presumably it would limit other employees to those who agreed to compatible conditions.

Whether enough people think this is a serious enough possibility that it’s worth discussing whether we want to protect men who believe what’s described above, in the same way we want to protect women who don’t want to respond sexually to their bosses no matter what–or whether we think it’s improbable enough that we can assume the conditions in the OP will help to eliminate sexual harassment–I don’t know.

Maybe the case is different elsewhere, but in the US, as Brian Weatherspoon noted above, the fact that the employment contract ruled something out is not much help, because the employee is still responsible for taking action. Since the employee can choose not to take action, but simply to walk away from the contract, there is no real penalty for noncompliance on the part of the employer.

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bianca steele 07.18.12 at 8:33 pm

Sorry, I meant to edit that a little more. It was a response, mostly, to this: It seems to me pretty unlikely that employers are going to offer employment terms that explicitly require workers to put up with sexual harassment ,/i>

which applies only to women. It does seem unlikely that men would refuse to take jobs that don’t let them harass.

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Substance McGravitas 07.18.12 at 8:39 pm

It seems to me pretty unlikely that employers are going to offer employment terms that explicitly require workers to put up with sexual harassment

Hooter does just that.

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bianca steele 07.18.12 at 8:52 pm

Weatherson, sorry.

I’m meeting Betty and Veronica later at the soda shop.

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Will McLean 07.18.12 at 10:07 pm

Anarcissie @119:

“However, in history we observe what we might call normal or traditional capitalism, in which a class of owners of the means of social production require another class, a laboring class, to operate the means of production and consume its products, with the owning class deriving a surplus from this process (exploitation) which provides a living and source of power for them, as well as further capital.”

That would be the classic Marxist take, yes. But most non-Marxists don’t buy it. Rather, they would say that capital investments allow greater productivity from labor, and so there is a just return on capital that need not depend on exploitation.

Consider the employee truck driver who uses his savings to buy his own truck. The difference between what he formerly got as an employee and his current profit is his return on equity.

If you say that that’s just his escape from exploitation, suppose that he then buys a better and more expensive truck, and his profit increases. Where did the improved earnings come from but return on capital, since his labor input is unchanged?

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Anarcissie 07.19.12 at 12:40 am

140 — If we’re talking about normal, traditional capitalism, then we’re not talking about the workers owning their means of production, either singly or collectively, as in the case of the truck driver and his truck. (That’s one definition of socialism.) We’re talking about a situation in which the means of production, and thus the workplace, are owned and controlled by people, capitalists, who are different from the workers, who do not own and control the means of production and have many different interests, methods and relations from the workers. I think objections to my or Marx’s take on the situation should start from within that framework.

Conceivably, capitalists might delicately extract from production only exactly that value which they had added to it; but I don’t know how they could possibly make this computation, or why they would be motivated to it. Mostly, capitalists want to maximize profit, and profit is maximized by generating surplus value and getting control of as much of it as possible, as determined by power relations. At least in the traditional model.

I’m using surplus broadly here — I mean not only the value taken away from production by the capitalists, but also the value generated by the workers and returned to them to be consumed, wasted, taxed, donated, stolen, etc., which they might not need or desire if they thought they had a choice between laboring and doing something more amusing.

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mattski 07.19.12 at 1:02 am

Katherine, you’re misrepresenting what I said. The OP was not focused on sexual harassment. I’m sorry for not appreciating sooner that this was your primary concern. I certainly didn’t say that sexual harassment is a minor issue. But it wasn’t the focus of my remarks.

Yes yes yes – all oppressed people throughout time have just let themselves be oppressed.

I didn’t imply this. Not even a little. I was trying to distinguish between the bad behavior of a boss and the feelings it induces in the employee. Why does your boss’s deficiency have any bearing on your character? I’m not denying that most victims of insult, certainly myself included, have a tendency initially to feel bad about themselves. I’m saying it’s important to come to see that our feelings of guilt are generated on the inside and aren’t the responsibility of the bad actor.

And by the way, if a woman who is being harassed has no “right” to her job, then surely the boss who is harassing her doesn’t have a “right” to it either.

Obviously, I agree.

By any and all standards of fairness, he is the one who should be shipping out, not her.

Yes, with the caveat that it isn’t always possible to get this result.

And no, poverty and humiliation in a world of plenty are not equivalent to someone stealing your parking spot.

I didn’t say it was. If by “system” you are pointing to matters of degree then I wouldn’t disagree. Maybe this will help- Clarence Thomas is on the supreme court. In my opinion this is a serious injustice. (Yes, sexual harassment factors into my equation here) But I’m going to tolerate it at least in so far as I’m not going to resort to extralegal means to try and change the fact. But as I said, what is just or unjust is a matter of opinion.

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Will McLean 07.19.12 at 1:04 am

@ 141:

I see no value in starting with an artificial construct that has never existed in the real world. In the United States in which I live, there have always been capitalists (using the non-Marxist definition of people that own, control and use capital) who were simultaneously controllers of means of production and suppliers of labor.

At least in the later 19th c. it was a pretty big group, considering that you could get farmland, a means of production, for the price of homesteading it.

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mattski 07.19.12 at 1:18 am

The last addressed to Brendan.

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Anarcissie 07.19.12 at 2:33 am

143 — I have been theorizing mostly from my life-experience and the reading of those histories which I could either verify or which seemed to correspond to my experiences. I was born in 1939, so my experience of the work world has been dominated by the corporate model, rather than 19th-century American agriculture and industry, which I seem to have missed. My experiences and reading have also led me to appreciate the continuing radical power of large corporations, or rather the people who own them, in political and social matters, which seems to require some explanation and corresponding plan of action.

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faustusnotes 07.19.12 at 4:26 am

I’m saying it’s important to come to see that our feelings of guilt are generated on the inside and aren’t the responsibility of the bad actor.

wtf? Why do people insult and bully other people, then? Because they know that these feelings will be generated, no matter what people want their response to be. Telling people to read a bit of Spinoza doesn’t help them feel better when their boss tells them they’re a gonk-faced shitwit. It just makes you look callous.

And in any case, your response to this sort of thing shouldn’t be of this tenor: toughen up! Not everyone can do this, and no one should have to.

I have to say I’m really disappointed by the direction this series of posts has taken. It seems to be dominated by people who have no experience of real work, or whose experience is composed entirely of a few weeks of manual labour in high school, that daddy could always save them from. And this bullshit idea that no one needs to be protected in a world of full employment, which – even if it were possible in modern disaster zones like the US or the UK – is not even, and never was, true.

The debate here has come to be dominated by fantasists who don’t seem to want to understand either the nature of bullying, or the way that most real workplaces work. In between, their are fantasists who think that all of labour relations can be reduced to a simple Econ101 model, where “full employment” does all the work of abstracting away the real power relations that exist in real institutions. For light entertainment we’ve had the likes of asdf dropping in to talk about how useless “the proles” are.

It just goes to show how terribly limited academics are in providing any sense to a problem more complex than a perfect point object floating in a vacuum.

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js. 07.19.12 at 5:17 am

Re: Substance @138: Wow, the no. 4 under what “female employees” have to “acknowledge and affirm” is horrifying! Presumably this acknowledgment and affirmation has to happen when you start the job!?

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js. 07.19.12 at 5:34 am

JQ @135:

the issue arises much more sharply with things like meal and toilet breaks – should these be legislated, or would it be better to even out bargaining power in such a way that workers could demand and get a better deal at the outset.

So, I’m simply not getting the contrast here. On the one hand, you could legally require that employees can take regular toilet breaks, get a lunch break, etc. Or…, they demand a better a deal how?

Here’s another way of putting it: Say I’m a worker in current in current US conditions. No bargaining parity at all! Now, we move to new and much better world where bargaining power has been evened out (presumably through legislation? I’m assuming you’re not imagining wildcat strikes, workers fucking up machinery etc.). Ok, now in this much better world, it seems to me the very first thing I do is agitate for legislation that requires employers to give me regular bathroom breaks! I mean seriously, if I have to wear diapers to work(!), what’s a better deal than not having to wear diapers to work?

Again though, I just really don’t get the contrast in the quoted sentence.

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Hidden Heart 07.19.12 at 5:38 am

Mattski: I’m saying it’s important to come to see that our feelings of guilt are generated on the inside and aren’t the responsibility of the bad actor. The cognitive sciences exist. Maybe you should take the time to go buy some clues from them before presuming to lecture the rest of us. Those of us with PTSD or any of the million other things that produce unwanted emotions would really like this sort of fucking nonsense to dry up and blow away, soonest.

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John Quiggin 07.19.12 at 6:00 am

” I’m assuming you’re not imagining wildcat strikes”

I’m certainly imagining strikes (not sure whether the wildcat/regular distinction matters much here). I implied as much in the OP, when I talked about union contracts. And, in a strong labor market, walking out at zero notice is often as damaging to the employer as machine-breaking.

Overall, I’m surprised by the fact that so many CT commenters have so much faith in regulations and courts. I think the Australian and US perspectives here may be quite different – I see the courts and industrial laws as being at least as likely to favor bosses as workers .

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faustusnotes 07.19.12 at 6:09 am

That seems strangely naive to me John. There are many very important examples of regulatory change in Australia that strongly supported workers – think of the low paid carer cases and the change in librarians wages just for starters.

And this construction of unions OR courts and industrial laws is really out of place in the Australian context, where unions have always worked through the courts as well as through strikes and community action. The unions certainly know which side their bread is buttered on, and they are very fond of setting up industrial tribunals and using them to their own advantage.

And once again (I don’t know how many times I’m going to have to say this before someone noticed, but I’ll try): full employment is not a guarantee of rights or protections. It wasn’t in Australia in the 50s and it isn’t in Japan now, nor has it ever been. This dichotomy – between regulation on the one hand and the wonders of a robust market with no unemployment on the other – is just false.

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John Quiggin 07.19.12 at 8:18 am

Courts are part of the process in Australia, and it makes sense for unions to use them. But it makes just as much sense for bosses, and they’ve had plenty of wins there – just in the last few months there’s been the court endorsement of the Qantas lockout, the order to break the picket line at Toll, the massive fines (millions of dollars) imposed on unions and individual workers. And of course those outcomes reflect the legislation under which they are set up. In the end, the balance of wins and losses depends to a large extent (not exclusively) on relative bargaining power.

Maybe in the US, laws and courts always side with the poor and oppressed against the rich and powerful, so there’s no need to worry about bargaining power. That wasn’t my impression, but YMMV.

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chris 07.19.12 at 12:20 pm

The laws may not always favor workers, but the absence of them always favors bosses. I don’t know much about the Qantas lockout, but even so I’m going to bet that it’s not as big a deal as Triangle Shirtwaist.

Also, ISTM that the balance of wins and losses under law depends mainly on political power, which is not necessarily the same thing as the economic power that rules the bargaining table. It’s hard to imagine a situation where the captains of industry don’t have grossly disproportionate economic power, practically by definition (and striking is almost certainly going to damage the strikers *more* than the employer, if only because they have fewer resources to mitigate the damage — precisely why they are such a last resort and unions prefer to negotiate).

But it’s possible to reduce the disparity in their political power relative to ordinary citizens and workers (who outnumber them), as demonstrated by the historical time periods where ordinary citizens and workers did in fact have more political power.

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faustusnotes 07.19.12 at 1:54 pm

John, the laws you cite were changed after a 10 year backlash against the power of organized labour and the regulatory system. It’s naive to pretend that the operation of the laws is independent of the cultural and political forces at work at the time. And it’s equally naive to assume that unions could achieve the same things in a full employment situation without regulation governing both unions and employers. No doubt you’ve read Keating’s comments about John Howard being like a stupid boy with a match in the powder room – that’s what happens when employers and employees are left to negotiate directly with only the unions as a go-between. Australia’s 15 years of growth were dependent on both regulations covering employers and an agreement with the unions. To claim that we’d be better off without those complex systems of consensus is to argue against most of modern Australian labour market history.

This kind of semi-anarchist approach to labour relations is a disaster waiting to happen. Reforming it was Hawke’s first order of business upon assuming power in 1983, and for good reason. Look at Australia’s economic performance up until then to see why!

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bianca steele 07.19.12 at 3:41 pm

Overall, I’m surprised by the fact that so many CT commenters have so much faith in regulations and courts. I think the Australian and US perspectives here may be quite different – I see the courts and industrial laws as being at least as likely to favor bosses as workers .

True or not, the US right believes the courts favor plaintiffs, which in this case would be the employee, and is trying to eviscerate what protections there are. If the BHL proposal involves eliminating what rights workers now have to file lawsuits, complaints with federal agencies, etc., to me that doesn’t seem like a good thing. I haven’t seen a good argument that we are already at zero in that respect and that therefore it doesn’t matter.

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mattski 07.19.12 at 4:06 pm

To the various people I’ve irritated, I wish it weren’t this way. Maybe I’m mistaken, but I’m trying to bring a perspective that I think could be useful. I’m interested in the interplay between our rational faculties and our emotions, particularly the susceptibility of our reason to being at times overwhelmed by strong feelings. I see that quite a bit on this thread.

Why do people insult and bully other people, then?

There are times when the only really apparent reason is, they do it for their own amusement, for the satisfaction of a sadistic urge. Where do sadistic urges come from? Probably from being similarly abused in the past. We repeat what we know from our experience. In other cases, the force of habit is combined with having a particular object in mind, like getting my female co-worker to have sex with me. I want something, I deploy the means I’m familiar with to get it, and in the case of the workplace I might think that I have something extra working in my favor, the power of being my co-workers boss.

My instinct tells me this shouldn’t be permissible. But even if it is illegal that hardly guarantees it won’t happen. It hardly guarantees that the courts are the best recourse. Maybe they will be in many cases, and that’s good. In other cases maybe there is recourse within the company, going over the head of the offending boss. But there may be many cases where the best answer is, “I’m not going to work for a bunch of assholes. Goodbye.” Or perhaps, “You must not value my contribution to this company very much if you’re willing to treat me this way. And by the way, go fuck yourself.”

Hidden Heart, I wouldn’t for a second make light of PTSD. I don’t think though, that PTSD is generally the result of verbal insults or other forms of non-violent disrespect.

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Yarrow 07.19.12 at 4:24 pm

John, I think what’s going on here is the same kind of thing that happens with the fat man in the philosophical trolley-car thought experiment — people just don’t believe the hypothetical. They don’t believe that it’s possible to know that pushing the fat man off the bridge will stop the trolley car from killing the three people bound to the tracks, so when we ask “what would you do if you knew that pushing the fat man off the bridge would stop the trolley car”, they answer instead “What advice would you give someone who mistakenly believed (or maliciously pretended) that they knew killing the fat man would save the other three?”

Similarly, when you ask people to imagine full employment (1960s-Australia full employment, not present-day-Japan full employment); a minimum wage that in the U.S. is at least 1.7 times the current one; and a universal basic income that’s presumably at least somewhat above what a full-time workers gets for the current U.S. minimum wage — they don’t believe it. (I think they might believe the default employment contract, but also that employers would quickly make people sign explicit contracts if the default provisions seriously impeded employer power. We know that landlords protect themselves quite efficiently from defaults that favor tenants, software vendors from defaults that favor users, and so forth.)

So given all that, would we really need so much government intervention? When you ask that, people answer a different question, something like “If a bunch of libertarians promised you full employment, double minimum wage, and a decent UBI — if only you’d support giving more power to employers — would you trust them as far as you can throw them, or less than that?” As you say in the OP, “The CT side mostly takes it for granted that the required degree of equality can’t be achieved in practice, and that it’s therefore silly to concede anything to demands for freedom of contract.”

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John Quiggin 07.19.12 at 7:22 pm

@Faustus – since many readers won’t be aware of this, I think I should clarify that the pre-1983 situation you refer to was one of ‘excessive’ wage increases (relative to the capacity of the system), some big reductions in working hours and so on. Hawke’s achievement in bringing back regulation was to manage a gradual retreat from that, with no change in real wages or hours for a decade or so, as opposed to the catastrophic defeat for the unions that occurred under Thatcher and Reagan.

I can concede the necessity of that, and agree that there is a good case for this kind of approach in certain circumstances, but it’s a very different one from “courts look after workers when bargaining won’t”.

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John Quiggin 07.19.12 at 7:31 pm

@Yarrow – I think that’s right. I certainly don’t believe the trolley car hypothetical, and I guess full employment is just as foreign to most readers here – IIRC even in the 1960s the US had something like 4 per cent unemployment.

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Chris Bertram 07.19.12 at 7:47 pm

“the courts”

I doubt that most people in the UK think of going to an employment tribunal

http://en.wikipedia.org/wiki/Employment_Tribunal

to challenge a case of unfair dismissal in quite the same way as they think of going to law to sue somebody. (My sense is that some participants in this discussion have in mind people suing one another for tort, breach of contract etc.)

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bianca steele 07.19.12 at 8:17 pm

Chris Bertram:
I’m sure someone can correct me if I’m wrong–there’s more than one lawyer commenting on the site, isn’t there–but as I understand it, individuals can get the protection of regulations like those against unfair dismissal by filing suit under the appropriate federal act. In some cases, a government agency can file suit instead. I don’t think this is the ordinary practice. I don’t think there’s anything like a criminal prosecution for wrongful dismissal in the US, or any kind of administrative action by a government agency, that I know of (in any kind of regulation): it is all through lawsuits. The exceptions might be things like excluding employers from government contracts.

To my mind, asking for things to be all by contract implies–normally–assuming there will be lawsuits when contracts are broken (I’d assume here is where power differentials etc. come into play)–or else, in ultra-libertarian-land–assuming that because everything is done by free contract between equals, equals meet setbacks with equanimity and move on.

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John Quiggin 07.19.12 at 9:33 pm

@Chris I agree that industrial tribunals are different from other courts.

Checking on the Australian situation (this link isn’t up to date but gives the relevant history), we had essentially no protections against unfair dismissal until 1988.

I don’t think there was any interest in the issue until the early 1980s, which was when the risk of losing a job became a big issue for employed workers (in the 1970s, the problem was mainly that young entrants couldn’t get jobs). Before that, the unions were strong enough that bosses usually thought twice about sacking anyone, and in any case, getting another job was easy – the quote in the paper I link implies this wasn’t true in Britain even in the 1960s, and makes the point that protection is needed in Oz now because of the bad state of the labor market.

To make the point more sharply, if given the choice of the Australian labor market in the 1960s, with zero legal protection against unfair dismissal, and the labor market now, with unfair dismissal legislation that is used quite regularly, and is the subject of continuous whining by bosses, I would (as a worker) go for the 60s without hesitation and (if I were an employer) much prefer the current situation. And that’s for a country with what is officially regarded as full employment (5 per cent) at present.

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Will McLean 07.20.12 at 12:12 am

@145:

“I have been theorizing mostly from my life-experience and the reading of those histories which I could either verify or which seemed to correspond to my experiences. I was born in 1939, so my experience of the work world has been dominated by the corporate model, rather than 19th-century American agriculture and industry, which I seem to have missed. “

Still, there seem to a lot of self-employed proprietors and partners still out there. In the US in 2010, they seem to have been that third biggest contributing factor to the national income at 8%, after employee compensation, (62%) and corporate profit (14%). Whenever I’ve been able to find figures, it’s a bigger factor than interest or rent paid to persons.

And a lot of corporations aren’t big.

http://www.nytimes.com/2011/08/06/business/workers-wages-chasing-corporate-profits-off-the-charts.html

Given that almost everybody would rather have $100 now than $100 five years from now, it’s hard to get people to let you use their money without paying for the privilege. And since equity gets paid last, after employees and interest, I’m not seeing a lot of exploitation built into equity returns.

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faustusnotes 07.20.12 at 1:31 am

John:

I would (as a worker) go for the 60s without hesitation and (if I were an employer) much prefer the current situation.

I don’t think this is a fair way to characterize the false choice you’re offering. You “as a worker” don’t represent the full range of possible participants in the 60s employment market and you’re hand-waving away a huge amount of oppressive and discriminatory practices with this comparison. Specifically, women in the 1960s were guaranteed low wages and no career options no matter what job they applied for, and sexual harrassment was common. Moving jobs in a situation of full employment didn’t change this for them: it was a constant of their labour market participation and required regulation to change. Indeed, at the time that regulation was being considered, many labour activists argued that to extend them the same rights as men would destroy full employment.

You can’t just hand-wave this away by saying that it wouldn’t happen now, because it would, and although the burden of this kind of problem wouldn’t fall so disproportionately on women now it would still apply: to people from poor backgrounds, to some new migrants, etc. In Australia, with an unregulated labour market, identifiably Aboriginal people would suffer continuous and crippling discrimination that would force them into exactly the labour market position of women in the 60s. Unskilled female labourers in their late 20s and early 30s would be unable to change jobs, because they would be a “hiring risk” due to the possibility of getting pregnant; so, if hte situation in their current job became untenable (due to e.g. harrassment or bullying) they wouldn’t be able to change work.

Other things that don’t affect you “as a worker” now but that are very important to other workers and have only been achieved through regulation are: workers compensation (largely irrelevant to economists in academia); safe work environments (economists don’t need safety gear); asbestos amelioration (do you work in a prefab?); anti-bullying laws (bullying can destroy your mental health long before you can get out); and laws about drug use, shift length and alcohol in the workplace that are crucial for ensuring the safety not just of employees but of the people they serve.

I just can’t understand how people can blithely assume that “full employment” situations from a different era will somehow provide protection to a working population that spent the last 30 years agitating to improve work conditions from that time. It seems terribly naive.

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Anarcissie 07.20.12 at 2:38 am

If equity gets paid last and there is no exploitation, it’s hard to explain how come the rich are getting richer and the poor are getting poorer, but I suppose it can be done if you put enough effort into it — a kind of exercise in baroque composition.

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Will McLean 07.20.12 at 3:45 pm

What’s hard to explain is how equity owners’ exploitation of labor causes rising inequality when equity yields over the past decade have been relatively low.

On the other hand, an increasingly globalized and growing economy makes it easier for the top performers in sectors that sell worldwide to earn much bigger incomes.

Low marginal cost products like software, electronics and recorded video make it easier for the companies that are first in their field to become hugely profitable.

Lower tax rates let high income people keep more of their earnings.

When social norms are eroded, executives, financial managers and lawyers are more willing to demand higher compensation.

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Norwegian Guy 07.20.12 at 5:30 pm

“As I’ve said a few times now, the issue arises much more sharply with things like meal and toilet breaks – should these be legislated, or would it be better to even out bargaining power in such a way that workers could demand and get a better deal at the outset.”

Why not both? The dichotomy you are suggesting is quite odd. In my opinion it’s much more likely that a strong labour movement would (and it certainly should) demand both legal protections and low unemployment. It’s not a question of either/or.

Unemployment in Norway is about 3% at the moment, but I haven’t heard anyone suggest that this means that laws ensuring employees get lunch breaks should be abolished. I doubt that was the case in the 50s, 60s and 70s either, when unemployment was below 2%.

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Bruce Wilder 07.20.12 at 6:16 pm

Will McLean: “What’s hard to explain is how equity owners’ exploitation of labor causes rising inequality when equity yields over the past decade have been relatively low.”

It is a kind of zen experience, to simply contemplate that sentence, pondering what possible causal constraint the author imagined low “equity yields over the past decade” might place on exploitation of labor or rising inequality of incomes.

Some of us might think there’s an arithmetic relationship between inflated asset values and low equity yields, which resolves the deep mystery of the rising share of total income claimed by Capital, and in related news, by Power.

Still, McLean does raise the collateral questions of financialization and globalization, and their relationships to income distribution.

A corollary to the idea that full-employment is the key to equalizing negotiating power, nationally, is the idea that wages have been depressed simply by the changed ratio of Labor and Capital in newly globalizing trade, in which a vast “supply” of (cheap) labor has been thrown onto the world market, in the form, I guess, of China and India, and this has shifted the natural balance of negotiation in favor of Capital, of which a shortage now exists. Plus, as McLean says, Hollywoodization, which delivers big bucks to IP and to Stars.

Of course, the problem may be that, for technological reasons, the required amount of “real” capital for high labor productivity is declining rapidly. Fiber optic internet plus a cellphone system is much cheaper than the previous mountain of copper behind a switched phone system, for example.

Vast amounts of purely financial capital, with no secure attachment to factors of production (equipment, business ownership, real estate), is seeking return the only way it can, by promoting ponzi schemes and usury. The exploitation driving inequality isn’t bathroom breaks, it is bankrupting Greece or overthrowing democracy in Italy, driving municipalities into bankruptcy with fraudulent bond deals, and payday lenders preying on the working class.

Apparently full-employment is completely at odds with delivering the big bucks to banksters, but for reasons only tangential to, if not altogether distant from, the labor-management relationship on the shopfloor.

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John Quiggin 07.20.12 at 8:33 pm

@Faustusnotes I agree and said so above that the need for anti-discrimination legislation would not change with full employment – in terms of the history the end of legal wage discrimination against women and Aborigines came during the period of full employment (just before the end, unfortunately). More generally, I’m not even contemplating, let alone advocating the kind of libertopia you’re implying here. Virtually everything you’ve mentioned would be covered by the default contract I mentioned as a condition in the OP.

That said, I was struck by ““full employment” situations from a different era will somehow provide protection to a working population that spent the last 30 years agitating to improve work conditions from that time.” You really think workers have been winning for the last 30 years? What about casualisation, the end of standard working hours, regular large-scale redundancies in profitable companies, increased workplace stress etc?

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faustusnotes 07.20.12 at 11:40 pm

John, a lot of Japanese workplace “rights” come down to negotiation of contracts, and it’s not really a very pretty way to resolve disputes. How are poor people mistreated at work meant to rustle up the cash and the spare time to fight a court case, just to get -what? An apology and a few weeks’ back pay? Also, if as you say workers have not been winning the regulation battle for the last 30 years, what do you think would be different about the resolution of disputes under contract law? Slowly and surely the big companies, with good lawyers and infinite resources to restructure the legal environment, would reset case history in favour of their own rights, and it would become (as, I think, is the case in Japan) increasingly difficult for workers to win cases.

What would happen then is class actions, and demands by employers and employees to liberate both sides of the contract from complex legal cases, followed by regulation, etc….

RE: your second paragraph. Just because workers have been losing battles in the last 30 years, doesn’t mean that the conditions they were fighting against are desirable for anyone. Unions fought to improve the lot of workers from the 1960s on. That should tell you that 1960s workplaces weren’t popular with working people. , Nostalgia for full employment without regulation should be taken with a pinch of salt.

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mattski 07.21.12 at 12:10 am

Bruce, I find it difficult to understand what you’re trying to say. Are you challenging the idea that “capitalism” isn’t necessarily exploitive? If so, would you look at this graph and tell me, is it only “capitalism” when the lines are diverging? Or, when the lines are rising together is that “capitalism” too?

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Will McLean 07.21.12 at 11:08 am

Mattski@171:

See this link, included in Krugman’s article, for a more complete explanation of the wedge:

http://www.epi.org/publication/ib330-productivity-vs-compensation/

Note that the biggest part of the wedge is bigger gains for more highly compensated labor vs. the median.

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Will McLean 07.21.12 at 2:20 pm

Note also that since the cost of college is rising considerably faster than inflation, you would expect the differential between the job that requires a high school education and a college one to widen faster than inflation, without necessarily leaving the college educated worker any better off after the cost of college is subtracted from his compensation.

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