Work and beyond

by John Quiggin on February 9, 2014

A little while ago, Ross Douthat tweeted a link to this Aeon article of mine, reflecting on Keynes ‘Economic Possibilities for our Grandchildren’, which gave rise to some interesting discussion (Memo to self: Find out about Storify). Now he’s addressed the topic in the New York Times, linking directly to Keynes essay. There’s some interesting food for thought here. Unfortunately, it’s mixed up with some silly stuff reflecting his job as the NY Times token Republican, in which capacity he has to do some damage control over the exposure of the latest Repub lie saying that Obamacare will cost 2.5 million jobs. As Douthat delicately puts it “this is not exactly right”. But, although his heart clearly isn’t it, he tries to construct a narrative in which the Repubs might be right for the wrong reasons, or, in an even less-felicitous defence, mean-spirited and inaccurate but justified by the success of Reaganism thirty years ago.

More interesting though, is Douthat’s discussion comparing idealised hopes for a post-work society with the reality in which well-educated professionals are working longer hours than ever, while many at the bottom end of the income distribution, particularly poorer men have withdrawn from the formal labour force altogether (presumably, relying on disability benefits or scraping a living in the informal economy). One possible solution to this problem, is simply to give the poor more money, for example, in the form of a basic income, and not worry about whether they choose to work. Douthat isn’t too happy about this idea, saying

Both “rugged individualist” right-wingers and more communitarian conservatives tend to see work as essential to dignity, mobility and social equality, and see its decline as something to be fiercely resisted. The question is whether tomorrow’s liberals will be our allies in that fight.

But this position elides a bunch of crucial issues.

First, while work may be necessary to “dignity, mobility and social equality” in a market society, it certainly isn’t sufficient. For unionised US workers in the mid-20th century, earning middle-class incomes in relatively secure jobs and expecting better for their children, work was, arguably both necessary and sufficient to achieve a fair measure of these things. But an at-will employee, juggling two or three tenuous jobs that pay $7.25 an hour, and looking at a steady decline in real income, is scarcely getting much in the way of dignity, let alone mobility or social equality.

Equally importantly, market work isn’t the only kind of work people can do, and certainly not the most valuable. Most obviously, there’s the raising of children. The US the developed countries that does not provide any kind of paid parental leave, and even the legislative provision for unpaid leave (12 weeks a year for mothers in firms with more than 50 employees, nothing for fathers) is incredibly stingy. The idea that the ‘rugged individualists’ who block any improvements to these conditions actually care about the dignity of the working class is simply laughable.

I don’t need to tell Douthat any of this. It’s all in his book Grand New Party with Reihan Salam, notably including a proposal for a full year of paid parental leave. The book received cautiously respectful reviews from many in the centre and centre-left, but fell entirely flat with its intended audience in the Republican Party.

I’ll have a bit more to say about the kind of technological determinism that seeks to explain labour market polarisation as arising from computers and the Internet a bit later. For the moment, I’ll repeat the conclusion of my Aeon essay that a response to technological change that will preserve the link between work, dignity and equality will require both a reduction in total hours of work and an expansion in the range of social contributions regarded as work, beyond those that generate a market return

Finally, coming back to the argument about Obamacare. Whatever your views on work and incentives, it’s ludicrous to regard as beneficial a system that ties people to their current jobs through the fear of losing health insurance. The result is not just that people work longer hours than they would choose to do at the wages on offer: they are stuck with their current employer until they can find a new job offering comparable health benefits, something that is getting increasingly difficult to do.

The employer-based health insurance system was (like Obamacare in many ways) a kludge adopted1 because it was better than nothing, and because a sensible single-payer system couldn’t get through Congress. But it’s been broken for years, and can’t be sustained indefinitely.

Again, Douthat is clearly aware of all this, but can’t say so in his current position. I’m still expecting him to jump ship before too long, and I hope he doesn’t go through too many more exercises like this in the process.


  1. I’m drawing, from memory, on David Moss, When All Else Fails who explains why national health insurance never made it into the New Deal. 

{ 114 comments }

1

Barry 02.09.14 at 1:14 pm

Why would he jump ship? He’s got a sweet gig now. If he became a heretic, he might keep his NYT gig[1], but he’d lose any other wingnut welfare checks.

[1] I don’t know what it takes to lose a columnist position there.

2

Opie Elvis 02.09.14 at 1:52 pm

It seems like Douthat has already descended into the world of Brooksian hackdom. He regularly treats Republican Potemkin Proposals like Mike Lee’s unscored, lacking in detail or specifics tax reform ideas as full fledged policy proposals.
His basic modus operandi seems to be to find ways to apologize for or legitimize right wing views using a sort of “on the other hand” style that misrepresents both the Liberal reaction or criticism to a ludicrous right wing meme and the actual meme itself.
Dean Baker has taken a modern approach to Keynes idea of shorter work weeks by repeatedly pointing out that if productive gains from technological innovation, the rise of the robots as it were, was distributed equally or at least well then the idea of labor shortages from an aging population and the conflicting attitude of not enough jobs because of robots taking work would be passe. Increasing productivity should lead to both fewer shortages and the need for less work provided the gains flowed throughout the economy and society.

3

William Timberman 02.09.14 at 2:29 pm

…dignity and equality will require both a reduction in total hours of work and an expansion in the range of social contributions regarded as work, beyond those that generate a market return

This is a key idea, it seems to me. It’s the only justification for your proposed new order that I can see resonating with the long term unemployed, or with those threatened by a devaluation of the jobs they still have, or those that they’ve prepared themselves to do. If you want to convince people that a service economy can be an adequate replacement for the manufacturing economy that we started outsourcing in a big way in the Eighties, this is the way to go. Setting the seal of social and economic approval on various kinds of do-goodery might even end once and for all those nasty right-wing populisms based on racial antipathies or a fear of so-called freeloaders and low-wage immigrants. Something to work on, at any rate, whenever the political opportunity presents itself.

4

P O'Neill 02.09.14 at 2:43 pm

What gives Douthat the opening is that liberals are convinced they won the round over the CBO estimates simply by pouncing on the clownish misstatements of it by the likes of Eric Cantor (note for example that Paul Ryan stated it correctly). But as the ones of readers on my own blog will have read already, Krugman and others who are in the ring on this one are simply asserting that the 2.5 million FTEs are better off. But are these people tucking in the kids at night, or headed for the ranks of the NEETs? In the victory dance over the CBO round, I’ve yet to see Krugman bring an iota of evidence or even interest in this issue. Douthat at least is asking.

5

Keith Ivey 02.09.14 at 2:47 pm

Have any of the folks yammering about “the dignity of work” come out in support of a 100% inheritance tax, or does this concern about dignity somehow not apply to those who have done the hard work of being born into the right family?

6

DrDick 02.09.14 at 3:09 pm

Releasing labor from its bondage to capital is anathema to conservatives. The last thing he wants is a workforce with choices and an assurance of at least minimal needs met if they are unemployed. How will the plutocrats continually increase their rent extractions in such a world?

7

Rowz 02.09.14 at 3:17 pm

Can someone explain why we would want to subsidize child-rearing *rather* than simply transfer an equivalent amount of income to the poor? Is the idea that the world is underpopulated, or that increased immigration is for some reason out of the question? I understand that child-rearing is difficult and important work. What I don’t understand is how people are forming a view of the optimal public subsidy for procreation.

8

oldster 02.09.14 at 3:25 pm

Typo alert:

“The US the developed countries that does not provide any kind of paid parental leave,”

I assume that should be e.g.,
“The US [is the only one of] the developed countries…”?

9

oldster 02.09.14 at 3:57 pm

Also:

Did he come to learn of that Keynes essay by reading an article of yours in Aeon, and then refer to the Keynes essay in his NYT piece without giving you a h/t?

Because that’s some really poor intellectual hygiene on his part. That’s the kind of cheap trick for making yourself look smarter that…well, that I suppose I have come to expect from Douthat, Goldberg (“can someone read Spinoza for me?”) and other wing-nuts.

10

Plume 02.09.14 at 4:14 pm

Elites throughout time have always been in the business of telling the “peasants” they’re lazing good-for-nothings and need to work harder. All too often, these “elites” are a part of the leisure class of that day and time. If a “peasant” chooses to fish or hunt, grow their own food, make their own clothes, gather with friends and neighbors to build their own homes, thus avoiding the employee/ wage-slavery trap . . . . they’re “lazy.” Whereas someone who has never so much as dirtied their fingernails, and makes money with money, all too often sees themselves as busting their gut in the desert sun 24/7.

Prior to capitalist dominance and forced expulsion from the land, people actually could self-provide enough to get by. And many chose not to go into the factories for a pittance, with its attendant loss of much of their time to be with family and friends. To live, in short. This enraged the various grand poobahs of society, especially the torchbearers of the new economy, classical political economists. They said in the 18th century exactly what conservatives are saying today.

“Get off your fat duff and get a real job!!” Shorter version: Sacrifice your life so that fat cats get rich off your sweat and blood.

No thanks.

11

Straightwood 02.09.14 at 4:20 pm

I think Douhat’s difficulty in challenging his ideological backers is no more embarrassing that the reluctance of academic economists to declare the obvious incoherence of their discipline at a time when the freshwater/saltwater divide has revealed it to be a house divided against itself. Pick a policy issue, and you will find equally prominent economists in diametrically opposed positions. This is ridiculous.

The prestige of the econ0mics community now lies in ruins, largely because of the mutual professional courtesy extended among members of the club. Economists have successfully defended their individual institutional franchises at the expense of their collective public reputation.

12

bob mcmanus 02.09.14 at 4:28 pm

Releasing labor from its bondage to capital is anathema to conservatives.

Because that’s socialism.

Because it’s impossible. Work that isn’t waged isn’t labor. It is outside the marketplace, and viewed as a cost taken out of wages, not out of production and profits. This is why we had a high “family wage” during the Fordist era.

Can someone explain why we would want to subsidize child-rearing *rather* than simply transfer an equivalent amount of income to the poor?

Because I at least want childcare to remain part of the “State,” financed partly from wages and partly from profits, in a socio-political democratic decision rather than an completely individual responsibility allocated from a family budget. Much like the difference between public and private schools. I also oppose the Basic Income Guarantee, preferring a system of State-provided services.

Endnotes The Logic of Gender

<blockquote.It is important here to state that, even if unwaged IMM activities and the abject might refer to the same concrete activities, these two concepts must be differentiated. Indeed, the category of the abject refers specifically to activities that became waged at some point but are in the process of returning into the unwaged IMM sphere because they’ve become too costly for the state or capital. While IMM is a purely structural category, independent of any dynamic, the concept of the abject grasps the specificities of these activities and the process of their assignment in our current period. Indeed, we can say that, if many of our mothers and grandmothers were caught in the sphere of IMM activities, the problem we face today is different. It is not that we will have to “go back to the kitchen”, if only because we cannot afford it. Our fate, rather, is having to deal with the abject. Contrary to the IMM activities of the past, this abject has already been to a large extent denaturalised. It does not appear to those performing it as some unfortunate natural fate, but more like an extra burden that one must deal with alongside wage-labour. Being left to deal with it is the ugly face of gender today, and this helps us to see gender as it is: a powerful constraint.

indirectly market-mediated sphere (IMM), sort of the sphere that reproduces labour-power, includes the State and ideological mechanisms

13

William Timberman 02.09.14 at 4:29 pm

Polanyi. He keeps coming up, and for good reason. His metaphor of embedding hasn’t resonated — possibly because it isn’t punchy enough for our Sabbath gasbags — but the insight behind it has endured. Which is embedded in what, which is the subset and which the superset, which the cart and which the horse. A value not expressed in dollars isn’t a value at all. Etc., etc. Weird that Graeber resurrected Polanyi’s switcheroo to great acclaim, only to fall victim to accusations of personality crimes. (Nota bene: I’m not trying to ignite a war over whether or not those accusations were justified.)

Ahem…. Where are Bruce Wilder and Bob McManus when we really need them? John C. Halasz? Anyone?

14

William Timberman 02.09.14 at 4:30 pm

I spoke too soon. Misericordia.

15

Bruce Baugh 02.09.14 at 4:31 pm

Douthat’s never going to jump ship unless the Democrats drift rightward enough to support a full-blown theocratic wing. The very core of Douthat’s existence is being the Pharisee praying in the Temple, in one of Jesus’ parables, and for all their faults, the Democrats simply don’t give anything like the cuddling the Republicans do to that way of life. It’s still hatemongering sneering even if you claim not to enjoy it.

As for the substance, my parents raised us to believe that there’s potential for value in all work, but also to have the Depression veteran’s skepticism that there’s any value in any given job as it actually exists. And as a zillion people have noted before, it’s not like we find all these blatherers volunteering to do the ugly dirty stuff themselves. They seem mostly to believe in the dignity of labor for people they don’t want trying to think or participate as citizens.

16

Bill Gardner 02.09.14 at 4:42 pm

Rowz: “Can someone explain why we would want to subsidize child-rearing *rather* than simply transfer an equivalent amount of income to the poor?”

You might want to look at Nancy Folbre’s argument that children are a public good (http://www.jstor.org/discover/10.2307/2117807) or the related argument by Serena Olsaretti that children are a ‘socialized’ good (http://onlinelibrary.wiley.com/doi/10.1111/papa.12019/abstract). These arguments justify transfers to parents. However, they do not discuss ‘optimal’ transfers.

17

ifthethunderdontgetya™³²®© 02.09.14 at 5:15 pm

18

Rowz 02.09.14 at 6:16 pm

Thanks, Bill. I don’t have JSTOR access at the moment, but I’ll be curious to see how Folbre deals with immigration.

19

Watson Ladd 02.09.14 at 6:59 pm

Plume: Read Aesop. In particular direct your attention to the grasshopper and the ant. Or Adam Smith’s discussion of the existence of beggars. Pre-agricultural societies had extremely limited ability to survive environmental dislocations. Specialization might render work’s relation to libidinal drives obscure, but was necessary to create civilization. Neurosis is the price of Bach.

In socialism labor and the division of labor will be enhanced, not eliminated. There was an article I saw a few years ago about a Russian family that moved to Siberia and lived alone. Their quality of life was abysmal: they engaged in endurance hunting of wild animals, had to plow by hand, and if one of them broke a leg, they would be crippled for life. Even if I lived on a tropical island with an upwelling offshore, failing to maintain my boat would mean starvation.

Birth control in pre-civilizational societies was only known on one island due to a property of the staple food reducing fecundity. Human populations were limited environmentally, a phrase that means starvation, predation, disease, miscarriage, accidents.

The question isn’t whether to abolish the formation of labor into capital. The question is who should benefit and direct it. We can’t end labor without killing billions of people by starvation. But we can ensure it benefits everyone.

20

John Quiggin 02.09.14 at 7:18 pm

P O’Neill @4 In the nature of things, detailed evidence on the effects future supply responses is a bit hard to come by.

But, since you’re commenting on my post, I’m a bit annoyed that you write as if I had ignored the issue, rather than giving reasons why the kind of job-holding incentive associated with employer-provided health insurance is unlikely to be socially beneficial. To use your own words, you haven’t provided one iota of either evidence or argument to back your position.

21

John Quiggin 02.09.14 at 7:23 pm

Straightwood “I think Douhat’s difficulty in challenging his ideological backers is no more embarrassing that the reluctance of academic economists to declare the obvious incoherence of their discipline at a time”

Umm, again, you’re commenting on my post, and I am, as you may have noticed, an academic economist. Have you even read what I’ve written on this subject?

@16, one of the few things (nearly all) economists of all stripes agree on is the desirability of limiting patents and copyrights. See the amicus brief in Eldred v Ashcroft for example. There’s plenty wrong with economics, but that dog won’t hunt

22

Lee A. Arnold 02.09.14 at 7:59 pm

We can thank the CBO for starting this particular conversation, but all the evidence isn’t in, and there is a lot more to be seen. One possibility is that ACA could increase small business start-ups.

Douthat writes, “One of the studies used to model the consequences of Obamacare… found a strong work disincentive while looking at a population of childless, able-bodied, mostly working-class adults.”

Will someone please help me out, here? At that link exists what appears to be an AEI position-paper for the FIRE sector. There are half-truths and bad logic which will make it a waste of your time, but I need help: I scanned the whole thing, and I don’t see mention of the study which connects Obamacare to a strong work disincentive.

23

John Quiggin 02.09.14 at 9:21 pm

I saw AEI and stopped right there. But I’ll check it out if I get a moment

24

Paul 02.09.14 at 9:31 pm

Longtime lurker, first time poster.

Prof Quiggin, have you heard of the work of Frithjof Bergmann on ‘New Work’? He was a recent guest on the Partially Examined Life podcast. Notably, he has gone beyond theory and been involved in practical implementations of his work around the world. At least partly, the practice takes advantage of technological gains for the sake of the worker, rather than for increased productivity for capital (ie 3D printing). It was interesting to hear his ideas and I’d be interested in the CT hivemind’s take.

25

Billikin 02.09.14 at 9:53 pm

P O’Neill: ” Krugman and others who are in the ring on this one are simply asserting that the 2.5 million FTEs are better off. . . . I’ve yet to see Krugman bring an iota of evidence or even interest in this issue. “

The assumption, pretty much regardless of political bent, is that people are generally better off when they have more options. The ACA gives them the option to get health insurance without staying in their current job, or any job, and an expected 2.5 million will exercise the option to quit work. True, people can make bad decisions, but the expectation is that most of those who quit work will be doing what is better for them.

26

Billikin 02.09.14 at 10:01 pm

Rowz: “Can someone explain why we would want to subsidize child-rearing *rather* than simply transfer an equivalent amount of income to the poor?”

Sure. Even those who believe that poor adults are responsible for their fate do not believe that poor children are. So there is wide support for alleviating the lot of poor children. We in the US would probably do more for poor children if it did not entail giving money to their parents.

27

Dr. Hilarius 02.09.14 at 10:48 pm

I’ve met people who expressed a sincere belief in the dignity of labor, almost all of them over the age of 70 with a diverse work history that included manual or farm labor. But from the current right wing this is just more cynical deflection. Witness the opposition to increasing the minimum wage, often ridiculing “burger flipping” as unworthy of decent compensation. I keep waiting for all the hedge fund managers, stock hustlers and conservative pundits to go Galt and leave the rest of us, unworthy as we might be, alone. Please?

28

djr 02.09.14 at 11:27 pm

P O’Neill @ 4:

“Krugman and others who are in the ring on this one are simply asserting that the 2.5 million FTEs are better off.”

Krugman’s point is that expressing the change in the hours worked distribution function in terms of FTEs is deliberately misleading when the question is how people choose to allocate their time between paid work and other activities. There won’t be 2.5 million people who have changed from full time to no work, there will be considerably more people who (according to the CBO) change the number of hours they work in a way that increases their personal utility functions. Krugman is playing whack-a-mole, by the usual rules of that game.

29

SamChevre 02.09.14 at 11:27 pm

Random nitpick:
npaid leave (12 weeks a year for mothers in firms with more than 50 employees, nothing for fathers) Actually, fathers are equally eligible for FMLA leave. (I took FMLA leave after each of my children were born, so I’m quite certain.)

30

UserGoogol 02.09.14 at 11:36 pm

Rowz@7: I’d emphasize the distinction between child-rearing and child-making. Child-making is what causes all the costs to society you’re talking about, but once a child is around you might as well take care of it. The problem is that the two jobs are deeply connected (at least for the foreseeable future), so subsidizing one will tend to cause some spillover to the other, but they’re different that you can want more of one and less of the other and try to achieve that in policy.

31

Ken_L 02.09.14 at 11:36 pm

Douthat’s argument is even more confused than you describe it. His premise is partly that “… the digital economy delivers rich rewards to certain kinds of highly educated talent, while revolutions in robotics eliminate many of today’s low-skilled, low-wage jobs”. The latter statement is misleading and illustrates the persistent tendency amongst pundits to equate “low-skilled, low-paid jobs” with “assembly-line work in factories that make consumer goods”. In fact the service-based economy has seen an explosion in low-wage jobs doing work that people used to do for themselves, from lawn mowing to dog-washing to childcare. (The question of whether these low-paid jobs are also “low-skilled”, is one that can’t be properly dealt with in a comment like this; but it’s significant that pundits like Douthat automatically assume they are simply because they don’t get high wages … as opposed, presumably, to something requiring “highly educated talent” such as churning out a few thousand words of pap for the “New York Times” every week).

The gaping hole in Douthat’s argument is that while he deplores the alleged permanent loss of jobs on the one hand, and maintains that work is good as an end in itself, he makes no suggestions about how the former is to be reversed in order to achieve more of the latter. But he knows that many of his less sophisticated ideological fellow-travellers are more than willing to supply the solution. As always, it lies in “labour market flexibility” and “entitlement reform”, meaning reduce the welfare safety net and the minimum wage to force ever more people to take crappy jobs for a few dollars an hour, in order to enjoy the dignity of avoiding starvation. That’s why they reacted so viciously to the CBO report; it’s evidence that despite all their frantic opposition, the damned liberals have made a tiny but positive step towards giving people the unalienable rights to liberty and the pursuit of happiness.

32

Ken_L 02.09.14 at 11:40 pm

By the way see also “Why do Republicans want us to work all the time?” at http://www.politico.com/magazine/story/2014/02/jobs-leisure-republicans-want-us-to-work-all-the-time-103282.html

33

Bruce Wilder 02.09.14 at 11:44 pm

P O’Neill: What gives Douthat the opening is that liberals are convinced they won the round over the CBO estimates simply by pouncing on the clownish misstatements . . . In the victory dance over the CBO round, I’ve yet to see Krugman bring an iota of evidence or even interest in this issue. Douthat at least is asking.

John Quiggin: detailed evidence on the effects future supply responses is a bit hard to come by

Lee A. Arnold: We can thank the CBO for starting this particular conversation, but all the evidence isn’t in, and there is a lot more to be seen.

It’s worth observing and reflecting on the extent to which this political discussion is a contest of dream worlds, projections of the future, where our reasoning accepts the constraints it likes and rejects the inconvenient truths, willy nilly. In politics, I’m not sure how many people can be brought together to share a dream world, or how long that sharing can last. Evidence may never matter, but the explanations attached to experience will matter.

It’s the contest over the explanation of experience, where the politics plays out.

Sadly, I think what John Quiggin, in his Aeon essay, called “market liberalism” — a “more neutral term” for the conservative-libertarian/neoliberal ideological policy consensus — remains the default, and effectively undisputed, framework for explaining economic experience. Undead, but still champion.

The liberal Democrat in the U.S. or the social democrat or labor party adherent in Europe is in a tough position, when they push 3rd and 4th best policies in compromise with plutocratic power mixed with the usual corruption, and then must “explain” their way through the confusion, numerous shortcomings, hardships and further erosion of economic security, which inevitably follow.

Does a utopian vision help the liberal or social democrat?

I guess I can see how it might help a bit in rallying the tribe. I’m not sure how it loosens the deathgrip of neoliberal ideology, which holds the mandarins and technocrats, and therefore establishment politicians, firmly in place, nor how it might advance liberals and social democrats in the direction of 2nd-best policy, which might actually turn out well, or be less ambiguous in its results.

34

Straightwood 02.09.14 at 11:47 pm

@21

Do you believe that the economics profession is undergoing a crisis? Do you believe that the current sharply contradictory policy guidance provided by leading economists (e.g., austerity vs. expansionism) has any counterpart in other branches of the social sciences?

35

Bruce Wilder 02.09.14 at 11:52 pm

The U.S. does have something like a basic income guarantee in Social Security disability claims. It’s a fairly sizeable number of people (more than 10 million). Not very utopian, but, I suppose, a political outlet of sorts. The usual array of political prejudices and pejoratives apply.

36

roy belmont 02.09.14 at 11:54 pm

We in the US would probably do more for poor children if it did not entail giving money to their parents.

Somehow that fits tidily beside/inside this:

Pre-agricultural societies had extremely limited ability to survive environmental dislocations

The unexamined valuation in both of them starts with “I’m basically the center of the universe, so anything that’s getting evaluated is going to start with me.”
Poor children often become parents.
There isn’t a bright line demarcating the change. Because it’s the same person.
But for solipsistic twits apologists for the status quo of course the difference is stark and fundamental. Because the world essentially came into being with their personal/collective rise to consciousness.
It is contempt, always, inevitably.
Contempt for the poor, contempt for the primitive.
And by implication self-praise, and the unargued unanalysed superiority of the conditions and values that keep twits benificiaries of the system central and necessary to it.
To be poor is failure, somehow personal failure. Poor choices. By individuals.
Not systemic, because the system’s rewarding you, so it can’t be bad.
But children are only poor through accident of birth, or whatever other murky horseshit rationalizations are required to make that work.
So to preserve your sense of moral superiority you have to extend some dribs of compassion downward to them.
At the same time it’s necessary to condemn the parents, because otherwise fault shifts to the larger context. Children are too obviously blameless in their own circumstances.
So twisted contemptuous pseudo-logical assertions, because Darwin.
Depending on where you want to mark the emergence of human consciousness on the evolutionary timeline, we’ve been doing the human thing for hundreds of thousands, if not millions, of years.
The success of our ancestors is directly, irrefutably evidenced by us. Being here.
They gave us this living. And far too many buy into the disdain and contempt for what were provable successful ways of being.
Otherwise you’d have to be asserting that umpteen thousands of generations of human beings only survived by miracles of coincidence, and continuously repeated fortunate accidents. Which is specious nonsense.
You turn your back on the poor because it makes you more comfortable than seeing them as and for what they are. Collateral damage.
You turn your back on your deep ancestors because you don’t measure up to even the minimal standards of their biological integrity. And paint them as no more than grunting thugs.
You couldn’t survive like that, therefore it’s squalid, failure.
You’re not poor, therefore there’s something wrong with the (adult) poor.
The alternative is of course that there’s something wrong with you and the way you live, and all the luxury and safety of your current material circumstances aren’t strong enough evidence to disprove that.
Let alone the horrific, still mounting, by-products of the very achievements you tout as evidence of your superior way of life.
There’s a considerable body of evidence that the current way of doing things (civilization whatever, 7000 years or so max) may well end up being not at all successful. If longevity of the species is the marker.
I’m content to leave the jots and tittles of the present economy to those whose professional skills and intellectual abilities suit the task, but I would like to hear just once someone affirm what seems to me to be important and completely lost in the polarized arguments about the ACA. That it is not about access to health care.
It’s about access to profit-driven healthcare insurance.

37

MPAVictoria 02.09.14 at 11:58 pm

“but I would like to hear just once someone affirm what seems to me to be important and completely lost in the polarized arguments about the ACA. That it is not about access to health care.
It’s about access to profit-driven healthcare insurance.”

In the US that is a distinction without a difference Roy.

38

Bruce Wilder 02.10.14 at 12:04 am

John Quiggin: one of the few things (nearly all) economists of all stripes agree on is the desirability of . . .

It would probably be best to simply erase that phrase from your vocabulary, and say no more along those lines, at least for a decade or two.

Whatever “truths” sound economic reasoning seems to confirm to a degree of certainty, the quality of judgment in the general run of actual academic economists is so debased, that its not worth considering whether they agree on anything. (No insult intended to present company, of course. Sincerely.)

I think I’d not get too excited about economists at least opposing perpetual! grants of intellectual property. Dean Baker’s usual scorn is a dog that always hunts.

39

Bruce Wilder 02.10.14 at 12:09 am

In the US that is a distinction without a difference Roy.

Polarized argument speaks.

40

ambzone 02.10.14 at 12:11 am

The medium is the message, roy belmont. I liked your piece nonetheless.

41

Matt 02.10.14 at 12:16 am

I’ll have a bit more to say about the kind of technological determinism that seeks to explain labour market polarisation as arising from computers and the Internet a bit later.

Please say it soon! The relationship between technology, class, and employment is one of my great interests along with post-fossil energy. I don’t want to start yammering in this thread if there is going to be a separate post a little later.

42

Robert 02.10.14 at 12:25 am

@22
I went through the AEI paper and didn’t find links to any studies on the topic.

I did a google search on the topic and I think this NBER paper is the study he meant to reference.

43

MPAVictoria 02.10.14 at 12:29 am

“Polarized argument speaks.”
Sorry Bruce, I don’t understand this statement.

44

John Quiggin 02.10.14 at 12:32 am

Straightwood @33 Yes and Yes

45

Plume 02.10.14 at 12:38 am

Watson Ladd #19,

I’m not seeing how your response is related at all to what I said, but, no matter.

Not saying we should abolish labor. I’m saying we should broaden how it’s defined — especially to include things done outside the employer/employee frame.

I’m also saying that since that frame has always been unjust, unfair, immoral and woefully out of balance, it’s long past time to change it to one where we work for ourselves and society, not to make a tiny fraction of the population rich.

And we can have our “division of labor” without having that employer/employee set up. We can have it without work defining who we are. As Marx said:

. . . to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticize after dinner… without ever becoming hunter, fisherman, herdsman or critic.”

Naturally, capitalists have always wanted to prevent people from working for themselves and their communities. They need wage slaves. And one of the mind-games they’ve always used is to try to guilt people into going to work for those capitalists. “You’re a no good, rotten, lazy slug if you don’t.” etc. etc.

I hope people wake up someday and see they’ve been had.

Bottom line for me: It’s waaaay past time we move to a community-based, small is beautiful, local is logical economy . . . . one that is flexible, optimizes free time for personal dreams and projects . . . . while ending immoral power and wealth imbalances between ownership and workers. We can very quickly end the latter imbalance by making everyone owner, with an equal share and equal voice.

46

P.M.Lawrence 02.10.14 at 3:15 am

More interesting though, is Douthat’s discussion comparing idealised hopes for a post-work society with the reality in which well-educated professionals are working longer hours than ever, while many at the bottom end of the income distribution, particularly poorer men have withdrawn from the formal labour force altogether (presumably, relying on disability benefits or scraping a living in the informal economy). One possible solution to this problem, is simply to give the poor more money, for example, in the form of a basic income, and not worry about whether they choose to work.

If a basic income were set at a sweet spot that was not quite enough to live off, but enough to live off when supplemented by low paying work, it would be practical for enough people to bid themselves into work of that sort since they could afford to lower the wages they would accept; this would lead to them working, since they would have an incentive to get that top up pay. As a Pigovian subsidy undoing a labour market externality, it would actually raise G.D.P. – once things settled.

There are catches, of course. If Malthusian constraints cut in, the floor would come up to meet the ceiling and not everybody could survive anyway, no matter how you re-arranged things. More immediately, there would be huge transitional problems: if the basic income were set low enough to be sustainable, a lot of people wouldn’t last until everything had shaken out and enough new, low wage work materialised; and if it were set at higher levels initially to stop people falling through the cracks, that might cost too much before the transition ended. That is why I prefer the Negative Payroll Tax option worked on by Professor Kim Swales of the University of Strathclyde and his colleagues (in the UK) and by Nobel winner Professor Edmund S. Phelps, McVickar Professor of Political Economy at Columbia University (in the U.S.A.), which I have looked into myself, here in Australia; that gives employers a tax break per worker, set at a figure per full time hour similar to a sweet spot basic income. A suitable Negative Payroll Tax wouldn’t have outgoings during even a long transition, and it wouldn’t have a time lag for wages paid to adjust either, so it is much more practical.

But an at-will employee, juggling two or three tenuous jobs that pay $7.25 an hour, and looking at a steady decline in real income, is scarcely getting much in the way of dignity, let alone mobility or social equality.

With employment support like that I outlined, they wouldn’t be tenuous. That is, getting another one would always be realistic, because there would be the incentives to offer more jobs.

Equally importantly, market work isn’t the only kind of work people can do, and certainly not the most valuable. Most obviously, there’s the raising of children…

That, too, would become more realistic if a household had two basic incomes supplemented by just one wage earner. It would also work out under a Negative Payroll Tax implemented through anonymous, transferrable vouchers, as there would be nothing to stop one wage earner offering all the household’s vouchers to employers.

All this could open up a path or trajectory to a sort of modernised Distributism, which Plume at least seems to have hinted at.

47

Tom Hancock 02.10.14 at 3:20 am

Please have your webmaster fix your RSS feed.

48

Matt 02.10.14 at 3:39 am

If a basic income were set at a sweet spot that was not quite enough to live off, but enough to live off when supplemented by low paying work, it would be practical for enough people to bid themselves into work of that sort since they could afford to lower the wages they would accept; this would lead to them working, since they would have an incentive to get that top up pay.

Wait, why is “not quite enough to live on” the sweet spot for a basic income? Right now the basic income is zero and therefore the incentive to get pay is even greater, but across the OECD there are millions more people seeking jobs than open positions available for job seekers. Under these conditions, trying to fix unemployment by focusing on job-seekers instead of jobs is irrelevant at best and a diversionary/delaying/blame-shifting tactic at worst. Or does lower the wages they would accept include scrapping minimum wages, so that everyone can have the “opportunity” to find a job underbidding offshore sweat shops?

49

Lee A. Arnold 02.10.14 at 3:46 am

Bruce Wilder #33; “It’s worth observing and reflecting on the extent to which this political discussion is a contest of dream worlds, projections of the future, where our reasoning accepts the constraints it likes and rejects the inconvenient truths, willy nilly.”

I think this is right. It is all pretty silly. With the caveat that the acceptance of any dream world is tantamount to a consumer preference, or a social preference, and that preference may make all the difference as to whether a step towards universal healthcare will, in reality, work. (If preferences weren’t “exogenous”, economics would be much more self-referential. I.e.economics the subject discipline would be seen to actively attempt to establish the preferences which it supposes the market to have “naturally”.)

“Healthcare-in-society” is an N-compartment complexity phenomenon, and ferreting out one or two connections (such as work incentives) to insist that this dominates the question is really non-computable and ludicrous.

50

Lee A. Arnold 02.10.14 at 4:03 am

@ Robert #42 — Thanks for that. It seems to me to leave open the question as to what lesson a sudden “disenrollment” from Tenncare is adequate to teach us, in general. The Appendix Figure A4 shows that it made a bounce around a more general trend downward in “share covered by private insurance” within other southern states, from around the year 2000.

51

Hey Skipper 02.10.14 at 4:20 am

… and looking at a steady decline in real income, is scarcely getting much in the way of dignity, let alone mobility or social equality.

But is real income really declining? I’ll bet you are relying on the CPI to reach that conclusion, but the CPI doesn’t do a very good job at measuring the hedonic component of inflation.

For example, an average new car today cost about 5 times as much as its counterpart 40 years ago. Hence 500% inflation, right? Look at it another way. How much would it cost in 1974 to buy a car comparable to today’s average new car?

There isn’t an answer to that question, because all the money in the world wouldn’t suffice. That means using monetary units risks meaninglessness in just about every realm affected to any significant degree by technology.

As it happens, in terms of time, in 1974 it took 23 weeks at the average wage to earn enough to purchase an average new car. In 2012 it took … 23 weeks.

But the 2012 version lasts at least twice as long, gets twice the gas mileage, requires very little maintenance, and has standard amenities that were only available, if at all, on luxury cars in 1974. The average new car requires something like 23% fewer work hours to own and operate than forty years ago.

The point here is that real income only makes sense in terms of what it gets. Income now gets a great deal more in many respects than it did even as little as forty years ago, so real living standards (which is what matters) have greatly increased over the period.

52

John Quiggin 02.10.14 at 4:25 am

@50 I guess you haven’t been reading this blog very long, or you would have seen this topic addressed at great length. Read excuse (ii) in this post

http://crookedtimber.org/2011/09/14/running-out-of-excuses/

53

P.M.Lawrence 02.10.14 at 4:27 am

Matt (no. 47), the sweet spot for a basic income has these features:-

- With top up work, it would be enough to live on.

- With the basic income, people wouldn’t need much pay from top up work.

- With the ability to settle for lower pay, they would all be able to price themselves into enough top up work to get a decent income in total.

- As this is the level that matches the labour market externality better, neither materially undershooting or overshooting, G.D.P. would go up and so providing that wage subsidy via a basic income would be realistic.

You write “Right now the basic income is zero and therefore the incentive to get pay is even greater, but across the OECD there are millions more people seeking jobs than open positions available for job seekers”.

Yes, but they have to try for wages high enough to live on without any further supplement, so not enough work is available for all of them. Their incentive to seek it doesn’t translate into employers offering it.

You then write “Under these conditions, trying to fix unemployment by focusing on job-seekers instead of jobs is irrelevant at best and a diversionary/delaying/blame-shifting tactic at worst”.

But this works out the same as applying the effort at a different point, after a transition. Your objection is only valid in the short term – but because it is a serious problem, that is precisely why my personal preference is for a Negative Payroll Tax approach. However, since it was the question of a basic income that was brought up, I addressed that first.

Finally, you write ‘Or does lower the wages they would accept include scrapping minimum wages, so that everyone can have the “opportunity” to find a job underbidding offshore sweat shops?’

Strictly speaking, yes, if you went the basic income way. Before you bite my head off, on the one hand they would not be getting a sweat shop income, they would be getting a sweat shop income plus a basic income – even higher than minimum wages; and on the other hand, if instead you went the Negative Payroll Tax way, wages paid would not have to change at all (in fact, minimum wages would become meaningless since employers would have incentives to offer even higher wages anyway).

54

Hey Skipper 02.10.14 at 4:27 am

… the conclusion of my Aeon essay that a response to technological change that will preserve the link between work, dignity and equality will require both a reduction in total hours of work and an expansion in the range of social contributions regarded as work, beyond those that generate a market return.

Your essay (which I read in full) foresees a reduction in the work week to 15-ish hours. However, there seems to be some unavoidable problems with math and reality.

My life is fairly typical: entered the work force for good at 22, and will retire at 65. However, presuming I live to 85, my lifetime average work week is already scarcely 20 hours long (40 hours/week, 50 weeks per year). My work week is longer during my working life in order to support non-working lives: my children now, and my retirement later. Should we get to a an actual work week of 15 hours, then the lifetime average would be hardly more than 7 hours. It is hard to imagine anything other than a Star Trek
replicator economy that could provide for childhood and retirement on 7 hours a week.

Then there is the reality problem. How is it that “social contributions” can be regarded as work? You use raising children as an example of an unpaid social contribution Yet that cannot possibly be true. For example, in “traditional” families the mother controls essentially all household income. More generally, wherever a parent stays at home to take care of children, that parent must be getting paid from some source. Just because the pay does not show up on a W-2 does not mean it doesn’t exist. (And that is before getting to deciding what “social contributions” are. Is art that no one wants to pay for worth making people pay for?)

55

Lee A. Arnold 02.10.14 at 4:45 am

It also strikes me that the NBER Tennessee Medicaid study examines a sudden disenfranchisement from a Medicaid subsidy as causing employment increase, then assumes that it works the other way too: that Obamacare will cause disemployment.

But this brings up the objection that the sudden “disenrollment” from Tenncare might simply catch people who are in dire need of medical attention, perhaps through chronic illness or disability — and are now in dire need of a job.

Does anyone have some estimate of the percentage of the U.S. working-age population that receives Medicaid (not Medicare) and is in chronic need of it? They may be what is causing this statistic of Tenn. employment-uptick.

To put it another way, Douthat wrote, “One of the studies used to model the consequences of Obamacare… found a strong work disincentive while looking at a population of childless, able-bodied, mostly working-class adults.”

–But I think that this could also be the artifact of a persistent percentage of the population that needs continuous medical attention, and by nixing Tenncare we increase their transaction costs — and their fears. Since it could happen to anyone at anytime, Medicaid expansion and improvement is the way to go.

56

John Quiggin 02.10.14 at 4:59 am

@Skipper Thanks for the gracious acknowledgement of error on your previous comment :-)

On your current comment, you mention math, but your argument appears to be one from incredulity “It is hard to imagine …”. Since you’ve read my article in full, you know that the math is spelt out there. If it’s wrong, why don’t you point out the error?

57

roy belmont 02.10.14 at 5:13 am

Is art that no one wants to pay for worth making people pay for?
That’s an astonishing question.
But the astonishment subsides, and then there’s just this sticky stuff on my shoes.
What is that?
Maybe it’s connected to the bizarre notion that women who full-time maintain homes and nurture children in those homes are getting paid “from somewhere”.
Because they have food and shelter?
Like how slaves get fed and sheltered, right? So paid. So not slaves.
Since slavery in the model you seem to be entertaining for this would be the complete absence of remuneration.
But then that would mean the only labor that fits the definition “slavery” would be being forced to work and having to feed and shelter yourself in addition. Not a tenable form of economic productivity, even for the most unrepentant master. Because of time and energy constraints and all.
Maybe that’s connected to the deceptive use of true but misleading stats like “23 weeks at the average wage”.
Are you looking around you here? We’re in the middle of some serious wealth redistributing, and it’s all going upward.
Phrases like “average wages” don’t really mean much of anything at the moment.
And the increased utility you use to justify the market-determined price of “average” cars fits the Bentley Flying Spur just as nicely. Worth every penny of its $220K sticker price. Because of advancements in technology etc.
Somewhere in there the reality of contemporary existence isn’t getting fully represented.
Maybe it’s just a smokescreen for “jettison the losers”?
Who are pretty much anybody not making those “average” wages. Which is more and more people.

58

Plume 02.10.14 at 5:17 am

Hey Skipper,

The median income in America for a single person is roughly 27K. This in a country with the most billionaires in the world, and one in which people actually make billions per year. The richest 400 Americans now hold as much wealth as the bottom 60% of the nation. The top 1% extracts 20-25% of all income.

In 1974, the top 1% brought in roughly 8%.

Also, in 1974, the typical CEO paid him or herself roughly 30 times the rank and file wage. Today, it’s more than 400 times. In Fortune 100 companies, the gap is even greater, averaging roughly 1000 to 1. A couple of years ago, Larry Ellison made a billion dollars in one year, which put his salary at more than 10,000 times his rank and file.

It’s disingenuous to try to claim that things are better for the rank and file today than they were during our only middle class boom (1947-1973). Actually, it’s not just disingenuous. It’s preposterous. During that boom, rank and file wages actually gained a bit on the salary and compensation increases at the top. Today? The gap between the top and the middle, between the top and the bottom, even between the super-rich and the rich is accelerating at a record pace.

It’s a dodge to try to say that middle class folks can now buy more gadgets. Yes, they can do that because:

1. They now have at least two wage earners per family when one used to suffice
2. They use credit cards when they barely existed for the rank and file forty years ago
3. They mortgage their houses unlike they did forty years ago and have many times the household debt held back during the boom.

We’re not better off, relative to the 1%, or even the top 10%. And to the degree that people have increased their gadget buying, it’s primarily due to more wage earners per family and much higher debt levels.

59

Hey Skipper 02.10.14 at 5:24 am

[John Quiggin:] On your current comment, you mention math, but your argument appears to be one from incredulity “It is hard to imagine …”. Since you’ve read my article in full, you know that the math is spelt out there. If it’s wrong, why don’t you point out the error?

I just re-reviewed the article and didn’t find any math in particular, and nothing in regard to the life-cycle average work week; apologies if I failed to notice, or take on board.

I do have to cop to the argument from incredulity charge, but a great many assertions in that article seem to come without arguments. For instance, there seems to be an assumption, implicit in your pull-quote from Marx, that jobs have no particular skill or experience component. Is it true that one could be a surgeon in the morning, algebra teacher after lunch, and airline pilot in the evening? Do we really want to spend enough money training surgeons so that they only have to work 15 hours per week? Would they retain enough proficiency at 15 hours per week? My incredulity increases with nearly every example.

60

am 02.10.14 at 5:31 am

“the latest Repub lie saying that Obamacare will cost 2.5 million jobs”

um, that isn’t a lie. It is exactly what the CBO projected: a reduction in employment equivalent to 2.5 million jobs. Gone, poof, thanks to Obamacare.

It would be false to say that 2.5 million people will involuntarily lose their jobs, but virtually nobody has claimed that.

61

John Quiggin 02.10.14 at 5:37 am

Thanks for the further apology, which is indeed merited. Please read the following passage

By 1990, 60 years after Keynes’s essay, average income for the world as a whole had just reached Britain’s level in 1930. So, it seems we need to add another 60 years, or two generations, to his timescale. On the other hand, because developing countries are mostly adopting existing technology, the average world growth rate of income per person is around three per cent, not the two per cent proposed by Keynes. In that case, an eightfold increase would take only 70 years. So, taking the entire world into account only defers the estimated end of scarcity by 30 years, to 2060 — within the expected lifetime of my children.

As long as you can do compound interest, it ought to be obvious that for any amount of work you regard as capable of producing a given output now, and three per cent productivity growth, the same output can be produced with half the labour input in 25 years (and so on exponentially). Converting average hours per worker into life-cycle averages as you’ve done, gives no additional information about feasibility.

62

Hey Skipper 02.10.14 at 5:42 am

[Plume:] Maybe it’s connected to the bizarre notion that women who full-time maintain homes and nurture children in those homes are getting paid “from somewhere”. Because they have food and shelter?

Simple observation should make clear that in the US women control the majority of spending.

Further, I think it a bizarre notion that anyone would think of the family budget as anything other than pooled income and expenses. Mothers are no more slaves than are fathers; indeed, considering that women control so much spending.

63

John Quiggin 02.10.14 at 5:47 am

@60 “Virtually nobody” apparently includes Eric Cantor “millions of hardworking Americans will lose their jobs and those who keep them will see their hours and wages reduced” along with the many news organizations who reported his claims as fact.

64

Hey Skipper 02.10.14 at 5:55 am

Converting average hours per worker into life-cycle averages as you’ve done, gives no additional information about feasibility.

I’m not giving information about feasibility, I’m asserting that in the US at least, we are already almost there. Moreover, nowhere did I see a single reference to the amount of time people live after retirement now than compared to Keyne’s time. In the 30’s, average life span was 60; now it is nearly 80. Very few people lived much beyond 65 then, a great many do now.

If my non-working life is going to be nearly half my working life, then the amount I work needs to take that into account.

65

Hey Skipper 02.10.14 at 5:56 am

[Plume:] The median income in America for a single person is roughly 27K.

Wrong. It is $52,000

It’s disingenuous to try to claim that things are better for the rank and file today than they were during our only middle class boom (1947-1973).

Air conditioning, dishwashers, safer cars, better medical care …

There has been an incredible flattening of consumption over the last 40 years. Would you really rather drive a Maverick than a modern Focus?

66

Plume 02.10.14 at 6:02 am

Hey Skipper,

You’re wrong. That’s the median household income. Not the median for a single person. There is a huge difference, as a household includes all income earners under that roof.

67

Plume 02.10.14 at 6:05 am

Hey Skipper #62,

You attribute the wrong person to that quote. It wasn’t me. It’s Roy Belmont’s at #57.

68

Plume 02.10.14 at 6:09 am

Hey Skipper,

And please address the massive increase in inequality over the course of the last forty years. Especially the last thirty or so.

Ignoring that is something conservatives do almost reflexively. It kills their general narrative of the wonders of capitalism, so they can’t even acknowledge it.

69

John Quiggin 02.10.14 at 6:12 am

I’m getting tired of this, Skipper. I agree, and said in the post I linked a while back, that median living standards have risen since the 1970s.

On the other hand, the evidence shows pretty clearly that they have fallen over the last decade or so, which means that workers today are indeed looking at “a steady decline in real income”. Unless you have something better to contribute, please don’t comment further.

70

P.M.Lawrence 02.10.14 at 7:20 am

John Quiggin (no. 61.) wrote:-

As long as you can do compound interest, it ought to be obvious that for any amount of work you regard as capable of producing a given output now, and three per cent productivity growth, the same output can be produced with half the labour input in 25 years (and so on exponentially).

But, if I read the original comparison correctly, the issue he was raising was more one of inter-generational transfer: at any given date, the population would be split into, broadly speaking, the young, the working age, and the retired, in about the proportions he used. As I read his statement, he was taking the split flowing from that as the right weighting to give effect to “average weekly working hours” aggregated over a single life. Sure, with the right growth and compounding, his working life working hours would more than pay back what he would need later (if that held up – but that in turn relates to whether everybody would be paying towards such later draw downs in that way, in which case a fallacy of composition might work through by lowering the rate of return; after all, 0% real interest is quite possible, as we now see). I think he was just commenting on the implausibility of carrying that burden unless things come right, using that aggregating of working hours over life to put it in perspective, while your objection is that there will be no problem if things come right, basically the future Keynes was musing about. That makes the two of you talking past each other.

71

Tim Worstall 02.10.14 at 7:28 am

My by now ritual complaint about the study of working hours over time. That there’s a general failure to distinguish clearly between unpaid working hours in household production and paid working hours in the market.

It’s not obvious at all that “working hours” increased with the industrial revolution. It is obviously clear that household production hours declined and market working hours increased.

For example, those claims that feudal peasants had 70 holidays a year and the like. The major fault with the calculation is obvious: animal owning peasants don’t get 70 days off a year. If they do then they’re not animal owning any more. What appears to have been done (and I’ve never actually been able to find the complete calculation that comes from, Juliet Schor I know, but I cannot find the actual paper….if anyone knows please do inform me) is to count the “market work” that had to be done. Those feudal obligations to the Lord in lieu of rent, but not the work that was done on the peasant’s own land or in that household.

The same point can be made about Keynes’ 15 hours. One recent set of numbers claimed that in the 1930s it took 65 hours of labour to run a household and now it takes two. That last number there sounds a little overcooked in an attempt to make the point but Hans Rosling makes much the same point with his story about the washing machine. Ha Joon Chang makes it about household technology in general.

Working hours have decreased since the 1930s. But it is those hours in unpaid household production which have.

72

John Quiggin 02.10.14 at 8:15 am

Tim, you might want to read my article.

73

Matt 02.10.14 at 10:05 am

P.M. Lawrence,

It appears that your fuller explanation of the Negative Payroll Tax is here: http://www.spectacle.org/0112/lawrence.html

I think we have a couple of deep differences that will prevent agreeing even about the problem, much less the solution, but I will elaborate since I may be mistaken.

The first is that you state the problem as one of avoiding social unrest at minimum cost — currently done through unemployment benefits, perhaps in the future done by a Negative Payroll Tax. I would frame the problem as one of equity: ensuring that people who start out only modestly more (wealthy, educated, skilled, lucky, diligent) than the median can’t compound that advantage over a lifetime or multiple generations to end up with orders of magnitude more wealth than their temporal/national peers*. Nobody spends a hundred times as long as the median in school, is a hundred times as intelligent, or works a hundred times as many hours per week. The limits to human variation are much narrower than the limits to income variation. If someone “earns” a hundred times the median wage, at best most of that surplus is luck and at worst it is loot stolen from the commons. Minimizing taxation may be orthogonal or counter to the goal of ensuring that there is not too large a gap in economic power between the median and the top.

The second disagreement is that I do not think that market employment is a good goal in and of itself. Productivity has been growing faster than employment at most times since the beginning of the industrial revolution, and I don’t want to fight that trend. I think it’s better to think about how to decouple employment and consumption, just as payroll and production have already diverged, than look for ways to force consumption and employment together again. We’re incentivizing a theme park version of employment if employers are negative-taxed to take on unwanted employees at token wages to perform unneeded work. I don’t think there’s any benefit to negative-taxing Boeing to take on a thousand more employees who will be assigned to solve sudoku puzzles or dig holes and refill them far from the aircraft.

Nor do I think Boeing will substantially change its production processes to purchase more labor and less productive capital when labor is made relatively cheaper. Humans working with simple tools are slower than specialized machinery at completing tasks, but more importantly cannot operate to the same standards of precision and repeatability. If it were just a matter of number of widgets finished per hour per worker there might be a smooth trade-off between capital and labor, but that describes few actual production scenarios. How long does it take an unskilled worker with simple tools to reproduce an hour’s output from computer-controlled machinery built for a role? Forever. Not possible. Erroneous assumption embedded in question.

*I’m not really on board with 100% income equality, both because there are observable differences in productivity among peers and because I think (bounded) incentives to compete can be good. But once we hit 100-fold differences in compensation between able people working in the same polity and the same year, I think we are well past variations explicable by everything plausibly called “merit.”

74

notsneaky 02.10.14 at 10:08 am

This and some related conversations that I’ve seen lately – reminds me of the old Bob Black essay, on the abolition of work.

http://www.primitivism.com/abolition.htm

Not that I agree or endorse, but I do like the “pox on all houses” sentiment. And it is probably outside of the sphere of things likely to be discussed by serious people.

75

MPAVictoria 02.10.14 at 11:06 am

“And it is probably outside of the sphere of things likely to be discussed by serious people.”

Don’t you mean Serious People notskeaky?

76

Matt 02.10.14 at 11:29 am

I was with Bob Black until he said he didn’t want robots to do everything. Iain M. Banks already described the Unobtainium standard of a post-work utopia. As far as I’m concerned the great challenge for progressive humanity — should we muddle through the next century of resource constraints and peak populations, or perhaps even as part of the solution to those challenges — is to implement a gold-standard version of the Culture, that is to say the Culture as far as possible without space opera physics. Or even a silver standard version: no space opera physics, no philosopher-king godlike machines watching over us, but still relegating want, work, and domination to history.

77

P.M.Lawrence 02.10.14 at 11:31 am

Matt (no. 73) wrote:-

… you state the problem as one of avoiding social unrest at minimum cost — currently done through unemployment benefits, perhaps in the future done by a Negative Payroll Tax.

What I was trying to do was describe – historically – the problems faced by the powers that be, as experienced by them, to explain why they chose to do something about the problems; I wrote:-

Unemployment benefits started out from things like the Elizabethan Poor Laws and Bismarck’s Welfare State, not simply out of charity but from a hard headed realism that wanted to buy off the social unrest that was already around and growing because there were ever more people without either adequately paid work or personal subsistence resources, a cost that includes higher levels of “crime of necessity”…

That doesn’t mean that I myself see the problem as simply one of “avoiding social unrest at minimum cost”, it’s that I wanted to set the background up by showing where the people who acted were coming from. For them, starving peasants were no problem, but revolting peasants were. Sure, the peasants themselves undoubtedly saw a problem, but they couldn’t do anything about it directly – but their murmurings threatened even higher levels of unrest that might develop into full-fledged revolt, and that presented a problem to those in a position to make a difference.

So, I’m afraid you’re reading my factual description as my own personal position, when I was careful to stay detached so as not to frighten the horses with what I wrote. It’s like a fan coming up to a novelist and accusing him of the views he makes his characters act out.

So, when you then write:-

I would frame the problem as one of equity: ensuring that people who start out only modestly more (wealthy, educated, skilled, lucky, diligent) than the median can’t compound that advantage over a lifetime or multiple generations to end up with orders of magnitude more wealth than their temporal/national peers*.

… that may be true, it may matter to you, it might (for all you know one way or the other) matter to me, but – as my mother used to say – it has nothing to do with the price of fish. This sort of “right action” can only be put in motion with the levers of power, precisely because that is what they are (which is itself a condemnation of the sort of broader system that is like that in the first place, when you stop to think about it).

For you and me, most likely, the only personal action other than putting our messages in bottles on the off chance they will reach and move those who can act, is to batten our personal hatches and – perhaps – try and set up community-based alternatives verging on Distributism. That course would also work, in the end and after an even longer transition, but it could very easily fail along the way, say by getting misdirected, and it is even less likely that either of us could ever get enough traction that way anyway. The only reason I mention it is because you want to frame the problem as one starting with you (or me), personally, and that looks like the only one on offer for that – but it’s a longer shot than I would ever recommend, short of desperate need.

Then you write:-

The second disagreement is that I do not think that market employment is a good goal in and of itself. Productivity has been growing faster than employment at most times since the beginning of the industrial revolution, and I don’t want to fight that trend.

But on the one hand, that is often an artefact of just what factors are being measured (100 workers making 100 widgets become 20 without work and 80 workers making 90 widgets – widget:worker productivity has risen!), and on the other hand much of this is driven by the defective externalities and in turn increases their leverage, much as your heart will grow to compensate for increased resistance in your lungs and then your lung capillaries will strengthen in the face of greater local blood pressure, and then … until it can’t any more (congestive heart failure; appendicitis also follows a similar vicious circle). So you may not want to stop the world to get off it, but – unless you can at least slow its wild career – when it crashes you will get off, roughly, if you are still on it then.

We’re incentivizing a theme park version of employment if employers are negative-taxed to take on unwanted employees at token wages to perform unneeded work. I don’t think there’s any benefit to negative-taxing Boeing to take on a thousand more employees who will be assigned to solve sudoku puzzles or dig holes and refill them far from the aircraft.

Nor do I think Boeing will substantially change its production processes to purchase more labor and less productive capital when labor is made relatively cheaper. Humans working with simple tools are slower than specialized machinery at completing tasks, but more importantly cannot operate to the same standards of precision and repeatability. If it were just a matter of number of widgets finished per hour per worker there might be a smooth trade-off between capital and labor, but that describes few actual production scenarios.

But where do you get the idea that that is what would happen? It’s a failure of imagination on a par with the Jetsons to think that “after” would be much the same as “before”, only with a few add ons. Just as the first motorcars did indeed look like carriages with motors bolted on, because people’s thinking had to start there, but they rapidly changed to something more coherent, so also industry would change in response to labour that had newer, lower marginal costs; it wouldn’t be just the same actual work done in the same way with the same labour inputs, with a bolted on token force on the side. And, of course, the Boeing issue is not the heart of it; you can have Boeing style activities as well as other sorts, just as Brazil has other things as well as Embraer, things that are far from capital intensive. Boeing wouldn’t change much – but the hypertrophy that pushes everything towards their approach, that makes other activities hypertrophy on capital even when they aren’t inherently capital intensive, that would stop.

You obviously tracked down some of my material that is out there on the internet. Here is an excerpt from a monograph I am working on that covers this (the monograph is on a wider area, and I have hopes it may grow up to be a book):-

… I anticipate results from adopting a Negative Payroll Tax working out along the following lines and with roughly the following timing:-

– Apprenticeship schemes would become realistic; we could expect a rapid reduction in youth unemployment. As mentioned in the main text in section XVII, “PULLING IT ALL TOGETHER”, point 14, this labour market externality has led to training currently being neglected; formerly, the indenture system operated as a Coasian solution to this. I anticipate that improvements in this area would be among the first to appear following the introduction of a Negative Payroll Tax, since there is always a present need for the trained that is based in the future rather than the present, i.e. apprentices are not taken on for their immediate usefulness as driven by current markets for their production but for their future usefulness, a benefit which is set against their current costs – which a Negative Payroll Tax would help. So this should start to show up as early as the first one or two batches of new school leavers.

– Downsizing schemes would become far less realistic; we could expect a rapid halt to many of them, or for them to become systems to vary remuneration packages rather than retrench employees entirely. Although this would start to happen within one or two planning cycles, perhaps six months to a year, it would be a negative thing – a thing not happening – so it would not be very visible at first.

– We could expect some non-jobs to be created as tax losses, which would gradually transfer the unemployed to the private sector as competition led to lower administrative costs than in the social security system, effectively privatising the social security system over time. This would happen comparatively slowly, because although the incentives for this would be in place immediately, with no delay while business needs for workers picked up, by the same token firms would be reluctant to take on people who would be redundant and would start to impose costs if the tax break system were ever changed to cease to cover those people. Firms’ cynical but well founded fear of such changes by governments would thus provide a “stickiness”, which could be expected to last for perhaps as little as two years or as much as five years until – and if – the sustainability of a Negative Payroll Tax had been demonstrated in practice by keeping it operating for long enough for it to become relied on. But as the scheme is constructed to be budget neutral for governments, they would incur no overall cost from keeping it going until results started to show (although both the A.T.O. and the D.S.S. would receive less once they did start to show!).

– The barely employable and long term unemployed would gradually be placed in industry in the same way as the genuinely unemployable, but they would be genuinely contributing, at least in a small way. There would not be an arbitrary and distinct separation from the regularly employed. Helping them back into work would not undermine the work ethic, as the only wage rate effectively guaranteed is the bare minimum provided by social security. At first this would proceed slowly, because of the same stickiness just mentioned, but within a year or so something else would start to take effect: the G.D.P. gains from lower overall costs and higher production, along with the funds reaching a growing labour force, would start to increase effective consumer demand – and firms’ sales would pick up, raising their need for productive workers whom they could mobilise realistically by then. Another way of describing the same thing is that a Negative Payroll Tax would provide increased consumer demand through something analogous to a Pigou or Real Balance Effect (ref 104) behind the veil of its virtual wage subsidy, one that would be more visible with a Distributist style Coasian approach. This, along with the previous paragraph’s mechanism effectively privatising the social security system, counters the objection that no matter how cheap workers became, firms still would not hire them unless and until they could produce something for which there was a market; this process would start to grow the market too, on a time scale that would show results in a year or so (Professor Kim Swales’s modelling [ref 97] indicates that, as my work suggested, both G.D.P. and employment levels increase – G.D.P. about half as much as employment levels in percentage terms).

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Tim Worstall 02.10.14 at 12:13 pm

“Tim, you might want to read my article.”

In which you say:”

“Unconstrained by seasons or by the length of the day, working hours reached an all-time peak, with the number of hours worked estimated at over 3,200 per year — a working week of more than 60 hours, with no holidays or time off.”

Which is one of the things I’m disagreeing with.

Agreed that you do cover the household work thing: apologies, I was relying upon memory from the last time you posted a link.

Re the estimations of future prosperity, there’s a useful check out there. The SRES, the economic models the IPCC is based upon. A couple of them make that assumption that all will be at or around current western middle class by 2100.

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Neo 02.10.14 at 12:25 pm

If this journey into “freedom” and FUNemployment is so desirable, why was there so much noise back in October when we had a (partial) government “shutdown” ?

Don’t government employees need “freedom” and the joys of FUNemployment too.
.. or was it that they still got paid after the shutdown that ruined it for them ?

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Trader Joe 02.10.14 at 2:46 pm

One of the things the CBO statement and the related interpretations points up is the very weak language that surrounds the word unemployment. Most focus on the various jobs reports for the “official” unemployment figure and there has been much consternation that this figure has been improving only as a result of people “dropping out of the workforce” which is then assumed to be automatically bad or the result of ineffective policy or some other political axe to be ground.

Notwithstanding the various weaknesses in the statistical collection of the official unemployment figure the notion itself overlooks the 50 shades of gray that surround what it means to be employed or unemployed. The worker tied to their job to get healthcare, who chooses to leave gets counted as unemployed when they make that switch even if the switch is so they can now provide childcare or elder care instead of paying for it or any of dozens of utility enhancing pursuits. The stat has no way to account for this even if all observers might agree the switch is a net positive.

As someone noted above, while we can’t rely on the statistics to capture the change correctly, we probably can rely on the fact that the individual is correctly calculating their increased utility by choosing to forego paid work for some other pursuit.

The statistics, for obvious enough reasons, seem to focus on people who seek jobless benefits, not people who benefit from being jobless as a “job” is defined. The partially employed, employed at non-paid work, undermployed, employed but via multiple part time jobs etc. are all poorly represented in the single “unemployed” statistic. Perhaps these further break-downs exist, but they aren’t headline numbers. Demographics and technology both seem to have a hand in this.

The OP seemed to pick-up lots of strands of this. I feel like the unrelenting focus on a single “unemployed” number, which may have been fine in 1920 is the wrong way to look at economy that provides 21st century choices (the CBO pointing to the latest of these).

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mpowell 02.10.14 at 3:56 pm

Regarding the 15 hour work week, do you believe this is an actually useful target? I have seen some studies on productivity (usually on the topic of workers working too much), but I remember productivity/hour peaking in the 30-40 hrs/week range. Is it really a good idea to hope France and Germany reverse recent trends and lead the way to the <30 hr work week? It doesn't seem like a good bet for total life cycle leisure and 35 hrs/week with several weeks of vacation per year seems reasonable, at least to me. This is entirely subjective though.

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Metatone 02.10.14 at 4:50 pm

@mpowell

Studies of productivity of people like Open Source programmers and various musicians and musical composers suggest that key to productivity isn’t putting in 35 hours, so much as putting in some minimum time (around 2-3 hours is the guess, but that’s still up for quantification studies) 5-6 days a week.

So that’s more like 10 – 18 hours a week for peak productivity – the key being the spread of hours that allows incubation but not too much forgetting…

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Rob in CT 02.10.14 at 5:58 pm

Random nitpick:

Unpaid leave (12 weeks a year for mothers in firms with more than 50 employees, nothing for fathers) Actually, fathers are equally eligible for FMLA leave. (I took FMLA leave after each of my children were born, so I’m quite certain.)

This is true, and at least some states have laws that piggyback on FMLA. Connecticut, for instance, adds 4 weeks, so you can take 16 weeks total.

One thing I didn’t know before having kids is that the laws are written to provide 16 weeks of leave per family, which meant that when I wanted to take FMLA after my wife, she had already used up our allowance, as we work for the same company (if we had worked for different companies, I guess the issue never would have come up). Thankfully, the people slightly up the foodchain from me are decent folks and approved personal leave for me instead (though this comes with less protection).

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Rob in CT 02.10.14 at 5:59 pm

Sigh. I screwed up my italics tags. Sorry. The first paragraph is me quoting someone else. The rest is me.

85

MPAVictoria 02.10.14 at 6:09 pm

“This is true, and at least some states have laws that piggyback on FMLA. Connecticut, for instance, adds 4 weeks, so you can take 16 weeks total.”

Which is still ridiculous. I get a year in my job, pretty much fully paid. Everyone should get at least that.

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mpowell 02.10.14 at 6:58 pm

@82: Are those programmers doing other programming the rest of the time?

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Barry 02.10.14 at 7:01 pm

MPAVictoria: “Which is still ridiculous. I get a year in my job, pretty much fully paid. Everyone should get at least that.”

Where do you live?

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DaveL 02.10.14 at 7:26 pm

Matt @ 76: “Iain M. Banks already described the Unobtainium standard of a post-work utopia.”

Indeed, but I think the stuff you discard to achieve the lesser gold and silver utopias (“space-opera physics” and “godlike machines”) is necessary to achieve the any of them, so it’s unobtainium or nothing. I think Banks said so himself (though I can’t turn up the reference).

Essentially, space-opera physics removes all resource constraints and god-like machines that really are running things remove most remaining vestiges of economics and politics as we know them (at least within the Culture).

I do find it interesting that many right-wing SF pundits/fans have latched onto Neal Stephenson’s “The Diamond Age” as a vision of a nearer future (not necessarily one they want but one they see coming). In that book there are “thetes,” who would correspond to those who are non-working but supported well enough to live without work, and the “vickies” (among others) who have a socially mandated work ethic and a Victorian morality. Thetes get nanotechnological “anything builders” and so on, but the Vickies have better ones, presumably because they can pay more.

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MPAVictoria 02.10.14 at 7:27 pm

“Where do you live?”

Canada.
/I do not want to get anymore specific sorry.

90

someguy88 02.10.14 at 8:52 pm

In the US low income folks today almost certainly enjoy a higher standard of living, after tax, than median income folks of the 30s. This gap is greater when you consider technological advancements.

Median work hours would only be something like 27 hours per week for those folks.

Are they closest to achieving Keynes’ Utopia? Why all the complaints about their conditions?

A decent living is a moving target. Today it includes a data plan, a color tv, cabel, and should include ortho.

Those aren’t my rules, those are the rules of progressives.

Tomorrow it will include brain enhancements and longevity.

Scarcity will most likely exist for a long time.

Also you won’t be doing away with status anytime soon.

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Matt 02.10.14 at 11:57 pm

@DaveL: I loved The Diamond Age but it has been years since I read it. I don’t recall how differentiated technological capabilities were supposed to be preserved. If you really have anything-builders then copying manufactured goods made from common elements should be roughly as easy as copying music is today and as hard to stop. The main danger of having replicator-like technology, as I see it, is that anyone with a grudge and enough patience can commit violence with weapons from hand guns all the way to crude nuclear bombs. Only weapons whose implementation details have been kept secret — like advanced nuclear weapons, B-2 bombers, and some chemical and biological weapons — remain inaccessible to the killer with an anything-builder and a library card. I seem to recall a woman in The Diamond Age blowing herself up with great force at one point, so maybe Stephenson’s solution was to accept that even mass killings will sometimes happen and try to make it easy for survivors to rebuild.

Kim Stanley Robinson, Iain M. Banks, Alastair Reynolds, and Marshall Brain have all grappled with the problem of post-scarcity violence in their fiction and solved it with ubiquitous surveillance plus either hyper-vigilant machines (mundane automated defenses in KSR’s 2312*, godlike guardians in the Culture) or implanted neural controls that can disable a violent human like a stolen car (Blue Remembered Earth, Manna). The Minds aren’t believable, direct neural intervention seems set up for turnkey totalitarianism, and other defenses are likely to be partial at best. Still, unmet needs kill a lot of people right now, albeit less spectacularly. It’s possible that a post-scarcity world with no more preventable deaths from tropical diseases or infant malnutrition still has longer life expectancy on average even if the flip side is that every few years someone blows up a city.

*And (spoiler) these can be fooled by the right sort of attack.

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DaveL 02.11.14 at 12:52 am

I believe the “anything builders” (my term, not Stephenson’s) that the thetes got couldn’t make as much or as good stuff as those the vickies had, because the various molecules or elements to make (e.g.) a nuclear bomb would either be inavailable (one hopes) or ridiculously expensive. They were assemblers which used “the feed” as raw material.

The woman who blew herself up (IIRC) did so as a result of a massive orgy, not as a way to kill a lot of people. In fact, I think several people blew up due to such events. The future: it’s not just jet packs and flying cars!

I read 2312 when it came out but haven’t re-read it. I just re-read Stephenson’s Anathem and liked it much more the second time, FWIW.

As for “post-scarcity,” I recall a story a long time ago where someone from our time makes it to the future and asks “Have we solved the problem of …” for all values of current problems. The answer he gets is “Oh, yeah, we solved those a long time ago, but we have real problems now.”

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Matt 02.11.14 at 1:12 am

I found the passage I remembered:

One of the Boers, a wiry grandmother with a white bun on her head and a black bonnet pinned primly over that, conferred briefly with the Boer leader. He nodded once, then caught her face in his hands and kissed her.

She turned her back on the waterfront and began to march toward the head of the advancing column of Celestials. The few Chinese crazy enough to remain along the waterfront, respecting her age and possible madness, parted to make way for her.

The negotiations over the boat appeared to have hit some kind of snag. Carl Hollywood could see individual hoplites vaulting two and three stories into the air, crashing headfirst into the windows of the Cathay Hotel.

The Boer grandmother doggedly made her way forward until she was standing in the middle of the Bund. The leader of the Celestial column stepped toward her, covering her with some kind of projectile weapon built into one arm of his suit and waving her aside with the other. The Boer woman carefully got down on both knees in the middle of the road, clasped her hands together in prayer, and bowed her head.

Then she became a pearl of white light in the mouth of the dragon. In an instant this pearl grew to the size of an airship. Carl Hollywood had the presence of mind to close his eyes and turn his head away, but he didn’t have time to throw himself down; the shock wave did that, slamming him full-length into the granite paving-stones of the waterfront promenade and tearing about half of his clothes from his body.

Some time passed before he was really conscious; he felt it must have been half an hour, though debris was still raining down around him, so five seconds was probably more like it. The hull of the white yacht had been caved in on one side and most of its crew flung into the river. But a minute later, a fishing trawler pulled up and took the barbarians on board with only perfunctory negotiations. Carl nearly forgot about Spence and almost left him there; he found that he no longer had the strength to raise the Colonel’s body from the ground, so he dragged him on board with the help of a couple of young Boers- identical twins, he realized, maybe thirteen years old. As they headed across the Huang Pu, Carl Hollywood huddled on a piled-up fishing net, limp and weak as though his bones had all been shattered, staring at the hundred-foot crater in the center of the Bund and looking into the rooms of the Cathay Hotel, which had been neatly cross-sectioned by the bomb in the Boer woman’s body.

This is some nano-handwaving explosive that is apparently non-nuclear but more powerful than any currently known chemical explosive.

Uranium is present in sea water and rocks all over the world, albeit at very low concentrations compared to commercially viable ores. The research on extracting from super-low-grade uranium sources such as these is fairly well developed and published openly. The risk isn’t that you can build a nuclear bomb straight from the Feed but that you use it to build uranium extraction and enrichment machines. In a post-scarcity world the main difference between getting uranium from conventional ore and sea water is how long you have to wait. Only detection and preemption remain viable strategies against nuclear proliferation: sanctions are basically meaningless in a post-scarcity world and mutually assured destruction is a far weaker deterrent.

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reason 02.11.14 at 9:25 am

“In the US low income folks today almost certainly enjoy a higher standard of living, after tax, than median income folks of the 30s. This gap is greater when you consider technological advancements.”

Tell me, why do you believe that. It seems you are impressed by shiny baubles (OK electronic gadgets).

My father sent five kids to university and bought a house in the suburbs of a major city on a median income. Find me todays low income folks doing this. You people are nuts.

95

reason 02.11.14 at 9:37 am

someguy88 @90 Me @94
I noticed that you specifically mentioned the 1930s (i.e. the depression – what a great comparison point!). So it would have to be my grandfather not my father – but he did exactly the same thing. Relative prices have changed enormously, but people lived much better in the past than you think they did.

96

P.M.Lawrence 02.11.14 at 10:42 am

Reason (no. 95), your remark “… people lived much better in the past than you think they did” has reminded me of something that the novelist Agatha Christie had written in her diary as a young girl in England (pre 1914, I’d guess), that she turned up in later life at a time which highlighted how much things had changed by then (she lasted until the 1970s). She had written that she thought she would never be rich enough to afford a motorcar, but never so poor as not to be able to afford servants.

So, yes, when people couldn’t afford our gadgets, they could often get things we can’t. (In case anyone is tempted to retort that they couldn’t all be in the servant employing class, that someone had to be in the servant class, actually, everyone in the latter was also part of the former, at any rate until the nouveau riche Victorians burdened the system. Until then, and to some extent even later, there had been an age stratification thing, and servants were drawn from the young of the middle class or sometimes the aspiring lower class, working for the upper class and older middle class – which latter included former servants, including lower class who had climbed out that way. Sherlock Holmes’s landlady, Mrs. Hudson, was someone who had set up as a landlady after going that route, and naturally had a maid or two to help out and perhaps a cook for certain nights of the week.)

97

Tim Worstall 02.11.14 at 10:54 am

“My father sent five kids to university and bought a house in the suburbs of a major city on a median income. Find me todays low income folks doing this. You people are nuts.”

It seems a little odd to be comparing median with low income. By definition low will be below median.

98

reason 02.11.14 at 1:16 pm

Tim,
read the comment I was replying to. He (assuming someguy is he) was doing the comparison.

99

Chris Bertram 02.11.14 at 1:33 pm

By definition low will be below median.

Clearly not. In a society with a small very very rich elite and the majority on the same subsistence wage , the median income will be a low income, probably way below the mean.

100

reason 02.11.14 at 1:48 pm

Chris, Tim,
the comparison was at widely spaced points of time. You need to read more carefully.

101

reason 02.11.14 at 1:49 pm

P.M. Lawrence @96
Yes, that is roughly what I was getting at. Simple comparisons based on price indexes really don’t tell you much over long periods of time. Price is not value.

102

mpowell 02.11.14 at 7:39 pm

In the Diamond Age the hard part is getting the plans to build cool stuff. I don’t remember how the IP is supposed to be protected, but random Joe can’t even get really good conventional weapons because he doesn’t have the instructions for his replicator. Now havoc wreaking organizations, yes, those exist. Diamond Age requires some wishful thinking about how diverse and powerful sovereign organizations would interact. That world would be even more dangerous than as postulated.

103

Tim Worstall 02.11.14 at 8:09 pm

“Clearly not. In a society with a small very very rich elite and the majority on the same subsistence wage , the median income will be a low income, probably way below the mean.”

Umm, yes, sorta. Given that we don’t count negative income numbers (all those entrepreneurs trying to make a go of it!) in our income averages therefore the mean income will always be above the median income.

Because there is a bound for income of $0 and no upper limit. Thus, ineluctably, the median will be below the mean.

In fact, given the way that we measure incomes (ie, not including negative ones) it would be astonishing to find a society in which the median income was above the mean one.

Agreed, this is what I am told is true: proof that I am wrong is welcomed.

104

L.D. Burnett 02.11.14 at 9:06 pm

James Livingston is working on a book project that is (I believe) going to be titled F*ck Work. I just did a search for that string on his blog and found a few posts that might be of interest in re: this thread.

105

Matt 02.11.14 at 10:44 pm

But on the one hand, that is often an artefact of just what factors are being measured (100 workers making 100 widgets become 20 without work and 80 workers making 90 widgets – widget:worker productivity has risen!), and on the other hand much of this is driven by the defective externalities and in turn increases their leverage, much as your heart will grow to compensate for increased resistance in your lungs and then your lung capillaries will strengthen in the face of greater local blood pressure, and then … until it can’t any more (congestive heart failure; appendicitis also follows a similar vicious circle). So you may not want to stop the world to get off it, but – unless you can at least slow its wild career – when it crashes you will get off, roughly, if you are still on it then.

I think your widgets and workers example is off in that it implies that global production of goods is contracting while jobs are contracting even faster. It is actually the case that production of goods is increasing, but jobs are increasing more slowly or sometimes contracting. As an example, the International Iron and Steel Institute report for 2006 showed that US employment of workers in steel production went from 204,000 in 1990 to 151,000 in 2000. Cross referencing with USGS statistics on steel production, US raw steel production was 90 million tonnes in 1990 and 102 million tonnes in 2000. Over a decade output rose 13%, employment fell 26%, output per worker went up over 50%.

It’s not just in the West, either. Chinese manufacturing, though less capital-intensive than corresponding production in the West, is more capital-intensive than it was in the West at a historically comparable level of wages because the capital keeps improving while humans are much the same. If you could bring all the jobs back to the West that used to fill the store shelves of the West, you would find that the refrigerator factory or textile mill would have fewer jobs to offer now than it did when it shut down in 1983, even if it’s making more product per year now. Even if you repealed the minimum wage, I don’t think that the production of metals, food staples, chemicals, fuels, electricity, or most manufactured goods can offer mass employment the way they did a couple of generations ago.

What specifically are some fields that could return working-age people to the labor participation rates seen in the West at the turn of the millennium, assuming even that the minimum wage were repealed and low-wage workers relied on government instead of employer to top them up to a living wage? I have had this discussion about the future of mass employment with a number of libertarians — not that I think you’re a libertarian, what with proposing substantial new government programs — and the answer is always “human wants are infinite, therefore the market will always provide full employment and if it doesn’t then government is to blame.” I’m hoping to get more specific and testable predictions one of these days.

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roy belmont 02.11.14 at 10:56 pm

Why should you care at all about wages and rates of employment if you don’t care about the rest of the lives of the people under discussion?
I understand that as economists and interested spectators of economics you find the topic limited to those areas, but if you start moving beyond that to questions about achieving greater rates of employment and fairer wages, you’re not talking centrally about economics, you’re talking about social morality or something.
Capitalism doesn’t care, it will never care about human lives.
It can be made to pretend to care by being beaten on with large clubs, but that’s it.
The marketplace, ungoverned and dominant, would eat the sun if it was turned loose on it.

107

Alex 02.11.14 at 11:05 pm

“Because there is a bound for income of $0 and no upper limit. Thus, ineluctably, the median will be below the mean.”

0. 3. 3. Median 3. Mean 2. U r an idiot. Qed.

108

Hey Skipper 02.12.14 at 1:35 am

[Plume @68:] And please address the massive increase in inequality over the course of the last forty years. Especially the last thirty or so.

Ignoring that is something conservatives do almost reflexively. It kills their general narrative of the wonders of capitalism, so they can’t even acknowledge it.

That would require a book, not just a blog response. BTW, where do you get the idea conservatives ignore it? City Journal is conservative and free market oriented. It seems to have no shortage of articles on inequality.

Here is an economics paper that shows the occupations of the top 1% (page 51), and discusses the difficulty of assessing causes to the increase in inequality.

According to this NYT article, striking changes in family structure have also broadened income gaps and posed new barriers to upward mobility (elsewhere in the article it states that up to 40% of the increase in inequality is due to changes in family structure).

The entry of women into the work force — obviously a good thing from a personal liberty point of view — greatly increased the supply of workers. The collapse of communism in China, did the same, times ten. Capitalism can’t be blamed for the former, and while it deserves significant credit for the latter, it seems unfair to blame capitalism for communism’s grotesque distortions in the first place.

Finally, you are posing a conclusion without an argument. Inequality is bad. OK, but compared to what? A college kid from a poor neighborhood gets to the NFL, and has a five year career during which he is in the top 1%. What do you want to do, take it all away? Surgeons invest in years of medical school and residency. How much of their income do they deserve? Was Steve Jobs paid too much?

More importantly, does growing wealth at the top have any impact on what the bottom earns?

Yes, inequality is troubling. But blaming capitalism for it is a lot like shooting the messenger, all the while ignoring that everything else that has been tried makes the poor far worse off.

109

Matt 02.12.14 at 2:37 am

Finally, you are posing a conclusion without an argument. Inequality is bad. OK, but compared to what? A college kid from a poor neighborhood gets to the NFL, and has a five year career during which he is in the top 1%. What do you want to do, take it all away? Surgeons invest in years of medical school and residency. How much of their income do they deserve? Was Steve Jobs paid too much?

More importantly, does growing wealth at the top have any impact on what the bottom earns?

Yes, inequality is troubling. But blaming capitalism for it is a lot like shooting the messenger, all the while ignoring that everything else that has been tried makes the poor far worse off.

Every nation in the “very high” group of the Human Development Index is a mixed market economy, but they have considerably different levels of inequality, so hopefully that puts to rest the idea that you have to go completely outside capitalism or make the poor worse off to reduce inequality.

Anyone who has been on the Internet for a couple of years knows how this “just asking questions” game goes. Ask a few simple questions in defense of the status quo. Start on one foot, for example asking for evidence that transfers from high income earners to low income earners could be in some sense technically efficient at improving the lot of the poor. Once the evidence has been assembled — which may be laborious enough all on its own to occupy the rest of the conversation — shift to the other foot, asking how it could be moral to take something that one person earned and give it to another. This would require another novella-sized essay to address comprehensively, and one wonders why the question of technical efficiency even came up if the questioner considered the process morally illegitimate in the first place. By way of contrast, anti-war activists don’t try to make the case that there are more technically efficient methods of killing, and pretend that they object only to the overpriced methods used by the Pentagon.

Of course the real purpose of just asking questions is obstruction and delay. Once both one-sentence questions have been answered with sufficient rigor, almost everyone has stopped paying attention to the discussion and anyone who answered with care looks like a long-winded bore to the casual observer. It’s like the litany of short, malformed questions requiring long, nuanced answers abused by Young Earth Creationists to challenge evolution.

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Chris Warren 02.12.14 at 2:53 am

Skipper

it seems unfair to blame capitalism for communism’s grotesque distortions in the first place.

Yes, inequality is troubling. But blaming capitalism for it is a lot like shooting the messenger

You should blame slavery and fuedalism for inequality because they expropriated wealth from producers to other classes.

Capitalism, properly understood, does the same. It is inherent to capitalism that inequality compounds when other options for staving-off crisis are exhausted.

Many distortions in past socialisms were in part caused by pre-existing fuedal relationships, but also caused by Western Cold Wars, subversions, interventions, nuclear brinkmanship, assasinations (eg Rosa Luxemborg) and economic warfare.

It seems clear to me that work within a non-capitalist cooperative economy – where expropriation is abolished – goes a fair way towards providing the world Keynes wanted for his grandchildren. Keynes, unlike Joan Robinson, never saw the problems for what they were.

Nothing in this thread can be resolved within capitalism.

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Chris Warren 02.12.14 at 3:01 am

“assasinations (eg Rosa Luxemborg)” → “assassinations (eg Rosa Luxemburg)”

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P.M.Lawrence 02.12.14 at 1:19 pm

I apologise in advance for the following lengthy treatment. It’s not quite a mind dump, but close.

Matt (no. 105) wrote:-

I think your widgets and workers example is off in that it implies that global production of goods is contracting while jobs are contracting even faster.

No, it doesn’t imply that. It’s meant to show that productivity increases aren’t the measure that should be used, not in isolation anyway, as they aren’t reliable measures or proxies of improvement; it’s necessary to look deeper. I used large-ish discrepancies to highlight that, with an extreme case in which production went down – but that was only for purposes of illustration, without implying that it always does. But the ratio of production to base population (including the unemployed) is a better measure than labour productivity per se for our present purposes. Even if you are looking at labour productivity to assess a firm’s profitability, when downsizing can indeed improve net profit, it is a misleading proxy as changes in it may reflect keeping the more productive workers rather than raising any workers’ output – but management may mistakenly draw the lesson that they did things that caused the latter, and which can be usefully stepped up. It all has to do with survivor bias. (Another case: hospitals found their mortality figures improved when they cut patients’ time in hospital; can you see how this effect was operating? probably not as well as in the extreme and unrealistic scenario in which we shoot sick people – so it is helpful to use extreme cases for purposes of illustration.)

I’m about to break some of your remarks into two parts to address separately.

… not that I think you’re a libertarian, what with proposing substantial new government programs …

You’re projecting again, reading in what isn’t there. No, I am not “proposing substantial new government programs”, any more than someone proposing a gradualist emancipation of slaves with a tutelage stage was proposing an additional feature for the institution of slavery. When you look into what I have proposed (for Australia, which already has a G.S.T., a Value Added Tax), you will see that I am proposing specialised cuts to that tax, to be made up and kept revenue neutral in the short term by tax increases on the base rate of G.S.T. or elsewhere (best of all, with Export Taxes substituting for our Carbon Tax and so cutting that tax for our manufacturers). Over a longer term, the changes would reduce the tax take and not be revenue neutral, but they would be budget neutral as they would reduce outgoings on unemployment benefits in step (Social Security, in the non-U.S. meaning of the term).

So it actually is all about cutting back government disruption over time, not about increasing the government’s role at all. There are other stages that could follow that, which would eventually – if reached – deliver something broadly Distributist, and all this wouldn’t be any sort of government programme at all. If my own wishes materialised, any genuinely necessary functions now undertaken by the government would be carried out by endowed voluntary institutions, within an environment made safe for Anarchists (at least of the broadly Mutualist sort, much like Kevin Carson, but with small “c” conservative tastes – so Chesterbelloc resonates with me). Now, some people classify that within a broad church definition of Libertarianism, as Libertarian Socialism of an Individualist sort; however, I personally am not interested in “Socialism” as such at all, though I can see this working out that way by some people’s standards. On the other hand, others would rule me out as a Libertarian as they think that you can only be Libertarian if you both shun gradualism as “a Covenant with Death, an Agreement with Hell” (which is my personal preference unless there are special reasons for abrupt change, contra William Lloyd Garrison, both as a matter of taste and tactically) and lock in support for corporations; but I see corporations as part and parcel of State systems, unattainable and unsustainable without supporting State machinery apart from special cases like monasteries or sporting clubs, and undesirable in themselves because of what that artificiality has made of them – “institutional sociopaths” someone called them, and able to outlive and outwait natural persons too.

What specifically are some fields that could return working-age people to the labor participation rates seen in the West at the turn of the millennium, assuming even that the minimum wage were repealed and low-wage workers relied on government instead of employer to top them up to a living wage? I have had this discussion about the future of mass employment with a number of libertarians … and the answer is always “human wants are infinite, therefore the market will always provide full employment and if it doesn’t then government is to blame.” I’m hoping to get more specific and testable predictions one of these days.

To repeat, government support to provide a top up isn’t my recommendation, it’s just where I came in on this discussion to show that that would work as the way to structure a Basic Income. My own preference is for the right kind of structured withdrawal of government involvement, one that synchronises and matches phasing out taxes and benefits relating to unemployment in such a way as to engineer out unemployment – I like the phrase “promote people out of poverty”, and in that sense I must hate the poor because I want to abolish them, qua poor people, not to maintain them in poverty on a drip feed of dependence. But it’s really a hate the sin, not the sinner kind of hate. I have also looked into how to phase out another area, age benefits (Social Security, in the U.S. meaning of the term), and that too would involve the right kind of withdrawal of government involvement, but that’s another area I only mention to show that I am not just trying to get rid of one government thing while leaving the rest, but rather to get rid of one thing after another as and when it is practical and convenient, with a view to getting rid of the lot in the end – only, improving things all the while and not triggering any poison pills that tend to lock us in.

Now we’ve settled that, those Libertarians were actually right, since they weren’t coming at it as people with measures but as people who were confident that cometh the hour, cometh the man; their focus was on what was wrong and should be fixed, not on how to get there from here (which has made me think very much in terms of transitions, trajectories, and a gradualist approach). “What” is a different question to “how”, and gives its askers a different emphasis. But that means that they were talking past you, and also you shouldn’t have been asking them that question, you should have been directing it at the people who really are working on that side of things – like Professors Swales and Phelps, to name but two. If those Libertarians of yours had understood what you were getting at, say if you had run some examples past them, they might have understood that you were knocking on the wrong door – and then, sooner or later, you might have found one who said something like “that’s not really my field, but try so and so” – which is just precisely how I first heard of Phelps’s work in this area, by being pointed at him by just such a Libertarian.

But if you were to ask me, I would say that we would end up with a modernised sort of Distributism, i.e. not back to the land all round but only for those so inclined, with many of the rest becoming self-employed or partners in less hypertrophied firms than ours that would nevertheless be doing similar stuff to ours in different ways, on the back of fleet leased operating equipment provided by friendly societies and municipalities and such, and with the remainder of the people working for others on the back of much better bargaining positions (probably more often when starting out, to gain experience as much as anything). The whole lot would be rentiers in a small way, just enough to get their top up income from investments that had been put in place during the transitional stages I would like (no, that doesn’t bring corporate stocks or government bonds back in, and so require the suppliers of those). But that there isn’t a plan, it’s an ideal to frame concrete steps, and it could well be subject to modification in the light of developments.

But you shouldn’t ask me, if only because I haven’t looked into the far end in that much detail, precisely because we should start from where we are and so that’s where I’ve put the most thought and effort. Others, however, have looked into the far end more than I have, like Kevin Carson and some of his colleagues at http://c4ss.org, so you could ask them (not all of them are to my taste, though – some strike me as a bit too doctrinaire and one size fits all).

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someguy88 02.12.14 at 5:58 pm

reason?

More like pure OT mood affiliation. I picked 1930 because well that is when Keynes’ idea was published. Pretty nefarious of me huh? If it makes you feel better use 1927 as the baseline. I didn’t set the terms of comparison as income. Again that was Keynes not me. I am just using the terms that have been set.

Income is not everything and today versus yesterday is not an exact apple to apple comparison. If I were too suggest that poverty is less about income and more about life narrative and outcome, most CT commentators would gladly burn me alive for being an evil warlock. [figuratively of course]

All of which is OT. As incomes rise our definition of what constitutes a decent income changes. Which means that nobody will be working 15 hours a week anytime soon.

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Michael Hall 02.13.14 at 2:56 pm

“All of which is OT. As incomes rise our definition of what constitutes a decent income changes.”

Actually, they don’t. Such basic animal necessities as food, clothing, and shelter have changed remarkably little since 1927, 1945, 1967, or 2008. Ditto the requirements for sustaining and nurturing a family. Access to basic transportation is often a general work (as opposed to lifestyle) requirement, and the notion that people should be entitled to at least a modicum of time for leisure and self-improvement has been largely agreed-upon in most industrialized countries for many decades. That people are working harder and longer so they can acquire more high-tech toys as part of a nebulously-defined ‘living-wage’ is just more right-wing cant and misdirection.

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