Trade after Trump

by John Quiggin on November 19, 2016

The one policy issue that was an unambiguous loser for Clinton was trade[^1]. Her grudging move to oppose the Trans-Pacific Partnership, choice of Tim Kaine as running mate and some unhelpful remarks from Bill Clinton meant that Trump had all the running. How should we think about trade policy after Trump? My starting point will be the assumption that, in a world where Trump can be President of the US, there’s no point in being overly constrained by calculations of political realism.

A few points and some suggestions

  • So-called “trade” deals like the TPP were actually devices to enhance corporate power (and, in the case of the TPP, to isolate China), and deserved to be defeated regardless of views on trade
  • The idea of manufacturing jobs as “good” jobs is historically specific particularly to the US, and reflects the fact that the dominance of manufacturing coincided with the New Deal and the unionisation of the labour force. It’s unions, not manufacturing that we need to bring back.
  • The big problem facing workers, in the US and elsewhere, isn’t competition from immigrants, or from imported goods. It’s the fact that capital is freely mobile and unfettered by any social obligation. So, a profitable plant can be closed down if its owners get a better off elsewhere. Alternatively, the threat of a move can be used to bargain down wages.

So, instead of thinking about tariffs and trade agreements, the big question is: what can be done to change trade and capital flows in ways that yield more good jobs?

Some suggestions over the page

The first and most important step is to reverse the global decline of unionism. The obvious starting point, for the US, would be to repeal the Taft-Hartley Act. More generally, the left needs to go beyond the (justified) demand for a higher minimum wage and seek to restore the wage share of national income to the level that prevailed during the postwar era. That can only be done with strong unions.

That leaves the question of how to handle the ability of corporations to undercut unions by outsourcing, corporate inversions and so on. The only positive element of the TPP was the attempt to impose some recognition of union rights on participating countries. But the better option would be to impose the relevant obligations on corporations themselves. That is, any corporation doing substantial business in the US should be required to respect labor rights, including the right to unionisation, and to impose the same requirement on its suppliers.

This would, of course, be totally unacceptable under the Investor State Dispute Settlement procedures of most existing trade agreements. So, it would be necessary to repudiate those clauses of the agreement and offer the counterparties the option of scrapping the agreements altogether or dropping ISDS.

The power of corporations to relocate capital is greatly enhanced by the massive flows of short-term capital currently amounting to $5 trillion per day, or around 30 times global gross product. The flow required to manage international trade and capital transactions is about 1 per cent of that. The fact that observed flows are so much larger mainly reflects tax evasion/avoidance and regulatory arbitrage. A Tobin tax at a rate of, say 0.1 per cent applied to all financial transactions would wipe out short term flows, so that international capital movements actually reflected shifts in physical capital investment. This would make it much easier to regulate such flows.

None of this could be done easily and much of it might never be achieved. But it’s the kind of program that’s necessary to counter Trumpism and that, thanks to the collapse of neoliberalism exemplified by Trump’s success, is now thinkable.

[^1]: This introductory background is not meant as an invitation to rehash the election result. Any comment that does so will be deleted.

{ 158 comments }

1

hix 11.19.16 at 10:59 pm

Not much of a suggestion, just a sad remark: The case of Volkswagen´s US factory, where workers voted against unionsiation despite support from the corporate side and non US VW Workforce shows that stronger unions in the US will be a very long way to go.

2

Collin Street 11.19.16 at 10:59 pm

It’s corruption. When/if the money-laundering prohibitions kick in, we’ll find out that the hot money that’s been flowing around since… what, the late sixties? is basically all stolen.

Without that money, you can’t move your factory and you can’t fund your disruptive — illegal — uber clone.

[… which means a tobin tax won’t work, because keeping the money static isn’t an option.]

3

Howard Frant 11.19.16 at 11:04 pm

Sorry, John. Not your fault that this all leaves me with a sense of unreality today– you made your assumptions clear enough. But imagining any of this seems difficult when we have multiply the probability of unlikely events times the probability that the US doesn’t become a fascist country.

4

Val 11.19.16 at 11:28 pm

I think that all sounds very reasonable although I don’t see either Trump or the Republucans (I think it’s legit to consider them as two different entities in this case) going for it. But politically it looks like a good program for Democrats, which they can strongly present as ‘you said you wanted to do something, well here’s something you can do’. At the least it’s a wedge and at best a program that could get some bipartisan buy-in.

However I do want to make another point about local self-sufficiency and decreasing trade overall. I know that you (JQ) have scoffed at local grow your own food type idealism (as you see it) and the Eco-village movement, but I really think it is an important part of the future for equity and climate change mitigation (and adaptation to what’s inevitable).

I think we could be a lot smarter in the way we use technology – use it for social (including political) connection and a limited amount of high tech manufacturing (eg in renewables) but a lot of stuff could shift back to local, largely craft based production.

Male or masculine identity has been talked about here quite a lot – one of the relevant examples here in Australia is the ‘men’s sheds’ movement. I have some reservations about it (which I won’t go into here) but there seems no doubt that it can offer useful productive activity for men who are otherwise ‘out of the workforce’ (retired, unemployed, newly arrived migrants and refugees etc). They make a lot of useful stuff for local communities – sure they are using machinery, but again it’s quite small scale and local.

Similarly in women’s traditional areas of employment – I remember in the 90s interviewing a woman who had been employed in the local textile manufacturing industry in Melbourne before the tarrif cuts and off shoring. She said “I miss the weaving …” and also that local manufacturers used to look after their workers (she was then an admin worker for a union, so unionisation was taken for granted in these interviews – I did several).

Sure these are two completely different models but both of them I think support my ideas about the possibility of local, non profit, cooperatives running low tech manufacturing. Also of course community gardens and local food production etc but that’s already been heavily debated on your oz website.

5

Timothy Scriven 11.19.16 at 11:59 pm

“The idea of manufacturing jobs as “good” jobs is historically specific particularly to the US, and reflects the fact that the dominance of manufacturing coincided with the New Deal and the unionisation of the labour force. It’s unions, not manufacturing that we need to bring back.”

I agree and I don’t. Specifically while I agree there’s nothing inherently positive about manufacturing jobs, and it all comes down to union jobs, I suspect that there are vast differences in how easy it is to unionise different professions- especially using traditional models of unionism.

There are structural reasons why it’s just easier to unionise a factory- or for that matter a wharf- that simply don’t apply to a typical service industry position. The workplaces often have fewer employees, the damage dealt by a stoppage is often less, the positions are more short-term etc. etc. Granted some of this (the precarious and short term nature of positions, for example) might itself be subject to industrial struggle, but still I think there are both good theoretical and observed reasons to think that unionism and manufacturing like positions are tightly linked.

Part of the solution is probably reverting to older styles of unionism designed for a period where industrial workers themselves were more flexible. Multi-industry, multi-workplace unions with a focus on shop floor organising like the wobblies.

6

Ebenezer Scrooge 11.20.16 at 12:17 am

It’s not only unions. Ideology has a lot to do with it, and the academy is much to blame. The intellectual center of the universities has shifted twice in the postwar era to follow the funding. The first shift was from the humanities to the physical sciences. The second shift was from the physical sciences to the business schools and economics departments–“economics” consisting of RBC macro and Chicago micro. The physicists may have been professional reductionists, but at least stuck to their knitting. The economists have become intellectual imperialists.
The result–it is almost impossible for young people of good faith to conceive of any alternative to the status quo. If you’ve been taught that only Econ 101 is real, how can you conceive of a union as anything other than a labor cartel: sand in the gears of otherwise-perfect markets?

7

Omega Centauri 11.20.16 at 1:07 am

The one way factories equals good jobs/wages could/should have been true was because the economic output per worker was high. As long as capital doesn’t take the bulk of the profits/value added for themselves, the pie is pretty large. But now the value added in modern manufacturing is much more skewed to capital (physical and intellectual), and the number of workers needed is much lower, and generally higher skilled (robotics engineers replacing line workers).

A bigger looming issue IMHO, is that with increasing robotization, we could soon approach a point where the total economic output could be high enough to make everyone well off, but we
have to work out how the goodies get distributed to the people. The idea that only hard workers deserve merit and a decent basket of goodies, is not sustainable if the future is high tech. This is
an unacknowledged change fast coming at us. It is especially acute in areas and communities which consider themselves conservative (i.e. wanting things to change little or slowly).

8

Anarcissie 11.20.16 at 1:22 am

None of this could be done easily and much of it might never be achieved.

Who is the putative agent in this passive construction?

9

Matt 11.20.16 at 1:40 am

The second shift was from the physical sciences to the business schools and economics departments–“economics” consisting of RBC macro and Chicago micro. The physicists may have been professional reductionists, but at least stuck to their knitting. The economists have become intellectual imperialists. The result–it is almost impossible for young people of good faith to conceive of any alternative to the status quo.

While reading the NYT article linked to above I had a sense of unreality; there’s a language trap, a status quo trap, maybe a thinking trap? Like this:

“Developing countries are suffering premature deindustrialization,” said Dani Rodrik, a leading expert on the international economy who teaches at Harvard’s Kennedy School. “Both employment and output deindustrialization is setting in at much lower levels of income.”

For poorer countries in Asia, Africa and Latin America, the decline of manufacturing as a bountiful source of jobs puts an end to the prime path to riches that the modern world has followed.

Prosperity is being able to consume abundant goods and services, live well, live a long life. If it now takes fewer people to make cloth, steel, glass, cement, refrigerators, electricity, and so on… shouldn’t those poor countries be able to raise their material standard of living faster and easier than e.g. South Korea or the US managed during earlier waves of industrialization? Calling higher industrial production (but lower employment in industry) “deindustrialization” seems completely backwards. Like jobs are the desirable product and the material outputs are accidental, unwanted waste streams. Like the US auto worker in the heyday of General Motors would have been even better off had you taken away his car, refrigerator, and washing machine and assigned him extra labor, perhaps on an extra shift that made cars just to be dumped in the ocean.

10

kidneystones 11.20.16 at 1:54 am

This is useful, John. Might I suggest distinguishing between ‘manu’ facturing and ‘robo’ facturing. As you rightly and very sensibly point out, factory jobs are disappearing.

Why?

Because ‘robo’ facturing is replacing ‘manu’ facturing. Why is the distinction important?

Because ‘robo’ facturing is the fire beneath our feet burning the foundations of our own social organizations away whilst we blithely watch the floor collapse beneath others.

Recommitting to ‘manu’ facturing in the larger sense and foregoing the efficiency of machines is essential if we hope to preserve any idea of ‘work’ in the 21st century. So, yes, that means diversification of tasks, possibly recycling, water purification, food production on local levels and only deploying machines to serve us, rather than the opposite.

The recent election is important in bringing this issue onto the table. We err if we believe that we are ‘irreplaceable’ in work settings, either by other humans, or by machines.

This issue has already been broached in distance education/mook programs, where ‘super-teachers’ online lectures from prestige colleges combined with AI grading displace/compete with those taught by instructors in meat-space.

Most of my own students are online before the greet anybody in meat-space. The intrusion of machines/AI in daily life requires conscious effort to recognize and then, perhaps, control. Factory workers are the canary in the coal-mine.

We’re all next.

11

Peter T 11.20.16 at 2:08 am

“manufacturing jobs aren’t coming back, any more than farm policy can restore an agrarian society.”

While an agrarian society is not coming back, the kind of agriculture that conserves soil and water and can weather climate change could easily absorb two or three times the current numbers on the land. The question is, as always, who pays?

12

Matt 11.20.16 at 3:09 am

The idea of manufacturing jobs as “good” jobs is historically specific particularly to the US

I might be slightly over-lapping with Timothy above, but this seems pretty clearly over-put to me. Isn’t this so (still, maybe) in Germany, and at least a few other countries? Obviously, there’s no necessary connection here, but the idea that this is a “particularly” US idea seems pretty clearly false to me, and if you get that wrong, I worry that you’ll get a lot else wrong. Unions play an important role, but we also need to understand why unions have seemed to work well, or better, in some fields than others – what’s going on in these cases? The moves here seem too fast to be right to me. If anything, this seems like a time to think a bit more slowly, even if time is tight.

13

Meredith 11.20.16 at 4:11 am

Timothy Scrivens seems to me to be thinking towards something valuable
. Problem is, the flexibility he calls for needs communal support for birthing, childcare, caring for elderly parents and others in a family who are ailing. If this is sounding like HRC’s agenda, sorry. Women have borne the brunt of “flexibility” for just about ever.

14

Omega Centauri 11.20.16 at 4:37 am

Is the idea that a person must spend forty plus hours per week at work throughout most of his/her adult life sacred? Or just a cultural anachronism. Early hunter gathers had much more leisure than we have today. Perhaps we should take the coming opportunities as a means of reclaiming a more balanced life?

15

Kindred Winecoff 11.20.16 at 5:09 am

All fine and good but let’s think about second-order effects. If you restrict capital’s ability to move then it has every incentive to become much more politically active locally, and in a much more direct way. You can try to stop that too but without an organized labor movement or even an organized leftish political party it’s pretty hard to imagine how that would end well. Everyone’s busy re-reading Polanyi, but it’d be good to dust off the old Hirschman, too, and maybe some Schelling, and remember what happens when exit isn’t possible. It doesn’t necessarily disempower.

I get that you’re eschewing realism, but let’s try to map this onto actual politics if we can: among other things the President-elect is a real-live crony capitalist, the sort that Romney (e.g.) never came close to being (and seemingly had no desire to be), and has every intention of protecting American capital from competition by foreign capital. I don’t think the American left has seen a character like this in a very long time, but a lot of what Trump’s going to try to do will superficially look like things that they want. But it won’t be.

This is why it’s folly for Sanders and Warren to signal that they’ll be “allies” if Trump goes after corporate America: he’ll attack the ones he doesn’t like and empower the ones he does, who will then face an emptied field of competition. On net this is not a net gain for the left, and if it becomes entrenched it will become very difficult to dislodge.

What I mean is that people interpreted Trump’s anti-foreign bias wrongly: it’s not about protecting labor, which as you rightly note is going to continue to be impacted by automation anyway. It’s about protecting capital, and capital does best when foreign entry is prohibited. This is a big part of the story of contemporary China that is often ignored. Of the major economies those with the most-closed capital accounts, by far, are the BRICS. Yet they have not purged the influence of capital in their political systems, far from it. Trump is now promising to beat them at their own game, to out-klept the kleptocrats. This is not good news for the cause of progressivism, or for labor.

Moreover, Trump is landed capital… he doesn’t care about short-term capital flows: he doesn’t benefit from them, and he’s pissed at Wall Street because they won’t lend to him anymore, so he’d probably be pleased to take you up on your Tobin tax. He’d then redistribute the proceeds to his own firms, those of his children, and those of his friends and supporters like Thiel. How is this is something the left should support, even hypothetically?

I’d far rather Jamie Dimon be marginally richer than fully give over the political economy to a robber baron with obvious dynastic intentions. So I say resist all of the economic populism proposed by Trump, every single bit of it, particularly if it gives discretion to the executive branch (i.e., capital regulation and the ability to award infrastructure contracts).

16

Val 11.20.16 at 5:29 am

Matt @ 9
Prosperity is being able to consume abundant goods and services, live well, live a long life.

I agree with much of your argument above, but I have to take issue with this. It is the other side of my argument above, arguing for more local self sufficiency, less trade and a degree of de-industrialisation.

In public health, it is widely known that we (humanity) have passed the point at which and abundance of manufactured/processed goods is doing us ‘good’. We have now have too much, we consume too much. Certainly there are areas of the world where there is scarcity, but in short, overweight is now a more widespread health problem than under nutrition globally.

We are not just stuffing up our planet, we are (literally) stuffing up ourselves. We consume too much high energy food (ie more than our bodies can use up) and lead lives that are sedentary to the extent they are actually bad for us. One of the big new emerging OHS issues is that office workers spend too much time sitting.

These are not ‘individual lifestyle issues’. They are inherent in the societies that industrialisation has created. So using that metric – an abundance of goods and services – just doesn’t work any more.

17

nastywoman 11.20.16 at 7:32 am

Unions are great – but you need manufacturing in order to recognize how ‘great’ unions are…

18

J-D 11.20.16 at 8:22 am

Anarcissie

None of this could be done easily and much of it might never be achieved.

Who is the putative agent in this passive construction?

Anybody who wants those things to be done/achieved. Recasting the sentence in active voice, it would read something like this: ‘People who attempt to achieve these results would face difficulties and might remain largely unsuccessful.’

19

nastywoman 11.20.16 at 8:26 am

– and here’s my theory:

‘The real divide between currently successful manufacturing economies, like Germany, and currently troubled ones, like the US, is not political but philosophical; it’s not Adam Smith vs. Karl Marx it’s Immanuel Kant’s categorical imperative vs. William James’ pragmatism. What the Germans really want is a clear set of principles: rules that specify the nature of truth, the basis of morality.
Americans, by contrast, are philosophically and personally sloppy: They go with whatever seems more or less to work.
Now, the German way doesn’t always work better. Even today, Germany can’t or won’t make Financialization to the standard of a F…face von Clownsticks. Germany concentrates on the production of luxury cars instead – or provides the precision scheduling that Germans take for granted.

America remains remarkably bad at exporting; the sheer quality of some German products, the virtuosity of German engineering, have allowed the country to become one of the worlds most powerful exporter despite having the world’s highest labor costs. The US did a better job of not resisting the inflationary pressures of housing bubbling or trying to destroy the worlds economy with monetary instruments of mass destruction.
But now the world has changed in a way that seems to favor discipline over flexibility. With technology and markets in flux, everything worth doing is worth doing well; in an environment where financial corruption is more of a threat than manufacturing, a obsession with monetary policies can be a recipe for permanent disaster for every country which can’t print as much money as it likes to print.

And so the US isn’t in trouble– but the whole philosophical project of unfettered capitalism is. The US supposed to be the philosophical-economic engine of the world is a philosophical drag instead for everybody else – perhaps the whole train in the wrong direction goes, not so?’

20

reason 11.20.16 at 8:46 am

John,
OK, I am old enough to remember when unions were not just a source of protection for some workers, but also a scourge for everybody else. I think creating a countervailing monopoly power, is still creating a monopoly power, and I’m not sure it is a good idea. There was a reason that reducing the power of unions became a political winner for people like Margaret Thatcher and Ronald Reagan. A better solution would be
1. A basic income to enable workers to say to exploitation
2. Something like the “Mitbestimmungsrecht” of workers councils in Germany that gave workers a say in major management decisions.
3. An acceptance of tighter labour markets by central banks.
4. More active anti-trust policy to combat not just product market domination but also monopsony.

21

reason 11.20.16 at 8:50 am

Oh, I forgot an important component of that set of policies, I think we need more “public options”. There was once a time when the public sector was a significant competing employer for the private sector, and a source of entry level training. This is missing in the world today. Certainly in fields such as banking, telecoms, insurance etc this could and would make sense to make firms offering a reduced but transparent set of services in competition to the private sector, keeping them honest.

22

Dave 11.20.16 at 8:59 am

I’ve been thinking a lot about what, exactly, “work” is and whether our society still needs it, as such. The early socialists recognized that much of what was alleged to be “productive” labor was, in fact, indulgence. Capitalism, since its inception, has exploited the human animal’s natural drive toward industry so that the few could profit off the work of the many, but I’m beginning to wonder if the Marxist construction of alienated labor isn’t itself invalid in our brave new world.

How can you “alienate” labor that scarcely seems to have a product in the first place? What do we make of that massive sector of the economy that does work that doesn’t appear to need doing? How do you harness the power of labor for social change when a huge chunk of the workforce feels like if they quit tomorrow, they could be replaced in a week or, perhaps, not replaced at all.

We can’t say it’s a matter of needing more “good jobs” or better “labor protections,” because both those solutions presume a specific paradigm where “working” is synonymous with “being productive” and that may no longer be the case. What happens when work isn’t labor, as such, but rather a kind of anti-labor? An inordinately large portion of the economy consists of people doing jobs for other people that those people would be able to do themselves if they weren’t so busy working. Food service for people who don’t have time to cook (or never had time to learn); childcare for parents who can’t be around to do it themselves; house cleaners, landscapers, dog walkers — an entire constellation of careers and “careers” apparently premised on the notion that modern people are just too damn busy to ever come home. Badly paid busy people doing work for underpaid busy people doing work for overpaid busy people who sell services to a hundred other busy people.

Now, the standard line is that specialized labor is more efficient, more efficient labor is more productive, and increased productivity makes us all richer. Capitalists tend to assume that the market is fair and those riches trickle down (or at least end up in the “right” hands), socialists rightly insist that the market doesn’t work that way so wealth must be redistributed. What wealth though?

Consider the lunch break. Something simple: coffee and a sandwich. You can “cook” it in ten minutes and the ingredients will cost you maybe a buck or two, or you can go down to the corner, spend the same ten minutes waiting in line, pay about ten times as much, and get something of roughly the same quality. It’s pretty clear what the math favors (even notwithstanding the “I asked for no mayonnaise” contingency), and yet millions of us are buying that coffee and sandwich every day. This leads me to ask if there’s such a thing as counterproductive efficiency (inefficient productivity?). I’m not an economist, so someone else will have to tell me if any of the standard models incorporate “forgetting to go to the grocery store” and “not having time to pack a lunch that morning” as variables, but it seems like as far as economics relates to real people, these petty details aren’t just part of the picture, they are the picture. If we can have a “convenience” industry that chiefly exists because the rest of our lives are rather inconvenient, and this is supposed to be more efficient, then something is very wrong with how we model efficiency.

It’s not just that our economies are underestimating the true costs of labor (in terms of time, health, and mental energy), it’s that we as a society have decided that it’s a social duty to do work that impoverishes us. What does it mean to “earn a living?” Consider that phrase. We use it constantly, for many of us it’s our main goal in life, and yet it’s anathema to the idea of inalienable rights. You cannot have a right to life (and liberty, pursuit of happiness, etc.) and an obligation to “earn” that living at the same time. Most of us would be outraged if we were told that we had to “earn” our right to vote, or our right to speak freely, yet our basic right to survival is contingent on participation in a labor system that squanders the better part of our lives, restricts our liberties, and has no patience at all for the pursuit of happiness.

Now, there’s much to be said for what was once called the “Protestant work ethic’ (before it went global). There will always be jobs that need to be done and people should be in the habit of doing them (and many of us know firsthand how bad things can get when you get out of that habit), but the reverse is also true. Some jobs don’t need doing (or only need doing because other people aren’t free to do them) and it’s high time we started asking why, exactly, we all have to spend so much time doing them.

23

reason 11.20.16 at 9:01 am

Another, separate issue I would like to see handled is whether or emphasis in trade analysis on comparitive static equilibrium analysis isn’t missing something important, stability and development.

Investment decisions are made in the long term, and then further influence the course of future development. I once asked Niall Smith if there was a theoretical analysis of whether imported instability could more than offset the gains from trade and he said quite dryly, yes. So why isn’t this shouted from the rooftops?

The second question of development looks at the extent to which a world market stifles (by outsourcing and via patent interference) domestic research and development and cuts off important entry level employment (so skills gradually become completely lost). I think development is something different than growth and can basically be measured by the thickness of the yellow pages. As Jane Jacobs would have said, healthy economies are diverse. Trade specialisation can push economies in the opposite direction and can in the worst case end in dead end. I sort of wonder if maybe we would all be better off in a plateau world (of seperated but level markets) rather than a sea level world where every wave can create a flood.

24

Bill Hawil 11.20.16 at 9:21 am

Some 30 Years ago, a lot was written in the media, that mechanisation will reduce the working hours to 20 hours a week and the leisure industry will be booming.
Not hard to see how that prediction turned out.
The suggestion to energize Unions has also its drawbacks; some Unions don’t even work for the benefit of their members, and now most Union leaders just aspire a seat in government and when that happens, they just become small capitalists.
The capital takes precedent to labour and swallows too much of the profits, and the workers slice of the income is steadily decreasing.
We consider ourselves to live in a democracy; nothing is further from the truth; more like a plutocracy, because the top 20% of the elite are getting richer and richer.
And PM Howard and Treasurer Costello made Australia a tax-haven, by introducing the tax-free super for the over sixties, and most super assets are accumulated with huge tax concessions.

25

Matt 11.20.16 at 9:43 am

In public health, it is widely known that we (humanity) have passed the point at which and abundance of manufactured/processed goods is doing us ‘good’. We have now have too much, we consume too much. Certainly there are areas of the world where there is scarcity, but in short, overweight is now a more widespread health problem than under nutrition globally.

We are not just stuffing up our planet, we are (literally) stuffing up ourselves. We consume too much high energy food (ie more than our bodies can use up) and lead lives that are sedentary to the extent they are actually bad for us. One of the big new emerging OHS issues is that office workers spend too much time sitting.

“Live well, live a long life” was supposed to include not ruining your health with over-consumption. I agree that some of the consumption patterns in rich nations are not only unsustainable but actually run counter to living well. Being able to afford 10 liters of wine every day is a blessing, but actually drinking that much is a curse. Being able to access rapid personal transportation is a blessing, driving everywhere and never walking further than across the parking lot is a curse. And so on.

26

nastywoman 11.20.16 at 10:31 am

– and Breaking News!!
Manufacturing is Back in the Homeland –
YUUUGE Time!

a factory which easily can employ 10,000 people in the next three to four years.
-(lot’s more than even Facebook)

a factory – when finished, will be about 10 million square feet, or about the size of 262 NFL football fields – that will make it one of the largest buildings in the world – and a lot bigger than google.

a ‘factory which is the machine that builds the machine,’ – and still will create thousands and thousands of workers more and more -(as don’t forget manufacturing has the highest multiplier – up to 4 additional created by just one manufacturing job.

Guess who???

So what’s about dismantling one of the worst ‘Non-Job Creating Companies in the US – Facebook and use the money to built ten more Factories like the one above – and then ten more factories like that in the rust belt and our F…face von Clownstick-Problem will be solved….

27

Lee A. Arnold 11.20.16 at 11:04 am

I will repeat what I wrote under Eric’s post, which is that China has given clear indications that it will take the election of Trump, uncouth and half-witted, as the signal to go full-on into a new global trade agreement with China at the center, and this will attract many countries already sick to death of US arrogance.

The Chinese have trade reps in countries throughout the world (including Mexico), don’t need the US market anymore, have reduced exposure to US Treasuries, and are building forward naval bases in the Pacific in case the Americans get belligerent.

International financial capital will take Trump’s tax cuts, and then take their profits from the hyooge infrastructure push, and then put that money into developing countries enjoying better growth because trading with China. Higher differential elsewhere! Bye bye, ‘Merica! Let “We the People” pay the tax bill!

In the US, Luddite emotionalism combined with the continuing idiocy about how money works, will rise to smash the robots in order to conserve the right to drudge for a living, under their real masters. The US’s current slow decline in the standard of living, vis-a-vis the rest of the world, will greatly accelerate. In about 5 years, some villages in Africa will have better cable and internet than many towns in the US.

The crackpot courtiers whom Trump is currently installing to run the show from the “White” House will ensure that all the darkskins get blamed for the ensuing emotional turmoil. Terrorist will get a half-life extension of another 50 years.

The Republican Congressional leadership, half nuts themselves, are going to be in the Oval Office everyday, stepping over the peons gilding the wainscot, to try to explain to Auric Goldfinger why his “ideas” are smelly bananas.

The world’s only hope now is 100% automation of everything + the pharmaceutical development of smart pills and mindfulness meditation.

Australians ought to consider learning Chinese in the interim.

28

John Quiggin 11.20.16 at 11:28 am

This is why it’s folly for Sanders and Warren to signal that they’ll be “allies” if Trump goes after corporate America

Mostly agree on this, though of course Trump isn’t going to do anything that would lead them to support him. The trillion dollar infrastructure program is just a PPP scam, while the big corporate tax cut will be real.

More generally, I think financial globalization has gone so far that the notion of “American capital” isn’t really meaningful. Trump himself, even though he’s mostly in the quintessentially local business of real estate corruption, has loads of foreign entanglements.

29

John Quiggin 11.20.16 at 11:32 am

30

John Quiggin 11.20.16 at 11:44 am

@26 According to Wikipedia, Facebook and Tesla each have about 15 000 employees. As a randomly chosen comparison, the Houston Independent School District has 30 000, as many as Tesla and Facebook combined.

31

Lee A. Arnold 11.20.16 at 12:14 pm

John I like your Aeon essay

32

nastywoman 11.20.16 at 12:17 pm

@30
‘As a randomly chosen comparison, the Houston Independent School District has 30 000, as many as Tesla and Facebook combined.

And Boing has 161 000 employees.

But seriously – as a surfer -(and have lived in Australia for a half year) I’m totally stoked about your surfing example.

Under the current economic structure I work in Germany – with such a lot of leisure time that I can combine the seven weeks of vacations with a lot more ‘Feiertage’ and – ‘anytime non payed additional vacations’ I spend alone in California -(my homeland) seven to eight weeks surfing and – YES! also joyfully helping to build Surfboards.

And so I -(as some other of my fellow Surfers) – owe it all to an economy -(the German one) – which is sooo totally depending on manufacturing –
And so – to get this utopian ideas of Keynes going – all we might have to do is introduce the same type of ‘leisure economy’ in the US – with the same kind of manufacturing base –
and our problem with F…face von Clownstick will be solved for sure…

as none of us should forget:

“We’re all equal before a wave.”

33

Chris Bertram 11.20.16 at 12:23 pm

“It’s the fact that capital is freely mobile and unfettered by any social obligation.”

Well yes, and concretely that means that capital does not have any special obligations towards the citizens of any particular states. The social democratic response is to try to tie capital back in via national legislation that forces it to act in particular ways, and that’s the drift of the OP. The alternative, though it seems pretty utopian at the moment, is to assert countervailing control at a global level via international institutions. I don’t think either strategy is going to work (because I’m a pessimist) but I think internationalization of governance could work in principle and that the barriers to achieving it are (merely!) formidable political and social ones, I doubt the social democracy in particular countries option could ever work again. Cosmopolitans r us.

34

Francis Spufford 11.20.16 at 12:40 pm

Or, if we’re being utopian, why not be even more so, and imagine a change to the structure of capital itself. Make it, for example, a condition of incorporation in all the polities of the developed world, that 30% of the shares in any newly created company belong to the public, through an Office of the Public Registrar, or something equally dull-sounding. This to be part of a deal in which the state (on the public’s behalf) undertakes to be an utterly passive shareholder, not interfering with management or voting the shares in case of takeovers etc, but being entitled to receive on exactly equal terms any dividend paid to other shareholders, and any accumulation in the capital value. This ensuring that capital becomes (at least on part) inherently social, and technological change produces its own budget for society’s adaptation to that change…

35

Tim Worstall 11.20.16 at 12:41 pm

There’s ever such a slight problem with this:

“seek to restore the wage share of national income to the level that prevailed during the postwar era.”

We most certainly don’t want to restore the wage level to anything at all. We might though want to restore the labour share (or total compensation, much the same thing). The difference for, non-economists, is that the wage share is just that, wages only, the labour share or total compensation includes pensions contributions, taxes paid upon employment and so on and on, health care for most American employees etc.

Quite how that split is done, between wages and benefits, doesn’t matter very much. But it’s the labour share which is what the workers get and which should be, if anything is, the target.

One example of the importance of this from here:

https://uneconomical.wordpress.com/2012/04/23/uk-gdp-by-income/

Employers’ national insurance payments have risen considerably over the post war decades. They’re not wages but they are part of the labour share. Thus that fall in wage share is a result of higher taxation, not the free international movement of capital or anything.

Also at that post we see the other problem with targetting the labour share. Because, obviously, it matters why that labour share has fallen. In the stnadard European national accounts we do not just have the two, labour and capital shares. There are four – mixed income (which is largely the self employed) and “taxes and subsidies”. There are more self employed people around now and in Europe that taxes part is most certainly larger. For that’s where VAT goes. So, either or both hte labour share should have fallen over this time. And as it happens, leaving aside the 1970s (when the capital share became unsustainably low, it wasn’t even covering depreciation), the capital share in the UK is around and about that post war average.

Meaning that we should rather be thinking that the decline of the labour share is as a result of the rise in self employment and greater consumption taxation, that VAT.

At which point beating up on international capital is unlikely to solve our problems.

In the US Matt Rognlie has an interesting observation. There there has been a rise in the capital share but this seems to be entirely due to an increase in imputed rents in owner occupied housing (think I’ve got that right). That in itself would seem to be, in my interpretation at least, something to do with zoning and strict controls on building in the coasts. It’s also true that the US labour share was pretty much static up to about 2000, it’s fallen a bit since then.

This also would appear to be something not amenable to hating on capital as a solution.

The solution, any solution to anything, requires the correct analysis of what’s gone wrong in the first place. And at the very least I am deeply unsure that the labour share has fallen as a result of more of the economy becoming a reward to capital. For there are those two other shares to consider. And if the labour share is falling for some reason other than the amount going to capital rising then the solution is going to lie elsewhere, isn’t it?

36

nastywoman 11.20.16 at 12:50 pm

and encouraged by your surfing allegory let me quote a relative amateur-mountaineer of mine -(otherwise ‘attuned’ to Global Sales and Contract Law – awarded by the University of California, Berkeley the title Master of Laws with high honors – adjunct professor at City University of Hong Kong – at Griffith University, Australia, and visiting professor at various institutions: fom the Europainstitut, in Basel Switzerland to the Université de Paris Val-de-Marne, France – the Victoria University of Wellington, New Zealand – the Loyola University Chicago – the University of Buea, Cameroon – the İstanbul Bilgi Üniversitesi, Turkey – the University of Ankara, Turkey – the the Pontifícia Universidade Católica do Paraná, Brazil; and the Universitetet i Oslo, in Norway)

And she agrees with me – that a Alpine village – which doesn’t produce anymore what it consumes – will become just like a worker in Detroit: Deeply depressed.
-(and isn’t that worth considering in writing about ‘manufacturing’?)
The Global Sales Law Project is a project of comparative law in the field of sales law and contract law.
Global Sales and Contract Law[edit]

37

kidneystones 11.20.16 at 12:52 pm

I assume everyone on this thread is over the age of 40, which means we’ve all spent more than half our lives thinking for ourselves, more or less. This last summer I did an informal study of 16 classes of undergraduates.

They live a different life to us. Few read books, fewer want to. One US study, I think, discovered a cohort of young twenty-something unemployed males living at home who are actually happier playing video-games than males the same age in work. Which may sound fine to Herbert Spenser, but give the rest of us pause.

Many/most twenty and under in first-world nations literally cannot imagine a world without the internet. Many of these people may be extremely bright and capable of doing great things. Others are unable to make toast. I watched a recent advertisement featuring an adult male working in cafe stumped by what to do with an unclean pot. His older, much wiser boss scolded him and pointed to the ‘magic’ dishwasher which would perform the task. His open-mouth response? Amazing.

Dishwashers used to be marketed as time-savers, not solutions. I spent the afternoon enjoying fall leaves and returned to clean the toilet and I made extremely sure our son knows exactly how to get out the rubber gloves and the bleach.

We’re raising a generation of web-dependent dunces and calling it ‘freedom from drudgery.’ If these folks don’t know how to do anything except ‘google’ it, what kind of knowledge, skills, and experiences do they plan on passing to their own kids, who we suppose will know how to ‘do’ and ‘pass on’ even less?

This isn’t anything to do with machines. We’re well past that. What we’re talking about is brain function and growth, long-term attention spans, and the ability to reason, not to mention ‘manual’ skills – such as playing the piano, or tennis.

We’ve been taught that globalization and consumption are irreversible. Both are if we surrender to our robot masters. So, yes. Unplug the machines and get outside for some fresh air and exercise.

38

Dave 11.20.16 at 1:13 pm

I agree that overconsumption is one of the main maladies of our age, but I don’t think we overconsume because we are rich. Rather, I suspect, we do it because we are poor. Public health statistics make it very clear that the “leisure class” leads far more active, healthy, and lengthy lives than most working stiffs these days and I don’t think all the credit should go to their doctors and personal trainers.

Work-related stress and financial insecurity are epidemic in the West and run side by side with spiking mental illness rates and rampant self-medication. Having a job is stressful, not having a job is stressful, worrying about losing your job is stressful, worrying about being stuck in your job is stressful. Unless, of course, you’re happy in your career, you don’t have to worry about money, and have solid job security. Now, hardly anyone I know meets any of those criteria, but if I snuck into the White House Correspondent’s Dinner, I might meet more professionally fulfilled, financially prosperous, socially exalted people in that one night than I have in the past several years (at least as long as I didn’t get stuck with the waitstaff).

Some of it’s a facade — money can’t buy happiness, everyone has problems, yada yada yada — but I can’t help think that maybe if I were one of those “winners” I’d be happier, and healthier, and make better life choices. Even if that is a “grass is greener” illusion, it’s one I believe and most of the people around me believe and we cling to it because we think it means that if we just found that next rung of the ladder, things would start going right for us and it torments us because that rung is so high and it makes us cruel because we know there aren’t nearly enough ladders to go around.

People like to talk about rock stars that never finished high school and tech billionaires that dropped out of Stanford and on and on, but I think we tell those stories because we know that that isn’t how it works most of the time. To the extent that the self-made man exists, he exists as a symbol of overriding merit, of the entrepreneur or visionary that was so good he jumped to the top of the meritocratic order without having to spend half his life steadfastly climbing the rungs in between.

What of the dropouts, the screw ups, the perennially unemployed, and the perpetually overworked? What of those of us who see the path to prosperity lit by a thousand glittering headlights and still find ourselves wandering around the side streets like an LA driver who stopped for cigarettes in South Central and is now trying to figure out where all the on-ramps are hiding. We can’t all get tenure or learn to code. We can’t all wear suits and have letters after our names. We don’t have million dollar ideas or know the One Weird Trick post-industrial capitalism doesn’t want us to know. We are failures, losers, wasted potentials, less productive than we could be, less virtuous than we should be. We see it, we feel it, we hear it every day. We just aren’t good enough and — you want to know the weirdest part — neither are most of the other people we know.

It’s not all the media’s fault or anything. We believe this shit because everyone else seems to and probably because our parents got very sad when we dropped out or picked the wrong major or got stuck in that dead end job. We feel it because basically every time we meet someone new they ask some variation of “so what do you do?” and we aren’t sure our answer is good enough.

When people talk wistfully about factory work — fricking factory work — tedious, backbreaking, mind numbing factory work — as if it was the bedrock of America, they’re not just bemoaning the loss of a bunch of decent paying (but otherwise kinda terrible) jobs, they’re mourning an ideal. The ideal that you could just go down to “the plant” one day, start at the bottom, work hard, and make a life for yourself without having to worry about “selling” yourself to anyone.

I’m inclined to thing that a lot of that equal opportunity claptrap was bogus even fifty years ago — capitalism is what it is and all that — but the fact that people actually could believe it, that people thought you could just go to work and do an objectively good job (as opposed to a “good job” relative to your coworkers/competitors) and that would be enough is almost baffling. A world with no downsizing, no “unemployables,” white collar jobs with no degree, blue collar jobs with no industry experience, affordable housing, persistent employment — it’s almost too much.

So why do we overindulge? Because we’re living in a society where the ideals no longer match the realities (or do even less than they ever did) and we think it’s our fault and when you can’t give yourself what you really want, you start giving yourself what you think you want. Anhedonia and dissatisfaction just makes us cling to hedonism and self-satisfaction all the harder and then we blame ourselves and are ashamed of ourselves and other people blame us and are ashamed of us and we blame them and shame them in turn and the society-wide depressive spiral just goes a little deeper.

Then, occasionally, you meet someone who says it’s OK, it’s not your fault, it was never your fault. It’s all their fault and once I take them down a peg, you’ll be great again. They’ve lied to you and once you learn the truth you’ll be whole again. Don’t listen to your so-called friends, do trust the supposed experts, they’re just afraid and holding you back, you’re special and as long as you stay we me, no one will ever make you feel small again.

Sometimes these people try to have sex with you or take all your money. Sometimes they sell you drugs or get you to elect them president. Blame them or don’t, hate them or don’t, but you only trusted them because things were already bad and you were already weak. Sooner or later, you’ll be blaming yourself for trusting them and hating yourself for being weak and things get a little worse and those still-bright lights get just a little farther away.

Is there a solution beside, like, the abolition of capitalism (or at the very least self-help culture)? Maybe, maybe not, but if national (or in this case supranational) depression is anything like it is for individuals, then the solution isn’t self-castigation or co-dependence, it’s true self-esteem and that can be very illusive. White collar liberalism won’t make us feel any better (unless we enter some sort of twilight zone where most of us are actually white collar), the relentless identitarian self-criticism of academic “progressives” usually just make us feel worse (and I’m sick of trying to figure out how to say that without sounding like a clueless white guy), and our periodic trips to reactionary fantasy land just keep us from seeking the help we so desperately need.

The solution? Best as I can tell, it is, in fact, hope. Or at least change we can believe in. It’s finding something, anything (besides spite) that an entire international class of abused, jaded, cynics can accept as a plausible future that might actually be worth fighting for. What is that, exactly? I’m still not sure, but I hope we find it soon and I hope we don’t get completely full of ourselves in the process.

39

Lynne 11.20.16 at 1:52 pm

“in a world where Trump can be President of the US, there’s no point in being overly constrained by calculations of political realism.”

That is a lovely line, JQ.

40

ML 11.20.16 at 2:02 pm

The big problem facing workers, in the US and elsewhere, isn’t competition from immigrants, or from imported goods. It’s the fact that capital is freely mobile and unfettered by any social obligation.

Yes, capital is freely mobile, but land is not. Rather than bending over backwards to control capital, we should intensify control over immobile location rents. For the most part, it can be achieved at the state and local levels. Henry George’s utopia is fairly easy to implement.

41

awy 11.20.16 at 2:06 pm

trade will go on, between mercantilist states married to state connected enterprises.

42

nastywoman 11.20.16 at 2:55 pm

– and I soooo agree:

‘The big problem facing workers, in the US and elsewhere, isn’t competition from immigrants, or from imported goods. It’s the fact that capital is freely mobile and unfettered by any social obligation.’

‘Unfettered by any social obligation’ – always was the main reason for the F… face von Clownstick-types to be ‘freely mobile’ with their capital.

And that’s what I never understood in this discussion about trade –
Nobody forces anybody to be – ‘unfettered by any social obligations’ –
or said in a way every American worker understands:
If your company outsources – it doesn’t care a flying f… about YOU!

Right? – especially as there are whole countries in this world – where companies don’t outsource or fire their workers when the company get’s in economical.

So –
all we actually have to do is – get rid of all the ‘F…face von Clownstick-Types – who are ‘unfettered by any social obligations’ – or to say it in a way our workers understands:
The a..holes who don’t care a flying f… about their workers.

Right?!

43

John Garrett 11.20.16 at 3:04 pm

Per NastyWoman, the underlying assumption that workers join unions and work for employers is no longer true for many smart young people. The gig economy isn’t just uber and exploitation: I know a number of top recent grads who’ve figured out one way or another (consulting) to work on different projects for short periods for different clients for three months a year and make enough to do what they want the rest of the year. More all the time, and the old models are simply irrelevant to them. In the knowledge economy, IMHO they are the future.

44

Kurt Schuler 11.20.16 at 3:16 pm

Hundreds of millions of good jobs have been created over the last generation, but mainly not in countries where most contributors and readers of this site live. The proportion of Chinese, Indians, and Africans who have to stoop over in a rice field, guide a plow being pulled by a water buffalo, or herd cattle has shrunk considerably. There is still far to go, though: China is now a middle-income country but India and much of Africa are not. The hundreds of millions of workers who are no longer subsistence farmers are both a source of demand and a source of competition for workers in rich countries. I suspect that they will be the predominant influence on events whether or not the rich countries raise trade barriers against them.

On the idea of a higher minimum wage: How high do you want to go? The minimum wage of $15 an hour that some people have suggested for the United States is near or even above the median wage in a few states. There are many people whose labor is not worth $15 an hour until they accumulate skills that are hard to obtain except from previous employment. I was once one of them. Set the minimum wage high enough and you will prevent them from ever being employed–or their first work will be internships where the pay is not $7 or $8 an hour, but zero. If you want to raise their incomes to a certain level, much better to do so through a direct payment to supplement their wages.

45

Glen Tomkins 11.20.16 at 3:48 pm

Why not tariffs that add back to the price of an import the value of any unfairly low labor costs in the producing country? Funneling that revenue back to the workers in the producing country would complete the circuit.

Why should we treat the ability to exploit workers as a natural advantage?

46

magari 11.20.16 at 3:49 pm

A union recognition requirement would violate not only our bilateral investment treaties (triggering ISDS) but also non-discrimination clauses as per the WTO, no?

47

cowardly lion 11.20.16 at 3:51 pm

@37 kidneystones

As someone who is a twenty-something, albeit a late one, I think you hit some good points here. Even my near-thirty cohorts are a mass of zombified-tech-spectators. They certainly read few if any books, and are genuinely puzzled when I reveal that I not only read them, but collect them. As a recovering zombified-tech-spectator myself I know how easy it is to leave the critical thinking to others – it’s very easy. So what’s the solution then? Make video games and television more didactic? Most have probably never heard of Carl Sagan, so they just tune that stuff out. There needs to be a shift in cultural mores, but how?

48

John Quiggin 11.20.16 at 4:17 pm

Chris @33 I’m sympathetic to the cosmopolitan idea On the other hand, and most notably with respect to trade and finance, the existing global institutions (WTO, OECD, IMF, BIS etc) are both saturated with neoliberalism (even more than national governments) and immune from democratic control. So, it seems to me that any approach to (a desirable form of) cosmopolitanism must begin with social democratic national governments.

For that matter, the same is true of core EU institutions like the Commission and ECB. Since we’re in utopian mode, I guess this could be resolved if the European Parliament became a real legislature with control over the executive. But that would still be more like a confederal nation state than a global institution.

49

nastywoman 11.20.16 at 4:26 pm

@
‘I know a number of top recent grads who’ve figured out one way or another (consulting) to work on different projects for short periods for different clients for three months a year and make enough to do what they want the rest of the year.’

Me to – and as I did that for quite some time too -(you know ‘Surfing’) I often was kind of jealous about some other ‘Surfers’ who had a more… let’s call it ‘structured’ life. And as there is -(without any doubt) a yuuuge difference between ‘a gig economy’ and the type of ‘oldfashioned’ Japanese -(or German) economy where for many, many workers – their companies are ‘their lifes’ it all depends…

And did you ever meet somebody who works for Facebook or Google – or Disney -(or for a Wall Street Investment Bank)?

Now these guys make a Toyota or Porsche worker look like the member of a much. much lessor -(and lesser dogmatic) church.

and so some ‘old models’ – might be the even newer models than some so thought
‘knowledge economy’ – IMHO somebody in Switzerland who has very strong reasons to believe that the future lies in exclusively handmade watches…

50

Dave 11.20.16 at 4:35 pm

kidneystones 11.20.16 at 12:52 pm

I assume everyone on this thread is over the age of 40, which means we’ve all spent more than half our lives thinking for ourselves, more or less.

You assume incorrectly. Don’t ask me why I’m up early posting about socioeconomics on an philosophy blog when I could be playing those darn video games, but I assure you I am an unemployed 20-something male (even if I am living 500 miles from my parents’ basement) and I can, actually, conceive of the time before the internet. In fact, I remember it — unless you think Usenet and AOL starter disks were any sort of equivalent to what we now call the internet.

When I was in high school, having your own cell phone was still a rich kid status symbol, no one knew what YouTube was, and half of us were convinced that Wikipedia would never catch on. I have often noticed that middle aged professionals seem oblivious to the amount of time they spend online and the way the internet has changed their lives and insist on talking about my generation like we’re a bunch of shut in screen addicts. You’d think none of you folks grew up with TVs in the house.

My dad thinks he’s bad with computers, but he still spends hours reading emails every day, teaches classes and grades papers online, and has the most active facebook page of anyone I know. Just because he mostly uses the web for work and I use it for entertainment doesn’t mean he’s any less affected by it than I am. On the contrary, if I lost internet for a month, I’d mostly just be a little bored, while he’d be losing his mind, along with half his social and professional life. I only got a smart phone this year and was probably as baffled as you were by their sudden ubiquity (my generation is fine, but those kids ten years behind me, I don’t know…). Say what you will about kids these days, but it’s the grownups that have been driving most of the big new tech trends (come on, how many broke 20-somethings do you think can afford a new iphone every year?) so it’s always a bit strange when my entire age group is singled out for happening to inherit a reality that was created, maintained, and (Zuckerbergs aside) defined by people who went to school in the 70s.

You may be shocked to realize it, but people my age do still read books. Actually, book sales have been rather brisk in recent years, and a boom in “young adult” fiction has been a huge part of that. We’re actually an extremely literate generation who give every indication of both reading and writing more in our daily lives than most (non-Ivory Tower) Boomers and Gen-Xers ever did. Presumably, this is because the internet is still mostly based around the written word and, to a large degree, technological literacy requires actual literacy.

Also, I have to ask. When, exactly, do you think people start thinking for themselves? As a humanist, I’m inclined to believe that it starts very early indeed, but all my training as a sociologist (like I said, “unemployed”) suggests that “thinking for yourself” is much trickier than it sounds. We all have our biases and none of us are immune to suggestion. You, for instance, saw an ad for a dishwasher and took it as proof that the internet has raised a generation of dunces. I should, perhaps, point out that the stereotype of the grown man who doesn’t understand housework is much older than I am.

I worry about how technology has affected your generations’ development that you would be so easily swayed by advertising and apparently mistake it for reality. Perhaps you should be reading and going outside and developing useful skills instead of rotting your brain in front of the idiot box. (See? It’s not so nice when someone does it to you.)

51

John Quiggin 11.20.16 at 4:55 pm

@46 Yes, this was one of the issues that led to the collapse of the Doha Round.

https://www.wto.org/english/thewto_e/whatis_e/tif_e/bey5_e.htm

52

nastywoman 11.20.16 at 5:07 pm

@50
Oh yes ‘Doha’ and the most awesome question:

Should a country -(like the US) trade with a country -(like Germany) – which has a much higher standard for labour rights – or does the US export gain an unfair advantage – by US companies not paying their workers at least six weeks of vacation – and would this force all countries to improve their standards (the “race to the top”)?

53

Anarcissie 11.20.16 at 5:49 pm

J-D 11.20.16 at 8:22 am @ 18 —
I thought the problems of doing the suggested project would be very different for different kinds of people. For us proles, probably hopeless from the beginning. Some of you all may be better connected, though. Or certainly talk as if. So that would affect how one would think about it.

John Garrett 11.20.16 at 3:04 pm @ 43 —
Sounds like the fat times of the 1960s, work three or four months and lay out in the woods for the rest of the year. I think today there are very few people who can do that. What I hear from the young especially is a tale of poorly-paid, precarious contract jobs and high rents. The few who can command high wages have to stay on the job to maintain their credibility, repute, and political position in the company and their field. But in any case they are few, so solutions like unions and worker-owned businesses may remain relevant. That is, if there is going to be any work at all. Occasional day labor is not a mark of general prosperity.

54

Robespierre 11.20.16 at 6:07 pm

1) Print money
2) Print more money

55

Layman 11.20.16 at 6:32 pm

Facing a future with fewer jobs, the only workable answer will be to separate labor from the means of subsistence. So a minimum basic income for all, universal single-payer health care. Add to that measures to constrain the labor force: A shorter work week to force job-sharing, mandatory early retirement to free up jobs for younger people. Add to that aggressive regulation of businesses, e.g CEO and executive compensation standards, GAAP changes to refocus businesses on long-term health and viability vs. short-term profit taking, mandatory equity stakes for employees, employment protections.

56

Guy Harris 11.20.16 at 7:14 pm

Francis Spufford:

Make it, for example, a condition of incorporation in all the polities of the developed world, that 30% of the shares in any newly created company belong to the public, through an Office of the Public Registrar, or something equally dull-sounding.

I think somebody here pointed, in one thread, to a Yanis Varoufakis proposal of that sort; his proposal was to use the dividends from those shares to fund a Universal Basic Dividend (arguing that a tax-funded Universal Basic Income is untenable – “The idea that the poor should be granted an unconditional income sufficient to live on has been anathema not only to the high and mighty, but also to the labor movement, which embraced an ethic revolving around reciprocity, solidarity, and contributing to society.”).

57

Dave 11.20.16 at 7:48 pm

Re 53:

Yeah, most of the post-industrial world has sky high youth unemployment (“youth” meaning under 30-35 types, not “teen working summer job”), a top-heavy wage structure that privileges older/more experienced workers, and costs of living that have kept rising even wages stagnated. Countries like Spain and Italy have been making headlines thanks to >40% youth unemployment, but the problem is global and exacerbated in certain demographics. It’s hard to say how bad it is in the US because the official stats pointedly don’t include all the people who aren’t actively looking for work as being unemployed. Underemployment is endemic, as is hiding out in college seeking extra degrees (and accruing mountains of debt) in the hopes it will make you more employable. I know many people my age and a little older who have condemned themselves to graduate coursework they never wanted because it was the only way they could get work in their chosen field (work that, even ten years ago, would only have required a BA). At the other end of the income spectrum, you’ll find working (or formerly working) people slumming in community colleges for years trying to find some way to pull themselves out of the precariate before the walls close in around them.

It’s bad out there and doesn’t seem to be getting much better, despite the supposed recovery. The chief culprits seem to be income inequality (which exacerbates preexisting ageism in the pay structure), financialization (which has contributed to rent seeking, student debt, and high CoL), and the lack of accessible jobs for the young, undereducated, or inexperienced (the typical “entry level” job listing in many professions now calls for a degree and five years of industry work experience). People do still find jobs and some even find good ones, but insecurity and the gig economy has shaped this generation in ways that will reverberate for decades.

For starters, the diminished lifetime income of people who graduate into depressions are well documented, but less acknowledged is the potential normalization of unemployment. Where some people insist on seeing lazy milenials sitting in their parents’ basements, I see millions of young people who know full well that there aren’t enough good jobs to go around (especially for them) and have had to define themselves in other ways.

When these people do finally start careers and families (and, honestly, we are trying), it will be with a radically different perspective than any previous generation since the Great Depression. Some people will no doubt cling to meritocracy even harder, but I don’t think most people in my generation are willing to accept the inherent justice of the labor market and, maybe, just maybe, we’ll actually try to change it.

58

nastywoman 11.20.16 at 8:28 pm

@54
@54
1) Print money
2) Print more money

Yes! – and please spend it on a very well manufactured 5Mill500000 Vision Grand Tourism Concept Bugatti – which sounds Italian but is actually German too – (Volkswagen) – and there is this rumor – that by manufacturing this car – Volkswagen loses up to 6Mill with selling each one if these cars.

Which (also) might explain somebody who believes – ‘no matter what policy is adopted, manufacturing jobs aren’t coming back’ –

but perhaps not so much somebody who believes that ‘the idea of manufacturing jobs as “good” jobs is historically specific particularly to the US, and reflects the fact that the dominance of manufacturing coincided with the New Deal and the unionisation of the labour force?

But what did one of the workers who are building Bugattis once say:

All the power – to (foreign) economists who believe that there is more money in printing money than in manufacturing Bugattis – or I would lose my job.

And isn’t that awesome… ‘philosophical’?

59

Matt 11.20.16 at 9:33 pm

I think somebody here pointed, in one thread, to a Yanis Varoufakis proposal of that sort:

Taxation is the wrong answer. Corporations pay taxes in exchange for services the state provides them, not for capital injections that must yield dividends. There is thus a strong case that the commons have a right to a share of the capital stock, and associated dividends, reflecting society’s investment in corporations’ capital. And, because it is impossible to calculate the size of state and social capital crystallized in any firm, we can decide how much of its capital stock the public should own only by means of a political mechanism.

A simple policy would be to enact legislation requiring that a percentage of capital stock (shares) from every initial public offering (IPO) be channeled into a Commons Capital Depository, with the associated dividends funding a universal basic dividend (UBD). This UBD should, and can be, entirely independent of welfare payments, unemployment insurance, and so forth, thus ameliorating the concern that it would replace the welfare state, which embodies the concept of reciprocity between waged workers and the unemployed.

I find this confusing. First, I would disagree that taxes are just fees for services rendered. Second, I do not see how “the public gets 30% of the dividends paid by public corporations” is not a tax proposal, even if the author takes great pains to call it not-a-tax. Third, it seems to again confuse material prosperity with immaterial numbers like in the NYT article linked in the OP; I don’t want a guarantee that I’ll be part-owner of the next Facebook and part-entitled to whatever it produces. Facebook actually doesn’t produce anything that I can live off of; I can’t eat money or Likes. I could take some Facebook-dividend-money and buy things I can actually eat, but do we have to stick to a pre-Copernican cosmology of prosperity, where we still pretend that money is the center and lesser bodies like human solidarity, ecosystems, information, energy, and matter all orbit around it?

If I got to claim a share of companies just for being a member of the public I’d prefer to be part-owner of Cargill. They at least deal directly in food. But Cargill is privately owned, so the public-ownership-upon-IPO scheme above wouldn’t even apply. I’d better hope that the owner class doesn’t notice that they can avoid sharing just by keeping companies private.

I’ve said before that I think directly applying robo-production to human prosperity may start in the Third World and eventually get imported to the First. Too many people in the First, even those with good intentions, are ingrained in the habits of thinking about the world in corporate and financial terms; even resistance is expressed in the vocabulary of the owners.

The future of using robo-production for the benefit of the global poor (or even the poor-by-local-standards bottom quintile in the First World) isn’t in seeking modest concessions from the owners of capital. It’s in telling the masters to fuck off with their past and proposed laws, because they can’t offer anything good enough to justify the Faustian bargain. It’s in South Africa and India manufacturing HIV drugs for their people at cost, because there is nothing Glaxo-Wellcome can threaten that is more bitter than death or sweeter than getting relief without markup. If machines-that-make-machines can relieve poverty in Ecuador faster than the traditional prescription of making your people work for foreigners via export industries, believe that a future Ecuadorean president is going to promote copying the machines directly while Americans are still thinking in circles, making offerings to the lopsided ownership system while trying to simultaneously escape it.

60

J-D 11.20.16 at 9:42 pm

Dave

It’s hard to say how bad it is in the US because the official stats pointedly don’t include all the people who aren’t actively looking for work as being unemployed.

That’s an international definitional standard, not just a US one, so if it distorts the picture, it distorts the picture internationally, not just in the US.

61

J-D 11.20.16 at 9:51 pm

Anarcissie

I thought the problems of doing the suggested project would be very different for different kinds of people. For us proles, probably hopeless from the beginning. Some of you all may be better connected, though. Or certainly talk as if. So that would affect how one would think about it.

It seems obvious to me that people here would vary in how ‘well-connected’ they are, no matter how you define ‘well-connected’, but I haven’t noticed any comments from anybody here that would suggest that they are sufficiently well-connected (in any sense) to make it easy for them to produce the kind of results John Quiggin was discussing.

That aside, and looking at it another way, it might be easy for a group made up of the leaders of the world’s most powerful countries and business corporations (a group I can’t imagine reading this blog) to bring about the kind of results John Quiggin was discussing, if they all agreed on wanting to do so; but they don’t, do they? So I come back to the conclusion that for people who do want those things to happen, they would be difficult to bring about; and I still take that to be John Quiggin’s meaning.

62

nastywoman 11.20.16 at 10:28 pm

@60
‘That’s an international definitional standard, not just a US one, so if it distorts the picture, it distorts the picture internationally, not just in the US.’

No it isn’t – because the official stats pointedly don’t include all the people who aren’t actively looking for work as being unemployed in the US – while in some other countries
all the people who aren’t actively looking for work included being unemployed.

And I fondly remember when a very famous US economists found that out by comparing the worker participation rate in France to the worker participation rate in the US.

63

kidneystones 11.20.16 at 10:45 pm

@47 Cowardly Lion. Thanks for this. You make some good points. I normally commute about 2 hours a day on trains and nothing disturbs me quite as much as watching adults playing with toys on the train on their way to work, or university.

To get the basic data and get the discussion started, I asked students to do behavior inventories: 1/ do you go online before, or after you wash your face/breakfast? 2/ how would you cope without your phone, emotionally, as well as functionally? 3/ what’s the longest period you’ve been off-line, like ever? 4/ do you bring your phone/computer into your bed? 5/ what’s the last image you look at before you go to sleep – on screen, a book, a person?

I then asked my peers the same questions, and these in turn generated more vocabulary from which to formulate questions. The most productive terms we agreed were ‘awareness’ and ‘conscious.’

Tech transformations are occurring beneath the radar and much faster than educators and others can track/adapt to. To draw student awareness to the risks and the process, I use the diet/exercise/size analogy – the insidious invasion of technology and ‘wealth’ to transform body types negatively. The difference, I suggest to them, is that we can see clearly the adverse changes,and otherwise, from diet. With tech, staring at phones has become normal. As for the addiction, I suggest that phones are as addictive as tobacco or crack. I point out their ‘dependent’ on phones in precisely the same way. That tends to get their attention, but perhaps not enough to change their behaviors.

@ 50 Thanks for this. I identify three age groups – 40 and over, 20 and under, and twenty-something males. I accept that I generalize fairly freely, but the reading comments in particular are based on actual surveys of university students. I take it you are not a student. You make some excellent points re: TV and the way technology affects people of all ages. You ask: ‘when do people start reasoning?’ Some might say, some never do/did.

I’ll be blunt re: employment, however. I suggest we need to work as a species. I’m sure you have and wish to again in the future. Thanks for the comment and good luck.

64

Helen 11.21.16 at 12:45 am

Dave, Omega Centauri, Matt, Layman and others – the concerns you raise about the future of work is the subject of a new book by another Australian blogger, Tim Dunlop (with whose work JQ is familiar). Recommended reading for the general reader.

https://www.newsouthbooks.com.au/books/why-the-future-is-workless/

65

J-D 11.21.16 at 3:26 am

nastywoman

‘That’s an international definitional standard, not just a US one, so if it distorts the picture, it distorts the picture internationally, not just in the US.’

No it isn’t – because the official stats pointedly don’t include all the people who aren’t actively looking for work as being unemployed in the US – while in some other countries
all the people who aren’t actively looking for work included being unemployed.

And I fondly remember when a very famous US economists found that out by comparing the worker participation rate in France to the worker participation rate in the US.

I feel it’s reasonable to consider official publications to be more reliable sources of information than your fond memories.

Here is an official publication from the EU:
http://ec.europa.eu/eurostat/statistics-explained/index.php/Unemployment_statistics

And here is what it says on the definitional issue, citing the International Labour Organization (ILO):

An unemployed person is defined by Eurostat, according to the guidelines of the International Labour Organization, as someone aged 15 to 74 without work during the reference week who is available to start work within the next two weeks and who has actively sought employment at some time during the last four weeks. The unemployment rate is the number of people unemployed as a percentage of the labour force.

It does also say:

In addition to the unemployment measures covered here, Eurostat also publishes statistics for persons who fulfil only partially the definition of unemployment. These persons are not included in the official ILO unemployment concept and have a varying degree of attachment to the labour market. The indicators on underemployment and potential additional labour force participants supplement the unemployment rate to provide a more complete picture of the labour market.

But the availability of additional information (which is a good thing) does not change the fact that it is an international standard (specifically an ILO standard) and not just a US one to exclude from the official unemployment rate statistics people who are not actively seeking work.

66

faustusnotes 11.21.16 at 6:28 am

I recently wrote a blog post about this, because I think fundamentally the future of human society is a world without much work, and if our goal is to liberate humanity from at least the hard and dangerous work, we’re going to need to find an alternative way of thinking about work than what we have at present. I think that to a certain extent Brexit and the Trump rebellion in the rust belt represent these issues bubbling to the surface in politics.

Robo-manufacturing was the start of this decline but once we get safe self-driving cars and factory-grown meat we are going to see a real collapse in the available work for people who are not highly skilled. At that point society is really going to have to start thinking about alternatives to work as a way of judging social value.

Also for a few people above I’d like to point out that unions can be strong without manufacturing. Unions in nursing, education, transport and the public sector tend to be quite strong, as do electrical and engineering services unions (which are only partially connected to manufacturing). This obsession with manufacturing is a throwback to a leftism whose time has long passed!

67

Dave 11.21.16 at 6:52 am

@60, 62
I must admit I switched to talking about the US because I simply didn’t know how the employment statistics in Spain and Italy were measured. I don’t know how many countries are lowballing real unemployment like the US does, but it’s a scary thought. Having high rates of unemployment in any demographic can be disastrous, but when it’s the youth it’s effectively selling out the future to comfort the present.

@64
Fair enough, and I must confess that I do worry about how technology is affecting young people. I think you’re right that broadband internet, social media, and ubiquitous internet-camera-phones are having significant effects (including negative ones) on society and I do think it’s reasonable to assume that these effects will be more influential on the young. My only rebuttal comes in a question I don’t know the answer to. Just how much more impacted by technology will my generation and the one after it be when compared to the ones before it? I remember that my great grandparents went from a world of trains and telegrams to jetliners and color tv (with the atom bomb in between) and they made it through that, so I figure, hey, how much worse can the internet be? Let’s just leave that as a rhetorical question for now though, because I’m not entirely sure I’ll like the answer.

68

Tabasco 11.21.16 at 7:43 am

There’s 7.3 million people employed in manufacturing in Germany, 20% of the labor force. Admittedly the percentage was double 40 years ago, but it’s still a lot of people.

Things are still being made and people are still employed to make them. It just has to be the right things in the right place.

69

reason 11.21.16 at 8:49 am

John Garrett http://crookedtimber.org/2016/11/19/trade-after-trump/#comment-698907
“The gig economy isn’t just uber and exploitation: I know a number of top recent grads who’ve figured out one way or another (consulting) to work on different projects for short periods for different clients for three months a year and make enough to do what they want the rest of the year. More all the time, and the old models are simply irrelevant to them. In the knowledge economy, IMHO they are the future.”

Sorry to pick on you, but this is ridiculous. You pick a small elite (chosen competitively) and try to extrapolate that to all of society. What’s more you don’t even consider whether these people are running potentially serious risks with their future (when you know their knowledge becomes redundant or they get old or sick).

70

Layman 11.21.16 at 11:30 am

Dave: “I don’t know how many countries are lowballing real unemployment like the US does, but it’s a scary thought. “

I don’t really know why you call this ‘low-balling’. The statistic counts as unemployed those people who say they’re actively looking for a job. What else should it do? It sounds to me as if you’re more interested in overall labor force participation. The good news is that they provide that, too!

71

nastywoman 11.21.16 at 12:10 pm

@67+65
‘I don’t know how many countries are lowballing real unemployment like the US does..’

Hardly any European countries – as hardly anybody unemployed in Europe has an interest to ‘fall out of the unemployed statistic’ – the way millions of Americans do – who get ‘kind of lost’ – after they don’t receive any unemployment money anymore –
Or – hoping to get employed again – they are pretending never to have been ‘unemployed’.
– as there is this very nasty speciality of US corporations – to hire only ‘winners’ and rejecting nearly everybody who can’t present a uninterrupted and successful employment history.

And so in France or in Germany – nearly everybody who is out of work – gets counted as ‘unemployed’ – and even if she or he is unemployed for years – which for @65 might be a mystery? –
Right?
But perhaps – as mentioned – in such ‘tricky times’ it’s better to look at workers participation rates – than at funny official US unemployment statistics.

As what did F…face von Clownstick say: In the US there are millions of millions of workers out of… work – and for sure he lied – again – by completely and utterly exaggerating the numbers – but a lot the millions – who are actually ‘out of work’ -(without appearing in any US unemployment statistic) probably voted for him anywhooo…

Well

72

nastywoman 11.21.16 at 12:28 pm

and – okay –
our host is ‘Australian’ – and as I have found out – there is quite a difference between Australian and American… ‘Humans’ – in general and between Australian and US Scientists or Economists in ‘teh detail’ –
I kind of wonder how an Australian economist could… let’s call it… ’emulate’ the predominant attitude of some very… let’s call it… ‘very established’ US economists towards manufacturing?

I mean – there is this… erection of ‘the most competitive countries’ of the world every year -(Switzerland currently Nr.1) – and there is only 1 country -(in words:One) which has only 10 percent of GDP in manufacturing – and that’s the US – and ALL the other of these most competitive – and WOW! – look at their non existing Trade deficits – now shouldn’t that make a Non-US-Economist think – there might be some kind of connection?

73

nastywoman 11.21.16 at 12:45 pm

– or does it need a trip to France and an invitation to the Élysée – listening to one of our French Friends when thy desperately tried to bring manufacturing back to France by inviting all these CEO’s and telling them that France really – REALLY loves manufacturing?

74

hix 11.21.16 at 1:05 pm

ILO standards are not a global agreed yardstick for all unemployment statistics. Eurostat uses ILO apperently (i didnt know before to be honest) and some US institution i think the FED publishes ILO numbers for a number of major economies that are better comparable than the ones from national statistics. But even within the EU, people typically dont hear the Eurostat number. Instead they hear a number based on national methodolgy which gives a different result and has different distortions up or down. How fast someone officially gets discouraged also depends on if he gets some governmental benefits that are tied to the condition to look for work…..
So its all a bit more complicated :-)

75

Ike 11.21.16 at 8:17 pm

@74: Although you’re probably right that the ILO standards are not globally agreed on, ILO unemployment figures are available on the World Bank, OECD, and UN data websites, so some people seem to find them useful. I’d assume it’s easier to do comparative work if you use a consistent definition across different countries! And as to your comment about how “even within the EU, people typically dont hear the Eurostat number”, this probably depends on which EU country you live in. Here in the northern periphery, our officals publish both the national figures (based on those registered as unemployed, and thus entitled to collect unemployment benefits) and the EU-harmonized, Eurostat/ILO-compliant numbers. Both seem to get pretty much equal attention in the media.

76

J-D 11.21.16 at 8:22 pm

hix

ILO standards are not a global agreed yardstick for all unemployment statistics.

I don’t dispute that. My original point, which remains valid, is that if something is an ILO standard then it is not a uniquely US practice. I’m not taking a position on the merits of the ILO standard and I’m not asserting that it’s the only one ever used anywhere. What I was doing was providing hard evidence against the kind of distorted interpretation preferred, for example, by nastywoman.

nastywoman

and – okay –
our host is ‘Australian’ –

No, John Quiggin is not ‘Australian’, he is Australian, as I am, which is why I became aware a long time ago of the ILO standard definition for compilation of unemployment statistics, even before I knew it was an ILO standard (or that it was used in the US), because it is the standard used for compilation of Australian unemployment statistics. There was controversy in Australia over the decision by the Fraser government to use this standardised statistic as the normal reference point instead of using figures compiled from registrations with the late lamented Commonwealth Employment Service; many people thought that using what I now recognise as the ILO standard was a way of minimising the scale of the unemployment problem. Maybe it is. But it’s still not a distinctively US practice, it’s more widespread than that.

77

hix 11.21.16 at 8:24 pm

The German methodology is in no way honest either. Consider everyone on the “second labour market” where the nominal salery, often 1 Euro per hour or less is paid by the government. Or everyone sent to some kind of schooling by the employment agency. They all do not count as unemployed.

78

George McKee 11.21.16 at 9:19 pm

@Guy Harris 56 & Francis Spufford 34
How to fund the Universal Basic Dividend — I acquired a substantial part of my minimal wealth back in the days when employee stock option grants were deductible – it’s a shame that the cure for fraudulent issuing of options was via tax policy rather than prison. Reinstating deductibility would be one way to launch part of a UBD program. There would still be the risk of Enron-like collapses, though, which destroyed the retirement funds for thousands of innocent Enron employees.

A less fragile method might be for the US to create its own sovereign wealth fund, with each citizen being a shareholder and entitled to an equal portion of the yield. This could be funded by allowing companies to pay their taxes in equity of equivalent mark-to-market value rather than in cash. I can imagine that a crazy amount of complexity would be needed to prevent a flood of Panama Papers offshore capital flow, though or to recapture the offshored wealth.

A carbon fee and rebate system could be directed through the America Fund, as well, giving citizens the choice of taking their rebate now or reinvesting it in compounding growth.

79

Helen 11.21.16 at 10:52 pm

Another factor distorting unemployment figures is that the criterion for “employed” is ridiculous – one hour a week. And apparently that’s an international standard. So “employed” =/= “earning enough to live on”.

80

John Quiggin 11.21.16 at 11:07 pm

@72 I am ‘Australian’ although as J-D says, it’s not obvious what the scare quotes are doing here.

Coming to the point, I can confirm that the Australian Bureau of Statistics uses the ILO definition of unemployment, though it also publishes stats on underemployment, discouraged workers (people who want a job, but aren’t actively looking) and so on.

As regards manufacturing, we had this fight in the 1970s and 1980s and I was on the pro-manufacturing/pro-tariff side. But we lost, and I now regard that as pretty much inevitable in retrospect. Australia now has 7 per cent of the workforce in manufacturing, and falling. We are an extreme case, but it’s happening everywhere.

81

nastywoman 11.21.16 at 11:53 pm

@80
‘Australia now has 7 per cent of the workforce in manufacturing, and falling’

That’s why – when I once learned from Roy Green:
‘The world’s best performing economies tend to have innovative and sophisticated manufacturing sectors. In contrast, Australia has relied too much on the mining boom and has squandered a unique chance to foster competitive industries’

and before – from Greg Milne:
‘There are strong arguments for Australia staying in manufacturing.
Manufacturing is the sector that contains and advances the skills and capabilities that prescribe membership in the ranks of the advanced nations of the world. For research and innovation, manufacturing provides the essential ground from which future streams of products and incomes can emerge.’

I thought most ‘Australian’ are on ‘our’ side –
and not only the ‘Italian’ Australians or the ‘Swiss’ Australians I’m related to -(because they inherited from some ‘Swiss’ mother – or ‘German’ father a certain admiration for manufacturing.

82

nastywoman 11.22.16 at 12:28 am

– and about the ILO standards – wouldn’t it be much better to go on the ‘how many application do you have to send off’ as the ultimate measure for unemployment?

Like I still have these friends in the US who have to send off around 200 to 300 job application to get no well paying job – while in Germany you need just around 2o to get a choice of at least 10 well paying jobs.

We could call it the HMADYHTSO standard?

83

engels 11.22.16 at 1:55 am

The statistic counts as unemployed those people who say they’re actively looking for a job. What else should it do?

Count people who say they’re unemployed? I know it sounds crazy but it just might work…

84

engels 11.22.16 at 1:58 am

Should homelessness statistics only count people who are ‘actively looking for a home’? Measures of world hunger only include those who are ‘actively seeking food’?

85

magari 11.22.16 at 2:12 am

Hi John, I was under the impression that Doha failed largely because of agricultural subsidies and not labor. Is that incorrect?

86

Faustusnotes 11.22.16 at 2:46 am

Really John, you’re in favor of tariffs? Doesn’t that make trump a kind of big plus for you?

87

Anononymous 11.22.16 at 4:33 am

John,

It’s a combination. As someone who works for a global manufacturer, let me be clear. If one of our plants in a developed country unionized….Let’s say the increased costs would make us review the long term production plan.

We pay a good wage for our workers, but if there was a unionization push we couldn’t run the plant profitably. It’s not the wages, really. It’s the seniority rules which protect incompetence and the work rules which eliminate production flexibility.

We can shift production overseas to one of our plants. And save money in the long run. Unionization is a death knell. I’ve worked in a unionized shop before. A temp started mopping hydraulic oil off of the floor (safety hazard) and the nearest union workers crowded around him screaming. Hydraulic oil cleanup is listed as Union only work. Yay.

Anyways, my 2 cents is this: manufacturing doesn’t gel with Americans very well. It’s hard to fill the jobs we have. We literally have openings all the time. We pay better than regular jobs, but you can’t post on Facebook all day. Or tweet. And you lose section 8 housing. The reservation wage of Americans is incredibly high. Especially in a liberal state. In one plant workers refuse to work overtime or take a raise due to the 500% marginal tax rate when losing benefits. Yay.

If workers unionize we can do two things: offshore or automate. Believe me, we are committed to automating everything which can possibly be automated (ROI-wise). Except for our plants in Asia. We can move our automation equipment to China when the cost of labor makes it infeasible to operate in the US, which should be around the time Chinese labor needs to be automated.

Anyways, my 14 hour manufacturing management day is over. Sleep time.

88

ZM 11.22.16 at 6:20 am

America has more manufacturing as a percentage of GDP (12% in 2014) than Australia, but America also has more States with very low labour force participation than Australia with 16 States at between 54% and 62.5% labour force participation, and 12 out of these 16 States voted for Donald Trump in the election.

The town I live in had a lot of changes to the economy since I was growing up here in the 1980s and 90s, manufacturing has either closed down, become globally owned, or become more mechanised with robotics. The carpet factory which closed down eventually after getting smaller is now a diversified complex with a small beer producer and bar, a coffee roaster and cafe, a small ice cream producer, a bazaar, furniture makers, artists studios etc.

Small scale production is a good way of creating employment where manufacturing has moved away. I think the vocational and further education TAFE system helps a lot in Australia, with providing education and training and also pathways to higher education degrees.

Looking at the number of States with such low labour force participation in the USA it makes me wonder what the issues are that have meant America has more of a problem in that area than Australia, despite having more manufacturing than Australia, signing up to similar trade agreements as Australia has, and overall being a more powerful economy than Australia.

89

nastywoman 11.22.16 at 8:18 am

@87
‘If workers unionize we can do two things: offshore or automate.’

How sad –
and perhaps that’s the ‘thing’ – that a German worker would have to correct such a very unfriendly statement with: If German workers wouldn’t be unionized to the extend they are ‘management’ can do two things: offshore or automate.

So do you think ‘manufacturing’ in wherever you are never will work properly because you (also) have this illusion it depends on paying workers the worst possible wages and salaries?

How come – I mean there is so much prove -(by the most competitive economies in the world) – that you can pay your workers the highest possible salaries and wages – and by the way: Why do you work 14 hours?

You see ‘real successful’ manufacturers not only give you a healthy 8 hours working schedule but also about 6 weeks of vacations a year that you can rest.

Perhaps your company should try that once? –
or is it mainly people who just have too much ‘natural resources’? -(like stuff in mines – or pumping oil) – which makes people not believe in ‘manufacturing’?
And do you guys know that one of the biggest part of US ‘manufacturing’ is actually ‘Petroleum’ – in other words ‘not really manufacturing’ and just called ‘manufacturing’ – as if having Oil greases your mind in a very unfortunate way…?

90

nastywoman 11.22.16 at 9:15 am

@79
So “employed” =/= “earning enough to live on”.

That message I would approve – even if I think my homeland (the US) wouldn’t approve some statistic which lists 80 percent of Americans as unemployed?

-(as is 160 000$ a year “earning enough to live on” in Manhattan?)

91

nastywoman 11.22.16 at 10:32 am

– and it probably is kind of important to finally respond to
@76
‘What I was doing was providing hard evidence against the kind of distorted interpretation…’

– as isn’t that the real tragedy – that there are so many different ‘interpretations’ about: Whassup?

Like unemployment numbers – who measure people – who are looking ‘actively for work’ or Australians who have a different interpretation than – for example Germans – about the fact that ‘manufacturing’ is decreasing.

While a German might take this fact as a yuuuge chance to open another factory and export the US right into the ground an Australian might stick with the interpretation that manufacturing is a losing proposition?

But then there is the hard evidence that whole countries are living from manufacturing in ways an American worker -(lately) only can dream about – but not on a European Beach as nearly the whole German working class each summer…

92

Layman 11.22.16 at 11:19 am

anonymous @ 87, two questions:

1) what is the median factory line-level wage at your company?

2) what is the value of your CEO’s total compensation package?

93

John Quiggin 11.22.16 at 12:30 pm

@85 There were a lot of reasons why Doha failed, including subsidies and labor issues. But mostly, I’d say that it was pushing global neoliberalism further, just as it was running out of steam. So, we got the shift to bilateral/plurilateral deals of which TPP and TTIP were the most ambitious, and now these have died also.

@86 Faustusnotes If you reread the comment, you’ll see that I was referring to the position I took 30+ years ago. The OP gives an indication of my current views.

94

nastywoman 11.22.16 at 2:12 pm

‘anonymous @ 87, two questions:’

and I love these questions – as they might lead to the point – that a lot of my fellow Americans -(and some Australians? and for sure a lot of Brits) – are not ‘that’ into manufacturing because some CEO’s think one can’t make enough dough with manufacturing?

And as I just saw F…face von Clownsticks brutally effective video message on y-tube – about bringing the jobs back – I somehow was reminded on Mercedes Benz – which a while ago suggested to outsource it’s headquarter to the US.

And there was such a brutally effective response from the workers -(and all sorts of politicians) – in Germany, who told the CEO’s of Mercedes to do that ‘on their own peril’ – that I thought – no wonder that Germany (still) has a ‘Merkel’ and not a F..face von Brownstick (yet?)

95

Brett Dunbar 11.22.16 at 3:03 pm

A big problem in some poorer countries is that a large proportion of business is in the informal sector, which generally doesn’t pay tax, rather than the formal sector which does. Making incorporation more difficult is unlikely to help businesses make the transition to the formal sector. Rich countries tend to have quick and easy methods of incorporation.

96

efcdons 11.22.16 at 3:33 pm

Anonymous @87

“Anyways, my 2 cents is this: manufacturing doesn’t gel with Americans very well. It’s hard to fill the jobs we have. We literally have openings all the time. We pay better than regular jobs, but you can’t post on Facebook all day. Or tweet. And you lose section 8 housing. The reservation wage of Americans is incredibly high. Especially in a liberal state. In one plant workers refuse to work overtime or take a raise due to the 500% marginal tax rate when losing benefits. Yay.”

How is it possible you pay better than “regular jobs” but your employees working at least 40 hour weeks (the only way they could be close to having to be paid an overtime premium for hours worked over 40 in a week) are eligible for means tested benefits? Which benefits? Imaginary LobsterFilletMignon Stamps (can only be used for lobster and/or steak and must be used in front of resentful right wingers to really piss them off)?

You talk about section 8. The most one can make and be eligible for section 8 is 80% of the area’s median income (https://www.huduser.gov/portal/datasets/il/il16/IncomeLimitsBriefingMaterial-FY16.pdf, pg. 1). So if your employees are eligible for section 8 they either all must have huge families or you pay them less than median area income. That doesn’t sound like paying “better than an average job”.

So are you lying on purpose? Exaggerating for effect? Ignorant on the specifics but feel the need to advance your political position based on anecdotes you’ve heard and things “everyone knows”?

Since what you say just can not be true I want to understand your motivation to come here and attempt to speak from authority (claiming to be a mfg manager) and influence the discussion with untruths. It would be one thing to give opinions (“Americans are sooooo lazy!). It’s another to lie about the nature of the US threadbare welfare state. And exaggerate (or lie) about how good the jobs you (supposedly) offer are for the employees.

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nastywoman 11.22.16 at 3:54 pm

– and trying to be a bit less sarcastic about the whole deal – there was this article in the NYT today ending with:

‘Many people in New Castle, not to mention the industrial Midwest, feel a deep cultural connection to craftsmanship — to making things and working with their hands. They’re not inspired by working in cubicles or comfortable offices.

At the same time, they can’t simply do as previous generations did and graduate from high school into a good job. They can’t bring back yesterday’s economy. They need blue-collar skill-building to thrive.

The country has failed to provide nearly enough of that skill-building, and we’re all living with the consequences.’

– and having predicted such consequences for years now – one can get really mad at economists who didn’t.
I mean – how can so called ‘economists’ overlook or ignore workers participation rates of 50 – 60 percent while at the same time parading around their misleading unemployment numbers.

That should be cause enough to make them – from here to eternity work not at Tesla but at some Chinese sweatshop manufacturing red ties for F…face von Clownstick.

98

hix 11.22.16 at 3:55 pm

Nastywoman, it is great you enjoy your life in Germany and are doing well. However, i grew up here and still live in one of the richest towns. What you are describing, e.g. getting well paying jobs after 20 applications is absolutly not representative for society at large. My personal environment is biased to the other end, here the question is if one gets any job at all after 200 applications. But my more distant soical environment also does inlcude some recent graduates with quite perfect cvs. They also dont get well paying jobs after 20 applications. Its a very small subset of society that gets well paying jobs after a few application. People with family contacts or people that have just the exactly right cv (the right ba, the right ma..even getting the rght MA after the “wrong” BA is trouble in Germany) and the right amount of on the job experience, of course no cv gap at all….

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bruce wilder 11.22.16 at 5:30 pm

Many good comments. I think Val was spot on regarding overconsumption / overproduction and connecting it to issues of scale and globalism. I like Dave’s extended meditations.

Re: Francis Spufford and his 30% shares idea: for a long-time, the U.S. had a 50% corporate income tax and actually collected it. Now, the U.S. has around 35% nominal corporate income tax and doesn’t come close to collecting it. A 50% corporate income tax that is actually collected makes the Federal government a partner in every business — hardly necessary to go thru the formality of handing over shares, which is just ritual if the government shares cannot be sold.

The upside of a 50% income tax rate — if it is properly structured — is that it is largely paid out of economic rents and tends to act as a major risk dampener. When a company issues a dividend out of current profits to shareholders, there’s no possibility of getting any of that back the next years when they lose money; try raising new capital during a period when business is declining and losses are incurred. But the tax collector may well allow income-averaging, so that a company can use tax refunds to cushion the blow of unexpected losses and so weather an economic storm. Actually collecting the income tax requires accurate financial accounting and auditing, which directly dampens control frauds. (Not-collecting, of course, can motivate a great deal of creative accounting that just obscures useful information, when it doesn’t license outright embezzlement.)

The hazard of a 50% income tax is that Congress can engage in policy by tax expenditure, enacting numerous tax deductions that have the effect of distorting corporate investment decisions — as long as it mostly affects only the highly profitable corporations that are actually throwing off income and cash, that’s not necessarily a terrible use of rentier privilege, but it was pretty hairy after a while. The worst thing is that concrete and predictable effects of chasing income tax savings tended to overwhelm management focus, distracting them from doing the riskier and more amorphous things they should have been attempting to improve operational efficiency.

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TF79 11.22.16 at 8:03 pm

@88 ZM – the state by state LFP rates are quite interesting – on the one hand you have West Virginia at 52.8% and on the other you have North Dakota at 71.6% – and both of them went for Trump by around ~40% with abouta 15% point shift from 2012 to 2016 (http://cookpolitical.com/story/10174). Lots of demographics are baked into that LFP number (older folks, veterans, % of women in the workforce), but interesting nonetheless.

IMHO Iowa is one interesting state that hasn’t received a lot of post-mortem attention (as opposed to the Rust Belt states), and it’s not immediately clear to me how to fit it in the trade/jobs/economic anxiety story. I think people haven’t focused on it because the polling showed it leaning Trump throughout the race, but the 15.2% (!) swing there was the swingiest of the swing states. It’s LFP rate is the third highest in the country at 70.4% and it’s unemployment rate is around 4%. Minnesota and Wisconsin look pretty similar on both measures, and also swung by 6 and 8% respectively. By contrast, “rust belt” MI, OH and PA look quite different (less LFP, more unemployment), but had similar margin shifts (10%, 11.5%, 6.5%). I don’t have a grand unified theory for this pattern (rural v. urban?), but I feel like it deserves more attention (not a criticism of the OP, but more of a general note)

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WLGR 11.22.16 at 9:20 pm

engels: “Should homelessness statistics only count people who are ‘actively looking for a home’? Measures of world hunger only include those who are ‘actively seeking food’?”

Don’t act so surprised. If you’ve read the work of your namesake and his coauthor, you know very well why unemployment statistics reflect the assumptions they do: because of capital’s interest in maintaining a reserve army of the unemployed to help drive the cost of labor power below the value labor adds to production, for which purpose a sole focus on the “economically active population” (as the jargon goes) makes perfect sense. From such a perspective, those who aren’t “economically active” are only worth caring about at all to the extent that they can be made economically active, whether it’s through Third-World trade policies designed to dispossess small farmers and force them into the working class (shoutout to Lupita!) or whether it’s through First-World benefit cuts/reforms designed to force those who had previously gotten by without regular productive employment to seek it.

In general, it’s perfectly obvious that econometric data on factors like unemployment and purchasing-power parity have never been intended as some kind of objective measure of human suffering under capitalism (if anything, as Marxian economist John Smith explains in great detail, those gathering such data would much prefer that it obscure human suffering) but as a resource for capitalism’s administrators in effectively managing its continued existence. I’m not sure why you would expect otherwise.

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Anononymous 11.22.16 at 10:40 pm

Again, it’s not about wages. We pay good wages i.e. competitive in the industry. Unionization drawbacks are in the work rules. I think it’s not illuminating to compare unions across the board as if they are all one in the same. IG Metal is not the same as UAW. German unions are not the same as American ones. Some of it is due to history, some due to labor regulations (NLRB). I’m not sure what work rule restrictions German unions insist on. I’d imagine since they have Board representation they are more committed to the success of the company long term.

I’m no historian, but there must be academics on this thread that can delve into the history of organized labor in the US vs Germany and explain the differences to us.

The future of manufacturing in Germany will be interesting to watch. I’ve never worked for a German company, but they still face the same long term market pressures we do. How they will cope and adapt to the future market landscape will be closely watched.

I think one difference would be in how they tax labor earnings. German welfare programs are mostly universal? Vs means tested in the US. In the US you get funky marginal tax rate thresholds at certain points, I’m not sure Germany has these as much. The real tax travesty in marginal rates isn’t the rich “job creators” paying too much. It’s the floor worker refusing overtime since he would lose out on means tested benefits.

Regardless, I’d be shocked if we pay less per employee than a German company does. I assume we pay more.

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engels 11.23.16 at 12:11 am

Don’t act so surprised

Er I didn’t realise I had; for the record, I’m not. Other than that, good points, I agree.

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marcel proust 11.23.16 at 12:53 am

Anonymous @ 102: I’m no historian, but there must be academics on this thread that can delve into the history of organized labor in the US vs Germany and explain the differences to us.

Neither am I, but I am an economist, read pretty widely in economic history and done a fair bit of research in (1 part of) labor economics. My understanding is that it has less to do with organized labor itself and more with

a) the response of business/mgmt to organized labor (read up on the organizing struggles the CIO unions in the 1930s. For example, any biography of Walter Reuther will cover both the violence that the auto companies used to attempt to break the UAW as well as the postwar offer by Reuther to GM to shape wage demands so that it would not be necessary to raise prices – an offer GM turned down because it felt that this infringed on mgmt prerogatives.)

b) how the German unions initially came to enjoy the power they do. This timeline in wikipedia suggests that they began during the 1848 Revolution (my speculation: either as part of the Revolution or an attempt to buy off support for more radical possibilities), and slowly developed with ebbs and flows over the next century. Then, after WW2, codetermination was a part of the post WW2 denazification/democratization push by the allies, and it was most recently formalized in the mid 1970s. Also, see this, and the timeline that begins on p 7 here.

My point is that looking for the sources of the different approaches “in the history of organized labor” is, to cadge a phrase, like looking for the leak in a flat tire at the bottom, where it is flat. Unions in Germany and the USA behave differently, but it has to do with differences in the conditions they faced and in the way that management responded to them. Some of it likely had to do with much of (organized) labor in the US being a movement of immigrants, and some had to do with the victors of WW2, ultimately allied with the German government, allowing this at a time when German managers were in no position to resist forcefully.

Further Reading:

This from Cornell’s School of Labor Relations is a history of the UAW and GM. Page 273 of this book has the following passage about the first postwar negotiations:

Although GM could well afford an innovative pay settlement, it firmly resisted most of the UAW’s demands for enhanced worker power on the shop floor. It consented to a greater role for committeemen in representing workers in disciplinary proceedings but denied union proposals for recognizing stewards and for improvements in union security, the seniority system, and negotiated production standards.

I imagine that without the allied armies, German mgmt would have responded similarly. This history of codetermination (from LSE: section 3 is most relevant), however, argues somewhat differently that “[The post WW2] These agreements were not the product of ‘fiat’. They were made voluntarily,” in large part because “… the bargaining power between employers and employees had become relatively equal. With the collapse in political power and moral authority of business after both world wars, German trade unions were in a good position to bargain for codetermination.” That, I suppose, is one way to put it.

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marcel proust 11.23.16 at 12:55 am

CT really needs a preview option. I would have closed that html tag and corrected a couple of typos if I could. Perhaps I’ll begin drafting long comments on another blog that has the preview, and then when it is correct, I’ll copy and paste it here w/o posting it there.

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Sam Tobin-Hochstadt 11.23.16 at 1:05 am

I feel bad even pointing this out, but the reason that the unemployment rate is different from 1-(the LFP rate) is because not everyone wants to work. For example, my parents just retired. Other people are students despite being working age. There are millions of stay-at-home parents. There are various ways to calculate unemployment, but the discussion in this thread is just silly.

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hix 11.23.16 at 1:48 am

Well, German managers certainly wouldnt be caught dead admiting they dont pay enough or threat people like shit either. Quite obviously, a company that has shity non union working condition should pay far above the industry average, thats what a typical German company with no worker represenation like Aldi does to get away with it. The managers are however on average a tad less social distant, far less antagonistic to unions and less unwilling to adapt to local culture at foreign plants. Theres a point where anti union behaviour isnt just unethical, but also a competitive disadvantage. A company that can only think of the old boring threats to close down plants even at foreign operations in response to unions is far beyond that point.

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engels 11.23.16 at 2:00 am

not everyone wants to work

Say it isn’t so! (I’ve heard it might even be true of thise of us with jobs…)

109

Anononymous 11.23.16 at 2:19 am

Efcdons,

Ok let’s run down the math here since we’re not seeing eye to eye. Section 8 is 80% limit, let’s call median household income for a family of 4 $60,000. Anything over 48k is going to put you out of the range. They can have a wife that doesn’t work or earns undeclared cash income on the side.

EITC phases out at 45k, iirc. Health coverage subsidies also start going down.

The point I’m making with this is that it is more common than you think. Some of these people get to a threshold level where their marginal tax rate is extremely high and decide it’s not worth it to work more.

Liberals should be able to come together and demand that high marginal tax rates for labor on the working class are to noones benefit.

110

Faustusnotes 11.23.16 at 4:53 am

Anononymous, “liberals” have been making that point about high marginal rates for years, I doubt you were listening though because those campaigns are often spearheaded by unions.

I’d be careful about claims of a link between low participation rates and trump voters. States with low participation rates will havearge retired populations and be older – the main predictor of voting for the orange fascist.

111

nastywoman 11.23.16 at 6:28 am

@98
‘Its a very small subset of society that gets well paying jobs after a few application.’

You mean – everybody who is very much into ‘manufacturing’ or let’s say ‘engineering’?
That is NOT a small subset of the society I currently enjoy – The (Green Ruled) State of Baden Württemberg – and there are not enough Engineers here to even closely satisfy the amazing demand.
And so everybody who has an engineering background actually – doesn’t have to write more than one or two applications for the plentiful well paying jobs offered.

Which doesn’t negate your statement at all – that one has to have ‘just the exactly right cv (the right ba, the right ma..even getting the rght MA after the “wrong” BA is trouble in Germany)
As also in Germany there is (was) this tendency to become ‘rich and famous’ -(just joking)
by ‘everybody making ‘Abitur’ – studying something – anything – and then finding out – it might have been a better idea to have a BA or MA in Engineering.

How ironic – in a world where manufacturing is decreasing?

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nastywoman 11.23.16 at 6:53 am

– and there ultimately is this very interesting theory – that in the future the world will be divided in ‘Producing Countries’ and ‘Consuming Countries’ – and to be one the (un)lucky?
‘Consuming Countries’ you need to have a lot of Natural Resources -(like Australia) or you have to be able to sell money to the world -(like the US) or charge a lot for some patents or copyrights (like the US) – or generally you have to have the reserve currency of the world and the biggest Casinos -(like the US) –
OR – you offer the most entertaining Leisure and Vacation Spots in the world -(like the US too?) –

ALL other Consuming Countries are f… and sooner or later have to become ‘Producing Countries’ again – at least in the dimension that they don’t consume as much more as they produce -(as US)

113

J-D 11.23.16 at 8:15 am

nastywoman

You mean – everybody who is very much into ‘manufacturing’ or let’s say ‘engineering’?
That is NOT a small subset of the society I currently enjoy – The (Green Ruled) State of Baden Württemberg – and there are not enough Engineers here to even closely satisfy the amazing demand.
And so everybody who has an engineering background actually – doesn’t have to write more than one or two applications for the plentiful well paying jobs offered.

If the number of engineers is not even close to satisfying demand, that would seem, if anything, to indicate that the number of engineers is small.

114

Faustusnotes 11.23.16 at 8:18 am

Nastywoman maybe that strange contradiction has to do with the fact that Germany is part of a huge free trade area with unrestricted access to markets in a population five times its own?

115

nastywoman 11.23.16 at 9:24 am

@114
‘maybe that strange contradiction has to do with the fact that Germany is part of a huge free trade area with unrestricted access to markets in a population five times its own?’

Maybe?

– or maybe this argument – that somebody is a member of a ‘free trade area’ – is just a lame excuse – a tricky diversion by nationalistic manipulators like F…face von Clownstick – trying to blame -(not Germany) – but some ‘Low Pay Countries’ for the fact – that it was US ‘homeland’ companies who exploited such developing countries by sending them the jobs of US – their ‘own’ – workers.

How absurd? –
Nobody forced these US Companies to give up manufacturing in their homeland to the extend they did.

They did it completely out of some… let’s call it ‘motives’ every US worker was very well aware off.
And to argue that Companies or Corporations in Germany didn’t do it because they had some ‘economical advantage’? by being members of ‘a huge free trade area’ – is completely missing the point – that these German Companies amazingly successfully are ‘eating US lunch -(like F…face von Clownstick likes to word it)

And they are ‘eating US lunch’ NOT because they are treating their workers like s… or pay them the lowest possible wages or salaries – a contraire – they pay them the highest salaries and on top of it some nice and very long vacations on all kind of European and even Californian beaches.

And I know such facts are very hard to digest for my fellow Americans -(or even some of my ‘Australian’ Australian friends)

BUT Eat IT!

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nastywoman 11.23.16 at 10:05 am

– and isn’t it the weirdest thing about:

‘Price is no object’

This phrase one might hear so often in the ranks of the F…faces von Clownsticks – when it comes to buying a new Rolls or ordering a golden toilet or flying to Paris to get the wedding gown for Melania – that if it comes to the price which has to be payed for the workers – who screw that Rolls together or manufacture the golden toilet or knit the wedding gown – the F…face von Brownsticks suddenly decide that ‘that price’ is an object…?

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Faustusnotes 11.23.16 at 10:20 am

I’m suggesting, nastywoman, that germanys success is due to free trade.

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nastywoman 11.23.16 at 11:11 am

‘I’m suggesting, nastywoman, that germanys success is due to free trade.’

Absolutely! –
But as (let’s pretend it is) ‘Free’ Trade has become this kind of ‘global’ thing –
it might be just another type of ‘Business Model’ -(thinking American) – like the Business Model of US ‘Agricultural Complex’ who lobbied so hard to have Nafta signed in hope to use the ‘Free Trade’ to swamp Mexico with their (hormon) Steaks and subsidized Corn – and then found out -Uuups – that worked – but suddenly ‘them Mexican’ are inviting all these greedy US Companies – which – Uuups – are so ‘clever’ – that they are sending us lots and lots of manufacturing jobs – which produces a lot of unhappy American (Ex) workers and thus F…face von Clownstick.

And talking about ‘Trade after Trump’ – should ‘economists’ – if they are not just ‘money machinists’ know all of that BT? (before Trump)

119

John Quiggin 11.23.16 at 11:42 am

Faustusnotes and nastywoman, please take this discussion to the (newly opened) Sandpit post. Faustusnotes knows the drill from my blog, nastywoman may want to take a look there to see how it works.

120

magari 11.23.16 at 12:29 pm

Here’s something that may be food for thought.

When Californians (either in the state house or via ballot referendums) propose to do something that increases the cost of business, there generally is a lot of ballyhooing about how it’s going to hurt XYZ (businesses, workers, consumers, etc.). Sometimes these initiatives become policy and they not only change how firms do business in CA, but often how they do business across their entire operation. It’s literally cheaper (or more lucrative) to create a standardized response, increasing the cost of production, than to exit the CA market.

If this is true about the California economy, wouldn’t it also be true about the US economy? If the US starts demanding living wages or higher environmental standards by firms that bring products into the US market, wouldn’t they prefer to do so rather than to exit the world’s largest consumer economy? And, if they were to stay and compete in the US market, would not they find ways to economize on costs outside of labor and environment? Such as reducing the capital share?

121

klaus barna 11.23.16 at 1:13 pm

Thanks, very much enjoyed Dave’s inputs–really got me thinking.

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nastywoman 11.23.16 at 2:24 pm

@119
‘nastywoman may want to take a look there to see how it works.’

– it works well – but as the discussion at the sandpit seems to be on a completely different track is there a way to have the two tracks leading into one without repeating ourselves?

123

WLGR 11.23.16 at 3:32 pm

nastywoman: in the future the world will be divided in ‘Producing Countries’ and ‘Consuming Countries’

This is how it’s been for a long, long time. Granted, this requires an understanding of what it means to be a “producing country” that doesn’t reduce itself to some banal sense of “here’s a big building with conveyor belts and welding torches and all that shit” — specifically, to “produce” is to produce value, which means human labor compensated poorly enough to allow for some of the value it creates to be appropriated as profit. (Basing one’s understanding of “productivity” on metrics like gross domestic product will only obscure the issue, since as John Smith again has pointed out, GDP is less a measure of value added through production than of value captured through commerce.) As Anonymous can surely attest, it’s quite possible for a factory to be thoroughly “productive” in a strict material sense (conveyor belts a-whirrin’, welding torches a-blowin’, more widgets per hour than ever!) yet if factory workers’ wages are uniformly high enough it still may not be be “productive” enough in an economic sense to make it worth keeping the lights on.

One might think of left-liberal social democracy like in Germany or the Nordic countries as a solution to this problem, but on a global macroeconomic scale it’s a major mechanism for institutionalizing the divide in the first place, since in global terms the benefits of First-World welfare states can be regarded as a form of supplementary wage paid for by taxation of commercial activity that involves “producing countries” and “consuming countries” alike but only paid out to citizens of “consuming countries”. As long as we live in a thoroughly global economy with globalized production processes, it boils down to a pretty straightforward question of which people in which nations have the right to basic economic security and which don’t, and in their bizarre, anti-intellectual, ideologically blinkered way, the Trump folks are facing this question much more clearly than most left-liberals.

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WLGR 11.23.16 at 3:36 pm

Regarding Germany specifically, for obvious reasons Yanis Varoufakis has a pretty thoroughly developed critique of the core issues with Germany and the Eurozone His focus is on the stabilizing role of “surplus recycling mechanisms” between consumer (i.e. creditor) regions and producer (i.e. debtor) regions in a given economic area, for which he cites as a model the role of US federal spending in maintaining economic balance through heavier taxation of creditor regions like New York and California to pay for programs that benefit debtor regions like Missouri or Mississippi just as much if not more. The Eurozone as an economic area has no such mechanisms, meaning that Germany has been vacuuming up the surpluses of its commanding economic position without distributing these surpluses back to the ever-more-immiserated populations of debtor regions like Greece. Something definitely has to change, and if it’s not some new form of surplus recycling mechanism like those in the US — Europe-wide welfare benefits distributed with no regard for nation/state, EU-subsidized industrial employment in poorer countries, and so on — it will inevitably be some form of collapse.

Of course this applies on a global level too: Varoufakis’ book The Global Minotaur is about the forms of global surplus recycling mechanism that existed in both the postwar Keynesian era and the post-Bretton-Woods neoliberal era, and why these mechanisms have broken down. Highly recommended.

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bob mcmanus 11.23.16 at 3:52 pm

WLGR 11.23.16 at 3:32 pm

That’s good. I finished the Smith book two weeks ago and you precis it succinctly, clearly, and movingly, much better than I could. Thank you.

126

Brett Dunbar 11.23.16 at 4:59 pm

The value added by an employee has to exceed the cost of employment, otherwise the business is making a loss and isn’t viable.

The drift from the countryside to the urban areas that accompanies economic development is a pull process not a push process. In an agricultural economy activity is highly seasonal, a large labour demand during harvest and far less during the rest of the year. Much of the rural population is chronically under employed and poor. Development produces a demand for year round labour as a somewhat higher average pay than what the under employed rural poor are getting. Pay in urban areas then stays at a level slightly above rural poverty meeting demand for labour by drawing people in from the countryside until the pool of rural poverty has been drained. At which point demand for labour leads to wage increases.

This happened in Britain during the industrial revolution, there was a long period of wage stasis until the rural poor had mostly moved to urban areas then real wages started increasing. It is starting to happen in China now, the rural poverty pool has been drained so wages are being bid up.

Third world development policies don’t force small farmers from the land, what they do is offer slightly better employment terms to landless seasonal labourers and other underemployed rural poor. They pull not push.

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Layman 11.23.16 at 5:17 pm

Anonymous: “We pay good wages i.e. competitive in the industry.”

‘Competetive in the industry’ isn’t the same thing as ‘good’. Walmart’s wages and benefits are ‘competitive in the industry’ and I think we can agree that they suck.

“I’d be shocked if we pay less per employee than a German company does.”

It ought to be easy enough for you to find out. Prepare to be shocked.

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nastywoman 11.23.16 at 5:25 pm

‘The Eurozone as an economic area has no such mechanisms, meaning that Germany has been vacuuming up the surpluses of its commanding economic position without distributing these surpluses back to the ever-more-immiserated populations of debtor regions like Greece.’

Believing in the theory – that workers have to be payed so well – that they easily can afford what they produce – I have my problems with Varoufakis money machinists idea -(as with all money machinists ideas)

And as there always was in the Eurozone this great tradition distributing money from the ‘richer’ States to the poorer ones – in a way – which changed Greece from the introduction of the Euro in just 7 or 8 years – from one of the so called ‘poorest Eurozone countries’… to a country where… and this is without any value judgement – Porsche Cayennes became a favorite ‘mode’ of transportation – let’s first agree – the ‘vacuuming up’ – firstly was a united effort.

And for sure – with the amazing growth in Greece -(and the other poorer Eurozone countries) – also the German economy grew – but not so much the wealth of the German workers – who without any doubt created a lot of this Common Euro Wealth – and that always get’s overlooked – mainly by Anglo-Saxon economists – who thought they could use
the non-comparable situation in Europe for their ‘pro or contra austerity discussion’

Or talking about another type of ‘Trade in Europe’.
There always was this ‘mechanism’ in the Eurozone – that nearly everything the workers from ‘the north’ had available as surpluses – they spend mostly on vacations in the South -(distributing – as Greece is one of the favorite vacation destination of Germans) – and thus – Greece made such a surplus in ‘trading’ Tourism – that the country – not unlike US – more and more gave up on manufacturing anything – and then the common bubble burst.

And suddenly the Producers were the creditors – not unlike China (supposedly) is the creditor of the mighty US of A…

129

J-D 11.23.16 at 9:07 pm

WLGR

Granted, this requires an understanding of what it means to be a “producing country” that doesn’t reduce itself to some banal sense of “here’s a big building with conveyor belts and welding torches and all that shit”

What, making a clear connection with observable reality is banal?

130

J-D 11.24.16 at 3:39 am

WLGR

specifically, to “produce” is to produce value, which means human labor compensated poorly enough to allow for some of the value it creates to be appropriated as profit.

Brett Dunbar

The value added by an employee has to exceed the cost of employment, otherwise the business is making a loss and isn’t viable.

It is seldom — probably never — possible to measure value created or added in the way that would be necessary to make meaningful comparisons with labour compensation or cost of employment.

131

Anononymous 11.24.16 at 3:46 am

Considering that the median household income in the US is significantly (approx 25-30%) higher, yes I seriously doubt our German competitors are paying more for labor. A quick Google search turned up around €32,000 for similar positions, which would be lower.

Management doesn’t have its visceral reaction to unions because of wages. Marginal product is marginal product. It’s the work rules. Being able to fire someone who will not show up on time, or smells like alcohol, or who is simply incompetent is critical to a functioning plant.

As to benefits, the line workers have the exact same health and dental benefits as I do, and the same 401k plans.

And yes, profit is why we exist. If it is unprofitable to continue operations we would shut down. The reasons there aren’t worker collective corporations isn’t due to a conspiracy, it’s a matter of efficiency and incentives.

A utilitarian should celebrate offshoring anyways, right? Lifting hundreds of millions of people out of poverty is perhaps the single greatest thing that’s happened in human history.

132

Anononymous 11.24.16 at 3:49 am

J-D,

In manufacturing, to measure an employee’s value added is a matter of glancing at a spreadsheet titled something similar to…Production xx.

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J-D 11.24.16 at 4:12 am

Anononymous

In manufacturing, to measure an employee’s value added is a matter of glancing at a spreadsheet titled something similar to…Production xx

Without more detailed information, I am not entirely persuaded by your assertion, but even supposing for the sake of argument it’s true, the majority of employees don’t work in manufacturing, and even if it is possible to measure an employee’s value added in manufacturing that isn’t an adequate basis for concluding that it’s possible more generally.

I wrote ‘seldom — probably never’ in the first place because I wasn’t confident the possibility could be excluded entirely; the truth of ‘seldom’ doesn’t depend on the truth of ‘never’.

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Cranky Observer 11.24.16 at 4:56 am

For what its worth (anecdata!) I’ve worked in a variety of US manufacturing firms and held responsibility for business data management at several; most couldn’t accurately report their average cost much less the marginal cost/productivity of a single employee. As Brett Dunbar noted there are just too many unknowns. At small firms there aren’t enough qualified persons or time to attempt such measurements; at large firms the interconnections and factors explode exponentially.

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Alex K. 11.24.16 at 8:09 am

Those who claim that it’s generally extremely difficult to measure marginal productivity per employee are correct — but this is a fact of very little relevance.

What employers care about is whether employee A is better than employee B, or at least better on certain task, and that’s in fact often not that hard to measure. You can usually tell who makes more mistakes per unit of work, who makes more widgets in a day, who sells more, who pisses off the customers more often and so on.

Once you have the ability to rank employees on certain tasks, you can restructure the workflow using that information — and that restructuring can be in the form of firing the most inefficient worker.

Whether the fired worked has a marginal productivity lower than his marginal cost, or whether it’s just a matter of being able to hire more productive workers is a question of little relevance to a manger — it’s something of purely theoretical interest.

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nastywoman 11.24.16 at 8:13 am

@131
a quick google search turns up an article in Forbes

How Germany Builds Twice As Many Cars As The U.S. While Paying Its Workers Twice As Much
In 2010, Germany produced more than 5.5 million automobiles; the U.S produced 2.7 million. At the same time, the average auto worker in Germany made $67.14 per hour in salary in benefits; the average one in the U.S. made $33.77 per hour. Yet Germany’s big three car companies—BMW, Daimler DDAIY +% (Mercedes-Benz ), and Volkswagen—are very profitable.

How can that be? The question is explored in a new article from Remapping Debate, a public policy e-journal. Its author, Kevin C. Brown, writes that “the salient difference is that, in Germany, the automakers operate within an environment that precludes a race to the bottom; in the U.S., they operate within an environment that encourages such a race.”

There are “two overlapping sets of institutions” in Germany that guarantee high wages and good working conditions for autoworkers. The first is IG Metall, the country’s equivalent of the United Automobile Workers. Virtually all Germany’s car workers are members, and though they have the right to strike, they “hardly use it, because there is an elaborate system of conflict resolution that regularly is used to come to some sort of compromise that is acceptable to all parties,” according to Horst Mund, an IG Metall executive. The second institution is the German constitution, which allows for “works councils” in every factory, where management and employees work together on matters like shop floor conditions and work life. Mund says this guarantees cooperation,

Mund points out that this goes against all mainstream wisdom of the neo-liberals. We have strong unions, we have strong social security systems, we have high wages. So, if I believed what the neo-liberals are arguing, we would have to be bankrupt, but apparently this is not the case. Despite high wages . . . despite our possibility to influence companies, the economy is working well in Germany.’

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nastywoman 11.24.16 at 8:59 am

– and finally getting to the conclusive point:

In manufacturing you can have a business model which mainly depends on how low you can go with the price for you product to beat the competition –
(the walmart philosophy or – infamous race to the bottom which always seems to be fought on the back of the workers)

Or

You can decide for the business model which mainly depends on the quality of your product – and where somehow – mysteriously? price is much less of an object –
(-the price is much less of an object philosophy – the admirable race to the top – also for the workers)

And somehow I prefer business model Nr.2…

138

ZM 11.24.16 at 10:00 am

TF79,

“@88 ZM – the state by state LFP rates are quite interesting – on the one hand you have West Virginia at 52.8% and on the other you have North Dakota at 71.6% – and both of them went for Trump by around ~40% with abouta 15% point shift from 2012 to 2016 (http://cookpolitical.com/story/10174). Lots of demographics are baked into that LFP number (older folks, veterans, % of women in the workforce), but interesting nonetheless.
IMHO Iowa is one interesting state that hasn’t received a lot of post-mortem attention (as opposed to the Rust Belt states), and it’s not immediately clear to me how to fit it in the trade/jobs/economic anxiety story. “

I don’t really know anything about Iowa, but I found that the low labour force participation States mostly voted for Trump in the election, and also the high labour force participation States mostly voted for Trump in the election. It was the medium labour force participation States that mostly voted for Clinton.

I think there needs to be some sort of look at employment policies for the low labour force participation States, but it would have to be the Federal government working with the State and City governments. It would probably take awhile to turn those figures around I would imagine.

139

Layman 11.24.16 at 11:29 am

Anonymous: “Considering that the median household income in the US is significantly (approx 25-30%) higher, yes I seriously doubt our German competitors are paying more for labor. A quick Google search turned up around €32,000 for similar positions, which would be lower.”

Again, I doubt that number. And, I imagine you’re ignoring benefits costs. Try this:

http://www.bls.gov/news.release/pdf/ichcc.pdf

140

Layman 11.24.16 at 11:32 am

Also, too, I think Cranky Observer is entirely right. I tried several times to get organizations to focus on understanding the relationship between the cost of a booking and the potential value of a booking (in the travel industry), and no one could agree on what factors should be included in the cost. If anything, there’s an incentive not to understand the cost, because then explanations are required.

141

J-D 11.24.16 at 12:17 pm

Alex K.

Those who claim that it’s generally extremely difficult to measure marginal productivity per employee are correct — but this is a fact of very little relevance.

It’s relevant to some things but not to others. It is, for example, relevant to the comments by WLGR and Brett Dunbar to which I responded.

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J-D 11.24.16 at 12:21 pm

nastywoman

There are “two overlapping sets of institutions” in Germany that guarantee high wages and good working conditions for autoworkers. The first is IG Metall, the country’s equivalent of the United Automobile Workers. Virtually all Germany’s car workers are members, … The second institution is the German constitution, which allows for “works councils” in every factory, …

The first of those lines up fairly closely with one of John Quiggin’s original main assertions, that beneficial consequences would flow from higher rates of union membership; the second lines up in a more general way with his associated suggestion of changes to the legal framework affecting unionisation and union rights.

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nastywoman 11.24.16 at 2:08 pm

@142
‘The first of those lines up fairly closely with one of John Quiggin’s original main assertions, that beneficial consequences would flow from higher rates of union membership’

How true – but you need a ‘healthy’ percentage of manufacturing in a country to enjoy these benefits and when John Quiggin wrote the idea of manufacturing jobs as “good” jobs is historically specific particularly to the US – he probably has overlooked @139

http://www.bls.gov/news.release/pdf/ichcc.pdf

– that it is mostly the northern European countries and Germany where there are the highest wages and salaries in manufacturing – illustrating the ‘reality’ of manufacturing as ‘really good’ jobs.

As one might find out – by staying in Australia or spending some time in Great Britain – or the US – that in Anglo-Saxon countries manufacturing jobs seem to lack a certain type of… let’s say ‘prestige’? And sometimes by talking to Anglo-Saxon economists that ‘lack of prestige’ might influence their judgement of manufacturing as ‘good’ jobs to?

Or not?

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John Quiggin 11.24.16 at 2:49 pm

nastywoman and other commenters who wish to debate with her, please take this to the sandpit thread

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Anononymous 11.24.16 at 9:15 pm

Layman,

Surely, you understand the difference between costs and wages. You also understand that this isn’t PPP adjusted. and you understand that it’s from 2011. So 1.4 is the adjustment factor. You guys are smarter than this.

You’re also not considering business model. Wal mart can’t pay Costco wages. Costco is proof that the Costco business model works, but Wal-Mart is using an entirely different retail model.

For our sector, yes, we pay more than German companies. Just like sector to sector we pay more in general. Auto manufacturing is a very specific sector that may be an anomaly.

But again, that’s not the point. Prof Quiggin can comment (please??) on how wages are ultimately determined by market pressures. We are going through a global period of wage equalization. Unskilled labor is unskilled labor. An American or German in the long run is no more valuable than a Bangladeshi. And we should celebrate this. Millions of people are going to be lifted out of poverty. Isn’t your normal refrain to check privilege or something ? Well, the blue collar workers in developed countries are about to get their privilege checked in a massive way.

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J-D 11.24.16 at 11:31 pm

Anononymous

Isn’t your normal refrain to check privilege or something ? Well, the blue collar workers in developed countries are about to get their privilege checked in a massive way.

I don’t know whether Layman is a frequent user of the expression ‘check your privilege’; I know I’m not; but I do know what the people who use that expression mean by it, and it’s different from what you are using the expression to mean.

147

faustusnotes 11.25.16 at 2:27 am

how wages are ultimately determined by market pressures

I live in a country with a declining work force, a very large and competitive manufacturing industry, and extremely low unemployment, and yet wages are not increasing despite the market pressures to compete for workers. Every company is looking for staff, yet wages aren’t going up. Could it be … say it ain’t so … wages can be determined by things other than market pressures??

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Peter T 11.25.16 at 2:56 am

wages are ultimately determined by market pressures

Only if wage-setting is left to the “market”. As in, the price of people is ultimately determined by market pressures only if people are bought and sold. What is in the market (people, baby-sitting, access to water…) is ultimately socially determined. Moreover, the labour share of income is also socially determined. And what counts as labour is socially determined (how much did you pay your mother?).

Further, what counts as productivity within a firm is subject to the firm’s overall direction. GM, Ford and GE all started making more revenue from finance than manufacturing – did the accountants become more productive than the engineers?

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engels 11.25.16 at 3:22 am

Unskilled labor is unskilled labor.

Skilled labour is also skilled labour fyi

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nastywoman 11.25.16 at 7:52 am

When I said, take this discussion to the sandpit, I meant it. No further commments on this thread from you, please – JQ

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reason 11.25.16 at 10:18 am

I just can’t help wondering if anonymous (various posts) is a Marxist. Remember this post started with Trump being elected after a populist campaign basically by telling people you are doing worse than you were and free trade is to blame. Anonymous then argues that making very poor people somewhat richer is a positive thing and we should be happy about it, even it means that lots of our fellow citizens are poorer as a consequence. But then a small problem arises, we live in a democracy, and our fellow citizens get to vote and foreigners don’t. And free trade was sold on the basis that EVERYONE could be better off. Somehow, this all doesn’t fit together does it. Either globalized capitalism has to go or democracy it seems. Dani Rodric is looking very good.
http://rodrik.typepad.com/dani_rodriks_weblog/2007/06/the-inescapable.html

152

reason 11.25.16 at 10:32 am

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Layman 11.25.16 at 11:59 am

@ Anonymous:

1) you keep saying your employer pays higher wages than comparable German companies, but you don’t actually offer any data on what you pay, what those comparable German companies are, or what they pay;

2) if you actually mean to say that, for the purpose of that claim, one should not consider non-wage direct or indirect compensation to be a factor in the comparison, while on the other hand one should consider relative purchasing power to dismiss actual higher wages in Germany, then it is a bit hard to take your claim seriously and I will now stop doing so;

3) stop calling me Shirley!

154

Layman 11.25.16 at 12:04 pm

“You’re also not considering business model. Wal mart can’t pay Costco wages.”

Why should I consider the business model to support the notion that Walmart wages suck? Walmart wages leave fully-employed workers below the poverty level. That is the definition of ‘suck’ as far as I’m concerned. I’m willing to grant that Walmart pays wages which are competitive with their peers, but not that those are as a result good wages. They suck.

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hix 11.26.16 at 1:18 am

““You’re also not considering business model. Wal mart can’t pay Costco wages.”

Sounds like lots of empathy for failed business models of multi billionaires and zero empathy for poor people. There is zero logic to this from a makroeconomic perspective. So Wal-Mart has to change or goes bankrupt, so what. By the way, if the implication here is that discounter cant pay high wages in general, that would be uterly wrong. Typically, discount stores pay higher wages and rely on less staff than more upscale ones.

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Collin Street 11.26.16 at 6:00 am

You’re also not considering business model. Wal mart can’t pay Costco wages. Costco is proof that the Costco business model works, but Wal-Mart is using an entirely different retail model.

And antebellum cotton plantations used a third business model, which couldn’t sustain even wal-mart wages. Or IG Farben, which used a fourth for a while.

That a particular set of economic behaviour can be described as a “business model” means, legally and morally, precisely nothing. “I did it because I needed to to make my business profitable the way I want” is not a legal or moral defence to any accusation whatsoever, nor even a plea in mitigation. We don’t need to — we must not — consider “business model”.

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Metatone 11.26.16 at 9:08 am

Some really interesting comments here.

Matt @9 and Dave @22 really push towards the issues I see as crucial – which is how many people can the industrial economy (as opposed to the service economy) actually employ?

If the answer is 7% or even let’s say 10% long term, then we have to ask:

Can our economic and political theories and institutions actually meet the challenge of a world where 30% of the workforce (agriculture & industry & energy/materials) really do most of the “value creation” and 70% are in services that may bring all sorts of “utility” but largely have to be paid for (balance of payments etc.) through the activities of the 30% ?

(One can invoke robots to make these numbers even more extreme, but I think it’s really important to realise that you don’t need to look to the future to see we have a problem.)

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J-D 11.26.16 at 11:35 pm

Can our economic and political theories and institutions actually meet the challenge of a world where 30% of the workforce (agriculture & industry & energy/materials) really do most of the “value creation” and 70% are in services that may bring all sorts of “utility” but largely have to be paid for (balance of payments etc.) through the activities of the 30% ?

Services aren’t paid for with goods; both services and goods are paid for in exactly the same way, with money. That is also how both of them have economic value, in exactly the same way, in that people are prepared to pay money for them; goods that people are not prepared to pay money for have no economic value in exactly the same way as services that people are not prepared to pay money for. The distinction you imagine is just that, imaginary.

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