Trade after Trump

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.

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.

“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.

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).

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.

“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?

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.

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).

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

– 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?’

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.

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.

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.

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.

John I like your Aeon essay

“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.

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?

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.

“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.

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

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.

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?

@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?

@
‘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…

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.

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.

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.

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.

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.

@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.

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.

@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.

John Garrett https://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).

@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

– 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: 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.

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.

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
‘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.

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…

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

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.

@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…?

– 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…

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.

– 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.

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.

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.

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.

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.

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.

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.

@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?

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
‘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!

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

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

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.

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.

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.

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?

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.

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’.

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.

– 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…

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

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.

@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?

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.

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??

Unskilled labor is unskilled labor.

Skilled labour is also skilled labour fyi

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

@ 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!

““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.

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.)