Daniel Rodgers’ Age of Fracture hasn’t received a lot—really, any—attention around here. That’s a pity because it’s a terrific book. Easily the most comprehensive account of social thought in postwar America, it narrates how our notion of the “social” got steadily broken down across a wide array of disciplines. It’s also a flawed book. My review of it has finally appeared in the London Review of Books. Unfortunately, it’s behind the paywall, but I’ve liberated some of it for your consideration here. Some people might feel uncomfortable commenting on the review without having read all of it—here’s my pitch for you to subscribe to the LRB—but I doubt that’ll ultimately prove to be much of an impediment.
From the category archives:
Economics/Finance
Alex Gourevitch, with whom I’m collaborated in the past, has [a piece at Jacobin](http://jacobinmag.com/2012/10/two-hurricanes-2/) that’s somewhat hostile to environmentalism. The piece is written as a provocation, and, indeed, it has successfully provoked at least one person: me. Alex argues that greens substitute science for politics, neglect the social determinants of well-being, would deprive the global poor of technological benefits that could protect them from natural disasters and risk condemning people to lives wasted in drudgery.
No doubt Alex can find plenty of instances of people mouthing the sentiments and opinions he condemns. But the trouble with this sort of writing is exemplified by the endless right-wing blogs that go on about “the left” and then attribute to everyone from Alinsky to the Zapatistas a sympathy for Stalinist labour camps. Just like “the left”, people who care about the environment and consider themselves greens come in a variety of shapes, sizes and flavours. Taking as typical what some random said at some meeting about the virtues of Palestinians generating electricity with bicycles is inherently problematic.
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Since long before I started blogging, I’ve been planning a big article on the prospects for Utopia, starting off from Keynes’ essay Economic Possibilities for our Grandchildren. While I procrastinated, lots of others had the same idea, most recently Robert and Edward Skidelsky. But, with encouragement from Ed Lake at Aeon Magazine, I went ahead anyway and the article has just appeared.
This is also a good time to announce that our long-promised book event on Erik Olin Wright’s Envisioning Real Utopias is going ahead, with a target publication date of March 2013.
Commenting on the recent labor unrest in China, Matt Yglesias makes a comparison with the past and present of the United States.
Conditions in contemporary China have much more in common, structurally speaking, with conditions during the heyday of western labor activism than does anything about the Chicago teachers strike or the apparent American Airlines sickout. The rapid pace of Chinese industrialization means the average wage in a Chinese factories has managed to lag behind the average productivity of a Chinese factory worker (roughly speaking because it’s dragged down by the absymal wages and productivity of Chinese agriculture) which creates a dynamic ripe for windfall profits but also for labor activism. The repressive nature of the Chinese state is an unpromising ground for union organizing, but by the same token Chinese labor organizations have much less to lose (in terms of union-managed pension funds, union-owned buildings, etc.) if they break the law with “wildcat” strikes and the like.
Why are workers rioting in China? Because, says Matt, of the large gap between labor productivity and labor compensation there, which is similar to how things once were in the US and Western Europe but is unlike anything in the contemporary US.
Oh really? Since 1973, labor productivity in the US has risen 80.4 percent. Yet median wages have increased only 4 percent, and median compensation as a whole—which includes benefits—has only increased 10.7 percent.
This is hardly a state secret; mainstream economists talk about it all the time. Which is why I was so puzzled by Matt’s claim.
So I asked him about the discrepancy. He responded: “I should explain the difference more clearly. US is a median issue, China is a mean issue.” I’m not clear what point he’s trying to make here, but it seems to work against him: if the mean worker wage in China is being depressed by very low wages in agriculture, that means factory work pays better than agriculture, so workers should be flocking to the factories. An increase in the labor supply is not usually conducive to labor activism.
Back to the US. So where did all that productivity growth between 1973 and 2011 go? Writes Paul Krugman:
One third of the difference is due to a technical issue involving price indexes. The rest, however, reflects a shift of income from labor to capital and, within that, a shift of labor income to the top and away from the middle.
2/3 of the productivity, in other words, went to the “windfall profits” that Matt speaks of above. Not so unlike China after all.
And what about labor activism? Matt is right, of course, about the repressive Chinese state. But as I’ve long argued, a good deal of worker activism in the United States also gets repressed. One in 17 of every eligible voter in a union election gets illegally fired or suspended for his or her support for a union. While it’s true that the American state is not the equivalent of the Chinese state, it’s also true that a great deal of repression in the US has always been outsourced to the private sector—even in “the heyday of western labor activism.”
Over the summer, when Chris Bertram, Alex Gourevitch, and I were advancing our thesis about workplace tyranny, Matt repeatedly professed bafflement as to why we were even talking about this issue. Well, this is one reason: repression and coercion in the workplace actually prevent the union organizing that helps ensure that that growth in worker productivity translates into higher pay and benefits for workers.
Matt gets it. In China.
This is cross-posted at coreyrobin.com.
This is a cross post of [a piece I’ve done for New Left Project](http://www.newleftproject.org/index.php/site/article_comments/predistribution_powerful_idea_or_window_dressing_for_austerity).
Back in 1875, Karl Marx had the sorry task of perusing the programme of the young German SDP. There was quite a lot he didn’t like, much of it due to the – as he saw it – bad influence of his rival Lassalle. One thing annoyed him immensely: the focus of the new German party on what he saw as the symptoms of capitalist class society rather than on the most basic structural features of that society. First among his targets was inequality, which the SDP was making a big thing about. Marx was scathing:
“Any distribution whatever of the means of consumption is only a consequence of the distribution of the conditions of production themselves. The latter distribution, however, is a feature of the mode of production itself. The capitalist mode of production, for example, rests on the fact that the material conditions of production are in the hands of nonworkers in the form of property in capital and land, while the masses are only owners of the personal condition of production, of labor power.”
One doesn’t have to buy into all the details of classical Marxism to see that he had a very good point. Since the early years of the 20th century, left-liberals and social democrats have been scrabbling around using the tax and benefits system to try to temper the gross inequalities that capitalism generates. Like Robin Hood, or maybe Robin Hood on prozac, they’ve cast themselves as taking from the rich and giving to the poor, without doing too much to address the question of how some people got to be rich and others “poor” in the first place.
I’m trying to find information on the effects of the 1990s welfare reform (surprisingly difficult, suggestions welcome) I came across this NYT article by Jason de Parle which included the following striking result (link added.[^1]
)
Luke Shaefer of the University of Michigan and Kathryn Edin of Harvard examined the share of households with children in a given month living on less than $2 per person per day. It has nearly doubled since 1996, to almost 4 percent. Even when counting food stamps as cash, they found one of every 50 children live in such a household
The result is striking because of the $2 figure, which is derived, not from a US poverty line, but from the World Bank Poverty line for developing countries. These children aren’t just poor by American standards – they would be considered poor in sub-Saharan Africa.
[^1]: Why does the NYT link internally for things like “Social Security” but not to the studies it is quoting?
SASE, the Society for the Advancement of Socio-Economics (the academic association for economic sociology), is hosting its annual conference in Milan next year, and calling for proposals for mini-conferences as part of the main event.
bq. Up to eight mini-conference themes will be selected for inclusion in the Call for Papers by the program committee, which may also propose themes of its own. Preference will be given to proposals linked to the overarching conference theme, “States in Crisis,” but mini-conferences on other SASE-related themes will also be considered. Proposals for mini-conference themes must be submitted electronically to the members of the program committee by October 1, 2012. All mini-conference proposals should include the name(s) and email addresses of the organizer(s), together with a brief description. As in previous years, each mini-conference will consist of 2 to 6 panels, which will be featured as a separate stream in the program. Each panel will have a discussant, meaning that selected participants must submit a completed paper in advance, by June 1, 2013.
I have a vested interest here – I’m a member of SASE’s executive board – but it is a pretty good way of getting serious discussion going on a topic or linked set of topics that are too big to deal with in a single panel.
This past Sunday, I appeared on Up With Chris Hayes, where I spoke briefly about the rise of austerity politics in the Democratic Party (begin video at 2:13). My comments were sparked by Bruce Bartlett’s terrific piece “‘Starve the Beast’: Origins and Development of a Budgetary Metaphor” in the Summer 2007 issue of The Independent Review. Barlett is a longtime observer of the Republican Party, from without and within. He was a staffer for Ron Paul and Jack Kemp, as well as a policy adviser to Ronald Reagan and a Treasury official under George HW Bush. Now he’s a critic of the GOP, writing sharp commentary at the New York Times and the Financial Times. He and I have argued about conservatism before. When it comes to fiscal policy, however, he’s one of the savviest analysts of the GOP out there. What follows is an extended summary/riff on Bartlett’s piece and what I said on Hayes’s show: to understand how austerity works in (and for) the Democratic Party, you have to understand how it once worked for the Republicans. Long story short: not so well.
How would open borders affect the well-being of the world’s population? I’ve spent much of today reading what some economists have to say about this and there seems to be something of a consensus that if people were able to move freely across borders, to live and work where they chose, then the people who moved from poor countries to rich ones would enjoy massive benefits. One author, Michael Clemens, “raises the possibility of a doubling of global income”:http://www.cgdev.org/files/1425376_file_Clemens_Economics_and_Emigration_FINAL.pdf (PDF); another, John Kennan, “envisages a doubling of the incomes of the migrants”:http://www.nber.org/papers/w18307.pdf?new_window=1 . Either way, the gains are huge: put those poor people into the institutional and capital contexts of wealth countries and they would do much much better.
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I was planning this as a followup to my earlier post on the feasibility of guaranteed minimum income (GMI) and universal basic income (UBI) policies[1]. Chris has opened debate on some of the fundamental issues associated with a Rawlsian transition, so there might be some benefits in a parallel discussion of the specifics of these policies, which seem to me to capture a fair bit of what Rawls had in mind.
Although the two kinds of policies can be made roughly equivalent in terms of their effects on the distribution of income net of taxes and transfers, they seem (to me, at any rate) to indicate quite different political approaches, and therefore different transition paths, each with their own difficulties.
We were talking not long ago about universal basic income policy, and there were a variety of opinions about the desirability, political sustainability and implications of such a policy. But, before arguing about those issues, it’s useful to consider whether a basic income is feasible at all and, if so, what kinds of tax policies, and adjustments to other welfare policies, would be required to support it. I’ve considered the relatively easy case of a guaranteed minimum income, rather than a universal basic income paid to everyone, as advocated by Philippe von Parijs and others.
Hi there liberal rule-of-law fetishists!
Now that I’ve got your attention, I’d like to mention something that’s been bothering me. This idea that we all order our affairs under a system of predictable rules sounds very nice, but I do wonder whether it’s compatible with some of the other things that you seem to be signed up for. Some of you, I know, are worried about this so-called 1 per cent, and even about the 1 per cent of the 1 per cent: the people who own lots of stuff. Not only do they own lots of stuff, but they own the kind of stuff that is useful if you want to own even more stuff. That’s how it goes. And, of course, they also have the means to bring about a favourable “regulatory environment”, so that they get to hold onto that stuff.
Now I suppose you want to do something about that? Yes? One option would be to let them hang onto all their existing assets – after all, they got them justly (or at least non-criminally) according to the rules of the system they themselves helped to formulate – but to introduce a new system of rules (call it a “basic structure” if you like) that works to the greatest benefit of the least advantaged. Assume you have the knowledge to design it with the distributive effects you want (big assumption that!). Let that system grind away for long enough – a few generations perhaps – and you’ll have shifted things a little bit in the right direction. (Assuming, that is, that the 1 per cent don’t use their residual wealth and influence to throw you off-track as soon as you hit the first bump.)
I think you can see where I’m going by now. If you really want a shift in the distribution of wealth and income, if you really really want it, then realistically you’re going to have to use state power to do a bit of _ex post_ redistribution. You’re going to have to take stuff from some people and give it to others. Doesn’t necessarily have to be that total Marxian expropriation of the expropriators: a comprehensive programme of debt cancellation would fit the bill. Life is about making choices: and you’re going to have to choose. Is it outrageous to dispossess someone of the wealth they acquired under the rules of the game; or are you going to say that substantive fairness sometimes matters more?
Now I know there are some wrinkles there. What about predictability? What about incentives? Sure. (Of course the predictability of stable property rules is a bit overstated: all those people who got their houses repossessed when the economy went bad didn’t see that coming!) You might have to duck and weave. You might have to convince property owners that you’ll only go so far and no further. But don’t kid yourselves that you can do the redistribution you want and treat the rule of law as absolute. If robbing the rich appals you, become a libertarian instead.
(UPDATE: Well I’ve clearly managed to confuse a bunch of people with this post. Probably a consequence of trying to make a serious point in a knockabout style. I had in mind not any old garden-variety idea of the rule of law but something a bit more specific, namely that society ought to be run according to predictable rules that provide individuals with certainty that their efforts won’t be nullified by state action, a view associated with Hayek but endorsed by Rawlsians. So _mea culpa_ for that.)
Oh Christ. IMAGINATIVE EMPATHY FAIL. The imaginative empathy fail button at CT headquarters is turning around and blaring and stuff and I am sick so I don’t have time to deal with this plus it’s an annoying sound. Everyone, please try to imagine you are a poor person for at least 45 seconds at a minimum. Also, if you look at an 80-comment thread and only one commenter with a visibly female handle has said anything, would you please just, go get someone off the street or something, or like maybe the woman next to you at Starbucks, to comment? Don’t tell her it’s about libertarianism!! Don’t be hitting on her either. Unless you’ve got mad game like Kells. Tell her I asked you to. Anyway.
Do you know how becoming a Jesuit differs from taking on a job that is unpleasant? You don’t need to become a Jesuit to get money to buy food and clothes for your family! For real! You’re not even supposed to have a family! So is there an issue there, about whether one can potentially contract oneself to SeaOrg or the Holy Catholic and Apostolic Church and come out missing your freedom? Yes, and that is what separates cults from churches in most people’s mind. This could be an interesting sidebar discussion but it has nothing to say about the “putting up with awful things to have a job” issue.
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[This post was co-written by Chris Bertram, “Corey Robin”:http://coreyrobin.com/ and “Alex Gourevitch”:http://thecurrentmoment.wordpress.com/ ]
“In the general course of human nature, a power over a man’s subsistence amounts to a power over his will.” —Alexander Hamilton, Federalist 79
Libertarianism is a philosophy of individual freedom. Or so its adherents claim. But with their single-minded defense of the rights of property and contract, libertarians cannot come to grips with the systemic denial of freedom in private regimes of power, particularly the workplace. When they do try to address that unfreedom, as a group of academic libertarians calling themselves “Bleeding Heart Libertarians” have done in recent months, they wind up traveling down one of two paths: Either they give up their exclusive focus on the state and become something like garden-variety liberals or they reveal that they are not the defenders of freedom they claim to be.
That is what we are about to argue, but it is based on months of discussion with the Bleeding Hearts. The conversation was kicked off by the critique one of us—Corey Robin—offered of libertarian Julian Sanchez’s presignation letter to Cato, in which Sanchez inadvertently revealed the reality of workplace coercion. Jessica Flanigan, a Bleeding Heart, responded twice to Robin. Then one of us—Chris Bertram—responded to Flanigan. Since then, the Bleeding Hearts have offered a series of responses to Chris and Corey.
The facts about inequality in the US, and increasingly in other developed countries, are now so clear-cut that the defenders of the status quo have little solid ground left on which to stand. So, they are mostly confined to arguments that have already been effectively rebutted. As new talking points emerge, it’s become increasingly easy to pick them out before they are fully formed and have a prebuttal ready.
That’s the case with data showing that income inequality arises mainly from differences in current incomes* rather than from inheritance. As I pointed out a couple of months ago, the absence of large inherited inequalities is a logical consequence of the fact that the distribution of income in the postwar generation was relatively equal.
Sure enough, here’s the prebutted talking point, stated by John Cochrane[1], who asserts
There are a lot of facts: the widening distribution comes from a skill premium, not inherited wealth.
He goes on with some older points, long rebutted
It’s new people getting rich, not the old rich keeping more money. It’s pretax income, not the rich keeping more money. Consumption inequality is much less than income inequality. And so on.
In reality, income mobility is falling not rising, and the tax system has become less progressive not more. And I’ve dealt with the consumption inequality point here and here.
fn1. This is a bit disappointing to me. In his technical work in finance theory, which overlaps with mine, I’ve found Cochrane to be admirably precise in his analysis and sensible in his comments on the critical issue of the equity premium. But his contributions to the broader public debate over the past few years have been very poor (of course, there are plenty who say the same about me).
* As JW Mason points out in comments, much of the growth in income for the rich has taken the form of capital gains rather than higher salaries. Piketty and Saez rank income-earners based on income net of capital gains, which obscures this fact.