The way ahead
economist.com
economist.com
In history this wasn't always so. Factory jobs were first considered unskilled positions whereas many service jobs required something akin to finishing school to acquire.
Now we put manufacturing jobs on a pedestal and deem them worthy of high wages whereas service jobs are lowly and what you do until you can get a real job.
Unions, with all their problems uplifted those jobs in the American consciousness. And whatever your politics unions and wage controls are how almost every country in the world guarantees high incomes.
There's a reason why TVs are so much cheaper, but medical care (ignoring liability and cost of medicine) and education have gone up in cost relatively. The bottleneck is people and machines and software hasn't made them 100s of times more efficient like it has for factories.
I do think unions are another factor. Factories had a concentration of workers, while service jobs distribute them across multiple shops, which makes it harder to organize.
Consider the collective value of all the physical goods imported into the US. Without any production in the US, that sum would have to be compensated by non-material exports only, or it will, sooner or later, result in an economic imbalance.
While there are certainly some high-value services and intellectual properties that can be sold across borders, it makes people queasy that so much of the country's productivity is tied up in law, finance and other zero-sum arenas that are essentially masturbatory. It seems unsustainable.
The world's Basic needs are realized through industry and agriculture
The worlds Psychological and Self Fulfillment needs are further up and are realized through services.
So the fact that if one assumes it models reality, then certain observed distinctions people make about jobs are sensible doesn't actually make those distinctions sensible.
(Also, psychological and self-fulfillment needs are realized through industry or agriculture [pretty much all luxury products of either kind], and a some Basic needs are realized through services.)
Students are taught Maslow's hierarchy as fact, so I think it can be assumed that the perception argument is fair here.
Architect which is a very respected profession isn't fully necessary to meet even the basic need of "shelter." You can build a house without an architect but you can't without a builder.
While corn farmer and cattle rancher, the underpinning occupations of our food system aren't treated with much respect or reverence at all.
For an example, basic food costs less than a ticket to the opera. The opera is higher on the hierarchy.
We know who he's referring to on the far right, but who on the far left?
When did populism become a dirty word?
>Decades of declining productivity growth
What decline of productivity is he talking about? The decoupling of productivity from wages is the issue. Productivity has continued to rise while real wages have stagnated. [0]
>In the past, differences in pay between corporate executives and their workers were constrained by a greater degree of social interaction between employees at all levels—at church, at their children’s schools, in civic organisations. That’s why CEOs took home about 20- to 30-times as much as their average worker. The reduction or elimination of this constraining factor is one reason why today’s CEO is now paid over 250-times more.
This is a ridiculous rationalization straight out of little house on the prairie. CEO pay is out of control because our values have shifted? Because we are childless atheist heathens? Seriously? He is clearly ignoring rule shifts in the system[1] that biased us toward this outcome.
>While the top 1% of households now pay more of their fair share
Laughable from the president that made the Bush tax cuts permanent. [2]
What reality is he living in?
0. http://www.theatlantic.com/business/archive/2015/02/why-the-...
1. http://www.npr.org/sections/money/2016/02/05/465747726/-682-...
I think he meant decline in productivity GROWTH; chart 1. http://cdn.static-economist.com/sites/default/files/imagecac...
I, too, would prefer more equitable outcomes, but I am fearful of patches ("tax the rich!") rather than addressing the root cause.
How much of the CEO/worker pay disparity is the result of attempts to work around taxation on income, causing business and individuals to "re-route" around the "damage" of taxation? Would we have found equity-based pay as quickly? I'd prefer a re-think on compensation taxation in general, rather than just slapping another tax on top of equity-based compensation in a ham-handed attempt to fix it.
Same for Obama's comment about potential physicists and engineers using their smarts to "shift money around in the financial system." How many of these things are merely profit-seeking machinations, and how many of them are regulatory dodges?
The deregulation of the financial sector in the 90s - allowing banks to become both investment and depository entities has allowed them to grow and consume a disproportionate amount of human capital and wield an incredible amount of political influence. Hopefully it's not a pandora's box, and we can build the political will to close it again.
0. http://www.heritage.org/research/commentary/2015/7/reagans-t...
Bernie Sanders. He makes clear references to both Sanders and Trump with this quote:
As appealing as some more radical reforms can sound in the abstract—breaking up all the biggest banks or erecting prohibitively steep tariffs on imports—the economy is not an abstraction. It cannot simply be redesigned wholesale and put back together again without real consequences for real people.
Populism became dirty around the time nationalism (or just being proud of your country/where you were born) became dirty. Maybe it's a response to some people in the West wanting to be seen as "unique, individual thinkers" (to put it politely) instead of a part of a bigger whole.
This seems like the wrong interpretation since later in the article he states "Unions should play a critical role." harkening back to that era where relatively unskilled labor could support a middle class lifestyle. (You say this like it's a bad thing.)
Not sure how much of this article is playing the politics game and how much of it is grounded in the facts that he actually believes.
Arguably, it didn't; if it was a "dirty word" on its own, the qualifier "crude" to specify that this wasn't good populism wouldn't be necessary. ("Crude populism" could also be stated as "demagoguery".)
When people claiming to be on the side of the little people started proposing simplistic solutions that, if implemented, will cause real harm to real people.
- the number of women in employment started falling for the first time since 1948 in 2000. Where as male employment had been falling for a long time, women had been growing. Shows how big the impact of the down turn was on female emplyment.
- America even with Bush in charge and refusing to sign the Kyoto Protocol managed to cut carbon emissions since 2000
https://www3.epa.gov/climatechange/ghgemissions/inventoryexp...
Any proponents of free market capitalism (or libertarianism) wish to chime in on this essay?
The problem is not with radicals, they will always exist. The problem is that people in the middle are getting tripped up and supporting radical measures.
The problem, and why I felt I had to submit this, is that there actually is a threat to capitalism. Things are better than ever, and at the same time people feel wronged. So wronged that Obama actually thinks that there is a real threat to capitalism and we might be at the verge of changing political and economic systems. This is very frustrating and scary. And I see no way to make people realize what they are doing.
This right here is why Trump has a fighting chance to win this election, much to my chagrin. So many people in wealthy East and West coast cities have no idea how much the majority of the country is suffering still. The recovery has not touched the majority of poor and lower-middle class Americans.
Usually, countries can react to common problems: if people are willing to forgo some income for security they can strengthen social system etc.
In the US, for some reason, people with identical experiences came to two different conclusions. The left advocates for policies "kicking up" - basically redistribution from top to bottom. The right chose to "kick down", basically trying to strengthen their competition by eliminating the competition from those considered lower than them.
These sides have fought each other to an almost perfect standstill, thanks to a few quirks in the constitution like first-past-the-post-voting and a three-legged legislative. As nothing happens, people get more frustrated etc. pp. rinse repeat.
The debate is around the words "broadly shared". How broad do we go? What level of prosperity is targeted?
I seriously don't see the US as having a problem with too much competition, profit motive, or capitalism. Our biggest problems are in our most highly regulated industries. And as regulation grows regulatory capture becomes a far larger problem. If anything, I think we are suffering from a terrible lack of capitalism.
Concerning other industries, those most regulated are those that tend to natural monopolies such as energy or telecommunications. Nobody can seriously advocate for a return of the old telephony monopoly, so I'd say these industries suffer despite regulation, not because of iy.
> “Government has three primary functions. It should provide for military defense of the nation. It should enforce contracts between individuals. It should protect citizens from crimes against themselves or their property. When government-- in pursuit of good intentions tries to rearrange the economy, legislate morality, or help special interests, the cost come in inefficiency, lack of motivation, and loss of freedom. Government should be a referee, not an active player.”
(from https://www.amazon.com/Capitalism-Freedom-Anniversary-Milton...)
Specifically addressing antitrust:
> My own views about the antitrust laws have changed greatly over time. When I started in this business, as a believer in competition, I was a great supporter of antitrust laws; I thought enforcing them was one of the few desirable things that the government could do to promote more competition. But as I watched what actually happened, I saw that, instead of promoting competition, antitrust laws tended to do exactly the opposite, because they tended, like so many government activities, to be taken over by the people they were supposed to regulate and control. And so over time I have gradually come to the conclusion that antitrust laws do far more harm than good and that we would be better off if we didn't have them at all, if we could get rid of them. But we do have them.
> Under the circumstances, given that we do have antitrust laws, is it really in the self-interest of Silicon Valley to set the government on Microsoft? Your industry, the computer industry, moves so much more rapidly than the legal process, that by the time this suit is over, who knows what the shape of the industry will be. Never mind the fact that the human energy and the money that will be spent in hiring my fellow economists, as well as in other ways, would be much more productively employed in improving your products. It's a waste! But beyond that, you will rue the day when you called in the government. From now on the computer industry, which has been very fortunate in that it has been relatively free of government intrusion, will experience a continuous increase in government regulation. Antitrust very quickly becomes regulation. Here again is a case that seems to me to illustrate the suicidal impulse of the business community.
(from http://object.cato.org/sites/cato.org/files/serials/files/po...)
> Just because Milton Friedman says it, it doesn't mean it's not idiotic. Government is the embodiment of a collected conscience. And just as it would be immoral for you to watch someone suffer when you could easily help, it is unconscionable for government to remain passive when any of its subjects suffer.
If someone is hungry and govt wants to feed them, then govt needs to forcibly take food/money from someone else and give it to that person.
That transfer of resources takes govt money and people to execute it. So in addition to an amount $A being transferred from person P1 to person P2, an amount $B must be expended. With a bureaucratic govt, that amount $B is non trivial relative to $A.
We can imagine a system where $B is reduced, or even taken to zero.
The idea is that if left to private markets, this sort of transfer happens anyway, but is (1) more efficient, and (2) more ethical because it does not rely on the use of force. It might happen due to family giving money, charity, etc.
In a less extreme form, a negative income tax (still administered by govt) might replace welfare, or minimum income might replace minimum wage; both are more efficient.
Also: you argument proves too much, i. e. if taxes are violence you should move to Somalia. Also please stop using the roads my friends and I build.
Finally government bureaucracy is generally overrated, while most large cooperations can easily compete with any government in terms of waste and bureaucracy. It's innate to large organizations, which is why competition cannot solve it.
"A Capitalism for the People: Recapturing the Lost Genius of American Prosperity" - http://amzn.to/2d6rUIi
I found it pretty convincing, even if I am not a libertarian.
People doing whatever works best for themselves can be good or bad, depending on how closely their own self-interest is aligned with the collective good.
In fact, in many ways capitalism is the root problem America now faces. In theory capitalism is great until you get far enough along its timeline and your reach present-day America. In present day America we have reach Capitalisms ultimate iteration and unfortunately unfettered, fully realized Capitalism is really greed run amok.
The way forward is going to require a new way of thinking about how a country like America is structured at a fundamental level and I can't help but think Capitalism is holding us back and causing more harm now than good.
It has Capitalism influenced by countless tweaks, patches, regulation, and special interests. Many regulations are necessary, but that does not mean that they were all well-implemented, well-thought-out, or still necessary.
> The world is more prosperous than ever before and yet our societies are marked by uncertainty and unease.
Without feeling that Henry George was describing exactly this some 130 years ago with his "Progress and Poverty."[0]
His solution was market-driven, but identified the cause of poverty to be economic rent, driven largely from the private holdings of natural resources such as land-- a Land Value Tax[1] would deliver the return of these scarce and valuable resources back to the community.
It feels to me that this stream of thought should be far more visible in the 21st century, but it remains extremely fringe. The milk-and-water socialism of Bernie Sanders, etc, may help, but it really fails to fix things at a foundational level.
[0] https://en.wikipedia.org/wiki/Progress_and_Poverty [1] https://en.wikipedia.org/wiki/Land_value_tax
From the Fascists in Europe in the early half of the last century, to 'dollar diplomacy', to "neoliberalism": Capitalism and state power have interacted in many different ways and forms.
Today the interaction of state power and private market competition:
* suppresses young and small businesses (small, non-multinational businesses don’t increase state power)
* protects and subsidizes industries with strategic value, from foreign policy protectionism (e.g. TPP) to state espionage support (e.g. BP), to huge endowments of taxpayer dollars (news media for information warfare, boeing etc for military weaponry, agriculture industry so other nations starve without America)
* circumvent each others restrictions by partnering closely and trading access to private and public arenas of law
Good god...
Imagine you have a brand new Macbook Pro. It's awesome; you've become super productive because of it, your quality of life has increased. Then you piss all over it. Frustrated that your laptop no longer works as intended you bring it to the Apple store. "This is the Macbook Pro's ultimate iteration; covered in my piss. It works like crap! You made a shitty laptop!" Imagine the Apple Store employee's frustration.
I envision that a new system will no longer rely on speculative market forces, but instead go back to command style economies powered by artificial intelligence. There might even be a rise of a new monetary system, which integrates harm reduction in some form.
1- fewer people than before live in "extreme" poverty, this is good
2- income inequality is higher than it was, this is bad
3- productivity is lower than before, this is bad
4- joblessness is higher than before, this is bad
5- wall street has gone off the rails, but we're fixing that, this is good
6- we need to get our shit together regarding climate change
With the general overarching message that Capitalism is mostly a positive force in the world.
I agree with some, but take issue with some.
1: this is a fine line to walk. How do you define extreme poverty? Does moving out of a tiny farm village in rural China to work at a factory in Shenzhen count as getting out of extreme poverty, and who does it really benefit? In "Geek Heresy", Kentaro Toyama gives the example of trade in southeast Asia that historically took place via narrow waterways navigated by boats. During the dry season, these canals dry up, and productivity goes way down - but it's fine, because it's a known cycle, so people are prepared for it and get a large chunk of freed up time. When this gets replaced by roads and trucks, sure you get a 24/7 transport system, the economy etc. goes up, but now people don't get 6 months a year for festivals. In that case, that might count as getting out of poverty by western centric economic standards - but is it really a gain?
3 and 4 seem kind of inversely correlated, which is problematic if you want to optimize for both. It takes a single digit percentage of the population working in agriculture to address the food needs of an entire country, when 500 years ago it took 99% of the population. As our tools make us more productive, there is less need for individual workers. Obama's point on better benefits, community colleges, etc. all stand - but at some point we probably need to embrace the fact that in a modern society, there will probably never be enough jobs to put the entire population at work. That's something that must be dealt with, and something along the lines of basic income seems inevitable if one wants to address that problem well.
He also says that "In 1979, the top 1% of American families received 7% of all after-tax income. By 2007, that share had more than doubled to 17%", but then says " Without a faster-growing economy, we will not be able to generate the wage gains people want, regardless of how we divide up the pie". The problem here seems to be more the fact that the top 1% gets more of the pie, rather than that the economy needs to grow faster.
Finally, I wish 6 got more than just a small paragraph at the end. It is a Big Deal®, and the less we do, the more we will exponentially pay.
30 years ago, your typical person in china was a subsistence farmer or worked for about $500/yr (in today's money). What that meant was that they were dirt poor and under threat of famine in bad weather years. Dirt poor means no shoes for your children, no radio or TV, no bike or scooter, meat is a treat instead of a part of your daily diet. Real poverty still exists in China, but is now confined to a fraction of the population instead of being the typical lifestyle. Quite an improvement by anyone measure, IMO.
They are mostly anti illegal immigrants. Obama has been trying to legislate the legalization of illegal immigrants. Legislation is the job of Congress. The Executive (Obama) is supposed to enforce those laws. Obama is not enforcing the laws.
These illegal immigrants take jobs away from Americans. Plumbing and electricians are licensed jobs in states and they have Americans working in these jobs as a result. Carpenters and bricklayers are not licensed and as a result illegal immigrants have taken these jobs as well as driven down wage rates.
Edit: Also not noted, is the growth of (legal) immigrants from about 9 million in 1970 (less than 5% of the population) to 43 million today (about 14% of the population). Add to this 11 more illegal immigrants and this increases immigrants to 54 million.
Moreover, a major cause of inequality is the high cost of rent in cities such as SF, NYC, Boston, DC, LA (and also for example London) is "rent-seeking" of local laws which create artificial scarcity of housing through zoning density restrictions. This transfers income and wealth from tenants to landlords (property owners).
Donald Trump holds a large position in Manhattan real estate so he benefits from these unfair laws that benefit special interests e.g., wealthy landlords. The markets can do an efficient job but parties that favored landlords getting more money for their property favor these zoning laws.
Eh, this argument gets trotted out a lot, but it isn't exactly clear-cut. The economy isn't a zero-sum game.
Sure, illegal immigrants do show up and undercut some jobs. Some percentage of people will find themselves working at a lower wage, or lose their job and need to find a new one.
But plenty of other people will find their business increased, higher wages, more profit, etc. All these immigrants require services and commodities too, and have to buy them from somewhere. They need to buy groceries, get hair-cuts, purchase mattresses, buy cars. Illegal or not, they contribute to the economy too.
Planet Money did a good piece on the cuban migrations to Miami in the 80's. It was the perfect microcosm to study the phenomenon: many immigrants, contained geographical region, etc.
http://www.npr.org/2015/10/01/444912593/when-cuban-migrants-...
Money quote at the top of the episode:
SMITH: So 80,000 refugees came to Miami, and there was no effect on the economy?
CARD: You couldn't detect any strong evidence of an effect one way or the other.
SMITH: No effect, not on wages, not on unemployment rates. Card says this is
because there is not a fixed number of jobs in an economy. When a bunch of new
people come, yes, they get jobs. But they also start buying stuff, getting haircuts,
going to the grocery store, which means you need more barbers and more grocers. That
creates more jobs.> Most recently this has centred on a dispute between two economists, David Card at the University of California, Berkeley, and George Borjas, at Harvard University, over the effect of an unexpected surge in Cuban migrants to Miami in 1980 (the so-called “Mariel boatlift”). In 1990 Mr Card found this influx had no effect on the wages of low-skilled workers in Miami; Mr Borjas has now revisited the analysis, and claims that wages of high-school dropouts in fact fell substantially.
Source: http://www.economist.com/news/united-states/21705699-who-are...
If a trade is not protected by licensure, then it is quite possible it will be replaced by illegal immigrants.
This meme is making it's rounds these days.
>Sure, illegal immigrants do show up and undercut some jobs. Some percentage of people will find themselves working at a lower wage, or lose their job and need to find a new one.
Right? No big deal!
>But plenty of other people will find their business increased
2/2 = 1
>have to buy them from somewhere
Was money created at some point? They took or undercut a job, and are spending money that...the other employee who they undercut or took their job from would have also spent...?
I'm sorry if I'm dense...either I'm missing some fundamental pieces of your argument or there isn't much logic to it.
This is what people mean when they say economies aren't zero sum. The total value of the economy increases due to greater production (driven by an influx of labor and increased demand), leading to more potential jobs and higher wages.
It is wrong for Americans to have their jobs replaced by people who are in this country illegally. It really is as simple as that. People who are in this county illegally shouldn't be able to work at any job according to the law.
Meanwhile, the people who have been unfairly unemployed because of these illegal immigrants and not fortunate enough to have their jobs protected from illegal immigrants by state licensure requirements, are suffering as are their families.
There are many societal costs when people are unemployed including many medical issues from alcohol and other drug abuse and from children not growing up in a stable environment, something society has to deal with for years to come with increased crime.
Illegal immigrants don't have to remain out of the country forever, they simply have to apply for a Visa like every other person who came to this country legally (except of course, Native Americans and Blacks who were brought here as slaves).
You can have a "papers, please!" kind of country, or you can have some level of illegal immigration and work. You can't get rid of all illegals without becoming a very, very different kind of place.
That said, you do want to try and minimize people living in the shadows. The best way to do that is to make legal immigration cheap and easy, which is currently the exact opposite of what we do in the US. It's basically impossible for most Mexicans to move here unless they already have family. This has all kinds of benefits: 1) people will be more likely to go home because they know they can easily come back 2) they are less likely to be exploited by shady employers 3) it really separates out the people who want to just come and work from people involved in various kinds of illegal and harmful activities.
By comparison, the UK which voted for BrExit largely because of the mass influx of immigration from Eastern European countries with labor that competed with British working class for jobs had 0.9 million 20 years ago (about 1.5% of the population) to 3.3 million today (about 5%).
Thus, our legal immigration is about 1 in 7 compared with an increase to 1 in 20 in the UK.
Our immigrants also mostly compete with working class trades not protected by licensure and other working class jobs.
Israel has built a security fence, while not perfect, has certainly decreased the amount of terrorism. I have been there many times and am familiar with the situation. They also have fences around Gaza and separating the border with Lebanon. These fences do work.
There should also be some sort of electronic verification system for jobs that goes beyond using illegal SSN's or someone else's SSN. There should also be very large fines for employing someone illegally.
Americans deserve to have their jobs and wage rates protected from illegal immigrants and those who hire them. It is so very, very unfair to them and children to let this happen.
As things are, thanks to NAFTA and increased trade with China working class jobs are being exported to outside the nation. In addition, other working class jobs are being replaced by automation.
We owe it to Americans to help protect their jobs from illegal immigrants, who are here because they are breaking our law.
That demonstrates willful ignorance of the situation:
http://www.npr.org/sections/itsallpolitics/2013/02/22/172622...
Doing things the legal way is basically impossible for many, many people. We should make it simple and easy for law-abiding people to come and work in the US.
But, many, many people, do immigrate to America legally each year. People from all over the globe immigrate to America. Since 1970 there has been a steady growth of immigrants from 9 million or less than 5% of the population to 43 million (legal) immigrants or about 14% of the population.
It might require years, but that what other people from other countries do.
Also, there are other countries besides the US. Many people immigrate to Canada for example.
Yes: economics.
We're more prosperous than we were 100 years ago, with far more people.
We add an extra 1,000 people so we have 2,000 people and 1,000 jobs. 1,000 of those people are unemployed and have no money.
Somehow this benefits our economy because those 1,000 unemployed people without jobs are going to buy things.
Sorry I don't understand "economics."
Also, 1000 of those jobs are presumably lost because the new workers are willing to work at a lower rate. That leads to two situations:
- The product/service they are creating will be cheaper (e.g. cheaper commodities out of China, cheaper fruit harvesting by migrant workers, etc). The average person spends less of their paycheck on these purchases, which means they obtain more value for less money. Or purchase more things using the same amount of money as before.
- The owner of the business pockets more profit by employing cheaper labor but keeping prices the same. This segues into the idea of "trickle down" or "supply side" economy, where the owner employs more people, expands business, invests more capital etc because they are now spending less on salaries. Not saying I agree with this analysis, but it's at least one viewpoint :)
Money is not a fixed thing, it's debt created by producing something that someone else values. Rather than a personal IOU we all agree to use money as a common means of exchange. Economic health is not the fixed amount of cash that everyone has, but by how many times it changes hands. Poor people who are living paycheck to paycheck are therefore the best contributors to the economy per dollar earned.
Your scenario that 1000 people show up and the jobs remains fixed is nonsensical, the number of jobs is very much correlated to how many people there are. This is somewhat abstracted away by globalization, but it still has to work itself out in the end.
How do people without jobs, and therefore without money, pay for goods and services?
I would suggest reading this:
https://en.wikipedia.org/wiki/Zero-sum_game#Economics
https://en.wikipedia.org/wiki/Lump_of_labour_fallacy
Paul Graham also has a good article: http://paulgraham.com/wealth.html
There are number of good books on the subject. Tim Harford has some pretty approachable books that are aimed at a general audience. Perhaps others have further suggestions.
As a consideration to others, strongly arguing something you have little understanding of lowers the signal to noise ratio of this site, and might be avoided.
Respectfully: that is simply not how labor works.
'Illegal immigrants' may flood the job market with workers that are willing (or forced) to take lower pay than most Americans, work longer hours than most Americans, or deal with more hardships than most Americans - but it is the employers role to decide whether they'd rather take on the risk of employing undocumented workers than fixing these conditions. If an employer says "eff it, I'm willing to turn a blind eye and break the law if it means slightly less money spent on wages" - they're the ones at fault.
I'm trying to point out what might seem obvious: focusing on the immigrants here may feel satisfying, but if the employers are not compelled to ameliorate their behavior, then deporting every last immigrant won't change the situation.
There was a recent Supreme Court case about the issue which left in place a lower court opinion stating that Obama did not have the right to do what he did.
Thus, while you are correct, it is a systems issue of our federal government refusing to do the job according to The Constitution and enforce the law that leads to the suffering of many Americans who have lost jobs to illegal immigrants.
The idea of not wanting new citizens to enter the work force when our current citizens cannot find work is labeled as xenophobic.
Any ideas on why this double-speak is being promoted is labeled as a conspiracy theory.
Only invading armies have the "right" to cross a border without permission.