It’s not a ‘labor shortage,’ it’s a reassessment of work
washingtonpost.com
washingtonpost.com
There’s a presumption that this is isolated to low-skill workers enjoying high unemployment benefits. However, stimulus has also greatly benefitted anyone owning assets which are more often high skilled workers.
The incentives are the same. If you have enough money you can quit working if you want.
A little pay bump isn’t going to bring someone out of early retirement and a high skill job can’t be filled by anyone.
More people will be able to find companies/niches to grow between the cracks, but a lot of existing businesses will need to raise prices, raise wages, and find other ways to compete.... but this would actually be a boon for capitalism because more people also have a ton of money to spend --assuming you can pay people enough to want to work for you.
The reality is, a lot of people are abusing the temporary safety nets to avoid what they see as inconveniences because it’s a once in a lifetime opportunity and probably won’t come back to bite them.
There's tremendous automation happening right now, and it'll accelerate, to the point where if the government waits 2 years, a good portion of those jobs likely won't exist, and the government will never be able to get rid of the dole.
It's kind of like quantitative easing infinity, except for the poors.
You know what’s crazy? The solution is very simple. Pay workers more. The minimum wage is not a living wage. Heavily fine companies that attempt to run models that cannot support paying a living wage. The uninformed think that this will stop innovation, but it will only slow it, and that’s OK. Innovation is fueled by need or greed, and the VCs who complain about mandated high wages will indeed be greedy enough to fund the next batch of companies, because even if your returns go from 1000x to 100x (when you win), the returns still beat a lot of other investment vehicles.
The only risk is that if gets so high there is more incentive for illegal work. That's one reason why UBI is better.
I agree with that as a long term result, but what I'm arguing against is the common refrain of the immediate detrimental effect on current business of increasing minimum wages to living wages. Higher wages for society does lots of great things I didn't get into, but the common refrain is that it will "hurt small businesses".
More people that can take more shots at innovating (also, producing culture which is an exportable good if not valuable in and of itself) is a great thing.
> The only risk is that if gets so high there is more incentive for illegal work. That's one reason why UBI is better.
I don't understand the point here on illegal work -- could you lay out the scenario?
I'm not sold on UBI -- no one has managed to give a satisfactory answer for why it won't lead to persistent (even if minuscule) inflation everywhere. The best people get at is "competition", but very few "free" markets are as competitive as people think they are. Once UBI takes hold, companies will rush to gain a percentage of that UBI (this is almost like securing a government contract that never ends), and businesses will raise prices because at least intuitively every single customer now has more purchasing power and there's room for more profit.
Remember that time that the government gave out $X checks and a lot of products magically became just around $X (in the recent years, very large TVs and stuff)? The market does react when it sees the government give out free money and I'm not sure why people think UBI will be any different. Don't add some new system that will be broken in new novel ways -- just help the people at the bottom of the economy right now, we know how to do it, we just won't because right now we are valuing economic growth more than stability/societal benefit.
[EDIT] - I want to add a personal anecdote -- I have business owners in my family and during the pandemic, and we disagreed over a few things:
- which businesses are really "essential"
- the fact that more people at the bottom of the economy with disposable income means more profit for their own businesses, and just about every business. This means paying their employees more actually results in more profits for themselves in the long run (of course there's a bit of a prisoner's dilemma here).
- The "job creator" narrative really is so ingrained at this point that it was hard to argue my point that businesses do not create jobs, demand creates jobs. Demand comes overwhelmingly from the middle and lower classes (well, except for very specific goods) -- most of the time smart businesses actually do their best to remove jobs (make their operations "lean").
Somewhat out of left field, but a lot has been said about the decline of the music industry -- but if you can get 1% of America to listen to your music, and give you a $1 for an album, that is 3 million dollars. It gets easier and easier to charge the more wages people make -- $5 a lot easier to pay when it's maybe 15mins of work for a worker. This kind of rising tide lifts all boats.
Inflation is persistent - the Fed has an inflation target of 2%! Year over year, that's the inflation rate and they manipulate spending and money issuance to hit it.
If you are holding onto large amounts of cash and not getting a 2% return, you are losing money and that's intentional because the government wants you to either spend it or invest it.
Also side note isn't it great that the Fed, which is trying to get to full employment is now targeting an average inflation target of 2%? I know that it's more complicated than this (if we allow the dollar to become too weak or too strong there are serious consequences for other counties who rely on it as a reserve currency), but inflation disproportionately damages the working class. So the signal is basically we're going to get people into as many jobs as possible, even if we're devaluing that work with our actions.
In fact, the wealth gap was smallest (relatively) at the end of the 1940s and 1970s, both decades with the most inflation in the 20th century. It all depends on the power of labor vs capital. That's why capital has fought so much against unions - if you bring back unions, inflation can return and it can benefit the lower classes at the expense of the rich.
That said, I don't see how any of what you've said points to a problem in my theory -- the power of labor vs capital has been heavily tilted in the favor of capital for a long time now, unions got essentially systematically busted a while ago. I assumed that would be obvious as context.
I assume that you're not suggesting the lower classes are immune to the coming variant of inflation?
I'm a little confused on what you are saying. A small business that cannot afford to raise wages certainly cannot with cash on hand afford to innovate.
> I don't understand the point here on illegal work -- could you lay out the scenario?
UBI means people are payed better whether they are hired or not, minimum wage only effects those with jobs. The latter incentivizes illegal jobs with skirt the minimum wage laws, since the employer is responsible for wages. UBI being financed "macroeconomically" means there less much less marginal incentive for an employer to go rougue because even if it lowers their wages, it won't allow them to skirt their UBI-funding tax obligations.
(I prefer simple, hard to evade taxes like VATs, LVTs, Carbon taxes, etc.)
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The stuff below the [edit] sounds great to me; since we agree on that I am wondering what about UBI you don't like?
> demand creates jobs
Yes! And nothing creates demand like a UBI since:
> Demand comes overwhelmingly from the middle and lower classes (well, except for very specific goods)
> The fact that more people at the bottom of the economy with disposable income means more profit for their own businesses, and just about every business. This means paying their employees more actually results in more profits for themselves in the long run (of course there's a bit of a prisoner's dilemma here).
UBI is supposed to be the ultimate way to defeat the coordination failure, since the actions of employers (as employers) don't effect the UBI at all! Whereas with minimum wage their actions do matter of a) how many employees b) illegal work perverse incentive.
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> I'm not sold on UBI -- no one has managed to give a satisfactory answer for why it won't lead to persistent (even if minuscule) inflation everywhere.
Happy to tackle this
> The best people get at is "competition", but very few "free" markets are as competitive as people think they are.
Agreed
> Once UBI takes hold, companies will rush to gain a percentage of that UBI (this is almost like securing a government contract that never ends)
Sure!
> and businesses will raise prices because at least intuitively every single customer now has more purchasing power and there's room for more profit.
I'll happy grant that they do; this is fine. Turning on UBI is a one-time adjustment, and this would be a one-time rise in prices. (I'm looking at all flows, no stocks here, to examine equilibria more simply.)
The thing to ask is, after that one-time adjustment, are we back where we started? The answer is emphatically "no".
Firstly, remember inflation is multiplicative, but wages are additive. If we scaled all wages by 1.2, prices could rise by 1.2, and we would be back where we started, but adding a fixed amount to wages is non-linear so no price scaling will restore the same distribution.
Remember now how richer people have helped jacking up the price of things like healthcare, childcare, housing, and education? (Those other cost diseases causer are at play). UBI with "compress" the purchasing power distribution so that the gap of "real" prices between that shit show and basic goods must shrink.
Now, we want the shit show goods to stop spiraling out of control, rather than the basic goods to join them. To that I have to argue spooky dynamics and appeal to the Keynsianisms we evidentally agree on. If the last few decades have been a case of too-low aggregate demand, then ratcheting up aggregate demand should lead to virtuous cycles like the WWII mobilization, not vicious cycles like 1970s inflation.
Finally here's a thing to consider: why are tech capitalists rather found of UBI? One might say singularity ideologically, but that's bullshit even if they do believe it. Here's a better one: competition between tech and traditionally elites. I think on some level tech is frustrated that they feel so much more productive than traditional business, but that very productivity frees up labor to make legacy businesses' operations cheap.
UBI, like I said above, is employment-agnostic and will raises taxes and wages on all corps. But if you are a more productive, demand-limited tech company, you can raise output (or embark in new fields) taking advantage of the new demand and make it up in volume. If you are a traditionally company, however, you will get screwed when your UBI-secure employees can bargain harder, and volume therefore can't save you.
Well I don't think that's quite true (workers are very expensive -- reforming your business processes could take like $100/month for some SaaS tool that massively saves everyone time or improves some process), but what I was failing to get across is that people get more shots at innovation (and entrepreneurship) with higher worker pay.
There's another thing here -- paying workers more also leads to more income for the businesses that workers frequent, but that's a mess of hypotheticals to go down.
> UBI means people are payed better whether they are hired or not, minimum wage only effects those with jobs. The latter incentivizes illegal jobs with skirt the minimum wage laws, since the employer is responsible for wages. UBI being financed "macroeconomically" means there less much less marginal incentive for an employer to go rougue because even if it lowers their wages, it won't allow them to skirt their UBI-funding tax obligations.
> (I prefer simple, hard to evade taxes like VATs, LVTs, Carbon taxes, etc.)
Illegal jobs which skirt the minimum wage laws aren't my focus. I actually think of those as fine as an on-ramp for recent immigrants who may be in an odd spot where applications haven't cleared but they need cash to purchase stuff to eat. Most normal citizens are not doing this unless you're in a society with lots of marginal fraudulent activity (some EU member states), but those countries have their own problems.
Agreed on preferring harder to evade taxes.
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> UBI is supposed to be the ultimate way to defeat the coordination failure, since the actions of employers (as employers) don't effect the UBI at all! Whereas with minimum wage their actions do matter of a) how many employees b) illegal work perverse incentive.
Right I get that -- but why doesn't this lead to a stagnant minimum wage? It's been hard enough raising the minimum wage with inflation and/or cost of living (again, it's supposed to be a "living" wage), and that's going to be a lot harder with UBI around. In my mind this starts with making the minimum wage a living wage, then considering whether UBI is still necessary (ex. when too many jobs have been automated).
------------------
> I'll happy grant that they do; this is fine. Turning on UBI is a one-time adjustment, and this would be a one-time rise in prices. (I'm looking at all flows, no stocks here, to examine equilibria more simply.)
Disagree, unless the benefits of UBI are extraordinarily well designed (percentage of some moving metric with inflation adjustment), then it will be much like the minimum wage is right now, and lag inflation and other changes. Businesses will adapt to those costs (and raise their prices) and UBI will fall behind just like minimum wage does now.
> The thing to ask is, after that one-time adjustment, are we back where we started? The answer is emphatically "no".
> Firstly, remember inflation is multiplicative, but wages are additive. If we scaled all wages by 1.2, prices could rise by 1.2, and we would be back where we started, but adding a fixed amount to wages is non-linear so no price scaling will restore the same distribution.
Hmnnn I think it's more a "maybe". Adding the fixed amount will not make it easy to restore the distribution, and I'm not guaranteeing it will be one for one, but some of that different will definitely slip. There is a realized % gain of wages that varies for each household, but businesses don't need to know the exact % to scale prices, they'll rise naturally. Now whether it gets to exact 1.2 (given that the household has a realized scale factor of 1.2%) is up for debate, but I'm arguing that it will not be 1 -- the pernicious thing is that it may even go past 1.2 for certain things.
> Remember now how richer people have helped jacking up the price of things like healthcare, childcare, housing, and education? (Those other cost diseases causer are at play). UBI with "compress" the purchasing power distribution so that the gap of "real" prices between that shit show and basic goods must shrink.
> Now, we want the shit show goods to stop spiraling out of control, rather than the basic goods to join them. To that I have to argue spooky dynamics and appeal to the Keynsianisms we evidentally agree on. If the last few decades have been a case of too-low aggregate demand, then ratcheting up aggregate demand should lead to virtuous cycles like the WWII mobilization, not vicious cycles like 1970s inflation.
I'm not sure that I can blame that uniformly on "richer people" -- there are lots of reasons those sectors are broken. I don't really see UBI shrinking the purchasing power distribution though -- it just shifts the whole curve? What if they just both go up (both basic goods and the shit show industries)?
I don't think anything can lead to WWII mobilization without an actual war and massive debt. I just don't know enough about economics but again, I see it very simply -- why would the price of both the shit show industries and basic goods go down with higher aggregate demand assuming constant-ish supply?
> Finally here's a thing to consider: why are tech capitalists rather found of UBI? One might say singularity ideologically, but that's bullshit even if they do believe it. Here's a better one: competition between tech and traditionally elites. I think on some level tech is frustrated that they feel so much more productive than traditional business, but that very productivity frees up labor to make legacy businesses' operations cheap.
I'm hugely critical of anything tech capitalists are fond of. The vast majority of them are not my friends (as in they do not have my best interest in mind) -- when I hear that they're fond of something, I assume it is because it will be beneficial to them and they feel they already have a space in the world. Elon Musk wants to go to Mars instead of cleaning up the oceans because he runs a company that does that.
I hadn't thought of that motivation (frustration) before but that sounds pretty plausible.
> UBI, like I said above, is employment-agnostic and will raises taxes and wages on all corps. But if you are a more productive, demand-limited tech company, you can raise output (or embark in new fields) taking advantage of the new demand and make it up in volume. If you are a traditionally company, however, you will get screwed when your UBI-secure employees can bargain harder, and volume therefore can't save you.
We don't need a UBI to raise taxes, and I don't want to raise taxes and wages on all corps. I want to raise taxes on the corporations with a massive disparity between generated capital gains and worker wages -- they're bad for society (in my opinion) and I want to disincentivize that behavior. I don't need UBI to do that, I just raise either taxes or mandated worker wages. In an ideal world, taxes just go up, and money is invested into the tax reclamation operations that target people in the top 10%. OK, let's not single those people out -- assuming they pay a reasonable amount near their fair share without any shenanigans, increase the capital gains tax directly, or tax the corners of finance shuffling around dollars every day.
Could you describe "the economy completely shutting down"? Certain parts would absolutely shut shut down and be adversely affected, but I'm not convinced of the doomsday scenario here. Yes, lots of restaurants and services would close down (as they have, but in greater numbers), but this is the cost of not being prudent, buying insurance (if it was possible, and it certain was after SARS and MERS, etc), and saving for a rainy day. The economy will start up again, because there is always money to be made, and people are motivated to make that money.
The problem is that it's "helping" everyone, but disproportionately helping the rich, with no return on investment in the government. The highest ROI (in GDP terms) on investment by government usually comes from infrastructure last I checked (there's also been a really weird perturbation of what "infrastructure" means by the Biden administration), so propping up balance sheets for companies that should have saved for a rainy day is absurd.
Let them fire who they need to fire, then help those citizens directly, via the government programs that are literally built to do just that. 2T is enough to pay A LOT of money out to all citizens (again, some % of the full/part-time work force, which is some % of the total population of ~350M), and definitely tide them over for a year. Strategic/truly essential businesses (let's say hospitals, airlines, freight, etc) are given extra help, and that's that. I am a layman to be fair, so of course it's not this simple but I sure would have been more behind 2T given straight to people who became unemployed as a result, and letting that money trickle up back into the economy.
> If the Government can issue trillions of dollars in debt that mainly goes into regular people's pockets (stimulus checks, umemployment, 85% of PPP loans/grants, wages for pork jobs), then the Federal Reserve buying off an equal amount of debt shouldn't be seen as a stimulus for the rich.
This is wrong on it's face, and I think it's due to intentional misinformation by political actors. That first 2T stimulus (a lot of press was made about that number, it was almost fetishized) contained something like ~700B to households/household-adjacent programs, but what people overlooked was that the ~500B that went to businesses was leveraged up to 6x[0]:
> “We’ll have up to $4 trillion of liquidity that we can use to support the economy. And that’s —those are broad-based lending programs under Section 133. We can leverage our equity working with the Federal Reserve,” Mnuchin said on "Fox News Sunday," referring to a section of the Federal Reserve Act that gives the agency broad power to issue loans to borrowers who cannot secure loans.
When you take into account that these loans are going to be given at sweetheart rates, and maybe may not even be repaid (picking good lessees is hard), the popularly cited stat that "more money was allocated to households than businesses" is absolute bullshit. This is absolutely stimulus for the rich, who didn't need it to begin with, and arguably companies should have been just as prudent as we expect people to be.
[0]: https://thehill.com/homenews/senate/488879-fight-over-500-bi...
> what people overlooked was that the ~500B that went to businesses was leveraged up to 6x
That was the money allocated to this program. How much of it actually went to them? I couldn't find anything super up to date, but the Federal Reserve only bought $10 billion in corporate bonds compared to the $750 billion capacity [1], and businesses only borrowed $3.7 billion of $600 billion capacity of the Main Street Lending Program.
Also, why is it that subsidized debt gets treated like it's a handout when a business takes it, but when it comes to student loans, it's treated as a liability?
[1] https://apnews.com/article/warren-buffett-corporate-bonds-fi...
[2] https://www.investopedia.com/main-street-lending-program-480...
Point taken, maybe this is just 2 blind mice. I understand this argument, and agree with it on some level -- steadying the ship so people don't run on the banks is important, but it's just not that simple. Some sectors of the economy imploded and some didn't -- some grew as a result. Some companies needed the help, some arguably did not and should not have had the help extended, the indiscriminate use of this money is putting us on the road to zombie companies. The US has been doing stealth QE since 2008 with no end in sight -- we can't build real financial stability this way.
As an aside, lender confidence is still shaken, credit has not grown and is in decline in the last 1Y period[0]. Lenders aren't buying the V shaped recovery narrative. If I think of this as purely a gambit to slow the process down (i.e. give businesses more time to absorb the shock) then fine, but if the goal is to stimulate the economy policies that enrich a segment of the population that does not spend isn't all that effective. We need worker wage growth.
> That was the money allocated to this program. How much of it actually went to them? I couldn't find anything super up to date, but the Federal Reserve only bought $10 billion in corporate bonds compared to the $750 billion capacity [1], and businesses only borrowed $3.7 billion of $600 billion capacity of the Main Street Lending Program.
My point on this was the messaging, that this point was overlooked, regardless of whether it was used or not. The Fed played the situation masterfully and essentially bluffed the market into buying the corporate bonds (because they believed in the backstop), but it's this backstop-at-any-cost that is a problem in my mind.
The main street lending and PPP programs are not what I'm referring to (though there was some graft there from larger corporations). As far as the PMCCF and the SMCCF, the Fed lent out 750B[1]:
> A related initiative by the Fed was the Primary Market Corporate Credit Facility (PMCCF). Between the two initiatives, the Fed purchased $750 billion in bonds
Also, the PPPLF[2] is a bit of an issue in my mind because of this:
> The PPPLF extends term credit to financial institutions making PPP loans, accepting the PPP loans as collateral. The liquidity provided by the PPPLF helps eligible financial institutions fund additional PPP loans. The PPPLF was established under the Board's 13(3) authority and the extension from March 31 to June 30, 2021, was approved by the Secretary of the Treasury.
So their goal here is to make more money available to financial institutions to make loans but with credit in decline, who is getting these loans? Businesses who arguably do not need them and/or people with cozy access to banks.
> Also, why is it that subsidized debt gets treated like it's a handout when a business takes it, but when it comes to student loans, it's treated as a liability?
Some points on how I see this:
- Student loans are very very hard to discharge, usually persisting through bankruptcy
- The narrative is usually the opposite —- companies are to be protected at all times whereas students should have just studied something else or went to community college instead. Companies are not in the same financial position as random students but the negligence should weigh heavier on a large corporation.
- In terms of generating consumption and economic activity, companies with already-large war chests, or ones that were eager in the past to do leveraged stock buybacks and running on razor thin margins should not be rewarded for doing so. Money spent towards freeing debt for people likely to spend should do more to increase spending and increase the velocity of money (which is down in the dumps still[3]).
[0]: https://fred.stlouisfed.org/series/TOTLL
[1]: https://www.investopedia.com/secondary-market-corporate-cred...
[2]: https://www.federalreserve.gov/newsevents/pressreleases/mone...
I agree, but in my view, the Federal Reserve is about the only institution doing their job to stabilize the economy. The problem is they're only meant to provide short term fixes, much like an ER doctor. Meanwhile, Congress primarily prioritizes bribing their voting base: Republicans through unnecessary tax cuts and Democrats through unnecessary handouts and pork spending. I agree with extending unemployment benefits during a pandemic, but it's ridiculous for single people making $75k to get a handout that comes straight from government debt.
>As far as the PMCCF and the SMCCF, the Fed lent out 750B[1]:
Your source says this, but its source is about their total capacity. If you look at their balance sheet, excluding the Main Street Lending program, they are only holding ~34.5 billion in corporate debt.
I can definitely agree with this, the means test was a bit wonky.
> Your source says this, but its source is about their total capacity. If you look at their balance sheet, excluding the Main Street Lending program, they are only holding ~34.5 billion in corporate debt.
Ahh you're definitely right -- thanks for pointing this out again, I stand corrected.
Instead of padding the pockets of Walmart or McDonald's by supplementing their labor costs, why don't we give the money straight to the people. Then force these companies to pay the true cost of their discounted labor.
It's a tried and true bi-partisan way to make sure the poor are worse off and feeling that we need to coddle them.
The dole is here to stay.
I say things like "California is not a market-based economy right now"
instead of saying what non-market-based systems are called. It goes over better with Americans who are more universally triggered by certain words, instead of their definitions.
second example I've had surprising luck with over the past several years is that I tell people that big pharma doesn't want them to know that our body can build immunity by being exposed to weakened and dead versions of viruses. They're like "I knew it, natural remedies all along!", they are just allergic to the word vaccine and not the concept.
You can get any redistribution you like depending on how the offsetting taxes work (if any).
Most of the libertarian supporters (Milton Friedman among them) are dead, making them not particularly effective activists, though.
> It isn't a left/right thing.
It actually is, but a left-and-(right-libertarian) thing, not a left-vs-right thing.
> In fact, many liberals staunchly oppose UBI-type initiatives.
liberals (center-right) tend to, yes, progressives (center-left to left) tend to be in favor.
All libertarians I have seen actually doing politics are corporatists.
Libertarians who support UBI think of it as replacing the other stuff. This is a wildly unpopular opinion on the left, who want everything else (welfare, college, childcare, healthcare, retirement) and UBI. Any libertarian non-corporatist supporter of UBI would not only have to win against his better-funded corporatist opponents, but would need to win with a "Let's get rid of social security for this other thing" pitch. You're more likely to find Bigfoot riding a unicorn.
AFAICT, as a left-wing UBI supporter who sees it as replacing lots of other stuff, that depends which other stuff and how you plan on replacing it; phased (such as by counting a UBI introduced at a low rate and increased over time) displacement of means-tested welfare programs is not all unpopular on the left. Displacing means-tested healthcare (Medicaid/CHIP) has more mixed reactions (healthcare policy in general is contentious within the left). Displacing earned benefits (Medicare, Social Security, Unemployment insurance) is even more likely to be rejected (though in this case the general controversy over healthcare works in your favor with Medicare, as its probably the least universally toxic of these on the left.)
Displacing minimum wage with it also isn't too popular on the left.
Where you run into problems with some stuff that isn’t problematic on its own is when you don’t have a plan for a robust, mature UBI but you want a big-bang cold-turkey replacement of programs that what you do propose for UBI can’t come close to dollar-for-dollar substituting for for current recipients.
Maybe, but that's comparing real market dollars vs. government spending dollars. When you're not spending 20k on a hammer and 30k on a toilet seat, prices go down. Half of the people will waste their UBI money, yes, but the government is going to waste half the dollars they spend.
Ask your friends if they want to send a check to Bill Gates every month. You'll find that most people on the left don't actually believe in UBI. It's a great talking point because a politician says it and people imagine whatever they want (yours was a great breakdown of potential disagreement points). But the people around you are imagining very different things.
Really? I've never heard this before, and I'm pretty far to the left. Replacing all those other things with UBI sounds like a no-brainer. Why administer N different welfare systems when you can administer one? But I think the larger issue is that "the left" does not at all agree that UBI is a good thing, regardless of implementation.
I think objections to replacing (specifically) Social Security are political in nature, not policy-based. In that anyone (left or right) proposing to eliminate Social Security -- even if it's replaced by something better and more comprehensive -- would get voted out next election cycle. It's a very touchy subject, I think.
One exception I will make is healthcare, though: I don't think we should keep our current healthcare system and just expect that, instead of getting insurance through their employers, everyone is expected to pay for it individually with their UBI check. We need a major overhaul that gets rid of the private insurance system (or at least makes it the "not really needed, but rich people can get it if they want" type of thing) and removes all of the unnecessary graft in medical billing. (I get that this is also a touchy subject, so I certainly accept that M4A or whatever is not the One True System and that there are other options that might work just as well. But our current system is absolute garbage.)
Left and right are relative terms. If everyone else moves left of you, you're on the right. I think this has happened to you but you're in denial over it.
If you consider yourself a classical liberal then you're firmly on the right. That's where we are.
Also, wild speculation...it's almost summer and why would you (if you really didn't need to) go get a job when you could stretch things out and try to enjoy this summer when the last one was taken from you.
Having said that I believe work and life can go hand in hand very healthily. The reality though is different. Work is for most people just financially compensated abuse.
The long-term goal of humanity should be an end to scarcity, and automation of everything possible. No one should have to work to live comfortably, though people should be able to choose to work if they enjoy it.
If someone wants to take 6 months off, someone else needs to be trained to handle their responsibilities during that period. Companies should be incentivized (somehow!) to provide good customer service; providing bad service should be more expensive for them than providing good service.
Which is a big proposition to just accept on its face, considering how the US government for example has been subsidizing the workforce of companies like Walmart and McDonalds, who actively encourage their own employees apply for food stamps and other social welfare programs - because their wage is so low that even though they’re working, they’re still qualifying for poverty programs!
Wages have not matched productivity for decades. To assume that the market was working correctly before this extra unemployment payout program started is misguided.
Supposed to? Says who? I say, employers are supposed to have to pay enough for a person to support themselves without government assistance. If we allow businesses to pay below a living wage, then the government is simply subsidizing their labor costs.
> “Clearly, there are industries in both manufacturing and services that are eager to beef up staff as the pace of economic activity accelerates. But those efforts are being frustrated. In some cases, the problem is a mismatch in skills. You can’t train a one-time courier on a bike to become an IT specialist overnight,” said Bernard Baumohl, chief global economist at the Economic Outlook Group.
As a hiring manager, it's become much more difficult to find even mediocre engineers over the past three years, and I don't believe it's because the duds we interview would rather live off of unemployment.
There will never be enough skilled software developers to provide software of the depth and quality that the greater population demands. It's a perpetual deficit, no doubt amplified by bit rot.
Electricity, cars, internet, non-dirt floors, children having their own bedrooms... none of these are things my grandparents had access to.
But now you cannot even build a house like the one they grew up in--it would not meet code. Even a poor person is expected to have access to running water and electricity.
I know it's controversial, but I think there is an upward sliding of what we expect the bare minimum to be. You could easily raise a family on minimum wage if you lived like a family 100 years ago.
Why is the livable wage so high - is the problem affordable housing? How about we provide guaranteed government backed housing loans directly through a federal agency (no intermediation), and force the rate on secondary mortgages and investment mortgages up significantly making investing in real estate less appealing?
The market is already not a free one - we know this ever since the FED started bailing out corporations in the 80s. If we are already moving towards a centrally planned system, why not drop the façade and at least do it in a way that benefits the underclass as opposed to the bankers.
It's a problem of hope. Why would I want to bust my ass to just barely make it? Thw powers that be can crush your progress at any point. I hate my job. Even though I'm in a high demand field and I make a decent amount (not even $100k), I still think about quitting or being fired and living on the government programs. It's because I have no hope that anything will get better. The political environment is not getting any better (in my opinion), I don't see a future at my job, I can't afford land, etc.
Even the military is having a hard time recruiting, why serve a country that doesn't love you....
The military issue is about a lot of things, but I think it's mostly about pay and the overall trend toward the population not trusting leaders without question like they did in the past.
Because it's all relative. The shitty jobs here are much better than the shitty jobs there.
Giving them the jobs won't fix anything. Now you would be adding to the people at the bottom of the income scale while still having people who were here drop out of the work force. If anything, the availability of cheap labor (and labor that is afraid to complain due to illegal status or because it's better than their past) keeps the labor price low, which could arguably hurt the overall labor price (I know, I know, Americans don't want those jobs; but maybe they would if they paid a lot more).
(1) They are being sold fantasies about how wonderful the US is, which don't reflect the reality of the life they will experience when they get here. There's a massive industry built around smuggling, fake documentation, and relocation assistance for illegal immigrants in the US. They make a ton of money selling the "American Dream" to desperate people.
(2) Even with a "low paying" job in the US, you still acquire an enormous amount of spending power in their home country, so remittances to family are extremely helpful. Often these people are coming from countries where $400-500 USD a month (or less) supports a family of 4-6 people.
But scolding someone for pouring out spoiled milk because there are children dying of thirst in Africa does little to fix the fact that the milk has gone bad.
Our great grandparents generation were traumatized by depressions, wars, and deprivation. We are afforded the luxury of being isolated from such experiences. That is no reason to declare society a finished product, and reject any criticisms of it.
Many of us want to have a hand in building a future in-which they can believe, and in-which they and their children have a meaningful place. But the world has become too big, too complex. Humans are increasingly cheap commodities to be consumed and replaced by massivr structures both private, and state - all hell-bent upon the minimization of the impact one is permitted to have on society. It is tempting to give up on ambitions, and instead live an easy, somewhat comfortable, if uneasely purposeless life.
Edit: added a lot, first two paragraphs were the original comment
At this point most of those jobs are done as 1099's via a proxy firm. There are few options for anyone in such a position to level up in, and pivoting to another service gig isn't going to provide significant upwards mobility options.
Even starting a business is more capital intensive now relative to the earnings you can make from it thanks to cheap money.
If there is no option to reasonably advance, it's reasonable that people will simply optimize to have the lowest effort.
Why is that? It sounds like you're well positioned for career improvement.
And sure, clearly staring at the sun (or a screen) for hours on end isn't good for anyone's eyesight, but at least there's glasses.
Here's some graphs to make the point:
https://fred.stlouisfed.org/series/CIVPART
We can see the labor participation rate has been declining since early 2000.
Even more so for men once women joined the labor force:
https://fred.stlouisfed.org/series/LNS11300001
But even for women this has gone sideways:
https://fred.stlouisfed.org/series/LNS11300002
The productivity vs pay gap illustrates a stagnant growth in wages even as the value of goods and services grows: https://www.epi.org/productivity-pay-gap
A combination of women joining the labor force in the 70s-80s, globalization, growing population, and automation has weakened the demand for labor.
At some point the declining demand for labor and the growing costs of things will come to a head. The current system will not work. It seems like this pandemic could be the catalyst for facing this reality and finding a solution.
People say automation and that’s true, but automation doesn’t seem to be stopping China from lifting millions of people out of poverty and giving them jobs, so I’m not sure why the US can’t do it. If you have more automation that doesn't necessarily mean you have fewer jobs, it can also mean you make more things.
To make this claim, the Chinese government uses a poverty line of about $2.25 a day, in 2011 prices and adjusting for purchasing power. The World Bank believes ...For upper-middle-income countries like China, it reckons that a reasonable poverty line is $5.50 a day.
https://www.brookings.edu/blog/future-development/2021/01/25...
China is also into forced relocation, forced labor, etc.
This information, to me, makes the China-automation evidence largely irrelevant in this discussion.
And, small but not insignificant point, a lot of our labor also went south to Mexico, not overseas. Not sure what the percentages are.
Compare the price level of Hawaii to the mainland USA. Food is expensive because it's imported, yet Hawaii has some of the most productive farmland in the world. Unfortunately that production goes to cash crops owned by global corporations, nearly eliminating all local food production.
"Unfortunately"? Clearly you haven't heard of https://en.wikipedia.org/wiki/Comparative_advantage
What it means is they don't want to pay the market rate for it, not that they can't find it.
The challenge for highly skilled labor is that the latency between a market demand signal and new supply is typically many years. Demand won't manufacture that supply on any time horizon that matters.
Good news, everyone! That's exactly what's going to happen.
Declining demand for labor goes hand in hand with lower production costs (cheaper labor overseas and automation). That means lower costs of things, not higher. And if the costs of things were higher than what people could afford due to being underemployed, the demand drops, which puts even more negative pressure on prices.
Theory and reality aren't the same. If Nike finds some slaves willing to work for .25 cents a day instead of .50 that has no bearing on what they charge for their sneakers. Nor does declining demand for labor mitigate the rapidly rising prices of the things people require to live (food, healthcare, housing, insurance).
Yes, I understand that this is your original argument. You don't believe that established economic theories like supply and demand apply in today's society.
> Nike's markup isn't correlated to what they pay for labor. There are plenty of other shoe companies that pay the same for slave labor and charge only a fraction of what Nike charges. People who pay $100 for a shoe that costs .50 cents to make aren't the "rational consumers" whose behavior is supposedly described by economic theories.
Nike gets a higher price because of the strength of their brand. When I talk about their competitors, I'm referring to other premium sneaker brands like Adidas, Asics, and Puma.
In fact, premium brands aren't an appropriate example for either of our arguments. It's not appropriate for my argument, since there is in fact a well known psychological effect (contrary to your claim) where consumers assume higher prices are associated with exclusivity and luxury. This can change the equation of how cost inputs effect price equilibrium.
It's also a poor example for your argument, since we are talking about people who may not be able to afford sneakers due to rising prices that allegedly break the laws of supply in demand. For that discussion, we'd need to use an example of a brand perceived as affordably-priced, not luxury-priced. (I could go on Amazon and find some, but their brand probably wouldn't be recognizable anyway, which is part of the point.) Those brands do compete on price, and cost inputs like labor absolutely effect what they charge consumers.
https://www.census.gov/library/publications/2020/demo/p60-27...
The 2019 real median incomes of White, Black, Asian, and Hispanic households all increased from their 2018 medians [between 5.7% (Blacks) and 10.6% (Asians)] Percentage change in share of aggregate income was highest for the lowest income quintile (+1.8%). High income quintile saw decrease in share of aggregate income (-0.6%)
I’d expect there to be a subset of companies who have grown their profits faster than inflation and for survivorship bias to mean that appears very common in a backward-looking point-in-time snapshot.
And yet, so many people seem to both support an easy money environment forever, but also oppose rising wealth inequality without realizing they are intrinsically linked.
The only way to increase welfare programs without increasing wealth inequality is to pay for your spending with taxation.
For sure. It's first spent by poor people on things that poor people need (maybe several times over as it works its way through the economy and is meanwhile taxed), rather than being given directly to rich people.
That's a massive difference to inequality.
That's why the proposed Infra and other bills are written to be paid for mostly with very high earner taxes and savings like beefing up IRS enforcement.
My concern is that if we pass say another 2-4T Republicans will revoke the .1% taxes and keep the spending.
Don't work = be poor
Why work?
This will be an interesting test case for the basic income gang. Especially now that some states are blocking the extra $ and we'll have stratified sample sets for comparison.
I imagine by not having to pay as much for social programs, like food stamps. We're already paying for social programs indefinitely.
Are you aware of this thing called "inflation"? Do you understand that printing more dollars dilutes the real value of a dollar?
https://www.cato.org/cato-journal/fall-2019/modern-monetary-...
If you give people close (or more) money than they would receive from actually working, most won't work.
Once automation reaches the level that you describe and there's a labor surplus, then we'll easily have enough resources to support UBI. But don't kid yourself, we're far from that point.
>A Pew Research Center survey this year found that 66 percent of the unemployed had “seriously considered” changing their field of work, a far greater percentage than during the Great Recession. People who used to work in restaurants or travel are finding higher-paying jobs in warehouses or real estate, for example. Or they want a job that is more stable and less likely to be exposed to the coronavirus — or any other deadly virus down the road. Consider that grocery stores shed over 49,000 workers in April and nursing care facilities lost nearly 20,000.
This whole thing has also shown me how working for a wage paycheck to paycheck even at six figures is basically slavery. You might get lucky and your 401k might grow in value but chances are you won't be able to retire till your 50s. It turns out that capital is everything.
Covid has shown us all that you might still die young so why work instead of enjoying life?
I retired at 30 and have done nothing but travel the world developing open source software since then. I have little to no possessions, and nothing tying me to any geographic area aside from a preference for clean air and such.
To your point, in my travels I’ve rarely come across anyone working a job out of anything other than financial necessity. Only a small fraction of people seem to do what they do out of genuine passion. Much more often, artistic, well-natured people are toiling away on menial tasks for money because that’s what it takes for them to survive.
> It turns out that capital is everything.
The gains from this are disproportionately accruing to billionaires while most people add almost nothing to the total output in exchange for cash and at the cost of much of their waking hours. These bullshit jobs are costing people time they’ll never get back, for dubious societal gains in many cases, while also depleting us of creative energy on an unbelievable scale.
Meanwhile, because of the dog-eat-dog nature of our existence, it seems as if there are only two viable paths for most people to achieve “freedom”: either you can withdraw deep into the proverbial jungle, or exploit the underexploited. A staggering amount of what passes for “industry” today is essentially just strip mining our planet of its natural resources, and/or converting it to food in whichever way using as inhumane of a process as is allowed by our current legal systems. The remainder of profitable human activities are by and large facilitating the dominion’s continuity, or quaint distractions from our highly cancerous existence.
But I don't own a business employing people near minimum wage so I guess that's easy for me to say.
If our society is too efficient, we run out of ways to give people meaning.
Retail workers are treated incredibly poorly, and the American customer frequently uses the interaction to establish the social class hierarchy for themselves.
This group was also ongoingly and repeatedly thrown to the wolves in COVID responses, being most exposed to the possibility of dying from the virus.
It is no surprise that the places which can't find workers are restaurants and retail outlets.
Welfare is a plague.
I know so many people who did not work because it would cut into their welfare.
I know so many homes that lived lies (separate fake addresses, never marrying) so they could get welfare.
I've seen welfare programs (wic, food stamps) exchanged for cash..
I've seen emergency rooms abused with medical cards (something most yuppies do not even know exists --- most do not seem to know most poor people already get free healthcare).
It's a sad thing. Reality on the privileged persons terms, I guess.
At least in these other, and we agree equally scummy cases, theres some run-off benefit we can assume given the higher levels of profit and/or related risk.
"...get rid of all police because some cops are dangerous and corrupt" because I said I've seen welfare do more harm than good? Geez, makes total sense.
Maybe they shouldn’t be in business.
Imho, these are effectively zombie businesses, and it would probably be better for the overall market efficiency (esp. wrt labor and asset allocation) if they closed.
They get deployed in other commercial activities that can make more efficient use of their time, and hence, pay them more.
As for the history books, I recall we've raised the minimum wage in the past. The US still exists, so i guess the history books say its ok?
What is more, one of the things that I love about the US is that we seem to be fairly good at deconstructing and reconstructing relatively quickly and efficiently. Our system isn’t perfect (tends to favor the capital class and stick it to labor more than I would prefer), but I personally think it’s much better than what Japan has done.
There's nothing wrong with people leveraging their (temporary) increase in bargaining position to drive the wages up. I'm not at all surprised that people don't want to get back to thankless, low-paid jobs when not faced with the prospect of starvation.
Also we’re finally giving a little bit of due to the house and home portion of a person’s work- the work of maintaining a house and caring for children. In other words some of those people now are probably staying home to care for kids.
Now hacker news being a bastion of people who want to be capital C capitalists, it’s natural the prevailing sentiment favors capital. I therefore expect that my expression of support for labor to garner me some harsh words.
But you can’t argue against the fact that having some kind of government assistance to fall back on makes it much easier to negotiate a higher salary, and will result in higher wages.
It also makes it much easier to start a business. If anyone should be cheering it on it’s entrepreneurs and VCs.
* profit margins: profit margins are set by
1) how competitive is the market, and
2) interest rates, which are set by the central bank. The "power" of labor has nothing to do with it.
For 1) this is about monopolies and we are seeing more concentration of market power, not less.
For 2) yes, interest rates are in a secular low period which does give rise to secularly low profit margins. That does not mean that workers earn more, it means investment increases so that marginal return projects are funded and more workers are hired.
* The "balance of power" between labor and capital.
First, there is no battle between labor and capital, the battle is between non-management labor and management labor.
Capital doesn't care and isn't affected by these disputes, which are struggles of the share of the pie given to management versus non-supervisory workers. When you buy a share of stock in company X, you just price the cashflow relative to what you can get from the central bank or another company, including foreign companies. You price it so that the risk adjusted returns are the same in all cases. So companies that earn fewer profits are just priced down to be less valuable and capital is reallocated elsewhere. So for capital, every return is the same.
The real battle is between managers (e.g. CEOs on down to branch managers) and non-supervisory labor.
In that battle, management has a lot of tricks up its sleeves: outsourcing to foreign countries, outsourcing to contract workers, eliminating demand for labor via automation. Non-supervisory workers have at their disposal the power of unionization and trying to get lawmakers to outlaw some of management's techniques.
It's not clear at all who wins and who loses, and this may shake out differently in different industries. There is no global change where one side wins and the other side loses. While most want executive pay reduced -- CEO pay seems especially obscene, so far management has proven itself to be effective at taking a bigger share of the labor bucks. Investors see low returns generally in an low IR environment, and that has been the case for some time, even to the point of many pension funds going bankrupt as the returns just aren't what they had predicted. Yet executives keep seeking and obtaining windfalls.
For example, in the 70s, it was a grim time to hire workers since wages kept rising and unions were powerful. But then again, inflation was high, so those wages were not rising in real terms. Thus labor thought it had "won" something when in reality there was stagnation in living standards.
Where it gets weird is when Capital is also pension funds.
40% of US corporate equity is owned by the foreign sector
40% is in tax-advantaged retirement accounts and pension funds as well as tax-advantaged non-profits.
20% is in various taxable accounts of US citizens and US based corporations.
source: https://theirrelevantinvestor.com/2020/10/25/who-owns-the-st...
It used to be that 70% of the stock market was owned by retirement funds, before we began accepting massive capital inflows from the foreign sector.
I guarantee you very few people who buy these portfolios even know the names of the businesses they own. There is nothing about "caring" involved in this equation. Nor is there anything about "loyalty". It's not a good idea to anthropomorphize capital markets, not if you are trying to understand them. People at a horse track placing bets on which horse is the fastest are not loyal to the horses, nor do they expect the horses to be loyal to them. If a horse doesn't run as fast, they just change the odds on that horse. Really, I think a poor understanding of both capital markets and banking is the main reason a lot of well-intentioned reforms end up being ineffective or backfiring. For example, you'd get a lot farther at promoting higher wages if you ban capital inflows than with unionization efforts.
To the extent the "new inequality" is these institutional investors, well it's "first time as tragedy, second time as farce" all over again.
> https://theirrelevantinvestor.com/2020/10/25/who-owns-the-st...
That's a neat graph. I would also like to see some measure of foreign assets with US owners to put that in perspective. "Foreigners" I also want to break down; that label makes it sound like all the rich individuals families went abroad (!), but I assume the foreign investors are institutional too?