By Pavlina Tcherneva, Assistant Professor of Economics at Bard College, Research Scholar at The Levy Economics Institute, and Senior Research Associate at the Center for Full Employment and Price Stability. Cross posted from New Economic Perspectives
This week workers in fast food restaurants across the country gathered to protest the minimum wage in the United States, which currently is a paltry $7.25, and to fight for a better standard of living. The battle for a living wage for the nation’s poorest workers is set against the backdrop of mass unemployment and the highest level of economic inequality in the U.S. in almost a century.
The first minimum wage laws in the U.S. were the result of a state-by-state effort in the Progressive era to secure a floor to a decent life to employed women and youth. The first of these was enacted in Massachusetts in 1912 and eventually led to the 1938 Fair Labor Standards Act, which instituted a minimum wage at the federal level.
The objective was fairness, economics opportunity, stability, and social cohesion. The problem was the unequal power between labor and capital—a rationale that even early neoclassical economists embraced on the grounds that it constrained labor’s bargaining power and reduced morale, productivity, and wellbeing.
The solution was to set the “rules of the game” so that working women could support their families and young workers would not fall prey to discriminatory practices of their employers. In the absence of such rules, economists thought, the market mechanism wouldn’t work. Firms simply could not be counted on to self-regulate or reinforce these rules. The minimum wage movement required legislation.
The Supreme Court initially resisted and ruled that the state laws were unconstitutional, but states and organized labor prevailed, and by the time the New Deal rolled around, the Supreme Court had changed its mind. It had begun to work with a much broader definition of “the public interest” and supported various state legislations to protect the “welfare of its citizens.” It was understood that the wellbeing of workers served an important public purpose.
American economists – neoclassical and institutionalists alike – all supported the movement, the legislation, and the rationale. This wonderful excursion in the history of the minimum wage movement and the history of economic thought by Robert Prasch (1999) shows that economists in the U.S. were virtually unanimous in their support. The objections largely came from the British, notably from Professor Pigou, until another British economist, John Maynard Keynes, disproved his argument. Not only were the assumptions behind the labor market mechanism unfounded in Pigou’s analysis, but the notion that the minimum wage caused unemployment was also theoretically and empirically flawed. As Keynes, explained, reducing wages as a macroeconomic policy was a “method socially disastrous in the process and socially unjust in the result.”
A federally mandated minimum wage was not enough to secure fairness, economic opportunity, stability, and social cohesion. The missing piece was a policy for full employment – one that guaranteed jobs for all who wished to work. That came later with the work of John Maynard Keynes, John Pierson, William Beveridge, and others. All advanced specific policies for full employment that aimed to secure decent work at decent pay to anyone who was ready, willing, and able, regardless of whether the economy was reeling from a Great Depression or enjoying relative prosperity. The right to work was codified by the international community in the 1948 Universal Declaration of Human Rights and found a special place in Martin Luther King, Jr.’s “I Have a Dream” speech during the 1963 March on Washington for Jobs and Freedom.
The New Deal put full employment front and center on the policy agenda. Though it did not deliver a long-term job guarantee program, it boldly and successfully experimented with direct employment policies. The war mobilization delivered true full employment, but Keynes insisted that public policy could and ought to achieve the same in peacetime.
In 1949, the minimum wage nearly doubled at a time when the economy was as close to true full employment as it has ever been, and when direct job creation was the policy of choice to deal with unemployment. Full employment and high wages ushered in the Golden Age of the American economy.
Today we have neither. Mainstream economists have successfully convinced themselves and policy makers that true full employment is impossible and that the minimum wage is the root of all evil.
Jobs for all (via a Full Employment Program through Social Entrepreneurship, a Green Jobs Corp, or a Job Guarantee) and a doubling of the minimum wage is what the economy needs today. Keynes made the case, Martin Luther King, Jr. made the case, and the international community made the case.
Sometimes the good old ideas are the best new ideas.
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In this framework jobs are conceived of primarily as a means to provide people with an income. If there is no need for a jobs to be added to the marketplace, then the gov’t should intervete to create them. In that case, I ask, what is the added utility of holding onto the idea of “a job” as a source of income? Why not just provide a minimum income to all adults directly and skip the mandate of finding some busywork of marginal value (and probably increased environmental degradation) for everyone?
Full employment is a pipe-dream and undesirable besides, we’ve already moved into the post-employment economy and our solutions should reflect that. The “work ethic” is a vestigial adaptation and our worst enemy in that respect. Why not just give everyone over 18 $25,000 to start out with every year? Basic security for everyone, which we could easily afford to provide, would broaden the horizons and allow for new experiments in community formation/sociality.
Our tribal psychology suggests we need to feel productive for the purposes of self-respect and fulfillment. Plus there is simply an unending supply of useful work to be done that simply does not generate financial profits. Conservatives would have us believe only work that makes a capitalist rich is worth doing, but I suggest we not listen to them.
A minimum basic income would “cost” about 3 trillion dollars a year, but it’s not a cost. It’s not like money we’d be sending to some other group of people, it stays right here in America where it gets spent. Think of minimum basic income as Quantitative Easing for people not banks.
The only people who can think of it as a cost are a minority who are both big tax payers and who consider the majority to be a kind of internal foreigners that are none of their concern. Anyone who thinks that way should leave, and try making their billions without the work of their fellow Americans.
That said, I’m for a higher minimum wage until the minimum basic income comes around.
Exactly, it’s not the money that does the actual ‘affording’, it’s the particular mix of money system with how that system robustly copes (or not) with the on-the-ground economic reality of productive resources, know-how (including robotics and automation) and the oft-forgotten environment. The money system (including the purchasing power distribution system, currently the out-of-date job thingy) ought to be made to adapt to the new reality, instead of the current madness of trying to force reality to fit to the creaking money system.
Minimum income would be very effective. People who are permanently unemployed could live and spend; people who are employed in lousy jobs could quit and find green jobs; people who are professionals could be compensated in some way (?); people and businesses hiring workers would be able to pay less and their businesses would be a little better off; and if we had, in addition to minimum income, national single payer health insurance the entire health industry would do better. Every small business and corporation that struggles to make ends meet or pay a dividend would get a break. It’s not like a minimum income would simply benefit desperate people, it would benefit the entire community. And keeping things going like that would be the best way to transition out of our dysfunctional profit by plunder economic system. The money dedicated to minimum income would be distributed in a closed system so that minimum income, once in the system, would be enough. It wouldn’t be 3 trillion per year.
Or a negative income tax:
http://www.nytimes.com/2006/11/23/business/23scene.html?_r=0
At the risk of being ripped for insensitivity or condescension somehow toward lower-income people, I have to say that this proposal to guarantee a minimum income without working for it, if implemented, would very likely produce a quite larger-than-we-wanted-or-anticipated population of what Susan was calling something moral-neutral like “the non-workers” (or something. It’s slightly hard to scroll back up to find). This projection I make from my own experience. I don’t mean to criticize Susan or the person who began the sub-thread, but the language with which they describe those who don’t work, while admirable in avoiding condemning the many unfortunates who have been put out of a job in the last several years and those who are genuinely disabled, tends, IMO, to obscure a reality in human nature as I’ve experienced it. That is, many, if not most of us, if given the choice to work or not without repercussion will choose not to. If there’s an easy opportunity to “cheat” or “game” the system without severe ostracism, there’s a pretty significant proportion of any given population who will choose to do that, too. In other words, both in my work and non-work experience I’ve known a bunch of slackers who got over on the rest of us. We who worked moderately hard then have had to work harder than we should to pick up the slack. We have tended to resent it mightily. I know others who have used a fair amount of creativity to try and get themselves declared disabled. Had they been succeeded, many more would have tried it, I’m pretty sure.
Let me put it this way. If my wife and I can get paid $25,000 a year each to kick back we will seriously look at our down-sizing options. I would not mind blogging all day, puttering in a small garden, fishing whenever I wanted to, and maybe volunteering for a bit of community service to make myself feel useful. I can live cheaply. I know she wouldn’t mind such a lifestyle either. We are both considered hard workers at our jobs, but I can tell you, it’s not because either of us really feel like it.
I sure would like to see a universal 30 hour work-week and go in that direction, but to consider the cultural imperative for all to work as simply arbitrary and superfluous and develop a system with that in mind is, IMO, asking for a pretty bad “unintended consequence”.
I would say that your resentment is your problem and not theirs for failing to respond to the work ethic/imperative as completely as yourself.
“Let me put it this way. If my wife and I can get paid $25,000 a year each to kick back we will seriously look at our down-sizing options. I would not mind blogging all day, puttering in a small garden, fishing whenever I wanted to, and maybe volunteering for a bit of community service to make myself feel useful. I can live cheaply. I know she wouldn’t mind such a lifestyle either. We are both considered hard workers at our jobs, but I can tell you, it’s not because either of us really feel like it.”
Wait, what… are you saying that this would be BAD?
I’m saying that a great many would likely go the same route and choose a life of modest leisure. The work necessary to keep even a modest lifestyle up for everyone would not get done were doing that left as optional. (Virtually) NO ONE wants to work.
A few of us work to keep my company going. We support a bunch of bums (somewhat dysfunctional work-place). I think our resentment is human nature and would happen most anywhere the same conditions prevailed. You apply that on a more macro scale (whole bunch of free-riding), I think you’ll end up with a problematic economy.
To make my point of view more clear, I just don’t believe that making daily labor somewhat optional could work out. However, I think that shortening the work-week by quite a bit could. (This is all more or less off the top of my head. I open to being shown my error.)
The economy needs to grow for one reason; the money system demands it (this is a simplification, but it’s true enough for now). When it’s not growing, it’s collapsing, which is the dynamic of a ponzi scheme. When it’s collapsing, jobs are scarce, so we associate non-growth with hard times. But there’s no ‘natural’ reason for it to stay the way it is: consumerism growing and growing forever. Were we as a species to rethink this whole shebang, to step back from consumerism, redefine the work ethic, abandon perpetual growth, most people (after a period of adjustment) could indeed fish and blog. And there’d be nothing wrong with that. Jobs as we have them would fade away, life would be far more flexible and less regimented by conveyor-belt schooling and career, work would be more and more pleasant, creative, playful. This is very possible, even though it sounds like an idle fantasy. The hard part is getting broad consensus behind this sort of change of direction. It’s never happened before (as far as I’m aware), but neither has there ever been a blog like this. And to expand the view much wider; once there were no humans. Change happens.
In the end though, humans tend to want to contribute something meaningful to the group or to society generally. We need to belong, we need to feel useful on some level.
One of the things a guaranteed income does is change our thinking about the direction of reward. A guaranteed income frees us to contribute in a way that is closer to what we are passionate about. In the current so-called job market, job seekers have to take whatever shit they’re given, which is slowly leading to (wage-)slavery conditions, which modern technology and automation is exacerbating. This amidst plenty. So instead of having money as the only useful reward distributed via wages, we would begin to enjoy the significance of our contribution and its success as reward. Money freeing us to really be, just as ‘unearned’ air enables birds to fly.
Success is its own reward, and guaranteed income would help us realise this simple truth.
To suggest that money paid to minimum wage employees stays in the US, and is recycled into the general economy is not exactly true. Billions are sent out the US (primarily to Mexico) in the form of “remitances”. At one point, this influx of US dollars was considered as a significant portion of the Mexican economy.
It’s very difficult to believe that as immigrants (either legal or illegal) will not increase the amount they send back to their home countries if the minimum wage is increased to 15+ dollars an hour.
The minimum wage was never intended to be something to support a family in the US, and one/more families in some other country.
> until the minimum basic income comes around.
From each according to his ability, to each according to his need, where have we heard it before? And it worked beautifully for the countries that tried it, because it is so compatible with human nature.
What seriously do you know about human nature? People will hold back if they think that they are being asked to do something meaningless or that they are being had. And they will fight, and die for something if they think it is worth doing. We live in a late stage kleptocracy. People would be fools to sacrifice for it. But just because that is the case now doesn’t mean they won’t work and sacrifice if they see a chance for something better, not just for themselves but for everyone.
Socialism in its broadest sense is about addressing the needs of society, that is the 99%. Do you have a problem with that? Trotting out old slogans consigned to the garbage heap of history convinces no one. Like socialism, they have been so bent and twisted as to be unrecognizable. The key question is do you want a society that is fair, just, and equitable without the distortions that great concentrations of wealth create. If so, then you accept that there must be both a floor and ceiling to wealth, and that any differences in wealth between these two limits must reflect contributions that benefit society as a whole. If you believe society should be unjust, unfair, and inequitable, then your paradise has arrived and is all around you because that is what we have now.
Fantasize all you want about the human nature, but you sir obviously didn’t live under socialist regime, which I did. And you refuse to learn from other people’s mistakes. Please don’t call for socialism in US. You don’t know (and refuse to know) what you are wishing for.
Federico Pistono wrote a book called Robots Will Steal Your Job but That’s OK. Pistono has given many talks on youtube so check it out. Indeed you are right–and it’s one of the many dirty little secrets that the mainstream culture simply cannot stomach–we don’t need “jobs” if we become a trusting society rather than a fundamentally hostile society.
Buckminster Fuller made a similar argument which I’m sure Pistono is familiar with. Fuller believe, rightly, that if you gave everyone enough to live on then even if 99% of the people just party or “go fishing” as he put it that one percent would feel liberated enough to pursue their interests and invent something new or develop an new processes that would create enough wealth to support the rest of the lazy ones.
I would say that social wealth would increase exponentially by people fully developing their human potential including more and better parties. This is a cutting edge issue that, as usual, society’ leaders refuse to talk about because their domination of others depends on our ignorance and fear.
I’m more concerned that robots will take all the Chinese jobs, then 1.1 billion Chinese will emigrate to the US and take all our lawyer and fast food worker jobs.
That’s what truly scares the crap outta me.
You and Bucky are expecting “the New One-Percent” to friggin’ kill themselves, dude!
Awesome that this is the first comment. The JG feels like a solution in search of a problem*. It’s just too top-down, hierarchical, and authoritarian for my tastes. It feels like people advocating it either aren’t contemplating the specifics of the American system or aren’t contemplating what it’s like to actually staff an organization with millions of low wage temp workers who can’t be fired**.
If we need something done, then we should hire professional workers at decent wages to do that job. If we don’t need something done, give people universal unemployment insurance, not temporary make work projects. The value of social insurance over JG is that it doesn’t require competent leadership acting in the public good to make it work.
And of course, if inflation wasn’t a problem, we wouldn’t need to double the minimum wage. The simultaneous advocacy of JG and increasing the minimum wage would hopefully make the more thoughtful wing of MMT ponder why both are necessary in this age of ‘no inflation’.
*The problem we face is inequality, the distribution of resources (not aggregate demand, the total size of the pie).
**and of course, this is some of the ambiguity of the proposals. Can a JG become unguaranteed? Will it pay a decent wage instead of a minimum wage (salary, holidays, vacation, medical, etc.)? These are the kinds of details that determine how the program would develop if actually rolled out in the US.
Why not just provide a minimum income to all adults directly and skip the mandate of finding some busywork of marginal value (and probably increased environmental degradation) for everyone?
Because a minimum basic income of the kind proposed by most here (e.g. give everyone over 18 $25,000 to start out with every year) is simply impossible. It is like saying, why don’t we all win the lottery. Pavlina Tcherneva (& Philip Harvey) are the worlds experts on the JG vs the (standard, modern, big) BIG. People could try reading their papers. See the posts against the BIG bait&switch by Wray at economonitor a couple months ago for his and their arguments and links. The “busywork of marginal value” provided by a JG has a US record (the (first) New Deal etc) of being spectaculary successful, productive, stimulatory & environmentally sound too.
Some of the academic BIG guys have interesting & worthwhile ideas and ways of looking at things, but that does not salvage the obvious impossibility of a big BIG. Frankly, it is an idiotic idea. Takes a lot of “education” & isolation from reality to not notice its manifest idiocy. Don’t worry – the banksters are generously providing the real world, genuine education and contact with reality (=cardboard boxes) to educated, isolated former middle-classers.
Hint: it is not the “work ethic” that makes the poor and homeless reason so logically, so MMT/Keynesianly and therefore laugh at a the childish big BIG fairy tale – it is the that they know oh so very well the ethic of people who have stuff they want: like food, shelter, clothing – they want money for it.
Personally I’m for a small BIG, a BIG of the sort proposed by Bertrand Russell a century ago, who BIGgers misappropriate – and a JG to protect it, also wisely supported by Russell, but originally proposed one century even earlier, by a philosopher Russell slandered.
jonboinAR says: At the risk of being ripped for insensitivity or condescension somehow toward lower-income people,
jonboinAR – you’re not insensitive and condescending to the poor, the homeless, the working class, the lower income people. Everyone else is! I wonder how many poor and homeless people big BIG-proposers have ever known. They see through the stupidity of a bigBIG in a second; only the smart, temporarily more comfortable people who think they know better can’t.
The poor are closer to “tribal psychology” I guess. So inferior. Well, you know why we have that “tribal psychology” – because it works. It makes sense. A monetary economy without full employment, without a JG is an insane idea. It’s a tribe without the tribal psychology essential to a poorer tribe’s existence. And a big BIG simply cannot work, does not and cannot make sense until we have robot armies to do our work for us. And then I’ll agitate on behalf of the damn robots, against their idiot human oppressors.
Terrific job at succinctly laying out what seems so obvious to many of us. You’re correct, the proof stares us in the face, yet great numbers of even Average-Joe-people remain victims of the best brainwashing scheme ever: 20+ yrs of believing that they, their families, their neighbors make TOO MUCH MONEY!! This group still thinks that accepting less pay and longer hours are “protection” against job losses when we’ve seen it simply is not so. The jobs left anyway.
“ometimes the good old ideas are the best new ideas.”
This.
We need the Old Deal back.
While Martin Luther King’s August 28, 1963 “I have a dream” speech at the Lincoln Memorial was delivered as part of the March on Washington for Jobs and Freedom, he did not actually talk about jobs. King’s speech was all the more incredible because he delivered it ex tempore, dumping his prepared remarks which were largely a criticism of Kennedy’s proposed civil rights legislation (which also did not say much or anything about jobs).
A clearer idea about King’s attitude towards jobs, work, and income can, I think, be found in his August 16, 1967 speech to the SCLC Convention in Atlanta:
BTW the actual quote from Henry George is:
Great quotes, thanks. It remarkable that our intellectual culture will not allow such arguments as we are making and the author of this article are making. The narrowness of intellectual discourse at this point in history, considering the implications of new research in a number of areas that should be paradigm-shifting, is stunning. If you go back to the 50s and 60s you will see all kinds of things discussed that can no longer be discussed.
“…early in the century this proposal would have been greeted with ridicule and denunciation as destructive of initiative and responsibility.”
Early in the 20th century, 1910 to be precise,
http://www.alternet.org/labor/when-america-came-close-establishing-30-hour-workweek
A minimum wage of $14.50 with 8 hour days and 260 working days in a year would yield a gross income of $30,160 before FICA, Obamacare, or income taxes. This also assumes any vacation and national holidays would be paid.
Thank you for doing that math and presenting the stark figures behind the “hourly wage” trope.
Which confirms that (1) the demand should be for a minimum wage of $35 per hour and (2) the Federal Poverty Level for a single person should be raised to $30,000 per year.
The fact that the fast-food workers are begging for enough to make $30K gros (before FICA, ObamaCare, State/Local Taxes and Living Expenses) illustrates how low the bar has fallen since the late 1970s.
There can be plenty, if not much, much more, healthy social cohesion absent wage slavery. A good start would be as others have intoned, a basic–living– income guarantee. When we get there we can start to obliterate the ethos of earth degrading consumerism. Until that time it’s just more of the same well intentioned smoke and mirrors, earth and people destroying, rhetoric.
Florida workforce loses ground since 2000, report says
It has been worse than a lost decade for Florida, economically speaking.
Working families statewide have been losing ground since 2000 based on nearly every metric, according to an analysis being released today.
We’re working fewer hours and being paid less. Housing prices and college tuition costs are both up sharply, while median income of Florida households has fallen at a greater pace than the rest of the country. Not only is unemployment higher than it was in 2000, but also a lower percentage of working-age Floridians are even looking for a job, masking the true number of jobless.
And poverty jumped nearly 50 percent in a four-year span.
Researchers from Florida International University said the decline in the standard of living not only harms social mobility, but also hampers the overall growth of the economy.
“Ultimately, the continuing decline in wages will mean lower consumer spending and therefore lower economic growth for Florida,” they concluded.
Every Labor Day, FIU’s Research Institute on Social & Economic Policy issues a “State of Working Florida” report.
http://www.tampabay.com/news/business/workinglife/fiu-report-florida-workforce-loses-ground-since-2000/2139207
JEB BUSH VERSUS HILLARY CLINTON
What a battle! Both are clean. Both are intelligent. Both are articulate. Neither is ruled by extremists in their party.
Hillary has a lifetime record of working for women and children.
Jeb must fight off the right wing extremists like Cruz.
Polls three years in advance are meaningless.
Your sense of humor never ceases to amaze. Corporatist candidate A or corporatist candidate B, both dishonest shills of the kleptocrats, but at least they’re CLEAN!
“My brother by another mother,”–Bush brothers call FP Bill Clinton. Here’s the link to “Barbara Bush gushes about Bill Clinton, says he treats George H. W. Bush like a father,” below.
https://www.nydailynews.com/news/politics/barbara-bush-gushes-bill-clinton-treats-george-h-w-bush-father-article-1.1113917
[Not sure this link will work. The piece above is from “The New York Daily News,” July 13, 2012–in case it doesn’t work.]
So, there’s shared “ideology” alright–it’s called “corporatism.”
So, I fear that this would amount to a “replay of 2012.”
In 2012, there were some differences on wedge issues, but not “much difference” on many major economic and foreign policy issues between the two major candidates.
[Never mind their “Kabuki.” Romney, due to the primaries HAD to kowtow to the powerful conservative base. But judging from his governance of Mass, Romney would not have been that radically different from PBO, had he been elected.]
And maybe “the left” would have found its voice, and pushed back on the “Grand Bargain”–which would have been pursued in some form, no matter which party was elected. (instead of being “sheeples”)
Of course, even today, PBO, occasionally “throws a rhetorical bone to the Dem Party base,” but as far as I can tell, he rarely follows up (at least not on economic issues).
It’s always been my understanding that Romney mostly governed in a (relatively) centrist, or DLC-like manner. And that much of the legislation he got passed was with a Democratic Party majority.
I deeply and sincerely hope that 2016 will bring us a Presidential candidate “from the left”–whether from within the Dem Party, or from a Third Party.
IMHO, this nation absolutely can’t afford to be dragged any further to the right.
Because, if this trend continues, give it another decade or two, and Third World will “look good” compared to what the US will become.
The recent strike by fast food kitchen workers, demanding at least $15/hour (this year) for their labor, suggests that it’s time for fast food restaurants to consider the use of service robots to flip the burgers, and fry the fries—instead of continuing to employ these people. The cost of $15/hour labor is really closer to $20/hour when social security taxes, and other costs are considered—which would force the price of these food products up considerably.
Entry level jobs are not intended for people to hold for decades. The idea is that people would seek other jobs within an organization, or elsewhere, based on increased skills, and responsibility, that they acquired in these jobs. This model of constant improvement, and advancement, seems lost on this generation of fast food workers.
The idea that people should expect the government to set the minimum wage so that low-skill/no-skill workers should be able to live comfortably in urbanized US locations, and be able to support families of 4/5/6 children makes no sense, and is not financially sustainable for small businesses.
It’s time for US industry to recognize that its dependence on low-cost labor is creating problems for everyone. Rather than trying to promote an open boarders immigration policy, our government should be helping businesses to find solutions to labor problems that don’t involve immigration, through increased mechanization, and automation.
This sounds verbatim like the talk of a pundit that was thoroughly shredded by John Oliver during his role as John Stewart.
Are you visiting under a different name, sir?
Full employment is not a pipe dream. We need to have the federal government pay for unemployment benefits instead of requiring the states to foot the bill. Additionally, it should be federal law for the states to provide a minimum weekly benefit of $600. The unemployed would obviously spend all of this money, which would massively raise sales, which would then force employers to hire and hire until we reached full employment.
There are some pretty bad economists out there, who have devoted themselves at theories and completely dismiss reality. They sit in their office, reading books, looking at theories, and trying to figure out a way (in a theoretical form) where everyone is happy (Marx, Keynes, Krugman, Bernanke). Everyone that wants money has money. Everyone that wants a job, has a job. Everyone that doesn’t really want a job, well, they get to not have a job. Everyone is satisfied in some way. And then we wake up and go out in the streets and see people starving, people without homes, people making minimum wage with mouths to feed, and best of all, even those with a decent job have trouble providing for their families. There have been some realists out there like Irving Fisher, who not only apply their research for their own legacy, but for the good of humanity.
How about the following suggestion:
– Remove minimum wage laws. This will ensure that employment is more equally distributed and is critical to build a highly skilled society.
– Remove the Fed. Other than manipulating the money supply and interests, the Fed does nothing. This also allows the market to appropriately price risk and it’s actually the law.
– Allow banks to fail. This will restore more trust in the system and set a precedent, you gamble, you fail. This also allows the market to appropriately price risk.
– Make the dollar, the first (in today’s world) currency fully backed by gold. This will force settlement between the US and other nations.
– In a phased approach, end the fiat system (which does not force settlement between nations). This will prevent countries, like China, from only being net sellers indefinitely to countries like the US. You want to do business with the US, settlement will force that country to buy from the US. This means more jobs in the US, and btw, the politicians KNOW this and are just making a fool out of you.
– End collective bargaining. This will stop the looting of tax payer purchasing power for the good of a few.
– End protection of the medical, military, agriculture, automobile and any other industry. You want to do business, do it on your own merit. The tax payers should not be subsidizing anyone’s business.
But here is the truth about 90% of the population. Most of you don’t want fairness, you don’t want to end poverty, you don’t want the better of society. If you did, you would be asking how you could contribute to getting goods and services produced to improve the live of those in poverty. But you are not and you wont. Not because it’s better for you the way it is, it’s worst and you think it’s better. They’ve conned and fooled you to the point it’s sad.
You want a safe life for you and your family. You want guaranteed food, clothing, cars, health insurance, etc – even if that means trashing the constitution, if it means higher taxes or devalued currency for someone else, and people starving and destitute around the world and at home, you could care less. Of course you will say you care, but not really. You care more about those immediate things you will “get”, the other stuff you really don’t know how it happens and you don’t care to learn how it does, you believe the government has a little magic pot where they get those things. You do know those things you consume were produced by someone that looks like you, right?
Well, don’t you think those poor people may just have something to eat if instead of just consuming, you also contributed to produce more things? Would prices of things not be cheaper if you did? Yet a professor with years of research under their belt can come up with an article as above. Sad state of affairs.
Typical libertarian, social Darwinian, I’ve got mine, Jack nuttery.
I’m almost sure you’ve got much more than me. What I don’t do is lean on the mob’s shoulder for unfair advantage.
It’s nice to have a bully on ones side to beat up on the weaklings. It’s double nice when you can also blame it on the weaklings too. It’s their fault for not forking it over to me.
Con artist?
What you call the mob the rest of us call We the People. And you have depended on us all your life. From the doctors we trained in the hospital where you were born, to the schools you went to, the roads you drive on, the safe foods you eat, the work we did, the security we provided, the internet you are now on. That is us. We are there. We have always been there.
Libertarians are the ultimate hypocrites. They ignore all that society gives them for an Ayn Randian Galtian cartoon of magnificent, and false, selfhood. There is a word for those who wish to feed off the work of others and return nothing. They are called parasites.
I’m with you that people produced every single one of those. But those people were not paid by the government, were they?
Were these projects not financed via either tax revenues of inflation? I thought so.
The last time I checked, parasites feed off the host. That would be the perfect description for a leftist, socialist, marxist. Work, contribution is their enemy.
If I’m not mistaken, a lot of people who have done a lot of productive work in this country HAVE been paid by the government. Teachers, policemen, highway workers and builders, scientific researchers, designers of our Internet, etc.
What I don’t do is lean on the mob’s shoulder for unfair advantage. Bapoy
Then why do you want the taxation authority and power of government to back the value of gold?
The next time you dismiss a bunch of people out of hand, you may want to actually read them first. Don’t be a tool, don’t be a fool, read a book, stay in school
You lie like a rug.
“The first minimum wage laws in the U.S. were the result of a state-by-state effort in the Progressive era to secure a floor to a decent life to employed women and youth… The objective was fairness, economics opportunity, stability, and social cohesion.”
No, not really. As the women’s and labor historian Alice Kessler-Harris recounts, the minimum wage under protective labor legislation was deliberately set just high enough to keep women from turning tricks but not high enough to make them independent people. The goal was not so much to offer “protection”–let alone fairness or “opportunity”(!)– as to tread the fine line of making them available to men without also reducing them to damaged goods. Recall, this is a period in which public morality shaped public policy. Like the “white slavery” scare. Like prohibition.
From the stories we hear of women electing to pole dance to pay for their college educations today, I gather the legislation isn’t fulfilling its original moral aims of sexual purity and compulsory heterosexual marriage.
We do have a whole legacy of entirely normalized feminized labor however, which has largely been rendered invisible as all sorts of care taking and making nice with the public is just naturally the unskilled, and therefore naturally low paid, work of women. It doesn’t matter what else one brings into that toxic brew of gendered assumptions. It’s almost always over determined.
So, today, we have well educated but not terribly experienced young women who voluntarily seek assignments as “consultants” so they don’t become tarnished by too close an association with the career damaging degradations of the gendered institutions of the typical American workplace. This can look a little precious, even presumptuous, but it is also very perceptive. Taking “the job,” and submitting to its discipline, is not always the right thing to do. Sometimes people can grow up a little faster than those around them can manage to change their spots, and certainly collective social patterns once established can be very difficult to alter.
There is, in fact, a whole academic literature on the progressive and New Deal eras that seriously challenges the liberal narrative of the progressive nature of these legislative efforts. It seems to me however, that much of it remains locked behind the scholarly publishers’ pay wall.
This doesn’t have to be the case, anyone who can readily gain access right from their office computer– Pavlova Tcherneva, for example, if not necessarily me—could easily cite this literature. Certainly they can’t be ignorant of it, given the way that established academics place such a very high premium on ascertaining that their fellow practitioners actually do know the literature of their fields.
So, this must be a choice. I therefore conjecture that liberals who write for and sometimes propagandize the public simply don’t want to hear anything critical and don’t want anyone to challenge their chosen narrative framework of liberal interventionist triumphalism.
It’s also true that much of this critical work almost inevitably crosses into the kind of race and gender “divisiveness” that the new critics of the contemporary liberal/left have decided is antithetical to political progress in the current moment.
There is, for example, the political historian Ira Katznelson who had the temerity to write a book on the New Deal blatantly called “When Affirmative Action was White: An Untold History of Racial Inequality in Twentieth-Century America.” His latest book, “Fear Itself: The New Deal and the Origins of Our Time,” details how the entire new deal era that everyone is always hearing was so progressive was shaped by a very powerful block of Democrats from the former slave states. He can be very convincing.
I am sympathetic to the view that the culture wars have displaced the economic as a topic of discussion and political organizing. However, it also seems to me that in evading “cultural” questions in favor of a false narrative of liberal interventionist triumphalism one fails to adequately deal with the larger history of how the US economy, workplace, social welfare provision, and even the hostile tenor of contemporary society itself was actively shaped by the various cultural assumptions of the economic interventionists of the day that went then unchallenged.
Meanwhile, it seems to me that many of the professional economic interventionists of today, whose attitudes I frequently have a hard time distinguishing from those of your typical sin and sloth berating, workfare mandating conservative– apart from their own professional power play as economic interventionists who would “bring jobs to the South” as vs the laissez faire private sector favoring elitist economists who wouldn’t– seem to take the position that everything should be their way or the highway. As if there were really only two public policy choices, in a whole world of potential public policy positions.
I wonder if this new “economically focused” liberal/left critical movement– that pre-emptively defines varied voices out of the conversation for the sake of a unifying strategy spearheaded by those informed by economics– is really off to such a hot start.
It has been established that economics is a very narrow discipline with a very narrow conception of human beings and a very narrow conception of the good life and good society. Liberal interventionist economists also explicitly seek to model the present on a falsely triumphant narrative of the past, about which many of their professional liberal colleagues are decidedly more critical.
As a consequence, one really should be asking what sorts of assumptions cum economic dictates would the liberal interventionist economists of today saddle real people with this time around should they ever attain the power and influence they so clearly seek, in which they claim a technical expertise that trumps the knowledge and expertise of everyone else, be they ordinary citizens seeking to mold their own lives or their own professional colleagues who have their own informed opinions on labor and social welfare policy, formed somewhat independently of a flawed past on which they have gained some critical distance and which they are therefore far less keen on seeing repeated.
Ad nauseum. It’s like the movie “Groundhog Day” around here. If liberal interventionist economists really insist on reliving history, they better learn to move a little quicker.
Yes I do think it is a safe bet to say that laissez faire is dead in the water. Specifically rising sea water. It has been dealt a mortal blow by too much CO2 in the atmosphere, too much radiation from nuclear plants, too much cryptic toxins from 50 years of militarism, and no way to move forward. Laissez faire implies you can go forward and exploit stuff with abandon. We cannot.
JTF,
That was simply brilliant. I know exatcly who your words were meant for and I must say I could not concur more.
Say what? ??? Not sure what or who is the target of your long rant. You start by pointing out that the New Deal was not so progressive or ‘nice’ as many of us would like to believe, the motives behind many of the policies ‘interventionist’ economics types (who is meant by this? name names or a school something?) drag in from the past aren’t so noble as they might want to believe. OK — so what? What we have now, the changes wrought to the old not so progressive economic system have not been improvements, and in fact it’s not hard to argue that the old ways — however unprogressive or badly motivated — at least allowed most folks to live a somewhat decent life. [As for links to applicable literature see: http://www2.ucsc.edu/whorulesamerica/power/social_security.html — and why should Tcherneva refer to such links to make a case for raising the minimum wage?]
You further assert that you think that culture wars replacing economics in political discussion is a good thing. Why? What does it have to do with the minimum wage? Is there some particular part of the culture wars that you want focus on? Why would you favor discussions on topics that ostensibly mask discussion of the issues of political importance to decisions and actions the government is taking. Little has come of the culture wars except an occasional sop to one side or the other of various issues while the economy is adjusted to become less progressive than even the not so progressive policies of the New Deal and we engage in endless wars that only a small part of our country seem to feel are necessary.
You assert that varied voices are cut out of the conversation. OK — who, what are they saying? What do they want to say? What so you think should be discussed that isn’t?
I have to ask again who you mean by the liberal interventionists? What intervention disturbs you and why?
I could be wrong, but I believe JTF’s digs are meant for some of what he sees as the more or less condscending MMTers out there. They in many meaningful ways differ little from thier laissez-faire counterparts when it comes to the workerist ethos.
…also, the status quo ante regarding the resurrection of the New Deal is really in effect a raw deal all over again.
Is it wrong to suggest that it might be less raw than the deal that seems to be planned for our futures? I have no quibble with doing better than the New Deal and redressing its shortfalls — I just don’t like cat food.
It’s high time to do a lot better than the New Deal. One thing is for sure: more and more mind, body and soul draining so called living wage jobs are not the answer.
The problem with the New Deal is that it saved the banking cartel, instead of destroying it.
Yes yes, the New Deal was a horrible white supremacist undertaking, its genesis was promoting racism, and unions were very racist too, this means we need to get rid of both and let the market rule, as it’s noble and full of equality granting powders.
What’s an “equality granting powder”? Meth?
Lambert,
I grew up in Chicago. The unions are racist to the core.
Genuine full employment can be achieved – and more than that there is probably so little genuine work to do we could have a flexible reserve. We don’t need to go back to Keynes or anyone else unless we are clapped-out functionaries of the establishment academic zoo.
Firstly, it is obvious that you can’t have a consuming economy without people who can afford products – unless you want to enslave people to debt.
Secondly, you can’t just have people consuming just anything (burning planet etc.)
Thirdly, if you want democracy you can’t let individuals or groups buy politics or develop a kleptocracy.
I don’t know how many more we’d have to add to or change in the above. I do know that economics is not based on what we would reasonably decide the rules to be, what the facts on resources are and how much building and maintenance work we need to get done. Given we have not achieved a working programme to sort this out, whatever economics is has little to do with a modern, egalitarian, self-sustaining society without war and with benevolent rule of law.
The old sages might be of use to us in preventing the re-invention of square wheels, but we need modern theory informed by science and that does not pretend to be science. I’ve read and taught too much theory and feel it is time to call the Emperor naked. To those who think they have heard this story, let me say this in disabuse. The child was crucified. This is what leaders and their henchmen do.
To the libertarians we have to point out that Von Mises’ notion that great fortunes would fall under competition from the new is a disaster as dumb as any red spouting perpetual revolution. We need new views on leadership, the enemies of open society and freedom that can’t be bought or bombed out from beneath people. Economics should be what helps make this work.
This needs to be a long way from dreams that all truth lies in the main destruction (anarchism) or that men who keep women in black bags and other men in a homosocial trap under polygani can enforce their control fraud on others or we the control fraud of neo-liberalism on them – all without letting our brains fall out in laid back relativism that can excuse anything.
This and more involve tougher calls than teaching 101 for an establishment sinecure. We need to understand the argumentative machine (Dan Sperber is a start) and how politicians who paid more or less the same dues at school and university we did are not convinced by arguments we read and teach. They can win just by ignoring us. Frankly, the sort of President I’d want would tell me to bugger off if I phoned with an idea on full employment based on my extensive reading of the old sages of economics!
I continue to be confused by some of the comments today. Maybe I need more coffee. I’ll start with the tail of this comment — Dan Sperber ??? the cog sci guy – relevance theory — that Dan Sperber? What does he have to do with the minimum wage? For someone who dismisses theory as lacking clothes, Dan Sperber seems like an odd reference — if you do mean the cog sci guy.
I can understand getting tired of the constant quoting and introduction of lengthy passages of the writings from old sages but I would miss them if they disappeared from this blog. I’m not in academia and have no particular place in an academic zoo but I do enjoy hearing words from the source of an idea. In the case of Keynes, I like reading his quotes if for no other reason than that they are very well written and succinctly make a point. When I can I will gladly steal the better words of an old sage to make a point both to alude to that sage’s ideas, to place my argument in a context of sorts, and yes — to argue from a reputation that I lack. Many subject areas are so complex and technical that I find it difficult not to fall back on belief based on the writings or statements of sages who do seem to have a command of that knowledge. For example, I don’t think you can find much deeper insight into warfare than in the writings of Sun Tzu. In economics — I think it might be wise to review the writings of sages who were part of the analysis and response to a recent major economic crisis like the Great Depression. I’d rather learn from that earlier experience than repeat the crisis so I could learn first hand.
In another part of your comment you note that economics has nothing to say about making working programs to sort out how much building and maintenance to do or what resources are available for muster. Here I must plainly differ with you. As far as I know, economics definitely played a role in managing the planned economy of the United States during World War II and did reasonably well at handling the job. At the tail of that thought you tacked on the notion that economic theory had nothing relevant to say about creating an egalitarian, self-sustaining society. Until someone actually succeeds at building such a society I think we’re going to have to rely on theoretical writings and historical analysis of past attempts at creating Utopian societies.
You comment that you wouldn’t care to have a President who would listen to ideas for full employment based on the writings of the old sages. I suppose you must be pleased by the Presidents we’ve had in the last hundred years or more. What should the President trust to as a guide for achieving full employment, assuming that some president actually adopted that as a goal?
The three assertions of what seem obvious to you near the top of your comment are interesting. I can’t disagree with them. However, given that they are indeed obvious what inference might one draw from your first assertion — especially wrt. student debt?
I continue to be confused by some of the comments today As you should be. You are thinking too well to understand them. You’re right, the old sages are right, listening to the old sages is right. The New Deal was a great thing, and the JG will be one too. Economics is a science. The idea that human beings cannot have real knowledge in the social, human sciences, outside the natural sciences is nothing but an absurd modern prejudice that has only grown far worse since an old sage decried this idiocy centuries ago.
Just because a bunch of morons at Harvard, Chicago etc fake up idiotic ideas with mathematics they don’t understand and pretend that their astrology is science doesn’t mean that people have not thought and learnt and acquired a great deal of valuable, real knowledge in economics and other social sciences. Nor even that some real and valuable work has not been done, once in a blue moon, in the astrological framework.
The article linked to Wray’s piece in Mother Jones is a very good read on the JG. It shows why theoretically it’s quite attractive, but in practice, it just doesn’t hold up to scrutiny. We already have massive systems set up trying to get people employed (google WIB or WIA or workforce development, for example), and they are straining under the weight of an economy beset by inequality and assault on the Constitution. Our challenge is resource distribution, not lack of work.
The article has no details on the recruitment/hiring process or compensation (hourly rate, sick, vacation, holiday, bereavement, medical, dental, retirement, professional development, etc.). It assumes that state and nonprofit organizations will magically come up with local jobs for unemployed people without any plan for addressing the basic employability problems among many of our lower income citizens: criminal records, illiteracy, mental health issues, the digital divide, substance abuse, lack of transportation, etc. It’s not actually a guarantee, because a worker can be removed from a position, and with multiple removals, suffers consequences. And my personal favorite, it demonstrates that work gets in the way of raising kids.(!)
These are the kinds of details that in aggregate make a JG system unworkable in the actual economy. No employer is going to hire significant numbers of these workers into the private economy. And no state and nonprofit job site is going to give workers meaningful experience in the sense of employability. If anything, this will drive nonprofit compensation of direct service providers (case workers) down to the level of the JG while requiring additional administration in organizations large and small.
If the jobs don’t pay well, it’s just indentured servitude. And if the jobs do pay well, tens of millions of people are going to sign up. We’ve never tried employing 1/2 the workforce indefinitely. That’s a radically new public policy approach, beyond anything done with the New Deal and WWII mobilization and Vietnam and GWOT and so forth.
washunate, the problem with Wray and the MMT approach to a jobs guarantee is that it is a partial solution to a system that is broken and totally corrupted. It is a bandaid for a cancer.
What all of us need to do is go back to first principles. We need to ask ourselves what kind of a society we want for ourselves and each other. And then we need to marshall our resources both physical and human to build that society. A right to a meaningful job paying a living wage could well be a part of that effort. But a jobs guarantee as currently formulated would amount to nothing more than a futile attempt to prop up a failed and criminal system.
Ha! I’m reminded of conversations in other places and times when it has been said, on multiple occasions and from different people with varying ideological perspectives.
O’Bloody Hell… every time Capitalism runs in the ditch… its time to fetch Keynes… too pull it out of the ditch again!
Skippy… others include… why do the kids keep giving the geriatrics the key to the Ecnocar… when they can’t make it down the mile long straight drive… fetching the mail… without veering off the road… something about throttle modulation problems… idle or wide-open thingy.
That would be nice, Hugh, but there aren’t enough pets who care as long as their masters provide for them. Other pets are manipulated into believing that TINA or they are fearful that their masters will abandon them, so they tow the line. Then there are the pampered pets that will defend their masters and work to maintain the status quo. We (the “awakened” pets?) are still a small minority and in no way can match the masters and their army of pampered pets.
It’s hyper-domestication that is the problem, IMO. The pets cannot survive without their masters. After the collapse, the “feral” people will be the ones left to carry on, as it should be. The ones that can provide the basic needs of their families, communities and regions while regenerating their life-support system will survive and hopefully they won’t start the whole insanity of agriculture -> sky-gods -> over-population -> civilization -> war and more war -> hyper-domestication, over again. Ag peoples (the vast majority of extant humanity) are the bane of themselves and the planet. I don’t think we can put the “negatives” of civilization back in the box while keeping the “positives.” Civilization has to end of its own madness and it appears to me that it is well on its way.
For me, the value of MMT is that it lays bare the b.s. that is fed to us by the government and the media. For instance, when Obama says “we are out of money,” it confirms that he is either an idiot or he doesn’t think the pets should know the truth (I think it is the latter). I believe the descriptive side of MMT is right on. The prescriptive side is, like you said, a band-aid; although we might have different reasons for believing that. It seems to me that you believe it is the corruption of our civilization and its institutions that are the problem while I believe that it is civilization itself that is corrupt. If I misrepresent your view, please correct me.
One more thing, Wray has been around Hudson and Black long enough to know the score. He gets that the JG won’t cure anything by itself – see here. That linked piece, coming from an academic economist, is quite remarkable, IMO, and I suspect that you would agree with most of it, if not all of it.
Thanks for the responses. I wholeheartedly agree Hugh that we need a fundamental rethink of what kind of society we want to live in. (I also think that is already happening. Younger people look around with a mixture of horror and hilarity at the idiocy of our system – to the extent our ‘system’ even still exists.)
This is my favorite line from that link:
“While I was open to his argument back in 2006, I could never have conceived of the scope of Wall Street’s depravity. It is all about fraud.”
lol…whocoodanode there was massive fraud before 2006?! This is the fundamental problem I have with JG as an integral part of MMT. It is offered as a solution no matter what the problem is.
P.S., forgot to mention the 1% mentality Wray talks about at the bottom. To me, that shows a remarkable lack of understanding from a leftist economist of how much the ‘1%’ already own. Most young people have no financial net worth; the ‘feudal’ system already exists. Inequality has been the driving factor of our breakdown for many years now (far predating the GFC).
And most importantly, it’s not the 1% vs. the 99%. The ‘top’ is a much broader structure than that. It includes all the people in media and academia and healthcare and law and finance and so forth that protect the existing power structure, that serve as the buffer between the public and the elites. These Americans (the pampered pets as you put it) do not identify with ‘the rest of us’. Putting exact numbers to it is tricky, but it’s more like the 20% vs. the 80% than it is the 1% vs. the 99%.
Back when people had family farms, jobs were far less important. But the banks took them away. Leviticus 25 would give them back.
I am all for raising the minimum wage – IT WILL NOT HELP A THING – it will not help because, you are doing it in the neo-classical economic frame work.
It will only raise the cost of living!! Why, you may ask?? because the predatory class/ rentier class will always raise their extraction rates to the highest level possible. You raise the minimum wage and rental costs for housing will rise accordingly….you raise the cost of living and working and producing and, you lose your low cost advantage in the world – under the neoclassical economic theory.
Tax what is damaging to the economy and un-tax economically productive activity (wealth creation)
Until the distinction between land and capital is re-established in the classical economic sense, (as in three legs to production – land/labor/capital) we will be helpless to raise our standards of living and equity in this nation. All efforts will enure to those most draining of our resources and, most threatening to our democracy.