Yves here. This post gives a useful, high level view of how the basis for unemployment has changed over time, including under Covid.
By Lynn Parramore, Senior Research Analyst, Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking website
Canadian economist Mario Seccareccia, recipient of this year’s John Kenneth Galbraith Prize in Economics, says it’s time to reconsider the idea of full employment. He spoke to Lynn Parramore of the Institute for New Economic Thinking about why 2021 offers a rare opportunity to rebalance the economy in favor of Main Street.
Once upon a time – not so long ago, really – unemployment was not a thing.
In agricultural societies, even capitalistic ones, most people worked on the land. A smaller number worked in villages and towns – shoemakers and carpenters and so on. Some might go back and forth from the countryside to the town, depending on the availability of work. If your work in town building houses dried up, you might come back to the country for the harvest.
Economist Mario Seccareccia, who loves history, notes that before the Industrial Revolution, it was unthinkable that someone ready and able to work had no job to do.
Questions: If unemployment was once unknown, why do we accept it now?
Where did unemployment come from?
In those pre-Industrial Revolution times, there were paupers, mostly people who could not work for some reason such as a disability. These were deemed deserving of charity. A small number of paupers were considered deviants and treated harshly, perhaps made to labor in public work-houses under vile conditions.
Seccareccia notes that early classical economists like Adam Smith and David Ricardo recognized that able-bodied people could experience temporary joblessness, but not the long-term variety. The word “unemployment” only became widely used in the nineteenth century. As cities grew and manufacturing took off, people living in cities and towns grew apart. Movement between the two places grew less fluid. The agricultural sector of the economy was shrinking.
At first, if you lost your factory job, you could still probably pick up something in the countryside to tide you over. But if you had grown up in the city, as more and more people did, you might not know how to do rural work. By the late nineteenth century, most city dwellers could no longer count on falling back on agricultural work during hard times.
Karl Marx noted that England’s enclosure movement, which gained momentum as early as the seventeenth century, had made things hard for agricultural workers as wealthy landowners grabbed up the rights to common lands that workers had traditionally been allowed to use and were a vital part of their sustenance. Uprooting peasants from the land and traditional ways of life, Marx observed, created an “industrial reserve army” – basically a whole bunch of people wanting to work but unable to find a job during times when industrialists held back investment or when machines took over certain jobs.
Marx saw that this new kind of unemployment was a feature of capitalism, not a bug. Still, a lot of mainstream bourgeois economists thought that the market would somehow sort things out and eventually provide enough job openings to prevent mass unemployment.
It didn’t turn out that way. Exhibit A: The Great Depression.
Especially after World War I, many later economists, most notably John Maynard Keynes, warned that high rates of unemployment were getting to be the norm in the twentieth century. Keynes predicted that a lot of people would go on being jobless unless the government did something. This was very bad for society.
Keynes emphasized that full employment was never going to just happen on its own. Mainstream economists thought that if wages fell enough, full employment would eventually prevail. Keynes disputed that. As wages fell, demand contracted even further, leading to even less business investment and so forth in a never-ending cycle. No, capitalism, with its business cycles led to involuntary unemployment, according to Keynes.
Seccareccia observes that economist Michał Kalecki agreed that the government could make policies to help more people stay employed at a decent wage, but there was just one problem: wealthy capitalists weren’t going to have it. They would oppose state-supported systems to hold demand up so that fear of unemployment checked workers’ demands for better pay and improved work conditions.
For a while, after World War II, the capitalists were on the defense. The Great Depression and the Communist threat got western countries spooked enough to go along with Keynes’s argument that governments should try to encourage employment by doing things like creating big projects for people to work on. Safety nets were created to keep folks from falling into poverty. The goal of full employment gained popularity and many more workers joined unions.
Capitalists v. Full Employment
Economists have bandied about various definitions of what full employment ought to look like, explains Seccareccia: “A well-known definition came from William Beveridge, who said that what you wanted was as many jobs open as people looking for them – or even more jobs because every person can’t take every type of job.”
In the mid-twentieth century, with the economy doing well, neoclassical economists like Milton Friedman started to push back against the idea of full employment. He discouraged the use of fiscal and monetary policy to support employment, arguing that attempts to push down unemployment beyond what he insisted was its “natural” rate in the economy would simply lead to inflation.
In the 1960s, some of what Friedman warned about did actually happen. Employment was low and prices started to go up mildly, particularly during the Vietnam War era. However, the biggest boost to the credibility of Milton Friedman came with the OPEC cartel oil-price hikes of the 1970s that pushed the inflation rate to double-digit levels while simultaneously pushing up unemployment. So, in the ‘70s, western countries started backing off from encouraging full employment and maintaining strong safety nets. Proponents of the new neoliberal framework were in favor of cutting safety nets, shedding government jobs, and leaving it to the market to decide how much unemployment there would be. They said that it had to be this way to keep inflation from rising, even though the cause of that high inflation of the ‘70s had nothing to do with high public spending and excessive money creation that Friedman and his friends talked about.
Seccareccia points to proof that the neoclassical logic didn’t hold up. In the two decades before the Global Financial Crisis of 2007-8, the rate of unemployment went down, but inflation didn’t go up. That proved that the neoclassical economists were wrong. But unfortunately, policymakers didn’t really digest this before the Great Recession hit. So, they bungled the response badly by putting the brake on public spending too quickly because of fears of excessive budget deficits and potentially higher future inflation that never materialized. They kept insisting that the employment level would return to that “natural” state Friedman had talked about if they just left things to the market.
“But it didn’t work out that way,” says Seccareccia. “Unemployment skyrocketed and it took a decade to return to pre-crisis levels.
Which brings us to the COVID-19 crisis.
A Crisis Is a Terrible Thing to Waste
Seccareccia says that we have to understand the difference between the current situation and the Global Financial Crisis. This time, it really is different.
“The earlier crisis started in the financial sector and spread to the real economy,” he explains. “But in 2020, when the Coronavirus emerged, the financial and industrial sectors got hammered at the same time.” This meant that people in both sectors stopped spending. Households couldn’t spend even if they wanted to because traveling, dining out, and other activities were off-limits. Businesses cut investment as uncertainty loomed and exports declined due to restrictions at borders. Unless you were Home Depot or an e-commerce company, you couldn’t sell anything.
The COVID-19 crisis also saw workers pulled out of activities thought to be too high risk for spreading the virus. Across the country, non-essential workers were sent home and told to stay there. Most, especially in sectors like leisure and hospitality, can’t do their work from home. A lot of these people lost their wages, and because most of them were low-wage to begin with, they could least afford the hit. Many were only able to maintain their incomes through government unemployment insurance. Businesses, meanwhile, were kept afloat with subsidies.
Seccareccia notes that unemployment had an interesting twist in the pandemic because it was both the problem and the initial cure for the health crisis. Unemployment kept the virus from circulating. It saved lives.
Fast-forward to late spring, 2021. As America and other western countries seek to put the pandemic behind them, the economy is opening back up. Employers are wanting to hire, and they are even competing with each other for workers. But many job seekers are waiting to go back to work. There are a lot of reasons why: caregiving for kids is still a huge burden, and people are still worried about getting sick. Transit routes have been disrupted making it harder for people to get to work. It’s also possible that some workers may be resisting jobs on offer which come with low pay and inadequate benefits.
Employers have started complaining they can’t find workers and blame the social safety net as the problem. Some employers, like those in the hospitality industry, are offering higher pay to lure workers back.
Just as Kalecki predicted, the wealthy capitalists are getting uneasy. The Chamber of Commerce, for example, has pushed the U.S. to stop expanded unemployment insurance benefits so that people will be forced to return to low-wage jobs. Some Republican-dominated states have jumped on board with this idea. Economist Larry Summers, for his part, is warning about inflation and telling the Federal Reserve to raise interest rates so that wages don’t go up. He complains that when he walks outside, all he sees are people eager to fill job vacancies. It’s unclear where he was living when he said that, or which people he is talking about.
Others argue that expanded unemployment insurance isn’t the problem, but the crappy jobs on offer. Seccareccia believes that it’s a good thing if employers raise their wages, even if that means a little bit of inflation.
Rising inequality, he emphasizes, is unsustainable in a healthy society, and it’s about time ordinary people had a little power to improve their lot. “When employers are worried about people quitting,” he says, “that’s when you know you’re getting close to full employment. And in a capitalist society, it’s an extremely rare situation when the number of quits begins to exceed the number of new hires as an economy nears the peak of a business cycle.”
In Seccareccia’s view, “there’s a balancing act between workers ‘fearing the sack’ and employers ‘fearing the quit.’” He observes that capitalists are very good at making sure that the former situation is more common, and they’ve been spectacularly successful in the last 40 years. “This is why you have flat wages and runaway inequality,” says Seccareccia. “Productivity goes up but the workers don’t share in it.” Profits pile up at the top.
Right now, inflation has been creeping up in some areas. In a couple of sectors, like used cars, it’s rising a lot. The question is, beyond a couple of unique cases, what will happen to inflation overall? And will be temporary? A lot of economists think that inflation will be short-lived and will not get very high, so it’s nothing to get excited about. Some economists, like Antonella Palumbo, think the worry about inflation is overdone. She notes that with unemployment still high and vast numbers of people who formerly worked but are still out of the labor force, the ranks of the famous reserve army of unemployed are still huge. As the economy restarts, all kinds of short-run bottlenecks are cropping up, but that reserve army is not going anywhere fast and will continue to limit wage increases.
Seccareccia points out that wealthy capitalists trying to stop workers from getting paid better and conservatives complaining about laziness fail to mention that meanwhile, the stock market is soaring, making the rich richer. Plus, the housing market is booming because the more affluent people lucky enough to have kept their jobs over the pandemic now have extra money saved to spend on big-ticket items. “Is it really fair,” he asks, “to complain about a few hundred dollars a week received by those at the bottom of the economic ladder? Especially how much the economy is already titled in favor of the haves?”
So, what exactly should the government do about unemployment? Should it do anything at all? For Seccareccia’s part, he thinks this is a perfect time to reconsider the idea of full employment, which has been so long abandoned by policymakers in favor of some “natural” unemployment rate. “Policymakers need to understand why COVID may offer a chance not seen since the end of WWII,” he says. “We could actually make the economy fairer for ordinary people.”
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The 1943 Michal Kalecki piece can be found here:
https://mronline.org/2010/05/22/political-aspects-of-full-employment/
> So, what exactly should the government do about unemployment?
My favoured solution, and that of other readers of this blog, I suspect, is the Job Guarantee as promoted by MMT.
Because a well designed job guarantee would provide a floor on wages and benefits, the private sector would be forced to match it at the very least. But as has been pointed out on this blog many times before, Kalecki’s point that full employment would remove employers ability to effectively threaten workers with the sack, means that it will be very difficult politically to see it implemented.
Still building “houses” with floors only?
I think a definition of “enough” is needed.
Next week I start my 2nd year of pandemic triggered unemployment after I was terminated without cause. On June 26th my extended UI benefits will be halted by TX Governor Greg Abbot. Okay.
In a year of applying for new positions I have managed to get exactly 1 phone interview after a 40 year career in technology development, ending up with almost 24 years at IBM. In my last year with them I received both a performance bonus and a salary hike. But I’m now over 60 and have been unemployed longer than 3 months so… that’s probably fairly typical experience. Okay.
The path to full employment is probably going to require the creation of new opportunities in a still contracting economic system. It’s not impossible if you’re focused on the goal. Here’s my shortlist of policy initiatives that could dramatically and quickly grow the number of available jobs, particularly for the under employed younger people who are paying off student loans.
Dramatically increase social security and medicare eligibility/benefits to convince older workers to leave the workforce.
Expand paid family leave and vacation policies to align with other industrialized nations in order to require businesses to hire to cover needed absences.
Drop the number of hours that define full time work to allow more workers to get full benefits.
Yeah, I’d like to be considered for another good paying job in a still viable industry. I spent decades developing skills that are still relevant and valuable. But I’m old and I’m expensive because I have expectations based on my own employment history that 40 years of neoliberal policies have rendered obsolete. Okay.
I’m close enough to retirement and lucky enough in my ability to save and plan that this won’t wreck us. I try to imagine my pandemic inspired involuntary retirement as an opportunity to become a labor rights activist. It helps.
My situation is virtually the same, although in academia as research scientist at major US university, with last 6 years as invited scientist at German research institute. Returned to US to the nightmare of Trump at 63, but fully (and naively) intending to continue working. I’ve lost count of how many job applications I’ve tendered, with only one interview in two years, then COVID. Now resigned to the fact that work for me from here on out will be … different. I continue to write papers with colleagues at university to maintain a reputation in my field. Now recognize that people take one look at my CV, and think: “Old! Expensive!” — but the truth is I would be willing to work for little just to stay active in a field applying expertise I’ve spent decades acquiring. I’ve since met many, many seniors in the same boat: trained professionals with lots of experience who still want to work (and, in my case, need at least some income).
But at least I had a career. I can’t imagine the hopelessness of people 35-40 years my junior, with huge debt from college, grad school, and unable to find a decent job.
Something must change. The situation as it exists is unsustainable. One bright light seems to be increasing recognition of the way the economy actually functions, the role of public spending, and the real limits to growth, prosperity.
Appreciate your commiseration Rolf. I expect there is an army of people like us who are in this situation or about to be.
Fwiw (maybe not much), I’m actively trying to get hired full time at the food coop near my house. The workers there are represented by a union and get full insurance benefits including dental with a 40 hour work week. The Vt minimum wage of $11.75/hr doesn’t matter as much as those insurance benefits do; we’re still in that 5 year gap between age 60 and age 65 where you are on your own if you need healthcare.
And I’ve pretty much decided to laugh off Beaux Jivin’s campaign promise to drop the medicare eligibility age to 60 etc. It’s abandoned along with many other campaign promises. Okay.
Thanks, A/S, for your kind words. Yes, benefits are key. I really am increasingly worried that Biden, and the Democratic Party in general, don’t seem the grasp the fact that the GOP is absolutely committed to recovering control of Congress and the White House by *any* means necessary. Biden in particular seems to entertain the notion that he can bring the right wing to his way of thinking by conciliation, negotiation, compromise, and good performance. But the GOP is not interested in Dem’s performance or compromise — McConnell has made this quite clear. So Dems have an opportunity to make significant history, a true course correction, but only this once. To pursue “bipartisanship” with a party that has no interest in compromise is hugely naïve — I can’t imagine Biden is that foolish, except that he did begin his campaign with the promise that “nothing would fundamentally change”.
The food coop gig sounds like a good, sound shot — all the best to you.
Don’t expect anything from the Democrap party. They have repeatedly demonstrated their allegiance to the neoliberal agenda. Nothing Biden says has anything to do with policy, he and his party are gaslighting for votes, nothing more. I am sorry, but until people take to the streets in large numbers, “nothing fundamental will change.” That’s the only Biden quote you can take to the bank. Period ?
Fellow army member, age 61. Lucky to have health care via spouse but definitely not enough wealth to retire. Two interviews in last two years, both in retrospect clearly designed to fill out an interview field when preferred (much younger) hire had already been identified. The canard about atrophied skills might apply in the occasional instance but IMO is just more bullsh1t in defense of existing social order.
Dem obliviousness to the reality all around us is truly horrifying. I used to argue that the big sort would result in fenced “progressive” enclaves in which all parties – those inside and those outside – would be thrilled to not have to interact with each other. But it’s clear to me now that progressives don’t need physical separation to avoid seeing what they don’t want to; they are completely able to not see the world right in front of them.
I spent decades developing skills that are still relevant and valuable.
Well, you agree. And I agree with you, though I don’t know you.
But Obviously the ‘Market’ does not.
Whose right here, and why?? is the issue.
I guess I should include this post script regarding my IBM termination:
After I’d been unemployed for about 90 days I was contacted by a recruiter working on behalf of IBM and my former managers. They were looking for people with exactly my skills and experience to come back to work at IBM as temporary contractors. I agreed to a short phone interview to learn more about the opportunity.
Once the recruiter verified my experience and contacts at IBM, I managed to confirm that they expected to bring me back on at about 80% of my former salary. With no benefits and zero job security. I laughed out loud at this acknowledgment of their duplicity but agreed to let myself be considered and provided a resume. Never heard back which is probably okay.
Amateur Socialist, Rolf and Left in Wisconsin — I take my hat off to all of you. Work left both my partner and me a number of years ago, and we quickly learned that we had aged out of the market and were useless to society as we thought of it. Fortunately, we relatively quickly became eligible for Medicare, which even in its steadily diminishing state was (and is) a significant help.
Good luck to all of you, and A/S, please let us know the outcome of your pursuit of the job with benefits at your local Food Co-op.
That is illegal
I think your experience demonstrates the problem with defining full Employment as, “anyone who wants a job has one”. Using this definition, the simple way to get the economy to FE then is to just make all the jobs so terrible and low paying that no one wants them. You dont need a job, and you dont want just any old crappy job. You want one similiar to your old one, If that doesnt exist anymore, one would reasonably say you dont want a job, since what you want doesn’t exist, hence we’re at full employment
All of this is to say, we shouldnt necessarily just encourage the government to get us to FE. Capitalists by themselves are quite capable of getting us there, as I’d argue they did in the 19th century. Its government interventions like minimum wage and basic safety protocols that keep us from reaching FE since that’s what makes people actually want a job
Did you read any part of the article?
Interesting overview.
it was unthinkable that someone ready and able to work had no job to do.
I think there is a conflation of the language terms bandied about–work-v-jobs-v-employment are all couched in the concept of a Consumption Based Economy. I am tired of this.
weeding the garden is work–unless I’m paying you then it becomes a job. In both instances, however, you are employed in the endeavor. This is grooming behavior using language, imo, and needs to stop.
I think this muddle is a componant of the current ‘Jobs Discussion”.
Covid has rattled generations coming out of Displacements following the very unequal GFC, and an undefined(maybe) examination of Meaning and Place within the current state of the world and the Economy that has been chosen to fulfill the needs of that Economy (Societal and Personal). More Intuitive than cognitive to many.
Selling Plastic bric-a-brac for the Man, to make the rent in an endless cycle, may have lost its cache’ subconsciously, to the ‘common man’ in this time of apparent Climate Crises et al.
There is still plenty to do, and little time for Idleness( itself a “reward’ promoted as a ‘something’ by the Consumptive Economy).
There is still plenty to do, like this(and all it encompasses)
Hero rat that sniffed out over 70 landmines retires The Hill
The Job Guarantee does do the trick, but expanding public sector employment to get necessary non-profit high skill work done is more paramount. The JG + BIG (basic income, like existing social welfare, but increased pensions etc, up to a decent living wage) as envisaged by MMT is likely a very small pool of workers and a counter-cyclical automatic stabilizer, superior to uBi.
Bill Mitchell has addressed the Kaleckians.
What MMT has always been saying is that an employed buffer stock of workers is superior (in all terms, especially anti-inflationary) to an unemployed stock of workers — and we only have the two options. So the JG is a no-brainer. Hire them all in the public sector, or lower taxes until the unemployed go away, or don’t hire them but offer a JG. Don’t put people out of work just for the hell-of-it.
“Proponents of the new neoliberal framework were in favor of cutting safety nets, shedding government jobs, and leaving it to the market to decide how much unemployment there would be. They said that it had to be this way to keep inflation from rising,”
“The market” – that’s the first con people have to get over. There is.no “the market” like there it is something like nature.
It’s system of intentional, changeable human decisions backed by beliefs and emotions of all kinds now matter how many theories or quantifications occur. And a corporate beuracracy is still a beuracracy.
And actually this neoliberal thinking of letting some imaginary entity “the market” “decide” (we should be lughing at this silliness!) to keep people unemployed to avoid “inflation” only makes sense if it actually meant to signify “avoid inflation of the population.”
The modern police force is a consequence of idle and unemployed city dwellers. Idled workers don’t just sit down and die from malnutrition. Instead, they roam around looking for food, or opportunities that would lead to procuring food. Hungry, impoverished mobs are never a good idea: Ask Czar Nicholas, Kaiser Wilhelm, or the French aristocrats of the 1780’s (rather, interrogate their ghosts) how idle, hungry crowds furthered their reigns. For all that, look to the unrest of the 1930’s in the US.
Given this reality–that unemployed and starving people refuse to sit down and die peacefully–what will happen as automation starts to rob routine jobs? Already we are seeing robots prowling the Walmart aisles, driverless vehicles delivering pizzas, and self-checkout lines in big box stores. We who work are losing the war on unemployment, which leads to a question: Who is the winner?
Almost as an afterthought, one wonders how much in contributions to Social Security and Medicare have been lost because of automation. Robots don’t pay taxes.
Maybe Keynes had an idea what to do?
https://www.openculture.com/2020/06/when-john-maynard-keynes-predicted-a-15-hour-workweek-in-a-hundred-years-time-1930.html
The benefits of labour-saving technologies have mostly been taken as money instead of time and by doing so the capitalist class kept power thereby leading to them getting the lions-share of the benefits of the labour-saving techologies.
The political class could, and still can, side with people and decide that labour-saving technologies is to be taken out as reduced amount of hours spent working for someone else. As is the politcal class have bought the ‘lump of labour’-fallacy-fallcy hook, line and sinker so what we see is increased pension-age etc
“The political class could, and still can, side with people….”
O Jesper, you and I share the same dreams! It’s just such a damn shame that they’ll never come true.
I tried out retirement for a few months. I’m 62 and got SS and a very small pension. It’s not enough so I went back – temping. The jobs I can get as a paralegal/admin person don’t pay a lot but there seem to be quite a few of them based on companies that are merging or have merged and have a huge mess to clean up. So they hire you for a few months to slog through chaos and fix it. Then on to the next one. I’ll keep doing this until I can move to a cheaper part of the U.S. Remote helps in that if I don’t have a Zoom interview they can’t tell how old I am. I feel for everyone who can’t even get tedious work. If my SS was higher I would stop working. If my salary had matched that of the male co-workers that had the exact same job as me, my pension would be higher. Retiring in America for many people is part nomadic as you have to move out of your area to survive after you leave your regular job, or it gets rid of you and the other part is being extremely frugal. Woohoo what a life after over 40 years of helping companies make money.
If my SS was higher I would stop working
Is this a complete and true statement, or a shortcut to meaning something else?
No criticism, just looking for the clarity.
Yes a totally true statement. For it to be higher I would have had to wait until almost 67 to take it. It will go up a tad from my additional employment – maybe. Anyway it’s a mostly a set amount. I make as a temp in 2 weeks (take home) what I get in SS once per month. If I make over about $19k annually while taking the SS, the US gov will begin to reduce the SS payment.
@Victoria H
June 5, 2021 at 11:20 am
——-
Social Security takes the highest 40 quarters (10 years) of your earnings to calculate your benefit. If your current work results in higher numbers than are being used currently, the higher numbers will be used and your benefit will increase.
SS uses the highest 35 years.
I tried to reply to your question – yes it is a true statement. What I wrote additionally may have been moderated out for some reason so I won’t repeat it. It only mentioned dollar amounts and the US gov so maybe that was bad – not sure!
Victoria H
and I thank you for that.
But I think you, and I will ‘work’ until we die–
What does work mean?
noun. exertion or effort directed to produce or accomplish something; labor; toil. productive or operative activity. employment, as in some form of industry, especially as a means of earning one’s livelihood: to look for work. … the result of exertion, labor, or activity; a deed or performance.
Work | Definition of Work at Dictionary.comhttps://www.dictionary.com › browse › work
I am personally familiar with what you are going through and My wife is there right now.
I waited till full retirement at 66 to collect–not being able to leave 2k on the table(diff btwn 62 and 66 for me). I cannot describe the amount of effort and gyration I needed to extend to achieve that–which may explain why I am the only one in my ‘Friend Circle’ to actually accomplish it.
Trigger Warning
I thought the coup de grace was when I had to sign up for–and Pay For, with cash, Quarterly–Medicare without a SS check to have it automatically deducted from. Because of my birthday I needed to pony up about 5 months worth of premiums(but i had 3 months to save up for the next Q pymt). I doubt you’ve ever been curbed at the end of a physical altercation, but that is what it felt like to me. Best think about all that.
Good news–do your own taxes for your enlightenment and you will see that the SS Income Worksheet provides a path to structuring your Income to counter-balance additional Income.
Discalimer–I am in no way an Acc’tant or Tax Man or even giving Advice. I am a Carpenter–but Written Instructions are Written Instructions and Numbers are Numbers and I made a paid living following both–so it’s understandable enough to give you some options to ponder.
And to Rolf/AmSoc and all the others—IMNSHO(the first ever time I have used this phrase) the most dispiriting element about ‘Retirement’ in America is the Stranding of So Many Valuable Assets embodied in the Retired when the world desperatly needs “All Hands On Deck” to resist the Man Made Extinction looming.
These are true words, Rod. I think catastrophic changes (no hyperbole) lie ahead, for which there is little precedent. Many make absurdly blithe assumptions, thinking they won’t be affected, or that wealth will insulate them. This is arrogant folly, and we will need everyone to row in the same direction.
The man who owns the Heating and Air Conditioning company I have been using for the last decade lives in the neighborhood and is 88 years old. After his brother had health problems, and the young nephew he employed left for greener pastures,he now does pretty much all the work himself, and let me tell you, he knows his stuff. I know I should have a back-up in mind, just in case, but so far, haven’t found anyone else I can trust.
Well said. I took retirement at 62 for several reasons,number 1 being i didn’t believe it would be around long enough to pay me back.
“All hands on deck” is imo exactly what is needed,but the mostly planned divisiveness (fake right vs fake left aka RepubliCons vs Dumbocrats) will help ensure that never occurs,to someone’s benefit.
Just think how many people would quit working, or enter self-employment, if they weren’t dependent on employer providedmedical insurance. I don’t know the answer/estimate; it would have to be a large number, enough to significantly raise wages across the board.
Retiring in America for many people is part nomadic
This observation made me remember a critical scene from the excellent oscar winner last year, Nomadland. Frances McDormand’s character meets a friend who explains why she took to the road: “Five hundred forty dollars a month from Social Security. After working non stop for over 40 years. How am I supposed to live on that”.
I’m paraphrasing possibly badly from memory; it’s a very short scene that isn’t really pursued farther in the script. But I do remember thinking “Aha! This is the root cause of all this misery and despair…”
We moved to southern Vermont from Texas just prior to the pandemic believing we had relocated to a cheaper part of the US as you also mentioned. But Vermont’s strong public health track record during the pandemic has unleashed a huge real estate boom here so who knows… We may end up priced out of Vermont eventually too.
Real estate is still relatively cheap in Texas (at least around Houston), with the caveat that Republicans don’t always keep the power on or the water pressure up in the middle of winter.
Unfortunately our place was in the Austin exurb of Bastrop. Which is now part of the Austin insane real estate boom. And yes Houston can be cheap but only if you don’t mind living near a refinery. Or in the path of many future hurricanes. Hard pass.
I keep seeing references to “flat wages.” While it’s technically true, I suspect it’s enormously deceptive.
Yes, we have flat wages. But the cost of necessities that add little or no value to people’s lives but which they’re FORCED to pay for have shot up far, far beyond the pace of inflation. Think medical care, housing and education, to name just three, all of which are somehow ignored or slighted in official inflation stats.
Retiring in America for many people is part nomadic
This observation made me remember a critical scene from the excellent oscar winner last year, Nomadland. Frances McDormand’s character meets a friend who explains why she took to the road: “Five hundred forty dollars a month from Social Security. After working non stop for over 40 years. How am I supposed to live on that”.
I’m paraphrasing possibly badly from memory; it’s a very short scene that isn’t really pursued farther in the script. But I do remember thinking “Aha! This is the root cause of all this misery and despair…”
We moved to southern Vermont from Texas just prior to the pandemic believing we were moving to a cheaper part of the US as you also mentioned. But Vermont’s strong public health track record during the pandemic has unleashed a huge real estate boom so who knows… We may end up priced out of Vermont eventually too.
The book “Nomadland” by Jessica Bruder which was the original source
of the movie was quite a good read. I remember passing it around to my
friends, and all of thinking, “I wonder if this is a viable path forward?”
(The book is nonfiction)
Right now the best transition is for the government to regulate capitalism in the direction the future (sustainability) dictates. The problem with regulating capitalism is that most capitalists think it is already too regulated; taxes are too high, etc. They are on the edge of revolution themselves. And regulated capitalism is almost an oxymoron to most Americans. It’s just business as usual to a European because they have better social spending and blablablah. The statistic I remember is that the EU spends about 45% of its revenue on social stuff; the US spends a little less than 35%. The problem, as I see it, is this: If we in the US do not achieve adequate social spending we create the perfect breeding ground for exploitation of the environment. People will be desperate for a job – any job. Which will not only cause worse CO2 problems, it will poison off, or starve off, many many species now living on the edge. We will further pollute the oceans and waterways. And we will not only stick with our sick and poisonous agricultural practices, we will exponentiate them – precluding all efforts to fix these unsustainable things. Capitalism as we have known it must change. So, even the great idea of capitalism must adapt to reality. Somebody please tell Larry. At this point “inflation” is an absolutely meaningless word. It would be a very good thing if we followed Eisenhower’s advice to LBJ and began to create social structures that are fair to all of society – to the capitalists whose current mandate of voracious profiteering is clearly unsustainable, as well as to “labor” – as we see it evolving – and now, most importantly, we must include the rights of the planet itself and all of our fellow travelers. We won’t last very long if we kill them all off and trash the Earth. The race to the bottom that all privateering capitalism eventually creates is the most absurd thing in the history of civilization.
Always with the Big Picture and the Clear Eyes.
Thanks
Indeed.
A good start would be breaking up all of the ubiquitous monopolies/monopsonies/cartels, that have taken over every sector of the economy, from food processing to entertainment to banking to manufacturing to politics to … (ad infinitum/nauseum).
I went to Firehouse Subs yesterday there was a whiteboard inside on a table, facing into the restaurant, that said they were hiring and offered starting pay of $9.00 for crew members and $12.00 for shift managers.
Just inside the door, facing out, was a whiteboard offering starting pay of $11.00 for crew members and $14.00 for shift managers. Seems like they’re getting the message.
As an aside, I’d like to give props to Firehouse Subs for using pressed paper clam boxes and paper bags.
The average mortgage payment in USA is $1158mo.
Using the 28/36 rule, how much should employers be paying hourly if their employees are valued enough to be able to afford a home?
I would be interested in some data on the alternative to unemployment:
theft. It is hard to judge people too harshly for stealing food and other
necessities. Or it should be hard. But it seems that the ‘ruling’ class has
two remedies for ‘shrinkage’- kill them or send them to prison.
And once you’ve got them in prison, they’re slave labor, fed, clothed and guarded at the expense of the public. Pretty neat!
Nostalgia for the Post-War Keynesian system of full employment is fine, but people forget that you had essentially national economies and national banking systems at the same time. Now you have monster banks and its very easy for capital to cross borders. If you look at 2019-2020 before COVID hit, you had extremely low unemployment rates, many economists were saying we were in full employment, but you had little in the way of upward wage pressure. If you have tight labor markets in one region, it is very easy to go somewhere else, and its not very hard to lobby for more H-1B’s or find undocumented workers to create the slack, not to mention the disappearance of unions outside of public employment.
It will take more than loose credit from the Fed to shift the wage structure upwards. It appears we are seeing some supply shock inflation as a result of rapid demand increase as a resulting of economic re-openings, and the way oil prices are headed, that will continue as petroleum prices get passed on to consumers. There may be some temporary wage increases to entice people to come out, but long-term its likely deflation and government deficit spending to prop up asset bubbles based on excessive private leverage, until the bottom falls out.
The Post-War system was based on national borders creating barriers to the flow of capital and labor, and the monetary policies only worked the way they did because of that feature.
Phase Two of Neoliberalism really began with Obama and Biden, and can be described as MMT for the wealthy and powerful, with a couple of underwhelming “stimulus” payments to keep the proles placid.
One could argue that the Fed under Greenspan was the start of MMT for the wealthy and powerful, but his economic polices also seemed to be linked to who was in power. Under Bush, he dropped the Fed interest rate below 2% and held it there until 2004.