Discussion for article #223405
This is an excellent framing of the problem. Of course tax policy is part of the answer, but income growth and the re-emergence of labor (that would be you and me) as a political force should be the number one priority of a Democratic party.
I was discussing the minimum wage with an MBA student. He provided the usual response that a higher wage will mean more unemployed. That may be true, but is irrelevant. It is one of the negatives mentioned in the article.
The response is: Then we will solve that problem on its own. We clearly have a problem with minimum wage earners receiving benefits t supplement their incomes. The other problem is the companies are making profits because they are not paying a living wage.
The net effect may only be that the company makes less and those newly unemployed receive benefits from the government that may not be any more costly than under the low minimum wage situation.
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Eventually, a correction will come…and lately, it’s looking more and more like it will end with guillotines.
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Yet the bar to win the anti-interventionist argument is set remarkably low. You don’t need evidence; you can just cite “basic economics.”
Absolutely. I’ve seen that kind of response from the right on just about every forum I’ve ever been on.
It is such a mindless application of such a crude version of “basic economics” that, if it were applied to the estate tax, it would require you to argue that eliminating the estate tax would encourage people to die.
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My 2 cents…
From my point of view there are other variables that helped get us where we are…
- Labor damaged its own cause back in the 70s & 80s with a bunch of strikes over less than noble issues.
and
- Since the 80s capital has quite frankly been a better negotiator. I think that part of the reasoning for this is mechanical. The “what if” tools that capital has had at it’s disposal since the invention of the spreadsheet has made it possible for capital to project its business model into the negotiations much more powerfully with the outcome being that they can more accurately see the projected bottom line under various scenarios. Labor has not found a effective way to counter this.
We don’t need that much of a new economics – Amartya Sen and Nordhaus and bunches of others go back 30 or 40 years with measures that aren’t pure money-based GDP. We need more support for the sane economics that already exists. And maybe a better word that “externality” – because people just seem to shrug off the billions of dollars a year in taxes that low wages cost them, or the tens of billions in healthcare costs from polluting fuels, or the hundreds of billions in losses from climate change. If we could have a public version of economics that doesn’t shove all the interesting stuff off the balance sheet, that would be a start.
Please, TPM, publish a lot more articles like this. These are the biggest problems to be solved, and the window is closing.
I’d add that “free trade” is destroying our economy, and as long as employers can pay foreign workers less than what it costs an American worker to buy breakfast, let those workers pay in blood for money saved on worker safety, and pollute as much as they care to without consequence, any attempt to make working in America better will just drive more jobs overseas.
In 1840 when Karl Marx wrote “Das Kapital” he presciently predicted that in a Capitalist Democracy the “capital” would inevitably overwhelm the “democracy”. We are living that right now as a rising Plutocracy takes over more and more of our education, politics, legal system and media. And of course their aim is to rule rather than govern.
That a higher minimum wage will mean more unemployment is an assumption that isn’t backed up by much empirical data. In fact,most of the data tends to indicate the exact opposite happens, at least with marginal increases in the minimum wage.
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Many texts have echoed German Sociologist Ralf Dahrendorf’s assertion that the reasons that Marxism did not succeed in Western Europe and the United States, during the late 1800-early 1900s (after all, Marx lived in Britain), were these:
(a) Rising productivity and innovation were able to lift up a greater percentage of people out of abject poverty, in general.
(b) The Capitalist class became more fragmented, inhibiting some of its power over workers.
© Governments were able to initiate measures which were able to help workers (standardizing hours per week, per day; wage standards, safety standards, etc.).
(d) Labor Unions.
Fast-forward to the the present. Because so many people in the United States seem to be more in love with the racialized Confederacy (Ante Bellum and Jim Crow) than recent U.S. history (1930s-1970s), they now seem prepared to surrender nearly all of the gains achieved in the 20th Century.
All in the name of Talk Radio, FOX “news” and a compliant, pro-business Main Stream Media.
(1) They are prepared to tolerate more inequality, in the name of dwelling on wedge issues [see (a) above]
(2) They are prepared to tolerate more consolidations and mergers of corporations and banks [see (b) above]
(3) They are prepared to deliver the U.S. Government to the Republican Party in 2014, guaranteeing little or no active government [see © above]
(4) Too many people have too little understanding of why unions were useful, over 100 years ago and how they contributed to the rise of the U.S. middle class [see (d) above]
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I think your 1) has a lot more to do with 2) than the development of the spreadsheet. Unions can and do use spreadsheets, too. It’s foolish to think either side has any sort of tactical advantage that would be unbalancing for decades.
As union membership has drop over the decades, however, corporate influence over wages has increased significantly. Not only for union jobs, but probably more importantly, for non union jobs. All the while demanding higher levels of productivity.
You don’t need evidence; you can just cite “basic economics.”
If you point out to people who use this argument that the same “basic economics” says that a given business should be barely profitable, for one which generates profits will induce someone to enter the market and undercut them and collect smaller, though still positive, profits, and so on until it is just barely worth anyone’s time doing it.
The fact that we have markets (say banking) with many players yet each is hugely profitable indicates that “basic economics” doesn’t apply. The real world is a lot more complicated; the structural problems with markets which are rigged (eg, again, banking being overseen by bankers) leads to far worse inefficiencies than what organized labor might incur.
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One potential answer to “why is capital so powerful?” can be found in the worthwhile but INCREDIBLY flawed book by Jonathan Nitzan and Shimshon Bichler – Capital as Power. The answer (as you might realize from the title) is not that capital is powerful, but that capital itself IS power.
Nitzan and Bichler are breaking very good theoretical ground here, but it needs a lot more tilling to be mature. However, it gets directly at the issue here – how do you use some form of power to restrict capital when that capital itself is power and can overcome it?
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Please enlighten us . . .
Which of the following strikes was “over less than noble issues”?
1970s
National Student Campus Strike
Salad Bowl strike
U.S. Postal Service strike of 1970
General Motors Strike
New York City Police Strike
Longshore Strike
Farrah Clothing Workers’ Strike and Boycott
Lordstown Ohio, Auto Workers’ Strike
Philadelphia Teachers’ Strike
1974 Washington Bus Strike
1974 Baltimore teacher’s, municipal workers’ strike, and police strike
Bituminous Coal Strike of 1974
Washington Post Pressmen’s Strike
Musician’s Union Strike
Atlanta Sanitation Workers’ Strike
Coors Beer Strike and Boycott
J.P. Stevens Boycott
Willmar Minnesota, Bank Workers’ Strike
Bituminous Coal Strike of 1977–1978
Wilkes-Barre Pennsylvania, Newspaper Strike
1978 New York City newspaper strike
Independent Truckers’ Strike
1980s
1980 New York City transit strike
1980 AFTRA/Screen Actors Guild strike
PATCO/Air traffic controllers’ strike
1981 Writers Guild of America strike
Arizona Copper Mine Strike of 1983
Yale University Clerical Workers’ Strike
Hormel Meatpackers’ Strike
Los Angeles County Sanitary Workers’ Strike
Yale University Clerical Workers’ Strike
Chicago Tribune Strike
Dollar Sweets dispute
Guilford Transportation Industries railroad workers’ strike
Trans World Airlines Flight Attendants’ Strike
United States Steel Lockout
Philadelphia Sanitary Workers’ Strike
International Paper strike
1988 Writers Guild of America strike
Eastern Airline Workers’ Strike
Bell Atlantic Strike
Nynex Strike
Pittston Coal strike
~OGD~
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Marx’ problem was that he was writing too soon, too early in the development of capitalism to appreciate how it could grow its mechanisms of control not only into the state, but into the ideo-sphere, into the eco-system, into language, and into human hearts. Labor, he wanted to believe, constituted a kind of equal and opposite force of history, but the opportunity to gather more data over the 20th century and early 21st century suggests that the 18th and 19th centuries were just practice runs. Now the game is really on, and the resistance power of labor is revealed to be weak, disrupted, and etherial. Capital keeps getting better, improving its technologies and methods, improving its capacity to recruit just those people it needs for power and no more, and, as Picketty describes there are no barriers to stop it.
Somewhere out there in the next hundreds of years, the carbon sink will be exhausted, the ecological conditions for life on earth will shift, the “surplus labor” (aka the people of this planet in their billions) will begin to die off, but a core of the capitalist class will continue to run the capitalist machine in their bubble cities, or in whatever form is required to enable its survival on the planet. Capital will win, because capital had adaptive and innovative capacities. There is no countervailing force.
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Capital went global with incentives like tax-free if they create jobs overseas and leave their money off-shore. They gamed the system by cheating meaning no concern for those they damage. US labor is not global. They have no presence in the US including any branch of government due to corruption. Importing goods will become expensive. Finding unpolluted land for food will be difficult. Hiring locals will become normal. Then labor will have some power, but not until then. It may not be long.
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Capital/corporatists are stronger because (1) they have more money; (2) labor has consistently decided to vote against its economic interests because of Jesus, guns, family values, abortion and other ancillary issues, thus giving the corporatists/right wing political power to pick their pocket over and over; and (3) too many Democrats moved center-right and sold out their traditional principles for mere mammon as the GOP has shifted further rightwing batsh*t crazy.
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Because Capital can afford to wait. As long as it takes. Labor has to work or they don’t eat.
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I’ve been arguing against these positions for decades, backed by considerable empirical evidence showing that moderate changes to tax rates, minimum wages, union density, the safety net, regulatory oversight and so on trigger nothing like the disasters their opponents claim and can yield important benefits…
Empirical evidence has shown that these socialist policies, with taxes and unions as main culprits, have driven entire Countries to the ground. We could start looking at Russia at the end of the cold war or most recently Greece with many other Countries in between.
“Income inequality” is just a socialist hoax, the rich are becoming richer because business from local has become first national and then global. There is only so much that a single person can produce in one day, thus limiting income. However there are literally no limits, but those dictated by the markets, for one person who sells a product globally. Jared Bernstein, yours is socialist rhetoric at it’s best.