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Comic Book Hayek:The Planners Promise Utopia

In his neo-Confederate “Mein Kampf,” Whither Solid SouthCharles Wallace Collins quoted a full paragraph from Hayek’s The Road to Serfdom regarding the emptying out of the meaning of words.

My instinct would be not to condemn Hayek for the politics of those who quote him. Even the Devil quotes Shakespeare.

But after taking another look at the Look magazine comic book edition of Hayek’s tome, I realized that Collins’s depiction of full employment as a sinister Stalinist plot was, after all, remarkably faithful to the comic-book version of Hayek’s argument. With only a little digging, one can readily infer that what the comic book refers to as “The Plan” is a policy also known as full employment (or, if you want to get specific, William Beveridge’s Full Employment in a Free Society). “Planners” translates as cartoon Hayek’s alias for Keynesian economists and their political acolytes.


To be sure, Hayek’s sole reference to full employment in the book is unobjectionable — even estimable… almost:

That no single purpose must be allowed in peace to have absolute preference over all others applies even to the one aim which everybody now agrees comes in the front rank: the conquest of unemployment. There can be no doubt that this must be the goal of our greatest endeavour; even so, it does not mean that such an aim should be allowed to dominate us to the exclusion of everything else, that, as the glib phrase runs, it must be accomplished “at any price”. It is, in fact, in this field that the fascination of vague but popular phrases like “full employment” may well lead to extremely short-sighted measures, and where the categorical and irresponsible “it must be done at all cost” of the single-minded idealist is likely to do the greatest harm.

Yes, single-minded pursuit at all costs of any nebulous objective will no doubt be short-sighted and possibly harmful. But is that really what “the planners” were advocating?

Hayek elaborated his views on full employment policy in a 1945 review of Beveridge’s Full Employment in a Free Society, in which he glibly characterized Keynes’s theory of employment as “all that was needed to maintain employment permanently at a maximum was to secure an adequate volume of spending of some kind.”

Beveridge, Hayek confided, was “an out-and-out planner” who proposed to deal with the difficulty of fluctuating private investment “by abolishing private investment as we knew it.” You see, single-minded pursuit of any nebulous objective will likely be short-sighted and even harmful unless that objective is the preservation of the accustomed liberties of the owners of private property, in which case it must be done at all cost!


Further insight into Hayek’s objection to Keynesian full-employment policy can be found in The Constitution of Liberty. The problem with full employment is those damn unions. On this matter, he quoted Jacob Viner with approval:

The sixty-four dollar question with respect to the relations between unemployment and full employment policy is what to do if a policy to guarantee full employment leads to chronic upward pressure on money wages through the operation of collective bargaining.

and

…it is a matter of serious concern whether under modern conditions, even in a socialist country if it adheres to democratic political procedures, employment can always be maintained at a high level without recourse to inflation, overt or disguised, or if maintained whether it will not itself induce an inflationary wage spiral through the operation of collective bargaining

Sharing Viner’s anxiety about those damn unions inducing an inflationary wage spiral “through the operation of collective bargaining” was Professor W, H, Hutt, author of the Theory of Collective Bargaining, who “[s]hortly after the General Theory appeared… argued that it was a specific for inflation.”

Hutt, whose earlier book on collective bargaining “analysed [and heralded] the position of the Classical economists on the relation between unions and wage determination,” had his own plan for full employment. It appeared in The South African Journal of Economics in September, 1945 under the title “Full Employment and the Future of Industry.” I am posting a large excerpt from Hutt’s eccentric full employment “plan” here because it makes explicit principles that are tacit in the neo-liberal pursuit of “non-inflationary growth”:

Full employment and a prosperous industry might yet be achieved if what I propose to call the three “basic principles of employment” determine our planning.

The first basic principle is as follows. Productive resources of all kinds, including labour, can be fully employed when the prices of the services they render are sufficiently low to enable the people’s existing purchasing power to absorb the full flow of the product. 

To this must be added the second basic principle of employment. When the prices of productive service have been thus adjusted to permit full employment, the flow of purchasing power, in the form of wages and the return to property is maximised

continued…. 

The assertion that unemployment is “voluntary” and can be cured by reducing wages is the classical assumption that Keynes challenged in the theory of unemployment. Hutt’s second principle, that full employment, achieved by wage cuts, will maximize the total of wages, profit and rent thus would be not be likely to command “more or less universal assent,” as Hutt claimed. But even if it did, Hutt’s stress on maximizing a total, regardless of distribution of that total between wages and profits, is peculiar. Why would workers be eager to work more hours for less pay just to generate higher profits? Hutt’s principles could only gain “more or less universal assent” if they were sufficiently opaque that no one could figure out what he was getting at, which Hutt’s subsequent exposition makes highly unlikely.

Hutt’s proposed full employment plan consisted of extending the hours of work, postponing retirement and encouraging married women to stay in the work force. He advertised his idea as a reverse lump-of-labor strategy. Instead of insisting — as contemporary economists do — that immigrants (older workers, automation or imports) don’t take jobs, Hutt boasted they create jobs, specifically because they keep wages sufficiently low and thus maximize total returns to property and wages combined. He may have been wrong but he was consistent. Nor did he conceal his antagonism toward trade unions and collective bargaining behind hollow platitudes about inclusive growth.

The U.S. has been following Hutt-like policies for decades now and the results are in:

For the 117 million U.S. adults in the bottom half of the income distribution, growth has been non-existent for a generation while at the top of the ladder it has been extraordinarily strong.

Or perhaps Hutt was right and what has held back those at the bottom of the income distribution is that wages have not been sufficiently low to insure full employment and thus to maximize total returns to labor and capital. The incontestable thing about Hutt’s theory is that no matter how low wages go, it will always be possible to claim that they didn’t go sufficiently low enough to enable people’s purchasing power to absorb the full flow of their services.

 

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Just Rumor(s) Today in Detroit

- Chrysler Fiat sold the car division sans Jeep, MiniVan and Trucks to the Chinese. They also closed production on Chrysler 200 and Dodge Dart June of this year. It will be the first time Chrysler/Dodge have not had Cars if this is true. 200 (UF) and Dodge Dart (PF) never did met forecast so it closing down production for these two cars is not a surprise. Overall, cars were not a Chrysler strong suit. Trucks and Jeeps were followed up by MiniVans.

- Yazaki (Tier 1) in Canton Michigan supposedly laid off 150 at Corporate Headquarters which is about a 10% workforce reduction. Yazaki is about $20 billion in size and a Japanese company.

I heard it from pretty good sources; but, one never knows. We will have to see if it is real or not. I wonder if Trump/Congress will intercede for this one?

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“America Belongs to White Men”

A Leading Intellectual according to Trump’s Chief Strategist Steve Bannon and founder of the Alt-Right, Richard Spencer “We won . . . .” I am playing the entire newscast rather than just the abbreviated version of the speech which is popping up all over. Sorry about the commercial. This took place at Texas A&M at the same time the University was holding a Unity meeting

America

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From Full Employment To “Inclusive Growth”

This is the third of three posts on full employment. The unifying thread is that “full employment” has always been a political and not an economic problem. The first two posts were The Electoral College, White Supremacy and Full Employment as “Reign of Terror” and Full Employment and the Myth of the General Strike.

Employing Sorel’s distinction between myth and utopia, full employment has always been a utopia. But it is a utopia long abandoned by economists, who have substituted the totem of economic growth for the utopia of full employment.

The term “full employment” did not appear in the speech given yesterday (December 5) by Mark Carney, Governor of the Bank of England. Instead, he mentioned the term “inclusive growth” six times.

“The cry for more inclusive growth starts with a crisis of growth itself.”

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Tom Price for Healthcare and Human Services

For those of you who may have missed it, Rep. Tom Price (R-Georgia) is Pres. Trump’s pick to be the head of the Department of Health and Human Services. Price is an Orthopedic Surgeon (former?) and has been in the House for 12 years now and a member of the Congressional Healthcare Caucus. It appears he has all of the required qualifications to be the head of the Department of Health and Human Services. The minority representative American Medical Association for doctors has endorsed Tom Price as an excellent choice.

AMA “strongly supports the nomination of Dr. Tom Price to become the next secretary of Health and Human Services (HHS). His service as a physician, state legislator and member of the U.S. Congress provides a depth of experience to lead HHS. Dr. Price has been a leader in the development of health policies to advance patient choice and market-based solutions as well as reduce excessive regulatory burdens that diminish time devoted to patient care and increase costs,” said AMA Board of Trustees Chair Dr. Patrice A. Harris.”

The choice of Tom Price is a no brainer for Pres. Trump as he is also in line with Republicans wanting to repeal the PPACA and put in its place vouchers for healthcare, Medicare, and Medicaid. Paul Ryan and Mitch McConnell’s jobs suddenly became easier. Mr. Price’s 2009 bill “would allow refundable, age-adjusted tax credits with amounts tied to average insurance for people who buy insurance on the individual market and don’t have access to a government or employer plan.” One can see the widow-peaked Paul Ryan smiling all the way to the House floor.

The AMA in 2012 represented ~17% of all practicing doctors and students. Overall numbers have been in a downward slide over the years. Does the AMA represent the majority view of doctors and how they view the PPACA? “Only 26 percent of all primary care physicians viewed the law ‘very unfavorably’. So it might be said that just one out of four primary care physicians “hate” Obamacare.” Indeed, all the scare tactics of decreased care put forth by the opposition about the PPACA have failed to materialize (Kaiser). It does not matter to Republicans what the finding are and to some on our side of the table can only speak of “crapification” due to the PPACA as it is a bill signed by Pres. Obama

A growing number of doctors have come out in opposition to the AMA as led by Doctor Manik Chhabra, Navin Vij and Jane Zhu on their new blog Clinician Action. At the time (December 1, 2016) of Neil Versel’s article “Pushback begins against controversial HHS pick Tom Price”, 2500 doctors had signed their petition. As of December 4, 2016; >4600 doctors have signed the petition in opposition.

“We are practicing physicians who deliver healthcare in hospitals and clinics, in cities and rural towns; we are specialists and generalists, and we care for the poor and the rich, the young and the elderly. We see firsthand the difficulties that Americans face daily in accessing affordable, quality healthcare. We believe that in issuing this statement of support for Dr. Price, the AMA has reneged on a fundamental pledge that we as physicians have taken ?—? to protect and advance care for our patients.

We support patient choice. But Dr. Price’s proposed policies threaten to harm our most vulnerable patients and limit their access to healthcare. We cannot support the dismantling of Medicaid, which has helped 15 million Americans gain health coverage since 2014. We oppose Dr. Price’s proposals to reduce funding for the Children’s Health Insurance Program, a critical mechanism by which poor children access preventative care. We wish to protect essential health benefits like treatment for opioid use disorder, prenatal care, and access to contraception.”

The rest of their stetment can be found on their blog; Clinician Action.

Whether Tom Price carries some of his views beyond an agenda to reform healthcare and repeal the PPACA, we will not know until he is appointed and has spent some time in the position. It is worthwhile to point out;

“Tom Price is a member of the Association of American Physicians and Surgeons, a conservative group that publishes a journal that has promoted discredited views — including the supposed link between ‘vaccines and autism.’”

The Association of American Physicians and Surgeons also came out with a statement on Living Wills:

“Living wills are not needed to prevent overtreatment in days when hospital procedures have ‘produced the imperative to ‘move things along.’” Death is usually “orchestrated by professionals in hospitals, … a transition that has markedly shortened the ‘waiting time’ for dying.”

The “Tucson, Arizona-based AAPS is also listed on Quackwatch (“Your Guide to Quackery, Health Fraud and Intelligent Decisions”).”

There is more to be said here and I hope you take a moment to read Neil Versel’s article, some of the other references, and visit Clinician Action.

“Pushback begins against controversial HHS pick Tom Price” MedCity News, Neil Versel, December 1, 2016

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Crony Capitalism

Teabagger and maybe Trump nominee for something (hopefully other than the Sec. of the VA), Sarah Palin slams Trump and Pence in a Randian manner on bailing out Carrier and Carrier workers calling it as an intrusion on free enterprise. Afterwards she gushes; “I am ecstatic for Carrier employees! Their bosses just decided to keep shop onshore. What a relief for hundreds of workers. Merry Christmas Indiana!”

Foundational to our exceptional nation’s sacred private property rights, a business must have freedom to locate where it wishes. In a free market, if a business makes a mistake (including a marketing mistake that perhaps Carrier executives made), threatening to move elsewhere claiming efficiency’s sake, then the market’s invisible hand punishes. Thankfully, that same hand rewards, based on good business decisions.

But this time-tested truth assumes we’re operating on a level playing field.

When government steps in arbitrarily with individual subsidies, favoring one business over others, it sets inconsistent, unfair, illogical precedent. Meanwhile, the invisible hand that best orchestrates a free people’s free enterprise system gets amputated. Then, special interests creep in and manipulate markets. Republicans oppose this, remember? Instead, we support competition on a level playing field, remember? Because we know special interest crony capitalism is one big fail.

Sarah is correct, incentives to business interests to not leave the country and layoff Labor only leaves the country hostage to corporate interests in the future. Trump’s actions and promises leave the door open for other companies to come through asking for a similar deal to save Labor. If he does not keep the company in the US, Labor will also see his promises to change the country as political rhetoric (if they haven’t already) to get elected and not worth much in the end. It will be interesting to follow his actions.

Come to Michigan which has a tough time fixing roads and infrastructure and yet can spend $billions in subsidies to business. Indiana had RTW laws, had multiple subsidies to business including Carrier, and had tax abatement of which none of it stopped companies from leaving Indiana. Under Pence, Indiana gave $Millions to companies that offshored jobs Companies come and go to states or other countries for other reasons which states can not prevent. Poorly spent money bribing companies to stay can also be hard to get back from the companies who had a change of heart. Indiana has had difficulty in getting the incentives back when companies still leave and the incentives are so poorly written they also do little or nothing to stop the company from closing an unspecified nearby plant.

Sarah Palin: But… Wait… The Good Guys Won’t Win With More Crony Capitalism YC Young Conservatives, December 2, 2016

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Trump Warns That Companies Shipping Jobs Overseas Will Be Slapped With Enormous Bribes

Andy Borowitz, comedian and author of the “The Borowitz Report.”, reports the news with his own pov:

President-elect Donald J. Trump drew a line in the sand on Friday as he warned that U.S. companies planning to ship jobs overseas will be slapped with enormous bribes.

“If you think you’re going to get away with sending jobs out of the U.S., think again,” Trump said. “You are about to be bribed, big league.”

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