Relevant and even prescient commentary on news, politics and the economy.

War is Peace, Freedom is Slavery, Ignorance is Strength

A piece of work is Professor Walter E. Williams of George Mason University. Back in February, I flagged a column by Williams in which the nimble prof performed the lump-of-labor fallacy shuck and jive. One of the venues for that rendition of Will Automation Kill Our Jobs was David (“Trump is 100% right”) Horowitz’s FrontPage Mag.

Little did I know at the time that just three weeks earlier, Williams had penned a defense of Trump’s (Sessions’s, Miller’s) immigration policy, Immigration Lies and Hypocrisy also published at FrontPage Mag. One may admire the accuracy of article’s heading as a label of its contents until one realizes it is not actually intended as a confession.

I wrote to Professor Williams about the bizarre discrepancy between his January 30th column and his February 20th claims. I don’t really expect to hear back.

Dear Professor Williams,

I appreciate that you “can’t respond to every query” but my question raises urgent questions of morality and intellectual integrity. In February of this year, you wrote an opinion piece decrying the so-called “lump-of-labor fallacy” that you claim lurks behind concerns that automation will “kill jobs.” I noticed that one outlet that carried your syndicated column was David Horowitz’s “FrontPage Mag.”

Today, the Guardian featured an interview with Mr. Horowitz in which he asserted that Donald Trump’s immigration policy is “100% right.” Horowitz, the article notes, was a mentor to Stephen Miller, the Trump advisor who in 2015 authored Senator Sessions’s “Immigration Handbook for the New Republican Majority.” Here are a few excerpts from that document:

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The Lump That Begot Trump

I don’t want to pretend that this explains everything. But it is “another brick in the wall,” so to speak, if not the keystone. In January 2015, Senator Jeff Sessions produced an Immigration Handbook for the New Republican Majority,” written by his communications director, Stephen Miller.

Miller’s analysis in the handbook is just the sort of thing that economists would denounce as a “lump-of-labor fallacy.” Curiously enough, few did. They were much too busy snatching pensions from future old folks on the pretext that older people working longer wouldn’t “steal jobs” from youth.

Here are a few representative arguments from the handbook:

The last four decades have witnessed the following: a period of record, uncontrolled immigration to the United States; a dramatic rise in the number of persons receiving welfare; and a steep erosion in middle class wages. But the only “immigration reforms” discussed in Washington are those pushed by interest groups who want to remove what few immigration controls are left in order to expand the record labor supply even further.

 ———————

No issue more exposes the Democrats’ colossal hypocrisy than their support for an immigration agenda pushed by the world’s most powerful interest groups and businesses that clearly results in fewer jobs and lower wages for Americans.

Here are the findings from a poll of likely U.S. voters commissioned by GOP pollster Kellyanne Conway:

  • 77% of respondents said jobs should go to current U.S.-born workers or legal immigrants already in the country—instead of bringing in new workers to fill those jobs
  • 88% of conservatives, 78% of moderates, 78% of independents, 71% of Democrats and 62% of liberals says current U.S. workers should get jobs preference
  • 80% of respondents said businesses should recruit the currently unemployed instead of expanding the labor supply with new workers from other countries

  ———————

How are any members of the Democrat caucus going to explain why they are determined to provide instant work permits to every illegal immigrant and visa overstay in the country? How are they going to explain why they want to double the number of guest workers when we don’t have enough jobs for the workers here right now? How are they going to explain why they voted for legislation that will surge the labor supply at a time when wages are down and a record number of Americans can’t find work?

As I mentioned above, these are precisely the kinds of arguments that economists routinely denounce as being based on a lump-of-labor fallacy. In fact, although he didn’t use that phrase, Walter Ewing of the American Immigration Council countered the handbook’s claims with one of the fallacy claim’s stock surrogates — the “not a zero sum game” rebuttal:

Employment is not a “zero sum” game in which workers compete for some fixed number of jobs. Immigrant workers spend their wages in U.S. businesses—buying food, clothes, appliances, cars, etc. Businesses respond to the presence of these new workers and consumers by investing in new restaurants, stores, and production facilities. And immigrants themselves are 30 percent more likely than the native-born to start their own business. The end result is more jobs for more workers. The economic contributions of unauthorized immigrants in particular would be amplified were they given a way to earn legal status.

This is all very well and good… except for one problem: Miller’s and Sessions’s handbook cited an actual “zero sum” of net employment growth for U.S.-born workers:

…according to the BLS, all net employment gains since the recession have gone to foreign workers while 1.5 million fewer U.S.-born Americans hold jobs today than did then—despite the total population of U.S.-born adults increasing by 11 million over that same time.

Well, as the economist says, that may be true in practice but is it true in theory?  There is indeed a gap between what the evidence shows and what it proves. There is no guarantee that if “foreign” workers didn’t take those jobs, they would still be there for U.S.-born workers. Miller and Sessions fill that in with pure supposition. However…

However, in a contest between suppositions based on peoples’ perceptions and suppositions contrary to those perceptions, who do you suppose wins? As I have pointed out repeatedly, the “no zero-sum game” rebuttal, the lump-of-labor fallacy is a red herring. Sometimes there are empirically zero sums and there doesn’t have to be a “fixed amount of work” for the actual amount of work to be deficient. As tendentious as Miller’s and Sessions’s argument may be, Walter Ewing’s rejoinder is no less tendentious — and loaded down with hollow promises and empty platitudes to boot.

See also Sessions, Krugman, DACA and the Lump-of-Labor Fallacy

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The Wage[s]-Lump Doctrine — still dogma after all these years

The Wage[s]-Lump Doctrine — still dogma after all these years

“The wage-fund doctrine was the quintessential product of what Marx termed vulgar political economy; a dogma concealing real economic relations, on the one hand, and justifying them, on the other. It was a transparent effort to disarm the working-class movement, and an attempt (largely successful) to rally public opinion behind bourgeois resistance to the demands of working people for a better life. It was the principal ideological weapon in the arsenal of capital in its disputes with labor over the level of wages.” — Kenneth Lapides, Marx’s Wage Theory in Historical Perspective

The lump-of-labor fallacy CLAIM is the wage-fund doctrine in disguise. The fallacy claim’s conclusions about the ultimate futility of workers’ demands are indistinguishable from the doctrine’s conclusions.. Only the premise from which those conclusions are deduced has been altered. Instead of asserting a certain quantity of work to be done, the fallacy claim attributes that fixed assumption to a designated scapegoat: workers, unions, populists. The claimants’ own assumptions are left undefined, as an amorphous “in reality.”

That undefined “reality” is a given amount of capital for employing workers that can only be increased or decreased as a result, respectively, of a decrease or increase in the cost of labor. That is to say, a wage-fund lump!

The wage-fund doctrine was debunked in 1826 by Sir Edward West. It was “recanted” in 1869 by John Stuart Mill. The lump-of-labor fallacy CLAIM was shown to rely on the discredited fixed wage-fund assumption by Charles Beardsley in 1893. So why do economists (& CEOs) still cling to this dogma?

Because it conceals real economic relations, on the one hand, and justifies them, on the other.

Because it disarms working-class movements and rallies public opinion behind bourgeois resistance to the demands of working people for a better life.

Because it is the principal ideological weapon in the arsenal of capital in its disputes with labor over the the hours of work.

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Projection and Disavowal

I don’t believe in intellectual property… I don’t believe in compound interest…

Nobody believes in the lump-of-labor fallacy. Mr. Nadella is engaging in a game of projection and disavowal that is as old as capitalism. He is affirming the reality of an event that only happens in the imagination — the production of something out of nothing. To perform this usurious hat trick, one must assume something one knows is not true — that money is fertile. The attribution of a bogus “fallacy” to others is a device for distracting attention from the deception involved in simultaneously fetishizing and disavowing the “productivity” of a mere formal claim to entitlement.

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Gorz: “The Right to an Income and the Right to Work,” part one

Gorz: “The Right to an Income and the Right to Work,” part one

From “Orientations and Proposals — The Reduction of Working Time: Issues and Policies” of Andre Gorz’s Critique of Economic Reason (1989) translated by Gillian Handyside and Chris Turner. I am posting the section on “The Right to an Income and the Right to Work” in two parts. This is part one:

The Right to an Income and The Right to Work 

When the production process demands less work and distributes less and less wages, it gradually becomes obvious that the right to an income can no longer be reserved for those who have a job; nor, most importantly, can the level of incomes be made to depend on the quantity of work furnished by each person. Hence the idea of guaranteeing an income to every citizen which is not linked to work, or the quantity of work done.

This idea haunts all the industrialized capitalist world of today. It has as many supporters on the Right as on the Left. To look only at recent history, it was (re)launched in the USA at the end of the 1950s by left Democrats and libertarians on the one hand and by neo-liberals (principally Milton Friedman) on the other. Since the end of the 1960s, several local experiments with a local basic income guarantee have been conducted in the USA. Richard Nixon tabled a bill to introduce a measure of this kind in 1972 and it was narrowly defeated. In the same year, George McGovern, the Democratic presidential candidate, included the guaranteed income in his programme. The object was to find a cure for poverty, which showed up more in the USA than elsewhere on account of the absence of a nationwide statutory social insurance system. The guaranteed income was meant as a substitute for such a scheme. European neo-liberals now dream of substituting such a basic income guarantee for the existing welfare-state institutions.

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Is the Job Guarantee a Ponzi Scheme?

“The basic idea is that the government can’t run out of money. It creates money just by spending.” — Stephanie Kelton

This is true. Government cannot run out of its own money. But what is money? It is a token or pledge that can be redeemed for something of value. If government creates much more money than there are things of value to redeem it for the prices of those things go up. Not to worry, Zach Carter assures us:

But even inflation doesn’t impose a hard limit on policy options. The Federal Reserve can raise interest rates to deal with it, Congress can raise taxes to pull money out of circulation or even impose price controls.

Hyman Minsky expanded on this explanation in his financial instability hypothesis:

The first theorem of the financial instability hypothesis is that the economy has financing regimes under which it is stable, and financing regimes in which it is unstable. The second theorem of the financial instability hypothesis is that over periods of prolonged prosperity, the economy transits from financial relations that make for a stable system to financial relations that make for an unstable system.

In particular, over a protracted period of good times, capitalist economies tend to move from a financial structure dominated by hedge finance units to a structure in which there is large weight to units engaged in speculative and Ponzi finance. Furthermore, if an economy with a sizable body of speculative financial units is in an inflationary state, and the authorities attempt to exorcise inflation by monetary constraint, then speculative units will become Ponzi units and the net worth of previously Ponzi units will quickly evaporate. Consequently, units with cash flow shortfalls will be forced to try to make position by selling out position. This is likely to lead to a collapse of asset values.

The financial instability hypothesis is a model of a capitalist economy which does not rely upon exogenous shocks to generate business cycles of varying severity. The hypothesis holds that business cycles of history are compounded out of (i) the internal dynamics of capitalist economies, and (ii) the system of interventions and regulations that are designed to keep the economy operating within reasonable bounds.

See? If “the authorities” decide to “exorcise [the demon of] inflation” through taxation or higher interest rates, it won’t be the government that goes belly up. It can’t run out of money. It will just be those speculative and Ponzi units whose net worth will evaporate. No problem!
It remains a mystery to me why job guarantee proponents point to Minsky as the patron saint of the job guarantee idea. It was, after all, Leon Keyserling who drafted the Full Employment Act of 1946, The Freedom Budget (1966) and job guarantee provisions of Humphrey-Hawkins (1976). Good old “siphoning off the increment to pay for the excrement” NSC-68 Leon.
Mr. Keyserling was a big fan of spending that “paid for itself” by augmenting growth in the gross national product. His 1966 Freedom Budget was also touted as being financed through an “economic growth dividend.” The idea was that economic growth of five percent over a ten year period would generate the revenue to pay for the program.
If it wasn’t the government doing it, the method of financing that Keyserling advocated would be a Ponzi scheme because it relied on revenues that would presumably arise solely from disbursements and not from the sales of value-added goods or services. Fortunately, a government cannot operate a Ponzi scheme because “it creates money just by spending.”
So, technically speaking, a job guarantee is not a Ponzi scheme. It’s only a wee bit Ponzyish.

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Jobs, Jobs, Jobs: GUARANTEED! — May 20 update

Class war? What class war?

Stephanie Kelton Has The Biggest Idea In Washington 

“Everybody wants a piece of Kelton these days because a simple, radical idea she has been workshopping her entire career is the next big thing in Democratic Party politics. She calls it the job guarantee… “

  • “Once an outsider, her radical economic thinking won over Wall Street. Now she’s changing the Democratic Party.”
  • “A onetime college dropout at California State University in Sacramento, Kelton has managed to earn the esteem of both Sanders and an oddball clique of multimillionaire Wall Street traders.”
  • “If you listen to Kelton long enough, you notice that she never refers to “bankers” or “Wall Street” with the derisive tone common among her political allies. She talks instead about “the financial community.”
  • “After all, Wall Street took her under its wing before Democrats took her seriously.” 
  • “Her career had changed tracks. She wasn’t just a clever economist with some quirky ideas anymore. Her credibility with Wall Street began to register as academic clout.”
  • “There are thousands of left-wing economists. But it’s hard for the economically inexpert to distinguish brilliant creativity from quackery. Kelton’s social credentials with Wall Street helped her stand out.”

I dunno what that’s about. Something about Wall Street?

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Jobs, Jobs, Jobs — GUARANTEED!

The current mania for “job guarantee” policies is making the Sandwichman anxious. I’ve been on the full employment beat for over 20 years so I think I have a pretty good grasp of the terrain. First principle is that there are no panaceas. My favorite policy option — reduction of working time — is not a panacea. Neither is yours.

Like my learned friend Max B. Sawicky, I am in favor of a job guarantee — provided it meets MY criteria. The proposals currently being shopped around don’t. That should not be a fatal flaw. Inadequate policy proposals can serve as the starting point for dialog that can lead to better proposals. From the left, Matt Brunig, and from the center?, Timothy Taylor have offered constructive critiques of the current proposals. I would like to offer a bit of critique from history.

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Active Measures against the Spectacle

Passivity is a key term in Guy Debord’s Society of the Spectacle:

12. The spectacle presents itself as something enormously positive, indisputable and inaccessible. It says nothing more than “that which appears is good, that which is good appears. The attitude which it demands in principle is passive acceptance which in fact it already obtained by its manner of appearing without reply, by its monopoly of appearance.

13. The basically tautological character of the spectacle flows from the simple fact that its means are simultaneously its ends. It is the sun which never sets over the empire of modern passivity. It covers the entire surface of the world and bathes endlessly in its own glory.

96. The ideology of the social-democratic organization gave power to professors who educated the working class, and the form of organization which was adopted was the form most suitable for this passive apprenticeship.

144. The commodity society, now discovering that it needed to reconstruct the passivity which it had profoundly shaken in order to set up its own pure reign, finds that “Christianity with its cultus of abstract man … is the most fitting form of religion” (Capital).

219. One who passively accepts his alien daily fate is thus pushed toward a madness that reacts in an illusory way to this fate by resorting to magical techniques. The acceptance and consumption of commodities are at the heart of this pseudo-response to a communication without response.

What, then, constitutes activity? Debord’s reply to this crucial question is inadequate — rhetorical slogans about an amorphous “revolution.” I would suggest instead two things, the autonomous disposal of disposable time and the labor strike (work stoppage or job action).As should be clear, capital seeks to colonize disposable time with commodity consumption and “The Spectacle.” How, then, does one distinguish between active use of disposable time and passive commodity consumption during one’s free time? The distinction can be based on the criterion of whether what one does in one’s free time will contribute to one’s ability to withstand an interruption of income.  Disposable time should be used to prepare for the struggle to obtain more disposable time!

Because, “there is, thank God! no means of adding to the wealth of a nation but by adding to the facilities of living: so that wealth is liberty– liberty to seek recreation–liberty to enjoy life–liberty to improve the mind: it is disposable time, and nothing more.”

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