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

Job Guarantees, Collective Bargaining and the Right to Strike

“Guaranteed jobs programs, creating floors for wages and benefits, and expanding the right to collectively bargain are exactly the type of roles that government must take to shift power back to workers and our communities,” — Senator Kirsten Gillibrand

“By strengthening their bargaining power and eliminating the threat of unemployment once and for all, a federal job guarantee would bring power back to the workers where it belongs.” — Mark Paul, William Darity, Jr., and Darrick Hamilton,

“Support for workers’ right to organize and collectively bargaining would, of course, be part of any such effort.” — Harry J. Holzer

 “This, then, was the broad issue to which Samuelson and Solow’s paper was addressed: Were price stability and full employment – or, as it was sometimes put, were price stability, full employment and collective bargaining – compatible in the America of their times?” — James Forder

Under conditions of full employment, can a rising spiral of wages and prices be prevented if collective bargaining, with the right to strike, remains absolutely free?  Can the right to strike be limited generally in a free society in peace-time? — William Beveridge, Full Employment in a Free Society

Everyone is talking about Job Guarantees these days and no one appears to have thought through the implications of such a policy for collective bargaining with anything like the thoroughness that William Beveridge did in 1946. In 1960, Paul Samuelson and Robert Solow concluded their discussion of full employment and inflation with a disclaimer:

We have not here entered upon the important question of what feasible institutional reforms might be introduced to lessen the degree of disharmony between full employment and price stability. These could of course, involve such wide-ranging issues as direct price and wage controls, anti-union and antitrust legislation, and a host of other measures hopefully designed to move the American Phillips’ curves downward and to the left.

We are told by the adherents of Modern Monetary Theory that inflation is not a problem. The government just sops up inflation by taxing back some of the money it has created to fund the program expenditures. Correct me if I’m wrong, but that seems like what they say. At the same time, though, at the same time, advocates of a Federal Job Guarantee tout the increased bargaining power that it would give to workers.

Usually that bargaining power is not specified as collective bargaining power. Harry Holzer’s comment is the exception. Senator Gillibrand’s mention of Job Guarantee and expanding the right to bargain collectively may have just been a smorgasbord of good things and not meant to imply advocacy of collective bargaining specifically for people in the Job Guarantee program. To use a distinction Richard Freeman and James Medoff adopted from Albert O. Hirschman, the “bargaining power” mentioned by Paul, Darity and Hamilton could as easily refer to the “exit” of individual choice as to the “voice” of collective action.

Well, who doesn’t want to see workers gain more bargaining power? That is not a rhetorical question. To ask it is to call attention to the very powerful political forces that have seen to it, especially over the last 40 years or so, that they don’t. Could it be that the advocates of the Job Guarantee have not done their opposition research? Do they suppose that the regime of supply-side, trickle-down, corporate neo-liberalism was inadvertent?

I am not so certain that the Kochs and the Waltons and Jeff Bezos and Jamie Dimon are going to shrug their shoulders and say, “O.K., workers, your turn now. Best of luck!” Regardless of whatever MMT says about inflation, the “inflation!” card will be played against any proposed job guarantee election platform, as will the “socialism!” card, the “moochers!” card, the “boondoggle!” card, and, yes, even the “lump-of-labor!” card.

In individual terms, bargaining power comes down to the alternative options if one quits a job — what is the Best Alternative if There is No Agreement (BATNA). Collectively, bargaining power is determined by strike leverage, which is a mutual perception of the relative capabilities of the two parties to endure a prolonged work stoppage. A Job Guarantee would appear to give additional leverage to unions in the event of a work site closure or the hiring of replacement workers. The amount of leverage depends on what the rules are regarding the eligibility of striking workers for a Job Guarantee. Presumably, workers currently on strike would be ineligible. But what happens if the employer hires scabs (otherwise known as “replacement workers”)? What if the company closes down and moves away? Would there be a waiting period before discharged workers become eligible for the Job Guarantee?

And what about the rights of the Job Guarantee workers themselves to collectively bargain and to strike? Until relatively recently public employees were denied the right to collective bargaining and the right to strike. Even today those rights are not universally acknowledged:

All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service… A strike of public employees manifests nothing less than an intent on their part to obstruct the operations of government until their demands are satisfied. Such action looking toward the paralysis of government by those who have sworn to support it is unthinkable and intolerable.

Who said that? Governor Scott Walker in 2011? Chris Christie? No, Franklin Delano Roosevelt, in a 1937 letter to the president of the National Federation of Federal Employees. Scott Walker cited FDR in a 2013 speech. Could a Job Guarantee program that denied participants the right to strike become a Trojan horse for rolling back public sector unionism? That is not a rhetorical question.

The conspicuous lacunae in the Job Guarantee literature regarding collective bargaining and the right to strike strikes me as an elephant in the room. The fact that no one talks about it could not conceivably be because no one notices it. For what is at stake here is nothing less than the sovereignty of the State and its monopoly on the legitimate use of violence. In an astonishing paragraph in his essay on the “Crtique of Violence,” Walter Benjamin makes this not so much “clear” as available for deciphering.

Benjamin’s provocative claim, distilled from the writings of Georges Sorel and Carl Schmitt, is that “Organized labor is, apart from the state, probably today the only legal subject entitled to exercise violence.” Let that sink in…

Benjamin goes on to offer qualifications and explanations that address the inevitable objections to that statement. By conceding the political right’s standard objection to the labor strike as violent, however, Benjamin — again following Sorel — has isolated and emphasized the one circumstance in which it is not — the revolutionary general strike. This is not to discount the inevitability of retaliatory violence from the State.

The insertion of Benjamin’s argument into the debate on the Job Guarantee idea may seem esoteric to the casual reader. The reason it doesn’t seem esoteric to me is that I have spent the last 20 years studying the history of anti-labor rhetoric of the right and how it gets translated ultimately into seemingly innocuous “policy principles.” Public works as an employment stabilizer sounds like a good idea — what happened to it? Full employment after the war sounds like a good idea — what happened to it? The reduction of the hours of work sounds like a good idea — what happened to it? As John Stuart Mill rightly pointed out, “He who knows only his own side of the case, knows little of that.”

Comments (2) | |

LOMPIGHEID: “Omgekeerd omgekeerd.”

Last week I was browsing through one of the books on the shelf at work, which had in it three essays by the inter-war German Marxist Karl Korsch. One of the essays, a 1932 introduction to Capital mentioned mentioned a section in Chapter 24, “The So-Called Labour Fund” as exemplary of Marx’s critique of political economy. The “labour fund” was more commonly known as the wages-fund, the doctrine famously recanted by John Stuart Mill in 1869.

After it had been repudiated in various degrees by the economists who formerly propounded it, the defunct doctrine became a straw man “fallacy” attributed to precisely the trade unionists who had been the targets of the doctrine’s disdain. Marshall dubbed the re-purposed doctrine the fallacy of the fixed work-fund. David F. Schloss christened it the Theory of the Lump of Labour.

As is my habit, I searched on “labour fund” and “lump of labor/labour” to see if anyone had previously made the connection between Marx’s critique in Capital and the ubiquitous attributions of the fallacy by economists to non-economists. What I discovered was a six-page discussion of my own historical investigation by a Belgian economist, Walter Van Trier, published in 2013 in the Belgian journal Over-Werk.

The title of the journal is somewhat of a pun as “over” means both “about” and “above” in Dutch, so it could mean both about work and overwork in English. The word lompigheid also contains a bit of a pun — as one might guess lomp is lump and lompigheit (with a ‘t’) refers to lumpiness, while lompigheid (with a ‘d’) means rudeness or clumsiness.

I am posting below a translation of the section from Van Trier’s article that deals specifically with my analysis of the lump of labor fallacy. The full article, in Dutch, can be found here. Happy May Day!

Comments (10) | |

Job Guarantee versus Work Time Regulation

There has been a bit of commotion recently about the Job Guarantee idea (AKA employer of last resort). I don’t consider myself an opponent of the strategy but I do have several reservations about its political feasibility, the marketing rhetoric of its advocates, and its economic and administrative transparency. Some of these concerns I share with an analysis presented by Robert LaJeunesse in his 2009 book, Work Time Regulation as Sustainable Full Employment Strategy. For that reason, it would be timely to post an excerpt from Bob’s discussion of”Job guarantees versus work time regulation.”

One thing that has puzzled me about the Job Guarantee rhetoric is the invocation of Hyman Minsky as patron saint of the strategy. There is no question that he advocated a job guarantee with the government acting as employer of last resort. But in the passages I’ve read, the proposal was either contingent to a broader discussion or supplemented with various other proposals some of which might be regarded as more far-reaching and controversial even than the job guarantee.

For example, a 1968 proposal argued that, “In addition, it will be necessary to restrain profits and investments; in particular, the highly destabilizing tendency for investment demand to explode will have to be brought under control.” Nineteen years later, Minsky supported a proposal for “a maximum of 32 hours of work a week at the minimum wage” but argued it needed to be supplemented by other programs such as a universal, non-means tested child allowance. Both of these proposals were historical and context specific, with the earlier one arising from a critique of LBJ’s War on Poverty and the later one in response to Reagan administration proposals for welfare reform.

The following excerpt is from pages 125-134 of  Work Time Regulation as Sustainable Full Employment Strategy. 

Comments (3) | |

C’mon, M’Honey, URINE THE MONEY! (you’ve got a lot of what it takes to get along.)

The REAL Trump pee-tape was a urine sampling pyramid scheme.

Whatever happened to Trump neckties?” asks  Zane Anthony, Kathryn Sanders and David A. Fahrenthold at the Washington Post, “They’re over. So is most of Trump’s merchandising empire.” Among the products that Trump lent his name to, for a fee, was a vitamin supplement, supposedly custom formulated based on the results of a urine test:

“Take a snapshot of the most critical metabolic markers in your body’s natural waste fluids,” said the website for the Trump Network, a vitamin company that sent its customers urine-sample kits with the Trump logo on them. The tests would be used to determine what vitamins the customer needed, according to archived versions of the Trump Network website.

As usual, the authors of this article miss the point of the enterprise, despite the Washington Post Wonkblog having covered it two years earlier. The overpriced vitamin supplements and quack urine tests were only window dressing. The real “product” the Trump Network sold was the “opportunity” to get rich quick by selling pseudo-scientific piss takes.

YouTube videos of Trump doing his urine test pitch have surprisingly few views, considering the man is “President of the United States” and his performance selling a get-rich-quick scam is, word-for-word and gesture-for-gesture, all he is and all he has ever been: pure flim-flam and puffery.

What bothers me, though, is not Don-the-con selling pie-in-the-sky schemes to suckers. What bothers me is what his kind of swindle reveals about the “legitimate” economy. The difference between a crude Ponzi scheme and conventional economic policy  is a question of degree, not of kind.
Hyman Minsky argued that there are both “legitimate” and “fraudulent” forms of Ponzi finance. The distinction seems to hinge on matters of perceptions and intentions. Ponzi finance thus may be regarded as legitimate if dividends are paid on the basis of income that has been accrued but hasn’t yet been received. Whether that income has actually been accrued and is going to be received is a matter of judgment about asset quality. A term deposit at the bank is one thing, a horde of Bitcoin is something else.
The quality of assets changes over time and is influenced by economic policy. “Everything that you do to encourage investment,” Minsky claimed, “encourages debt financing. This increases instability.” Here is the congressional testimony where he said that almost 40 years ago: June 20, 1978, from Special Study on Economic Change, Hearings before the Joint Economic Committee, Congress of the United States, Ninety-Fifth Congress, Second Session, page 858:

Representative BOLLING: I would like to begin by asking Mr. Minsky a question due to my own ignorance. This is my weakest area. I don’t claim to be an economist, just a political economist. I need to know some things. In your statement, next to the last page — the second sentence in the first full paragraph — there are few words and a lot said. I want to be sure I understand it.

To decrease the emphasis on debt, the full employment rather than economic growth should become the proximate objective of policy;

Now, I would like you to explain that to me. I don’t understand exactly what you mean.

Mr. MINSKY: I don’t believe it is an accident that we have had increased instability and increased inflation since the emphasis shifted toward economic growth during the Kennedy-Johnson administration.

Everything that you do to encourage investment encourages debt financing. This increases instability. The simple example is that during the 10 years it takes to put a nuclear power plant on stream the workers producing that nuclear power plant are receiving income, spending that income on consumer goods, and not producing any consumer goods in exchange. So every time you increase the ratio of investment expenditures to consumer goods expenditures in the economy, prices rise.

Any time a higher proportion of a wage bill is used to pay for people who are earning investment income compared to the wage bill that is used in the production of consumer goods, consumer goods prices will increase. This, in turn, means that the wages of workers will go up. This is a very simple idea.

It takes 10 years before you get a kilowatt out of a nuclear power plant. People all the way back to the producers of input into that complicated thing meanwhile are spending. Every time you build a plant that does not quickly pay off you are producing inflation in the country.

Every time England goes out and builds a Concorde you produce inflation. Any banker and businessman knows that for every investment project worth doing there are thousands that are not. Everything you do to increase growth by way of increasing investment, offer incentives to undertake things that are not worth doing in a pure private account, you produce inflation.

Perhaps Minsky’s “very simple idea” was a bit too simple. What if economic policy was used to encourage investment and debt financing but suppress the wages of workers? Voila! Perpetual, non-inflationary growth! A non-accelerating inflation rate of unemployment! Instead of letting the instability and inflation infect the whole economy, why not target it on those dumb fucks who have no political traction anyway? If the rabble become restive, they can always be placated by chauvinist circuses and slick get-rich-quick scams.

So much winning! As John Kenneth Galbraith observed, “Weeks, months or years may elapse between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.)”

Comments (6) | |

LOLFF on TED

LOLFF on TED

 In a TED talk, “3 myths about the future of work and why they are not true” from December 2017, Daniel Susskind channels Sandwichman:

Now the third myth, what I call the superiority myth. It’s often said that those who forget about the helpful side of technological progress, those complementarities from before, are committing something known as the lump of labor fallacy. Now, the problem is the lump of labor fallacy is itself a fallacy, and I call this the lump of labor fallacy fallacy, or LOLFF, for short. Let me explain. The lump of labor fallacy is a very old idea. It was a British economist, David Schloss, who gave it this name in 1892. He was puzzled to come across a dock worker who had begun to use a machine to make washers, the small metal discs that fasten on the end of screws. And this dock worker felt guilty for being more productive. Now, most of the time, we expect the opposite, that people feel guilty for being unproductive, you know, a little too much time on Facebook or Twitter at work. But this worker felt guilty for being more productive, and asked why, he said, “I know I’m doing wrong. I’m taking away the work of another man.” In his mind, there was some fixed lump of work to be divided up between him and his pals, so that if he used this machine to do more, there’d be less left for his pals to do. Schloss saw the mistake. The lump of work wasn’t fixed. As this worker used the machine and became more productive, the price of washers would fall, demand for washers would rise, more washers would have to be made, and there’d be more work for his pals to do. The lump of work would get bigger. Schloss called this “the lump of labor fallacy.”

And today you hear people talk about the lump of labor fallacy to think about the future of all types of work. There’s no fixed lump of work out there to be divided up between people and machines. Yes, machines substitute for human beings, making the original lump of work smaller, but they also complement human beings, and the lump of work gets bigger and changes.

But LOLFF. Here’s the mistake: it’s right to think that technological progress makes the lump of work to be done bigger. Some tasks become more valuable. New tasks have to be done. But it’s wrong to think that necessarily, human beings will be best placed to perform those tasks. And this is the superiority myth. Yes, the lump of work might get bigger and change, but as machines become more capable, it’s likely that they’ll take on the extra lump of work themselves. Technological progress, rather than complement human beings, complements machines instead.

 

Comments (8) | |

The Unsolved Riddle of Poverty Reduction

The Unsolved Riddle of Poverty Reduction

A submission to the B.C. Poverty Reduction Strategy engagement process
March 23. 2018

“What makes one poor is not the lack of means. The poor person, sociologically speaking, is the individual who receives assistance because of the lack of means.” – Georg Simmel

“A tight labor market is important for all workers, but especially for historically disadvantaged groups.” – Janelle Jones, Economic Policy Institute

EXECUTIVE SUMMARY

Forty percent of the 678,000 British Columbians living below the poverty line are working adults. This submission focuses on the reduction of poverty among employed adults.

“What do you think are the best ways to reduce poverty in British Columbia?” (p. 3)

Poverty is not simply a problem of insufficient wherewithal but more fundamentally a problem of disparities of political and social power grounded in grossly disproportionate wealth. Reduction of the hours of work is an economic solidarity strategy whose greatest benefit is the enhancement of the collective bargaining strength of employees relative to that of employers.

An unsound economic theory of “leisure choice” has obscured the crucial role that work time reduction plays in mitigating social, economic and political inequality. Although this theory has been systematically refuted, it continues to dominate economic thinking and consequently public policy through sheer institutional and intellectual inertia. This obstacle to social justice must be repudiated.

“What can we do as a province, a community or as individuals to reduce poverty and contribute to economic and social inclusion?” (p. 6)

Comments (4) | |

Will Boilerplate Kill the Invisible Hand?

Will Automation Kill Our Jobs? by Walter E. Williams appeared in the Gaston GazetteCharleston Gazette-Mail, Daily Tribune, Frontpage Mag, Richmond Times-Dispatch, Townhall, Holmes County Times-AdvertiserNational Interest, Rocky Mount Telegram and CNS News (not to mention the Dogpatch Völkischer-Beobachter). It features the following cutting edge (& pasting) analysis:

People always want more of something that will create a job for someone. To suggest that there are a finite number of jobs commits an error known as the “lump of labor fallacy.” That fallacy suggests that when automation or technology eliminates a job, there’s nothing that people want that would create employment for the person displaced by the automation.

Williams is a professor of economics at George Mason University. His column is syndicated by the Creators Syndicate. Apparently there is still a HUGE market for cuts ‘n pastes of well-aged boilerplate. The Trump-bots on twitter eat this shit up.

Let’s see what Professor Williams thinks of Adam Smith’s lump of labor fallacy:

Dear Professor Williams,

I was interested to read the other day your account of the “lump of labor fallacy” in the Charleston Gazette-Mail. As you pointed out, the number of jobs is unlimited as long as there are people who want more of something that requires work to be done.

I had previously read a statement by a famous economist claiming that the number of workers who can be employed cannot exceed a certain proportion of the capital of the particular society the workers live in. I am wondering if you can clarify for me whether that economist has committed a lump of labor fallacy by suggesting that the number of jobs is limited by something other than the demand for goods or services, which — for all intents and purposes — is unlimited, as you have pointed out.

Furthermore, I am intrigued by the idea that people contribute to the public good without intending to when they are only pursuing what they perceive as their own self-interest within a free and competitive system of market exchange. Would such a contribution to the public good result even if their notion of their self-interest was “erroneous,” as in the lump of labor fallacy?

For example, if truck drivers were afraid that self-driving vehicles would put them out of work, they would presumably be acting in their self-interest if they made campaign contributions to candidates who promised to ban such vehicles on the grounds that they would create unemployment. Such contributions would be free speech, as defined by the U.S. Supreme Court. But wouldn’t such a ban, at least on those grounds, be based on a fallacious assumption?

Finally, I have been wondering who actually said that there is “a fixed amount of work to be done” or that “there is only a certain quantity of work to be done.” I have seen numerous rebuttals to such a view but no positive statements of it from representatives of organized labor. I would be grateful if you could identify sources who actually commit the lump of labor fallacy in plain words.

Sincerely,

Tom Walker

Comments (0) | |

All Economists Are Bastards — Except Us

All Economists Are Bastards — Except Us

Peter Frase has a very interesting post up about the role of popular culture in legitimizing the police.  Frase recounted a forum he attended with Alex Vitale  talking about his book, The End of Policing. In response to a question about why people believe that the function of policing is to maintain peace in the liberal order when its actual practice and history suggest otherwise, Vitale cited television cop shows like  as “a relentless machine for producing and reproducing the legitimacy of policing in the public mind.”

This is what called to Frase’s mind the perpetual plot line he calls “‘ACAB-EU’: All Cops Are Bastards, Except Us.”:

The trope works by consistently portraying its central characters as liberal fantasies of the good cop–whether it’s the pseudo-scientists of CSI, the workaday victim-protectors of SVU, or the magical profiler-geniuses of Criminal Minds. At the same time, it makes a seeming concession to concerns about police misconduct, by constantly putting its protagonists in conflict with “bad cops” and their enablers, whether it be a rapist Corrections Officer or a corrupt small town department whose cover-up leads all the way to the Governor.

Of course this trope works for politicians too. And economists.

Comments (0) | |

Rumble on Wall St. — No Other Way of Keeping Profits Up!

Rumble on Wall St. — No Other Way of Keeping Profits Up!

At Jacobin, Seth Ackerman did an interview with J.W. Mason about The Class Struggle on Wall Street that considers the trade-off between relative profit and wage shares of income. Whether you agree with his analysis or not, Josh teases out some of the implications of the relationship, both for profit expectations and for political prospects.

One assertion I would question is “there is absolutely no reason to expect an uptick in inflation.” Well, yes, no one expects the Spanish Inquisition, either. While there may indeed be no reason to expect inflation, inflation’s chief weapon is surprise… surprise and fear… and ruthless efficiency,

And this is also why I think it would be impossible to empirically confirm Egmont Kakarot-Handtke’s “law” of profit. There is no “real” yardstick with which to measure aggregate profit. If Egmont is right that “[m]acroeconomic profit depends in the most elementary case alone on deficit spending, that is, on the change of private or public debt,” then he is wrong that his profit “law” can be tested empirically and “will be confirmed without exception.”

Josh Mason also talks about the “tightrope we have to walk” in thinking about the relationships between profits, wages, inflation and productivity. Not only is the rope tight, it is also tied in knots with “inflation” and “productivity” referring to ratios between incomes, costs and outputs. Egmont’s theory reminds us of yet another tightrope — the tightrope central bank authorities must walk between inflating the money supply through the expansion of credit and persuading the public that such inflation is not inflationary.

The conventional persuader is unemployment. One doesn’t have to subscribe to the NAIRU doctrine that insufficient unemployment accelerates inflation to concede that policy-induced unemployment tips the scales against wage increases and thus insulates the profit share of income from the latent inflationary consequences of credit expansion. Yes, the trick here is how to sustain compound profit inflation without accelerating priceinflation! How to debase the coin of the realm without debasing the coin of the realm. It’s a beauty contest.

There is, after all, no other way of keeping profits up!

Comments (0) | |

Watch Out for Charlie Kirk’s Treacle Tart

“There’s many a fly got stuck in there.”

Who is Charlie Kirk? He is the 24-year old executive director and founder of Turning Point USA. Jane Meyer profiled the organization in the New Yorker in December:

Based outside of Chicago, Turning Point’s aim is to foment a political revolution on America’s college campuses, in part by funneling money into student government elections across the country to elect right-leaning candidates. But it is secretive about its funding and its donors, raising the prospect that “dark money” may now be shaping not just state and federal races but ones on campus.

A couple of weeks ago in The Baffler, Maximillian Alvarez described the tactics employed by TPUSA to harass and silence opposition to their “free market” totalitarianism. If you like Tomi Lahren, Sebastian Gorka, Donald Trump Jr. and Sean Hannity, you’ll love Charlie Kirk.

Charlie Kirk is a Charlatan.

Last Friday, the Sandwichman posted Is the “Invisible Hand” a lump of labor? to EconoSpeak and Angry Bear. It received a little over 300 views on EconoSpeak and a total of three comments on both blogs. Charlie Kirk’s twitter video on the “socialist myth of the ‘fixed pie'” was tweeted three days earlier. It has so far received 3,300 “likes” and 1,688 comments.

Comments (3) | |