The Mismeasure Of Technology

tech42914

On April 29, 2014, Richardo Hausmann writes on Nation Of Change:

There is nothing better than fuzzy language to wreak havoc – or facilitate consensus. Ludwig Wittgenstein argued that philosophical puzzles are really just a consequence of the misuse of language. By contrast, the art of diplomacy is to find language that can hide disagreement.

One idea about which economists agree almost unanimously is that, beyond mineral wealth, the bulk of the huge income difference between rich and poor countries is attributable to neither capital nor education, but rather to “technology.” So what is technology?

The answer explains the unusual consensus among economists, for “technology” is measured as a kind of “none of the above” category, a residual – Nobel laureate Robert Solow called it “total factor productivity” – that remains unexplained after accounting for other production inputs, such as physical and human capital. As Moses Abramovitz aptly noted in 1956, this residual is not much more than “a measure of our ignorance.”

Follow Project Syndicate on Facebook or Twitter. For more from Ricardo Hausmann, click here.

So, while agreeing that technology underpins the wealth of nations sounds more meaningful than confessing our ignorance, it really is not. And it is our ignorance that we need to address.

 

In an important book, W. Brian Arthur defines technology as a collection of devices and engineering practices available to a culture. But devices can be put in a container and shipped around the world, while recipes, blueprints, and how-to manuals can be posted online, putting them just a few clicks away. So the Internet and free trade should make the ideas and devices that we call “technology” available everywhere.

In fact, much of modern growth theory, starting with Paul Romer’s research in the late 1980’s, sprang from the idea that output was driven higher by ideas that are hard to come by but easy to copy. That is why inventors have to be protected by patents and copyrights or subsidized by governments.

So, if ideas are easy to copy and devices are easy to ship, why do differences in “technology” persist between countries?

When something upsets a beneficent natural order, humans crave for stories featuring some malign force. For example, the argument in Daron Acemoglu and James Robinson’s book Why Nations Fail is essentially that technology does not diffuse because the ruling elite does not want it to. They impose extractive (bad) institutions, instead of adopting inclusive (good) institutions; and, because technology may upset their control over society, they choose to do without it.

As a Venezuelan who is seeing his country collapse at this very moment, I do not doubt that there have been many instances in human history during which those in power have prevented progress. But I am also struck by how often governments that embrace the goal of shared growth – post-apartheid South Africa is a good example – fail to achieve it.

Such governments promote schooling, free trade, property rights, social programs, and the Internet, and yet their countries’ economies remain stuck. If technology is just devices and ideas, what is holding them back?

The problem is that a key component of technology is knowhow, which is an ability to perform a task. And knowhow, unlike devices and ideas, neither involves nor can be acquired through comprehension.

The tennis champion Rafael Nadal does not really know what it is that he does when he successfully returns a serve. He just knows how to do it; putting it in words is impossible, and any effort to do so would not make the rest of us better players. As the scientist and philosopher Michael Polanyi would say of such tacit knowledge, we know more than we can tell.

So we do not need extractive elites or other evil forces to explain why technology does not diffuse. Technology has trouble diffusing because much of it requires knowhow, which is an ability to recognize patterns and respond with effective actions. It is a wiring in the brain that may require years of practice to achieve. This makes its diffusion very slow: As I have argued previously, knowhow moves to new areas when the brains that hold it move there. Once there, they can train others.

Moreover, now that knowhow is becoming increasingly collective, not individual, diffusion is becoming even slower. Collective knowhow refers to the ability to perform tasks that cannot be carried out by an individual, like playing a symphony or delivering the mail: neither a violinist nor a letter carrier can do it alone.

Likewise, a society cannot simply imitate the idea of Amazon or eBay unless many of its citizens already have access to the Internet, credit cards, and delivery services. In other words, new technologies require the previous diffusion of other technologies.

That is why cities, regions, and countries can absorb technology only gradually, generating growth through some recombination of the knowhow that is already in place, maybe with the addition of some component – a bassist to complete a string quartet. But they cannot move from a quartet to a philharmonic orchestra in one fell swoop, because it would require too many missing instruments – and, more important, too many musicians who know how to play them.

Progress happens by moving into what the theoretical biologist Stuart Kauffman calls the “adjacent possible,” which implies that the best way to find out what is likely to be feasible in a country is to consider what is already there. Politics may indeed impede technological diffusion; but, to a large extent, technology does not diffuse because of the nature of technology itself.

 

http://www.nationofchange.org/mismeasure-technology-1398785625

Corporate Tax Breaks: How Congress Rigs The Rules

reagan22914

On April 29, 2014, Robert Borosage writes on Nation Of Change:

“The game is rigged and the American people know that. They get it right down to their toes.”

— Senator Elizabeth Warren

This week, the House Ways and Means Committee is poised to demonstrate exactly how the rules are rigged. On Tuesday, the committee will begin to mark up a series of corporate tax breaks – known as “extenders” because they have been extended regularly every year or two for over a decade. Only now the committee plans to make many of them permanent, at the cost of an estimated $300 billion over 10 years. And it does not plan to pay for them by closing other corporate loopholes or raising rates. The giveaway – almost all of which goes to corporations – will simply add to the deficit, no doubt fueling the later demands of those who vote for them for deeper cuts in programs for the vulnerable in order to bring “spending” under control.

The tax measures range from big to small, sensible to inane. Two centerpieces are glaring loopholes for multinational companies and banks, encouraging them to ship jobs and report profits abroad to avoid an estimated $80 billion in taxes over a decade.

Call them – one known as the “active finance exception” and the other as the “CFC look-through rule” – the General Electric tax dodges. The loopholes allow multinationals with huge finance arms, like General Electric or Wall Street banks, to dodge paying their fair share of taxes simply by claiming that U.S. based financial income is being generated offshore. These “exceptions” are central to how GE managed to declare a profit of more than $27 billion over the past five years, while not only paying nothing in taxes, but pocketing tax refunds of more than $3 billion. The multibillion-dollar multinational pays less in taxes than any mom and pop store that turned a profit. These breaks don’t pass the smell test.

Making these permanent without offsetting them by closing other loopholes is a brazen insult to American voters. Republicans have railed incessantly about deficits, forcing austerity budgets that have impeded the recovery and cost jobs. They have even refused to pass emergency unemployment compensation for long-term unemployed workers unless it was “paid for” by cuts elsewhere. (And even after the Senate passed the measure with “pay-fors,” Republican House Speaker John Boehner still refuses to allow it to come to a vote.)

Emergency unemployment compensation is temporary, targeted and timely. It goes to sustain the families of unemployed workers who are still looking for work. It is of limited duration. And the families that receive it spend it immediately on food, rent, gas – helping to boost jobs and the economy. And that can’t get a vote on the floor of the House.

The offshore tax dodges that the committee is about to mark up and bring to a vote will be permanent. They aren’t emergency measures. They are targeted perversely to benefit the biggest corporations and banks the most. And they will cost jobs rather than help generate them.

But in a Congress supposedly locked in hapless partisan gridlock, these bills are greased to go. They are backed by a full-court press from the corporate lobbies. They gain bipartisan support by pairing the obscene with “side of the angels measures” – a deduction for schoolteachers who pay for supplies out of their own pockets, a tax break for employees that ride mass transit to work, a tax relief for families taking a loss from selling a home with an underwater mortgage, a production tax credit for renewable energy.

This is the routine way the rules get rigged, the powerful get the gold and the workers get the shaft. But perhaps this time business as usual may bear a price. Warren is right: Americans are increasingly onto the game. As polling for Americans for Tax Fairness has shown, voters are outraged that corporations and the wealthy aren’t paying their fair share of taxes. They are incensed at the notion that Congress is giving multinationals incentives to ship jobs or report profits abroad. Or that Wall Street banks are paying lower tax rates than small businesses.

Even the perpetually tanned House Speaker John Boehner will blanche at trying to explain how unemployed workers can’t be helped but multinationals need permanent loopholes to stash their earnings abroad. Even the glib Republican budget chair Rep. Paul Ryan will find it hard to justify deeper cuts that boot kids out of Head Start or cut Pell grants for college in order to make up for deficits produced by rewarding GE for stashing profits in the Cayman Islands.

This is an election year with voters in a surly mood. Embattled incumbents might be wise to think twice before bowing to the dictates of the corporate lobbies. Surely challengers in both parties should relish going after legislators who voted to carve a permanent loophole for multinationals that ship jobs abroad, while cutting investments in education and abandoning workers struggling to find a job.

Washington is a city wired for the insider’s deal to fix the game. And the rules will keep getting rigged until voters sort out who is on their side and who isn’t – and throw some of the latter out of office.

 

http://www.nationofchange.org/corporate-tax-breaks-how-congress-rigs-rules-1398779456

The Future Of Capitalism

See http://www.bbc.co.uk/programmes/b041vvvf

On April 28, 2014, BBC’s Anne McElvoy talks to the social theorist Jeremy Rifkin who foresees the gradual decline of capitalism and the rise of a collaborative economy. As new technology enables greater sharing of goods and services, Rifkin argues that it provides a challenge to the market economy. The sociologist Saskia Sassen warns that the majority of people may not enjoy the fruits of this new world as increasing inequality, land evictions and complex financial systems lead to their expulsion from the economy. The Conservative MP Kwasi Kwarteng looks back at the history of international finance and how gold and war have shaped the economic order of today.

Government––Protection Racket For The 1 Percent

GovernmentisProtectionRacketforRich042514

On April 25, 2014, Bill Moyers and Michael Winship write on Nation Of Change:

The evidence of income inequality just keeps mounting. According to “Working for the Few,” a recent briefing paper from Oxfam, “In the US, the wealthiest one percent captured 95 percent of post-financial crisis growth since 2009, while the bottom 90 percent became poorer.”

Our now infamous one percent own more than 35 percent of the nation’s wealth. Meanwhile, the bottom 40 percent of the country is in debt. Just this past Tuesday, the 15th of April — Tax Day — the AFL-CIO reported that last year the chief executive officers of 350 top American corporations were paid 331 times more money than the average US worker. Those executives made an average of $11.7 million dollars compared to the average worker who earned $35,239 dollars.

As that analysis circulated on Tax Day, the economic analyst Robert Reich reminded us that in addition to getting the largest percent of total national income in nearly a century, many in the one percent are paying a lower federal tax rate than a lot of people in the middle class. You may remember that an obliging Congress, of both parties, allows high rollers of finance the privilege of “carried interest,” a tax rate below that of their secretaries and clerks.

And at state and local levels, while the poorestfifth of Americans pay an average tax rate of over 11 percent, the richest one percent of the country pay — are you ready for this? — half that rate. Now, neither Nature nor Nature’s God drew up our tax codes; that’s the work of legislators — politicians — and it’s one way they have, as Chief Justice John Roberts might put it, of expressing gratitude to their donors: “Oh, Mr. Adelson, we so appreciate your generosity that we cut your estate taxes so you can give $8 billion as a tax-free payment to your heirs, even though down the road the public will have to put up $2.8 billion to compensate for the loss in tax revenue.”

All of which makes truly repugnant the argument, heard so often from courtiers of the rich, that inequality doesn’t matter. Of course it matters. Inequality is what has turned Washington into a protection racket for the one percent. It buys all those goodies from government: Tax breaks. Tax havens (which allow corporations and the rich to park their money in a no-tax zone). Loopholes. Favors like carried interest. And so on. As Paul Krugman writes in his New York Review of Books essay on Thomas Piketty’s Capital in the Twenty-First Century, “We now know both that the United States has a much more unequal distribution of income than other advanced countries and that much of this difference in outcomes can be attributed directly to government action.”

econInequality_wealth

Recently, researchers at Connecticut’s Trinity College ploughed through the data and concluded that the US Senate is responsive to the policy preferences of the rich, ignoring the poor. And now there’s that big study coming out in the fall from scholars at Princeton and Northwestern universities, based on data collected between 1981 and 2002.

Their conclusion: “America’s claims to being a democratic society are seriously threatened… The preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy.” Instead, policy tends “to tilt towards the wishes of corporations and business and professional associations.”

Last month, Matea Gold of The Washington Post reported on a pair of political science graduate students who released a study confirming that money does equal access in Washington. Joshua Kalla and David Broockman drafted two form letters asking 191 members of Congress for a meeting to discuss a certain piece of legislation. One email said “active political donors” would be present; the second email said only that a group of “local constituents” would be at the meeting.

One guess as to which emails got the most response. Yes, more than five times as many legislators or their chiefs of staff offered to set up meetings with active donors than with local constituents. Why is it not corruption when the selling of access to our public officials upends the very core of representative government? When money talks and you have none, how can you believe in democracy?

Sad, that it’s come to this. The drift toward oligarchy that Thomas Piketty describes in his formidable new book on capital has become a mad dash. It will overrun us, unless we stop it.

Recovery Has Created Far More Low-Wage Jobs Than Better-Paid Ones

wage-master675

On April 27, 2014, Annie Lowrey writes in The New York Times:

The deep recession wiped out primarily high-wage and middle-wage jobs. Yet the strongest employment growth during the sluggish recovery has been in low-wage work, at places like strip malls and fast-food restaurants.

In essence, the poor economy has replaced good jobs with bad ones. That is the conclusion of anew report from the National Employment Law Project, a research and advocacy group, analyzing employment trends four years into the recovery.

“Fast food is driving the bulk of the job growth at the low end — the job gains there are absolutely phenomenal,” said Michael Evangelist, the report’s author. “If this is the reality — if these jobs are here to stay and are going to be making up a considerable part of the economy — the question is, how do we make them better?”

The report shows that total employment has finally surpassed its pre-recession level. “The good news is we’re back to zero,” Mr. Evangelist said.

But job losses and gains have been skewed. Higher-wage industries — like accounting and legal work — shed 3.6 million positions during the recession and have added only 2.6 million positions during the recovery. But lower-wage industries lost two million jobs, then added 3.8 million.

Continue reading the main story

An Unbalanced Recovery

Most of the jobs added during the recovery have been in lower-wage industries.

Jobs lost

Jobs gained

From employment

peak (Jan. ’08)

to low (Feb. ’10)

From employment

low (Feb. ’10)

through Feb. ’14

MILLIONS OF JOBS

3

2

1

1

2

3

4

LOWER-WAGE JOBS

Median hourly wage

$9.48 – $13.33

MIDWAGE JOBS

$13.73 – $20.00

HIGHER-WAGE JOBS

$20.03 – $32.62

Source: National Employment Law Project

With 10.5 million Americans still looking for work — the unemployment rate is 6.7 percent — employers feel no pressure to raise wages for those who are working. As a result, the average household’s take-home pay has declined through the recession and the recovery to $51,017 in 2012 from $55,627 in 2007, after adjusting for inflation.

With joblessness high and job gains concentrated in low-wage industries, hundreds of thousands of Americans have accepted positions that pay less than they used to make, in some cases, sliding out of the middle class and into the ranks of the working poor.

That includes Connie Ogletree, a former administrative and executive assistant who now earns $7.25 an hour at a McDonald’s in Atlanta. “It was 40 years ago that I had my first fast-food job, at a Dairy Queen,” said Ms. Ogletree, 55. “This is my second.”

Ms. Ogletree is in school working toward a bachelor’s degree, in the hope of returning to a white-collar position. But in the meantime, she and her older sister have scrimped and saved to make ends meet on her meager earnings.

She said that she appreciated her job — many do not have one — but that she found the work tough.

“When you go into a fast-food restaurant, you want to be sure the people in the back are doing the best job they can,” she said. “You want them not to be worried about missing a day if they’re sick, to be able to go to a child’s play at school or a P.T.A. meeting. I’d like a vacation once a year, but my employer doesn’t offer that, or sick days.”

The National Employment Law Project study found that there were about a million fewer jobs in middle-wage industries — including parts of the health care system, loan servicing and real estate — than there were when the recession hit.

Economists worry that even a stronger recovery might not bring back jobs in traditionally middle-class occupations eroded by mechanization and offshoring. The American work force might become yet more “polarized,” with positions easier to find at the high and low ends than in the middle.

The swelling of the low-wage work force has led to a push for policies to raise the living standards of the poor, including through job training, expansion of health care coverage and a higher minimum wage.

President Obama has supported a Democratic proposal to lift the federal minimum wage to $10.10 an hour from its current level of $7.25.

“Nobody who works full-time should ever have to live in poverty,” Mr. Obama said on Saturday in his weekly address. “That’s why nearly three in four Americans support raising the minimum wage.”

Raising it to $10.10 would “lift wages for nearly 28 million Americans across the country,” he said. “We’re not just talking about young people on their first job. The average minimum-wage worker is 35 years old. They work hard, often in physically demanding jobs.”

But with congressional inaction stalling that proposal, many state and local governments have forged ahead on their own. States including Connecticut, New York, New Jersey, California and Rhode Island have raised their local minimum wages. And a total of 34 states are considering lifting their wage floors, while activists in other states are pushing for ballot referendums to do so.

“They’re actually getting the job done, so that workers get a raise,” said Thea Lee, the deputy chief of staff of the A.F.L.-C.I.O. “The hope is that it creates momentum nationally and builds an activist base.”

But many Republicans oppose raising the wage floor while the economy remains weak. And many businesses staunchly oppose higher minimum wages because of the threat to their bottom lines.

The National Employment Law Project study found especially strong growth in restaurants and food services, administrative and waste services and retail trades. Those industries — which often pay wages at the federal minimum — accounted for about 40 percent of the increase in private sector employment over the past four years.

There has also been strong jobs growth in some high-paying industries, like professional, scientific and technical services — a category that includes accountants, lawyers, software developers and engineers. That sector accounted for about 9 percent of the private-sector job gains in the recovery.

http://www.nytimes.com/2014/04/28/business/economy/recovery-has-created-far-more-low-wage-jobs-than-better-paid-ones.html?_r=0

The Fed’s Corrupt Policies

MW-BW917_econye_20140318141831_MG

On April 25, 2014, Al Lewis writes on MarketWatch:

Our financial system is so corrupt you might say that a fish rots from the Fed.

How else can one describe a regime that punishes savers and rewards borrowers and speculators for years on end? Our central bank is essentially taking billions of dollars a year from average Americans, who are still struggling to get by in a bombed-out economy, and it is giving it — yes, giving it — to the very banks that helped cause the 2008 financial crisis in the first place.

Richard Barrington, an analyst with Moneyrates.com, estimates the Fed’s policies have cost savers $757.9 billion since the crisis, in an analysis released Tuesday . That’s approaching $1 trillion, which used to be considered a lot of money, even to bankers, before the crisis. The Fed, meanwhile, has only given the world a little assurance that its policies will change at some point in the distant future.

“It’s a stealth bailout,” Barrington said. “Low-interest-rate policies have helped bail out banks, the stock market and real estate, but the Fed has not publicly acknowledged the cost of those policies.”

Of course, not. Because the costs are staggering.

Money-market rates have been stuck between 0.08% and 0.10% but the annual inflation rate has been, at least nominally, 1.5%. That’s pretty low for inflation, yet this spread eroded the purchasing power of American deposits by $122.5 billion over the last year alone, Barrington said.

Barrington’s analysis, by the way, is conservative. It only counts what inflation has done to savers. It does not include what savers might have made if interest rates were closer to historic averages. And after five years, these costs are only mounting.

“Unlike the other bailouts we’ve seen, this one has become open-ended,” Barrington said.

He does not attribute this ongoing folly to corruption, as I do. He sees it, more charitably, as the result of “thinking that’s trapped in the past.” Our economic problems are unprecedented, and yet the Fed is still making comparisons to what they think should have been done in the 1930s.

The Fed has been purchasing tens of billions of dollars per month in U.S. Treasurys and mortgage-backed securities from banks. It has been cutting back this program, and many Fed watchers expect it to end by October, but so far these purchases have totaled more than $3.3 trillion.

And what does the Fed have to show for this? Economic growth averaging only about 2% a year. A sluggish labor market. And artificially raised stock and real estate prices that may not hold if the Fed ever stops manipulating interest rates to such historic lows.

Most Americans, by the way, haven’t participated in these lofty stock market gains that continue to widen the gap between rich and poor.

Bankrate.com on Monday released a survey of more than 1,000 households that showed 73% are “not more inclined to invest in stocks.” It was the third year in a row that this survey uncovered negative sentiments regarding the stock market, even as the Standard & Poor’s 500 Index SPX -0.80%  has doubled since hitting bottom in 2009.

After getting burned twice in one decade — the 2001 Internet bust and the 2008 financial crisis — it is easy to see these gains as part of yet another financially engineered scheme. Average Americans either don’t have money to risk or they simply refuse to be herded into a casino, even at a time when money-market rates and bank deposits are delivering negative returns relative to inflation.

 

http://www.marketwatch.com/story/whats-that-fishy-smell-the-feds-corrupt-policies-2014-04-23?link=MW_story_popular

Poverty Is Killing Us.

On April 24, 2014, Thom Hartmann writes on The Thom Hartmann Program:

According to a new study from the Brookings Institute, wealthy Americans are living considerably longer lives than Americans who are struggling with poverty. The report points out that the by the age of 55, the average American man in the top10 percent of the income bracket can expect to live another 35 years or so. But, by the age of 55, the average man in the bottom 10 percent of the country’s income bracket only has around 24 years left to live.

The lifespan discrepancy between wealthy and poorer women is even worse. While these new findings are startling, they shouldn’t be surprising. That’s because poverty has a very, very long list of negative effects.

For example, poverty is the biggest predictor of educational outcomes. A staggering 40% of children living in poverty aren’t ready for a primary education, and by the end of 4th grade, low-income students are already 2 years behind where they should be. Meanwhile, a study by Professor Sean Reardon at Stanford University found that the gap in standardized test scores between wealthy and low-income students has grown by nearly 40% since the 1960’s.  Thank you, Reaganomics.

Similarly, a study by researchers at the University of Michigan found that the gap between rich and poor children completing college or university has grown by around 50% since the late 1980’s.  Reaganomics again.

Americans struggling with poverty are also more likely to be struggling with obesity. A 2005 study found that body mass index or BMI, an indicator of body fat and obesity, was higher each year between 1986 and 2002 among adults in the bottom income bracket than adults in the highest income group.

Meanwhile, a 2010 study found that Americans making low wages were more likely to have higher BMI’s and higher risks of obesity. And, obesity rates increased by 10% for all American children aged 10 to 17 between 2003 and 2007, but increased by 23 percent over the same time period for children living in poverty.

Even worse, poverty doesn’t just increase the risks of obesity and prevent children from getting a proper education. As Richard Wilkinson and Kate Pickett point out in their brilliant book The Spirit Level, poverty and wealth inequality influence a host of other social ills. Drug use, mental illness, violent crime, STDs, and teen pregnancies are all higher in countries with greater wealth inequality and poverty.

We must do something to combat poverty, and thus stop amplifying all of the social ills that it creates.  And we need to do it now. LBJ’s piecemeal approach to poverty was a start, and it worked, but because it had so many different pieces, it was also fairly easily taken apart bit by bit by 33 years of Reaganomics and even by Bill Clinton.

So, instead, let’s take a couple of simplifying steps.  First, end most all of the remaining anti-poverty programs.  They’re a complicated mess. Then roll back the Reagan tax cuts for corporations and the wealthy elite, and, like Reagan did, tax Capital Gains at the ordinary income rate – that will generate enough money for step three. And that final, third step is to take a page out of Thomas Paine’s “Agrarian Justice” – yes, THAT Thomas Paine, one of the Founders of our country, and give EVERYBODY a Guaranteed Minimum Income.

Conservatives win because they get rid of all those “anti-poverty” programs they hate. Progressives win because we end poverty in America altogether.  And, if a Guaranteed Minimum Income were made an entitlement like Social Security, rather than a welfare-type program, even billionaires would get a piece of the pie. Most importantly, a Guaranteed Minimum Income isn’t some new and radical idea. It’s been tried and tested, and it works.

Countries throughout Europe, including France, Sweden, and Germany have some form of a Guaranteed Minimum Income right now. And currently, Switzerland is considering a plan that would guarantee every citizen, whether they work or not, a yearly income of 30,000 Swiss francs, or roughly $34,000.

Back here in the U.S., Alaska has had a permanent fund in place since 1976, which collects money from oil production in that state, and redistributes it to the people of Alaska each year. An Alaskan family with 3 children gets about $10,000 annually from the state government, and Sarah Palin was very, very happy to write those checks every year.  The bottom-line is that a Guaranteed Minimum Income works and would instantly eliminate poverty in America.

In his 1967 book Where Do We Go From Here: Chaos or Community, Martin Luther King Jr. wrote that, “I am now convinced that the simplest approach will prove to be the most effective — the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.” He’s absolutely right.

It’s time to eliminate poverty in America, and give everyone a shot at living the American Dream.

 

http://www.thomhartmann.com/blog/2014/04/poverty-killing-us

Your Government Owes You A Job[?]

jobsfair_ap_img

“The federal government can easily afford a job guarantee program, becoming our employer of last resort.”[?]

On April 23, 2014, Raul Carrillo writes in The Nation:

Involuntary unemployment is barbaric. In the wealthiest country in history, almost 30 million people wish they had full-time work. But, as always, there aren’t enough jobs. And because economic security requires decent work, it’s unsurprising that 50 million people are poverty-stricken and 16 million children are hungry.

This is a disgrace and an economic error: the US government can easily afford a Job guarantee (JG) program, becoming our employer of last resort.

A right to a job may sound outlandish, but it’s common sense. You need dollars to eat, and unless you steal the dollars, you generally have to earn them. If the government wants to protect property with cops, courts, and prisons, issue a single, common currency, and tax and fine us in it, it should at least guarantee we can work for our own dollars. Politicians ramble about equality of opportunity and the dignity of work, but to pull ourselves up by our bootstraps, we need boots. And lest our boots stomp each other’s necks in senseless competition for too few jobs, we need a job guarantee.

A job guarantee isn’t that radical. Thomas Paine proposed one in 1791. In 1944, FDR included the right to a living wage job in his Second Bill of Rights and his Republican opponent promised state-ensured employment. The Universal Declaration of Human Rights enshrined the right to work and philosophers Rawls and Dewey advocated government provide enough work. LBJ deliberated a JG and Martin Luther King Jr., demanded one.

In 1977, the Senate proposed legislation guaranteeing employment, allowing residents to sue the US government should it fail to provide it. The litigation provision was cut, but the finalHumphrey-Hawkins Act authorizes Uncle Sam to “create a reservoir of public employment.” According to legal scholar Cass Sunstein, in 1990, an overwhelming 86 percent of respondents expressing an opinion wanted that reservoir. This January, the JG still polled high at 47 percent—even higher among people of color—despite its relative unfamiliarity.

Would a job guarantee just create dismal make-work? No. Even ultraconservative idol Bill Buckley admitted there’s always something to be accomplished. New Deal employees built dams, bridges, roads and parks. Similar efforts have succeeded in Sweden and South Africa.Congressman Conyers has proposed creating enough public works for full employment, targeting decaying, unsustainable infrastructure.

But JG employees needn’t construct trains or solar panels. Locally administered, non-capital-intensive programs have thrived in Argentina and India. Economist Pavlina Tcherneva has extensively researched Argentina’s decentralized strategy, which emphasized childcare, eldercare and community gardening, empowered women in particular and swiftly slashed extreme poverty by 25 percent. A bottom-up JG could bolster small businesses andnonprofits, and co-ops could apply for JG grants to pay wages. Neighborhoods wouldn’t have to bankroll Walmart or McDonald’s.

It may sound expensive, but a JG would pay for itself. “Deficit owls” argue we can afford much more federal spending of this type. Remember, current anti-poverty programs like unemployment insurance pay people not to work, destroying human capital, sales, output, and the tax base. Estimated spending for a national infrastructure JG is $750 billion; bottom-up models, cheaper. JG outlays would replace or reduce the costs of much current anti-poverty spending (roughly $746 billion), with exponential benefits. The Treasury should finance a JG, but national, state or local agencies could administer it.

As conservatives Kevin Hassett and Peter Ferrara have argued, Obama-style stimulus is sloppy. Unlike a JG, it doesn’t target households directly. Elegantly, JG spending is inherently constrained; a JG would implement a universal guaranteed wage—effectively the new minimum—and employees could join or leave in response to private sector booms and busts.

Please support our journalism. Get a digital subscription for just $9.50!

Would jobs for all skyrocket wages and prices, spurring inflation? Such unfounded belief holds the jobless hostage to hysteria. The JG is an inflation stabilizer, easily compatible withadditional precautions. Because non-JG employees could quit for a JG job, their bargaining power would increase. By the same token, businesses could hire JG-trained employees, so employers’ negotiating power would increase as well. Thus, wages wouldn’t spiral. Furthermore, guaranteed employment for low-income individuals would discipline the prices of goods and services they typically buy.

Aside from the economic benefits, we deserve to participate in society as both producers and consumers. Participation is a premise for both collective enterprise and the self-determination Americans cherish. Even the best education and training programs cannot assure full employment. We need to change the economy, not people.

On that note, a JG is key to the movement for further reforms. It’s a complementary framework for the living wage campaign. It offers strikers security. It relieves parasitic student debt. JG wages could even be deposited into postal banks.

A JG would offer a hand-up from the isolation and stagnation often accompanying joblessness. As economists Sandy Darity and Darrick Hamilton argue, it would also combat racist hiring discrimination, anti-immigrant sentiment and crime.

Some critics don’t want dignified living to depend on wages, preferring an income guarantee. I’m sympathetic, but people want checks and good jobs. Moreover, unemployment, like disenfranchisement, feeds the fat cats. Paying people to sit on the sidelines, without offering an option to participate, can finance apathy.

To paraphrase MLK, call a JG what you want. I call it common sense. And I call it justice.

 

http://www.thenation.com/article/179476/your-government-owes-you-job?utm_source=Sailthru&utm_medium=email&utm_term=email_nation&utm_campaign=Email%20Nation%20%28NEW%29%2020140424&newsletter=email_nation_tuesday