Here's something no conservative will tell you.
There is no such thing as unemployment. Not in America.
There is, instead, a mismatch among our skills, our expectations, and the political value of work.
Go into a restaurant. Order lunch. Now, if you can, go into the kitchen. Chances are most of the people there will be Mexicans – cooks, dishwashers, everyone behind the scenes. Mexicans probably butchered your meat, picked the vegetables on your plate, packed the fruit. It's likely they, or their Central American brothers and sisters, mowed your lawn today, and wiped the butt of your aging mother in her nursing home. They may be caring for your kids right now.
Mexican labor is everywhere. Wherever there are employers who want to exploit workers in order to increase profits and keep prices down, you'll find Mexican labor. In Europe, it's Turkish and Serbian labor. In Japan, Philippine or Chinese labor.
It's not an immigration problem. It's a market problem. Employers aren't paying wages Americans will accept. If Americans took those wages they'd be living like Mexicans.
But when you drive labor costs down, you degrade the market you're selling to.
Go into any Mexican neighborhood. I stayed in one last week in Sonoma. We have many here in Atlanta. What are you going to see? Tiny houses, filled with people. Few possessions. Lots of security protecting very little. Mexico, in other words.
Mexico's market isn't like ours. Ours is built like a fat man. The money is in the middle. Theirs is a triangle – the money's at the top.
The stronger your middle class – the more broadly wealth is distributed within a society – the bigger the market and the more its rich can make. When everyone is poor there's no one to sell to.
This is the key lesson of the New Deal era, the lesson today's Republicans seem so anxious to wipe out. When you drive wages down, when you forbid workers with fungible skills from organizing, when you skew the tax system so the poor are paying for the government order the rich enjoy, you're eating your seed corn.
What has to happen next is that the rich battle one another, and some of them fall, until there's only one left standing. That's the way capitalism works. Unchecked by any outside force, it moves steadily toward monopoly or a closely-held oligopoly. More and more of each industry held in fewer-and-fewer hands.
The word for that isn't freedom.
You know who the richest man in the world is today? It's Carlos Slim. A Mexican. He's the final piece of evidence that driving all your wealth to the rich doesn't make you into a vibrant, competitive, capitalist society. It turns you into a feudal society, where progress is blocked, and where the only way up is out.
So Mexico exports people, we import them. But what we're really importing is Slim's disease. We're driving the value of our own market down, by devaluing our own labor, and rewarding only those who play games with assets, like pieces on a chessboard.
None of this is a call to communism, or socialism. Trading Carlos Slim, who at least knows how to make money for himself, for Fidel Castro, who never knew anything about making money, won't improve society. Giving Carlos Slim's money away to hungry Mexicans won't make Mexico into America.
The question is how we keep America from turning into Mexico. And the answer to that lies in our own Constitution. Checks and balances.
The Constitution includes some. But our history has created others. Whenever a small group has tried to seize power and control everything, the larger society organizes against it and applies counterweights. Anti-trust laws. Regulations. Income taxes. Government.
The most important job of any government is maintaining order by maintaining balance among all the interests within society. Its legitimacy is based on the acceptance of that role by everyone, the belief that they will be heard, in a court, in a legislature, somewhere.
The tools to reverse Mexicanization, to add value to labor so it becomes of interest to Americans, to restore balance to the market, they're all in our hands. We can raise the value of American labor so Americans will want to do it. We can raise its skill level, automate it, so Americans will go to school to do it. We can have a progressive tax system where those who benefit most from order pay more than those who benefit less, because they have less. We can have public schools that work because we invest in them, health care for all, especially the elderly and young whose work can't pay for it. We can make sure of one man one vote, not one dollar one vote as the Supreme Court has ruled.
We can do all these things if we just use the tools history has given us. Our laws. Our rights.
And the most important such tool?
You're soaking in it.
Excellent. Just excellent. You’ve hit the nail on the head, without drawing in any of he red herrings or political ideology. None of that matters. What matters is balance. It’s more physics than art, although the art gets used to motive the balance that needs shifting.
I’ll be back!
Excellent. Just excellent. You’ve hit the nail on the head, without drawing in any of he red herrings or political ideology. None of that matters. What matters is balance. It’s more physics than art, although the art gets used to motive the balance that needs shifting.
I’ll be back!
There’s a problem with the rationale.
The problem is, why for americans living like a mexican isn’t enough?
How much es enough? America isn’t known exactly by the frugality of it’s people, studies everywhere show it has the greatest oil expend per capita of the world.
Life is so great in America, some people find it cool enough to live in those tiny houses you are dismissing so ligthly. I bet those houses are bigger than the houses you can find in Japan BTW.
Or is it that every American has the right to a house in the Hamptons, working 6 hours a day, and without getting dirty?
Let’s be clear, average american is not that bright, but has very high expectations none the less.
What is putting pressure in America is not work devaluation, is lots of brigther people with lower expectations, willing to do the job.
Say hello to the globalized economy my friend, it has a globalized workforce in it.
There’s a problem with the rationale.
The problem is, why for americans living like a mexican isn’t enough?
How much es enough? America isn’t known exactly by the frugality of it’s people, studies everywhere show it has the greatest oil expend per capita of the world.
Life is so great in America, some people find it cool enough to live in those tiny houses you are dismissing so ligthly. I bet those houses are bigger than the houses you can find in Japan BTW.
Or is it that every American has the right to a house in the Hamptons, working 6 hours a day, and without getting dirty?
Let’s be clear, average american is not that bright, but has very high expectations none the less.
What is putting pressure in America is not work devaluation, is lots of brigther people with lower expectations, willing to do the job.
Say hello to the globalized economy my friend, it has a globalized workforce in it.
Guille,
So you advocate continuing on this path of accumulating all the wealth at the top and driving down the standard of living for everyone else?
It seems that the end game in that scenario would be a Global Workforce living at subsistence level with the wealthy sequestered in secure compounds, hopefully protected from the masses with their wrong headed notions a better life.
I would much prefer a Global Middle Class work force with a rising standard of living, and a realized expectation of a better life for the next generation. Then when making hiring decisions, I could consider time zone, language, skillset, and personality rather than being pushed to the lowest wage expectation.
Even from a hard edged practical point of view I want my workers to have adequate food, housing, security, health care, and transportation – so they can think about their work rather than the stresses of poverty.
Thanks,
Guille,
So you advocate continuing on this path of accumulating all the wealth at the top and driving down the standard of living for everyone else?
It seems that the end game in that scenario would be a Global Workforce living at subsistence level with the wealthy sequestered in secure compounds, hopefully protected from the masses with their wrong headed notions a better life.
I would much prefer a Global Middle Class work force with a rising standard of living, and a realized expectation of a better life for the next generation. Then when making hiring decisions, I could consider time zone, language, skillset, and personality rather than being pushed to the lowest wage expectation.
Even from a hard edged practical point of view I want my workers to have adequate food, housing, security, health care, and transportation – so they can think about their work rather than the stresses of poverty.
Thanks,
Mike: Both you and Guille actually make good points, albeit different ones. Guille notes that there’s a vast work force willing to work for less, and you point back to the distribution of wealth as being unequal.
One of the hallmarks of this last decade has been the rise of a middle class in India and China. Taken together that’s about half the world’s population. Both still have hundreds of millions in poverty, but both now have solid middle classes, with middle class expectations.
My point is that the rise of the middle class in those places has made the wealthy of India and China even wealthier, and given their wealth more stability. Tearing down the middle class, as Mexico and (increasingly) America are doing, does create a very small number of oligarchs, but the total wealth held by those oligarchs isn’t rising, even as their numbers decline.
In other words, a prosperous middle class is the best protection wealthy people have for both their present and future wealth and happiness. It’s not what our rich are taught by Forbes or Murdoch, it’s what economics and history teach us.
Mike: Both you and Guille actually make good points, albeit different ones. Guille notes that there’s a vast work force willing to work for less, and you point back to the distribution of wealth as being unequal.
One of the hallmarks of this last decade has been the rise of a middle class in India and China. Taken together that’s about half the world’s population. Both still have hundreds of millions in poverty, but both now have solid middle classes, with middle class expectations.
My point is that the rise of the middle class in those places has made the wealthy of India and China even wealthier, and given their wealth more stability. Tearing down the middle class, as Mexico and (increasingly) America are doing, does create a very small number of oligarchs, but the total wealth held by those oligarchs isn’t rising, even as their numbers decline.
In other words, a prosperous middle class is the best protection wealthy people have for both their present and future wealth and happiness. It’s not what our rich are taught by Forbes or Murdoch, it’s what economics and history teach us.
Having just read Dan Ariely’s September 2010 post on Wealth Inequality, in which he reports on a study demonstrating that Americans greatly underestimate wealth disparity and yet greatly prefer more equitable distributions, and reading your comment about India and Brazil, I decided to dig around a bit for some numbers.
In Ariely’s study, he presents the following breakdown of wealth distribution in the U.S., based on quintiles:
A BBC report on India Rising, from January 2007, referenced an unnamed study from “University of Western Ontario, 2006” and presented the following distribution in India:
In looking for the study that might have been referenced in the BBC report I found a following working paper by James Davies, et al., on The Level and Distribution of Global Household Wealth. Table 7: Wealth shares for countries with wealth distribution data, offers the following figures:
Having just read Dan Ariely’s September 2010 post on Wealth Inequality, in which he reports on a study demonstrating that Americans greatly underestimate wealth disparity and yet greatly prefer more equitable distributions, and reading your comment about India and Brazil, I decided to dig around a bit for some numbers.
In Ariely’s study, he presents the following breakdown of wealth distribution in the U.S., based on quintiles:
A BBC report on India Rising, from January 2007, referenced an unnamed study from “University of Western Ontario, 2006” and presented the following distribution in India:
In looking for the study that might have been referenced in the BBC report I found a following working paper by James Davies, et al., on The Level and Distribution of Global Household Wealth. Table 7: Wealth shares for countries with wealth distribution data, offers the following figures:
I came to your blog by way of a Tim O’Reilly tweet.
You start out by stating [emphasis yours]: “There is no such thing as unemployment. Not in America. There is, instead, a mismatch among our skills, our expectations, and the political value of work.”
This is equivocation or argumentation by changing the accepted definition of terms. There is unemployment. You may attribute it to a mismatch of skills, expectations, and political value of work. But you may not equate them. I can see the contribution of the mismatch, but your statement about political value of work is absolutely meaningless. What is the “political value of work”?
You next correctly identify that it is the labor market that is behind the influx of low wage workers.
Then you say things like “When you drive wages down, when you forbid workers with fungible skills from organizing, when you skew the tax system so the poor are paying for the government order the rich enjoy, you’re eating your seed corn.” Who is this “you” who is driving down wages? Name an individual or group of individuals. Who is forbidding workers to organize and how? Why is it just fungible skills? How is the tax system skewed against the poor? It certainly isn’t because of income tax, or capital gains tax? Are you talking payroll taxes and sales taxes? I would not be hard against taking caps off payroll taxes. Sales taxes are a state by state issue as would be property taxes. You need to be specific when you talk about tax systems.
But from there you really head off into the weeds making the claim that the US is becoming a Mexico. Economies exist on a spectrum–with socialism at one end and unbridled capitalism at the other. Mexico is much further to the right on the spectrum than the United States. Moreover, the United States is in no danger of heading to the far right of the spectrum.
Your description of “…how capitalism works” isn’t even accurate for pure laissez-faire capitalism much less for the mixed economy the United States has. Almost all companies in the US are public companies and these are by and large owned by the middle class via their retirement plans. These are not the days of Rockefeller, Vanderbilt, and Carnegie. Your last-man-standing theory would have occurred before now if that were really the way capitalism worked in the US. You are correct in saying the way we prevent this oligopoly is “appl[ying] counterweights. Anti-trust laws. Regulations. Income taxes. Government.” All these already exist in a mixed economy such as the US. While claiming not to call for socialism, your statement “The most important job of any government is maintaining order by maintaining balance among all the interests within society” belies that claim. What the heck does “maintaining balance” mean in this context if it does not mean the government making sure that some people are not too successful and for government to spread the wealth.
Your ideas as to how to add value to labor are nothing new and are being applied as we speak. The jobs that are remaining in the US and not being outsourced are skilled jobs. We automate now more than we ever have. More Americans attend college than ever before. Our income tax system is so progressive that the bottom half of wage earners pay no income tax and the top 5% pay over 50%. Spending on public education is as high as it has ever been.
Right or wrong, a call for “health care for all” is a call for socialism that you are supposedly not calling for.
Your characterization of the recent Supreme Court ruling is false. Elections are still one man (or woman) one vote. The ruling on Citizens United v. Federal Election Commission was about whether it was constitutional to limit the speech of a corporation. The corporation in question was a non-profit, not an Exxon. Other corporations whose speech may not be limited include ABC news, the Huffington Post, the ALCU, Dog Eat Dog Films, etc. Before you criticize this ruling, I suggest you actually read it: http://www.scotusblog.com/wp-content/uploads/2010/01/citizens-opinion.pdf
I came to your blog by way of a Tim O’Reilly tweet.
You start out by stating [emphasis yours]: “There is no such thing as unemployment. Not in America. There is, instead, a mismatch among our skills, our expectations, and the political value of work.”
This is equivocation or argumentation by changing the accepted definition of terms. There is unemployment. You may attribute it to a mismatch of skills, expectations, and political value of work. But you may not equate them. I can see the contribution of the mismatch, but your statement about political value of work is absolutely meaningless. What is the “political value of work”?
You next correctly identify that it is the labor market that is behind the influx of low wage workers.
Then you say things like “When you drive wages down, when you forbid workers with fungible skills from organizing, when you skew the tax system so the poor are paying for the government order the rich enjoy, you’re eating your seed corn.” Who is this “you” who is driving down wages? Name an individual or group of individuals. Who is forbidding workers to organize and how? Why is it just fungible skills? How is the tax system skewed against the poor? It certainly isn’t because of income tax, or capital gains tax? Are you talking payroll taxes and sales taxes? I would not be hard against taking caps off payroll taxes. Sales taxes are a state by state issue as would be property taxes. You need to be specific when you talk about tax systems.
But from there you really head off into the weeds making the claim that the US is becoming a Mexico. Economies exist on a spectrum–with socialism at one end and unbridled capitalism at the other. Mexico is much further to the right on the spectrum than the United States. Moreover, the United States is in no danger of heading to the far right of the spectrum.
Your description of “…how capitalism works” isn’t even accurate for pure laissez-faire capitalism much less for the mixed economy the United States has. Almost all companies in the US are public companies and these are by and large owned by the middle class via their retirement plans. These are not the days of Rockefeller, Vanderbilt, and Carnegie. Your last-man-standing theory would have occurred before now if that were really the way capitalism worked in the US. You are correct in saying the way we prevent this oligopoly is “appl[ying] counterweights. Anti-trust laws. Regulations. Income taxes. Government.” All these already exist in a mixed economy such as the US. While claiming not to call for socialism, your statement “The most important job of any government is maintaining order by maintaining balance among all the interests within society” belies that claim. What the heck does “maintaining balance” mean in this context if it does not mean the government making sure that some people are not too successful and for government to spread the wealth.
Your ideas as to how to add value to labor are nothing new and are being applied as we speak. The jobs that are remaining in the US and not being outsourced are skilled jobs. We automate now more than we ever have. More Americans attend college than ever before. Our income tax system is so progressive that the bottom half of wage earners pay no income tax and the top 5% pay over 50%. Spending on public education is as high as it has ever been.
Right or wrong, a call for “health care for all” is a call for socialism that you are supposedly not calling for.
Your characterization of the recent Supreme Court ruling is false. Elections are still one man (or woman) one vote. The ruling on Citizens United v. Federal Election Commission was about whether it was constitutional to limit the speech of a corporation. The corporation in question was a non-profit, not an Exxon. Other corporations whose speech may not be limited include ABC news, the Huffington Post, the ALCU, Dog Eat Dog Films, etc. Before you criticize this ruling, I suggest you actually read it: http://www.scotusblog.com/wp-content/uploads/2010/01/citizens-opinion.pdf
Joe: Developing countries develop capital by keeping income at the top. Think of our country in the late 19th century — China and India are there right now.
The New Deal crisis was ended by stimulating demand — having buyers for what was being sold. Many conservatives predicted the economy would collapse after the war. It didn’t because by that time there was a large, and growing, middle class demand, in the form of soldiers returned from the war, growing in their careers and buying into Levittown.
So, as your charts point out, our economy is hurt by its present income and wealth distribution. There’s not enough demand to create opportunities for wealthy people.
Joe: Developing countries develop capital by keeping income at the top. Think of our country in the late 19th century — China and India are there right now.
The New Deal crisis was ended by stimulating demand — having buyers for what was being sold. Many conservatives predicted the economy would collapse after the war. It didn’t because by that time there was a large, and growing, middle class demand, in the form of soldiers returned from the war, growing in their careers and buying into Levittown.
So, as your charts point out, our economy is hurt by its present income and wealth distribution. There’s not enough demand to create opportunities for wealthy people.
Chaos2night: Bill O’Reilly has served you ill. Large portions of our economy are now out of the public market, for example.
As to whom is driving wages down, and preventing workers from organizing, I just read the headlines. Wisconsin, for example, has denied collective bargaining rights to police and firefighters who’d been organized for decades.
Our labor laws have been turned into anti-labor laws by Republican Congresses and judges.
The Ryan budget, which Republicans just approved, eliminates Medicare and Medicaid as we know them, eliminates their guarantee of care in favor of vouchers and block grants. It gives trillions in extended tax breaks to rich people, and (this is the kicker) doesn’t come into balance for a decade. (Even the Progressive caucus did better than that.)
Now I know Fox News has its own reality, which it screams at you like Pravda 24-7. Pravda is the Russian word for Truth.
But just because someone tells you something — me or anyone else — doesn’t make it true. You need unbiased back-up. And pretending that Citizens United doesn’t mean one dollar-one vote because of some blog you found won’t do it.
Reality, I’m afraid, is what it is. It’s not what you pretend it is.
Chaos2night: Bill O’Reilly has served you ill. Large portions of our economy are now out of the public market, for example.
As to whom is driving wages down, and preventing workers from organizing, I just read the headlines. Wisconsin, for example, has denied collective bargaining rights to police and firefighters who’d been organized for decades.
Our labor laws have been turned into anti-labor laws by Republican Congresses and judges.
The Ryan budget, which Republicans just approved, eliminates Medicare and Medicaid as we know them, eliminates their guarantee of care in favor of vouchers and block grants. It gives trillions in extended tax breaks to rich people, and (this is the kicker) doesn’t come into balance for a decade. (Even the Progressive caucus did better than that.)
Now I know Fox News has its own reality, which it screams at you like Pravda 24-7. Pravda is the Russian word for Truth.
But just because someone tells you something — me or anyone else — doesn’t make it true. You need unbiased back-up. And pretending that Citizens United doesn’t mean one dollar-one vote because of some blog you found won’t do it.
Reality, I’m afraid, is what it is. It’s not what you pretend it is.
Tim O’Reilly, not Bill O’Reilly.
The who of Wisconsin is limiting (not denying) collective bargaining of public employees. Public employees such as your average Wisconsin teacher who makes $51,000 in salary and $25,000 in benefits ($76,000 total compensation). These people are not hurting. Furthermore, this hardly constitutes forbidding organizing in some sort of systematic manner as your screed implied. In the aggregate, over the long term, the market sets wages.
“Our labor laws have been turned into anti-labor laws by Republican Congresses and judges.” You know, merely repeating a claim does not in itself count as substantiation.
The Ryan budget will never survive the Senate. And even if it survived the Senate, President Obama would not sign it. In other words, it is just a dead bill like 100s of other dead bills that do not become law. Let’s limit ourselves to things that are actually law and not straw men.
As for Fox News, that is not my normal source of news. I don’t avoid it, but I certainly don’t seek it out. And no, Bill O’Reilly is not someone I watch. So you can stop beating that straw man too.
I agree that you telling me something does not make it true. That’s why I’ve asked you to substantiate your claims. Repeating them is not substantiation.
What I read with regards to Citizens United was the Supreme Court ruling. That’s how I know what it means.
Everything, you complain of is caused by the fact we are in the midst of moving from regional labor markets to an international market. You can no more stop this than stop most agricultural jobs disappearing 100 years ago.
Tim O’Reilly, not Bill O’Reilly.
The who of Wisconsin is limiting (not denying) collective bargaining of public employees. Public employees such as your average Wisconsin teacher who makes $51,000 in salary and $25,000 in benefits ($76,000 total compensation). These people are not hurting. Furthermore, this hardly constitutes forbidding organizing in some sort of systematic manner as your screed implied. In the aggregate, over the long term, the market sets wages.
“Our labor laws have been turned into anti-labor laws by Republican Congresses and judges.” You know, merely repeating a claim does not in itself count as substantiation.
The Ryan budget will never survive the Senate. And even if it survived the Senate, President Obama would not sign it. In other words, it is just a dead bill like 100s of other dead bills that do not become law. Let’s limit ourselves to things that are actually law and not straw men.
As for Fox News, that is not my normal source of news. I don’t avoid it, but I certainly don’t seek it out. And no, Bill O’Reilly is not someone I watch. So you can stop beating that straw man too.
I agree that you telling me something does not make it true. That’s why I’ve asked you to substantiate your claims. Repeating them is not substantiation.
What I read with regards to Citizens United was the Supreme Court ruling. That’s how I know what it means.
Everything, you complain of is caused by the fact we are in the midst of moving from regional labor markets to an international market. You can no more stop this than stop most agricultural jobs disappearing 100 years ago.
@Chaos2: Nice job in explaining the errors of Dana’s blog.
And to Dana: I see you’re blaming the people who produce jobs, for unemployment. Are you in fact saying that your own unemployment is to blame to someone else than you?
Maybe you should simply accept that capitalism means competition. And if an immigrant wants to do the work for a wage that you don’t want to work for, then it’s your own choice to be unemployed.
Suck it up. Stop whining and get a job.
@Chaos2: Nice job in explaining the errors of Dana’s blog.
And to Dana: I see you’re blaming the people who produce jobs, for unemployment. Are you in fact saying that your own unemployment is to blame to someone else than you?
Maybe you should simply accept that capitalism means competition. And if an immigrant wants to do the work for a wage that you don’t want to work for, then it’s your own choice to be unemployed.
Suck it up. Stop whining and get a job.
Capitalism means competition. Think of it as evolution in action.
But evolution results in a “climax state” that is highly vulnerable to its own destruction. Monopoly is such a climax state. If allowed to continue society becomes feudal.
Our society is moving rapidly in that direction. For capitalism to thrive we need to maintain social mobility. That means a poor man can become rich, and a rich one poor, while a thriving middle class supports the social order.
Right now it’s Democrats who are supporting capitalism by opposing the class war of a small elite which is funding the Republican Party. The economic situation has become analogous to that of the late 19th century.
The answer is to speak softly and carry a big stick against those who would destroy capitalism in its own name.
Capitalism means competition. Think of it as evolution in action.
But evolution results in a “climax state” that is highly vulnerable to its own destruction. Monopoly is such a climax state. If allowed to continue society becomes feudal.
Our society is moving rapidly in that direction. For capitalism to thrive we need to maintain social mobility. That means a poor man can become rich, and a rich one poor, while a thriving middle class supports the social order.
Right now it’s Democrats who are supporting capitalism by opposing the class war of a small elite which is funding the Republican Party. The economic situation has become analogous to that of the late 19th century.
The answer is to speak softly and carry a big stick against those who would destroy capitalism in its own name.
It’s like you are inventing some sort of double speak. First you say: “Capitalism means competition.” and then turn around and complain about “Monopoly is such a climax state.” FYI, monopolies result from a lack of competition.
Your choice of the ecological climax state as an analogy for capitalism is far fetched and totally unsupported by you. Most people are even not going to have a clue about something so esoteric.
Exactly how are “…Democrats…supporting capitalism by opposing the class war of a small elite which is funding the Republican Party”? Are the people supporting Republicans elite because they are a small group? What makes them elite? Why do you think Republicans have significantly more or less supporters than Democrats? Describe this so-called “class war”. Why do you think the Democrats are somehow above it?
Ultimately the problem I have with your blog and your responses is that the things you assert in them simply are not supported by you. You say things such as society is becoming feudal, but then don’t say why or how. Fedual systems have certain characteristics. Can you point out features in our current society that match those characteristics. You say our economic situation is analogous to the late 19th century, but you don’t support this with anything. What aspects are analogous and be prepared to say why you think they are.
Maybe you are totally correct in your assertions, but you’ve got to at least give me a hint as to why they are true. Or maybe you are just used to preaching to some choir following you have.
It’s like you are inventing some sort of double speak. First you say: “Capitalism means competition.” and then turn around and complain about “Monopoly is such a climax state.” FYI, monopolies result from a lack of competition.
Your choice of the ecological climax state as an analogy for capitalism is far fetched and totally unsupported by you. Most people are even not going to have a clue about something so esoteric.
Exactly how are “…Democrats…supporting capitalism by opposing the class war of a small elite which is funding the Republican Party”? Are the people supporting Republicans elite because they are a small group? What makes them elite? Why do you think Republicans have significantly more or less supporters than Democrats? Describe this so-called “class war”. Why do you think the Democrats are somehow above it?
Ultimately the problem I have with your blog and your responses is that the things you assert in them simply are not supported by you. You say things such as society is becoming feudal, but then don’t say why or how. Fedual systems have certain characteristics. Can you point out features in our current society that match those characteristics. You say our economic situation is analogous to the late 19th century, but you don’t support this with anything. What aspects are analogous and be prepared to say why you think they are.
Maybe you are totally correct in your assertions, but you’ve got to at least give me a hint as to why they are true. Or maybe you are just used to preaching to some choir following you have.
Daniel: Read some history. As I wrote last year, “The 2008 Crisis has much in common with the 1896 and 1932 crises, in that our problems are primarily economic.” (http://www.www.danablankenhorn.com/2010/02/the-1898-game.html)
In the 1890s economic change was accelerating, but America was unable to take advantage of it so long as privately owned monopolies (railroads), owned by a relative handful of people, prevented goods from moving, and controlled all the money so they could block needed economic change. The answers were antitrust laws, and regulation of utility monopolies. This gave new manufacturers the price assurance they needed to build scaled factories, like that of Ford.
If railroads had been able to control rates on “their” lines, they could have easily strangled Ford as they’d strangled the farmers in the 1890s, which was the cause of the Populist movement.
Monopoly had become an ecological “climax state” preventing progress. The answer was regulation.
Fast forward to the Depression. Everyone was selling. No one was buying. Prices were falling. There was no “natural bottom.” The only solution was to raise demand.
It’s unfortunate that the demand created by that era was for goods of war. It didn’t have to be that way, but the demand creation efforts of FDR’s first two terms were too timid to do the job, until the threat of Hitler forced Republicans to go along.
Now, we have all that history. American history. We know what happens when you don’t have enough demand. We know what happens when you allow unregulated monopoly. We know what happens when all the wealth is concentrated in a very small number of hands.
We can use these lessons to progress, or we can, as you suggest, deny these lessons and go backward, to the economics of those times, and the conditions of those times.
Oh, by the way, the economy in Alabama sucks for a reason.
Daniel: Read some history. As I wrote last year, “The 2008 Crisis has much in common with the 1896 and 1932 crises, in that our problems are primarily economic.” (http://www.www.danablankenhorn.com/2010/02/the-1898-game.html)
In the 1890s economic change was accelerating, but America was unable to take advantage of it so long as privately owned monopolies (railroads), owned by a relative handful of people, prevented goods from moving, and controlled all the money so they could block needed economic change. The answers were antitrust laws, and regulation of utility monopolies. This gave new manufacturers the price assurance they needed to build scaled factories, like that of Ford.
If railroads had been able to control rates on “their” lines, they could have easily strangled Ford as they’d strangled the farmers in the 1890s, which was the cause of the Populist movement.
Monopoly had become an ecological “climax state” preventing progress. The answer was regulation.
Fast forward to the Depression. Everyone was selling. No one was buying. Prices were falling. There was no “natural bottom.” The only solution was to raise demand.
It’s unfortunate that the demand created by that era was for goods of war. It didn’t have to be that way, but the demand creation efforts of FDR’s first two terms were too timid to do the job, until the threat of Hitler forced Republicans to go along.
Now, we have all that history. American history. We know what happens when you don’t have enough demand. We know what happens when you allow unregulated monopoly. We know what happens when all the wealth is concentrated in a very small number of hands.
We can use these lessons to progress, or we can, as you suggest, deny these lessons and go backward, to the economics of those times, and the conditions of those times.
Oh, by the way, the economy in Alabama sucks for a reason.
Excuse me, but I have not been reading your blog for years. As I first wrote, I came by your blog by way of a tweet from Tim O’Reilly who recommended it.
I have now read post you linked to.
You say that monopoly was the climax state and that regulation was the answer. My question is did this regulation get repealed? Do we have fewer or more regulations on business today than then?
You state that there was no “natural bottom” to falling prices. That is absurd. Zero is the natural bottom. People had to eat and barter was the real bottom.
The accepted causes of the Great Depression were the Mississippi Valley drought, uninsured fractional-reserve banking, protectionism such as the Smoot-Hawley Tariff and the stock market crash of 1929 caused by over leveraging. These led to the lack of demand that defined the Depression. Some economists believe it was government’s & Federal Reserve’s reaction to an ordinary recession that shrank money supply and tipped us in. Keynesian economics (which I am not a subscriber to) would call for deficit spending. Maybe FDR was too timid, I’ll let economists and historians argue that one. I do not think that WWII was the event that cured the Depression. The US economy had been expanding since 1933. I think an argument can be made that the Great Depression caused World War II. At any rate, your blaming Republicans for FDR’s failures does not hold water–especially as it is not clear that FDR’s belated actions were the actual cure.
“We know what happens when you don’t have enough demand.” I think you are confusing cause and effect here. The lack of demand is not the cause of bad policies, it is the effect. Those bad policies have included the meddling in markets–especially the housing market. Instead of bailouts, companies should have been failing. Those policies have included deficit spending in good times as well as bad. Those policies have included the idea that government can be the cure all.
“We know what happens when you allow unregulated monopoly.” What are the unregulated monopolies that you speak of? Are you seriously suggesting that a Google is equivalent to a Robber Baron?
“We know what happens when all the wealth is concentrated in a very small number of hands.” What exactly is happening? Show me studies, reports, statistics, something that shows that American is going to hell in a hand basket because of Robber Barons or monopolies or anti-labor laws? Explain to me why people are not better off with an absolute increase in their wealth because someone else has relatively more? Give me something that explains what you are complaining about better than simple, unavoidable, globalization of labor markets.
I suggest neither going forward nor backward as I do not accept your basic premise. What I do suggest is that what you claim is Mexicanization and what you claim are its causes have not been demonstrated much less proved.
And the reason you think Alabama’s economy sucks is? And why do you even think Alabama in the specific is relevant to this conversation?
Excuse me, but I have not been reading your blog for years. As I first wrote, I came by your blog by way of a tweet from Tim O’Reilly who recommended it.
I have now read post you linked to.
You say that monopoly was the climax state and that regulation was the answer. My question is did this regulation get repealed? Do we have fewer or more regulations on business today than then?
You state that there was no “natural bottom” to falling prices. That is absurd. Zero is the natural bottom. People had to eat and barter was the real bottom.
The accepted causes of the Great Depression were the Mississippi Valley drought, uninsured fractional-reserve banking, protectionism such as the Smoot-Hawley Tariff and the stock market crash of 1929 caused by over leveraging. These led to the lack of demand that defined the Depression. Some economists believe it was government’s & Federal Reserve’s reaction to an ordinary recession that shrank money supply and tipped us in. Keynesian economics (which I am not a subscriber to) would call for deficit spending. Maybe FDR was too timid, I’ll let economists and historians argue that one. I do not think that WWII was the event that cured the Depression. The US economy had been expanding since 1933. I think an argument can be made that the Great Depression caused World War II. At any rate, your blaming Republicans for FDR’s failures does not hold water–especially as it is not clear that FDR’s belated actions were the actual cure.
“We know what happens when you don’t have enough demand.” I think you are confusing cause and effect here. The lack of demand is not the cause of bad policies, it is the effect. Those bad policies have included the meddling in markets–especially the housing market. Instead of bailouts, companies should have been failing. Those policies have included deficit spending in good times as well as bad. Those policies have included the idea that government can be the cure all.
“We know what happens when you allow unregulated monopoly.” What are the unregulated monopolies that you speak of? Are you seriously suggesting that a Google is equivalent to a Robber Baron?
“We know what happens when all the wealth is concentrated in a very small number of hands.” What exactly is happening? Show me studies, reports, statistics, something that shows that American is going to hell in a hand basket because of Robber Barons or monopolies or anti-labor laws? Explain to me why people are not better off with an absolute increase in their wealth because someone else has relatively more? Give me something that explains what you are complaining about better than simple, unavoidable, globalization of labor markets.
I suggest neither going forward nor backward as I do not accept your basic premise. What I do suggest is that what you claim is Mexicanization and what you claim are its causes have not been demonstrated much less proved.
And the reason you think Alabama’s economy sucks is? And why do you even think Alabama in the specific is relevant to this conversation?
I like the debate around the issue. Some comments.
I don’t think it’s a market problem, but more of an entitlement problem. The same Americans who don’t want to work the fields are the ones looking for the continued cheap prices at the supermarket. If you pay people more, it will cost more to deliver. You can’t have it both ways.
I get the sense from your post that the capitalist system is the only one to blame here for the problem and the Government is the only mechanism we have to fix it. The way I see it is that both sides, both business and labor, are at fault, and that there are multiple avenues to fixing the problem, not just via Government intervention.
Government’s role in this ought to be insuring fairness and equal opportunity for workers, not increasing their value (I’m not sure what you mean by “add value to labor”). Giving all Americans a fair chance is what Government should strive to achieve, and really nothing more. You point out some good ways to achieve that, through regulations, a progressive tax system, making education affordable, etc. There are certainly very valid cases of the powerless poor who legitimately need help. But we have to be careful how far we go. Government is actually doing workers a disservice when it helps them to perpetuate the problem. If someone wants to continue to sit on the coach all day watching C-rated soap operas, without putting in the hard work to remake their life, there’s nothing we can (or should) do about that.
Beyond the limited power of Government to achieve the means of fairness and equal opportunity (try getting something through Congress quickly, or these days, at all), competition itself can be a powerful tool. In fact, I would argue that competition is the best protection against the 1-man-left-standing fear, so long as it is fair. Fair competition keeps prices in check because it gives people choice, their most powerful weapon. As long as ordinary people have a choice – and I agree that not all markets are currently fair and equal – they are the best ones to decide what’s best for them. That is certainly freedom, isn’t it?
Last, in response to one of your comments, I wouldn’t consider one of the hallmarks of this last decade to be the rise of a middle class in India and China, not because of the quite impressive end results we’ve seen, but by the way in which it was achieved. China and India are both highly corrupt and unfair places (although now admittedly less than in the past). There have been a lot of winners who have joined the middle class, but many of those winners have not earned their way. In fact, the way in which business and government conspire together to favor those who are most connected and/or can afford to give bribes is an assault on workers and the powerless. If they were able to operate in a mode that is more straightforwardly competitive, my opinion is that you would see much less of that inequality.
I like the debate around the issue. Some comments.
I don’t think it’s a market problem, but more of an entitlement problem. The same Americans who don’t want to work the fields are the ones looking for the continued cheap prices at the supermarket. If you pay people more, it will cost more to deliver. You can’t have it both ways.
I get the sense from your post that the capitalist system is the only one to blame here for the problem and the Government is the only mechanism we have to fix it. The way I see it is that both sides, both business and labor, are at fault, and that there are multiple avenues to fixing the problem, not just via Government intervention.
Government’s role in this ought to be insuring fairness and equal opportunity for workers, not increasing their value (I’m not sure what you mean by “add value to labor”). Giving all Americans a fair chance is what Government should strive to achieve, and really nothing more. You point out some good ways to achieve that, through regulations, a progressive tax system, making education affordable, etc. There are certainly very valid cases of the powerless poor who legitimately need help. But we have to be careful how far we go. Government is actually doing workers a disservice when it helps them to perpetuate the problem. If someone wants to continue to sit on the coach all day watching C-rated soap operas, without putting in the hard work to remake their life, there’s nothing we can (or should) do about that.
Beyond the limited power of Government to achieve the means of fairness and equal opportunity (try getting something through Congress quickly, or these days, at all), competition itself can be a powerful tool. In fact, I would argue that competition is the best protection against the 1-man-left-standing fear, so long as it is fair. Fair competition keeps prices in check because it gives people choice, their most powerful weapon. As long as ordinary people have a choice – and I agree that not all markets are currently fair and equal – they are the best ones to decide what’s best for them. That is certainly freedom, isn’t it?
Last, in response to one of your comments, I wouldn’t consider one of the hallmarks of this last decade to be the rise of a middle class in India and China, not because of the quite impressive end results we’ve seen, but by the way in which it was achieved. China and India are both highly corrupt and unfair places (although now admittedly less than in the past). There have been a lot of winners who have joined the middle class, but many of those winners have not earned their way. In fact, the way in which business and government conspire together to favor those who are most connected and/or can afford to give bribes is an assault on workers and the powerless. If they were able to operate in a mode that is more straightforwardly competitive, my opinion is that you would see much less of that inequality.
ChrisM: No offense, but this is a great example of capitalism exalted into ideology. For example, you write “I would argue that competition is the best protection against the 1-man-left-standing fear,” but that’s simply false, as proven time-after-time through America’s history.
Competition’s climax state is not open competition. It’s monopoly, or shared monopoly. Mexico allows monopolies, and thus they have a very small number of very rich people. We have anti-trust laws, and (had) progressive taxation, which until recent decades maintained competition and kept a feudal class from rising.
What has Paris Hilton done in her life to deserve untold wealth? Does she have no responsibility to society for that wealth?
Most Americans would answer no to the first question, and yes to the second. Even Bill Gates would answer in that way, which is why he’s deliberately leaving his kids a pittance relative to his billions.
I don’t like idle poor. I also don’t like idle wealth. And I don’t think wealth that’s idle is good either. I think the examples of America and Mexico, until recently, prove that point.
We have a choice. We can continue to enable laziness, and monopoly, and scarcity, or we can act as we did in the late 19th Century, under the Republican Party, and adjust in order to remain internationally competitive.
What you’re rationalizing, Chris, is ideology that enables the creation of a feudal ruling class.
ChrisM: No offense, but this is a great example of capitalism exalted into ideology. For example, you write “I would argue that competition is the best protection against the 1-man-left-standing fear,” but that’s simply false, as proven time-after-time through America’s history.
Competition’s climax state is not open competition. It’s monopoly, or shared monopoly. Mexico allows monopolies, and thus they have a very small number of very rich people. We have anti-trust laws, and (had) progressive taxation, which until recent decades maintained competition and kept a feudal class from rising.
What has Paris Hilton done in her life to deserve untold wealth? Does she have no responsibility to society for that wealth?
Most Americans would answer no to the first question, and yes to the second. Even Bill Gates would answer in that way, which is why he’s deliberately leaving his kids a pittance relative to his billions.
I don’t like idle poor. I also don’t like idle wealth. And I don’t think wealth that’s idle is good either. I think the examples of America and Mexico, until recently, prove that point.
We have a choice. We can continue to enable laziness, and monopoly, and scarcity, or we can act as we did in the late 19th Century, under the Republican Party, and adjust in order to remain internationally competitive.
What you’re rationalizing, Chris, is ideology that enables the creation of a feudal ruling class.
I’m a conservative Republican and I agree with what you say about the market. I just want to know how you think we’re going to reverse the problem as long as there are so many illegals willing to work for cash under the table for every unemployed American Citizen (who must pay taxes)? Do you think that business owners are suddenly going to realize that their greed and unwillingness to pay a decent wage is making this economy cave in on itself, say, “Oops, my bad,” and mend their wicked ways? The economic issues this country is facing are indeed, at least in part, due to illegal immigration. It’s just that bleeding heart liberals would rather pretend otherwise and blame Republicans than face up to the facts.
I’m a conservative Republican and I agree with what you say about the market. I just want to know how you think we’re going to reverse the problem as long as there are so many illegals willing to work for cash under the table for every unemployed American Citizen (who must pay taxes)? Do you think that business owners are suddenly going to realize that their greed and unwillingness to pay a decent wage is making this economy cave in on itself, say, “Oops, my bad,” and mend their wicked ways? The economic issues this country is facing are indeed, at least in part, due to illegal immigration. It’s just that bleeding heart liberals would rather pretend otherwise and blame Republicans than face up to the facts.
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Dana Blankenhorn: Unemployment and Mexicanization