The State of the Unions

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Erik Kain

Erik writes about video games at Forbes and politics at Mother Jones. He's the contributor of The League though he hasn't written much here lately. He can be found occasionally composing 140 character cultural analysis on Twitter.

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186 Responses

  1. Avatar DougJ says:

    “These days anyone can buy things, all it takes is a little credit card debt, maybe a second mortgage.”

    That is pre-9/15 (08) thinking.Report

  2. Avatar gregiank says:

    Great stuff Eric. I hear there is a going to be Senate opening AZ………hmmmmmReport

  3. Avatar North says:

    Interesting. What do you think is the cause of the demise of the unions? Keep in mind they’ve pretty much croaked in Canada the same way they have in the US.Report

  4. Avatar Bob says:

    What greg said, well, only the first three words.Report

  5. Avatar Robert Cheeks says:

    What happens to the economy when taxes go up? Does it grow and creat jobs or does it shrink and lose jobs?
    How do we determine the economic worth of a electrican, plumber, tow motor driver, miner, etc.?
    Do you really expect our gummint to carry this off without causing pain and suffering?
    Barry’s spent trillions and how many ‘jobs’ has he created? (one kinda misses Bush’s 5% unemployment). How many times do we have to watch this circus until we realize it doesn’t work?
    How succesful do you think the progressivists/commie-dems were?
    In order to institute your programs you’re going to work to have Barry and the commie-dems recapture the electorate. How you gonna defeat the Tea Party people who will vigorously oppose your form of socialism?Report

    • > What happens to the economy when taxes go up?
      > Does it grow and create jobs or does it shrink and
      > lose jobs?

      Generally it shrinks. But not because of the taxes, directly. Because of the loss of liquidity, right?

      So if liquidity is the real driver of growth, one can tax more in a very liquid environment and less in a less liquid environment and have the same net effect on the growth of the economy (although there will be stark differences in government revenue).

      Liquidity is not exactly a problem right now, in that most corporations are sitting on tons of cash. They’re just not spending it, so there’s this huge balloon of capital that would get the economy moving again if we would just pop the balloon. So pop it.

      We have our dreaded 35% corporate tax rate with all these loopholes that everyone talks about. Cut out a slew of them, but make the corporate tax rate progressive.

      So your small business would have effectively a zero corporate tax rate. Your medium business would have a slightly higher corporate tax rate, with very few exemptions. And your large business would temporarily keep the really high corporate tax rate with no other exceptions… except a short term huge cut for investing that short term liquid capital. That pops the balloon, and then next year you cut the upper tax bracket for corporations down to something that has sustainability in economic growth (you’d have to, after you pop the liquidity bubble, or you’d wind up contracting the economy by taxing too much).

      Does this work?Report

      • Avatar Bob in reply to Pat Cahalan says:

        “Generally it shrinks.”

        Would the economy under Clinton qualify as an exception to the general? Republicans howled about the economy killing tax increases of the early 90’s but they had to eat there words. The economy boomed:

        “Of course, far from bringing the Doomsday of which Republicans were warning, Clinton’s policies ushered in the longest sustained period of economic growth in the nation’s history, with 23 million jobs created. Compared to the administration of George W. Bush, the Clinton-era saw more job growth, more GDP growth, more wage growth, and more business investment. Incomes grew under Clinton but fell under Bush, while poverty did the opposite, falling under Clinton but increasing under Bush.

        “Oh, and Clinton balanced the budget for the first time since 1969. On May 27, 1993, Rep. Robert Michel (R-IL) said “[Americans] will remember who set loose this dreadful virus into the economic bloodstream of our nation.” If only we could have a “dreadful virus” of that sort today. ”

        http://wonkroom.thinkprogress.org/2010/08/10/1993-quotes/Report

      • Avatar Robert Cheeks in reply to Pat Cahalan says:

        Actually, it’s not bad. With that said, as a paleo, I’m always concerned when gummint sticks it’s winkie in the soup and it’s gummint, you’re telling me, whose going to impose this ‘progressive’ (I just winced) corporate tax. But, if your ideal follows through it would work, I think. But, it is an ideal and you know how special interests et al want to get their hands on the pie.
        The truth is corporate taxes are passed on, I understand, and the consumer is forced to pay the tax. When the price gets to high the consumer quites buying and we go into decline.
        Why not eliminate corporate tax altogether (my commie-dem friends just blew coffee outta their noses!), drastically cut out bureaucratic regs and let the economy prosper. Then we have less welfare costs, a growing middle class, and a central gummint weakened by less and less presumed social responsibilities.
        I like your suggestion but I like to craft mine grounded on the freedom of the individual, not one dependent on the central regime’s assumed tender mercies.Report

        • Optimally, I like it when systems are generally left to their own devices. But complex systems to get out of whack. They’ll eventually return to equilibrium, but in the meantime it sucks to be you if the system in question is the economy.

          > But, it is an ideal and you know how special interests
          > et al want to get their hands on the pie.

          Yes, I do. And of course it wouldn’t be perfectly implemented.

          For the record, I’m down with cutting corporate taxes down quite a bit. I think corporate activity comes with some externalities that should be accounted for via tax, but for the most part I’m not a fan of double taxation. That’s a balance that you need to work on, and right now it seems to be wonked. Certainly our corporate tax code is ridiculous.Report

    • Avatar Steven Donegal in reply to Robert Cheeks says:

      Actually, there is virtually no correlation between top marginal tax rates and GDP growth. Here is a link to one of many charts that one can find in about 5 seconds of Googling.

      http://thoughtstate.blogspot.com/2011/01/tax-rates-and-gdp-growth.htmlReport

      • Can you correct that graph for economic liquidity? I don’t have the econ chops to do it, myself.

        TMTR vs GDP growth is a limited graph. It tells us something; that the top marginal tax rate isn’t correlated directly to GDP, and people should stop moaning about the tax rate destroying the economy as that’s clearly an overgeneralization.

        That’s pretty much all it tells us, though. If the two variables aren’t strictly dependent, though, it doesn’t tell us much else. I doubt they’re strictly dependent about as strongly as I doubt they’re completely independent.Report

        • Avatar Daulnay in reply to Pat Cahalan says:

          Our problem right now is insufficient demand, not liquidity. The economists have a way of putting it (grossly simplified into Econ 101, or maybe 01):

          C + I + G = C + S + T
          Spending side (which drives the economic engine):
          C = consumption
          I = investment
          G = government spending

          Income side
          C = consumption
          S = savings
          T = taxes

          Normally, S and I are close to equivalent, as are G and T. Theory is that running deficits (higher G than T) pumps the economy when the economy is in the doldrums. Notice that right now, corporations are sitting on a lot of savings and not investing. That’s counteracting the nice large stimulus package (deficit increase) passed last year.

          Note that this is more a Keynsian interpretation of the problem, the Austrians and monetarists have different ones.

          Also, notice that monetary policy is “pushing on a string” right now, because inflation and interest rates are close to zero. The Fed cannot cut interest rates further; Ben Bernanke’s Fed has had to resort to directly expanding the money supply rather than using the traditional interest rate mechanisms.

          If you follow Calculated Risk, you’ve seen the graphs of this recession compared to the other post WWII recessions. This one looks much longer and deeper. It looks much more like a depression; people are unemployed for far longer than usual, and overall prices are flat and in danger of trending downward.Report

    • Avatar Barry in reply to Robert Cheeks says:

      “What happens to the economy when taxes go up? Does it grow and creat jobs or does it shrink and lose jobs?”

      Probably it grows and creates new jobs, judging from the USA.Report

  6. Avatar carlos the dwarf says:

    Welcome to the Democratic Party, E.D.! If you look off to your right, you’ll see the Blue Dog Coalition and their lobbyist cuddle-buddies.Report

  7. Avatar MFarmer says:

    It’s final. Thank goodness that’s over. Good luck.Report

  8. For what it’s worth, I’m on board with resurrecting some sense of organized labor. We heavily subsidize organized capital in our economy, that ought to be better offset.

    That said, pensions are a scary mechanism. They work well in steady state systems, but our economy ain’t such a critter. They also put a large pot of money under the control of a small pot of decision makers (note: mutual funds and about 90% of your 401k and 403b offerings have the same weakness there, so the current alternative isn’t any better).

    Looking forward to reading where you’re going with all this, though, E.D.Report

    • Avatar E.D. Kain in reply to Pat Cahalan says:

      No doubt reform is needed, Pat. Not sure what though.Report

      • Avatar Pat Cahalan in reply to E.D. Kain says:

        A crazy man I know suggested that the whole problem with the financial system is that Obama (who he dislikes) did not nationalize the banking system. His argument went something like this:

        The trick to long term investment is to beat inflation. Basically, that’s it. Innovation and efficiency gains means you don’t need to make a ton of profit; this whole myth of retiring as a millionaire is hooey. All you need to be able to do is retire with a very modest monthly income, sell your remaining non-liquid assets (your house, which is no longer a durable consumer good but an asset). Travel for two years, and then take your remaining home equity, buy a nice small usable place in a region that you can afford monthly expenditures on your small income, and fish. If you don’t get sick (side note, that was a whole ‘nuther conversation) you’re fine. You don’t want retirees to living in the neighborhoods where families live anyway, that’s where the schools are already built, and the parks are full of noisy kids.

        So for basic long term savings, we don’t *want* a major market player. We don’t want someone who is constantly trying to beat 5%. First of all, because you’re never going to hit that target in the long run, and second of all, because most people don’t need more than 5% for actual long term savings. Nationalize the banks that provide basic financial services. Pay 5%. Take the funds that depositors put into the bank, and give out very conservative loans at 7%, to cover costs. Do not under any circumstances buy federal securities or put any of this money in the general fund.

        Give people the opportunity to put money in this bank, tax free, out of their paychecks using the same mechanisms we use now to fund 403bs and 401ks.

        I have no idea if this would work, but it seems to solve several problems at once. Which means it’s probably got several fatal flaws in it somewhere, but I couldn’t see them offhand.Report

        • Avatar 62across in reply to Pat Cahalan says:

          One of those fatal flaws is that the financial sector oligarchy will never let it happen.

          Before going too far discussing how to reform, you have to find a way to break down the barriers to reform. Strengthen the middle class, by any means available (including stronger Labor), or there is no political force that can stand against the oligarchs. Strength in numbers is all the lower 95% have for leverage.Report

        • That’s the missed opportunity of the recent crisis. Big crisis gives you the opportunity to tear down things and rebuild them quickly in different forms because you can bulldog through resistance.

          I mean, even if you were the world’s biggest Democratic fan, and a huge Obama booster, you have to be honest and admit that he didn’t lead anything through the financial crisis. He negotiated his way through it.

          Don’t worry, they’ll muck it up again and we’ll have another chance.Report

          • Avatar 62across in reply to Pat Cahalan says:

            I agree there was an opportunity lost, though I’m convinced that some kind of change in the zeitgeist is necessary before any politician would have the balls to challenge the real power. To my mind, a desired end of the whole “Strengthen the Middle Class” project would be a little less reverence of the rich and a renewal of the esteem of the working stiff.

            I find it sort of dreadful to think that another muck up is what it will take.Report

    • Avatar Barry in reply to Pat Cahalan says:

      “That said, pensions are a scary mechanism. They work well in steady state systems, but our economy ain’t such a critter.”

      What I find interesting is so much opposition on the right seems to be on the theme of ‘This is the USA; we s*ck, can’t do things that other countries can, because it’s different here – we’re worse.”

      ” They also put a large pot of money under the control of a small pot of decision makers (note: mutual funds and about 90% of your 401k and 403b offerings have the same weakness there, so the current alternative isn’t any better).”

      True, there can be problems with pension funds. However, if you’d please turn your attention to the past few years……Report

  9. Avatar Sam M says:

    Go work in a unionized factory. It will take you about two days to figure out that there is no hope for unions in America, and trusting them to do anything productive is a fool’s dream. (One time I worked in the dark for several days because the light bulb over my station blew out, but a different local was in charge of that stuff so I was NOT permitted to change it myself.)

    On the other hand, it should take you about the exact same amount of time to reach the same conclusion about management.

    This will leave you approximately where you are right now. So… disregard the advice to go work in a factory.

    If you can find a solution other than wringing your hands about it, let me know. Because I’ve looked and that’s all I can come up with.Report

    • Avatar E.D. Kain in reply to Sam M says:

      I have no illusions about this. Reforms are certainly needed.Report

    • Avatar Jaybird in reply to Sam M says:

      We need better people.Report

    • Avatar DensityDuck in reply to Sam M says:

      And it seems to me that this is something that Kain alludes to in his mention of Sweden, with business and labor working cooperatively. American unions always seem to act like it’s 1921 and Andrew Carnegie is making asbestos-scrapers buy their own dust masks.Report

      • Avatar BlaiseP in reply to DensityDuck says:

        The American unions developed in a milieu of open warfare. If the unions became violent and corrupt, they did not start the war.

        It seems every time some folks hear the worlds “trade union”, it’s like the horse in Young Frankenstein every time it hears “Frau Blücher”. These witchsmellers roam the countryside, preaching their Right to Work nonsense with all the fervour of lunatick parsons trying to scare the rubes into selling their farms, donning white robes and waiting for the Return of Christ in Power ‘n Glory.

        Reminds of nothing so much as those tinhorn dictators down in Central America. Every time someone mentions Land Reform, you can hear them all fart in outrage “pinches Comunistas, ladronesReport

      • Avatar Barry in reply to DensityDuck says:

        “American unions always seem to act like it’s 1921 and Andrew Carnegie is making asbestos-scrapers buy their own dust masks.”

        Proof of evil by assertion.Report

  10. Avatar dollared says:

    Nice to see you and J.K. Galbreath have joined forces, E.D.

    I’m in agreement, but I despair about the unionization idea. I wonder: is there room for a AAWP? The American Association of Working People? If it could stake a certain center-left ground and be
    -pro business
    -pro financial integrity
    -pro family (40 hour weeks, family leave, paid vacation minima)
    -pro safety net (Social Security +, Expanded Medicare, unemployment, workers comp)
    -pro progressive taxation (same taxes on Labor as on Capital Gains)

    It might have some strength – with the non-aligned backing.

    Just a thought….Report

    • Avatar E.D. Kain in reply to dollared says:

      That could work. It’s an idea in any case and right now we need lots of ideas.Report

    • Avatar Matt in reply to dollared says:

      @dollared: unless there’s something awfully libertarian hidden in the “pro-business” or “pro-financial-integrity” above, this isn’t a “center-left” proposal at all in the current climate – it’s practically to the left of half of the Democrats in Congress. Not that that’s a bad thing, but it’s indicative of how much the high-level political discourse has turned into the jackals deciding who gets to eat which part of the middle class first.

      For instance, “paid vacation minima”? We can’t even get the right to agree that a minimum WAGE is a reasonable thing, much less vacation!Report

      • Avatar Will H. in reply to Matt says:

        I’m a journeyman in a trade union.
        I don’t paid vacation. I don’t really get a vacation at all. I can take off for three weeks or five weeks or whatever, pretty much any time I want to, with notice. But no pay.
        Most of the locals (in my own union) these days have a “vacation fund” which holds out a portion of the gross (from 5% to 10%) and sends it to an account. It’s always at a local bank that has an agreement (some kind of special deal) with the local. The rules for deposit and withdrawal are very different from one place to another. I might be able to get my money out once a month without a fee, or it might be twice a year.
        These vacation funds are the old strike funds. They just changed the name is all.
        But no vacations.Report

  11. Avatar Will says:

    Leaving aside your economic assumptions, it’s worth mentioning that American labor law as it relates to unionization and union membership is profoundly coercive. If a union gets into a bargaining unit through a majority vote, everyone in that workplace is obligated to accept union representation, whether they voted for it or not. Moreover, unaffiliated workers in said workplace can then be compelled to pay union dues for the purposes of collective bargaining. I’d rather see that system reformed than extended to more sectors of the economy.Report

    • Avatar Will in reply to Will says:

      The other weird thing about this post is that you link to an article outlining an absolutely disastrous public sector pension crisis without refuting any of the particulars. So we’re stuck with this massive problem and the solution is to . . . export that model to the private sector?Report

      • Avatar E.D. Kain in reply to Will says:

        Will – I’m not saying there doesn’t need to be reforms. But what if that article, and the entire discussion so far surrounding public pensions, is only focusing on one tiny slice of a much bigger problem – namely, that people aren’t going to have retirement savings. 401k’s are fine, but a lot of people don’t know how to manage them. The crisis extends far, far beyond the pension crisis in California. Even there, however, I think a much deeper problem is the inability of the state to pass a budget.Report

        • Will raises the points I was planning to and I have to say this response really ducks the issue raised, where is the money?

          It seems a bit odd to respond to a concern about how lucrative retirement payments are bankrupting state and municipal governments (at a cost of jobs and crucial services, I might add) by saying the bigger problem is that people aren’t going to have retirement savings.

          I mean specific to California, the inability to pass a budget is a political problem, not a structural one. The inability to fund retirement promises made to tens of thousands of people speaks to structural issues at hand not some transitory lack of political will.Report

          • Avatar E.C. Gach in reply to Kyle Mathews says:

            “The inability to fund retirement promises made to tens of thousands of people speaks to structural issues at hand not some transitory lack of political will.”

            I think the lack of political will is that when it’s time to pay, the public rationalizes ways to skip out on their debt. In California the public is responsible, in part, for whatever contracts are offered and agreed upon, and are responsible for the terms of those contracts when they come due.

            I’d be curious, I’m sure California is already rated pretty low, but does the inability to meet it’s pension agreement also affect the state’s credit rating?Report

          • Avatar David Cheatham in reply to Kyle Mathews says:

            You’re right, lucrative retirement payments aren’t really bankrupting state and municipal governments. Lack of _tax revenue_ are doing that.

            Which is about 33% the fault of the recession, and 33% the fault of the local right-wing tax-cut fanatics failing to have any buffers in revenue at all, and even having too little tax revenue before the recession, and 33% the lack of the Federal government failing to help out enough because of tax-cut fanatics there.Report

            • I don’t buy it. High tax cities like New York and San Francisco also have large underfunded pension liabilities and a sizeable tax base to actually fund them.

              Moreover, unlike the federal government where the wealthy have less ability to dodge tax liabilities, it’s comparatively easy for people who make money to move to lower taxed states/municipalities, which is why Texas is growing in population and California is null. Why border communities in states with lower taxation, Tahoe/Fairfield County, Virginia continue to thrive.

              It’s easy to say the Howard Jarvis Taxpayers Assoc is the root of all underfunded government problems but it’s less clear that short of a East Berlining themselves, states and municipalities wouldn’t have a hard time keeping a tax base in lieu of keeping tax rates relatively low.Report

    • Avatar Michael Drew in reply to Will says:

      I can see arguing for a supermajority requirement, but other than that, surely you see the difficulty with organizing representation in a more opt-in kind of a way, right? If that means you’re against unions, great, but that’s what it means.Report

      • Avatar Michael Drew in reply to Michael Drew says:

        The solution to this, though, is pretty simple: just look around. This inherent dynamic has obvious disadvantages, and the result is that over time, wrokers have sought choices and secured them. So private industry has been precipitously de-unionized. I know there has been a legal-political dimension to that development, but I am woefully undereducated on the topic of labor law so I can’t account for the relative parts of the causation here. But I am inclined not to wring my hands too greatly over the decline of unionism, because I tend to think that more than anything, we have really just seen people (and companies) vote with their feet. But at the same time, I am inclined to feel the same way about public sector unions. The public sector is at a disadvantage compared to private firms, because it is geographically bound, so that is a legitimate response to that inclination. But real disadvantages are just that: real disadvantages. Retaining talent and intellectual capital is something that governments will inevitable have to expend resources to do, commensurate with their relative disadvantages in the labor market. Unions crop up where either there is gross exploitation of workers and workers acquire leverage by reaching the point of marginal indifference between employment and unemployment, or where there is a structural advantage that they want to consolidate or preserve. It is just something employers have to deal with – the First Amendment guarantees the right to assemble.Report

        • Avatar Barry in reply to Michael Drew says:

          “This inherent dynamic has obvious disadvantages, and the result is that over time, wrokers have sought choices and secured them. So private industry has been precipitously de-unionized.”

          ‘Sought choices’ = crushing unions. By that standard, many people in many countries sought the choice of not publicly criticizing their governments.

          All a matter of choie.Report

        • Mike – I think this simplifies things a great deal. The history of the labor movement is fraught with corporate and government attempts to quash and disrupt and destroy organized labor through physical force or the strong arm of the law. When this failed it was to outsource jobs and bring in foreign, non-unionized workers. We can argue about the various benefits of these policies to the economy on a whole, and certainly trying to reconcile unionism and globalism is tricky, but the methods used and the intended results strike me as rather lopsided toward the elites at the expense of workers. Other countries – I keep mentioning Sweden – incorporate globalization and organized labor without subverting either.Report

          • Avatar Michael Drew in reply to E.D. Kain says:

            Erik – absolutely! I’m amazed that I’m being cast as anti-union here. I am pro-union. But at the same time, we have to acknowledge that unions had benefitted before their decline from changes in law that greatly aided their ability to organize shops. But there is not some absolute presumption that strong union-protecting laws are the only right kind of laws to have in this area. I said that I wasn’t clear on exactly how to assign the levels of causation in union decline between changes in the law due to industry-led political changes and actual desire on the part of workers at large not to be organized. Clearly, I am acknowledging the way that untions have come under political attack and had their legal protections eroded. This has played a part in their decline; I said as much. But I also think that things like the right-to-work movement were real political forces, reflecting real desires on the part of real workers (at least I have no reason to assume this wasn’t true. So I think these factors – worker preferences and legal changes forced through politics – had to have gone hand-in-hand to some extent. On the other hand, clearly also industry capture greased those skids as well. It’s hard to parse out all the causality, as I said.Report

      • Avatar Will H. in reply to Michael Drew says:

        I’ve actually seen that done. It’s called a split shop.Report

    • Avatar Barry in reply to Will says:

      “Leaving aside your economic assumptions, it’s worth mentioning that American labor law as it relates to unionization and union membership is profoundly coercive.”

      Yes, it’s rather coercive, and has worked to largely crush private-sector unions.

      Oh, wait – you’re talking about something else.Report

  12. Avatar John Howard Griffin says:

    E.D., I can see the long road of thought that lead you to writing this post. Fine work.

    In my own long road of thought, I can’t get past (find a solution for) the extreme wealth inequality that already exists. How is that “undone” (or, as some might say, redistributed to the poor and middle class)? I just can’t see the powerful class of the super-wealthy not using every tool available (even those that might be questionably legal or downright illegal).Report

    • Avatar DensityDuck in reply to John Howard Griffin says:

      You beg the question of whether the “extreme wealth inequality” is a bad thing. Are we assuming that wealth inequality is bad based on historical experience? Because in historical experience, the low end of the equality scale was generally starving to death. In modern America, the low end of the equality scale has cars and TVs and cell phones and is so well-fed that their biggest health problem is obesity.Report

      • Extreme wealth inequality is a bad thing.

        Not that I have anything against rich people, mind you. But if you’re looking at the economy as a complex system, having a very small portion of the agents have a very large impact on the behavior of the system is going to lead to much more severe oscillations when the system gets out of equilibrium.

        Generally, this leads to a longer period before the system gets back into equilibrium. I am willing to call that “a bad thing”.Report

      • Avatar Daulnay in reply to DensityDuck says:

        Um, no. At the low end of the equality scale, people are out of work, and their children are depending on charity and/or free school lunches for food.

        Today’s Las Vegas Sun:
        “And as we wrote earlier, a federal report released this month shows that hunger among all age groups in the country is at its highest level since the Agriculture Department began keeping records on this topic 14 years ago. The report is based on statistics compiled in 2008, when national unemployment rose to 7.2 percent. The current national unemployment rate is 10.2 percent (in Nevada it is 13 percent), meaning that the records in all probability will be even worse when updated”

        From today’s Las Vegas Review-Journal:
        · Nearly half of Clark County, Nevada School District’s students received free or reduced-price school meals in the 2008-2009 school year. The report shows that low-income children may receive up to 50% of their calories from school meals.”

        Obesity is a symptom of *not* being well-fed; mothers who skip meals periodically to feed their children are more prone to obesity, as their bodies respond to the “feast or famine” situation.

        Why Las Vegas? It’s one of the hardest hit major cities, and there were stories of schoolkids there taking bunches of catsup packets out of the school cafeterias to eat later. Couldn’t find the story, though.Report

        • Avatar DensityDuck in reply to Daulnay says:

          “At the low end of the equality scale, people are out of work, and their children are depending on charity and/or free school lunches for food.”

          So, not starving, then. Not “earning their keep” in a middle-class Puritan-values sense, but not actually dying for lack of food.

          And do you deny that this is a unique situation in world history thus far, that the destitute worry not about food but about work?Report

    • John – I agree that income inequality is a problem, but especially when it is caused by the sort of financial wizardry we see in this economy.Report

  13. Avatar Ken Lovell says:

    Sam M you make the error of perceiving unions as service organisations. That’s an observation, not a criticism, because many union officials unfortunately see their organisations in the same light. No doubt it reflects the effect of 20 years conservative propaganda that every human relationship, properly understood, is nothing but a market transaction.

    Effective unions must be mass worker-controlled organisations, not quasi-businesses that operate externally to workers and then try to sell them a service. They are only effective if workers are spontaneously inspired to join and participate, not if someone comes along and says “Hi I’m from the union and I’m here to help you”. Unions only have power to the extent members feel a genuine sense of belonging and a willingness to put collective interests ahead of individual interests.

    Governments can make laws to hinder or encourage the development of effective unionism, but it must be driven by workers themselves. Saying “Stronger unions would be good” is like saying we need more people to believe in god; it’s nothing but hand-wringing.Report

    • Avatar Will H. in reply to Ken Lovell says:

      I’ve been told by officials at my local for at least the past 7 years that getting good people on the Labor Board is the No. 1 goal.
      They have to have standing in order to be effective.
      And I kind of grew up in the oilfield, so I’ve seen some of those illegal union-busting activities first-hand.
      But there’s a lot more to it than just the workers wanting it.Report

  14. Avatar E.C. Gach says:

    But it turns out that you don’t need a middle class to buy things, to keep the engines of commerce humming and whirring and piling up vast stores of cash. These days anyone can buy things, all it takes is a little credit card debt, maybe a second mortgage. For the truly committed consumer there’s always payday loans.

    We’ve gotten into this sick circle where the rich lend to the poor so the poor can buy from the rich. Those at the bottom and the top are no better off. But some where along a middle man divorced from the consequences (bankruptcy of the borrower/default on the lender) cleans up.Report

    • Avatar Pat Cahalan in reply to E.C. Gach says:

      Boy howdy. And I have to admit it’s pissing me off.Report

    • Avatar Michael Drew in reply to E.C. Gach says:

      It doesn’t seem that sick to me. Both sides get the basic things they want: stuff for the poor, and sales for the rich. The issue comes if we go with our puritan instincts to deplore debt, debtors, and above all those (as long as they aren’t extra-human legal constructions who are simply expected to do) who mismanage their debt and deal with the consequences rationally (i.e. by bankruptcy or seeking other reasonable adjustments). There’s no actual need for us to do so. Debt and lending is the system that allowed us to develop the modern world in which we live; it’s not a threat to our existence or immortal souls.Report

      • Sure. It’s the “middle class guy comes along and cleans up afterward” that’s the problem.Report

        • Avatar Michael Drew in reply to Pat Cahalan says:

          Middle class guys are just as much who use (and occasionally misuse) this system as anyone else. Indeed, it’s who it was initially developed to serve (as the poor were presumed to have no credit). The push to extend credit to the poor has had its problematic consequences, but overextension is not a creature of that exclusively, by any stretch. Most people who are currently underwater on mortgages were not poor people pushed into the market; they were “middle class guys” who made questionable (or, what turned out to be questionable) decisions. Default is part of credit; credit is why we have a highly productive economy and high standard of living.Report

        • Avatar Michael Drew in reply to Pat Cahalan says:

          The middle class guy, BTW, is only on the hook if the financial system is arranged in such a way that consumer debt is so overleveraged by high financiers that normal (or even more-than normal) fluctuations in consumer default threaten the entire financial system such that taxpayer-funded bailouts become necessary. Consumer default on its own doesn’t put you as a taxpayer on the hook. It does raise interest rates, and it’s fair for you to complain bout that, but these things will go up and down; it’s part of the cost of having a credit-lubricated economy (which you and i both know we want.) The large-scale “clean-up” only becomes necessary when the Masters of the Universe come to believe their existence is more fundamental than the law of gravity.Report

  15. Private and public sector unions are different animals. I’m all for the private unions getting what they can, but they participate in reality and make concessions from time to time so as not to kill the golden goose.

    The public sector unions live in a bubble. Their incredulous reaction to Chris Christie is astonishing.

    Christie responded that he understood the officer’s frustration, but he told him that the contracts that cities in New Jersey has with the police unions are often “obscene.” He particularly cited an example in which three police officers were able to “cash out” unusued sick leave when they retired at a cost of $900,000! The city they worked for had to borrow money to pay them!

    The way Christie put it was that he was sorry he happens to be the guy in office “when the party’s over.”

    Party’s over. Not just in New Jersey, not just here in America, but the fit has hit the shan for Eurostatism, too.

    As for income inequality and the rest, the Burkean in me suspects that any cure [read: gov’t intervention] will either be ineffective or destructive.

    Ben & Jerry come to mind here, those warm & fuzzy capitalists, who have since cashed out. One commenter said we need better people. An untenable notion in my eyes that such a Brave New Man exists or can be created, but if not Ben & Jerry as the new model for a “caring capitalism,” then who? The New Republic here:

    http://www.jonentine.com/articles/evil_empire.htm

    [I esp enjoyed the punchline:

    Caring capitalism is perhaps best left to larger enterprises. Ben and Jerry’s ultimate contribution is a more conservative one: translating the spirit of the ’60s into ad copy: ‘You know it will sell, because Dead paraphernalia always sells,’ wrote the two anonymous hippies who suggested calling a new flavor Cherry Garcia. And sell it did. Ben and Jerry printed up bumper stickers in psychedelic neon that read, ‘what a long, strange dip it’s been.’ Aging baby-boomers bought it by the carton. But the story is not without its ironies. When Ben and Jerry sent a pint to Jerry Garcia, they got back a letter from his lawyer demanding royalties. Still, Ben forgives. ‘Jerry Garcia inspired us and lifted our spirits,’ Ben laments on the occasion of the legend’s death. And, as always, there’s a happy ending: as soon as his death was announced, sales of Cherry Garcia frozen yogurt shot through the roof.]Report

    • Avatar BlaiseP in reply to tom van dyke says:

      Oh the crocodile tears shed over public sector unions. That mendacious little turd Chris Christie presided over the doling-out of hundreds of millions of dollars to his Special Friends. To hear him whine about having to borrow money to pay off retiring police officers, while he awarded all those no-bid contracts is the height of hubris.

      It is no accident so many Republicans are also Born-Agains. Yes, no matter how shameful the sin, however deep the stain, there is Pardon from Above and a New Life in Politics.Report

    • Avatar E.C. Gach in reply to tom van dyke says:

      He particularly cited an example in which three police officers were able to “cash out” unusued sick leave when they retired at a cost of $900,000! The city they worked for had to borrow money to pay them!

      Sounds like someone made a really stupid contract. Don’t we have to fulfill the agreements we make with one another? Someone must have forgotten to insert a cap on total sick time that could be cashed in like that.Report

      • True, Mr. Gach. However sane, realistic parties to a contract sometimes renegotiate for the health of the golden goose.

        There’s far more on the problem than can be addressed by mere ad hom; I just pulled a fragment and didn’t feel like transcribing the video

        http://freedomslighthouse.net/2011/01/27/gov-chris-christie-tells-upset-nj-police-officer-hes-sorry-hes-the-guy-in-office-when-the-partys-over-video-12711/

        If you don’t like Christie [and some here clearly don’t, heh heh], one can google California, the UK, France, Spain, Greece…Report

      • Avatar DensityDuck in reply to E.C. Gach says:

        If you don’t put sick-time payouts in the contract then we’ll STRIKE.Report

        • Avatar E.C. Gach in reply to DensityDuck says:

          and if you strike, we’ll fire you and hire new workers.

          We’ve been through this, striking, or the threat there of, actually brings balance to markets. If the city had to grant 900,000 in sick time payouts, they must have a horrible time finding people who want to be cops. You gotta do what you gotta do to get people to do shitty jobs.Report

          • I didn’t look at the video, but I believe Christie pointed out a number of NJ cities that laid off 100+ cops each. The golden goose done pooped out.

            But in principle, I agree with you. However, on the whole, there probably aren’t too many bureaucrats and civil servants who aren’t eminently replaceable.Report

          • Avatar Will H. in reply to E.C. Gach says:

            I know of two contracts rejected that were due for a strike.
            I’m not going to mention where they were at, but they were very similar.
            Time to negotiate a new contract comes up (every three years). The business agent hears members at the meeting to get an idea of what kind of raise to ask for. Maybe the organizer has some inside info on what the contractors plan to offer. Whatever it is, they come to an agreement. So the business agent has his marching orders.
            He goes to negotiate, and it’s a hard sell. He is successful at last. Time to vote on the new contract. But there is now a movement among the membership against it. There is a huge turn-out at the next meeting, and the contract is voted down.
            A month-and-a-half to go with emergency negotiations before the old contract expires. Everything comes down to the wire.
            In the one case, reps were flown in from national to help persuade the membership to vote for the contract, and it ended up going through.
            In the other case, the business agent refused to negotiate further. They had to nominate and vote on a new representative to negotiate their contract. But no one would accept a nomination. (It would be really bad form to undermine the BA like that.) Eventually, the contract was voted in.
            But that’s what I’ve seen from this end.Report

        • Avatar Robert Cheeks in reply to DensityDuck says:

          Well, isn’t that the point with public unions, don’t give into their demands and they’ll strike? That’s why there should be no public unions.Report

    • Avatar Barry in reply to tom van dyke says:

      “Christie responded that he understood the officer’s frustration, but he told him that the contracts that cities in New Jersey has with the police unions are often “obscene.” He particularly cited an example in which three police officers were able to “cash out” unusued sick leave when they retired at a cost of $900,000! The city they worked for had to borrow money to pay them!”

      D*mn government! It should work more like Wall St, where nobody gets away with large paychecks for nothing!

      Seriously – I’ll believe Christie when he both proves that those officers got such money, and furthermore that it wasn’t for something else (e.g., a disability lump-sum, or some other case of taking a lump-sum up front rather than a payout over time).Report

  16. Avatar Jaybird says:

    It seems to me that it is far more likely that we’d end up like Michigan within a lifetime than like Sweden within a lifetime.

    To say something like “for us to be more like Sweden, we’d need to be more like Sweden” seems trite and axiomatic but to what degree would we have to have something like, say, official language laws? To what degree does Sweden have monoculture (it seems to me that it’s much more than in the US)?Report

    • Avatar BlaiseP in reply to Jaybird says:

      Heh. I come and go to Sweden and Finland. Everyone speaks English. About 14 percent of the population is immigrant at present time. Sweden and Finland are by no means monocultures.Report

      • Avatar Jaybird in reply to BlaiseP says:

        Sweden and Finland are by no means monocultures.

        The United States is by no means a monoculture, either… but, it seems to me, that Sweden is closer to being monocultural than the US and has a greater history of being such than the US does. (As someone who lives in Colorado, I can tell you that not everyone speaks English here, for example.)Report

        • Avatar Jaybird in reply to Jaybird says:

          (And, in case I am misunderstood, I oppose language laws and support more, more, and even more immigration.)Report

          • Avatar Will H. in reply to Jaybird says:

            Immigration per se is over-rated.
            What we need is more immigration in the really hot chick sector.
            Maybe there can be some type of meter placed at points of entry and airports and such, where the hotness of potential immigrants can be evaluated.
            I don’t think I’d mind going out to calibrate the thing.Report

        • Avatar BlaiseP in reply to Jaybird says:

          But Sweden isn’t a monoculture, even without the immigrants. There’s the south of Sweden, where most of the people live, and they sound almost Danish. As you work your way north, you’ll start encountering Sami, a people of the Arctic, also found in Finland. There are also the tornedalsfinska , who still speak Finnish. Swedish isn’t even the official language: it has four, including Romani, the language of the “Gypsies”. I hear Pashtun and Somali all over in the cities, lots of them have come in as refugees.

          It’s a big country, Sweden, and mostly empty. You really ought to see it for yourself before saying it’s more monocultural than the USA.Report

          • Avatar DensityDuck in reply to BlaiseP says:

            And some of the Swedes’ best friends are black, right?Report

          • Avatar Jaybird in reply to BlaiseP says:

            You really ought to see it for yourself before saying it’s more monocultural than the USA.

            So it’s as multicultural? Has as much of a history of multiculturalism as the US?

            Or is this one of those things where I just need to see it for myself before I say “not as diverse” about a country in Northern Europe with language laws and a population about 3% of the size of the US’s?Report

          • Avatar Kyle Mathews in reply to BlaiseP says:

            Well first, Swedish is the official language of Sweden. Sweden also recognizes minority languages, emphasis on the minority status.

            Hearing refugee language says nothing about the immigrant experience or importantly their effect on mainstream culture. It seems highly doubtful that Sweden’s political culture takes many of its cues from Somali heritage.

            Sweden is also a country where 8 out of every 10 people is ethnically Swedish, as distinguished from similar looking Scandinavians though many share a Germanic heritage and in religious preferences, 87% are Lutheran.

            Unquestionably, Sweden is (and this is a comparison) more culturally homogeneous than the United States of America. The mere existence of minorities and regional variations speaks little to the actual effect of the same on political and social culture of the country that determines how its governed. I believe this is the point Jay was making.

            We’ve discussed this at the league before, namely that populations that share many core values have an easier time designing successful programs that exhibit, conform to, and reinforce those values than groups which are far more heterogeneous.Report

            • Avatar BlaiseP in reply to Kyle Mathews says:

              I seem to be wrong: since last I was there last in 2009, Swedish has been declared the official language.

              As for the rest of your conclusions, I believe social programs work better in smaller, not necessarily more homogeneous countries. Switzerland is the least-homogeneous nation in Europe and its social programs seem to work reasonably well. The reason is pretty simple: being smaller nations, the turn-around is shorter.Report

      • Avatar tom van dyke in reply to BlaiseP says:

        We’ll see, Mr. P.

        Maria pointed across the dual carriageway to the neighbouring housing scheme of Rosengård, known locally as “the ghetto”.

        It is home to almost 20,000 immigrants, overwhelmingly Muslim, almost half of them jobless.

        “It’s become crazy around here. You can’t go out in the evening,” said Maria, who like other locals, did not want her surname revealed. “I’ve got nothing against foreigners. I’ve been married to a Bulgarian for 40 years. But these people don’t share our values. If you don’t like the colour of our flag, I say, I’ll help you pack your bags.”

        http://www.guardian.co.uk/world/2010/sep/24/sweden-immigration-far-right-asylumReport

    • Avatar Robert Cheeks in reply to Jaybird says:

      I don’t wanna be Swedish, I wanna be American!Report

  17. Avatar Freddie says:

    This is an absolutely essential point: pensions are previously negotiated and earned compensation. They are not an extra, a bonus, or a gift. Preserving them is an elementary matter of protecting property rights.Report

    • Avatar Bob in reply to Freddie says:

      As I understand it, the GOP is in favor of allowing states to declare bankruptcy. Thereby allowing them to discharge their obligations.
      Nice.Report

    • Avatar Mike Schilling in reply to Freddie says:

      Nonsense, it’s not like they’re performance bonuses for people whose companies needed government bailouts.Report

    • Avatar Pat Cahalan in reply to Freddie says:

      Sure. Still, they’re a contract. A futures contract, no less. All futures contracts come with risk; there’s the chance that when the time window passes the money isn’t there.

      I can sign a contract that says 50 years from now I’ll get a solid gold statue of my genitals blown up to 8x scale as a severance package in lieu of taking a 4% pay raise this year.

      50 years from now, if the organization (be it public or private) can’t afford the statue, I ain’t gonna get it. Sucks, but even if I could force liquidation of the company (if it was a private organization), if the capital isn’t there, it isn’t there.

      In the case of California, public sector unions signed contracts that promised them the gold statue, an 8% raise, and a reacharound to boot. And this is possible because those contracts aren’t subject to public review, really. Do I feel bad for the teacher’s union in CA? Some of them, yeah, you betcha. Do I feel bad for the firemen and the policemen? Some of them, yeah, that too. But the state can’t meet those obligations without either crushing public services to nothing or taxing enough to bury this economy in the dirt.

      Is this the fault of the government or the unions? Both.Report

    • Avatar Jaybird in reply to Freddie says:

      Preserving them is an elementary matter of protecting property rights.

      Indeed!

      But what happens when its spending proves to be less than sustainable and it looks like money might be taken from others in order to meet those obligations (this creates tension, at least, with the concept of property rights)?

      Can the people on the hook for the obligations then say “we want you to make fewer promises to people in the future”?

      If not, why not?Report

    • Avatar Simon K in reply to Freddie says:

      Contracts are not property rights. They’re contracts. While breach of contract is a Bad Thing, it isn’t something that the state punishes. Its up to the parties. In cases where one party literally cannot pay – as is the case with public sector pensions in California under any reasonably scenario – the other party is screwed. That doesn’t change just because one party is a government.Report

    • Avatar Will H. in reply to Freddie says:

      My experience is somewhat different.
      The pension (and annuity) contributions are part of the total package. How much of each raise will go to wages and how much will go to benefits are voted on by the membership before the wage increase is effective (the previous portions already being known).*
      So, if I get $4/hr going into my pension, this is part of the total package (wages + benefits) that is my compensation.

      Now then, because of rules I really don’t care to explain, because my home local** is in Florida, I can retire at any time, unlike the national pension (where I could only take half at 20 yrs, 3/4 at 25 years, or full pension*** at 30 years****). The amount I receive is determined by how much I have paid in. It’s really simple, straight-forward arithmetic to figure out how much I would get if I retired tomorrow.
      And it’s constant.

      Ok, the amount paid in is agreed to beforehand. The pay-out amounts are determined by the trustees. They can vote to change that at any time, or they can move the whole plan to some other administrator. But we vote on that. We have a financial officer that gives monthly reports at the meeting.
      So, that contract comes with a lot of contingencies.

      * Division of benefits is voted on separately.
      One of the things that unions bargain for is “pyramiding” benefits. If the benefits pyramid, then they are paid at the same rate as wages; ie 150% for time-and-a-half, and 200% for double time. Otherwise (as is usually the case), benefits are paid in straight time exclusively.
      ** Some trade unions issue a travel card, where a journeyman maintains membership at his home local when working outside of its jurisdiction. Others issue transfer cards, and have specific rules regarding these transfers, where a journeyman transfers his membership in a local to another hall in order to work outside of his jurisdiction. Some unions issue both, and which one is determined by the by-laws of the local.
      *** As of 2011, full pension pay-outs are right under $3500/mo.
      **** Our constitution specifies that 2000 hours of work equals one year of service.Report

  18. Avatar Simon K says:

    Very interesting article ED. I have disorganized thoughts, so just let me write a list of them:

    1. I hope this isn’t too personal, but its really interesting watching your political evolution. When I first read you I pegged you as quite substantially to me right, although well within the bounds of sanity. You’re now quite clearly substantially to my left, and while I might have moved rightwards a smidge, it was definitely just a smidge.

    2. I like unions in theory. I hate them in practice. Every time get broadly sympathetic to the idea of unionization, some thing happens to give me a rude awakening. Basically unionization happens to employers who don’t understand how to fight it, off the back of employee complaints the union constitutionally can’t help with anyway. It alienates employees from management, and thus does little or nothing to resolve whatever underlying issues there were, while collecting dues. Public sector unions are even worse. Meanwhile in workplaces that are genuinely abusive, the employers understand how to fight the unions off. Thus where they’re useful they never get a foothold, while they collect dues from employees whose problems they actually can’t help with. I don’t see how how get away from this – part of it is because the NLRB process is dysfunctional, but how do you get a better process? It would be worse with no process at all.

    3. I don’t understand how you could bring final salary pensions back to the private sector. It worked fine when the employer was likely to outlast the employee’s working life, and had a reliable stream of profits to pay pensions from. Now, most employees will work for several employers, and most of those employers will be gone by the time the employee retires. So who pays the pensions? It would have to be a third party. If its a private third party, it becomes basically a kind of life insurance – pay us X for 40 years, we pay you Y after you retire. You can guarantee that the finance boys will make sure you get less than the market rate of return, so is it worth it for the apparent absence of risk? Probably not. If its the government, its just an earnings-related add-on to social security, which would worry me, given the government can’t fund the social security obligations it has.

    4. All this “nation of debtors” business is silly. For person A to borrow money, person B must save it. Money does not grow on trees. The money person A pays in interest, person B gets in interest, minus a cut for whatever intermediaries there may be. It is not possible for all of the net savers to be Chinese – for starters China has capital controls, but while the US has a big capital account deficit, it isn’t that big . So for most of the dollars Americans are borrowing, other Americans are saving. Similarly, not all of the net savers can be rich. There aren’t enough of them. For the most part, all that debt consists of other American’s retirement plans, and the net debt is from young people to older people – I don’t really see a problem with this.

    5. I am nonetheless in complete agreement with the idea of removing obstacles to growth while making sure there is a hole-free safety net. The American safety net is excellent in places, and extremely holey in others. The public needs persuading that in order for the safety net to work, it has to catch people they don’t like as well as people they do.Report

    • Avatar Will H. in reply to Simon K says:

      #5: I get concerned about that talk, because I see the natural default for “safety net” is government program.
      Maybe if there was a way to develop a safety net apart from government, it might be an easier sell.Report

      • Avatar Simon K in reply to Will H. says:

        I am indeed thinking of a government program Will. I don’t see any other way. But would you be more comfortable if the states or even local governments did it? As I understand it, Denmark’s welfare state is run by the local communes and appears to work just fine.Report

        • Avatar Will H. in reply to Simon K says:

          Many years ago, I though the same way. But I’ve seen where private organizations can do and will do better than governmental entities in addressing an issue.

          Here’s a link to NACA’s “About” page. If you don’t know about Bruce Marks and NACA, then you should. That whole thing began with Hotel Workers Local 26.

          But there really is no need for a governmental entity to supply social safety net services.Report

          • Avatar Simon K in reply to Will H. says:

            NACA is excellent, but they don’t really meet the criteria for being a safety net service. They’re selective in who they help, and from what I’ve been told rather slow. If you’re in a position where you really don’t have the money to pay for food and shelter, its not the right model.Report

            • Avatar Will H. in reply to Simon K says:

              All true.
              It does show that functions assigned to governmental entities can be done by non-governmental entities.
              I believe food & shelter are traditionally within the realm of needs that faith organizations attend to.
              Specialization should lead to increased productivity.
              Somehow, that last statement doesn’t jibe well with my military experience, but nevertheless, I’m willing to accept the underlying reasoning as sound.Report

      • Avatar E.C. Gach in reply to Will H. says:

        Fund nationally, administer locally.Report

    • Avatar MFarmer in reply to Simon K says:

      Most people talking about private sector unions here have never worked in a union. I worked for GM for a while in the UAW, and my father retired from GM in the UAW. Managers walked past old union members on the line as the union members mixed drinks or sold stolen jewelry or made bets, or some other time-stealing activity — there was a little union mafia there and they controled the factory — you could get anything you wanted, even names to doctors who would give medical leaves for up to six months. Many of the old heads spent more time scheming and screwing management than they did working. There were old union guys making 21 dollars an hour wiping off the water fountains all night, nothing else, just wiping the water fountains. One heroin addict I knew had caused over a million dollars worth of damage and rework, and had been in treatment 10 times, but still kept his job. One night I saw a drunk passed out in the back of a car and he went all the way through the line like that, with everyone laughing at him. If I wanted a drink, I’d hold up one finger when the right guy came by, then later under a towel at my station would be a half pint of Canadian Mist.Report

      • Avatar Will H. in reply to MFarmer says:

        I’ve never seen anything like that.
        I’ve known some auto workers though, and I’ve heard plenty of horror stories.
        I did work at a Ford plant one time (not as an auto worker), and I got preferential parking because I was driving a ’68 Comet.
        How far back are you talking about?Report

        • Avatar MFarmer in reply to Will H. says:

          “I’ve never seen anything like that.”

          You wouldn’t if you never worked in such an environment — the media doesn’t do a lot of reporting on such issues. Although recently there was the report on Chrysler union workers drinking and doing drug deals on the job — they are all protected by the union. I don’t know how to value all the lost productivity, but it’s got to astronomical, enough to improve the pay and conditions if there were more productivity and efficiency. Unions and government intervention and corporate enmeshment with government have created a hot mess that led to the Big Bailout — Ford made some smart changes and dodged the bullet, but even Ford could be in trouble in the next five years if foreign competiton gets its act together and free trade doesn’t meet protection.Report

          • Avatar Will H. in reply to MFarmer says:

            I know of drinking and drugging going on at the job at Nameless Auto Plant. And I know they go over to the hall right across the street and sit in the parking lot to drink at lunch time.
            But that is only through reliable reports.
            I haven’t seen it.
            But about half the time, I’m self-supervised anyway.

            It’s likely that things are a bit better now. I’d wager they were.
            A big part of that is that there’s less people there.Report

      • Avatar MFarmer in reply to MFarmer says:

        I worked there in the mid to late 70s but I kept in touch through my father and friends until the plant was finally closed in 1990. It got worse after I left, which is why it eventually closed (not because I left, but because it got worse). Japan kicked GM’s ass after the US auto plants degenerated — I blame management, unions and government intervention.Report

      • Avatar Simon K in reply to MFarmer says:

        There’s an excellent “This American Life” about NUMMI, the GM/Toyota joint venture in Fremont, CA, that talks about the GM Fremont plant – not NUMMI, the GM plant that was there before NUMMI – and it appears to have been exactly as you say.Report

        • Avatar MFarmer in reply to Simon K says:

          It was exactly as I say — I saw it every day, and I just related some of the problems. Later on through the years when I was Director of Marketing for a company, when we held exhibits in NE cities, we couldn’t put up our own exhibit, which took abut 15 minutes, and we couldn’t even plug in the lights until the Union was paid. An electrician had to push the plug into the socket. This cost us $1500 more than conferences in the south, so we quit going to the NE — many other exhibitors quit going to the NE also. Unions, although a good idea in the beginning, have become economy killers, hurting many non-union workers — but they don’t care as long as they can gouge to fill their pockets.Report

    • Avatar Kolohe in reply to Simon K says:

      “For person A to borrow money, person B must save it. Money does not grow on trees”

      Fractional reserve banking and the Federal Reserve* (both separately and together) create money ex nihilo.

      *and other central banking entitiesReport

  19. Avatar Sam MacDonald says:

    A whole can of worms that I am surprised nobody has opened and smeared across the room: low-skilled immigration.

    One way unions achieve higher wages is by erecting barriers to entry in their various markets. There is less of ned to erct barriers of there is less competition for the jobs. That is, a seller’s market in labor will tend to push people on the lower end of the wage spectrum toward the middle class.

    Now, the ultimate thing a union can do is dictate who can work and who cannot. Want to hang doors in Pittsburgh? Gotta be in the carpenters. Want to fit some pipe in Dubuque? Th pipefitters local. And only the pipefitters local. Not in the union, but you are willing to work for a lower wage? Too damn bad. You can’t. No matter your skills.

    The model seems pretty similar to a strict stand against low-skill immigration, and even immigration of tradesmen.

    If one seems a good model, isn’t the other?Report

    • Avatar Jaybird in reply to Sam MacDonald says:

      Freddie talked about it here:

      ordinary-gentlemen.com/blog/2009/03/02/you-cant-support-the-labor-movement-and-illegal-immigration/Report

    • Why just illegal immigration though? Why not outsourcing jobs? At least with immigration you get an increase in demand, more mouths to sell food to, etc. Outsourcing work takes the money out of the picture and doesn’t add any new demand. Yes, it might lead to cheaper goods but is it an even trade? Is it as good a bargain as increased immigration?Report

      • Avatar James K in reply to E.D. Kain says:

        Actually foreign trade (including offshoring) does create demand. When you pay those foreign workers for their service, you are paying them in US dollars (directly or indirectly, it doesn’t matter). What do they do with those US dollars but buy US goods.Report

        • Avatar Will H. in reply to James K says:

          I believe both oil and gold are denominated in dollars, and yet we are net importers.
          As long as the chicken can run outside of the fence all day, she won’t need to go in to nest.
          But the egg’s going to come out somewhere.Report

      • Avatar Sam MacDonald in reply to E.D. Kain says:

        Good point. I wasn’t trying to write that out of the picture. One complication, of course, is policing. Money flows more easily than bodies. So even the strictiest programs would likely have more effect on people coming across a border than $$ flowing on the Internet. But enforcement is another issue entirly, and we can set it aside for now.

        I guess the starting point is: You seem to be arguing here for a pretty extensive restructuring of the American economy, which would include strong structural (including governmental) support for:

        1. Unions, and all they entail
        2. Strong anti-immigration measures, especially in low-skill sectors, and all they entail
        3. Strong protectionist measures, and all they entail

        It’s fine to come down in that direction. A lot of people do. I often feel a strong pull myself. It feels good and right. Yet… I dunno. Such a cure might be far worse than any disease we are suffering at the moment. Go back to “all that entails.” A trade war, for one. Increases in prices for anything and everything when producers pass along the wages to consumers. (Unless you are arguing for price management. And if you are… shortages.) Yikes.

        The immediate response is, well, how about we just have some little nudges in these directions. I don’t think that works, for the same reason you can’t really require health insurance companies to cover pre-existing conditions unless you have a mandate; it’s all too interconnected. You wan’t to squeeze illegal immigration? Great. The companies go offshore. So you react to that with huge tariffs, and the companies respond with huge price hikes. Which you respond to with… Which they respond to with… Etc.

        Maybe it’s a rabbit hole we MUST climb into. But it’s deep, man.

        Like I said, I lean in this direction, too. But I think the end-game leads us to a really strong mercantilist future, a dangerous level of economic isolationism etc. And on the upside? Maybe if the whole system were run by angels, it would be a net positive. But I suspect that once the AFL-CIO gains strength and can lord it over the Chamber of Commerce and NAM, the smart lawyers will just jump ship and follow the paycheck. New boss? Old boss? Same dude!

        Which is why I so strongly prefer some kind of structure that does not concentrate power in the Chamber of Commerce or or the Unions, but diffuses it. I know. Good luck with that, too. Still, a trade war and immigrant bashing seems like something that, ultimately, runs in the wrong direction.

        But Sweden manages! Yeah. I know. And Singapore is a great place to live to, were it not for all the canings.Report

  20. Avatar PurpleGirl says:

    Can you define for me what high level skills are? (From the post…a lack of supply of high-skills….)

    What does, say, an administrative assistant who has worked with computers for close to 25 years, need to know?Report

    • Avatar Sam MacDonald in reply to PurpleGirl says:

      Excellent qustion. I was drawn to that same section. I don’t know where you stand, but I was particularly struck by the comment about public universities being defunded. First: rubbish. The tuition subsidies along push plenty of kinds–and money–into the system. Second… it’s about time.

      Not that I am against “education.” But this idea that the predominant place for that to happen is in a four-year university strikes me as bizarre. Lots of people want to be nurses. And the systems needs a lot more. But over the past few decades we have gotten away from the tradition RN diploma program and steered millions of people into BSN programs. That’s great if that’s what you want, but there is no real clinical reason, as far as I can tell, to prefer one to the other.

      Most of the kids I taught at the college level, I would say at least 3/4, were really interested in career training. Sure, they might like to read a little lit crit or philosophy. And more power to those who do. But most of them would have taken a pass on the extra two years of if the school would have offered it. But the school almost never does. which was great for me. But terrible for everyone else.

      Ponzi scheme, I tell you.Report

  21. Avatar silentbeep says:

    “There’s room for liberal markets, pro-growth policies, and a vibrant public sector in our culture, and for a strong labor movement and a strong safety net.”

    The closest thing that I have ever found that even comes close to defending the above, is the barely-in-its-infancy liberaltarianism. But you know all about that already….haReport

    • Avatar Michael Drew in reply to silentbeep says:

      No, sorry, but that description fits just plain-vanilla DLC-Obama-style liberalism. (Leaving aside selling out on social issues.)Report

      • Avatar Michael Drew in reply to Michael Drew says:

        I mean, roughly speaking. Yeah, if you want near-perfect correlation with every nook and cranny of your policy orientation, then you’re going to always be dealing with nascent, fragile, barely-existing political coalitions. It’s one’s choice.Report

      • Avatar Michael Drew in reply to Michael Drew says:

        And to be fair, it also fits pre-2009 mainstream Republicanism pretty well too, in their policies if not their rhetoric. So I suppose some degree of discrimination is called for.Report

      • Avatar silentbeep in reply to Michael Drew says:

        No not really. i don’t think DLC-Obama style liberalism is on board with Hayek.Report

        • Avatar Michael Drew in reply to silentbeep says:

          I think the actually are, much more than you think they are. Which is not to say that every one of their policies will be exactly what we would derive if we applied a century-old Austrian’s views to what we should do in our modern economy. But that is a standard that any political coalition will fail to meet while in power. Prices as signals of information actually are a broadly accepted analysis across our politics, for example. E.D. wrote the line. Do you think he had Hayekian purity in mind when he referred to “liberal markets”? Maybe he did.

          I guess you are ultimately right, though. In the last analysis, perfect Hayekian nonintervention is going to end up being the province of libertarians of some stripe or other. That’s sort of a definitional truth.Report

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