Who’s Going to Demand Full Employment?

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Elias Isquith

Elias Isquith is a freelance journalist and blogger. He considers Bob Dylan and Walter Sobchak to be the two great Jewish thinkers of our time; he thinks Kafka was half-right when he said there was hope, "but not for us"; and he can be reached through the twitter via @eliasisquith or via email. The opinions he expresses on the blog and throughout the interwebs are exclusively his own.

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50 Responses

  1. Avatar Pyre says:

    One could say the same thing about Globalization. In fact, you could point out that the policy towards full employment was pursued during a period when it was to the country’s benefit to have both a strong manufacturing base and to keep all the jobs at home.

    I think you put too much importance on one factor.Report

    • Avatar Roger in reply to Pyre says:

      Yeah, maybe my browser is malfunctioning but I fail to see where this charts such factors as unemployment vs regulations against self employment. Or vs expensive mandatory benefits. Or vs regulatory employment code. Or vs average income from those foreign workers that used to be excluded unfairly from the market. Or vs minimum wage. Or vs unemployment benefits.

      American workers had era of limited competition and relatively low employment regulation.
      Global markets came to the rescue of workers making a dollar two per day in other countries. This may have been the greatest humanitarian advance of the past century. Progressives screwed up local labor markets with regulations, minimum wages, mandatory benefits, and laws against self employment. Thus American workers are facing a double whammy. Free employment markets abroad and mucked up markets at home.Report

      • Avatar Michael Cain in reply to Roger says:

        Where exactly are all these free labor markets abroad? Not Canada. Not the EU. Not Japan. Not India. Not China. For the most part, not the places where so many American jobs have gone.Report

        • Avatar Jaybird in reply to Michael Cain says:

          How many jobs have we lost to Canada, the EU, or Japan when compared to India or China?

          Does either India or China have as good a record with handrails in the handicapped stalls in the bathrooms (to use just one example) on the 4th floor as Canada, the EU, or Japan?Report

        • Avatar Roger in reply to Michael Cain says:

          Michael,

          So your point is that other places are screwing up their markets too?

          My point is that globalism spread jobs based upon comparative advantage. The labor markets here should have responded but were jammed up with ignorant policies.Report

          • Avatar Troublesome Frog in reply to Roger says:

            I agree with you on the comparative advantage point, but what should the labor markets here have done to respond if they hadn’t been jammed up?Report

            • Avatar Roger in reply to Troublesome Frog says:

              Absent the jam, supply should meet demand. That means it approaches full employment. It is odd that Elias talks about the master planners passing all their master plans to micromanage everything and then getting perturbed because part of their master plan is full employment (to appease us little people and keep us from taking to the streets). I guess nobody told the master planners that full employment is what they get without all the interference in relatively free markets.

              If we vote for the right lizards, maybe they will build it ino their next four year master plan.Report

              • Avatar Troublesome Frog in reply to Roger says:

                I thought that we were talking about decades old policy trends. During that time, the labor market was clearing just fine most of the time. I’m not see a meaningful correllation between those policies and long-term unemployment rates one way or the other.

                I agree with you that the notion that unions somehow drive the unemployment rate lower is not supported. I just don’t see what the American worker could really do to respond to the fact that the supply of labor available to American employers has drastically increased over the past few decades.Report

  2. Avatar North says:

    Interesting, and what exactly is driving down unions in the US in your opinion?

    Also, does immigration have any impact on the full employment ideal because it seems to me like trying to achieve full employment when you share a long open border with a badly underdeveloped nation full of workers who’ll happily work for lower wages than your citizens is very much akin to trying to inflate a tire with a hole in it.Report

  3. Avatar DensityDuck says:

    If farming requires twelve hours a day of effort to produce enough food, then society has full employment…as farmers.

    Therefore we should burn down the tractor factories.Report

  4. Avatar George Turner says:

    That would explain why unemployment in heavily unionized sectors like domestic automotive and textiles is so low, whereas in non-unionized sectors like networking, telecommunications, engineering, and IT, unemployment is shockingly high.

    Oh wait. I have that backwards.

    It explains why unemployment is so low in Detroit and why it’s so high in Texas.Report

    • Avatar MFarmer in reply to George Turner says:

      But George, you are talking about results that came about due to lack of force. If unions get big, strong and nasty, we can force jobs into existence and stop worrying about the cost of goods, efficiency, productivity and all that other free market nonsense that causes widespread unemployment in dying industries we can keep alive through willpower and government support.Report

  5. Avatar Jaybird says:

    I don’t exactly see a strong correlation between the two lines on the chart. I’m not seeing a weak one either.

    If it’s speaking for itself, it seems to be saying “there’s no real conclusion you should reach”.

    Am I reading it wrong?Report

    • Avatar George Turner in reply to Jaybird says:

      The chart seems to say that the unemployment rate bounces around and that unions are a thing of the past.Report

      • Yah. In fact, the Reagan years 1983-1988 and the Golden Age of Clinton, 1992-2000 both look really good. Kennedy-Johnson 1961-68 looks pretty good too. All have dropping unionization rates.

        The Bush era I bad, Bush II good except the tail end there. 1970-79 just out and out sucks for all involved.Report

    • Avatar Will Truman in reply to Jaybird says:

      I think the main area of interest is 1971 to 1983, where one fell off while the other took off. Of course, we also have 1993 to 2005. We can talk about bubbles, but as long as we’re talking about external factors driving events… the importance of 1972 has been mentioned before. It seems like a lot of things changed at around that time.Report

    • Avatar James K in reply to Jaybird says:

      I read graphs like that for a living, and while picking a correlation from a graph can be a dicey proposition, what I see there is no relationship at all.

      I’d want to dig deeper before declaring there was no correlation, but from what I see there there is no relationship whatever between those variables.Report

  6. Avatar Kolohe says:

    “I think it speaks for itself”

    The ending of the draft really put the kibosh on unionization.Report

  7. Avatar Lyle says:

    Actually it is simple to explain the change the death of the Soviet Union. Recall that before WWII the Soviet Union was seen as a model by many in the educated class. The powers that be wanted to ensure that a communist takeover did not occur so it was necessary to give something to the proletariat. Just like the GSEs were created IMHO to put an answer to the cry “Workers of the World Unite you have Nothing to Loose But Your Chains” , once you own a house (or you and the mortgage company do) the cry is no longer valid. In particular the rich welfare states of Italy and Greece come from fighting communist takeover in Greece, and fighting the large communist party in Italy.
    Once the capitalists loose their competition so that there is no longer a viable alternative, then the powers that be go back to their desired state.Report

    • Avatar Jaybird in reply to Lyle says:

      A society that requires secret police to survive will destroy itself. It wasn’t destroyed by Capitalists. It ripped itself to shreds.

      It was never a viable alternative.Report

      • Avatar Roger in reply to Jaybird says:

        Jaybird,

        I think what he is saying is that we created/allowed the unions to appease the workers and keep their eye off the holy grail of true socialist paradise. Once the dream was gone, we no longer needed to tease them with union membership, so we took it back.

        This was of course, as you and I know, all part of our scheme. The cat is now out of the bag as they say.Report

        • Avatar Lyle in reply to Roger says:

          Right what is the alternative right now? There is no ideology like Marxism hiding in the wings right now. Perhaps 50 years or so. Unions, mass homeownership in the US, social democracy in Europe were ways to keep the masses quiet. The fall of the Soviet Union also resulted in the opening up of huge numbers of new workers as well in China.Report

          • Avatar Kim in reply to Lyle says:

            Sure there is. Get people riled enough, and they will break free of their chains.
            Nobody needs ideology to make a mob, they just need frustration. See JapanBashing, see the MLK/1960’s/1970’s inner city riots.Report

  8. Avatar Brandon Berg says:

    Saying that we need unions to reach full employment strikes me as pretty nutty. Unions are cartels that obtain favorable terms of employment for their members by keeping out the competition. The causal relationship most likely runs the other way: Unions were able to thrive because of the tight labor market and lack of foreign competition.Report

  9. Avatar BobbyC says:

    This is one of the most depressing posts I’ve read. In it, current elites are given the choice of being mean or stupid, while unions are proposed as a solution to unemployment.

    Tonight we heard President Obama complain that because the US doesn’t tax overseas corporate profits, the US tax code encourages big business to invest overseas.

    Presumably US prosperity will be restored once we become an autarky and all employment requires that you join a union which will use legalized monopoly power to raise wages.

    Aside from it sounding extreme, why do people who like these ideas not just propose capital controls to prevent capital investment by Americans abroad? How about a temporary 35 hr work week to get to full employment? How about wage controls (you could even cite Nixon and call it bipartisan and American)? Or just have the govt guarantee everyone a job like in the movie Dave? Or just put a big wealth tax in place to level the playing field? Really, if you believe that not letting businesses fire people is a good idea for getting businesses to employ everyone that they profitably can employ, then why not believe all the rest?Report

  10. Avatar James K says:

    I think you’re overlooking the main reason why policy makers no longer strive for full employment – after the failures of the 1970s they realise they can’t do it.

    Full employment as a policy goal didn’t last beyond Old Keyneisanism. If you believe in the simple Phillips Curve then full employment is easy, you just keep pushing interest rates down until unemployment hits structural and frictional levels. Unfortunately, it doesn’t work that way – the effect of the stimulus is temporary, and you end up with high unemployment and high inflation both.

    The only other thing a government can do is hire people into make-work programmes, but that’s ruinously expensive (seriously, it’s one of the major things that drove the New Zealand government to the wall in the 1980s), and it’s still a lie. A job given to you just to deliver you a pay-cheque is nothing more than a disingenuous unemployment benefit.

    And I am honestly baffled as to how you think unionisation would reduce unemployment? What’s your model?Report

    • Avatar Will Truman in reply to James K says:

      (seriously, it’s one of the major things that drove the New Zealand government to the wall in the 1980s)

      I would love for you to write more about this. Makework as an alternative to welfare is something that interests me.Report

    • Avatar Brandon Berg in reply to James K says:

      And I am honestly baffled as to how you think unionisation would reduce unemployment? What’s your model?

      The model, as I understand it, is that unions provide the political clout to pressure the government into using fiscal or monetary policy to promote full employment.Report

    • Avatar Matty in reply to James K says:

      A job given to you just to deliver you a pay-cheque is nothing more than a disingenuous unemployment benefit.

      This is factually correct but a lot of people seem to feel that having to do something, anything, before you get money innately makes you better. It is closely linked to the idea that people receiving benefits are lazy.Report

      • Avatar Kim in reply to Matty says:

        One might wonder if we wouldn’t be better with more Public Works, ala Roosevelt’s DPW.
        Just like buying a car is shooting a hole in your wallet and one that gets bigger with time, we keep on building cheap roads that cost more and more to maintain.Report

      • Avatar James K in reply to Matty says:

        Yes, but since it really is a benefit this amounts to the government enhancing people’s self-esteem by lying to them and everyone else. I’m really uncomfortable with that.Report

    • Avatar BobbyC in reply to James K says:

      I’m all for work as are nearly all Americans, but the political obsession with the govt’s employment policy is annoying and confused.

      There are lots of ways to ensure full employment – impose a cap on hours worked, have the govt hire people, require profitable businesses to expand employment until profits decline sufficiently, require people with incomes above a certain level to offer employment to a proscribed number of people, end all unemployment benefits, kill the unemployed, kill enough people until everyone is needed in the workforce, etc. There’s plenty of options, just not any good options. Maybe we should be thankful that the thought leaders of the New Keynesian movement only want to use taxpayer backed promises to stimulate aggregate demand in order to try to get the labor mkt to clear – it could be worse I guess.

      The notion that full employment is a goal in itself is absurd, even if commonplace in the electorate.Report

  11. Avatar Damon says:

    I don’t know how one can conclude that you need unions (a monopoly of labor) to generate full employment. The two concepts are innately contradictory.Report

    • Avatar Kim in reply to Damon says:

      *snort* who needs them to be a monopoly? they’re competition for a “union-free” workplace. And they do their job well. In industries where there is a reasonable union presence, the wages are higher for NON UNION workers.Report

      • Avatar Damon in reply to Kim says:

        Not in “closed shop” states or where the union has negotiated a contract that requires those working in the industry/shop to join the union. Not joining the union wasn’t an option at the auto plant I worked in for 6 summers. State law and union rules.Report

      • Avatar BobbyC in reply to Kim says:

        In oil markets, OPEC doesn’t have to have a monopoly to raise oil prices for non-OPEC producers. In diamonds, the de Beers don’t have to control every diamond to raise diamond prices even for NON-cartel members. Raising wages is a sign of the economic distortion of unions, not their success!Report

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