Walmart and the Welfare State

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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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1,077 Responses

  1. Avatar Kazzy says:

    Here is my thing with much of the handwringing over Walmart: If they raised wages, offered health care, etc. what would happen to their prices? What would happen to the people who depend on Walmart’s low prices to get by? It just doesn’t seem quite as simple as it is often made out to be.Report

    • Avatar Philip H says:

      Price increases to offset wage increases in a company like Wal-Mart are a red herring – all the company has to do is accept the corresponding drop in profit percentages and the pricing can remain intact. It’s like Papa John’s saying they have to either raise prices or fire workers to comply with the Affordable Care Act – they won’t say how much they might have to lower prfit margins to remain neutral, but I bet they could do it for under 10%.Report

      • Avatar Kazzy says:

        Of course. But what incentive does Walmart have to accept a drop in profits? What mechanisms can force them to do so?

        A societal mentality of every man for himself is really the issue here.Report

      • Avatar DensityDuck says:

        Interesting how people always think that profit is like Prometheus’s liver–it’s infinitely large, it always grows back after you rip out a piece, and it might be painful to take another chunk but you only feel that pain empathetically (which is to say, it’s imaginary.)Report

      • Avatar James K says:

        You’re assuming there’s much give in their profit margins – capital markets are very competitive, and most companies run close to their risk-adjusted cost of capital.Report

        • Avatar Kim says:

          Yes. I am assuming that. Because otherwise they wouldn’t be advocating for lower taxes. In a non-nearly-monopoly market, a taxhike doesn’t cost much of anything to a company, because prices are set via competition.
          In a monopoly-like market, a taxhike costs the company a lot in PROFIT, because they can’t raise prices to compensate.Report

          • Avatar Mopey Duns says:

            My understanding is that your assumption is wrong. It has been a few years since I looked at this so I may be wrong, but I believe that their profit margins are such that a small wage increase would remove them entirely.

            Their profits are almost entirely from economies of scale.Report

    • Avatar Mr. Harris says:

      If you’re living below the poverty line and you depend on Wal-Mart to meet your daily consumer needs than, god help you!Report

    • Avatar Kim says:

      They’re already abandoning Walmart for dollar stores, particularly near the end of the month. Wallmart’s financial disclosure docs are ALWAYS worth aread.Report

    • Avatar Ramblin' Rod says:

      It’s important to note that labor costs are only a part of their cost structure. If labor costs rise 10%, they would only need to raise prices by some amount <10% to compensate. Likely only a percent or two, maybe 5% at most.Report

  2. Avatar ThatPirateGuy says:

    We don’t know how much the prices would rise.

    If the prices increased such that a struggling family needed 1000 more dollars per year to buy the same goods then the wage increases would have a more negative effect than if the wage increases only caused price increases such that the struggling family only paid 50 dollars more per year.Report

  3. Avatar Philip H says:

    Gotta love the irony, but as I always ask commentators on both sides when issues like this come up – what do we DO about it? Calling out these inequities is the first step, and I’d love to see some enforcement against Wal Mart and others for their clearly illegal anti-union actions. But the publicity surrounding lack of living wages and health insurance has been around for, what, two decades regarding this company? The bad press certainly hasn’t hurt them any – they are as unwilling to engage in fair labor practices now as they were when I worked there part time a decade ago.Report

    • Avatar Dan Miller says:

      The only solution to things like this is a strong union movement in stores, which can’t come about without the government actually enforcing the laws around union-busting that Walmart routinely violates. That’s the key here.Report

      • Avatar North says:

        Actually it might be time for a reform or repeal of union laws. It’s quite possible that current laws are actually excessively restrictive on union formation and permissible activity.Report

        • Avatar Dan Miller says:

          That would also help. But even putting teeth in the “don’t fire people for organizing” bits, which are already on the books, would be useful. Certainty of enforcement would be huge even barring a change in the law.Report

        • Avatar NewDealer says:

          Taft-Hartley needs to be chucked out the window.Report

          • Avatar Will H. says:

            TH isn’t so bad. It has a place.
            A union can shut you out of work as well as open the door.
            There are many different models, and you don’t get to choose the model by membership.

            There are many, many times that I feel like a land-locked peasant trapped in some antiquated feudal system.
            In fact, that’s a completely adequate summary of the situation.Report

      • Avatar Will H. says:

        I disagree.
        I like the idea of government-assessed fees for services provided to employees.
        It won’t level the playing field, but it would make it much less tilted.Report

  4. Avatar Mr. Harris says:

    And Wal-Mart doesn’t just depress the wages of it’s own employees, it’s practice of pressuring suppliers to meet it’s low price points forces those same suppliers to cut costs to the bone. And don’t even get me started on the corrupting and illegal practices they employed to secure retail locations in Mexico. Apparently Wal-Mart is the biggest single employer in Latin America as well. I wonder how those employees manage to get by?Report

    • Avatar Remo says:

      Just to put your comment in some perspective.

      Down in Brazil, minimum wage is R$ 600 per month. Thats roughly U$300 per month – our usual ‘business months’ are considered to have 172 hrs of work.

      A big mac meal costs R$17 – roughly U$8.5

      A Chevrolet Camaro (first car that came to mind that exists here and in the US) – begins at R$ 203,000. Thats U$ 101,500. Yes, 100k.Report

  5. Avatar zic says:

    Ron Unz, writing for The American Conservative addressed raising the minimum wage, and tackled this question of ‘what would happen to prices?’

    . . .given the simultaneous rise in labor costs among all competitors and the localized market for these services, the logical business response would be to raise prices by a few percent to help cover increased costs while also trimming current profit margins. Perhaps consumers would pay 3 percent more for Wal-Mart goods or an extra dime for a McDonald’s hamburger, but most of the jobs would still exist and the price changes would be small compared to typical fluctuations due to commodity and energy prices, international exchange rates, or Chinese production costs.

    The resulting one-time inflationary spike would slightly raise living expenses for everyone in our society, but the immediate 20% or 30% boost in the take-home pay of many millions of America’s lowest income workers would make it easy for them to absorb these small costs, while the impact upon the middle or upper classes would be totally negligible. An increase in the hourly minimum wage from the current federal level of $7.25 to (say) $12.00 might also have secondary, smaller ripple effects, boosting wages currently above that level as well.

    The piece is worth a read; a good conservative argument for a liberal policy.Report

    • Avatar zic says:

      Should note that a big part of the argument here is that low minimum wage means that tax payers subsidize giant retailers like WalMart. Increasing minimum wage would actually move many people, the working poor, off welfare and decrease the EITC, so there would be a significant federal savings.Report

      • Avatar Roger says:

        Pirate,

        To mash up the line from Kung Fu… When you can point out the logical mistakes in the link you provided, it is time to discuss it. Until then, we are both wasting our time.Report

        • Avatar zic says:

          Roger, did you read either of these links?

          Because your response to them, critical response, not knee-jerk, would be appreciated.Report

          • Avatar Roger says:

            i can’t open yours. Can you re link?

            The point about Pirate’s that was interesting was its focus on retail jobs. It basically suggests a minimum wage on retail jobs, which is interesting. The reason of course is that retail jobs, like government jobs, don’t face competition from outside the US. Manufacturing jobs were killed when we messed with market forces. Foreigners stepped in and did it for less.

            Since foreigners can’t step in to do retail jobs, they are more immune to competition, thus the government can use mandatory wage hikes as a kind of redistribution paid by consumers of retail products.

            I am not a fan of this approach due to the way it interferes clumsily with the market, and thus will reduce productivity. On the other hand, the best retort to my concern is probably “compared to what?”.Report

            • Avatar zic says:

              The American Conservative article.

              He makes the same argument, but also several others. The big one being that the conservative argument here is for shifting the burden of a living wage to private industry instead of having it subsidized by the taxpayer.

              Important in all this, it seems, is that WalMart has requested an increase in the minimum wage, but will not raise its wages without the force of law. That does make me wonder if there’s an element of regulatory capture — another tool to put the small retail competition out of business, perhaps.Report

              • Avatar Roger says:

                Zic,

                I kinda like it. If we raise the minimum wage to $25,000 or so, we can basically eliminate poverty. We can raise ourselves up by our own bootstraps, so to speak.Report

            • Avatar BlaiseP says:

              Hey Roger… what’s standard gospel for Libertarians when it comes to monopolies or monopsonies? I really don’t know.Report

    • Avatar Remo says:

      The problem with a sudden rise in minimum wage is that there might be a lot of stuff that is tied to minimum wage.

      Here in Brazil we have a lot that is tied up with minimum wage – Everything related to federal retirement is, as well as most federal employees wages are based on the value of the minimum wage. So a rise on the value of minimum wage means that the whole government spending will go up a lot.

      Yes, it is a stupid system.Report

  6. Rather than beating up on Wal-Mart, we should be looking at why these people can’t find better jobs. Wal-Mart jobs are pretty useful as part-time jobs for teens and others who want a second job. If enough people currently working there move on to greener pastures, the need to fill those positions will push the wages up.Report

    • Avatar LWA (liberal With Attitude) says:

      circa 1936-
      “Rather than beating up on Ford Motor Company, we should be looking at why these people can’t find better jobs. “Report

    • Avatar Dan Miller says:

      Why can’t we do both? Try to get Wal-Mart to give these workers a better salary, and also try to enhance their skills so that they have more options? They’re not mutually exclusive.Report

    • Avatar BlaiseP says:

      That’s an interesting question. They’re not qualified for those jobs. The larger question remains, in the game of Wage Limbo — (basso profundo Caribbean voice) “How lowww … can you goooo?”

      Want to sell something to Walmart? There’s a whole process for it. They’ve got the whole life cycle of your product mapped out. They’ll help you find an appropriate manufacturer for it (in China, natch), they’ll look at your numbers, tell you exactly where your price point will be every year you sell your product, predict exactly how you’re going to reduce your margins. Nobody who sells to Walmart gets a break.

      Many manufacturers refuse to deal with Walmart on those terms, in which case, Walmart will start competing with them via a house brand. They’ll steal your trademarked bottle design and put their own mouthwash in it and colour it to your exact shade of blue and sell it right next to your product.

      If there are greener pastures there are also browner pastures. A lot fewer green ones than brown ones. Walmart could pay its people more and pass the costs along to the consumer. But once you’re in the commodity space, you’re driven by ever higher volume and ever lower margins and that’s all Walmart does. You want an alternative to beating up on Walmart? Walmart beats up everyone, even their own suppliers. Care to comment on that? Coz this is what I know. Every bottle of Listerine going through Walmart flows through my web services.Report

      • Avatar zic says:

        This is really important. I’ve seen several businesses, small manufacturers, done in by WalMart (and here in ME, by LLBean) in just this way. Smaller producers cannot meet the needs, often end up growing their businesses too fast while shedding other, existing customers, and so fail, only to have their product co-opted by the monster they were trying to sell their product to.

        The end result is both fewer places to shop and fewer products to choose from. But hey, that stuff is cheap.Report

      • Avatar DensityDuck says:

        ” in which case, Walmart will start competing with them via a house brand. They’ll steal your trademarked bottle design and put their own mouthwash in it and colour it to your exact shade of blue and sell it right next to your product. ”

        House brands have been a thing since forever. It’s not something that started with Wal-Mart.

        Besides, you seem like the kind of guy who’d claim that it’s the mark of an anticompetitive loser to claim that they should have some kind of exclusive authority over putting a particular blend of chemicals in a bottle.Report

        • Avatar DRS says:

          House brands have been a thing since forever. It’s not something that started with Wal-Mart.

          No one said that they did start with Walmart. Try to read better.Report

      • Avatar M.A. says:

        The man who said no to Wal-Mart.

        In one of the few industries that can get away with it, of course. Lawnmowers are a commodity whose purchasing begins at lower-middle income levels.Report

    • Avatar Kim says:

      Oh, I don’t know, maybe it’s because they’re in dead and dying areas of the country? Where there are no jobs except digging up old coke bottles at the dump?Report

      • I often wonder if perhaps the most optimal social program would be a moving allowance. Most of the problems seem to be people stuck in the wrong place: places where there are no jobs, places where the schools are bad, etc. Let’s give everyone a free move to the place of their choice. And you get another free move every two years in case that didn’t work out for you. The beauty of this is it also helps the other side of the equation: places with plenty of jobs can now fill them. Places that want growth can more easily compete for people looking to move.Report

        • Avatar Dan Miller says:

          Actually, if you move to take a job, your expenses are currently tax-deductible, so something like this is in place. I think it’s refundable, too, but not 100% sure on that.Report

          • Yeah, that’s great for me, but doesn’t help the inner-city single mom with three kids who doesn’t make enough to pay taxes.

            Wait, which side am I on?Report

            • Avatar Dan Miller says:

              That’s why the refundability is key.Report

              • Still, that inner-city single mom has to put the moving money up front, and be reimbursed at a (potentially) much later date. The working poor aren’t just income-poor, they’re also capital-poor. This is one of the problems with most proposals for carbon taxes in the energy arena. Pundits say that the resulting higher energy prices will cause people to buy more insulation, replace/repair windows, get a car with higher mileage, put in a high-efficiency furnace, etc. The poor can’t do those things, all of which require capital.Report

              • Avatar Dan Miller says:

                Good point.Report

              • Avatar Kim says:

                This is why we give them fucking cheap loans!!! Government subsidized!
                Free money is a good thing, particularly when the loan pays for itself (with lower utility bills)Report

              • Avatar Will H. says:

                It currently isn’t refundable.Report

              • Avatar Dan Miller says:

                Good to know–thank you!Report

            • Avatar Brandon Berg says:

              Yeah, that’s great for me, but doesn’t help the inner-city single mom with three kids who doesn’t make enough to pay taxes.

              Wait, which side am I on?

              Clearly not the left. If you were, you’d say that inner-city single moms with three kids who don’t make much money pay more in taxes than the rich do.Report

        • Avatar Kim says:

          Mises would like this. And it would solve a lot of problems This OneTime ™, aka the current recession/depression.
          Just one problem: a lot of people sunk tons of wealth into their current properties. They aren’t getting that back. Do you support jinglemail? (send back in the keys, cancel all debt?)Report

          • Well, I was figuring most of the people benefiting from this would be renters, not homeowners. But it could be tweaked to allow for cases where the owner is underwater in their mortgage. Just have to be careful not to create an incentive for people to screw over the mortgage companies. And yes, I’m biting my tongue trying to avoid starting a whole subthread on the cause of the housing bubble.Report

            • Avatar Kim says:

              I blame Greenspan.
              Tanta Vive.Report

            • Just re-read your comment and realize I was a little off the mark. Yeah, that is a problem, if everyone leaves and can’t get anyone to buy their house, business, etc. Guess I’ll have to think this one over a little more. Already working on Retirement Solutions, Inc. Now I’ve got Mobility Solutions, Inc. on my plate, too.Report

              • Avatar Kim says:

                More of a market problem is folks buying a $100,000 house thinking that it will be worth MORE 20 years from now… It won’t. Most of the money people sink into new houses is fancy gewgaws, with hardly anything spent on the bones. (and this is ignoring problems like subsidence…) Very few people buy “forever” homes, and this is because people are being priced out of their retirement (most of a person’s wealth aggregates in his house, not retirement savings).Report

              • Avatar Ramblin' Rod says:

                All the appreciation in home values is in the land. The actual house value depreciates (at an average rate of ~1/3%/yr).

                And the Case-Schiller home price index shows that the value of residential housing has just matched inflation for the last century.

                It’s a relatively safe mattress to stuff your money in, since you need a place to live anyway, but it’s not really a paying investment unless you get lucky and ride a good bubble.Report

              • Avatar Kim says:

                Suburbs aren’t going to be popular forever. And then everyone who decided to plunk down in a cheap exurb is gonna be really poor, because they can’t sell out, and gas prices will pinch ’em good.Report

              • Avatar Jaybird says:

                Once the shifting of thought that led to “outsourcing” morphs and shifts and realizes that “homesourcing” is not *THAT* different plus you don’t have to provide janitorial, I think we’ll see as much pro-suburb pressure as anti.Report

              • Avatar MikeSchilling says:

                Outsourcing still includes management to make sure the peons are putting in their hours. Homesourcing, which doesn’t, is a much harder sell.Report

              • Avatar Jaybird says:

                There was one hell of a backlash to, let us say kindly, “certain accents” in certain outsourced countries that did, indeed, result in hits to the bottom line.

                For a while there, there were a spate of commercials that tried to walk the fine line between coming out and screaming “OUR CUSTOMER SERVICE CENTERS ARE BACK IN THE US!!!” while refusing to acknowledge that they might have ever been somewhere else.

                I have high hopes that there will be at least one corporation that says “WE’RE MAKING MONEY HAND OVER FIST!” and that results in investors asking “why aren’t you doing this?” in the same way that outsourcing once inspired.Report

              • Avatar MikeSchilling says:

                I called Verizon customer service a while ago, and got a guy with one of those accents. He was great, so it was just idle curiosity when I asked him, while we were waiting for my phone to reboot, where he was. He replied “Albuquerque, sir” (which, if you picture it being said in that accent, is quite funny.) And it was true. When I mentioned Breaking Bad, it turned out that he was also a fan and mentioned several places he knew well that had been used for location shots.Report

              • Avatar Kim says:

                Mike,
                yeah, I know someone who works for a big corp around here. She’s from South America originally, and still has a lot of the accent. When people sometimes ask her “where are you calling from” she responds “US Steel Tower”Report

              • Avatar Kim says:

                By the way, just grabbed this from the consumerist:
                http://consumerist.com/2012/11/21/l-a-seafood-task-forces-catch-of-the-day-features-lots-of-mislabeled-fish/
                proactive consumer protection. In LA, even!Report

          • Avatar Mad Rocket Scientist says:

            Actually, I do support jingle-mail. It’s in the contract. I have the right, for whatever reason, the hand the property back to the lien holder. There are costs associated with it, of course (credit score hit, responsibility for the remainder of the note after the sale of the property, etc.), but it is my right.Report

        • “I often wonder if perhaps the most optimal social program would be a moving allowance.”

          I just wrote a post on this subject on my blog and welcome comment there by anyone interested. Or, if the powers that be want to copy it over to here as a “comment rescue” of sorts/guest post, the added exposure would be welcomed.Report

        • Avatar Barry says:

          There’d have to be (significantly large) areas with a labor shortage; currently we could tell if/where those would be by finding large labor markets with rapidly increasing wages.

          I don’t think that there are too many.Report

    • Avatar NewDealer says:

      The problem is that there are a lot of jobs which are necessary for society but seem absolutely determined to pay a low wage. This is an issue I think about a lot.

      There was another story this week in Bloomberg that was indicative of this trend. It was about an African-American woman who worked as a care taker for the elderly. She has been making 12 dollars an hour since 2005. She also lost her dream house in the Fiscal Crisis. The story contrasted her fate with the guy who ran the Mortgage Department at Bear Sterns. He made something like 8 Million Dollars last year and seemed to suffer no punishment despite being the guy who ran the department that caused Bear Sterns to belly up.

      Why does the home care taker only make 12 dollars an hour and has not seen a raise since well before the fiscal crisis began? The United States has a rapidly aging population and we are going to need more people who take care of the elderly. No one can argue with a straight face that her job is unnecessary. Perhaps it is not quite skilled labor but there should still be a wage premium for necessary jobs.Report

      • Avatar Kim says:

        And there are a lot of jobs that are utterly unnecessary for society, but also seem to want to pay a low wage. Canvassers and Waitresses in particular.
        The market for legal prostitution, on the other hand, seems remarkably expensive.Report

      • Avatar Roger says:

        New Dealer,

        You should think about it a lot. It is like a Zen Koan. When you finally get it, all will be clear. You may also want to think about why water and food, which are necessary for life, usually cost less than diamonds, which are totally superfluous.Report

        • Avatar MikeSchilling says:

          And why someone who has the rare talent to destroy a firm as large as Bear Stearns makes so much more than someone with the mundane talent of taking care of people.Report

    • Avatar NewDealer says:

      Or her contrast her to me.

      I graduated law school in 2011. According to the statistics, only 55 percent of people who graduated law school in my year have jobs that require bar passage. Luckily I am one of these people.

      My job is on contract but it pays very well. Surely my firm could probably charge less because of the alleged overglut of recent law school graduates. Some firms have been trying to take advantage of this. Yet my firm luckily does not.Report

  7. Avatar LWA (liberal With Attitude) says:

    Its also worth pointing out- again- that Wal-Mart only exists in its present form, due to the legal and regulatory structure that the taxpayers have constructed and pay to maintain and enforce.

    I say this in anticipation of the properety rights/ contract rights argument, that the labor agreement between workers and Wal-Mart is not the taxpayer’s business. The taxpayers have every right to ask if Wal-Mart’s very existance is in our benefit and if so, under what terms we allow them to operate.Report

    • Avatar Roger says:

      Interesting justification for Socialism in one sentence, LWA. Since I suspect that is not what you really mean, you may want to consider modifications in your rationalizations. Maybe not though.Report

      • Avatar LWA (liberal With Attitude) says:

        I phrased it deliberately to make the point that Wal-Mart in its present form, has no right to exist.
        The corporate form of business has no natural right to exist- it was a legal fiction, a thing that we the taxpayers created for the sole purpose of being aconvenience to us, to facilitate our needs for commerce.

        We could, with a stroke of the pen, abolish it tomorrow and Wal-Mart revert back to a sole proprietorship.

        Further, as we’ve discussed on many other threads, all large corporations in America exist atop a massive pile of direct and indirect subsidies, market distortions, and outright welfare, given to them by the taxpayers.

        We have every right to ask if all of this privilege we create is in our best interests.Report

  8. Avatar Roger says:

    This post is like a fly trap for those drawn to folk theory economics.

    1) Walmart pays market wages for labor. That is what they should pay if we want to optimize productive efficiency and prosperity.

    2). If you think market wages are too low, then I recommend rectifying it with non market fixes. Let’s see to it that these working poor get their fair share of the almost trillion dollars in means tested redistribution we spend each year in the US.

    3) Beware oversimplified models on the effect of coercively higher wage rates. If Walmart doubled wages, the market would respond not by getting the same people higher wages, but by different people becoming Walmart employees. You would just get substantially higher qualified and skilled people filling the slots. The major effect would be to subsidize skilled workers and encourage them to underutilize their skills.

    4). Beware oversimplified models of profits. The long term effects of raising rates cannot be paid out of long term lower profit margins. The market will respond to this and the net result will be less stores, higher prices, fewer employees and less competition. Profits are dynamic signals in markets.

    5). Considering the tone of this post and those on the left and their anti market, anti walmsrt vitriol, I cannot begin to imagine why the Walton’s donated money to the GOP. This is like a case study on why we want to encourage political contributions. To combat illogical pandering like this.

    6). Is anyone surprised that Walmart wants to reduce wages? You do know that this is what employers are expected to do to manage costs, right? Managers are paid to optimize costs vs benefits. If anyone thinks they have done so pooly, the market response is to prove it by doing so better yourself. Which you can do by working for or investing in Target.Report

    • Avatar Kim says:

      Yeah. I knew a manager once (worked Ames). He was always giving out bonuses. Got him better employees, better workers, and he was always turning a better profit than everyone else in the division.Report

    • Avatar Chris says:

      1) Walmart pays market wages for labor. That is what they should pay if we want to optimize productive efficiency and prosperity.

      This is a truism, and tells us nothing.

      It’s also why we need a strong labor movement. “We’re just paying you the market rate” is a pretty sorry excuse for paying people shit, but it seems to work for people who feel like the market determines the value of everything. The nice thing about the labor movement is that it says, “You know, we’re worth more than that to you, and we’re going to put pressure on you to pay us what we’re worth to you, not what you can get away with in the ‘market.'” This isn’t folk economics, it’s just not the facile economics of the “market” pure and simple.Report

      • Avatar Roger says:

        Chris,

        With all due respect, I do not believe you understand market dynamics and the effects of your recommendations. Sorry.Report

        • Avatar Dan Miller says:

          Roger, I actually think you don’t understand them. At a given price-point, Wal-Mart generates a certain amount of profit. But how to divide that between workers and management? There are multiple viable equilibria on that one. Unfortunately, we’re in the one where the Waltons earn billions and wages for their employees are low. The way to move to a better equilibrium is to enhance the bargaining power of the employees relative to management–hence, unions.Report

          • Avatar Roger says:

            Dan and Chris,

            As I mentioned to Kimmi below, the wage levels paid to workers can be viewed as a theory of how to meet consumer needs. Target’s theory might be let’s pay slightly higher wages and get better workers and see how that works. The theories then play out in the market. Profits are the signals that consumers give on how well those needs were met. They are like applause. Saying Walmart is wrong in a reasonably well functioning market is like saying the audience is wrong in their enjoyment of a concert.

            There are ramifications of viewing this as a struggle between the owners and the employees, it is inherently an act of cooperation, not conflict, with supply and demand determining the optimal weights. Assuming that we could take x from annual profits and move it to employees, ignores the effects longer term of lower expected risk adjusted rates of returns. This will reduce capital investment, numbers of stores, competition in the industry, raise prices and lower the number of required workers.

            Yes, short term we can enact a wealth transfer by taking from net worth of the Waltons and shifting it coercively to our favored groups. But this is called exploitation. I believe I have no right demanding they fund my conscience. Any fair system would not pick out the one party that is doing the most for those workers (paying them voluntarily agreed to wages) and penalize this by forcing them to pay above market wages. It isn’t just wrong and partial, it is counterproductive. It penalizes job creation.Report

            • Avatar BlaiseP says:

              Heh. About the time you get around to explaining how Walmart employees can be paid so little that they qualify for food stamps, then we can get back to the much-hated Wealth Transfer line of rhetoric. I’d prefer not to have my tax dollars subsidise goddamn Walmart’s wage structure.Report

              • Avatar Roger says:

                The alternative is to demand that the one person actually providing the job pay for your conscience. There is a cost to manipulating markets, and the cost plays out in less effective markets, and since market’s create the wealth that we use to fund our conscience, this is very dangerous.Report

              • Avatar BlaiseP says:

                Now yesterday was awfully productive, me talking about how Libertarians were trying to reduce friction in the economy. Don’t be posing absurd alternatives.

                When we want more of something, we subsidise it. When we want less of it, we tax it. That’s the truism, nu? Subsidies are a form of market manipulation. If the taxpayers put Food Stamps in a Walmart employee’s pocket, it’s that much less Walmart has to pay them. Simple economic fact. In point of fact, by keeping its workers below the poverty line, they pay fewer taxes and their employees remain on assistance.

                So whose conscience is being mollified by subsidising Walmart? Not mine.Report

              • Avatar Kim says:

                Markets create wealth? Humph. Aeroseal is simply a distribution of soemthing that wasn’t market created. Ditto velcro and a gadzillion other things. Useful, cool stuff.

                RISCy business, eh?Report

            • Avatar Chris says:

              Roger, ideally it would be “inherently an act of cooperation, not conflict,” but of course it’s not when the employer holds all of the leverage. That’s why unions can act as a counterbalancing force, and, dare I say, as one that can quite easily be considered a part of the market. To say that wages are at “market level” simply because that’s what wages are is to miss that point (and many others). Sure, Walmart’s profits would drop, or their prices would go up (the latter is probably more likely). If the prices went up, and then their profits dropped, we could have a conversation, but ya know, unions have been known to take wage cuts when profits fall.Report

              • Avatar Roger says:

                Chris,

                Wage rates are not set by leverage. They are set by the rate where supply meets demand. Seriously. I do not believe you get this.Report

              • Avatar Kim says:

                Naturally. Refusing to hire men because they’re more resistant to blackmail is all a happy daffy supply and demand thing.
                “Hey guys, we’re going to lower your wages!”
                –Hell, no!
                “Hey girls, we’re going to lower your wages!”
                –my kids still have to eat, don’t they…?

                Exploiting psychology is all part of supply and demand

                How is chocolate like sex?
                –a better Zen koan for you.
                Not that I expect you to get it.Report

              • Avatar Chris says:

                Roger, I didn’t claim that wages are set by leverage. However, there are two groups who have interest in wage levels, and often one of those groups has all of the leverage, or power, or whatever you want to call it, such that the only “market factors” that play a role in wage-setting are those related to the interests of that group.Report

              • Avatar Roger says:

                Chris,
                This would be true in a market of one employer. In a market of lots of employers, wages are set not by the lowest wage that the employer can imagine but by the lowest wage that is simultaneously too high for another employer to entice the worker away. That is where supply meets demand.

                And yes, this stuff is very complicated and above my pay grade. Every time I post my comments I realize that James K or Nob or James H or Brandon will correct me, and sometimes they do, and when I dig into it I usually find they were right and I was wrong. Damn! That said, the only way I can learn is to try to say it and then read their push back.Report

              • Avatar Chris says:

                Roger, except, as others have noted on this thread, the employer end works more efficiently when there are more employers too. It’s not as simple as the lowest wage they can pay without losing their employees to other employers, because the other employers aren’t the only variable in the equation. Labor is another variable, and one that can, by raising that lowest wage, raise the wages throughout the market.Report

              • Avatar Roger says:

                Chris,

                Could you clarify please? I am assuming lots of prospective workers and employers and that the competitive cooperative dynamic leads toward full employment.

                Raising the lowest wage, by such things as a minimum wage or a coercive union, would lead to more unemployment and lower net productivity and wealth. The key to a more prosperous working class pretty much comes out of increased productivity. Productivity is the path to prosperity. Not workers fooling themselves about solidarity.Report

              • Avatar Chris says:

                Roger,

                Raising the lowest wage, by such things as a minimum wage or a coercive union, would lead to more unemployment and lower net productivity and wealth. The key to a more prosperous working class pretty much comes out of increased productivity. Productivity is the path to prosperity. Not workers fooling themselves about solidarity.

                This is false, likely because the paragraph that precedes it is false. Again, look at the effects of unions in the first 60 years of the last century.Report

              • Avatar Roger says:

                Chris,

                US Incomes and standards of living are substantially higher now than then. And the real gains have been in less developed nations.

                Chris, I know this sounds goofy and all , but the past decade was the best decade ever for humanity and average incomes. By a long shot, by a country mile. This isn’t as good as it can get, but it is the best it has ever been.Report

              • Avatar Chris says:

                Roger, I’m not sure how to answer that, as it appears to be completely unrelated to what I said. Or rather, to the extent that it is related, it supports my point.Report

              • Avatar James Hanley says:

                ya know, unions have been known to take wage cuts when profits fall.

                And they’ve been known to push their firms over the cliff by refusing to take them.Report

              • Avatar Kim says:

                cite?
                Pittsburgh’s steel industry was headed over a cliff, union or no union.Report

              • Avatar James Hanley says:

                Hostess. Even the Teamsters told them not to strike. And now the union is complaining that Hostess was mismanaged. Well of course they were, which is exactly why it was a stupid time to strike. When you’re chained to a clumsy person at cliff’s edge, you don’t give them a push.Report

              • Avatar greginak says:

                The union may , in fact they likely, screwed up. However they had already taken significant pay cuts and had Hostess unilaterally take away money/benefits to use for the companies needs.Report

              • Avatar LWA (liberal With Attitude) says:

                And its not like the management had demonstrated any particular skill in running the company profitably.
                From what I’ve read, that management team couldn’t run a whorehouse on a Navy base.Report

              • Avatar Kim says:

                Just goes to shwo that everything has bad failure states, and with enough tries, will actually reach one. (You should see what happened in physics-land!)Report

              • Avatar zic says:

                Hostess (the company) was also a victim of leveraged equity investing Bain style. New investors, investing borrowed money, transferring that debt to company while paying themselves back, plundering pensions, etc.

                That, btw, leaves taxpayers on the hook for the pensions.Report

              • Nob Akimoto Nob Akimoto says:

                http://www.aflcio.org/Blog/Organizing-Bargaining/Hostess-Pattern-of-Mismanagement-and-Debt-Caused-Its-Collapse

                Yes, it’s the AFL CIO, but it’s good to have a competing version of the story out there.Report

              • Avatar wardsmith says:

                Hostess hasn’t been without its problems over the years. To blame their current demise on Private Equity is to purposely misread the facts. For decades the American eating habits have been to replace sugary bleached foods with more whole wheat, sugar free offerings. Yes everyone (except me) might cheat now and then and have a Twinkie now and then, but that’s nothing to hang a business hat on.

                IF the union wanted to keep their jobs (5000 of them) AND wanted to keep their brethren not in the same union (13,000) employed , they could have accepted some concessions. Of course by not doing so they sure showed Hostess didn’t they? The word stupid doesn’t even begin to describe some people.Report

              • Avatar LWA (liberal With Attitude) says:

                Ward-
                Your first paragraph describes how the management targeted the wrong product to the wrong market;
                Yet this fundamental business error could have been- should have been- overcome by the workers taking a pay cut?

                Is that really your argument?Report

              • Avatar BlaiseP says:

                I know more than I can say about Hostess Brands. My current firm was involved with their emergence from BK. Trust me on this, it isn’t the unions. The unions already took a hit in 2009.Report

              • Avatar BlaiseP says:

                Here’s what I can say. When Hostess Brands filed for their second BK, they simply stopped paying into the retirement fund, as per their previous 2009 agreement.

                The unions really didn’t want to take them to court over this, but Hostess Brands was already before the court. So there’s the outstanding unpaids, among them are the obligations to the union pension fund…. the rest you already know.Report

              • For decades the American eating habits have been to replace sugary bleached foods with more whole wheat, sugar free offerings.

                If only Hostess had done something along those lines.

                Hostess is in an industry that is, as far as I know, doing fine.Report

              • Avatar wardsmith says:

                Other companies are doing well in the bakery business, companies NOT saddled with addled employment contracts as Hostess was. Those contracts paid over $65/hr plus unsustainable pension benefits. The word unsustainable is one that needs to make it into the vernacular of the liberal lexicon. Companies CAN NOT survive on unsustainable business practices. Governments CAN NOT survive on unsustainable practices either, although being able to print money and field armies gives them a bit more “runway” as the VC’s would call it.

                And Nob is wrong about the Teamsters, they are no longer part of the AFL-CIO and /had/ agreed to concessions. Let’s talk about those concessions shall we? The unintentionally funny part of this scene was the antiquated work rules the Teamsters operated under, wherein delivery trucks would not commingle different Hostess products.

                Unions have driven companies out of business before, they will continue to do so in the future. There is no antidote for stupidity. 18,000 people are unemployed because one of the unions at Hostess was at least as stupid as the management. Certainly 20 years ago they could have started working on better products and marketing if they hadn’t been making unsustainable concessions to their unions. Unions have ZERO interest in the long term viability of the companies they work for, they are only selfish interest agents, always have been, always will be. The rest is just window dressing.Report

              • Avatar clawback says:

                In what sense did the union members screw up? Management made an offer; the workers decided they’d be better off working somewhere else, so declined the offer. Sounds like a routine negotiation. Yay free markets.Report

              • Avatar LWA (liberal With Attitude) says:

                OK, so you say the unions and management were both stupid, inept and shortsighted.

                So again, the point here is what?Report

              • Avatar Wardsmith says:

                Lib, just like with the auto industry, when times are good mgt makes deals with unions that are mathematically and fiscally unsound. Would mgt have made those decisions in the /absence/ of the unions applying pressure? I leave the answer as an exercise for the student.Report

              • Avatar Mike Schilling says:

                Clearly the free market isn’t working, because management keeps getting out-negotiated by unions. We need laws to prevent workers from talking to each other or forming associations that can hurt their employers.Report

              • Avatar wardsmith says:

                @Mike, if you’re happy that a minority of employees can drive the company out of business (and cause unemployment for the majority) then so be it. I’m guessing you’re not in a union yourself, just brutha’s wit em.Report

              • Ward, shouldn’t that be a minority’s right, if their absence is crucial enough to the company that the company cannot survive without them? If a small company of seven has one superstar programmer, should that one guy (a minority) be prevented from threatening to leave without a raise?

                If you think that the employees ought to have to act as a single unit, either they all strike or none do, then that’s a big union argument.Report

              • Avatar Mike Schilling says:

                I’m agreeing with you, Ward. It’s one thing for a corporation’s management to use corporate assets to influence an election — that’s protected free speech. But for a corporation’s employees to conspire to try to increase their wages? That should be a RICO violation.Report

              • Avatar James Hanley says:

                I think everyone’s missing my point about Hostess.

                1. I agree that mismanagement is the reason for Hostess being in dire straits. I don’t really know whether it was sheer stupidity, inability to adapt to changing American dietary patterns, private equity, or what, but for purposes here that doesn’t matter–call it all management, and say it’s the reason Hostess already went through bankruptcy and was struggling in recovery.

                2. I understand that Hostess’s employees had already made concessions. I also understand that Hostess had imposed unilateral changes (approved by a judge) in the contract that cut employee’s benefits even more.

                3. When your employer is that close to the wall, what does a rational union do? The Teamsters said, take it, shut up, and come back to demand more when the company actually recovers (I may be paraphrasing a bit there). The Bakery, Confectionery, Tobacco Workers and Grain Millers’ International Union (best union name ever!) instead made demands that led the firm’s owners to decide that actually closing the business down was their best option. And instead of getting anything remotely like they asked for, the workers all lost their jobs.

                Clawback suggests the workers rationally “decided they’d be better off working somewhere else, so declined the offer.” No. Any worker who decided they’d be better off working somewhere else would have quit and gone looking for a job. What they actually did was to ensure elimination of the job itself. That’s a substantively different thing.

                I’m not letting management off the hook here, but as I said, if you’re at the edge of a cliff and you’re chained to a clumsy person, you don’t push them.Report

              • Avatar Mike Schilling says:

                If you never call a bluff, you’re not much of a poker player.Report

              • Avatar clawback says:

                The workers evidently decided their prospects for finding other jobs, combined with their judgment of the expected value of holding out for a reasonable offer (i.e., the value of a successful strike times the probability of success) exceeded the value of accepting the crap management offer. Funny how economic actors are assumed to be generally rational except when they consist of some hated group.Report

              • Avatar James Hanley says:

                Clawback, that doesn’t explain why instead of just leaving their jobs they actually destroyed them. If I decided my job was no longer worth the pay, and that I had better prospects elsewhere, I’d resign, not make sure the job disappeared.Report

              • Avatar Kim says:

                James,
                then you’ve never worked for a truly bad employer. I know a guy who’s shot quite a few folks in the foot (not literally) just to get out of employment.Report

              • Avatar clawback says:

                If I decided my job was no longer worth the pay, and that I had better prospects elsewhere, I’d resign …

                But that’s what they did. They just did it collectively, which they have every right to do.

                … not make sure the job disappeared.

                This is incoherent. The company is free to keep making Twinkies without the workers if it so chooses.Report

              • Avatar Kazzy says:

                “This is incoherent. The company is free to keep making Twinkies without the workers if it so chooses.”

                Is it? I am not an expert on labor, but many of the reports I read made it seem like the company had to figure it out with the labor or they wouldn’t be able to staff the plant. Are there any requirements that they work with union labor? Was no one willing to cross the picket line? These are genuine questions… I’ve never been a part of a labor or worked in a union shop.Report

              • Avatar Mike Schilling says:

                It’s not i coherent at all. Management said “We’re going to go under unless we get these concessions”” and the Union said “Fish you, you’re lying. If things are so bad, why did you all give yourself raises?” It turned out the management wasn’t lying. This time. And they gave themselves raises because, you know, they could.Report

              • Avatar clawback says:

                Kazzy, proceeding without the union workers would have been complicated but possible. The company chose not to attempt it, which suggests they determined doing so would not be economic. Which in turn suggests they decided they cannot produce and sell Twinkies economically enough to attract qualified workers, union or none.

                You’ll note none of this fits in with some “the union destroyed the company” trope.Report

              • Avatar clawback says:

                Mike, the decision to close was made by the company, not the workers. That it was preceded by a threat no more places the onus on the workers than my saying “your money or your life” before murdering you would make you responsible for your own murder.Report

              • Avatar Roger says:

                Kazzy,

                I agree. Management should have had the freedom to renegotiate contracts or find new employees. If they in actuality did have this freedom, then so be it, the market hypothesis lost out in the competition of trying to serve customers. If they did not have this freedom, then they had their hands tied behind their backs, and we limited the responsiveness of the market.Report

              • Avatar Mike Schilling says:

                Clawback, we are in violent agreement.Report

              • Avatar Kazzy says:

                It seems to me that companies should be able to hire as they like (with certain limitations… no “Irish need not apply” rules) and employees should be able to organize as they like. I am sure there are real reasons why it is not quite that simple. However, it does appear to the untrained eye that it is needlessly complex.

                Ultimately, if you can’t run a profitable business, you probably should go under. I mean, it’s not like we have the mayors of major cities putting forth legislation specifically targeted at certain industry…oh… wait…Report

              • Avatar Mike Schilling says:

                And they’ve been known to push their firms over the cliff by refusing to take them.

                The factory’s closing because it’s not profitable enough and the owner won’t invest in upgrading it!

                Creative destruction is capitalism at work.

                The factory’s closing because the bank won’t renew the company’s line of credit!

                The bank’s is in business to make a profit; it’s not a charity.

                The factory’s closing because the union won’t accept the latest round of pay cuts!

                Fishing unions, always destroying jobs!Report

              • Avatar Stillwater says:

                It’s interesting to me that the actions taken by the collective known as a union is always nefarious but the actions taken by the collective known as the owners and representatives of a firm are never nefarious.Report

              • Avatar Roger says:

                Coercive acts are nefarious regardless of which side they come from.Report

              • Avatar Mike Schilling says:

                And refusing to work for the compensation offered is coercive.Report

              • Avatar Roger says:

                Note that the reason I am washy washy on this is that my experience is much of the disagreement between libertarians and the left is that those on the left are often evaluating the action on intentions or first order effects, and the libertarians are trying to anticipate all effects in a dynamic world of chains of cause and effect.

                The arguments on sweatshops, the effect of higher wages on profits, and other concerns in this thread often come down to disagreements of this manner. I have not worked out the details pro and con of limiting workers ability to exchange data on their salaries as a part of a voluntary employment contract. It seems like a bad idea to me, but before I am sure I would want to see how the factors play out in a dynamic world.

                Wouldn’t you?Report

              • Avatar Roger says:

                This comment should have gone on the thread about limiting workers rights to share salary info.Report

              • Avatar Mike Schilling says:

                much of the disagreement between libertarians and the left is that those on the left are often evaluating the action on intentions or first order effects, and the libertarians are trying to anticipate all effects in a dynamic world of chains of cause and effect.

                I’d say the opposite. Libertarians start from “Absolute property rights are an unmixed good”, and are willing to go wherever that leads them (e.g. the public accommodations section of the 1964 CRA being evil statist coercion), while liberals try to gauge the effect of different policies before embracing them.

                I’m guessing that you’d completely oppose a law against disclosing salaries, because that would obviously be coercive, but you’re unwilling to call something enforced by private economic sanctions coercive. I’d call that a libertarian blind spot.Report

              • Avatar Kim says:

                Roger’s never met a sweatshop owner in his life, I suspect. I know far too many meddlesome people… The amoutn of coercive acts in some of these “sweatshops” is truly gruesome.Report

              • Avatar Roger says:

                I would be proud to invest in a sweatshop though. I would like to help those most in need.Report

              • Avatar Kim says:

                *spits* Both stupid and dumb. The people most in need aren’t working sweatshops, Roger. And why help one person when you can save 100 from blindness with the same amount of funds? A kid who goes blind by the age of 5 is functionally nonproductive as a citizen, particularly in poor countries. Living by begging.

                But, oh, no, let’s talk about sweatshops, as if you know anything about them.Report

              • Avatar Roger says:

                Of course they aren’t working in sweatshops yet, they are still waiting for my much needed capital investment, I am ashamed to say. Does anyone have a good list of sweatshops I can invest more in?Report

              • Avatar Roger says:

                Mike,

                I agree with your take on anyone who believes in absolute property rights. Seriously.

                I think it is possible that a law which prohibits taking action against employees disclosing salaries woul be a good idea. I really am not sure. I am not against all regulations, nor am I for property rights for the sake of property rights.Report

              • Avatar Kim says:

                Just ask 4chan. /b/ has plenty of CP threads for you to discover many things in. Then, if you dare, come back here and tell me how happy you are to have invested.

                Or, yanno, it’s black friday.
                http://consumerist.com/2012/11/20/philadelphia-shelter-makes-black-friday-literal-adopts-black-pets-for-free/
                Adopt a black kid for free today. [Link Is Not Related].Report

              • Avatar Mike Schilling says:

                At least 117 killed in fire at Bangladeshi clothing factory

                Yeah, thank God for sweatshops. Think how many jobs would be lost if they had enough fucking fire exits.Report

              • Avatar Chris says:

                Mike, 117 workers now out of the market should decrease the supply without decreasing the demand, making the market wage go up. You’ve got to look at these things from a market standpoint.Report

            • Avatar bookdragon says:

              It is truly amazing that you can discuss the poverty wages the Waltons pay their employees (a practice that gives them a share of Walmart profits sufficient to make the Waltons among the wealthiest Americans out there), and somehow conclude that transferring some of their net worth to those employees would be exploitation!

              Sorry. I just can’t see this bunch of manipulative plutocrats as the victims here. T

              As to capitalism, the union movement started in this country precisely because of things like this. If you think unions are counterproductive and socialist and whatever, then it would behoove you not to defend the sort of business practices that ultimately lead to workers uniting.Report

              • Avatar Roger says:

                Dragon,

                I do not support exploitation from any side. I dont support the Walton’s using force against employees or vice versa. Both lead to a worse world. The proven solution to this issue is to set wages based upon supply and demand, and supplement it with safety nets, public and private.Report

        • Avatar Chris says:

          Roger, I know you don’t, and that’s why I called your economics “facile.” It’s a convenient way of treating avoiding having to deal with real problems, and even suggesting that they aren’t the moral problems that they are.

          But, given that I know what happens when labor movements are strong, I don’t have to accept “facile” economics that treat wages as a simple product of a labor market.Report

          • Avatar James Hanley says:

            Chris,

            I think you not ought to call Roger’s economic facile, and claim your approach isn’t folk economics, until you’ve put some serious study into the field. I know you’re aware of the concept of folk psychology, and I’m sure you’re aware of how little understanding of your field people who’ve never bothered with a serious study of it have.Report

            • Avatar Chris says:

              James, I agree, and I would never claim to be an expert in economics, but I think I’m on pretty firm ground here.Report

              • Avatar James Hanley says:

                I don’t share your confidence.Report

              • Avatar Chris says:

                James, what I find odd is that when someone else says what I’m saying (Mike S, for example, down thread), Roger has no problem accepting it. I can’t help but think that his take on my economic knowledge has nothing to do with my economic knowledge or his (which, I now suspect, is probably about as impoverished as mine).Report

              • Avatar Roger says:

                Chris,

                I am sorry. I just didn’t think I needed to restate my same arguments to Mike. I will though. Again, I am no expert on this stuff, and will appreciate any corrections.Report

              • Avatar Michael Drew says:

                You’re no expert on this stuff? You talk like you are, so often saying that others absolutely are wrong, that they don’t get concepts that they absolutely must get, that you are absolutely right about, that there’s no chance you are wrong apply just as you think they do in the situation at hand. I would say that kind of talk requires the confidence of an expert in the subject-matter of his expertise, except that, especially in a field like economics that relies so heavily on stylized assumptions about behavior, but generally as well, in my experience real experts tend not to display it quite like you do. So I guess your behavior comports with your self-description as “no expert.” Perhaps it comports more with “ideologue” or “polemicist.”Report

              • Avatar BlaiseP says:

                Speaking as someone who argues with Roger a great deal, I’d rather have someone directly oppose a point generally, then retreat specifically. Makes for a sounder debate, I think. The Devil is in the details as he usually is, but so are the angels who dance on the head of a pin.Report

          • Avatar Brandon Berg says:

            But, given that I know what happens when labor movements are strong, I don’t have to accept “facile” economics that treat wages as a simple product of a labor market.

            Sure, unions can cartelize the labor market, and that changes the price and market-clearing quantity of the labor market for their industry. Every introductory economics textbook has a section on monopolistic markets, and how they differ from competitive markets. Specifically, they tend to result in higher market-clearing prices and more producer surplus, but also deadweight loss and lower market-clearing quantities.

            No one’s saying that unions don’t change the dynamics of the labor market. We’re saying that those changes are not good.Report

        • Avatar LWA (liberal With Attitude) says:

          Me and my liberal friends were saying this just the other day, if only there were a business pro who could drop by and explain to us- slowly and clearly, mind you- How Business Works.
          Maybe even give us a primer in Econ 101 (“when demand rises and supply falls, prices A) Rise or, B) Fall . We can never get that straight!)

          And sure enough, here we go!Report

          • Avatar Kim says:

            Yes. Because folks who are liberals never start successful businesses.Report

            • Avatar Roger says:

              It’s a great opportunity. All you have to do is take a gamble on your philosophy, pay double market wages and see what happens. Please, please go for it. After all, your employees will buy some of your stuff so you can get some of your money back, right? Now is the chance to test your theories!Report

              • Avatar Kim says:

                Done and done. Now will you accept that I’m telling the truth, and “via the magic of the marketplace” my philosophy is better than yours?Report

              • Avatar Roger says:

                Yes. If your theory works it can prove itself, whether I believe it or not. Markets are constructive problem solving systems that solve for the problem of how do we cooperate best together to solve consumer related problems.Report

              • Avatar Kim says:

                FIRE in da hole! Cheating customers is an entire marketplace in of itself, isn’t it?
                What’s the market to do? I know, start a two-hour riot in Reykyavik.Report

              • Avatar Kim says:

                Pardon, but this is nucking futz. See what I said about Ames down below (the second response, about game theory)Report

              • Avatar LWA (liberal With Attitude) says:

                Hmm, if only there was a real world empirical example of higher wages being coerced on employers, and then we could examine to see the effects!
                Too bad the idea of workers striking and forcing employers to raise wages is nothing but a novel theory. It would be great to see how it would work.

                In the meantime, lets discuss economics again, in a fact-free, evidence-free way, where we trade abstract theories and postulate hypotheticals with game theory and ideology.Report

              • Avatar Mopey Duns says:

                What about the part where unions have killed businesses in the past?

                It has happened. I am generally sympathetic to collective bargaining for higher wages, but it’s silly to pretend their aren’t trade-offs.Report

              • Avatar BlaiseP says:

                A company which can’t reconcile with its own employees has far bigger problems than unions. Germany outlaws closed unions but it puts employees on the boards of directors. Somehow, they can keep their factories running.Report

              • Avatar Scott says:

                Mopey:

                You mean like Hostess? Thanks Bakers’ Union.Report

              • Avatar LWA (liberal With Attitude) says:

                @ Mopey-
                For every business killed by greedy and inept unions, we can demonstrate another that was killed by greed and inept management.

                So your point is…?Report

              • Avatar BlaiseP says:

                Heh. Those damned old unions, paying themselves huge raises, climbing into the lifeboats after decades of mismanaging the company and loading it up with debt. It took a court to reveal the full extent of the damages done by those dreadful unions the owners.Report

              • Avatar Mopey Duns says:

                I agree with you.

                You guys need to chill.

                Obviously bad management is bad for business. There is no way I support golden parachutes for the people whose incompetence and negligence torpedo a company. The reward structure, particularly for executives, is horribly skewed, in a way that is both grossly inequitable and destructive of economic growth in the long term. A captain should go down with the ship, not shove the children out of the lifeboats.

                If I could publicly cane those responsible for the 2008 financial crisis and the subprime loan fiasco, I would. Personally.

                That being said, that is all beside the point, because all I was trying to address was that you are acting as if there is no possible downside to unionization. I simply pointed one out.Report

              • Avatar Jeff No-Last-Name says:

                So CostCo is a dying business?

                At least TvD provides humor and occasional insight…Report

              • Avatar Ramblin' Rod says:

                You mean like Costco?Report

      • Avatar Brandon Berg says:

        It’s also why we need a strong labor movement. “We’re just paying you the market rate” is a pretty sorry excuse for paying people shit

        There’s nothing to excuse. An employer makes an offer, and potential employees are free to take it or not. If the employee doesn’t have any better offers, that’s not the employer’s fault.

        The bottom line is that paying above-market wages is charity, not something that employers owe to their employees. The idea that there’s some connection between employing someone and having an obligation to give him charity is sheer non sequitur. The logic doesn’t even rise to the level of “facile”—there’s nothing there at all.Report

        • Avatar Chris says:

          Yeah, you’ve apparently missed the entire discussion. That, and your economics appear even more impoverished than Roger’s and mine.Report

        • Avatar BlaiseP says:

          Here’s a brief primer of employment theory. To get money to cross the counter and into a cash register (the entire point of capitalism) someone has to ring up a sale, or these days, manage the cashier-bot at the self-checkout.

          An employer can only justify hiring someone if there’s some monetary benefit to the proposition. The employee must agree to work for somewhat less value than he brings into the firm. To illustrate this principle, when a gangster wants to extort money from a firm, one option is to featherbed: create a job for someone who does no meaningful or profitable work. Salesmen work on commission but they’re worth every penny if they can create value. But they still need a base salary, be it ever so low, to keep them in peanut butter between sales.

          But the employee is not privy to the accounting which goes into the justification for his hire. Nor would the salesman know the true cost of production of the goods he sells. Unless you’re waist deep in the accounting, it’s hard to know what the margin actually is. Nor would anyone know how much anyone else is being paid, unless others told him: in America, knowing everyone’s salary is very rare.

          There’s simple way to short circuit the Marxian employer-employee conflict. It’s often seen in Europe, where it’s actually the law in countries such as Germany. If an employee were on the board of directors, the employees would know the true state of affairs. This goes both ways: the employee-director could come back to the employees and say “Folks, times are not good, to keep this firm afloat we must cut salary costs for a while, until we get into a better patch.” But when times are good again, the board remembers the employees and rewards them for sticking it out through tough times.

          Employees are not cashier-bots. Employers aren’t ATMs. When I hear people talk about Market Rate for employees, there’s no market without meaningful information to support it.Report

          • Avatar Wardsmith says:

            Blaise this is where you’re screwed. There is NOTHING stopping a union from plunking some of the billions it collects in dues and BUYING shares in the company. But enough shares and you are /guaranteed/ at least a seat on the BOD. Problem solvedReport

            • Avatar BlaiseP says:

              I’m not screwed. I just finished the paperwork for my consulting firm, turning the revenue over to the people I trained. Heaven forbid an employer would take an interest in the well-being of his employees, or consider them as valuable assets.

              You’re the one who’s screwed, thinking employees ought to have to buy their way into the good graces of the board.Report

              • Avatar wardsmith says:

                You talk like you have a fishing clue how I run my businesses. I’ve NEVER had employees who didn’t have options to own shares in the company. I’ve also had employees continue buying shares above and beyond the ones they were granted outside of the option program (ie on the open market). I’ve made millionaires out of employees who bought into the business. However I’ve never had union employees either, the very concept of having an adversarial relationship with owners is anathema to me. My employees /are/ owners, so adversarial with me is adversarial with themselves.

                We could make fun of other unions, such as the pilot’s union at United Airlines. They had a crippling ALPA strike WHILE the pilot’s union was the /majority/ shareholder in the company. At the company meeting a pilot stood up and said, “My shares were worth $2.5 million and now they’re worth nothing” and management explained to the pilot how his OWN actions caused that to happen, just so he could get a few thousand a year more in wages. Braindead is as braindead does.

                If unions were such a great idea, unions should own companies and run them the union way. We’re all sitting by with bated breath to see how that all works out. Funny thing is, unions have been around for more than a century and the only outcome of the “union” running things was in the Soviet “Union”. We all know how /that/ particular experiment ended.Report

              • Avatar BlaiseP says:

                Well, my crew of monkeys are pretty happy with the arrangement. Germany has this problem beaten. It’s obvious: put an employee or two on the board, the problem solves itself. You can even outlaw closed unions. Wouldn’t that be great?Report

    • Avatar North says:

      So Roger I’m guessing you should be fully supportive of the employees of Walmart voluntarily organizing to pressure their employer to improve working conditions yes? You’re down with deregulating the old labor laws that currently restrict what activities and strategies labor movements are allowed to use (presuming of course that force and fraud remain illegal of course) yes?

      Also regarding your #2 I believe Elias already observed that Walmart specifically employs the redistribution you’re talking about as part of its employment model.

      But I do agree with you on one thing. Absolutely everyone who possibly can should patronize Target instead of Walmart.Report

      • Avatar zic says:

        I’m blessed. I live in Maine. I can shop at Reny’s.Report

      • Avatar Roger says:

        North,

        Of course I support non coercive labor organizing in the private sphere. I don’t think it can lead to above market wages, though it may be able to slightly adjust what the market clearing wage plays out to. In other words, voluntary unions are a great idea, but probably not very effective in achieving much higher wages. The key word above was voluntary.

        By the way, I would really value any critiques you or Nob or either of the Patricks provide on this issue. You guys often disagree with the libertarians, but you always know what you are talking about. When you tell me I am wrong, I really listen, because there’s a very real chance you are correct.Report

        • Avatar Dan Miller says:

          Actually, union wage premiums are a commonly-accepted phenomenon. See footnote 2 in this paper for starters.Report

          • Avatar Roger says:

            Hence the emphasis on the word voluntary. The effect of non voluntary, aka coercive unions is to get higher wages at the expense of the industry and the consumers the industry was intended to serve.Report

            • Avatar BlaiseP says:

              That would presume the workers were volunteering to do their jobs. Please dispense with that Voluntary/Coercive line of rhetoric. It doesn’t work in the real world. There’s nothing voluntary about stocking shelves.Report

              • Avatar Roger says:

                The employees chose Walmart every bit as much as Walmart chose them. That is voluntary.Report

              • Avatar Chris says:

                Chose Walmart over what?Report

              • Avatar Roger says:

                Chris,

                In the end, they chose it over entropy. Life requires constant problem solving to survive and thrive. Markets are systems that discover how to cooperate together to meet these needs in a world of entropy and scarce resources. If you master plan the market, you kill off the problem solving capability and the result is poverty, short life spans, and about 6 billion less of us. Please do not do anything to markets until you learn how they work.Report

              • Avatar Chris says:

                If you master plan the market, you kill off the problem solving capability and the result is poverty, short life spans, and about 6 billion less of us. Please do not do anything to markets until you learn how they work.

                And again you’ve essentially created a straw man. No one is suggesting we master plan the economy, but instead that the reigns should be taken off another market force. One that you’ve even admitted is such a force.Report

              • Avatar Chris says:

                P.S., I’m trying to stay respectful, but arguing from the position that anyone who disagrees with you doesn’t understand how the market works, is a pretty shitty way of going about things. For one, your view is not the only one even among experts. So if you want to argue that your interlocutors disagree with you simply because they don’t understand economics, you’ve got some legwork to do before that becomes a convincing point in your favor. As it is, it just looks like you’re being dismissive.Report

              • Avatar Kim says:

                Chris,
                no, see, roger just said that since I can make a profit (and have) via paying above market wages, he’s wrong and we’re right. Nevermind that I wasn’t arguing it was a universal solution…Report

              • Avatar BlaiseP says:

                Heh. You’re already on board for subsidising Walmart’s crap wages. You’ll have to decide which you want, a world where we have equilibrium or one without it. As wages stagnate and executive compensation increases, that’s proof positive we don’t have market equilibrium and soon enough it’s into a death spiral, leading to your Hobbesian Dystopia.

                Oh, by the way, poverty increases populations, not decreases them. Capitalism always concentrates wealth, no sensible person argues with that. The key to keeping capitalism working is to make sure the money keeps moving from hand to hand, and not into cash glaciers.

                The Fiscal Cliff is provoking an interesting response on Wall Street. Corporations are currently holding roughly 6-8 trillion dollars in cash reserves: they can’t seem to find anywhere useful to invest that money. But faced with the prospect of higher taxes, they’re now disgorging that money as dividends.

                That means there’s going to be a torrent of cash entering the economy. Until quite recently, he usual route to deal with that cash was to simply buy back stock. And it’s all going to be taxed, which will give the USA quite a boost. You don’t have to Master Plan the economy. You have to steer it toward some goal.Report

              • Avatar Turgid Jacobian says:

                “In the end, they chose it over entropy”

                Stop euphemizing.Report

              • Avatar judas says:

                It is not market distortion for unions to negotiate a higher price at which to sell the labor it is offering, no more than it is for a corporation to negotiate a lower price for the products it resells. That is the market. .. but only ideologues think markets, left on their own are inherently efficient,Report

              • Avatar zic says:

                Really.

                And consumers, too. Though I never set food in them if I can help it, more and more I cannot help it because the alternative are no longer available.

                And manufacturers, too, who chose to go out of business because of WalMart’s requirements for doing business with WalMart and the lack of alternative markets (see above).

                WalMart. The Norman Bombardini of marketplace solutions.Report

            • Avatar Kim says:

              Interestingly enough, you don’t even need a union for that to be the case. Just the rumor of a union is enough.Report

            • Avatar Dan Miller says:

              Roger, the right to voluntary agreements is not an absolute–for instance, an eight-year-old can’t voluntarily agree to a 40-hour work week, and I can’t make a voluntary agreement to sell myself into slavery even if I had a willing buyer. So the small bit of coercion involved in what you call “non-voluntary unions” frankly doesn’t concern me all that much, when weighed against the large gains in human well-being that would come about from higher levels of unionization.Report

        • Avatar Mike Schilling says:

          The current “market wages” result, among other things, from the huge disproportion in bargaining power between employees and workers. It seems to me that if you rectify that, the result is still a market wage.Report

        • Avatar North says:

          Roger would you support doing away with the old regulations that restrict unionizing like Taft-Hartley?Report

      • Avatar Jeff No-Last-Name says:

        Costco is even better. Unionized, and the CEO was a big backer of PPACA (he know it would reduce his costs).Report

        • Avatar wardsmith says:

          Only 18% of Costco is unionized. Which is the tail and which the dog?Report

          • Avatar BlaiseP says:

            Costco employees get pretty much the same wages as the union employees. They have a three year cycle where the employees’ wages are adjusted to the union rates. True, it doesn’t offer the protections afforded the Teamsters members, but 85% of Costco employees have health insurance.Report

    • Avatar BlaiseP says:

      1) Walmart pays market wages for labor. That is what they should pay if we want to optimize productive efficiency and prosperity.

      “Market wages” is a fallacy. Wages are a result of price discovery. Supply/demand, you know, that sort of thing

      2). If you think market wages are too low, then I recommend rectifying it with non market fixes. Let’s see to it that these working poor get their fair share of the almost trillion dollars in means tested redistribution we spend each year in the US.

      Most Walmart employees don’t earn enough to pay taxes.

      3) Beware oversimplified models on the effect of coercively higher wage rates. If Walmart doubled wages, the market would respond not by getting the same people higher wages, but by different people becoming Walmart employees. You would just get substantially higher qualified and skilled people filling the slots. The major effect would be to subsidize skilled workers and encourage them to underutilize their skills.

      They won’t double wages. Walmart is in the commodity business. They don’t sell quality, they sell volume. The only way they could improve wages would be to get off the death spiral of low quality. You have it exactly backward: Costco pays its people more because they compete on quality and volume. Of course, you have to buy a lifetime supply as a minimum sales unit. Just sayin’.

      4). Beware oversimplified models of profits. The long term effects of raising rates cannot be paid out of long term lower profit margins. The market will respond to this and the net result will be less stores, higher prices, fewer employees and less competition. Profits are dynamic signals in markets.

      Profits aren’t the only signal in markets: beware of oversimplification yourself. Walmart’s dumping cash into dividends to avoid higher tax rates. It’s hardly alone in so doing.

      5). Considering the tone of this post and those on the left and their anti market, anti walmsrt vitriol, I cannot begin to imagine why the Walton’s donated money to the GOP. This is like a case study on why we want to encourage political contributions. To combat illogical pandering like this.

      Walmart wanted low tax rates. Such contributions were an investment to that end.

      6). Is anyone surprised that Walmart wants to reduce wages? You do know that this is what employers are expected to do to manage costs, right? Managers are paid to optimize costs vs benefits. If anyone thinks they have done so pooly, the market response is to prove it by doing so better yourself. Which you can do by working for or investing in Target.

      Which takes us full circle. Walmart can reduce wages because it can: so much for “Market Wages”.Report

      • Avatar Roger says:

        You pretty much offered the same definition I would use to define “market wages.” Furthermore, I agree with many of your points. Just to clarify, number two relates to the need to ensure that working poor get their fair portion of means tested transfer benefits. My guess is that some of them do already.Report

        • Avatar BlaiseP says:

          Except for the prosperity part. The Walmart workers do not prosper. Many qualify for Food Stamps and public health care.

          So let’s quit subsidising Walmart’s substandard wages, eh? How about paying them a living wage, where they’d get off those Means Tested Transfer Benefits and Walmart could put that money in their paychecks?Report

          • Avatar Roger says:

            I believe that if Walmarts wages do not meet my values, that it behooves me and those who agree to subsidize them. Asking Walmart to do so would be counterproductive to enhancing the prosperity of the poor. It would do more harm than good. In this case the moral high ground of paying for my values and the path which is most productive are totally aligned.Report

            • Avatar BlaiseP says:

              Down that path lies madness. And communism.Report

            • Avatar Ramblin' Rod says:

              See, Roger… that’s a fine idea. And we should pay for that social largesse by taxing the crap out of the subset of the population that owns as much wealth as the the bottom 40% combined. That would be the Wal-Mart heirs, BTW.Report

              • Avatar wardsmith says:

                The “wealth” the Walton heirs own is in the form of Walmart stock. Destroy Walmart and you’ve destroyed their wealth base. Tax them to death if you like but there is NO WAY you’ll receive the book value of that stock. Even selling their shares on the open market will drive down the value of the remaining shares, so $10Billion worth of shares will clear the stock market at something like $1B or less. Paper value is just that, paper. Much of the “wealth” of that top 1% looks exactly the same, good on paper, illusionary in reality.

                Bill Gates put a large percentage of his Microsoft stock into the Bill and Melinda Gates foundation. They’ve been steadily selling the stock since they had it gifted to them. That has been a headwind against the Microsoft share price, which has been stagnant almost to the day since the foundation was formed.

                The US government owns a goodly chunk of GM. They couldn’t possibly recover their investment if they started selling. Only over much time could it /possibly/ get back to the price at which the gov’t paid for the shares and this was out of BANKRUPTCY! The debt was all cleared off the books already, it was a clean slate (except for the concessions to the unions, but I won’t go there in this tiny column).Report

              • Avatar Major Zed says:

                To pile on here, at the risk of being labeled a FYIGM toady of the oligarchy (only a matter of time anyway), I’d like to make two observations.

                (1) If two members of the household were earning $14k each (and such arrangements are common, I’m told) then the combined income of $28k would put that household ahead of 1/3 of the households in the US. I don’t have stats on health insurance coverage, so there is a comparability issue, admittedly.

                (2) If we were to expropriate the evil Walton clan, and could convert most of it to cash (contra wardsmith) to fund a pay increase for present and future Wal-Mart employees, it would work out to about $1 per hour. If instead, that perpetuity were put towards health insurance, it wouldn’t be enough – it would have to be more than 3 times that (see this).

                Just trying to scope out the magnitude of this injustice.Report

              • Avatar Kim says:

                How much of that 1/3rd are single income families?Report

              • Avatar Major Zed says:

                Can’t seem to find that. Median income for households with no earners = 19k; one earner = 42k; two earners = 81k; three earners = 99k; 4+ earners = 122k. (source). So your point is taken.Report

    • I very much like the idea that my writing is having such a dramatic affect on the Waltons’ psyches as well as financial decision-making and would like to subscribe to your newsletter.Report

    • Avatar LWA (liberal With Attitude) says:

      Nearly everything that Wal-Mart sells comes through a port or harbor on the coastline of maerica.
      Nearly all of these ports were constructed by taxpayers.

      Suppose We decided to charge a fee for port use, commensurate with the societal cost that We estimate Wal-Mart is costing Us?

      Suppose We charged a trucking fee for the use of Our roads?Report

      • Avatar North says:

        We could do all of that. But all it would do would be to jack up prices for the consumers and result in job losses when our trade partners retaliated with similar measures in their ports.Report

        • Avatar LWA (liberal With Attitude) says:

          Everything we do, “jacks up prices” for consumers. But the increased price isn’t a wash; the benefits of reduced welfare dependency of the workers is superior to the slightly higher prices.

          And the threat of a trade war can’t be an all-purpose defense against a legitimate action to cover our costs.

          Or to put it another way- if China only trades with us on condition we impoverish ourselves into 3rd World despair, then we have nothing to gain from trade.Report

      • Avatar wardsmith says:

        LWA what makes you think using ports is free? Using highways? You don’t know there are ALREADY taxes on them? What rock are you living under?Report

    • Avatar NewDealer says:

      There is more to life and decision making than Market Justifcations. There is also ethics, morality, fairness and justice. Abstract notions but important ones that makes us human. Ghandi was onto something when he came up with the creed of no economy/commerce without morality. This is much better than the cheerful praise of The Dismal Science.

      So even if there is a perfectly market justified reason for Wal-Marts compensation practices, they are still morally and ethically wrong and therefore should stop. It is wrong to give people less than a living wage and causes more of a burden on the state. If Libertarians wanted less state than they would support higher living wages for unskilled workers. Of course you maybe you have a secret fantasy of meeting a Robspierre or Trotsky one day.Report

    • Avatar Shazbot5 says:

      “these working poor get their fair share of the almost trillion dollars in means tested redistribution we spend each year in the US.”

      Well, about half of that trillion (that the right often lies about, implying that we spend a trillion on poverty) is medicaid paid by the states and federal gov’t. It’s not like there’s a bunch of wasted welfare-cash on medicaid that we can just use to help walmart employees.

      A lot of that “means-tested” money is not “welfare to help the poor” but is money that is absolutely necessary to keep the middle class, middle class.

      BTW, Rober Rector -the guy Heritage guy who authored the trillion dollar claim- is a hack and a liar (of sorts.). “In a 1994 congressional hearing, Robert Rector of the Heritage Foundation unveiled one of the most repeated sound bites of the 90s: “Since the onset of the War on Poverty, the United States has spent over $5.3 trillion on welfare. But during the same period, the official poverty rate has remained virtually unchanged.” This is totally false; the poverty rate fell from 19 to 11 percent between 1964 and 1973. And the U.S. has spent only $700 billion on AFDC and food stamps since 1962. To get his inflated $5.3 trillion figure, Rector’s “war on poverty” had to include solidly middle class programs like student loans, school lunches, job training, veterans pensions and Medicaid, three-fourths of which goes not to the poor but the elderly and disabled. (6)”

      http://www.huppi.com/kangaroo/L-thinktank.htm

      There is no “welfare” money sitting around to help Walmart workers. We spend very little on the working poor (outside of the bare minimum of medicaid.)

      That will need to change if the Walmartization of society continues apace.Report

      • Avatar Roger says:

        Yes, of course the trillion bucks is being greatly spent on the middle class. We tax each other to pay ourselves, with politicians and bureaucrats standing in the middle and laughing at our folly.

        Your desire to fund the working poor by demanding others rise up to the challenge is not very fair, is it?Report

        • Avatar Shazbot5 says:

          We don’t tax each other to pay each other. We tax each other, with the wealthiest and the upper-middle class paying the most (though that’s at risk) to pay those in the middle-class who might need help at the moment (say a lower-middle class student gets help paying loans or Pell Grants) who will then be more able to pay it back later. (For example, a lower-middle class student gets Pell Grants for Undergrad, does well in life, and then later becomes someone who pays more in taxes.)

          I think gov’t programs that help the middle class are good and necessary. But they are beside the point.

          Rector, the author of the trillion dollars for welfare dishonesty, seems to think all of those middle class programs count as welfare for the poor, or at least that’s what he wants the rubes to hear.

          The truth is, about 5 percent of the federal budget is spent on the non-working poor: http://www.motherjones.com/kevin-drum/2012/02/how-much-do-we-spend-nonworking-poor

          It is harder to calculate how much is spent on the working poor as opposed to the those who are higher up in the middle class.

          My point is simple: as inequality increases, if we don’t keep increasing the minimum wage, if current trends continue, we will have to start spending a lot more on the working poor. And as we do that, Walmart will be -as others have pointed out- able to pay less.

          I think the solution we’ll eventually get is this: Everyone in America will get a basic living wage and basic healthcare along with the option of getting subsidized loans (paid back dependant upon how much you earn after your education.) You will then get more money on top of your government cash if you take a job at Walmart or some such, adding up to a good-living wage. If your job pays enough, you will forfeit your basic living wage, but you won’t care. If you continually don’t work at all for more than a year and lazily collect your basic living wage, you will be entered into a selective service (maybe for 1 year, not all military, maybe also peace corps or teachers aid or whatever, where you will be trained, and people with children will have to be given selective service options that allow them to stay with their child) lottery or you will be given the option to forfeit your basic living wage.

          Maybe.Report

        • Avatar Shazbot5 says:

          “to fund the working poor by demanding others rise up to the challenge is not very fair, is it?”

          No, it is fair to have a system that redistributes wealth so as to benefit the worst off.

          Stanford Encyclopedia, Rawls on redistribution, fairness, and justice:

          “Rawls’s second principle of justice has two parts. The first part, fair equality of opportunity, requires that citizens with the same talents and willingness to use them have the same educational and economic opportunities regardless of whether they were born rich or poor. “In all parts of society there are to be roughly the same prospects of culture and achievement for those similarly motivated and endowed” (JF, p. 44). So for example if we assume that natural endowments and willingness are evenly distributed across children born into different social classes, then within any type of occupation (generally specified) we should find that roughly one quarter of people in that occupation were born into the top 25% of the income distribution, one quarter were born into the second-highest 25% of the income distribution, one quarter were born into the second-lowest 25%, and one-quarter were born into the lowest 25%. Since class of origin is a morally arbitrary fact about citizens, justice does not allow class of origin to turn into unequal real opportunities for education or meaningful work.

          The second part of the second principle is the difference principle, which regulates the distribution of wealth and income. With these goods inequalities can produce a greater total product: higher wages can cover the costs of training and education, for example, and can provide incentives to fill jobs that are more in demand. The difference principle requires that social institutions be arranged so that any inequalities of wealth and income work to the advantage of those who will be worst off. The difference principle requires, that is, that financial inequalities be to everyone’s advantage, and specifically to the greatest advantage of those advantaged least…

          The difference principle gives expression to the idea that natural endowments are undeserved. A citizen does not merit more of the social product simply because she was lucky enough to be born with gifts that are in great demand. Yet this does not mean that everyone must get the same shares. The fact that citizens have different talents and abilities can be used to make everyone better off. In a society governed by the difference principle citizens regard the distribution of natural endowments as an asset that can benefit all. Those better endowed are welcome to use their gifts to make themselves better off, so long as their doing so also contributes to the good of those less well endowed. “In justice as fairness,” Rawls says, “men agree to share one another’s fate.” (TJ, 102)”Report

          • Avatar Roger says:

            Shazbot,

            I would not agree to live in that society, so it wouldn’t be fair to me would it? My guess is Walmart wouldn’t agree to it either, since you seem to be picking them at random in a totally partial way after the fact rather than before.

            I believe a better definition of fairness is as follows. A game or transaction is minimally fair if the players agree to the rules. To make it more fair, provide multiple alternatives and allow them to choose the best game or transaction for them. Thus you can get people with different values to agree with playing or interacting with others .

            If the players choose Rawls rules, then they will indeed be playing a fair game according to them ,and that is what matters. My guess is you and Rawls would choose his system. I would choose another based upon what really seems to work in the real world.Report

            • Avatar Shazbot5 says:

              “I would not agree to live in that society, so it wouldn’t be fair to me would it.”

              So your definition of fairness is: X is fair if X maximizes Roger’s self-interest?

              I just took a break from the family, but that is crazy, no?Report

            • Avatar Shazbot5 says:

              Sorry, I didn’t read the rest of your comment. You have a definition of fairness (which is a worse one than I thought).

              Rawls says the rules we select for society (i.e. how to organize the basic structure of society: the nature of democracy, economic issues, the extent of property rights) are fair to everyone if everyone would choose those rules (on the basis of pure rational self-interest) from behind the veil of ignorance. (The veil prevents you from knowing who you are in society, i.e. that you are rich Roger and not a poor black, blind person born to alcoholic, child-molesting parents.)

              The problem with your way of choosing rules is that no one would agree to any set of rules. The powerful would select rules that benefit them, the poor would slect rules that benefit the poor, but no set of rules could be agreed to by everyone. If we accept your method for determining fair rules, then there are no fair rules, because there are no rules that everyone would agree to.

              But from behind the veil of ignorance, everyone will view society similarly, because everyone is rational, self-interested, and equally ignorant of their own situation.

              But from behind the veil of ignorance, we would be very worried about being the worst off in society, so we would want opportunities and the resources needed to get those opportunities to the worst off.

              Happy Thanksgiving from a Rawlsian.

              Back to dinner.Report

              • Avatar judas says:

                Bravo. You just ate Roger up. He should spend more time reading and listening, and less time sharing his half-informed opinions.Report

              • Avatar Roger says:

                Judas,

                I find it is more productive to reveal my half formed opinions to the light of discussion. This allows me to refine, revise and hopefully improve them. Obviously I have a lot of room for improvement.Report

              • Avatar Roger says:

                Shazbot (and Murali if out there)

                I basically agree with Rawls veil, with caveats. First, what I like about it is that it leads to impartial rules. The classic example is the procedural fairness of dividing a pie… You cut and I will choose.

                Let me clarify how my views of fairness possibly* differ from Rawls’:

                I believe people have different values and will thus tend to choose different social arrangements that meet their values from behind the veil. This implies more decentralized institutional arrangements.

                I believe many people will tend to choose outcomes based upon lifetime expected value adjusted for time preference rather than at a point of time.

                I suspect I place a lot more value on incentives and the dynamic affects of actions and interactions. How we distribute the spoils of our efforts is the most important decision in what and how we create. And creating value, over the long term eats distributing value for launch. In other words, a creative society over the long haul is going to be unimaginably better for most than a more equal but uncreative society.

                I suspect most people would choose the society which would allow them to optimize their expected lifetime earnings, rather than minimize downside risk. In other words, I believe most people are less risk averse.

                Finally, I think people need to be able to choose not upon intellectual rationalizations, but based upon how societies actually work. Societies are complex adaptive systems, and how we think they will work in a thought process is not how they really work. Thus I would choose based upon empirical evidence of how people actually tend to perform according to my values.

                As to your argument that people would not ever agree to rules, this is both incorrect and yet at the same time more true for Rawls’ rule set than for mine. Why?

                First, rules and institutions tend to evolve. We can influence them in directions that make them more like Rawls’ or more like mine. Many institutional arrangements are established between two people and expanded out. I agree voluntarily to play with Dave, and he agrees to play with me. Agree to rules and others can join in.

                Over the last ten thousand years, millions of games and institutional and social arrangements have evolved, expanded, competed with each other, died out, flourished and proven themselves. Of course the rich would love to have rules that give them advantage, and the poor look for the same. Some societies have discovered ways for the two to work together voluntarily. One side cuts, the other chooses.

                * I say possibly, because I find Rawls, confusing, and really do not care whether he agrees with me or not, I seek wisdom on fairness not wisdom on what he thinks.Report

              • Avatar Shazbot3 says:

                Some basic Rawls stuff:

                “I believe people have different values and will thus tend to choose different social arrangements that meet their values from behind the veil. This implies more decentralized institutional arrangements.”

                Rawls idea is that X is fair if self-interested choosers would choose X from behind the veil. So, in that sense, their moral “values” are irrelevant to what is fair. This is one the advantages of Rawls’ theory.

                “And creating value, over the long term eats distributing value for launch. In other words, a creative society over the long haul is going to be unimaginably better for most than a more equal but uncreative society.”

                I’m not sure I understand this. I think you mean that socialism kills incentives and creativity, i.e. that we need to reward motivation and good choices and “winning” in economics. I think Rawls agrees. But we can redistribute goods and still have markets that reward winners and punish losers. In fact, if we took away all inheritance, the parents of rich kids would be more motivated to work, and the children of poor kids might feel more empowered (instead of believing, accurately, that their odds of success are grim) to compete. But to organize society so that there is fair competition amongst all requires distributing wealth from the top to the bottom. It also requires regulations to prevent the wealthy from gaming the system or passing off externalities to everyone else, etc. It also means redistributing resources and opportunities and wealth to those who were born unlucky to have certain disadvantages: born into poverty, bad education, disability, bad parenting, etc.

                “n other words, I believe most people are less risk averse.”

                I’m sympathetic to this criticism. But it misses the point. See here and Harsayani’s critiques on risk aversion.
                http://plato.stanford.edu/entries/original-position/

                In brief, you are somewhat risk averse if you -before the ACA- were young and bought health insurance. Different levels of risk aversion are all plausibly rational, but all Rawls needs to prove that the difference principle is what you would choose is that you would want, out of self-interest, to insure yourself against being born into horrible poverty or disability (or both) without some aid from the state. If you sometimes purchase insurance (or save your own cash as a kind of insurance) against massive loss, then you are risk averse enough to choose the difference principle from behind the veil.

                “Finally, I think people need to be able to choose not upon intellectual rationalizations, but based upon how societies actually work. Societies are complex adaptive systems, and how we think they will work in a thought process is not how they really work. Thus I would choose based upon empirical evidence of how people actually tend to perform according to my values.”

                Rawls agrees. From behind the veil of ignorance, you see society as it is. (You just don’t know who you are.) So, you know for instance that markets maximize overall wealth, including creating wealth at the bottom for the worst off. But you know that a safety net will not destroy the market and benefits the worst off. Etc. Etc.

                The rest of your post is pretty much incomprehensible to me.Report

              • Avatar Roger says:

                To the extent Rawls does agree with me, I think he is right.

                I have not yet picked out Harsayanis critiques, as the article is really long and complicated. I will try to work through it though.

                As I stated I totally agree people would wisely choose a society with safety nets and with strong incentives for creating value.Report

            • Avatar Stillwater says:

              A game or transaction is minimally fair if the players agree to the rules.

              But which set of rules is the one that people ought to agree on? That’s been your argument all along, actually – that people ought to adopt and play by different rules. Take unions as an example: the rules union members accept are that they get to leverage higher wages out of employers by collectively bargaining. The employer in turn accepts a rule whereby management gets to leverage lower wages out of employees by breaking the union, or hiring scabs or shipping jobs overseas. The problem is that management’s rules – that they permitted to seek and achieve the lowest possible labor rate – doesn’t require any agreement on the part of labor to be acted on.

              Of course, most liberals, it seems to me, are inclined to think that the desire of management to maximize profits isn’t negotiable, or contingent, or up for a public vote, or part of a contract. It isn’t an agreed upon rule, but an acceptance of a basic fact. But how that desire manifests is negotiable. (Those are the rules we’re talking about here, yes?) And liberals think that if management’s desire to maximize profits is entirely open ended, then labor needs some leverage to act as a counter-balance and make the game fair. And that means permitting labor to seek the highest wages possible thru collective bargaining, but other means as well.Report

              • Avatar Roger says:

                SW,
                Just to clarify, I think people playing the same game need to play by the same rules.  I am encouraging as decentralized institutions as possible or practical so that those with different values can play different “games” with like minded individuals.  That said, over time, some rules prove themselves over time and become the standards.  Some rules need to be society wide.  To further complicate it, sometimes standards are better when set consistently so that people can experiment together without creating chaos.  

                I believe the rules that lead to the best long term prosperity of humans in regards to wage negotiations is loosely grouped around mutual agreement and open entry/exit and competition. This is a hypothesis on my part though, and I recognize both that I could be wrong or that it could be wrong tomorrow, or that it may not match others values. As such, I think it is good that people experiment around this rule set, especially if they can do so without using coercion. 

                I am of course fine with them bargaining collectively, or striking collectively. I am also fine with management firing them collectively.  It is a voluntary contract of employment and should be so on both sides. And the should comes because I see all economics facts pointing out that this leads to more happy smiling prosperous humans that spend their days debating on the Internet as opposed to toiling all day in the fields before they return to their clay huts. 

                The reason wage negotiations are fair is that they do have the same leverage. Employees are competing with other prospective employees for jobs.  Employers are competing with employers to hire people.  Characterizing it the other way is silly. Does this make sense?Report

  9. Avatar Jason Kuznicki says:

    If Wal-Mart raised wages, more people would apply to work there. Some of them would have more impressive qualifications than the current employees. “Job gentrification” would put them out of work.

    If that sounds good to you, by all means, advocate it.Report

    • Avatar Dan Miller says:

      So is your position that there’s no way to improve the lot of Wal-Mart’s current workforce? Union wage premiums exist, and are especially strong for low-skilled workers in hard-to-outsource jobs like Wal-Mart (cite).Report

      • Avatar Dan Miller says:

        Or, if you feel there’s a better way to improve the lot of the working poor, write about it! You say that you favor a functioning welfare state, and I take you at your word; but you almost never seem to get angry about the plight of the poor, the way you do about drug policy or drones. You don’t spend that much time writing about it, either; it’s usually an aside in a post, designed to deflect liberal criticism rather than bring about actual change (and the fact that the changes you favor are fundamental transformations that most likely won’t ever happen completely makes you even more vulnerable to this charge).

        In short, Jason, I believe that you favor “a no-deductions negative income tax with a substantial guaranteed minimum income, minus the entire welfare state”. But I also believe that it’s not a high priority for you; that you’re willing to sacrifice almost nothing to gain progress on this front. I don’t believe that someone trying to get by on $14K pisses you off the way that many other issues do, or the way that it obviously does anger Elias.

        And that’s why liberals and libertarians can’t agree on the welfare state. Not because our visions are logically incompatible–if we both wanted to, these are the kind of differences that could be hammered out in any form of coalition politics. But because we place drastically different weights on different priorities.Report

    • Avatar Brandon Berg says:

      Perhaps more importantly, this may cause people who are qualified for more productive work to end up taking jobs at Walmart, and the economy loses whatever value they would have created in that more productive job.Report

      • Avatar Chris says:

        Right, because the people in skilled jobs making $9.50 are just dying to leave for the now comparatively high-paying unskilled Walmart jobs at $9.75.Report

        • Avatar Brandon Berg says:

          If for whatever reason they find their current jobs less desirable, sure. I had a friend who quit a high-paying job in the software industry to work retail. The heterogeneity of preferences is easy to underestimate.Report

          • Avatar Chris says:

            I’m fine with accepting a certain amount of heterogeneity of preference, but if you think a.) the market is rational, and b.) people will leave better opportunities for worse one’s en masse because of a slight shift in the short-term attractiveness of the worse opportunity, then there’s something wrong in your thinking.

            There’s also something wrong in your thinking if you think there are a lot of skilled workers making $9.50 long-term who will be excited about the possibility of making $.25 more long term. The people who would leave their jobs for newly raised Walmart wages are, in general, the people working at Walmart’s competitors or with similar skill levels to existing Walmart employees. I mean, it’s not like anyone’s suggesting that Walmart pay nurses wages, or hell, even medical assistant wages.Report

            • Avatar Roger says:

              Chris,

              So if Walmart pays a quarter more per hour, your beef with them ends, and workers are all justly paid?Report

              • Avatar Chris says:

                Roger, not with a quarter, no. The process is, as you’ve noted (I point out again), a market one: Walmart and its employees (unionized or no) come to an agreement on wages, and either the people can live on them or they can’t, and either Walmart continues to make the profits it wants or it doesn’t, and we start the next round of coming to an agreement. The reason this doesn’t happen now is because Walmart is able to crush any attempt at unionization.

                If you’re wondering why people on the labor end look at this as an antagonistic relationship, there’s your answer. That and because there are people who say these are the “market wages,” and the employees of Walmart should be grateful, or get another job.Report

              • Avatar Roger says:

                Chris,

                Again I am confused. Yes, every day can be viewed as an open employment contract between Walmart and each employee. They have a job that needs to be done, and the wage they pay is the level that someone who can do it well is willing to accept. If they pay more than that, then someone else can come and say, “I will do the same job for one penny less.”. As a profit maximizing firm, they will accept the one cent lower rate. Eventually nobody offers their services for less.

                Of course there aren’t just millions of potential employees, there are millions of potential jobs and thousands of competing potential employers. These bid up wages. Supply then meets demand.

                If Walmart voluntarily or if an employee cartel used threat of violence to achieve wages that are different than this level, then resources would be allocated less efficiently and productivity would be lower. Agreed?

                An example, if they paid double wages, then the result would be higher skilled workers would apply for these jobs instead of doing the job that optimizes their skills ( you just raised the entry level above the more demanding job.) Thus pverqualified people would get these jobs. The unskilled workers you want to help would now need to look for a new job, but if you eliminated all these jobs, then you also eliminated the need for these workers. Now we have structural unemployment, higher skilled workers misplace in lower skilled jobs. Less total productivity and lower GDP divided among the same number of citizens.

                This is really complicated, and I appreciate any corrections to this basic, probably oversimplified model. However that is my take on it.Report

              • Avatar Chris says:

                Roger, see below (way down at the bottom).Report

              • Avatar Stillwater says:

                if they paid double wages, then the result would be higher skilled workers would apply for these jobs instead of doing the job that optimizes their skills ( you just raised the entry level above the more demanding job.) Thus pverqualified people would get these jobs.

                And here the argument is again. An objective measure of what constitutes an “over qualified person” taking a job is outside the scope of libertarianism, it seems to me, and confuses the goals of the theory. Libertarianism is a theory about liberty (based on the NAP, primarily), and voluntarism. If a person is presented with options A and B, and they choose B even tho they are overqualified for the job, they are acting rationally and freely within the libertarian framework. It’s the ideal (optimal) outcome. To measure that person’s choice against a model where everyone works to the level of their skill set is not a libertarian model, it seems to me. It’s an ideal that logically follows from maximizing liberty. A libertarian can’t use both metrics to justify a policy or position, at least as I see it.

                If overqualified people are taking jobs that under-utilize their skill set, then that is either a) permissible within libertarianism, or b) libertarianism isn’t primarily concerned with maximizing liberty (since the overqualified person chose that job freely and rationally as the best option available to him or her).Report

              • Avatar Stillwater says:

                I’ve bungled the italics in there…Report

              • Avatar Stillwater says:

                Another way to say this, in language Tim K is comfortable with, might be that libertarianism is about processes and productivity is about outcomes, and conflating the two is inherently problematic.Report

              • Avatar Kim says:

                Fuck all. HOW do you fix the finance sector hiring OVERQUALIFED folks?
                Yeah, sir, that’s my fucking problem. I don’t give a jack-all damn about people who aren’t gonna make me new awesome shit, and their fucking productivity. Call me selfish, I call it fucking practical.
                Some forms of overqualified are a LOT more painful for the economy than others. Soem people are far more qualified to create new markets, new ideas, more cool shit than others.

                Oh. Yeah. Solve That for Me.

                (I like an inheritance tax, myself, as it drops money into the hands of consumers fromt he hands of “investors” — aka lazy people who don’t work for a living)Report

        • This is why you don’t need 100% of jobs to be unionized in order to raise wages pretty much across the board. If unionized Walmart pays $9.75, then my boss will have to pay something more than that to employ my number-crunching or real-time programming skills. IIRC, the “magic” number is about 30% — that many union jobs and all employers have to pay roughly union wages in order to attract labor.Report

          • Avatar Mopey Duns says:

            Having worked at Walmart during my impressionable years, I feel like I can say a few things about it.

            First, the jobs at Walmart completely suck. You get a lot of grief for little cash compensation.

            Second, when some union reps came around, the store managers rounded up all the employees for the morning meeting and told us, straight up, not to talk to them, and that we didn’t need to talk to them, because they already treated us so well. Even as a teenager this struck me as somewhat peculiar.

            Third, Walmart had net profits of $15.4 billion in 2011. They also had 2.1 million employees worldwide. I am not an economist, but I am pretty sure that means that a pay hike of around $7,300 per year for every employee (some of whom are already paid pretty well, admittedly; ie managers), would consume all of their profits.

            Assuming the average Walmart schlub works 25 hours a week, 52 weeks a year, that is 1300 hours. So, an increase of $5.5 dollars would be the absolute, untenable maximum wage increase.

            If the woman in the OP making $14,000 a year is typical, then she would be bumped up to around $21,000.Report

            • Avatar Roger says:

              mopey,

              And absent all profits, Walmart would cease to exist, as there is no point in investing capital in it. Right?Report

              • Avatar Jesse Ewiak says:

                Um, so a company ceases to exist the moment it stops making a profit? I’ll let Sony know they should’ve blinked into nothingness a few years ago.Report

              • Avatar Mopey Duns says:

                I doubt anyone will actually read this comment, since it is not exactly timely, but my point was to ground this conversation in something other than invective.

                My main point was to establish the maximum amount of wiggle room that Walmart has in terms of adjusting wages (without addressing how the wage increases would actual interact with Walmart’s gross earnings. Obviously there is a relationship there, but I am not clever enough to suss it out).Report

              • Avatar Kim says:

                … you’ve never bought stocks, like, ever, have you? Utilities never run a profit (it’s why people invest in them!) Most of the biotech sector doesn’t run a profit, like, ever (if they actually find something that works, they promptly skyrocket in value and get bought up by MERCK or some other big corp).Report

            • Avatar Mike Schilling says:

              This assumes no gains in productivity from greater compensation, in increased morale, better retention, or any of the other things that seem to work for Costco. You know, no one would make this argument about, say, office chairs (“We have to buy the very cheapest ones, and if we all get chronic lower back problems, we owe that to the shareholders!”) but it’s so easy to assume that non-white-collar workers are purely a drain on the people who actually matter.Report

        • Avatar Brandon Berg says:

          By the way, I didn’t say that people would leave their current jobs to work at Walmart. The more likely scenario is that people who could do somewhat better with some work choose not to put in the effort to get a better job, because Walmart pays enough. It’s not going to deter someone from going to medical school, but maybe someone who otherwise would have taken computer classes at community college to get an office job decides just to stick it out at Walmart.Report

    • Avatar ThatPirateGuy says:

      Money that goes to the Walmart employees gets spent in the local economy instead of disappearing into the bank accounts of the Walton’s to remain unspent. Additionally it increases tax revenue.

      This local growth creates new opportunities for the displaced workers. The increased tax revenue makes providing services for the displaced workers more affordable as well.Report

    • Avatar Jeff No-Last-Name says:

      What qualifications do you need to stock shelves?Report

      • Avatar Scott says:

        No qualifications are necessary but the company should pay their employees very well to do it, otherwise liberals will be angry.Report

      • Avatar Kim says:

        showing up on time, being able to follow directions, and being able to read never hurt.
        Not killing the customers is a good idea too.Report

        • Avatar Scott says:

          Sadly as my wife, who has run several doctors’ offices, tell me it is hard to get folks to even show up on time these days. She has told me that she will forgive a lot if someone shows up on time on a regular basis. Yet these same folks always want higher salaries when they have few if any skills. It is easy to get on the gov’t dole. How far this country has fallen .Report

          • Avatar BlaiseP says:

            Ah, but now we have the best of both worlds. Walmart gets its people to turn up on time … aaaand… those people are on the Gov’t Dole. Isn’t capitalism great?Report

          • Avatar LWA (liberal With Attitude) says:

            Seriously?
            Your argument is yet another variant that American workers (present company excluded, I am sure) are lazy bums who refuse to work hard, but prefer to live off the dole.Report

            • Avatar Scott says:

              The bakers union seems to feel that way:

              Twinkies bakers say they’d rather lose jobs than take pay cuts

              http://news.yahoo.com/twinkies-bakers-theyd-rather-lose-jobs-pay-cuts-075558559–finance.htmlReport

              • Avatar LWA (liberal With Attitude) says:

                It may very well be that the bakers calculated that the pay they were offered was worth walking away from.
                Which is exactly what businesses do every single day of the week, when they strategically default.

                You have heard that theory that conservativism and libertarianism are actually just elaborate defenses of authoritarians, of a feudal mentality of obedience to Rightful Authority?
                This is where that theory gets its start.

                We both agree that that the company was mangled by inept management; yet it is the action of the workers that you find morally objectionable- the actions of the management appear to be acceptable to you.
                Why?

                As an analogy, if the management had asked for more favorable terms from the bank instead of the union, and the bank refused, tipping the company into bankruptcy- would you be angrily accusing “those bankers” of destroying the company?

                Why is self-interest on the part of workers morally reprehensible, yet not on the part of management?Report

              • Avatar Scott says:

                I don’t know the full history of the corp but I do believe that the current owners bought it and tried to make a go of it. Without the the current owners who took the risk to buy the crop and fix it, the unions would have been out of jobs a while ago. I understand and appreciate self interest but at a certain point it seems that having a job you don’t like is better than not having a job as it allows you to survive until you can find a better one. Self interest is great until it becomes a substitute for common sense. Your banker analogy it fails b/c the unions helped create the problem. From the article I linked to, “Unlike some non-unionized rivals, the maker of Wonder Bread and Drake’s cakes had to navigate more than 300 labor contracts, with terms that often strained efficiency and competitiveness, Hostess officials have said. In some extreme cases, contract provisions required different products to be delivered on different trucks even when headed to the same place.” When they pull fish like like that I don’t have any sympathy for them.Report

              • Avatar Dave says:

                Scott,

                The company was screwed in so many ways, but the biggest reason was that there was no viable plan to grow revenues and increase profitability. It came out of bankruptcy too heavily leveraged and without any plan to increase revenues and profitability, there was no way to reduce the leverage as a percentage of the total capital structure. That someone thought this was a good way to emerge from bankruptcy strikes me as crazy.

                Yes, the contracts with the unions were a burden (one of many) on the company (and every capital source looking to invest into the company stated as much), but why is this only the fault of the unions? Management accepted the terms of the agreements. Why is it that when collective bargaining agreements are discussed, the unions bear the brunt of the “collective bargaining” component but people (especially right-leaning individuals) ignore the “agreement” component.Report

      • Avatar Will H. says:

        That’s one thing that I’ve been thinking about.
        Maybe I’m something of a snob, but I think unions work better where the type of work is more specialized and require a higher level of training.

        And a couple of other things here:
        I’ve known a few people in the Riverside-Ontario area that were members of the grocers union. California has a system that sustains union membership for grocery workers.

        That said, there are several types of establishments that are known as “grocers.”
        There’s the model where everything is stacked in boxes and you bag your own groceries.
        There’s the more upscale version with an expanded deli section, some of which now have wi-fi.
        There’s the type with high shelves where you point at a product and a guy with a stick knocks it down from the shelf for you.

        A lot of different business models doing the same thing.Report

        • Avatar Roger says:

          I’d think long and hard before looking to California, Illinois or Detroit for economic advice. These areas have all been captured by libertarian special interest groups.Report

    • Avatar Michael Drew says:

      If Wal-Mart raised wages, more people would apply to work there. Some of them would have more impressive qualifications than the current employees. “Job gentrification” would put them out of work.

      In some cases, yes, in other cases, it would motivate WalMart employees who currently are undermotivated on account of working nearly full time and still being poor to come to work with a better attitude, care more about helping make the shopping experience at WalMart a bit better, and keep their job. I think it’s an overstated argument that somewhat better wages at WalMart would cause a whole-sale switch-out of the labor force.

      However, I don’t think that an argument about the social value of low prices is overstated. I personally would have no problem if a rise in wages at WalMart -sky allowed/caused WalMart to rise slightly above its current low-price-bad-shopping-experience market point. Maybe something that subtly apes Target’s experience (although I’m not really sure how much of that shopping experience comes directly from the employees). But then, despite not being particularly flush myself, I already don’t shop at WalMart because the experience is so bad and the price difference just isn’t worth that much to me. But it’s clearly worth ti to some. Should we will that the near-lowest price option of WalMart be priced up somewhat by better ages for its employees? I’m not sure who’s getting done over here: the public (especially others who work for low ages not at WalMart) if wages at WalMart go up and with them prices, or WalMart employees if prices stay low at the cost of wages staying low too. Again, I know I’d be happy if WalMart became a nicer place to shop, but there would be a loss for others. Our economy could currently use a bit more price-wage inflation, but rising prices at WalMart would hit everybody (including those of us who don’t even shop there), while a corresponding wage increase would only affect WalMart employees (if WalMart increased its wages, would that put upward pressure on wages at Target the way that rising prices at WalMart would allow prices to float up at Target as well?).

      These are the questions that to my mind should determine whether we want wages to go up at WalMart. We shouldn’t will there to be jobs that pay really badly just so that the very marginally employable can hold them. Those people are (according to the argument) doing those jobs now. We shouldn’t assume that the prospect of better pay couldn’t offer enough incentive for them to be able to improve their performance enough to be able to keep them. That’s an incredibly condescending and disempowering assumption to make.Report

      • Avatar Michael Drew says:

        Random “-sky” in there. Who knows?

        Happy Thanksgiving.Report

      • Avatar Tom Van Dyke says:

        Here’s the Costco story told [well, I think] through union eyes.

        http://www.d.umn.edu/~epeters5/Cst1201/Articles/The%20Costco%20Challenge.htmReport

        • Avatar Michael Drew says:

          Costco is low prices for affluent people. It’s still a question whether really-low prices for people without much cash-on-hand are important to preserve. Tbh, I’d be perfectly happy if we had much better income assistance for the working poor (like you seem to endorse in this thread), and let WalMart float where it wants on the shopping-experience/price matrix. Thing, I think it’s comfortable with the place it occupies. If there were better income assistance, it would be taxed more & may be forced into providing a better experience for everyone, shoppers & workers alike.Report

          • Avatar Tom Van Dyke says:

            True. Costco is only 1/10 the size of Walmart and its product selection [except for toilet paper*] is whatever they can get a deal on. The article was interesting because Costco does indeed pay better, and has happier and more productive workers, with a retention rate of 75% rather than Walmart’s 50%**.

            *They come for the toilet paper, they stay for the 10-lb tub of Greek yogurt.
            http://money.msn.com/investing/latest.aspx?post=e8a6e01c-31c6-4846-b880-e43773d53b26

            **”A 2004 Business Week study ran the numbers to test Costco’s business model against that of Wal-Mart. The study confirmed that Costco’s well-compensated employees are more productive.

            The study shows that Costco’s employees sell more: $795 of sales per square foot, versus only $516 at Sam’s Club, a division of Wal-Mart (which, like Costco, operates as a members-only warehouse club). Consequently Costco pulls in more revenue per employee; U.S. operating profit per hourly employee was $13,647 at Costco versus $11,039 at Sam’s Club.

            The study also revealed that Costco’s labor costs are actually lower than Wal-Mart’s as a percentage of sales. Its labor and overhead costs (classed as SG&A, or selling, general and administrative expenses) are 9.8% of revenues, compared to Wal-Mart’s 17%.

            By compensating its workers well, Costco also enjoys rates of turnover far below industry norms. Costco’s rate of turnover is one-third the industry average of 65% as estimated by the National Retail Foundation. Wal-Mart reports a turnover rate of about 50%.

            With such rates of employee retention, Costco’s savings are significant. “It costs $2,500 to $3,000 per worker to recruit, interview, test and train a new hire, even in retail,” said Eileen Appelbaum, Professor at Rutgers University’s School of Management and Labor Relations. “With Wal-Mart’s turnover rate that comes to an extra $1.5 to $2 million in costs each year.”

            Other analysts of the retail industry agree that happier, well-compensated workers help generate bigger profits. George Whalin, president of Retail Management Consultants in San Marcos, Calif., disagrees with many of Wal-Mart’s critics, but said: “There’s no doubt Wal-Mart and many other retailers could do a better job taking care of their employees. The best retailers do take care of their employees — Nordstrom’s, Costco, The Container store — with fair pay, good benefits and managers who care about people. You have fewer employee issues, less turnover and more productivity. It lessens costs to the company.”

            Still, Wall Street analysts intent on cutting up-front labor costs tend to frown upon Costco’s model. “Costco’s corporate philosophy is to put its customers first, then its employees, then its vendors and finally its shareholders. Shareholders get the short end of stick,” said Deutsche Bank analyst Bill Dreher.”

            Average Pay
            Wal-Mart: $9.68/hour
            Costco: $16/hour

            Health Plan Costs
            Wal-Mart: Associates pay 34% of premiums + deductible ($350-$1,000)
            Costco: Comprehensive; employees pay 5-8% of premiums

            Employees Covered By Company Health Insurance
            Wal-Mart: 48%
            Costco: 82%

            Employee Turnover (estimate)
            Wal-Mart: 50%
            Costco: 24%Report

            • Avatar Roger says:

              Two hypotheses are being tested in the market. Profit and loss are the sounds of success and failure.Report

              • Walmart @3.5% margin. Not much wiggle room. If McArdle is on your flip-your-lid list, do not read.

                http://www.thedailybeast.com/articles/2012/11/23/unions-organize-walmart-protests-rest-of-the-nation-goes-shopping.html

                Recessions are also a time when employers don’t necessarily have a lot of profits to give up. Walmart’s $446 billion of revenue last year was eye-popping, but its profit margins are far from fat–between 3% to 3.5%. If they cut that down by a percentage point–about what retailers like Costco and Macy’s have been bringing in–that would give each Walmart employee about $2850 a year, which is substantial but far from life-changing. Further wage improvements would have to come out of the pockets of Walmart’s extremely price conscious shoppers. Which might be difficult, given how many product categories Amazon is pushing into.

                Report

              • Avatar Kim says:

                That’s about a third of the avg. mortgage payment per year (and this for people not in Boswash!), or half of what a car costs, if you’re lucky. I’d say that has the potential to be life-changing, particularly in a two person family.
                But what the hell do I know? I just read the numbers…Report

            • Avatar Stillwater says:

              Shareholders get the short end of stick,” said Deutsche Bank analyst Bill Dreher.”

              A priori, no doubt. Because CostCo doesn’t employ the “standard” model for maximizing profits. Profit/hourly employee seems like pretty good refudiating evidence, tho.Report

            • Avatar Mike Schilling says:

              Nice post, Tom.

              I admit that my opinion of Wall Street analysts was solidified a while ago.
              Back when Apple was in the doldrums, I was listening to a radio show where several of them agreed than Macs needed a new operating system, and it was 100% fishing obvious that not a single one knew what an operating system was.Report

              • I’m on the fence about this stuff, Mike. Although I oppose the gov’t getting its hands all over private transactions, there also exist situations where the employee is so desperate that he’s not an equal partner in the employment agreement.

                This was especially true in the early Industrial Age, and the rise of unions completely understandable, even to the point of resorting to violence. shut up and work yourself to death in the hope of eventual peaceful change? Screw that, universe.

                Costco does appear to be a unicorn, its CEO accepting $350K as salary, the stores’ wares limited to what it can sell at attractive margins. It’s a 1/10 the size of Walmart, and I don’t see that its model could stand 10X growth.

                [We let out membership lapse this year, and I don’t really miss my old Kirkland lifestyle.]

                OTOH, Walmart is only possible in a welfare or mixed-welfare state making up the shortfall. The libertarian cannot truthfully deny this. It is not a self-contained organism. It’s more an adjunct to the economy than a full member of the economy.Report

              • Avatar Stillwater says:

                Excellent comment Tom. {{Except for the casual disregard of the Kirkland lifestyle. That wounds me.}}Report

            • Avatar LWA (liberal With Attitude) says:

              “Costco’s corporate philosophy is to put its customers first, then its employees, then its vendors and finally its shareholders. Shareholders get the short end of stick,”

              This demonstrates an angle in one of my other posts- the Wal-Mart model maximizes shareholder value, ahead of customers and employees.

              Given that we the taxpayers have created the laws that created corporations and the stock market, aren’t we the taxpayers within our rights to modify those laws when we decide that they are no longer benefitting us?

              In other words, there is no natural right for the stock market to even exist, let alone exist in a form that doesn’t benefit the commonweal.Report

              • Avatar Stillwater says:

                aren’t we the taxpayers within our rights to modify those laws when we decide that they are no longer benefitting us?

                Seems right to me. As Jaybird might say, that’s what the second amendment is for.Report

    • Avatar Stillwater says:

      You’re saying we are currently experiencing bad thing A (Walmart leveraging wages against the public safety net) but correcting that would entail bad thing B (gentrification! even worse!!). So on your view, there’s just no good solution to this either way. That’s a funny thing for a libertarian to say, it seems to me.

      It’s similar to Brandon’s argument below: if we allow increases in wages at Walmart then we – as a society – might experience less total productivity because overqualified people will end up taking those jobs. Boooo! But why should a libertarian care about that? The goal of libertarianism is to achieve the maximally free society, not the maximally productive one. (Maximal productivity is supposed to follow from maximal freedom.) If a person decides that taking a $12 job at Walmart is the best option they have, even if they’re overqualified for the job, then there is a problem in the theory, not in the choices people make. Because by definition, the person is maximizing his or her utility by taking a job they’re overqualified for.Report

      • Avatar Roger says:

        SW

        For the record, Jason and I argued the exact same point too, and all of us appeared to do so spontaneously without comparing answers.

        I won’t answer for the other three, but I care more about productivity, which I will summarize as collective human problem solving output, than I do with freedom. I value freedom because it leads to good results for the most people, not for freedom’s sake alone.Report

        • Avatar Kim says:

          So you’re in favor of a high inheritance tax, as that provides a much better equality of opportunity for people? (with concommittant ability for entrepreneurial people to SELL stuff, instead of Bubbling Assets?)Report

        • Avatar Stillwater says:

          Fair enough Roger. I wrote a comment in response to your argument upthread (I think). I’ll take this a your response to what I wrote there.

          But I do want to point out that conflating productivity with libertarianism is a no-no. The two things are conceptually distinct (tho there is, as I said, some overlap there). And I’ll need to think about this some more, but it seems to me that structuring policy to prevent an overqualified person from freely and rationally taking a position which doesn’t maximize that person’s productivity is pretty much the opposite of libertarianism as it’s conventionally understood.Report

          • Avatar Roger says:

            Stillwater,

            I have absolutely no idea what you are talking about on the supposed divide between productivity and libertarianism, or what Tim has said on the topic.

            And we are not trying to structure things so the overqualified can’t freely take lower skilled jobs. We are trying to get markets free enough so that the best applicant is drawn to the job at the lowest cost, thus creating the product most efficiently.Report

            • Avatar Stillwater says:

              thus creating the product most efficiently.

              Models, again.Report

              • Avatar Stillwater says:

                There’s you answer about how pragmatic/consequentialist you are in your argumentation, I guess.

                If lower wages necessarily increases efficiency, and efficiency is a trumping good, then you’re not making a pragmatic or consequentialist argument. You’re making a first principle argument.

                Can we agree on that?Report

      • Avatar Mike Schilling says:

        And the idea that those higher-paid people might also be more productive as Walmart employees: find better ways to serve customers, give better feedback on how well sales and special offers are working, give intelligent feedback on how to improve store layout and purchasing decisions, etc. — that’s all stupid. I mean, for God’s sake, they’d be the kind of people that work at Walmart.Report

  10. Avatar Brandon Berg says:

    She said that many employees who would otherwise be working full-time were scheduled for 24 or 26 hours a week, so that Walmart would not obliged to provide them with full-time benefits.

    Government levies huge tax on employing workers for 30 hours or more per week; company avoids employing workers for thirty or more hours per week. Let’s go live now to the city park, where we have a report that a dog has bitten a man.

    “I struggle to support my family on $14,000 a year,” said Sara Gilbert, a customer service manager at the company for three years. “My children are in state housing and we get subsidized housing and food stamps.”

    So let’s say that a living wage for a single parent with three children is, say, $30,000 per year. So we pass a law obligating Walmart to pay all of its employees $30,000 per year. What about the employees with five children?

    Because without the big government welfare state that their chosen candidates promised to strip to the marrow of its bones, the Waltons would could not get away with paying their employees such a pittance.

    What is your mental model for how this works? How exactly do welfare benefits lower the market price of unskilled labor?Report

    • Avatar judas says:

      A living wage is just that: the amount it reasonably costs to maintain and reproduce the labor force, no? If people are working but earning less than it costs to maintain themselves in a state fit to do that work, and the government takes up that slack, then companies paying that low wage are benefiting indirectly from the welfare state.Report

  11. Avatar Scott says:

    I have solution, don’t like you job at Wal Mart, then go get a new one that pays more.Report

    • Avatar LWA (liberal With Attitude) says:

      If you don’t like the taxes here, go to a country where they are lower!

      Deja vu all over again.Report

      • Avatar Roger says:

        No, LWA. The difference is that there are myriads of choices for employers without becoming an immigrant to another country. Remember, a fair interaction is one that both agree voluntarily on, and where there are plenty of easy competing alternatives. There is a big, big difference between switching jobs and moving to Somalia.Report

        • Avatar LWA (liberal With Attitude) says:

          “Remember, a fair interaction is one that both agree voluntarily on, and where there are plenty of easy competing alternatives. ”
          Dang, see I keep forgetting that! Its like the prices-go-up-when-demand-rises thingy that we liberals can never understand.
          Thanks for the tip!

          But, just so we’re clear- a wage negotiated between Wal-Mart and its worker is fair because they both voluntarily agreed on it, and there are…whats that again..”plenty of easy competing alternatives”.

          Got it!Report

          • Avatar Roger says:

            LWA,

            Actually yes. Prospective employees compete for millions of job offers. If there were less interferences in the market there would be substantially more offers.Report

          • Avatar MFarmer says:

            :But, just so we’re clear- a wage negotiated between Wal-Mart and its worker is fair because they both voluntarily agreed on it, and there are…whats that again..”plenty of easy competing alternatives”.”

            Actually, statist policies have steadily reduced the alternatives for many many years, so, because statist policies have created an environment of economic stagnation, now government tells us it has to control more and invest heavily in the Great Recession so that we can grow and prosper. We’re stuck in a loop that’s spiraling down a giant crapper once known as America the Beautiful. But, elections have consequences, so…whatev. It’s the Fair Deal and justice will prevail, without pants, though. It’ll be entertaining, at least.Report

    • Avatar Shazbot5 says:

      Why do you think they took the job at Walmart in the first place?Report

      • Avatar Scott says:

        I don’t know why they took the job. If they don’t have the job skills for a better job then why complain about the wages? I guess they just want more money without having to provide better skills for their employer.Report

        • Avatar Kim says:

          I don’t think that is an unreasonable position. Certainly America’s CEOs don’t, as they make well over the industrialized world’s average. And they don’t give enough added value to compensate.Report

        • Avatar Shazbot5 says:

          Many of them do have job skills. It is just that the job market only has so many positions that employ skilled labor and the unskilled labor positions (given the death of unions) don’t support a person. So it’s gov’t subsidies or a degree of inequality that is intolerable.

          Maybe you believe the market will eventually push them all to go back to school to bcome programmers and they’ll all get great high-paying jobs, and we’ll have no unemployment and the market will solve everything. That’s a conceivable possibility, but all the trends in the actual market we live in suggest that it isn’t going to happen in the foreseeable future. Walmartization is growing. Low-skilled labor is getting crushed economically and society is suffering as a result.Report

          • Avatar Roger says:

            The only reason for systemic unemployment is that the market has not cleared. This is caused by the very interferences you are promoting. You are making recommendations that degrade markets then complaining about the market. Cause and effect.Report

            • Avatar BlaiseP says:

              What does this Market Clearing involve? Systemic un- and under-employment is a function of aggregate demand. This market-clearing business can only go so far: no economy can employ everyone. Where demand for jobs exceeds supply, there’s no upward pressure. But the job market never actually “clears”.

              Markets only clear where buy meets sell. The only way such an employment market would “clear” is if we were selling slaves, which I hasten to add you’re not advocating, just pointing out employment is an ongoing relationship, where only continued demand for services can possibly keep that relationship ongoing.Report

              • Avatar Roger says:

                The answer is that it approaches the point of full employment. Slavery would be several steps beyond that point.Report

              • Avatar Chris says:

                This attributes a level of efficiency to the labor market that has never been observed. It is, essentially, like a chemist working with ideal gases. For example, you can’t eliminate structural unemployment if the labor market evolves too fast for labor to keep up. This is particularly true when it evolves at a rate that essentially excludes people of of a certain age (because they’re trained/educated for an earlier market which is sufficiently different to make any sort of quick catching up impossible). We see this today, for example, in the fact that much of the structural unemployment is the result of a labor market that evolved rapidly and left people without some sort of degree or advanced certification (not just a 2 week program, e.g.). So a lot of people who became unemployed in their 40s or 50s simply won’t be able to catch up, and will therefore spend much if not all of the rest of their working years (which will probably go on much longer than they otherwise would have) underemployed or unemployed. There doesn’t appear to be any market corrective for this, and so far, government programs designed to provide training, certification, and education, have been woefully inadequate.Report

              • Avatar Roger says:

                Blaise and Chris,

                That is why the word “approaches” was included. It always seeks and never achieves for the reasons you included.Report

              • Avatar Chris says:

                But again, even the “approaches” extends well beyond the observed data. In the case I described, the labor market is actually creating more unemployment, not less, and it’s creating even more underemployment than unemployment (we haven’t even talked about underemployment, but it’s a pretty big problem for the market).Report

              • Avatar Roger says:

                Chris,

                The more we interfere with the market with minimum wages, licensing requirements, above market union wages and so forth the more structural unemployment we will get. Yes. That is one of the major reasons why I do not recommend above market wages.Report

              • Avatar BlaiseP says:

                Until a sale is completed, the market hasn’t cleared. Unless someone actually owns the means of production, whole and entire, which would be true if a master owned a slave, no transaction has cleared.

                Furthermore, several significant factors present which further tangle the completion picture. Fungibility: one employee cannot completely replace another. While it’s true, nobody’s indispensable, costs accrue to replacing an trained employee, no matter how unskilled the job might seem. Timing is another: the worker must be able to do the work when it needs to be done. This list gets very long.

                You’re right, we’re several steps away from slavery. Those steps are all screwing with market clearing.Report

        • Avatar Kim says:

          Perhaps they like being able to shop at the store they work at? according to walmart’s own documents, their end-of-month sales are hurting…Report

  12. Avatar Shazbot5 says:

    I think Walmart foreshadows the doom of society as we know it. Okay, that sounds extreme, but hear me out (read me out?).

    Here are the facts as I see them. 1.) The labor that people provide to Walmart is vitually worthless. I don’t mean to insult Walmart employees (I worked a similar retail job for a couple of years), but Walmart really just needs any warm body. Once upon a time, retail sales required expertise, salesmanship, maturity, and good retail sales people had something they could sell (as labor) to retailers. But big advertising and the big box phenomena kills that. You don’t go to Walmart to get help with or advice about what you are buying, the way people used to when buying clothes or food or hardware.

    2.) Walmart has no self-interested incentive to pay its employees anything. Even in the utopia of full-employment, there will be lots of employers like Walmart who deploy labor that is nearly worthless. And all those people who don’t have valuable labor to sell to employers like Walmart will have no leverage to force Walmart to keep them.

    3.) Unions offer a possible solution. Walmart employees (or retail employees in general) could become, conceivably, a powerful 40’s style union like the auto unions used to be.But unions are dead and dying. The union solution is not feasible.

    4.) So Walmart employees are doomed to low wages. And the trend in the U.S. (and all first world countries) is that the percentage of people who are educated are developing labor skills that are more and more valuable, and there is a growing pool of people who have no skill to offer except be a warm-body for a company like Walmart.

    5.) As Elias states, these low paying jobs are not enough to sustain a family without massive aid from the government. And as I have argued, we will see more people in these jobs, even in full employment, and their wages will remain crap all. The state (and voters) will then have a choice of deciding to transfer large amounts of money (actually supplementing wages, not just health insurance or demanding a minimum wage) or accepting a level of inequality (of outcome and opportunity) that will be unimaginable. Both these alternatives will require and will cause fundamental changes to society as we know it. One will move us to a level of welfare that could be described as truly socialist. The other will move us towards, not just a class stratified society, but something more resembling a caste society.Report

    • Avatar Kim says:

      My, aren’t we pessimistic today?Report

    • Avatar North says:

      I disagree Shazbot5, I doubt that Walmart foreshadows any kind of doom, particularly since we already have Walmarts doom (and the doom of similar big box retail venutres) slithering around with us here on the internets. Online retailing is big and rapidly growing bigger, it’s going to eventually start chomping into the market share of behemoths like Walmart particularly since they don’t have to integrate the capital costs of multiple stores or employees.

      What this presages for low income Walmart employees I’m not certain. If Walmart gets devoured or even merely ravaged by online retail/delivery then they’re out of jobs. There are presumably replacement jobs in delivery and warehousing but online retail eliminates a lot of sales jobs and replaces them with fewer high paying programming and information jobs along with some customer service call centers (likely offshore).Report

      • Avatar Shazbot5 says:

        Okay, I do think boutique retail could make a come back, partially by working with the online shopping experience. In my dream world, online retailers will also have local stores (in the mall or whatever) where you can go and meet with an expert, who will have samples and advice about various products. I think this could work for books (small places with a few books where people go for gift ideas or to drink a coffee and look at a few new books that are owned by Amazon) or clothes (sort of how it is now, but maybe fewer brick and mortar stores with more expert employees) or even groceries (you go to a local place occasionally that gives you recipes and shows you foods you might not have thought of and then you buy your regular stuff online).

        As an old man, I find myself sometimes in need of a record store where I can ask some kid about music to buy for my nieces, or a video store where there are movie buffs or at least people who have seen some new movie I am interested in. I would be willing to pay for that experience and expertise.

        But there is no guarantee that we will get this. Part of the problem is that advice about movies, clothes, food, and music is all online, for free. That is great, but people used to get a fair wage by selling their expertise. No longer. And now a lot more people are, according to the market, “unskilled.” even if they have an expertise to offer.Report

  13. Good post, Elias. A few thoughts/topics for discussion that I think are important here:

    1. You write in the OP that “As the example of Sara Gilbert shows, Walmart’s willful near-immiseration of its workers is, today, only feasible due to big government programs like public housing and food stamps.” You forgot to add “and Obamacare.” Lest we forget, Walmart actively lobbied for the passage of PPACA: http://www.cbsnews.com/8301-503544_162-5127536-503544.html

    2. Walmart’s reliance on federal social programs is critical to its ability to block unionization while keeping wages low. It is, quite literally, Walmart’s first line of defense against unionization that would force it to pay higher wages, helping to minimize employee dissatisfaction with Walmart’s crappy treatment of them, thereby minimizing the appeal of unionization. This is precisely the opposite of how Whole Foods and Wegmans block unionization, which is by taking responsibility for treating their employees well. Although Whole Foods’ prices are obviously sky-high and it competes for, effectively, a luxury market, Wegmans’ prices are actually pretty competitive, and their proprietary products are usually cheaper (and better!) than other grocery stores’ proprietary products. Simply put, taxpayers subsidize Walmart’s fight against unionization.

    3. Walmart’s second line of defense against unionization, exemplified in its pending NLRB complaint, demonstrates why unions should be viewed as labor market participants and why existing labor market interventions on the whole work far more to the harm of sellers (employees and unions) and to the benefit of buyers (employers), rather than vice versa as it is commonly presumed. What makes these interventions particularly offensive is that they directly impinge upon employee 1st Amendment rights of speech and association – rather than merely allowing employers to fire employees for the exercise of those rights, existing labor law actively makes the exercise of those rights illegal in many circumstances.

    Specifically, in its NLRB complaint, Walmart is accusing employees and the union of “illegal picketing” – in other words, they’re accusing them of “illegal speech.” In most contexts, complaints about “illegal speech” are given the short shrift they deseerve by the courts; but in the context of the NLRA, they’re given priority and must be expedited, with a successful complaint resulting in an outright injunction against further speech.

    But even beyond that, the actual strikes are spreading in spite of the NLRA, not because of it, and their effectiveness is ultimately going to be limited because of the restrictions that the NLRA puts on them. Specifically, the striking workers have had to be exceedingly careful not to seek recognition as a bargaining unit and it is, in effect, illegal for them to exercise their First Amendment right to freedom of association by openly seeking to associate with a union. If and when hard evidence emerges that the striking employees are directly cooperating with a union, you can rest assured that Walmart will be filing an additional complaint.

    A major reason the strikes thus far have been effective is that they have been unpredictable and have been able to take advantage of the element of surprise (hence the reason that the leaders won’t identify stores that will be going on strike), preventing Walmart from stopping them before they begin or making contingency plans. Unfortunately, because of the NLRA, the only way to preserve this element of surprise is to avoid any open attempt at, or demand for, collective bargsaining. That is not a small restriction, and there’s a reason why strikes like this are so rare (absent social media and some very recent groundbreaking NLRB decisions protecting employee use of social media, I’m not even sure they’d be logistically possible).Report

    • Avatar Shazbot5 says:

      Walmart will destroy the unions. Unions are dead. Even mildly left-wing people vote against them.Report

    • Avatar Roger says:

      Mark,

      I too think Walmart should play fair with employees, just as the employees should too. But I want to pull out the second point you made.

      “2. Walmart’s reliance on federal social programs is critical to its ability to block unionization while keeping wages low. It is, quite literally, Walmart’s first line of defense against unionization that would force it to pay higher wages, helping to minimize employee dissatisfaction with Walmart’s crappy treatment of them, thereby minimizing the appeal of unionization. This is precisely the opposite of how Whole Foods and Wegmans block unionization, which is by taking responsibility for treating their employees well. Although Whole Foods’ prices are obviously sky-high and it competes for, effectively, a luxury market, Wegmans’ prices are actually pretty competitive, and their proprietary products are usually cheaper (and better!) than other grocery stores’ proprietary products. Simply put, taxpayers subsidize Walmart’s fight against unionization.”

      This is the first worthwhile argument against Walmart that I have seen in this thread. It deserves our focus and discussion. Anyone care to weigh in against Marks position?Report

      • Avatar LWA (liberal With Attitude) says:

        Well, its similar to the argument most liberals are making about Wal-Mart; that its cheap prices are in fact not the workings of a market, but are subsidized by social programs.

        I referred to this in post #125 where I figured we could quantify how much Wal-Mart is costing us, in terms of social welfare, and assess fees and taxes sufficient to cover the cost to us.Report

        • LWA – it’s not similar to that argument. It IS that argument, just slightly recast.Report

          • Avatar Roger says:

            For the record, I do not believe this argument is correct, but I believe it is a damn good argument. However I am unqualified to counter it.

            Brandon or one of the James or Jason care to weigh in? Otherwise Mark wins per the rules of good blogging.Report

            • Avatar Brandon Berg says:

              Again, I’d like to see an actual model for this, because it’s not at all clear to me that the existence of welfare subsidies actually results in Walmart being able to pay lower wages. I laid out my argument for why I don’t think this is the case—and why the opposite may actually be true—in another recent thread, though I forgot which.Report

              • Avatar Brandon Berg says:

                I don’t mean a formal mathematical model, by the way. Just an explanation of how this would work.Report

              • Avatar BlaiseP says:

                It’s trivial. Different rules apply for part-time workers and full-time. Walmart keeps the number of hours below the full time threshold for precisely this reason.

                Each such part-timer’s pay check is low enough for that worker to qualify for food stamps. If, let’s say, Walmart had two part-timers doing the job of one full timer, (it’s not that simple, but grant me the simpler math), Walmart can (among other curious benefits) avoid having to offer the part-timer benefits such as health insurance and doesn’t even have to pay unemployment. Walmart knows all such “employees” qualify for food stamps. It makes sure they qualify, to avoid the overhead associated with a full-timer.Report

              • Avatar Mark Thompson says:

                Yup. The effect, to the worker, is that the federal benefits, which Walmart doesn’t pay for, raise their hourly compensation to something a lot closer to the hourly compensation they would be able to get with a union, meaning there is less incentive to take the risks necessary to try to organize as a union.Report

              • Avatar Stillwater says:

                I’d like to read that comment, BB.

                What do you mean by “model” in the above comment? It seems clear enough in principle: Walmart can leverage the wages it pays its employees against the safety net. If there were no safety net, then Walmart’s employees would be more inclined to unionize/collectively bargain to get higher wages.

                This is actually a very clever argument Mark and LWA have put forward, one that libertarians ought to take seriously. The absence of a safety net would cause workers to increase pro-union activity more aggressively in order leverage “living wages” (I don’t mean that pejoratively) from their employers. Neither policy/outcome is consistent with the libertarianism, but it seems consistent with the empirical evidence.

                And I think recourse to the ideal case (“libertopia” as it were”) isn’t a plausible move at this point, since we have an actual, real world example of a major corporation trying to shave pennies off its wage-cost to enhance its bottom line. That part of the scenario is fixed, it seems to me. Corporations will do whatever is within their legal power (and sometimes illegal power as well) to maximize profits. (That comment shouldn’t be objectionable.) So it wouldn’t change one iota in any alternate scemario, it seems to me.Report

              • Avatar Brandon Berg says:

                Here it is.

                The absence of a safety net would cause workers to increase pro-union activity more aggressively in order leverage “living wages” (I don’t mean that pejoratively) from their employers.

                Ah, I see. Sorry about that. I was stuck on a slightly different version of the claim which didn’t specify unionization as the mechanism.

                I’m still not convinced, though. Maybe not having welfare to fall back on causes them to be more afraid of losing their jobs, and they don’t unionize because of that. In general, I’m skeptical of the idea that an employee’s personal expenses play a big role in wage negotiation. The employer doesn’t care, because the employee’s labor doesn’t magically become more valuable just because he has more expenses. The employee cares, but really, we all want to make more money. It’s not clear to wanting more money is all that different from needing more money, in terms of their effects on unionization rates.Report

              • Avatar Tom Van Dyke says:

                It seems clear enough in principle: Walmart can leverage the wages it pays its employees against the safety net. If there were no safety net, then Walmart’s employees would be more inclined to unionize/collectively bargain to get higher wages.

                This is actually a very clever argument Mark and LWA have put forward, one that libertarians ought to take seriously. The absence of a safety net would cause workers to increase pro-union activity more aggressively in order leverage “living wages” (I don’t mean that pejoratively) from their employers.

                I don’t see how Mr. Stillwater’s analysis here is the least bit controversial. When unionization in the Industrial Age began, it was a question of survival, not avarice.

                That Wal-Mart “freeloads” on America’s “socialistic” safety net is surely beyond question. OTOH, they also hire many who are—let’s face it—otherwise unemployable, many who could not get a job anywhere else, neither smart, young, nor strong.

                But they’re people too, and better for them as human persons that they’re out there every day. The “dignity of work,” they call it, and it is indeed dignified. And if the taxpayer fills in the $$ around the edges, well, that’s dignified too. I don’t have a problem here.Report

              • Avatar Roger says:

                Stillwater,Mark, LWA, Brandon and Tom,

                Ok, let’s assume that Walmart can reduce the likelihood of unionization because of social safety nets. Lets just take that as a given Indeed as SW implies, management should optimize efficiency /productivityof their company, and in a society with safety nets that includes taking this into account.

                What are the implications that various people are making on this? Are you suggesting that Walmart is getting corporate welfare or that this is supplementing net profits? Are you suggesting we don’t establish safety nets, and instead require employers to pay higher wages? Are you recommending something else?

                What then are the implications that people are suggesting libertarians take from this? Remember, we are all for non coercive unions. If this leads to Walmart avoiding coercive unions, I am not sure the take away you think we should have is the one we actually do have. And if they get non coercive unions, I am not convinced wage rates will really change appreciably for anyone.

                We have an Actual good discussion going on this sub thread. Let’s keep it going.

                Oh, Happy Thankgiving.Report

              • Avatar Tom Van Dyke says:

                Roger, I have no problem with WalMart employing the unemployable or semi-employable and the taxpayer filling in the rest. I’m a cheerful half-a-loaf kinda guy.

                Not to mention [OK, I will] that the “dignity of work” is the ideal for the human person. There are all sorts of checks and remittances, but a paycheck is the best of them all.Report

              • Avatar Stillwater says:

                I’m in agreement with Tom on this point: Walmart hires lots of people who are otherwise very likely to not find work. I’d just mention that they do so because those people are already receiving government subsistence that covers part of their living expenses.

                I’m not sure the moral dimension of Walmart hiring the elderly and disabled can be disentangled from the economic motive of hiring otherwise unemployable people at less than subsistence wages as clearly as Tom might be (I’m not saying he is) suggesting.Report

              • Avatar James Hanley says:

                Walmart hires lots of people who are otherwise very likely to not find work. I’d just mention that they do so because those people are already receiving government subsistence that covers part of their living expenses.

                I don’t understand this. If the government stopped providing benefits to those people, Wal Mart would not hire them?Report

              • Avatar Stillwater says:

                Have you read upthread? It’s part of a larger argument that Mark T and LWA put forward, one that Roger and Brandon Berg challenged, Tom sustained, and I’m just following up on what I thought was a very good point made by TVD.Report

              • Avatar James Hanley says:

                I still don’t get it. The semi-employable don’t have better options, so they’ll take what Wal Mart offers. If the gov’t stops giving them bennies, Wal Mart won’t suddenly have to. Those semi-employable people will just need jobs even more desperately, and their bargaining position vis a vis Wal Mart will be even worse.Report

              • Avatar James Hanley says:

                I should add, in reference to the unionization argument, that if unionization became a real threat, it would be minimized by hiring the barely employable, because their lack of overall skills is likely to affect their organizing abilities.

                Of course if an effective union does develop, then, yes, you’re right that Wal Mart will stop hiring the barely hirable because at union wages they’ll demand greater employee productivity. So the ironic effect of unionization would be to take away jobs from those who have the greatest difficulty finding other employment. Are we all comfortable with that?Report

              • Avatar Kim says:

                James,
                you’re assuming rational actors. Assume that half these people are “trapped” in places without other options. Now, we do have jobs for these people, they just aren’t in their current geographical area.

                Cut walmart’s actual “here’s what you get” payout, and some/most of these people move.

                Maybe. I’m not assuming rationality, after all.Report

              • Avatar Stillwater says:

                So the ironic effect of unionization would be to take away jobs from those who have the greatest difficulty finding other employment. Are we all comfortable with that?

                Probably not, but that’s besides the point, right? I mean, libertarianism is the idea that labor surplus finds a market, yes? So that’s not an issue for a libertarian to be worried about, it seems to me. Someone’s going to get those jobs.

                But that concern is also besides the point being discussed, which is that Walmart suppresses wages and total compensation because the government will fill in the cost-of-living gap. Are you comfortable subsidizing Walmart’s profits and employment practices with your tax dollars? Are you comfortable with Walmart actively obstructing the formation of a union to represent Walmart employees’ interests to they could obtain a living wage and better total compensation?

                Jumping all the way to a potentially undesirable outcome following from Walmart increasing it’s pay-rate isn’t very consistent with libertarian market principles, it seems to me.

                Outcomes are the kinds of things only liberals worry about, right? And maybe that’s your point. If so, it isn’t a very good one.Report

      • Avatar Will H. says:

        It sounds very much like what I’ve heard from some guys in my trade from Connecticut.
        They tell me that in Conn., the companies pay well to keep the unions out.
        I gather that this has a lot to do with the influence of NY being right next door.Report

      • How, exactly, are the employees not playing fair, though? Absent a union through which they can collectively bargain, the only way they can leverage their collective market strength as suppliers of labor is to strike and protest, taking a risk of being fired in the process. These are legitimate, non-coercive actions under any definition of non-coercion, little more than an exercise of free speech rights.Report

        • This is absolutely right. I’m not anti-Walmart, and I’m not particularly pro-union (I agree with you about RTW, though I don’t think employers should be forced to recognize a union and I don’t think anyone should be required to join one unless it’s part of a union-employer arrangement), but I fail to see any problem here.

          (It’s not unlike those who were talking about how “unions killed the twinkies”… as though the union in question had an obligation to play nice so that we could have tasty treats – and that’s without regard to whom I think was making the best decision.)Report

          • I will say, though, that this does not endear me to the union’s cause.Report

            • Avatar greginak says:

              Why? Its a union that works at the airport. They are not going someplace where they aren’t involved just to be a pain in the rumpus. I understand it will be difficult for passengers. But for a protest to be effective someone has to actually notice it and also present a cost for the employer.Report

              • Because I don’t want their squabble complicating the ability of people getting home to see their family over Thanksgiving. Flying is risky enough around the holidays without having to worry about this. This isn’t like the Walmart folks, preventing people from getting the best deal on Black Thursday/Friday. This is seriouser stuff.

                They want to get noticed, they’re getting noticed. It is a sort of notice that makes me more antipathetic to their cause, however. The same would apply if the airport were to initiate a lockout or somesuch just prior to the holidays.Report

              • Avatar greginak says:

                I know its a pain for fliers. If i was the union i’d be very careful how i protested. I would aim for being seen and getting the message out with creating as little nuisance as possible. However i think the reality is some strikes only work by being enough of a PITA that people press employers to give in a bit. Sympathy only goes so far.Report

              • Being seen is cool. Being seen makes me wonder if they have a point and what their point might be and maybe I should be agreeing with them.

                Screwing with traffic makes me – on some level, at least – hope that their employers win, regardless of the merits of their case.Report

              • Avatar Chris says:

                This is a line that all unions/labor groups straddle when they strike: they want to put pressure on the employer and make their cause visible in order to gain outside support, but they don’t want to inconenience people other than the employer so much that they turn against the action/cause.

                I’m watching that unfold here. The bus drives in Austin voted to strike about a week an a half ago, but they haven’t yet followed through, because the week following the vote was F1 week, and then the Thanksgiving week. Striking during that time would have created enough of an inconvenience not only for regular riders but also for many people who don’t ride regularly that it would probably have harmed the drivers’ cause. And as it is, the drivers are likely to get a lot of sympathy because the contractor for whom they work has really been fucking them over royally.Report

              • Avatar Jaybird says:

                In this particular case, there’s the additional dynamic that one of the most vocal supporters of unions in general (the cosmopolitan left) tends to brag about not shopping at Wal-Mart in the first place.

                “If you paid your workers more, maybe I’d shop there!” is not something I tend to hear in this debate.

                Not from the Target/Costco/Amazon people, anyway.

                Which then makes me wonder: what are the people who actually shop at Wally World most likely to think when they see the flier? “GOOD FOR THE UNIONS!!!” is one possible response… but “Are they gonna raise my prices for this?” seems equally likely.

                The lack of solidarity seems to be a problem here.Report

              • Avatar greginak says:

                I’m not quite sure the “Cosmo left loves unions” but will never shop there isn’t just a variety of Volvo driving Brie NPR watching stereotype. Lots people on the leftish side think unions are a good idea and have so for a long time. I’m sure some of those lefties would be irritated by this strike. Then again most people want cops to ticket speeders but feel put upon when they get stopped. Actually a paragraph later, i sure the Cosmo left looks down on Sprawlmart is pretty much just a convenient stereotype.

                I’m sure lots of people would put me in the Cosmo Left group but my dad was a union organizer in the 30’s so i have a personal attachment to unions as well as thinking they are a good idea. And i shop at Walmart for a few cheap items.Report

              • Jaybird,

                Anecdotally, I shop at Walmart and if I rolled up to the Walmart in and they were picketing, I would likely start considering alternatives. I don’t know if I agree with them or not, but I’m not going to be making The Statement of crossing a line.

                I’d imagine that others, less financially well-to-do and more empathetic towards trying to ratchet up meager wages, might be even more sympathetic. I think there is at least some discomfort among the working class that shops at Walmart as to how much the employees there are getting paid and their working conditions. The empathy may well be there.

                Or maybe not, but it might well be worth a shot. (There’s also the issue that workers protesting instead of working would have a detrimental effect on shopping there anyway. I’d be wondering how long the lines inside are going to be – which is already an issue at Walmart since the lines tend to move slow.)

                (In contrast to LAX, where I would be quietly fuming and likely not blaming the employer.)Report

              • Avatar greginak says:

                well to be fair, lots of people at LAX are quietly fuming most of the time. That place is a pain.Report

              • Avatar Jaybird says:

                Safeway here in town had a strike a couple of years ago and, oh, maybe 15 years ago.

                15 years ago, the city stood in solidarity with the union for the most part and didn’t cross the line.

                A few years ago, there were grumblings about how the Safeway workers aren’t even willing to pay five bucks for their health care coverage. More folks were willing to shop there.Report

              • Avatar Chris says:

                Jay, unions and labor aren’t infallible. Sometimes they are unreasonable. The difference between unreasonable capital and unreasonable labor is that, in the vast majority of cases, unreasonable capital holds more cards.Report

              • Avatar Mike Schilling says:

                I’ve always wondered what their private cops are called: LAX Security?Report

              • Avatar Jaybird says:

                Chris, keep in mind, I *LIKE* unions. Public sector ones, anyway.

                I think about the Wal-Mart situation, though, and think about the stuff that made unions work in the past and stuff that we’re doing today and seeing stuff that doesn’t overlap.

                I don’t see Solidarity.

                That should be a red flag, right there.Report

              • Avatar Chris says:

                Jay, why do you think that is, that lack of solidarity?Report

              • Avatar Jaybird says:

                As I said, the cultural differences between one of the most vocal groups (if not *THE* most vocal group) supporting the union and the groups most likely to be shopping at Wal-Mart.

                Don’t see a criticism in that sentence, mind. It’s intended as dispassionate observation.Report

              • Avatar Chris says:

                Jay, I think you’re both right and wrong. I don’t think the group you see as the most vocal is, in fact, the most vocal, but I do think there is a disconnect between the people who, once upon a time, supported unions, and the people who would benefit most from unions. This is reflected, unfortunately, in the fact that the Democratic party, which was once the party of labor, does little more than pay lip service to labor issues most of the time, and then only enough to ensure that labor continues to give them money come election time.

                Also, I think you meant to say private sector unions.Report

              • Avatar Jaybird says:

                Oh, yeah. I meant the unions in the places that are open to the public. Not the places where you have to know a guy.

                I always mix those up.Report

              • Avatar Stillwater says:

                Not the places where you have to know a guy.

                We’re in fantasy land now.

                And I know you can provide links to evidence and whatnot …Report

              • Avatar Shazbot5 says:

                Will,

                I think the employees are doing a big strike/protest at 1000 locations this Friday.

                http://www.huffingtonpost.com/robert-reich/walmart-black-friday-strikes_b_2171524.htmlReport

              • We’re in fantasy land now.

                Maybe, but it’s not an uncommon perception. At least, back home, (private-sector) union jobs were considered much more connections-oriented than most jobs. Some of that may have been related to their desirability and so they could afford to be such. Or maybe it was mythical, and the union people perpetuating the myth were lying.Report

              • Avatar Jaybird says:

                The stories my Grandad told about the union were that anyone who wanted to work was given a job… maybe it was “last in, first out”, but it was also “last out, first back in” and even someone who was only smart enough to shovel sand could be assured of an honest day’s pay.

                It was the government job that you had to know someone to get.Report

              • Avatar Jesse Ewiak says:

                Yup, the one time I’ve been a member of a union, ya’ know I managed to get in? I hit the apply button online. Yes, in 1975, and in certain fire departments today, you might have to be the son of the son of the son of the son of a fireman, but the greatest growth in union jobs these days are in the service industries.

                Your typical union member these days is just as likely to be a thirty-something nurse with a nose ring as it is to be a burly dockworker.Report

        • Avatar Roger says:

          Mark,

          Based on my vast courtroom experience (primarily listening to judge Judy), I have learned that it is best to hear from both sides before passing a verdict. If you assure me that the employees are all fighting fair, I will take your word for it.Report

  14. Avatar James Hanley says:

    I wish we could go back to the time before Wal Mart when every unskilled person had a high paying job.Report

    • Avatar Chris says:

      I wish we could go back to the time before Walmart when union rates were much higher.Report

      • Avatar James Hanley says:

        Union rates for retail store employees? You don’t need a time machine; you need a wormhole to an alternate universe.Report

        • Avatar Dan Miller says:

          Costco is unionized. So is Giant, the grocery store chain closest to me. And Jewel, the grocery store chain in Chicago where I grew up. Those are the examples I came up with off the top of my head. It’s not exactly unheard of.Report

          • Avatar James Hanley says:

            A) Those aren’t the stores Wal Mart supposedly drove out of business.

            B) Are their union rates lower now that Wal Mart exists?

            I’m not opposing unionization of Wal Mart employees. I just don’t care if they’re unionized or not.Report

        • Avatar Chris says:

          James, I was being facetious, because I thought you were. I do wish we had higher union rates. I don’t want to go back to a time when so many unskilled laborers had to work in soul-sucking, back-breaking jobs.Report

          • Avatar James Hanley says:

            Chris,

            OK, I missed that. I wasn’t being facetious so much as sarcastic. Too many people seem to think there were great high paying jobs in mom and pop retail stores until Wal Mart came along.

            I’m just going to exit now. I’ve had the Wal Mart argument too many times. It’s like arguing abortion; both sides have their positions carved in stone. I should have disciplined myself and just avoided it in the first place.Report

            • Avatar Chris says:

              James, no problem. I know some people around here have been treating you as though you’re arguing in bad faith, instead of just disagreeing, misunderstanding what someone is saying, or even being unfair unintentionally (because we’re all unfair unintentionally sometimes). I know you well enough not to believe that you’re arguing in anything but good faith. That’s why when you disagree with me, even on an issue I believe strongly, I always take a step back to think about it some more. Can’t say that of many people here.Report

    • Avatar Dan Miller says:

      James, you’re strawmanning here, and not being very charitable.Report

      • Avatar James Hanley says:

        Not really. People seem to think things were better before Wal Mart. Look at Chris above. Look at M.A.’s comment the other day about all the retail jobs destroyed by Wal Mart. But you know, those mom and pop stores supposedly driven out of business by Wal Mart? They didn’t pay high wages; they also didn’t offer people either the product variety or the convenience that Wal Mart does. (And before anyone disses convenience, when a hail storm broke the skylight of the trailer I was living in at 1:00 a.m, so that water started pouring down the interior wall of my kitchen, “convenience” meant a place I could buy a ladder, tarp, and rope in the middle of the night and at a price I could afford, preventing much damage.)

        Look Wal Mart offers people jobs. It’s the best jobs that are available to them, or they’d be taking other jobs. And the response is not “thank god someone’s offering them an opportunity that’s better than their alternatives,” but “they’re so horrible to be offering them jobs that aren’t better enough than their alternatives.”Report

        • Avatar Dan Miller says:

          Yes, that is the response. Because a job that intentionally gives you 28 hours a week to keep you from getting health benefits? That pays less than $10/hr and expects you to get by as an adult? That’s a shitty job! The proper response isn’t, “Well, we’re living in the best of all possible worlds”, but instead to support real efforts to redistribute wealth from the Waltons to their employees, and to level the playing field between the two so that employees can get a better deal. Contra you and Roger, it actually is possible to increase wages at the low end without turning us into some socialist hellhole where you wait in line for bread.Report

        • Avatar Kim says:

          Things were better before walmart. I posted the data on hate groups in this very thread.
          Maybe other things are better after walmart, I definitely dig your convenience argument.Report

          • The convenience thing is huge for me. I don’t care half as much about the low prices as I do about the convenience.Report

            • Avatar Will H. says:

              Same here, which is why I only go to Walmart in the middle of the night.
              I can’t spend half-an-hour or upwards standing in a line.
              A man is made of time.Report

              • Since Walmart isn’t nearby, I don’t have a whole lot of flexibility on when to go. Which is actually what makes it so handy. If I’m out in Redstone, I can go whenever I want. Other places close between 8 and 11. If I’m going to go shoppng last – a good idea since I will have coldfood in the trunk – then it’s really helpful. Lets me stay at the coffeeshop until closing time.

                But my current circumstances aside, it’s been a constant. You never know how nice it is to have a place that’s always open – and has a little bit of everything so you can usually get something close to what you want – until you don’t have it. The only time I shopped at Walmart back when I was in Southern City was for late night trips (partially for the lines, partially because of my work schedule). Since moving to smaller-town America – the ones that Walmart is alleged to have destroyed – it’s been a different matter.Report

        • Avatar zic says:

          But you know, those mom and pop stores supposedly driven out of business by Wal Mart? They didn’t pay high wages; they also didn’t offer people either the product variety or the convenience that Wal Mart does.

          This is convenient and easy to say. But the economic impact of big-box retail is something that’s being studied, and studied hard. Most particularly, the shrinking town center, and the vanishing Main St.

          I can’t speak for other parts of the nation, but here in the rural parts of the Northeast, I don’t think it even begins with big boxes, but with government: with school consolidation. The small towns that lost their teenagers to high schools in nearby towns shrank, while the towns that got the high schools became regional service centers.

          It might be better, economically, if we all packed it in and moved to the city. But there’s also a lot of work that wouldn’t get done in rural areas as a result. Wal Mart isn’t a big factor in the economies of cities so much; but in rural areas, it’s rewriting the face of community every bit as much as school consolidation. And the net result is cheaper products under one roof, but they’re usually further away. Quality is a problem. And there are fewer jobs within communities to help diversify the local economy. But remember: I thing we undervalue the importance of strong regional and local economies.

          Sometimes, at the end of the day, cheaper is not always better, it’s just cheap. And those lost jobs? Well, at the hardware store, you used to get advice and help on how to do stuff, on what you needed. Try getting that at most Wal-Marts. I know guys who used to have well-paying jobs in hardware stores who now work in the hardware dept. at Wal-Mart. I watched the talk over the change, and weep.

          And I’m guessing they’d say you should have had a tarp and rope with you to begin with; that convenience has made you stupid. Which is kinda funny, because that’s one of the libertarian complaints about regulations. Maybe that cuts both ways.Report

          • From the perspective of this Rural American, the existence of Walmart beats the non-existence of Walmart by a mile. The part about it being further away is negligible in comparison to the all-in-one aspect whether day or night. The quality issues with Walmart products are exaggerated (though, as with so many things, “it depends”).

            The much-maligned box stores (not just Walmart, but others as well) more generally have generally been greeted with open arms (far more outside the cities than inside them, for sure).

            Of course, we may just not know what’s good for us…Report

            • Avatar Chris says:

              This has been true for a long time. I remember when Walmart came to my small hometown in the mid-80s. It was a revolution: suddenly there were a bunch of jobs, and you didn’t have to either go to 10 different places or drive to Nashville to get stuff. Plus it was open 24 hours, so instead of the entire city shutting down at 9 pm, you could now actually get something in the middle of the night if you absolutely needed it, or if you worked 2nd shift.Report

              • I honestly never cared that much one way or the other about Walmart when I lived in the city. I mean, there were some late night trips because, hey, it’s three in the morning and I’m awake and I wanted a basketball pump, but it wasn’t until I moved away that it started to actually matter.Report

              • Avatar Stillwater says:

                I don’t think anyone is disputing the value of a Walmart in a small town. I lived in a town about two and half hour drive to Denver for a while, nothing but knick knack shops and a City Market. When Walmart came to town, you could actually shop locally. No lie.

                I remember a conversation with a townie back then, when Walmart was lobbying the town for permission to bring in another store on the other side of town. She was in favor of it, because “Walmart could use the competition”.

                Small town life!Report

              • I thought Zic was painting a pretty dour picture of the effects of Walmart on small towns. I might have been projecting arguments I’ve heard repeatedly (from people who, unlike Zic, never actually lived in small towns and sometimes have expressed a disinterest of people who live in small towns except when it comes to this and they suddenly care).

                So yeah, my response may have been unfair. Sorry if so, Zic.Report

              • Avatar Stillwater says:

                Will, I think you’re right about that actually. And maybe zic expressed that view. I probably – no, definitely – overstated things when I said that no one thinks that Walmart hasn’t done good things for small towns. I remember those types of arguments quite clearly, actually. I’ve lived in two small towns that have gone thru Walmartization. Back then, some people thought that on net, Walmart would be bad for the town. Others, tho, thought that Walmart would bring nothing of value to the town.Report

              • Avatar zic says:

                First, I did specify the northeast. And lets consider — these are older towns, well established before the invention of the car. And I also noted that the shrinking service centers also pre-dated WalMart; pinning it somewhere around the move toward school consolidation, which also times with the pervasiveness of the two-car family, at least here. (1950’s on.)

                It would not surprise me that what’s a problem here in maintaining rural service centers is also a boon in newer communities where there seems a lack of choice.

                The point is that this is a very large country, and what’s true in one place may not be true in another.Report

              • Avatar Chris says:

                I should note that the second greatest shopping day in the history of Franklin, TN (at the time) is when Target moved in (circa 1992; it came with the mall. Then we were spoiled, because you didn’t have to just get what Walmart. Plus, for teenagers, Target was a better employer, and I just happened to be a teenager interested in making a little money for… umm, stuff.Report

              • Now that you mention it, my observation is that main street didn’t get hit half as hard as shopping malls. Main streets in small towns run the spectrum, but shopping malls are almost uniformly depressing.Report

        • Avatar Turgid Jacobian says:

          Certainly an alternative response might be: “is it just that in one of the richest places and periods to ever grace the earth at extended duration, we have more or less any people that have to resort to this to get a bit of dental care?”Report

    • Avatar Shazbot5 says:

      Things used to be bad, so therefore Walmart can’t be problematic today.

      Thanks Professor TVD, I mean Hanley.Report

  15. Avatar zic says:

    Just a bit of family promotion:

    Not available for free listening, but the track We all Bought the Farm is composer Denny Breau’s response to what, at the time, was the largest WalMart in the world.* My sweetie produced this CD, and plays melodica, sax, and harmonica on it. I highly recommend any of Denny’s work, he’s an amazing guitar player, singer, and composer. Younger brother of guitar legend, Lenny Breau, and son of RCA recording artists Betty Cody and Lone Pine Hal (back in the day when music was regional, they played the same RCA circuit as Chet Atkins.) Album photos were taken in my yard.

    This CD is not available at WalMart.

    *Do not know if this still holds. And please delete this if it rises to the level of spam.Report

  16. Avatar Chris says:

    While I admit that I am no expert in economics, it’s become increasingly clear to me over the course of this thread that some people are taking an extremely narrow and both biased and ultimately inaccurate approach to compensation (let’s stop talking about wages exclusively, and widen it to compensation generally). Their argument, which is quite simple, is that Walmart is paying the market rate because they are paying the lowest rate the market can support. This is, as I’ve said up thread, tautological: the market rate is defined as the lowest rate the market will support, and so by definition Walmart is paying the market rate because any other rate they paid would also be the market rate. But there isn’t a market rate. That is, there isn’t only one rate the market will support, and labor’s goal, be it unionized or otherwise, is to get the highest rate of compensation that the market will support. In the end, if the system is working well, the two will compromise so that labor can live on their compensation and the employer can make a profit.

    And there are more than just the straightforward variables to consider. These are dynamic systems in which concessions to labor, both in the form of compensation and in the form of making the workplace safer and more comfortable, benefit the employer as well. For example, workers with access to health care will miss fewer days of work and be more productive. So will workers who are comfortable and not subject to things like stress injuries or injuries from repeated motions.

    I’ve been told several times that I don’t understand the economics of this, but I’m not pulling this out of my ass, and it’s not like this stuff is all that controversial. We can debate the short and long-term effects of raising wages across the board, but the interaction of labor and capital/management is part of the market, and labor is a market force that isn’t captured in the simple estimation of what capital can get away with. One of the reasons people hate libertarians (and I don’t hate libertarians — I find their world view abhorrent in many ways, but I don’t hate them) is the smug attitude you get from people like Roger and Berg that their view is the factual view, and there is no other possibly correct view, so everyone who disagrees with them simply doesn’t understand economics. It’s irksome in the extreme, and it doesn’t help your case.Report

    • Avatar Stillwater says:

      Oops. This (the above) is a most excellent comment.Report

    • Avatar Shazbot5 says:

      Also, there arelots of economists who think Walmart’s wages are a problem, for example Robert Reich.

      http://www.huffingtonpost.com/robert-reich/walmart-black-friday-strikes_b_2171524.html

      Reich’s view is that Walmart isn’t immoral. They’re just fulfilling a niche in the market. But the existence of Walmart and their labor practices is an awful consequence of how markets are currently set up. (He writes “Don’t Blame Walmart.”) http://www.nytimes.com/2005/02/28/opinion/28reich.html

      We want cheap goods and we want Walmart to pay more. Well, we can’t have both. And it is unlikely that consumers will stop buying the cheap goods. The solution is not to eliminate Walmart but to regulate them into providing decent health insurance, full time work, slightly better pay, etc.

      “The fact is, today’s economy offers us a Faustian bargain: it can give consumers deals largely because it hammers workers and communities… We can blame big corporations, but we’re mostly making this bargain with ourselves. The easier it is for us to get great deals, the stronger the downward pressure on wages and benefits. Last year, the real wages of hourly workers, who make up about 80 percent of the work force, actually dropped for the first time in more than a decade; hourly workers’ health and pension benefits are in free fall…But you and I aren’t just consumers. We’re also workers and citizens. How do we strike the right balance? To claim that people shouldn’t have access to Wal-Mart or to cut-rate airfares or services from India or to Internet shopping, because these somehow reduce their quality of life, is paternalistic tripe….The problem is, the choices we make in the market don’t fully reflect our values as workers or as citizens…. The only way for the workers or citizens in us to trump the consumers in us is through laws and regulations that make our purchases a social choice as well as a personal one. A requirement that companies with more than 50 employees offer their workers affordable health insurance, for example, might increase slightly the price of their goods and services. My inner consumer won’t like that very much, but the worker in me thinks it a fair price to pay. Same with an increase in the minimum wage or a change in labor laws making it easier for employees to organize and negotiate better terms… These provisions might end up costing me some money, but the citizen in me thinks they are worth the price.”Report

    • Avatar Roger says:

      Chris,

      I apologize. I’ve really enjoyed your discussion, and have learned from it and specifically from you. My bad.

      The market rate isn’t what is actually paid, it is what would be paid in a reasonably free and efficient market. Before you and Blaise point it out, yes this is an ideal that is never achieved. It is just sought. It is what wages “seek” yet probably never find in a dynamic market.

      I hope I have addressed your points on optimizing profits and productivity already above, if not please push back again.

      I agree that any company that doesn’t consider your points in your second paragraph is stupid. That said, I hate to say it, but I think they should be free to be stupid too. In other words, I recognize it could be that they are right and that Kimmi and I are wrong.Report

      • Avatar Roger says:

        Oh, and yeah, on sweatshops these issues are even more important. I believe strongly that we should encourage market rates for adults in emerging markets. Above market rates is highly problematic.

        I may be irksome, but I truly believe sweatshop wages, if set at the free market rate, are best for the workers.Report

      • Avatar Chris says:

        Roger, another thing to consider is that, contra was certain writers on this site have said in the past, the point of organized labor is not to achieve a minimum level of subsistence, but to get a fair share of the fruits of one’s labor. This is another area where there is antagonism between capital and labor, and where they essentially serve as counterbalancing market forces. Labor and capital are both motivated to seek bigger slices of the pie, and by considering only capital in the “market rate,” we’ve essentially made a normative decision, rather than an empirical one, to exclude labor’s position that profits can be smaller so that labor’s slice is bigger.Report

        • Avatar Roger says:

          Chris,

          I won’t even try to convince you, but let me share the way others think about this issue.

          There is no absolute fair share. Fair isn’t a number, it is a process. A fair football game isn’t one that ends 7 v 7, it is one where both teams and the judges played by the agreed upon rules.

          In wage negotiations, the employee should ask for as much as possible subject to the risk of not getting accepted. The employer asks for as little as possible, subject to the concerns with turnover, and not getting any applicants. In a world with millions of applicants and millions of jobs and thousands of employers, there is a meeting place where any given employee can’t get any better offers, and any given employer can’t get any lower paid applicants. This is the market rate. It is procedurally fair according to the rules of free markets.

          In a tight labor market, the fair wage goes up. At other times the fair wage goes down.

          The only realistic way to get other than the fair market wage rate is if one of the parties uses fraud, violence or threats. This will really only work long term though if they can get everyone on their side of the exchange to collaborate. However, the incentive is for people or employers to not collaborate (per collective action problems). Thus the only real way to enforce the coalition is to police it with threats of violence as well.

          Thus there is the free market wage which is procedurally fair and there is some other wage which is established by threats of violence both among and between the sides of the negotiation.

          The threat of violence process really only works if an extremely powerful player dominates. In modern markets this usually means the state.

          The free market rules are not absolute, they were discovered over time. Other rules could theoretically emerge. The reason economists like these rules are that they lead to higher economic efficiency, higher standards of living, higher productivity and so forth compared to other rules. They also have the benefit of suppressing ( not encouraging) coercion. They avoid destructive zero sum activities and encourage an endless series of self amplifying positive sum, win/win interactions. They are the source of economic prosperity.

          Let me provide an example explaining the last point. If wages are set by coercion, the key to higher wages is more coercion and getting further in bed with the source of power that determines what the wage is. The same is true for getting lower wages. We have destroyed the market and replaced it with a top down centrally designed process.

          The key to higher wages in a free market is to improve ones skills, seek out high demand specialized fields,and increase productivity. In the end, wage rates and profits emerge out of this process, which serves the consumer.Report

          • Avatar Chris says:

            Roger, I don’t expect to change your mind, though I appreciate the apology above (I meant to note that in my last comment, but was half asleep). I just hope that you will accept that the model you’ve presented is not the only one used by economists to figure out how compensation is set. Labor does not need to be coercive in a way that makes it a distorting force in the market, which seems to be the way you see it. When organized, however, it can actually correct for distorting forces that result from capital having more information and more bargaining power. In other words, without the corrective effect of an organized labor, capital will tend to distort the market rate downward. And keep in mind, organized labor doesn’t tend to work only at the single-employer level, which adds another variable to your equations.Report

            • Avatar Roger says:

              Chris,

              I agree. To the extent a union gets people to voluntarily agree to bargain collectively, it can be more efficient. Again, it is always in danger of being undermined by workers that refuse to join though.Report

              • Avatar Chris says:

                Roger, it’s also always in danger of being undermined by employers who work to intimidate employees or otherwise undermine organization efforts. Historically, the biggest problem for unions has been the coercive tactics of employers. This, I believe, is one of the reasons pro-labor folks get so upset at Walmart. Walmart not only treats its employees pretty poorly (and they admit as much), but it also one of the most active anti-union employers out there. The argument — and keep in mind, this is an economic argument, and not one that I’m just making up, but one that comes out of economics — is that Walmart distorts the labor market. It doesn’t pay the market rate, it pays a rate that it can get away with because it manipulates the market. This might be considered a market rate, but at this point we’re not simply dealing with facts of the matter, but also with normative considerations.Report

            • Avatar Roger says:

              Well said, Chris.

              I am not a fan of a corporation using politics to interfere with markets, I am also not a fan of unions doing so either.

              The reason is because I believe the market solutions degrade into a win/lose political game where value is destroyed rather than created. In reading history, as best I can tell, this win/lose dynamic in various incarnations got every society since the advent of agriculture ten thousand years ago. All of them. They either stagnated long term to the equivalent of a few bucks a day living standard, or they collapsed altogether . Usually both.

              The trouble with zero sum, destructive competitions is that the logical response once you enter into such an arms race is to win it by beating the other guy. Walmart is engaged in such a battle. The unions are too. Both are trying to manipulate a zero sum political game to their advantage.

              They are both playing rationally. However, they are both playing the wrong game. The movie War Games was right. Some games are best not played.

              Libertarians are simply pointing to the exit sign that gets out of this zero sum game.Report

              • Avatar Chris says:

                I don’t think it’s really a zero sum game. I don’t think unions see it that way, either. In fact, I don’t think unions can see it that way and survive, because one of the main differences between capital and labor is that labor, in a capitalist system, is that labor is always going to be subservient to capital. Sure, capital needs labor, but the relationship is asymmetrical, and labor generally realizes this (and either works within it or pushes for revolutionary change). Hell, one of the reasons that European governments in the late 19th and early 20th century gave political concessions to labor is because labor was becoming increasingly dissatisfied with this asymmetrical relationship, and revolutionary fires were beginning to burn. One way to put out those fires is to make labor happy with the way things are, even though they remain in a more compromised position. Germany and France, for example, did this, while Czarist Russia did not.

                Anyway, the point is, labor has to accept that the relationship between capital and labor can be mutually beneficial, while capital can act as though it is a zero sum game. That’s what Walmart is doing. That’s what capital has historically done. Labor can’t afford to think that way.Report

              • Avatar Chris says:

                Also, I’m about to take off for the next several days, so I won’t be able to respond, but thank you for the exchange, and thank you again for the apology above. Happy Thanksgiving, and I hope we can have future exchanges like this. I suspect you’d be surprised to learn that we have similar views of government (I’m a quasi-anarchist, and notice I haven’t said a word in favor of government intervention), though vastly different philosophical views about the nature of economics and capital, resulting less from a difference in understanding of the facts on the ground than from normative, or perhaps better said, ethical considerations.Report

              • Avatar Roger says:

                Viva la difference and Happy Thanksgiving to you.Report

              • Avatar Stillwater says:

                They are both playing rationally. However, they are both playing the wrong game.

                This is where you lose me. You’re saying that people ought to be playing a different game, one that’s admittedly inconsistent with individuals actual, real and expressed economic rationality.

                You’re adopting a normative ideal of market activity and not only comparing reality against that ideal, your adopting an idealized definition of individual rationality in which people would be rational to reject the game they’re currently playing. But that’s incoherent, it seems to me. If individuals are rational to pursue their self interest by engaging in behavior B in game G, then they’d be rational to pursue B in game G’.

                So it seems to me that “changing the game”, on your view, requires individuals to adopt a different kind of rationality than the currently do. That would require people to be different than they actually are. But rationality just is what it is, independently of how we define it.

                Now, I get that you think the rules of the game as expressed in law and all that are not static and subject to revision. But if it’s in an individuals self interest to persist in engaging in a rule you think is wrong (according to an idealized model), it would be incoherent for that person to adopt a different rule, yes?

                How is your view of the “right game” supposed to be realized when you concede that individual rationality entails the existence of the current game?Report

              • Avatar Roger says:

                As an example of playing the wrong game, consider gladiators. It is a violent, zero sum game that even the one standing at the end of the contest often is a net loser in due to injuries sustained. They would be better playing a game like soccer, where they both enjoy the game and nobody is expected to get injured.

                My point is that we should avoid destructive competition such as gladiatorial sport. Instead the players should choose a constuctive competition such as soccer. However, once the gladiatorial, game begins, it is totally rational to kill the other guy.

                I am suggesting that we’d all be better off if Walmart and all prospective employees played a constructive game rather than a destructive one. Elias’ post was an expression of disgust that a company was trying to influence the political arena. My disgust is just one level of abstraction higher. I am disgusted we allow the game to degrade to this level of all, and I find cheering on the blood sport is abominable regardless of sides.Report

              • Avatar Stillwater says:

                My point is that we should avoid destructive competition such as gladiatorial sport.

                I think that’s where the disconnect between us arises. As an individual, I pursue my own economic self-interest, yes? As a practical matter, I do X, Y and Z to maximize the expression of that self-interest. So what does it mean to say that I ought to adopt a different set of rules and play a different game? Normatively, it means that you think my self-interest would be maximized if I all of us were playing a different game. And I might agree with that one-hundred percent. But in practice, I’m stuck playing the current game, not another one, and I’m only rational in acting according to different rules if it maximizes my self-interest.

                But by hypothesis, it doesn’t.

                I can only adopt the rules of the game you want me to play if, and when, those rules actually do serve my self-interest. But not until then, it seems to me. Even if I accept that a different game would be a better game to play.Report

              • Avatar Roger says:

                I think I agree with everything you said. Once we get buried in zero sum games, it is possible there is no easy way out.

                Everyone makes fun of libertarians for their idealism. They are often guilty as charged. We are suggesting what we as a better game, and we recognize that we cannot use force within the current game without betraying our very ideals.

                Once an industry, or institution or nation or relationship degrades into a destructive, zero sum pattern, it may be too late.Report

          • Avatar Mike Schilling says:

            In a world with millions of applicants and millions of jobs and thousands of employers, there is a meeting place where any given employee can’t get any better offers, and any given employer can’t get any lower paid applicants. This is the market rate. It is procedurally fair according to the rules of free markets.

            That is, there is one true wage, and the notions of consumer surplus and producer surplus have been abandoned. It’s funny how that isn’t true for any other market in the world.Report

            • Avatar Chris says:

              Mike, I hate that you can say things in two lines (plus one word) that I try to say in multiple paragraphs. Bastard.Report

            • Avatar Roger says:

              Mike,

              I didn’t say there was one TRUE wage. There are infinite numbers of possible wages. And yes, the point where supply meets demand is true of all working markets. So, what is your push back?Report

              • Avatar Stillwater says:

                the point where supply meets demand is true of all working markets.

                Only in a really degraded sense, in the case of sweatshop labor as per our previous discussions about it. In those threads, you argued that sweatshop labor practices were voluntary and mutually beneficial, and those conditions alone sufficed for a “just wage”, even tho, but the definition you’re working under now would entail that sweatshop labor markets aren’t really “functioning markets” since there greater demand than supply for jobs in those areas.

                Which is precisely why they’re attractive to employers, yes?

                Or am I missing something?Report

              • Avatar Roger says:

                If there are more applicants than supply then the wage rate is simply too high. In a free market the wage rate should keep dropping as it approaches the point of full employment. The effect of lower wages is to attract capital and jobs. The growth in capital and jobs increases wages and productivity. That is pretty much the story of the modern industrial breakthrough. This establishes a positive sum self amplifying system that produces various solutions for the elusive “consumer” aka all of us.Report

              • Avatar Stillwater says:

                It seems to me like you’re saying that a positive sum transaction is sufficient for free markets. Upthread you said that positive sum transactions are only necessary for free markets given that “In a world with millions of applicants and millions of jobs and thousands of employers, there is a meeting place where any given employee can’t get any better offers”. ANd that defines “market wage”.

                Here’s my question: in situations where the argument space of “receiving any better offers” is reduced to zero (because there are no other offers), how can we say that sweatshop labor practices reflect a market wage?Report

              • Avatar Roger says:

                I do not believe it is sufficient. No. There are rules which need to be followed for markets to work well. Part of how we identify good rules vs bad ones is that good rules lead to positive sum outcomes and bad ones don’t. GDP is one imperfect measure of these outcomes.

                If I understand your last question, if there are no better offers, then you should take the existing one. If there are no offers at all, you need to lower your demands. This is true for buyers and sellers, employers and employees.Report

              • Avatar BlaiseP says:

                This is what you’re missing, Roger: your lovely sweatshop still won’t employ everyone. The sweatshop works while you have an exploitable population and another, wealthier population to buy their commodity goods. But it all comes to an unhappy ending: the sweatshop runs away to an even more exploitable population and your economy crashes anyway. In the race to the bottom, the laws of inertia take over.Report

              • Avatar Roger says:

                So the industrial revolution was a fluke? So the rise in prosperity for those open to markets was a coincidence?Report

              • Avatar Stillwater says:

                That comment is too broad to have any bearing on what BP is talking about, or any of the themes we’re discussing, it seems to me. I mean, one could just as easily say that the industrial revolution only led to massive increases in prosperity (in the US, anyway) because of unionization, which was only effective because capital was relatively fixed.

                You may reject that analysis, but it’s certainly not an uncommon or implausible view.Report

              • Avatar Roger says:

                It seems to lack supporting data. The industrial revolution started creating wealth for the first time before the popular advent of unions, indeed part of what allowed the revolution to kick off was that producers were able to escape the stifling guilds which were playing the same zero sum game. That and the stifling royal monopolies.

                Without looking up any data, memory serves that industries where unions prospered in the UK and US are the ones that began suffering or growing the least. In other words the effect of unions was to choke off the engine of productivity in comparison to less unionized areas.

                That said, I am fine and dandy with voluntary unions. It is unions using coercion (or employers using coercion) that I reject, and which I believe lead to choking off prosperity.

                Good discussion though….Report

              • Avatar James Hanley says:

                OK, if Roger’s comment about the industrial revolution is too broad, then look at South Korea, Taiwan and the PRC. Multinationals don’t open many sweatshops in S. Korea or Taiwan anymore, because those countries became too prosperous. It’s declining in the PRC as well, because it’s become prosperous enough that you can’t get the best wage rates there anymore. Today the game is Vietnam, Thailand, Burma, etc., but the economies of those former sweatshop dominant countries hasn’t collapsed–instead they parlayed the increased wealth into economic modernization.

                One could just as easily say that the industrial revolution only led to massive increases in prosperity (in the US, anyway) because of unionization, which was only effective because capital was relatively fixed.

                No, one really couldn’t. The increases in prosperity were occurring before unionization. This is particularly easy to see if we look at the industrial revolution in England. Marx was writing at the time of, and in response to, England’s industrial revolution. It had an astonishing amount of ugliness, which makes Marx’s (and others’) reaction pretty understandable. But Marx faced one fundamental problem: He predicted the masses would become more and more impoverished, while instead they became better and better off. Not by our standards today, certainly, but as a decade-by-decade increase. Instead of a vast starving unemployed industrial reserve army ready to overthrow the system, English workers kept increasing their daily caloric intake and had diminishing infant mortality rates.Report

              • Avatar Roger says:

                You certainly can’t accuse James and me of being inconsistent! Lol.Report

              • Avatar James Hanley says:

                Roger, if we ever got together, I don’t know what we’d find to talk about. Too damned much agreement; it’d be boring. We’d have to drink until we got cantankerous and started disagreeing just to disagree.Report

              • Avatar James Hanley says:

                “sweatshop labor markets aren’t really “functioning markets” since there greater demand than supply for jobs in those areas. “

                If that’s true, then what it means is sweatshop jobs pay too much. For the market to clear, the “price” of the jobs to those demanding them needs to increase (i.e., the wage has to fall and/or the working conditions have to get worse).

                More simply, as long as people are still standing in line trying to get those sweatshop jobs, the employers are actually paying above market wages. So if the market really isn’t functioning right, it’s malfunctioning in the direction you would prefer.Report

              • Avatar Stillwater says:

                I was questioning Rogers definition of “market wages” and suggesting that it breaks down in the case of sweatshops. I wasn’t concerned with any particular outcome of how markets effect wages.Report

              • Avatar James Hanley says:

                That’s fair. Nevertheless, it does open up some interesting questions about the evils of sweatshops, doesn’t it?

                If we are in agreement that multinationals are paying above market wage rates in sweatshops, what explains that?Report

              • Avatar Robert Greer says:

                This is overly simplistic, James. It’s easy to imagine ways that shopowners could wield power over workers even when the market is facially functioning.

                “Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. In the long run the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate.” -Adam SmithReport

              • Avatar James Hanley says:

                Robert,

                I can’t begin to see how you’ve actually responded to what I wrote. I was referring only to wages and demand for jobs.Report

              • Avatar Robert Greer says:

                James, my point is that referring only to “wages” and “demand” can obscure other questionable characteristics of the market that obviate the usual justifications for letting “markets” run their course. (You can of course question whether these are markets or pseudo-markets.) It’s simplistic and reductive to conclude that just because people are lining up for jobs that there is no systemic exploitation.Report

              • Avatar James Hanley says:

                Robert,

                I wasn’t talking about justifying anything. You’re reading into it something I wasn’t talking about.

                But if you want to go there, then the reality is that all the working conditions cumulatively are the “price” (to the worker) of a job. The wage rate, the number of bathroom breaks, availability of fresh air, etc. And if people are still lining up to take those jobs–if demand is not fully met–then the price has not gotten too high, and employers could increase that price (whether by reducing wages, reducing the number of bathroom breaks, etc. etc.) and still get the number of employees they want.

                It’s not a normative argument, and you seem to want to have normative argument. I’m not going to bite on that.Report

              • Avatar Robert Greer says:

                James, in the post to which I responded, you spoke of markets not “functioning right,” and related this to Stillwater’s political “preferences.” This is inseparable from normativity.Report

              • Avatar Roger says:

                Great minds….Report

              • Avatar Stillwater says:

                Heh. You understood my comment (greater demand than supply of jobs) from the pov of capital. I wrote it from the pov of labor. Ie: that there are more people seeking jobs than there are jobs to be filled. And in a comment somewhere up there I proposed a scenario in which the value of the term “better job offers” is zero, as a limiting case. In that situation, Roger’s definition of “a market wage” doesn’t seem to apply.Report

              • Avatar Stillwater says:

                And if it does apply, then it’s something along the lines of what Mike Schilling wrote somewhere: a market wage is just the defacto wage.Report

              • Avatar James Hanley says:

                From the pov of labor, it still means an above market wage.Report

              • Avatar Stillwater says:

                Now you’re not making any sense. If you the number of laborers is constant but the number of firms seeking employees goes up, then wages ought to go up, yes? That’s the scenario.

                Or does demand not increase price?Report

              • Avatar Stillwater says:

                But we’re still missing the point. The idea of a “market wage” as Roger defined it requires conditions that aren’t met in the scenario I described. So on what grounds do you conclude that labor is receiving an above market wage in that scenario?Report

              • Avatar James Hanley says:

                The idea of a “market wage” as Roger defined it requires conditions that aren’t met in the scenario I described. So on what grounds do you conclude that labor is receiving an above market wage in that scenario?

                The market price (and wages are a price) is a theoretical construct. We can compare other prices to that theoretical construct even if the construct itself were never found in the real world.

                If you the number of laborers is constant but the number of firms seeking employees goes up, then wages ought to go up, yes? That’s the scenario.

                Yes, standing by itself. But if there are still laborers willing to take the jobs at the status quo wage, then the wages should not go up, they should go down (until the labor market gets tighter). Only when all labor is employed and more firms come in seeking employees (or more loosely, as the labor market gets tighter), should the wage rate increase.

                And in industrializing countries, the pool of labor isn’t normally constant, but increases as labor moves from rural to urban areas. That’s a consistent enough finding that it’s probably worth treating as a law of economics. In fact industrialization in large part is just about the mobilization of labor–the reason developing countries get ridiculously high annual GDP growth rates is simply because labor is moving from low productivity ag work to much higher productivity industrial work. Nobody maintains those GDP growth rates after labor is fully mobilized.

                Rambling off on a tangent now, much of the oohing and aahng over the Asian economic model was misplaced–most people didn’t realize it was just about labor mobilization. And I think much of our oohing and aahing over the U.S. economy in the post WWII era is misplaced because most people don’t realize to what extent it was about labor mobilization, the movement of women into the workplace.Report

              • Avatar Stillwater says:

                then the wages should not go up, they should go down (until the labor market gets tighter).

                Unless the wage is already as low as it can go and still get people to show up.

                I know, I know. That’s not what the model predicts…Report

              • Avatar Stillwater says:

                Actually, thinking about this a bit more, you’re right. Just so long as there is someone in line to compete with the going rate, and wage rates between parties aren’t made public, then the wage rate for any individual is too high. Of course, the “above market rate” has already been agreed to by both parties.

                I suppose one could think of it as an auction where all the prospective employees publicly bid down the rate until the firm has reached the lowest wage rate sufficient to employ X number of people. That would be one way to understand the concept of market wages.

                There’s a down side to that (or upside, depending on pov), it seems to me. Especially on the model you advocate, where non-public transactions are a market.Report

              • Avatar Mike Schilling says:

                Perhaps I misunderstood you. Where do you think consumer surplus and producer surplus fit into labor markets? In particular,why do you seem to disapprove of labor organizing to reduce consumer surplus (i.e. raise wages.)?

                If you’d like to discuss the culture among employers that discourages reveling salaries (in many places, it’s a firing offense) and how that distorts the market by creating a vast asymmetry of information, feel free.Report

              • Avatar Roger says:

                I am fine with employees organizing to optimize their bargaining power, and I suspect it is unproductive to allow employers to suppress communication via threats. I very well could be wrong on the latter though. It seems wrong though.Report

              • Avatar Mike Schilling says:

                I suspect it is unproductive to allow employers to suppress communication via threats. I very well could be wrong on the latter though.

                Well, it’s not like that’s coercive.Report

              • Avatar Roger says:

                I am probably in agreement with you. Let’s leave it at that.Report

    • Avatar Mark Thompson says:

      This. Unions, especially in the private sector, are no less part of the market than employers.Report

    • Avatar Brandon Berg says:

      Their argument, which is quite simple, is that Walmart is paying the market rate because they are paying the lowest rate the market can support. This is, as I’ve said up thread, tautological: the market rate is defined as the lowest rate the market will support, and so by definition Walmart is paying the market rate because any other rate they paid would also be the market rate. But there isn’t a market rate.

      It’s not really clear to me what claim you’re rebutting, and who you think made it. Of course if the supply curve changes the market price changes, and of course unions can manipulate the supply curve. Any basic economics textbook has a chapter on monopolies and cartels, and no one is really disputing this.

      Cartelization is not a good thing. It reduces output and creates deadweight loss. When one group of workers unionizes, it’s good for them. But the benefit to them outweighs the cost to the rest of the economy. When everyone unionizes, it’s pretty much a loss across the board. As a libertarian, I don’t think the government should stop the formation of cartels, but neither should the government support it, nor should we as a society encourage or celebrate it.

      I have specifically been responding to the claim/insinuation by Elias and others that Walmart is doing something wrong—that there’s something immoral, or at least harmful, about paying low wages. To put it as Elias himself put it, I’m not sure whether this political worldview is best described as chutzpah or ignorance or fecklessness.Report

      • Avatar Brandon Berg says:

        When everyone unionizes, it’s pretty much a loss across the board.

        By the way, I want preemptively point out that the idea that the losses will come disproportionately from corporate profits is wrong. Union membership has been falling steadily since 1950 with no discernible effect on corporate profits as a percentage of GDP.Report

        • Avatar Stillwater says:

          While wages have steadily declined.Report

          • Avatar Brandon Berg says:

            Right, but the difference hasn’t been going to corporate profits. It’s been going to government transfer payments. Corporate profits were at the same place in the early 2000s as they were in 1950. They’re high now, but it’s a short-term spike. Union membership fell for 50 years with no long-term uptrend in corporate profits, so it’s pretty tough to argue that that’s the cause of the recent spike.Report

            • Avatar Stillwater says:

              Transfer payments, eh. Funded by wage earners. And not the wealthy.

              Huh. Now I wonder what all the complaining about “redistribution” is all about, when the middle class is actually funding those programs.Report

              • Avatar Brandon Berg says:

                Transfer payments, eh. Funded by wage earners. And not the wealthy.

                That’s only Social Security, which is currently about 4.7% of GDP, less than a third of total government transfers. There’s no cap for Medicare taxes, so high earners pay a wildly disproportionate share. Also, Social Security is redistributive as well, as the benefit formula is set up so that the more you earn the worse a deal it is for you. See my reply to greginak for details.Report

            • Avatar greginak says:

              What transfer payments have gone up sharply? Who is getting so much extra from the gov now that they didn’t get? SS, medicaid, medicare are the bulk of gov safety net spending. Of those only medical costs have gone up a lot, but most of those programs go to the elderly .Report

              • Avatar Brandon Berg says:

                From 1963 to 2011, as a percentage of GDP:
                Social Security: 2.5% to 4.7%
                Medicare: 0% to 3.7%
                Medicaid: 0% to 2.8%
                UI*: 0.5% to 0.7%
                Other**: 1.2% to 2.9%
                Total: 4.9% to 15.2%

                Payroll taxes: 3.5% to 6.1%

                Source: Economic Report of the President, table 29.

                I don’t see that the fact that it goes mostly to old people is relevant. The point is that the decline in wages as a percentage of GDP has not gone to corporate profits.

                I should mention that total government transfers were around 12% of GDP in 2007, so some of that is hopefully just a temporary spike.

                *Included for completeness, but you can ignore this, since it’s small, volatile, and doesn’t really have a long-term trend.

                **Your guess is as good as mine. Likely includes miscellaneous welfare programs like housing and food aid. I don’t believe it includes government pensions.Report

              • Avatar Stillwater says:

                The point is that the decline in wages as a percentage of GDP has not gone to corporate profits.

                How does that make any sense?If everyone else is earning less over a time because costs have gone up, but corporate profits have stayed steady, then it seems entirely clear that a decline in wages has gone to maintaining corporate profits.Report

              • Avatar Murali says:

                If everyone else is earning less over a time because costs have gone up, but corporate profits have stayed steady, then it seems entirely clear that a decline in wages has gone to maintaining corporate profits.

                Not necessarily. There could be other exogenous factors. One such exogenous factor is inflation. People at higher income levels are able to absorb inflation better than those at lower income levels.* Inflationary monetary policy therefore hurts the poor worse than it hurts the rich. It doesn’t follow that wealth is therefore transferred from the poor to the rich.

                Inflation means that the poor end up consuming less because they are able to afford fewer things. It means that the rich end up consuming more because the value of savings decreases. This reduces the amout of available capital for reinvestment, which also in turn depresses long term job-creation rates, which again hurts the poor in the long term as well. It is also unlikely that increased spending by the rich can compensate in terms of stimulating demand for the decreased spending by the poor.
                *Because consumption as a percentage of income is lower for the rich than for the poor.Report

              • Avatar Stillwater says:

                Inflation means that the poor end up consuming less because they are able to afford fewer things. It means that the rich end up consuming more because the value of savings decreases.

                If true, that rather confirms my point, no?Report

              • Avatar Murali says:

                No, it doesn’t it just means that rich people are able to withstand negative exogenous effects better than poor people, not that the rich benefit at the expense of the poor.Report

              • Avatar Stillwater says:

                If the exogenous effects are systematic, and in-built, then the relative decline of wage earnings as a % of GDP relative to the wealthy is evidence that the wealthy are the beneficiaries of policy decisions (and whatnot) that permit that to happen.

                I really don’t see any other way around this. Corporate profits are remaining steady while wage income has declined. Isn’t that the bare evidence we’re working with? I mean, if we’re not trying to massage it into conformaity with a preferred theory?Report

              • Avatar Brandon Berg says:

                Actually, after closer inspection of the data, I’m calling bullshit on the claim that there’s been any long-term downtrend in employee compensation.

                It’s technically true that wages are declining. But employee compensation is not. From 1963 to 2011, as a percentage of GDP:

                Wages: 51% to 44%
                Employer contributions for pension and insurance funds: 2.9% to 7.4%
                Employer contributions for payroll taxes: 2% to 3.3%
                Total employee compensation: 55.9% to 54.6%

                The all-time high for employee compensation was 59.4% in 1970 and again in 1974, but it was 58.2% in 2000, not significantly lower.Report

              • Avatar Stillwater says:

                From the other link I provided:

                The figures for wage and salary income arguably understate the cost of hiring, since they exclude both the employer’s share of payroll taxes and the cost of other benefits, like health insurance. Including those costs, total compensation of employees came to 54.3 percent of G.D.P. That figure is not a record low, but it is the smallest share for any period since 1955. Report

              • Avatar Brandon Berg says:

                Sure. The labor market is really slack now, so obviously employee compensation is going to be down a bit. But this is nothing like the nine-percentage-point drop in the other chart you linked to. In 2008, before the bottom fell out of the labor market, total employee compensation was 56.5% of GDP, three percentage points below its highest point since 1963. Add in the increases to Social Security and Medicare, net of payroll taxes, and the share of GDP going to wage earners is as high as it’s ever been.

                And all of this is tangential to my original claim, which is that union membership declined for 50 years with no long-term uptrend in corporate profits as a percentage of GDP. You’re not actually disputing this, are you? Unless you want to explain how the recent spike in corporate profits could have been caused by a decline in union membership that had already been going on for fifty years?Report

              • Avatar Stillwater says:

                Now, I’m not disputing that because all the evidence seem to suggest that corporate profits haven’t declined.

                What’s declined is the disposable income of people who earn wages. According to your hypothesis, it’s because of an increase in transfer payments. But the evidence seems to suggest that the increase has been funded entirely (in %GDP terms anyway) by the middle class.

                I mean, how else do you account for increasing government costs coupled with relatively static corporate profits?Report

              • Avatar Stillwater says:

                Also, notice that in your argument above you’re effectively confirming my suggestion that social programs have been funded by the middle class (or wage earners, generally) and not by the wealthy. So why all the griping about redistribution???Report

              • Avatar Murali says:

                social programs have been funded by the middle class (or wage earners, generally) and not by the wealthy.

                Wouldn’t that mean that money has been taken from the middle class and given to the lower income folks*

                *am I alowed to say “lower classes” without sounding like I live in the Hamptons?Report

              • Avatar Brandon Berg says:

                Not really, no. See my comment at 7:20. Social Security is the least redistributive of government transfer programs, and it’s somewhat redistributive. Medicare is very redistributive, and the means-tested programs even more so.

                Public schools are redistributive as well. Say public school costs $10,000/year. If we suppose that inflation and interest roughly cancel out, we can say that a student graduating from high school today owes a hypothetical $130,000 debt. At 5%, that’s $6500 for the rest of his life just to keep current on interest, to say nothing of paying down the principal. Most people don’t pay that much in state taxes, and that’s putting aside all the other things state taxes pay for.

                Also, my figures above aren’t for middle-class wage earners. They include compensation for all employees, including, e.g., highly-paid executives.Report

              • Avatar greginak says:

                Murali- Not exactly. SS benefits the elderly, some of whom would be dirt poor without it. However many elderly have other pensions or income/savings so it isn’t going to poor people entirely. SS goes to some well off elderly people.Report

              • Avatar Murali says:

                So its still redistribution, except a more regressive scheme. From middle class to upper classes. Let’s do away with it.Report

              • Avatar Stillwater says:

                Murali, both your comments seem to be correct. Social programs are funded by the middle class, hence, there’s no “redistribution” from the wealthy to the poor via social programs. Also, it’s effectively a trasnfer from the poorer to the rich,since the wealthy get to exploit the system to their own ends ala Walmart without paying in their fair share to begin with.

                As to why we don’t eliminate it, I’d rather ask why we don’t require the wealthy to pay their fair share into the system and not exploit it.Report

              • Avatar Stillwater says:

                Public schools are redistributive as well.

                Ahh sure. But that’s not the topic at hand. One thing I’m becoming increasingly impressed by is the plethora of arguments libertarians can throw out, many of which are beside the point, in order to make their conclusions come out true. It’s amazing to witness.Report

              • Avatar Roger says:

                Brandon answered your question, Stillwater.

                https://ordinary-times.com/blog/2012/11/walmart-and-the-welfare-state/#comment-417370

                Compensation has not dropped, compensation has just shifted away from wages. You are trying too hard to make a point that leads nowhere.Report

              • Avatar Kazzy says:

                BB,

                However, education spending isn’t allocated equally to all students. Students with special needs may rack up spending of $130K in a year or more.

                It’d be interesting to see a more precise breakdown of money in the system. My hunch is that the students having the most money spent on them would hail from middle- or upper-class families, as these are often the ones best equipped to advocate for services. I wouldn’t be shocked if I was wrong, but that is what my anecdotal evidence indicates to me.

                So, while it is still redistributive on the whole, perhaps not as much as at first glance.Report

              • Avatar Kim says:

                Kaz,
                we already see that? Wasn’t rose talkign about how autism gets funded way outsize other disabilities? And autism is a middle to upper middle class disease… (epidemiologically speaking)Report

        • Avatar Stillwater says:

          Also this.

          Corporate profits after taxes were estimated to be $1.56 trillion, at an annual rate, during the quarter, or 10.3 percent of the size of the economy, up from 10.1 percent in the second quarter. Until 2010, the government had never reported even a single quarter in which the corporate share was as high as 9 percent, as can be seen in the accompanying charts.

          The government began calculating the quarterly figures on corporate profits in 1947, but it has annual figures back to 1929. Until last year, the record annual share was 8.98 percent, set in 1929. For all of 2010, the figure was 9.56 percent.

          Wage and salary income was only 43.7 percent of G.D.P., the lowest number for any period going back to 1929. That figure first fell below 45 percent in 2009. Report

  17. Avatar Stillwater says:

    This is a most excellent comment.Report

  18. Avatar MFarmer says:

    I imagine if I look into regulations I’d find roadblocks to small mom and pops creating an alliance in a NAPA like logistics arrangement by which they could attain buying power and costs savings through a superior logistics system. Each town could have a large store area like Super WalMart with different needs met by say a small local hardware store owner, a clothing piece to it, a sporting goods piece, with each section divided off to highlight the local owner and his/her specialty. The marketing could focus on local owners, a focus on employee satisfaction, maybe with a profit sharing plan to attract good workers, small fighting back against big, etc. — I’ll bet that there are regulations that make it almost impossible to put something like this together cost efficiently to compete with a WalMart type operator. This NAPA type arrangement could offer a buy-in to the local mom&pops that covers expert business support to help offset the waste of each small business owner having to hire an accountant or book-keeper. The NAPA-like association could offer centralized business support for each site, and the small business owners would have to worry only about buying and selling.Report

  19. Avatar LWA (liberal With Attitude) says:

    I don’t accept the premise that labor and capital can be thought of only in terms of supply and demand.

    First, this premise assumes too many preconditions that can never possibly be met.
    Secondly, it assumes that labor is no different from a consumer good, like a toaster, to be traded subject only to market price.

    This is where libertarianism is radically different, at its conceptual root from traditional conservatism and liberalism. In order to place every transaction into an economic framework, other conceptual frameworks like the sacred need to be dispensed with.

    In most people’s viewpoint, work itself is sacred; notice how indignant people get when someone chooses to not work, and instead loafs, whether they are on the dole or not.

    We see that in the discussion about the Hostess bakers; Notice how many commenters assumed a moral tone, that it was not simply poor negotiationg, but morally repugnant for demanding higher wages and driving the company into bankruptcy; Witholding your labor is not a business transaction, but a moral failing.

    Negotiating over labor can never be a market transaction. The one holding labor has in all but the most extreme scenario, more incentive to close the deal than the holder of capital, because our labor is more important to us than it is to the employer.

    The exceptions to this prove the rule; for example, with medicine, the roles are reversed- the purchaser of labor has no bargaining power, because the service always means more to him than it does to the doctor.

    In both cases, the essential market preconditions can never be satisfied.Report

    • Avatar Tom Van Dyke says:

      Hostess is worth more dead than alive to its investors. That’s a market reality. The intellectual property [formula, brand name] will be sold to a baking company with better profit margins, cheaper [non-union?] labor presumably a factor. The union doesn’t seem to realize it’s in the buggy-whip business.

      Because Ward was right about the change in eating habits. The Canadian licensee for Hostess cakes took a big hit in the 2nd quarter.

      Canadian dairy giant Saputo has reported a fall in annual profits after recording a C$125m (US$121.5m) impairment charge on its small grocery products business.

      The charge, which Saputo blamed on “stagnating growth in market-wide snack cake sales”, led its net earnings to tumble 15.4% to C$380.8m for the 12 months to the end of March.

      http://www.just-food.com/news/cake-challenge-sours-saputo-earnings_id119379.aspxReport

      • Avatar Roger says:

        I have yet to weigh in on the Hostess thing.

        My thought is that management is responsible for the success and failure of a company, in a free world, this means they establish the wage rates and benefits, the products, the marketing, the distribution processes and so forth. their strategies must adapt to market realities of course, and these change over time.

        One problem with Hostess is that they lost control of their wage related costs. they got into a bad situation and did not have the freedom to re-establish alternative wage strategies.

        Yeah sure the union took a gamble and lost. The root cause of this failure though is probably related to regulations that prohibited hostess management from being free to change wages or replace the workers.

        For the first time in history, at exactly 3:10 PM Central Time, a libertarian blamed market failure on government interference. Mark your calendar.Report

    • Avatar Roger says:

      LWA,

      Not trying to convince you, but just so you know how I think about it….

      I don’t JUST think we should think economically about supply and demand in regards to labor, I think there is value in doing so*. The value is that allowing it to play out leads to prosperity. I keep repeating the gag worthy phrase of “engine of prosperity”, but that is what I am convinced markets are. They are is discovery, or problem solving systems that figure out how to cooperate effectively to create prosperity. ( I feel you eyes rolling even as I write it). Welcome to the machine.

      The way I think about your bargaining power objection is simple. In markets of lots of employers and applicants, it pretty much doesn’t matter. The market rate still seeks the same point. This is because the real competition was never between the applicant and the employer, it was between employers. Similarly your real competition for jobs has always been other applicants. The worker solidarity thing is a myth the spinners of fables have spun to accomplish their own selfish goals. Have a cigar.

      I am of course probably wrong. I the mean time, shine on you crazy diamond.

      * I do not think we should ONLY think about labor in market terms.Report

  20. Avatar gregh says:

    Walmart is the gorilla in the room. They got big by aggressively using imports from Asia/China. The pretty much started that game. And they got big by taking advantage of the relative wealth of the U.S. versus the low wage poverty of Asia. They don’t sell stuff as cheap as they could, only cheap enough to undercut their competitors. And they are agressive about keeping wages low. This helps to keep the profit margins high. But they set the bar. When they move into an area they put the local businesses out of business. And those out of work workers MUST work at Walmart or not work.
    If Walmart raised their wages it would have the effect of raising wages in all of the competing businesses. Those underpaid workers might move to Walmart and those other employers might have to raise wages to keep the help. Walmart still would have the advantage of it’s size and ability to import cheaper goods.
    And as far as the argument that the shoppers at Walmart need their low prices, the shoppers at Walmart ARE the Walmart workers. And all of the similar workers in the area. They all need a raise. The race to the bottom in wages is why there is so much consumer debt. Who can afford to buy a car with cash nowdays? Or even an appliance? School? Consumer debt interest is the same as payday loans. It is a constant tax on those trying to live. And to “get ahead”. Forget that.
    But it will take a change in the mindset in this country. We must get over the “what’s good for GM is good for America” mentality…..
    ghReport

    • Let’s not let ourselves as consumers off the hook, trampling Mom & Pop on the way to Big Box.

      And what gregH writes here probably goes double for Apple and your iPhone.

      Wages make up just 2-5 percent of the iPhone’s sale price, while Apple’s profit is 57 percent of every iPhone sold. Keep these figures in mind when reading about the latest flare-up at Foxconn, which is a major manufacturer of Apple products including the new iPhone 5.

      A report by several Chinese and Taiwanese universities published last October showed that nearly 28 percent of Foxconn workers have been verbally insulted by supervisors or security personnel, and 16 percent have suffered physical abuse. “Workers aren’t allowed to talk, smile, sit down, walk around or move unnecessarily during their long working hours, which require them to finish 20,000 products every day,” this report stated.

      The pent up anger of Taiyuan workers against this routine mistreatment exploded on Sunday night. A relatively trivial altercation between guards and workers returning to their dormitories seems to have set off the riot, which soon spread, with workers attacking police cars, metal gates and shop windows within the factory compound. Microblog postings stated that “factory guards had beaten workers and that sparked the melee”

      A worker told the South China Morning Post “Thousands of angry workers searched and beat up every security guard they saw.”

      Etc.

      http://chinaworker.info/en/content/news/1885/Report

      • Avatar Stillwater says:

        Tom, you soung like a liberal on these issues. More liberal than most so-called liberals, in seems.Report

        • Hm. Mebbe it’s a proper conservatism, Aquinas and all, human flourishing. Perhaps a promising vein for the right—[the very Catholic] Bobby Jindal said just the other day of the Reps

          “We’ve got to make sure that we are not the party of big business, big banks, big Wall Street bailouts, big corporate loopholes, big anything,” Jindal told POLITICO in a 45-minute telephone interview. “We cannot be, we must not be, the party that simply protects the rich so they get to keep their toys.”

          So thank you for your observation. It’s really where the Thomism takes me, Just Wage and all that. I don’t love or hate Walmart; it does seem to hire some of the otherwise unemployable and in that way uniquely contributes to human flourishing, and on the money end, we bargain-loving consumers are all its enablers. In the eyes of many, it’s a good thing, even if it does leech off the public teat.

          Has a lot in common with Tammany Hall, come to think of it. Tammany Hall is very underrated.Report

          • Avatar Stillwater says:

            Playing the other side of the fence here for a minute, there’s an argument in favor of Walmart that I’m sure is out there, but I haven’t heard yet: Walmart isn’t leveraging wages against the safety net, it’s providing opportunities to labor pool that exists in any event, independent of the safety net – the elderly, the disabled, etc. Walmart is basically offering these folks the opportunity to earn wages and be productive, and importantly, Walmart will structure their compensation so that it doesn’t compromise their eligibility for government funds they already receive. It’s a win for the worker, a win for Walmart, and not a loss for taxpayers.

            I’m not sure I want to push too hard on that argument. But it’s out there.Report

        • Avatar Michael Drew says:

          Tom’s a romantic at heart. Sincerely.Report

    • Avatar greginak says:

      I’d be more impressed if he didn’t trot out idiotic strawmen like taking away the Walton’s fortune of give the CEO no salary. Those are silly points for silly people. I would be moved by his noting liberals pushed for uni HC if he and most every other galtian superman didn’t seem so invested in stopping uni HC.Report

      • Avatar Michael Drew says:

        Yeah, the relevant quantity there is simply yearly operating profits; I wasn’t sure why he didn’t break that one down. It would make the same point using the relevant info.

        And I agree, I don’t get what the point is wrt health care. Rather than a universal system, we have a safety-net health-care backstop. It’s not meant to be desirable to have to rely on it, and we still have most of a consensus that health care should be paid for either as a benefit from employers or out of wages, rather than socially provided. So how is saying a that a major employer is failing to help make that set-up work inconsistent with having pushed for a moderate bolstering of the backstop system? At least as of yet, we still are looking for people to purchase their own coverage through employers or on the (improved by Exchanges?) individual market.Report

        • Avatar greginak says:

          Well i think there is consensus that providing HC socially for people over 65, under 18, Vets, the disabled and small groups who are really screwed like people with breast cancer is just fine. It’s everybody else people aren’t sure about, well the people who have employer provided HC aren’t sure about providing HC to those other people.Report

        • Avatar Michael Drew says:

          It is worth saying that corporate profits is just generally a bit of an unconfortable topic for professional free-marketers like Suderman – actually an impolite phrase in those circles – and a considerably less strawmanable one than this or that personal/family fortune or CEO salary. (Which, to be fair, are to a great degree strawmen that the left seems to delight in joining with the doctrinaire Free Markets And Liberty intellectual industry in a ritual celebration that involves, on the one side, stuffing full of straw, and then on the other, setting ablaze. They get together afterwards with bags of marshmallows and stare into the fire. I love staring into hot fires late at night. I can feel my brain melting.)Report

          • Avatar Roger says:

            I am all for higher wages, but am torn between where best to fund these raises. I am playing with two alternatives.

            1) Take it out of the owners/investors/entrepreneurs that create these jobs to service consumers.
            2) Take it out of a unicorn’s ass.

            Considering the pros and cons of each, I am leaning toward the unicorn’s ass. The reason is that if we take it out of profits, we reduce the entire frickin’ reason for them to create the jobs and service the consumers in the first place. The unicorns at least stand still while we dig for goodies.Report

            • Avatar Michael Drew says:

              If we take it out of profits (and I’m not saying we must – I meant to provisionally concede that the amount would be marginal like the other amounts Suderman calculates), the reason for them to create the jobs would still be the profits. The rest of them. No one is suggesting assigning all profits to wage increases/bonuses. OTOH worker-owned co-ops do exist and tend to feature motivated workers and management in my experience.Report

            • Avatar Michael Drew says:

              BTW, this is maybe the most obnoxious comment I’ve seen you make here yet, Roger. You’re essentially saying that you are axiomatically against above-labor-market wages (inasmuch as higher-than-market wages will decreases job creation and therefore are socially inefficient, which is a perfectly great argument!), while either trying to somehow also say you’re for them (you’re not saying you’re for rising market wages bc you suggest whatever it is you’re talking about would need to “come out of” somewhere, and that’s not a qualification that applies to market rates, as that’s just simply the cost of acquiring the labor, taking human considerations of generous compensation over and above that rate out of the mix) — or you are just giving the most convoluted sarcastic, and therefore condescending in keeping with your general mien but taking it to another new level, statement of the aforementioned very legitimate argument that I frankly think is conceivable (okay, maybe that’s an overstatement).

              If I’m understanding your “argument” correctly and your view is the one I describe, you do have the option of just saying so directly. And incidentally, you’ll notice that in my appraisal of Suderman’s argumentation, nowhere do I even raise the question of whether WalMart ought to immediately (or gradually) voluntarily raise their retail wages above the rate necessary to procure the labor they’re interested in. I was simply questioning whether Suderman actually examined the numbers necessary to make his fundamental point that there isn’t enough productive margin in WalMart’s operations to substantially increase wages while even just breaking even (which no one is suggesting they ought to even consider, as far as I am aware). On the contrary, he seemed to do everything he could to avoid making the apt calculation. That was my point, and frankly it didn’t advance the view you’re so patiently yet cleverly aiming to rebut here.Report

              • Avatar Roger says:

                Michael,

                I was being silly and obnoxious, and though I tacked it onto your prior comment, I was aiming broadly, and not as a retort to any position of yours.

                For the record, there was a point in it, one that I actually have made more directly through these threads. That is that there is an element of wishful thinking going on with this higher wage hope. A kind of “wouldn’t it be great if everyone could make a living wage and be above average in looks and intelligence,” kind of argument.

                We convince ourselves of the reasonableness by taking a favored group and paying for it by pretending it comes out of an unfavorable group. This just sounds right to some of us, and even if it didn’t accomplish it’s goals of helping workers, is probably just, because there is a grand struggle between workers and capital, and those of us that are good are for the little guy.

                My argument throughout is that this is an incorrect way to evaluate the situation. The employer and the worker are cooperators. It is other workers who compete for jobs, and other employers who compete for applicants.

                It seems like higher wages come out of profits, and higher profits come out of lower wages, because that is how the accounting works. And if one firm did choose to pay double the going rate wages, it would pretty clearly be less profitable. But this is all distorting what profits really are. If all employers raised salaries by double the necessary rate, the system would not necessarily take this out of profits. It would come out of unicorns. All we are really doing is making the system less efficient. Prices would go up, employment would go down — especially for the less skilled, we would have misallocation of resources, higher skilled workers would be drawn to less skilled jobs, and the net prosperity of us, our kids and our grand kids would be lower. Sure, employers would be getting less too, but that is because they are getting a slice of a smaller pie.

                If we really care about prosperity for all and for the less skilled, it is really important that we come to grips with this dynamic. There is a bill to be paid in artificially raising wages, and before we pat ourselves on the back for helping the little guy, we need to work through how the system actually responds.

                I would recommend we not mess with the market rate, and instead build institutional safety nets for the less skilled that encourage them to work their way out of poverty by investing in hard work, education, long hours and such.Report

              • Avatar Michael Drew says:

                In the future, if you’re going to make an incredibly sarcastic, condescending response to an argument you see being made here, I’d appreciate it if you didn’t locate it as a direct response to a comment in which I didn’t make said argument. Doing what you did here is quite literally nothing other than a public display of disrespect or even contempt directed at the commenter to which your comment responds, and whether or not some of the arguments you see being made here justify such a response (and your behavior would be equally as I describe it even if they did), in any case if I haven’t made any such argument, then the response you’ve given is not only not on point, which is bad form in itself, but is further a completely unwarranted public display of disrespect from you to me.

                If you want to email me messages detailing your lack of respect for my capacity to think through problems, I can be reached at drew.mike@gmail.com. I’d prefer we keep such messages in the private sphere, as, in my view, nothing I’ve said in this thread (nor frankly anything anyone else has argued in my view, but that’s between you and them) warranted the level of disrespectful, sarcastic condescension that you inexplicably attached to my comment here. There are definitely relationships between intelligent people here at the League that have deteriorated into little but uneasy toleration punctuated by almost competitive displays of mutual contempt. These tend to be characterized, though, by either deep differences in world views or repeated violations by one party of the other’s (though not the League’s) expectations about standards for discourse. Neither between you and I, nor as far as I can see, between you and most of the other liberals who comment here, is there a any such kind of wide rift. We don’t have to go down that road (and in any case, I won’t). All that’s needed to preserve quality dialogue here is basic respect. You often show it, but display frequent rather stunning breaches.

                I’m not sure why you don’t realize how quips like suggesting that people repeat the tenets of your ideology like a Zen koan until they get it and all becomes clear, or misdirecting sarcasm involving unicorns at comments that don’t even raise the question the sarcasm is meant to address come across. But you need to figure it out fast.Report

              • Avatar Roger says:

                Then the only appropriate response is an apology. Full stop.Report

              • Avatar Michael Drew says:

                Accepted. Thank you.Report

      • Avatar Mike Schilling says:

        I like this one:

        Erase the entire Walton family fortune and you get an average $1/hour boost to Walmart workers.

        He’s equating a quantity and a rate, which is the kind of units failure that gets you either a C in middle school math or an editorship at Reason.Report

        • Avatar Michael Drew says:

          He is. Though really,who knows what he’s doing? Including the fortune’s earning power present value/not? Comparing to a years worth of WalMart’s retail staff’s wages (i.e inventing a rate)? Who knows.Report

          • Avatar Michael Drew says:

            To be fair, I’m confident he is consciously doing some version of this in a reasonably intelligent way, not just doing a single division problem on the desktop calculator with two poorly related numbers he pulled of the internet. Perhaps I give him too much credit, perhaps not.Report

        • Avatar Major Zed says:

          I did the math, got the same result, posted upstream. Take the family fortune and set it in a bank account to fund a perpetuity for all current and future employees (assuming no growth in their numbers, no inflation, etc.). Divide by number of hours worked per week. Standard actuarial mathematics, though highly simplified to get an order-of-magnitude answer.Report

    • Avatar Stillwater says:

      Suderman is making a pragmatic argument in support of a situation inconsistent with his principles. He’s appealing to the benefits of a “redistributive” arrangement whereby social programs lead to socially beneficial outcomes. He hit on all the points libertarians have hit on here: that requiring Walmart to pay healthcare and increase total compensation would force half of its current labor force into unemployment, that the customer base hardest hit would be the poor, that Walmart brings good things to life to small towns so the mechanisms by which that’s made possible don’t really matter. He even implied that liberals are to blame and/or are hypocrits for criticizing Walmart’s labor practices since liberals support the program – Medicaid – that Walmart is leveraging compensation against! So Shaddup!!!

      It’s an entirely consequentialist argument, it seems to me, the type of argument that conservatives and libertarians criticize liberals for making. Where outcomes are what matters most, mechanisms be damned.

      And if it’s not consequentialist, then the underlying principle is simply that corporations get to do what they want and need to do to ensure maximum profitability.

      It’s an amazing string of tweats, really, since they’re completely incoherent except as a defense of principles that Suderman has made a career out of criticizing liberals for holding.Report

      • Avatar Roger says:

        “It’s an entirely consequentialist argument, it seems to me, the type of argument that conservatives and libertarians criticize liberals for making. Where outcomes are what matters most, mechanisms be damned.”

        I am still not aware of when I have ever made an argument that wasn’t consequentialist*. And when I criticize progressives it isn’t based upon the consequences, it is based upon the fact that they justify actions on intentions and first order effects rather than long term, widespread, actual consequences.

        *the natural rights/divine rights conservatives/libertarians might make such an argument, but I have no idea what they are talking about, either.Report

        • Avatar Stillwater says:

          Yes, you’re a bit different than most on that score, so maybe my above comment doesn’t apply to you.

          I’m also quite sure that everyone else will argue that it doesn’t apply to them, as well. Even Suderman, if he were to show up.Report

          • Avatar Roger says:

            So your argument is that we think we are consequentialists, but you know better that we aren’t (even though we keep arguing as if we are)? Pretty cool rhetorical trick, that.Report

            • Avatar Stillwater says:

              No. My argument is that everyone who the above argument is directed at will reject that it applies to them, ie., that their adopting a consequentialist argument that violates the principles they advocate and which they use to criticize liberals with.

              You’re a bit of a tricky situation as far as that goes. That you reject that above analysis is expected (unless you were to say that Walmart ought to pay people a living wage, which you haven’t) but I also concede to you that you’re fundamentally a pragmatist about this stuff. Not a “best outcome given the situation” pragmatist, but a pragmatist nonetheless.

              But come to think of it, even the most strident ideologue thinks he’s a pragmatist. He’s so convinced that his principles will lead to (logically entail!!!) the best outcome that, in his mind, it’s obvious that any rejection of his view is based on ideology.Report

        • Avatar Stillwater says:

          ,I.I am still not aware of when I have ever made an argument that wasn’t consequentialist*.

          Thru all these threads, you’ve argued that NAP ought to be the necessary condition on all transactions, whether exclusively private or openly public or involving government. The conclusion you draw from that, is seems to me, is that acting in accordance with NAP will lead to the best outcomes. That duality, I think, is where the distinction between a first-principle approach and a consequentialist approach breaks down.

          Recall what I wrote yesterday. Something to the effect of: libertarianism is an ideology in which maximizing freedom leads to the best actual outcomes. There’s a tension there, of course, since if outcomes are suboptimal but consistent with NAP, then which criterion takes precedence? All too often, at least in my experience, libertarians will say that the suboptimal outcomes ought to be rejected even when that outcome is consistent with libertarian first principles.

          So in that sense, I’ll concede that at least your understanding of libertarianism is pragmatically justified.

          But I also think that at that point, pragmatic justifications rely on a calculus that libertarians and conservatives generally reject. That is, the balancing of values as they reveal themselves in actual practice (and not apriori).

          {{And I agree that your critiques of liberalism are mostly about intentions, and while that’s one issue that we’ve disagreed about I don’t think it’s significant enough to belabor.)Report

          • Avatar Roger says:

            First thing in the AM before coffee, it was hard for me to follow all the double negatives, and that was after I figured out what the heck NAP was.

            But I think I broadly agree. I am against coercion(such as forcing higher wages) because it tends to lead to worse results. Where coercion leads to better results long term I am for it. And where outcomes can differ based upon various courses of non coercive action, then I am for the path that leads to better results.Report

      • Avatar Murali says:

        Just because Suderman may not himself hold consequentialist beliefs doesn’t mean that he is being incoherent when he makes consequentialist arguments.

        It is perfectly legitimate to point out that a certain belief does not have the implications that a certain group of people who hold that belief think it does.

        His point is that even if you are a liberal consequentialist, you should not be coming down on Walmart because that would be counterproductive.

        That Suderman is not a consequentialist is not the point. The point is that many people who are consequentialist are angry with Walmart because they think that it is contributing to bad consequences by paying their workers so little. But Suderman says that they are mistaken about the facts. He is saying that as consequentialists they shouldn’t be angry with Wallmart. This is still a valid argument to make. And it doesnt consist of a defence of consequentialismReport

        • Avatar Stillwater says:

          Just because Suderman may not himself hold consequentialist beliefs doesn’t mean that he is being incoherent when he makes consequentialist arguments.

          You’re right. For example, an appeal to consequences can be used as evidence that acting on the first principles leads to desirable outcomes. That’s fine.

          His point is that even if you are a liberal consequentialist, you should not be coming down on Walmart because that would be counterproductive.

          Maybe. That’s one of the arguments he made. A pretty poor one, it seems since it assumes that since liberals support medicaid they can’t criticize Walmart for exploiting that program for their own personal profit.

          But how does the situation square with his principles? He criticizes liberals for redistributing income in support of social programs, yet in this case, he’s defending a practice which not only relies on those programs, but seems to be leveraging against those programs to increase profits. How is that consistent with libertarianism? Or even right-conservatism? Unless, of course – it seems to me – the principle in play is that corporate profits are the main value our societal institutions should promote.

          Look, I’ll concede that he’s making an argument against liberal here, but contained within that argument criticizing liberals is a complete refudiation of the principles he ostensibly holds. So it seems to me his argument is incoherent. Except insofar as it’s a criticism of liberals and liberal principles. Principles he suddenly accepts in order to make his argument go thru.Report

          • Avatar Murali says:

            but contained within that argument criticizing liberals is a complete refudiation of the principles he ostensibly holds. So it seems to me his argument is incoherent

            Not necessarily. Consider what I would do if I were arguing with a conservatie about gay marriage. Now, why I think gay marriage should be legalised is really because the government should not be basing legislation on some particular conception of the good. And there will be lots of times that I will argue against basing other kinds of legislation on some conception of the good. Nevertheless, I am not incoherent when I tell the conservative that if he cared about family values and preserving the family and encouraging responsible, monogamous norms, he should be in favour of accepting gay marriage so that gay cuples are accepted in wider society and brought into the fold so to speak. I will argue that whether or not they approved of homsexuality, if they thought that two men living in a long term stabe relationship was better than men engaging in all sorts of risky behaviour, they should be in favour of gay marriage.

            Now, it may be that in the larger picture, we should not concern ourselves with what consenting adults do in the privacy of the bedroom, but if I advance an argument that basically says that given your premises you should agree with me, that doesn’t mean that I am being inconsistent even if I don’t agree with your premisesReport

  21. Avatar Shazbot5 says:

    Regarding the dispute between moderate libertarians and liberals on equality of opportunity: I recommend everybody read the excellent piece linked below in Foreign Affairs.

    http://www.foreignaffairs.com/articles/138368/lane-kenworthy/its-hard-to-make-it-in-america

    The author argues that there is substantially less equality of opportunity in the U.S. now as opposed to decades ago, and that other wealthy, western countries are now much more likely to offer equal (or soewhat equal, anyway) opportunity to succeed to all people.

    The most damning stat, IMO, is that only 9 percent of lower class Americans go to college, while it’s closer to 54% if you are not lower class. Brutal. things are not this bad in Canada, Norther Europe, and elsewhere.

    The author also explains that other countries provide more benefits to poor parents (much larger child benefits), to poor students (free university in some places), much larger minimum wages in some cases, more maternity leave, etc. (No country offers everything, but most countries offer more help to ensure an equal opportunity to succeed. In short, they offer a lot of “welfare” (construed very broadly) to the poor and the middle class, especially to families, and we in the U.S. don’t. As a result, they are the land of opportunity and the U.S. isn’t.

    So, a question to all moderate libertarians (and R’s more generally): if we don’t offer much more “welfare” (which will have to be paid for by the well off) and higher taxes on the wealthy to pay for it to ensure an equal opportunity so society and not an oligarchy, then how do we do it?Report

    • Avatar Shazbot5 says:

      Oh, and I’d absolutely love if someone did an OP on this article and how we can provide equality of opportunity without some sort of redistribution of wealth that is larger than what we do now.

      I think this would be a cool topic for any conservative or libertarian. This is where liberals disagree on policy IMO, we see certain kinds of directed benefits for the middle-class and lower-class, paid for by the upper classes, as essential to equality of opportunity.

      I’m also worried that some logically possible libertarian attempts to create more equality of opportunity are going to be unrealistic in terms of what is actually acheivable. (The liberal solution is to do more of what we know works -as it works in Europe and Canada- as a solution to the problem of inequality of opportunity.)Report

    • Avatar MFarmer says:

      http://www.cato.org/pubs/pas/PA694.pdf

      How much more should we spend? And why spend more on this welfare system when it doesn’t appear to create opportunity that leads to a reduction in poverty?Report

      • Avatar Shazbot5 says:

        Ugh. I was hoping someone would respond, but not Mfarmer.

        I adressed the tillion dollar dishonesty elsewhere in conversation with Roger. In brief you only get to 1 trillion dollars if you include medicaid, the EITC, Pell Grants, School Lunches, Adoption Aid, Work Study, and other programs that do 3 things:

        1. Help primarily middle class kids go to go school (Pell, work study, etc.)
        2. Pay basic medical costs for the non-working poor and the elderly (from lots of different backgrounds) in nursing homes through medicaid
        3. Give middle class people with kids a very small break on the EITC

        Those are laudable goals and indeed these are all necessary programs. They help minimize equality by keeping the non-working poor from dying, helping the middle class through the financial hardship of college a bit, etc.

        The link I cited makes a simple point. We will need to spend significantly more (or use regulations like minimum wage, union protections, etc.) to redistribute wealth from the rich to the poor to create equality of opportunity betweej the children of rich kids and the children of poor kids. We don’t have that equality of opportunity here in the U.S., but they do have it in Europe.

        Why?

        I assume you will say that the problem is that America has too many blacks and hispanics, and they will fail in large numbers, so we will always see a higher degree of intergenerational poverty in the U.S because of race. And then I will accuse you of racism. If you say that.Report

        • Avatar Roger says:

          Shazbot,

          I agree, you should write up a summary of it and send it to Erik,

          The data I have seen (Scott Winship) is that mobility has not gotten worse in America, nor is it worse than other developed nations with one very notable exception… bottom quintile males. In addition, when we look at consumption data, there are few places better to be poor than America.

          I agree that we are seeing the effects of positive and negative feedback loops. Educated, high earners with long time horizons are marrying each other and having kids with long time horizons that get parents that will do anything to see them succeed, as that is what these types of parents do. On the other hand, those with shorter time horizons, low earning ability are now able to have kids without marrying their crummy, short time horizon boyfriends because we step in with aid. Thus we get low time horizon kids, with ignorant, low time horizon moms and no dad. This is problematic for little girls and catastrophic for little boys.

          Add in to this bureaucratic school monopolies which run schools not for the kids, but for the unions, bureaucrats and rent seekers. In communities with educated parents that have long time horizons and lots of resources, they pay the rent seekers off and add whatever is necessary to still get a good education for their darlings. In the neighborhood where parents have neither the resources or the time horizons, the monopoly runs amok.

          Recommendations?
          1) Listen to conservatives and libertarians on the long term effects of
          master planning on incentives. The statists built these institutions and then are shocked that they created a world which leads to exactly what conservatives told them would happen. We subsidized having kids without husbands and we handed the education of our kids to rent seeking monopolists.
          2). Break up school monopolies and replace it with a subsidized market based system. Provide larger education subsidies to the poor, and smaller to the well off.
          3). Experiment with improvements in safety nets which penalize having kids out of wedlock, and which discourages dropping out of school and which requires that those getting aid work forty hours a week.
          4). Encourage the creation of free colleges using modern technology that can compete with paid colleges.
          5). Shame parents that don’t read to their kids, help them with homework, or invest in their kids future. Shame people for not doing all they can do to help themselves, before expecting others to help. Shame the wealthy that don’t give back to others.Report

          • Avatar Roger says:

            And please quit calling the Cato study dishonest. If you read the study it clearly lays out exactly where the money goes. The point is that we are already spending about a trillion dollars on support. The obvious questions…

            1). Are we giving some of the trillion to the wrong people?
            2). Since we do give them a trillion, shouldn’t we include this in our evaluation of their standard of living?
            3). Is our giving contributing to bad incentives and bad institutions?Report

            • Avatar Shazbot5 says:

              It isn’t a trillion on welfare for the poor. Much of that trillion is spent on the middle class (e.g. previously middle class seniors in nursing homes) and much of it is necessary. Some of it is spent on the poor, true.

              None of it is enough or as much as they spend in other countries that have real equality of opportunity.

              I do not think there is much of any incentive to be poor and live off welfare in the U.S. or elsewhere. Only in very rare cases.Report

              • Avatar Roger says:

                Shazbot,

                The point again is that we are doing a boatload of redistribution. If a significant fraction really is going to the middle class, then we need to ask why we are not directing it at those most in need. In other words, if only “some of it is spent on the poor,” this supports my point number 1.

                The next point, is that as I stated above, class mobility is the same in the US as other wealthy nations and the same as the past except for lowest quintile males. Refences available on request

                In addition the standard of living of the poor in the US is as good as anyplace in the world. Arguably it is too comfortable, and this is part of the problem. I could go in for hours on how are destroying good cultural incentives and propagating bad ones. The solutions are going to be difficult.Report

          • Avatar Shazbot5 says:

            “Add in to this bureaucratic school monopolies which run schools not for the kids, but for the unions, bureaucrats and rent seekers.”

            http://www.edexcellence.net/ohio-policy/gadfly/2012/november-14/breaking-up-is-hard-to-do-the-edison-story-in-dayton.html#body

            TBF, a conservative outfit in favor of school reform, now admits that for-profit companies like Edison, using business models to improve education, are a big fat failure. The bureaucrats and unions who dedicated their lives to teaching (and not to profit) turn out to know a thing or two.Report

            • Avatar Roger says:

              Did Edison go bankrupt?Report

              • Avatar Shazbot5 says:

                The article I cited claims it is unclear how much money they made even while the schools they ran were failing. It might’ve been a lot. We’ll never know, even though it’s taxpayer money.

                Grifters gonna grift, as Atrios says.Report

              • Avatar Roger says:

                Shazbot,
                I am not even sure what your argument is. The data on private schools is that they outperform public schools by a long shot on most or all measures. The argument is not that every private school succeeds. Indeed, the reason the Private schools do better is because those that don’t, fail. An example of these failures doesn’t make your case, it points to how capitalism and creative destruction are supposed to work absent government interference.

                Here is the worlds most comprehensive study on the value of privatized, competitive schools…

                http://www.cato.org/pubs/articles/coulson_comparing_public_private_market_schools_jsc.pdfReport

              • Avatar M.A. says:

                Selective cherry-picked data and confusing correlation with causation.

                What are the most important causative factors for a child’s success in school?
                1. Socioeconomic status
                2. Involved parents

                Those come naturally for private schools because they can select out kids who don’t have factors 1 and 2 going for them. Private schools don’t “succeed” because they are private, they show success that they simply couldn’t succeed if they weren’t allowed to pick and choose kids who were already on a better track.

                I didn’t really expect any better from Cato, mind you.Report

              • Avatar zic says:

                This is 100% on target.

                Public schools must take all comers. Private schools select their students first. And then students who don’t fit in or are troublesome are asked to leave.

                Which is also something parents should really focus on before opting to enroll their children in private schools; for you surrender your rights at the door. There is a legal process to suspending/expelling students in public schools; the family is entitled to legal council. No such rights exist in private schools; if your child gets in trouble, you may not even be allowed to attend the disciplinary hearing, and you have no right to council. And if your child’s kicked out, you likely also have no right to a refund of your tuition.

                The other consideration should be learning differences. Public schools must meet the needs of children with special requirements. Private schools are under no such obligation; and often charge significantly more for supports for students with learning differences.

                Full disclosure: my husband teaches at a private school. For students who thrive there, it’s a wonderful experience. For students who find trouble or fail to learn well in the school’s environment, it’s a disaster; and in the tight-knit community of the school, these students simply ‘disappear.’Report

              • Avatar BlaiseP says:

                There are a few exceptions for public schools: magnet schools get to pick and choose. But this only goes to M.A.’s point about the reality of School Choice: the parents might choose but the good schools get to pick.

                Which isn’t to say all public schools are bad. I’ve previously shown how parents can make even a take-all-comers public school into a great school: they keep property taxes high and raise money for the school. This benefits their bottom line by keeping property values high. But at the end of the day, such efforts only drive off the families who can’t afford that zip code and school district.

                The poorly funded public schools become dumping grounds for everyone else.Report

              • Avatar Roger says:

                Read the study and feel free to reply or counter that, but please stop making up arguments clearly refuted by the study.

                “The superiority of market over monopoly provision of schooling revealed by the econometric literature thus does not, in practice, depend on the share of students enrolled in the private sector, as would be expected if that superiority depended on the consumption of private schooling only by a small, especially committed elite. When the majority, sometimes the vast majority, of schoolchil- dren enroll in the private sector, and when market schools still significantly out- perform their public sector counterparts, it is no longer reasonable to ascribe the market’s advantage to some special indefinable quality of a parental elite.”

                This is the most comprehensive study I have ever seen, and it overwhelmingly supports market bed schooling. The burden of proof is on the progressives to refute this. I am still waiting.Report

          • Avatar Shazbot5 says:

            The bottom quintile is likely the problem. But that’s 20% of all Americans.

            The problem with your placing the blame on bureaucracies and negative incentives from welfare-style programs is that the countries that have higher taxes to pay for more help for the poor are doing better on equality of opportunity, not worse. You want to fix the problem by making us less like the places that are solving the problem. By analogy, imagine if someone proposed shrinking the school year to make us more educationally competitive with Asia and Europe while they already have a longer school year. Space Madness!

            I think some of your incentive programs sound nice in theory, but they might suffer from all the problems that the war on drugs as an incentive to stop (primarily the poor) from using drugs failed. Beating people down with penalties for bad behavior doesn’t usually work. It makes them beaten down failures.

            But I am open to more specific suggestions.

            Have you seen ypur proposals succeed in another country? If not, what is your evience that they will work?Report

          • penalize having kids out of wedlock

            Maybe channeling Helen Lovejoy here, but how does one go about imposing such penalties without harming the children involved? I understand there are subsidies to single-parent headed households, but as far as I can tell these benefits don’t even approach the difficulty involved in successfully raising a child in the US under those circumstances.

            (Not to mention the many reasons I’d suggest assigning blame – and penalties! – in this area isn’t constructive: abusive relationships, spousal deaths, or plain vanilla relationship breakdowns.)Report

            • Avatar Roger says:

              Creon,

              That is why I said experiment, as in we should be trying lots of things and seeing how they work. The full sentence stands on its own better than this phrase. In the end, we are not going to change their behavior. They will have to change. If they don’t change, then we will continued to have lots of young boys without fathers stuck in poverty. We aren’t likely to buy our way out of this one.Report

              • Roger,

                When Shazbot5 posed the question, moderate libertarians where are your policy prescriptions, I expected things like negative income taxes, maybe responses on voluntarism and civil society. But I am not familiar with what wedlock-oriented interventions you’re suggesting we experiment with. The nearest thing I can imagine is potential disincentives, in the form of withdrawing benefits, due to marriage similar to the welfare trap. And even that doesn’t quite fit what you’re describing. Did you have something particular in mind?

                As for whether we can buy our way out of the problem, as a liberal I have a long wish list of state interventions in this equality of opportunity area: nurse home visits during pregnancy and after childbirth, paid maternity leave, a mandatory minimum of paid sick days, expanded head start and early childhood care/education, that whole spiel about sensitivity to vulnerable populations, etc., etc. I’d also agree with the arguments Shazbot5 ably makes elsewhere in this thread regarding comparing the US to peers on intergenerational socioeconomic mobility. Those countries with more social welfare provision appear to be successfully buying their way out of quite a few problems.Report

              • Avatar Roger says:

                Creon,

                Could you substantiate your final claim please? Please show me these countries that have as high or higher standards of living living on average, better mobility and higher standards of living in terms of consumption than America. Then let me know how their level of means tested income transfer compares to the US. Is it higher per poor person, lower or what? Them let me know what they do with their programs that we don’t. Also, please highlight any major differences in cultural diversity compared to the US. Specifically, do they have problem subcultures, and if so what are the sizes and nature of their issues?Report

              • Avatar BlaiseP says:

                How do you want your standard of living denominated? In a GINI coefficient? That would be sorta recursive, being a measure of income inequality and I suspect you’d reject it on those grounds. But maybe you wouldn’t.

                Thing is, how would you go about measuring a standard of living? Awful lot of intangibles in such a measure.Report

              • Avatar James Hanley says:

                GINI’s clearly not a standard of living measure.Report

              • Avatar BlaiseP says:

                Well, okay, as I said, if GINI doesn’t work for you, provide a better one.Report

              • Avatar James Hanley says:

                There are arguments for different methods, but the most solidly measurable is GDP per capita expressed in terms of purchasing power parity. I usually turn to the CIA’s World Factbook to get that info.

                GDP based measures aren’t perfect, and I’m not going to pretend they are. But other measures aren’t perfect, either, and at least it actually measures standard of living, unlike GINI. (A country where everyone has exactly nothing has a great GINI score, while a country where everyone lives comfortably but there are some Bill Gates’s and Sultans of Brunei would have a worse GINI score.)Report

              • Avatar Roger says:

                Shazbot and fellow progressives are the ones claiming that we are worse off than someplace else. I am asking them to define their terms. What is the problem and who does it better and what do they do different and how much do they spend compared to us?

                I have made my point crystal clear. The glaring inadequacy in the US is lack of upward mobility for lowest quintile males. Once we define the problem, it narrows the range of explanations and cures.Report

              • Avatar James Hanley says:

                If someone wants to argue for using the Human Development Index, that’s less straightforward, but might be even better. It is composed of three variables:
                1. Life expectancy at birth;
                2. Education (measuring a combination of school enrollment and adult literacy);
                3. Standard of living as measured by GDP per capita on a purchasing power parity (in U.S. dollars) basis.Report

              • Avatar BlaiseP says:

                GINI coupled with GDP: that’s really what HDI is, after all. Saudi Arabia has some shocking poverty, though it’s got pots of money. I look at GINI numbers, not on a national basis, but with extreme locality.

                Take northern New Jersey. What you get in some of these places is millionaires and their maids. In other places, rural Louisiana, you have extensive poverty across the board. There are ways of looking at this situation but you can’t evict the GINI coefficient quite so easily. It appears in the Lorenz Curve. The magnitude of inequality matters: no economy can do well when it’s got extremes of wealth and poverty.Report

              • Avatar James Hanley says:

                Life expectancy and education !=GINI.

                Again, if none of us have anything, we have a high GINI score. If our society has $1 and I have it and you don’t, we have a horrible GINI score. That’s not to say GINI’s meaningless; just that it doesn’t actually tell us anything about how well off we are, only about how whatever wealth we have–weather zilch or a lot–is distributed.Report

              • Avatar BlaiseP says:

                I didn’t say they were. I said HDI is GINI + GDP and that’s been congruent and have been for a long time now. Where they’re different, I have reasons to discount the differences.

                GINI only confirms everything else. We have a great deal of wealth, also a great deal of poverty in the USA. Those distributions vary by location. Same holds true in other countries. Different countries, different reasons for inequality.

                I contend we shouldn’t worry about skinning the very wealthy. Robin Hood economics is bullshit. To affect the Lorenz Curve, do I really have to do the math for you to explain why a steep Lorenz Curve is bad for a country? Here’s the Lorenz Curve for the rest of usReport

              • Avatar James Hanley says:

                I said HDI is GINI + GDP

                But HDI is Education + Life Expectancy + GDP.

                Formally, that would mean GINI = Education + Life Expectancy.

                And that’s false.Report

              • Avatar BlaiseP says:

                Look, (GDP / (total pop)) is a meaningless statistic. I reject it out of hand as a worthless measure of a society. GINI correlates to life expectancy already and we’ve known this for many years. It corresponds to essentially every measure of social progress.Report

              • Avatar James Hanley says:

                Well, if you reject GDP out of hand, then you can’t accept the HDI since it’s based partly on GDP.

                And I never said GINI had no correlation with life expectancy. You said HDI was GINI + GDP, which would mean GINI _is_ Life Expectancy + Education. Which it’s not, despite the correlation. If you want to say they’re correlated, then say they’re correlated, don’t say one _is_ the other. You and I both know those don’t mean the same thing.

                Look, this is getting stupid. Let’s just move on. I’ve rejected GINI; you’ve rejected GDP per pop on a PPP basis. HDI’s currently still on the table: do you agree we can use that as a standard, or do you propose another alternative for consideration?Report

              • Avatar BlaiseP says:

                Will you read what I wrote? You have a really bad habit of this, James. When you’re paying attention, you’re good company and excellent discourse. When I’m pointing out the obvious here, that all these statistical measures are easily poisoned and there seems to be a fresh crop of statisticians ready to inflict more upon us, that the GINI coefficient is an excellent predictor of what’s going on in such measures as life expectancy, you’re like a pig looking at a wristwatch. I don’t like HDI because it’s only a re-examination of what GINI already tells us. I don’t like GDP because it doesn’t reveal the true extent of the problem, that is to say, income disparity.

                If capitalism is to be a viable mechanism for lifting the poor out of poverty, and it seems to be the only one remaining, what with the demise of Communism which promised much and delivered nothing but tyranny, the poor must earn their way out of poverty. And that only works when there’s somewhere Up to go. In terminal capitalism, the whole thing collapses in a pile, wheezing its last as the Lenins and Maos and Hitlers all find reasons to behead the capitalists. Eliminating poverty is in a nation’s best interests and that progress won’t be measured by Gross Domestic Product.Report

              • Avatar James Hanley says:

                Oh, that Blaise decided to answer. Joy.

                Look if you want GINI to be the standard, just say it clearly (you’ve done anything but that). But you asked what would be acceptable, and I already rejected GINI. You can’t ask someone else what standard they would like and then demand they take the one you want. So I still say no to GINI.

                I’m not interested in playing those games with you.Report

              • Avatar BlaiseP says:

                I think I’m going to coin a new unit of measure and submit it to SIU: the hanley. It’s a deterministic unit of differential overpressure measuring the combined forces of misunderstanding and vehemence.

                I’ve already said GINI doesn’t work unless it’s seen in context, often in very small contexts, hence that business about New Jersey and Louisiana. I’ve outlined the troublesome parts of GINI: it obscures as much as it reveals. Wealth and poverty are simple nouns extracted from troublesome assertions about the role of the wealthy and the lot of the poor.

                Your own example reveals how poorly you understand this problem: in a world where you have a dollar and I don’t, say, maybe I can sell you a dozen mangoes for that dollar. Now you have the mangoes and I have the dollar. That’s capitalism, money moving down into the hands of some poor man who went out and gathered them and brought them to you, so you don’t have to.

                In New Jersey, with millionaires and maids, precious little of that money’s moving down, not that it ought to or even could move down. The rich don’t need servants any more: it’s gauche. What with labour saving devices and luxury cars, maybe some rich guy who has to go from Bergen County to Manhattan might want a limo driver.

                There was only so much lace required for a nobleman’s neck in 1793 and the sanculottes made sure there were fewer such necks. When the poor get poor enough, there’s always a Robespierre.Report

              • Avatar James Hanley says:

                Heh, you’re insulting me on precisely the point where you’re most like me. Classic.

                But to the issue at hand; you still haven’t answered the question. We’re looking for a measure of standard of living. Do you agree with using HDI? If not, what do you propose?Report

              • Avatar BlaiseP says:

                Let’s not have any of that, Hanley. I already put forward what I proposed.

                But let’s make this clearer, since you don’t seem to grasp this: let there be a three dimensional GINI map, with a multivariate calculus to describe income inequality. We can thus see Bergen County as high-income but also high-homelessness. GDP doesn’t reveal that problem. But the GINI coefficient predicts such things are a natural by-product of income inequality. Helps you spot trouble hiding in plain sight. But GINI tells you less and less, the larger the sample size becomes. Poor places are also cheaper to live in, like rural Louisiana.Report

              • Avatar James Hanley says:

                A) I think we ought to use a method that’s actually already out there, so we can all be pulling the same numbers. If we’re going to answer Roger’s question about comparing European countries to the U.S., we need to do that–however imperfect–instead of trying to devise a new system nobody else is using.

                B) If that system gets less useful as our sample size increases, then it’s not going to do much good for comparing European countries to the U.S., which was the question that was asked.

                If this debate isn’t ultimately going to focus on the question Roger asked, then I’m not interested. And maybe to you it still seems focused on that, but to me it doesn’t. Our analytical styles are clearly radically different, and I think that’s what leads to a lot of our disagreements.Report

              • Avatar Major Zed says:

                Not to imply I’m a fan, but a suitably Rawlsian metric might be “average income of the bottom X%.” Rawls would want X to be very small, but data limitations and statistical stability considerations might make X=10 a good compromise. If the actual stats weren’t available, and you were willing to make assumptions about the common shape of the income distributions (e.g., they are all Pareto), then you could use the Gini index to allocation per-cap GDP to the deciles.Report

              • Roger,

                I’d refer you to Intergenerational Transmission of Disadvantage: Mobility or Immobility across Generations? A Review of the Evidence for OECD Countries by Anna Cristina d’Addio (pdf), from the summary,

                Intergenerational earnings mobility varies significantly across countries. It is higher in the Nordic countries, Canada and Australia but lower in Italy, the United States and the United Kingdom….

                Early and sustained investment in children and families can help. A key role is played by early childhood education, care and health. Financial transfers and in-kind services to parents are also important as they provide them with the resources to better rear and care for their children. Overall, a strategy based on a greater investment in children holds the promise of breaking the cycle of intergenerational disadvantages because of its effects in reducing child poverty and contributing to child development.

                OECD web stats portal appears to be down at the moment, but the more detailed answers can be found there, but offhand I know that social welfare provision by the US lags behind many OECD peers.

                Lastly, this subcultures cul-de-sac, I get the impression from the discussion that there are somehow these singularly unique situations in the US: immigrant populations, households where the dominant language isn’t spoken at home, child poverty, single-parent headed households. These are not challenges that are unique to the US and it hasn’t been beyond the wit of policymakers in OECD peers to design intervention that yield more successful outcomes. Not even leaving the anglosphere, Canada and Australia spring to mind as exhibiting better performance than the US on important metrics (see pages 55-57 of the linked report, figures 7-10, charts on performance gaps in math by economic background, single-parent households, and first generation or non-native students).Report

              • Avatar Roger says:

                Creon,

                On your question, the issue is this. We created a dependency trap. For the last few generations, we created a monolithic bureaucracy which paid women to have kids without dads. And this is what we got, in abundance. We paid people who claimed disability to stay home, and we got them in abundance. We allowed poor schools to be captured by rent seekers who worried about themselves rather than the kids. So we got several generations of a subclass of people who are poorly educated, don’t work and have kids that are raise by stay at home uneducated moms that never learned to read to their kids and invest in them.

                As we warned, institutional bureaucracies that are established to address social problems usually become parasitic on the problem. The institution thrives by NOT solving, and even worsening the problem, as long as the cause and effects aren’t blatantly obvious. Thus they thrive on creating these webs of dependency. And thisi s what we got in abundance.

                The statists created this with perverse incentives and good intentions. Now they want those of us that opposed them to offer suggestions on how to get out of it? Am I allowed to suggest time machines where we get to reverse the perverse incentive systems we established back in the 60s when things started spinning out if control?

                I assume no. So the question becomes how do we dismantle this monster in such a way as to avoid harming the people that depend on safety nets, and simultaneously change safety nets so they discourage dependency rather than encourage it?

                The answer to schools is easy, and you know what I will say. On the issue of aid to kids and moms, the answer is to experiment with local, bottoms up solutions. The communities need to find ways to encourage finishing high school, not having kids before marriage unless they can afford them, holding the dads accountable for child support, encouraging contraception and requiring work for benefits. The details will depend upon the culture.

                The measures of success are not money spent, but progress over time at accomplishing the critical three steps to get out of poverty. Finish school, get and hold a full time job and don’t have kids out of wedlock. How might they address these? Some may experiment with paternity requirements for aid. Moms will get substantially higher benefits if they disclose who the father is, so the father can be held responsible to supplement this money. There are hundreds of bad ways to do this, and potentially a few good ways. When a good way is discovered, it can spread to other communities. Moms can be required to do a full time job, with some of the moms employed educating and attending to the kids, including reading. Some of the communities will establish expectations for good motherhood.

                My suggestion though is not DO THIS. It is create a decentralized system that is rewarded for discovering how to solve the problem. Failure to do this just means we will continue to throw away a class of humans.

                The only way to solve this is to help the communities to solve it themselves.Report

        • Avatar MFarmer says:

          “I assume you will say that the problem is that America has too many blacks and hispanics, and they will fail in large numbers, so we will always see a higher degree of intergenerational poverty in the U.S because of race. And then I will accuse you of racism. If you say that.”

          And you assume this why?

          So, how much more money needs to be spent and how will extra amount spent make improvements? If you will tell me this, I’ll take you seriously. Liberals always say more needs to be spent, but spending more doesn’t do the trick, so they say spend more.Report

    • Avatar James Hanley says:

      The author argues that there is substantially less equality of opportunity in the U.S. now as opposed to decades ago, and that other wealthy, western countries are now much more likely to offer equal (or soewhat equal, anyway) opportunity to succeed to all people.

      The most damning stat, IMO, is that only 9 percent of lower class Americans go to college, while it’s closer to 54% if you are not lower class. Brutal. things are not this bad in Canada, Norther Europe, and elsewhere.

      More lower and middle class Americans go to college now than decades ago. It used to be the province of the elite, and has continually trickled down to the masses. Community colleges are ubiquitous, so almost everyone has the opportunity for some college (and some only need some college, and others may not benefit from any amount college at all).

      What’s changed is the decline in high paying manufacturing jobs for those without a college education. And those aren’t coming back. They only existed in the first place because a) much of the industrialized world was rebuilding the world after WWII, b) most of the rest of the world hadn’t begun industrializing yet, and c) the U.S. imposed tariffs on imported goods.

      None of those are good things, even though they collectively benefited America’s uneducated. And those times aren’t coming back. When people focus on the blue collar past, it’s important to remember that it was a only very short period of time, post WWII to early-mid 1970s, about three decades, and was based on a unique set of circumstances that won’t return (nor should we want them to).

      So if we want that greater opportunity–and I imply no argument in any direction on that point–we will have to build it on a very different model. Perhaps something more like a European model, but let’s not over-romanticize those and fool ourselves into thinking there isn’t a significant underclass in Europe, too.

      I’m sorry I won’t be able to follow up this discussion (family duties dominate the day), but that’s my two cents.Report

      • Avatar Shazbot5 says:

        Thanks James,

        I agree with some of this, I think. But this claim seems false or exagerated: “More lower and middle class Americans go to college now than decades ago. It used to be the province of the elite, and has continually trickled down to the masses.

        The author of the articled I cited claims the following: “The economists Martha Bailey and Susan Dynarski have compared the college completion rates of Americans who grew up in the 1960s and 1970s to the rates of those who grew up in the 1980s and 1990s. The share of young adults from high-income homes that got a four-year college degree rose from 36 percent in the first group to 54 percent in the second group. The share from low-income homes, however, stayed almost flat, rising only from five percent to nine percent.

        I get that some people only need some community college for their career, but on average pay and a completed college eductation are correlated and there is a causal connection. So the lower classes do not have much acess to college at all. Not like they do in other places.

        I agree that unions won’t work to solve our problem, long term. (They can help.) Unions that would have the levelling effect of old manufacturing unions would have to be very different. (Maybe if every retail worker in America belonged to one union, they could threaten to strike and have a lot of power, but that is fantasy land, IMO.)

        I think the liberal solution is borne out in Europe to some degree: more benefits for the poor, more education subsidies, strong unions (helps a bit), etc.

        Is there a moderate libertarian solution to the problem of inequality of opportunity? Is it politically feasible? Has it ever been tried such that there is evidence (as Europe is evidence that the liberal solution will work) that it is likely to work?Report

        • Avatar Kazzy says:

          Shaz,

          Going from 5% to 9% is not flat at all. In fact, it is an 80% jump in the number of college attendees from low-income homes. Is 9% still too low? Probably. But that is certainly not flat.Report

          • Avatar Shazbot5 says:

            It is flat relative to the growth of college attendance rates for the upper and middle class here in the U.S. and relative to growth rates for all lower, middle, amd upper classes in many other 1st world countries.

            In brief, a move from 5 to 9% completion rates over decades sucks butt. It is a total failure, especially compared to what has been done elsewhere.Report

        • Avatar Roger says:

          Shazbot,

          You are not being comprehensive in your analysis.

          http://www.hoover.org/publications/policy-review/article/123566

          “America’s economy has outperformed all other industrialized nations. The vast majority of Americans have fared well over the period of the cbo study. In fact, the U.S. economy has been the best-performing large economy in the world as measured by per-capita gdp and median standard of living. According to the oecd, per-capita gdp in the U.S. in 2010 was $46,600, which is 47 percent higher than the $31,800 average per-capita gdp in the eu nations in that year.

          In addition to substantially higher gdp per capita, the U.S. has a significantly higher standard of living than almost all of the most advanced economies. According to “The Luxembourg Wealth Study,” the data source used by the oecd for international comparisons, in 2002 (the latest year for which results were available), median disposable personal income in the U.S., adjusted to reflect purchasing power parity, was 19.3 percent higher than in Canada; 68 percent higher than in Finland; 45 percent higher than in Germany; 59 percent higher than in Italy; 31 percent higher than in Norway; 73 percent higher than in Sweden; and 31 percent higher than in the United Kingdom.10

          The figures for gdp per capita and median income understate America’s economic performance advantage because the median age of the U.S. population (36.8 years) is about four years lower than the average median age in the European Union and almost eight years lower than in Japan. Age, as a proxy for experience, is a significant contributor to income until individual earnings peak sometime between age 50 and 55. In addition to higher median incomes, Americans also have higher median net worth, a further contributor to the difference in standards of living.

          On a per-capita basis, the U.S. once again outperformed, albeit by a smaller margin. During the comparable period, real compound annual gdp per-capita growth in the U.S. was 2.1 percent, higher than the 1.8 percent weighted average growth of other members of the g-7. Again using per-capita numbers, in 2009 the U.S. economy contracted about 4.3 percent, which was less than the 5.1 percent contraction recorded by the other g-7 members. And in 2010, the U.S. economy grew 2.1 percent, 31 percent higher than the 1.6 percent growth of non-U.S. g-7 countries.

          Further evidence of the superior economic performance of the U.S. economy comes from a comparison of unemployment rates. The average unemployment rate in the United States from 1982 to 2007 was 6.0 percent, compared with 9.0 percent in France, 8.3 percent in Germany, and 7.7 percent in the United Kingdom.”Report

          • Avatar Roger says:

            And even more importantly, we are the best looking of all countries. I’d rather our poor be good looking.

            http://www.telegraph.co.uk/news/worldnews/northamerica/usa/7250038/Americans-are-most-attractive-people-in-the-world-poll-finds.htmlReport

          • Avatar Shazbot5 says:

            There is no doubt that the U.S. is a wealthy country. (And we aren’t comparing the U.?s to all E.I. countries, only the wealtheir ones, but even there the U.S. is on top.)

            I am not disputing that. I am disputing that the U.S. is a society woth equality of opportunity. It clearly isn’t, not at least in comparison with other wealthy countries.

            Perhaps you mean to suggest that if we create equal opportunity for our citizens, we will cease being the wealthiest. I have 2 responses: 1. What evidence is there that the U.S.’s great wealth is caused (in a significant way) by the same policies that create an inequality of opportunity (e.g. not making university free)

            In other words, how do you know that the U.S.’s wealth isn’t caused by factors other than low taxes and a minimal spending on equality of opportunity, e.g. it’s natural resources (especially oil), large free trade zone that has existed for centuries, large fiscal union, succesful open immigration policies that have drawn the worlds best, succesful public and private investment in univesrities, a headstart after the devastation of WWII, etc.?

            2. Isn’t some tradeoff of equality of opportunity for wealth worth it? (Harder question.) If so (I think you will say, yes, some tradeoff is worth it) then how do we go about determining how much tradeoff is worth it? (Serious question for all of us, I think.)Report

        • Avatar James Hanley says:

          Shazbot,

          First, I find high vs. low income categories unclear. Is there no middle group, or are they excluding the middle group?

          Second, an increase from 5% to 9% is an 80% increase, whereas an increase from 36% to 54% is only a 56% increase. So not only is 5% to 9% not almost flat, it’s a much greater rate of increase than for the high income group–42% higher.

          Yes, I get that you’d like even more lower income people to go to college, and I’m not criticizing that. But looking at 5 to 9 and thinking it’s not much isn’t the proper way to look at numbers. A 4 percentage point increase doesn’t tell us much, because at that low end it’s an 80% increase, while if the increase was from 95 to 99%, it would only be a 4.2% increase.

          Third, the numbers support what I said; more people of lesser means are going to college now than in the past, so whatever the causes of our possibly increasing inequality, access to college isn’t it.

          Finally, as to a moderate libertarian (and I did notice and really do appreciate your use if the phrase) approach to reducing inequality… I won’t claim this is complete on its own, but reducing the red tape and restrictions to starting one’s own business could go a long way toward that I think. Despite our image of ourselves, the U.S. has a smaller percentage of small businesses, as a fraction of total number of businesses, than does Europe. As Roger and I, among others, have frequently pointed out, licensure laws often create unnecesary barriers to entry that limit opportunities for the less well off, and one of my personal pet peeves are municipalities’ restrictions on the number of taxicab medallions.

          That may seem off target, but I have a vivid memory of my 20th high school reunion, when several people wanted to see me because I was the only one of my high school class who’d earned a PhD.* I was more impressed by how many o f them had started their own businesses, from the cute girl who bought a used dump truck and built it into one of the area’s largest fleets to the guy who owned a couple of used pieces of earth moving equipment and did excavation work. They weren’t college types, so that wasn’t what they needed. There’s a lot of people like them. Let’s not make it so damned hard.

          At this point a predictable response is, having national health care would help with that. I’d say that’s not enough by itself, but I agree it would help.

          *Funny thing was, I was never the top student in my class. At the reunion I ran into Gary, who had always been a better student, and much quicker, than me. He’d followed his dream of becoming a golf pro and felt like he got paid to play games every day. Which persuaded me that he always had been and still was a lot smarter than me.Report

          • Avatar Shazbot5 says:

            Hi James,

            Yes, I do recognize you are a moderate and we agree on more than it sometimes seems.

            There’s a lot here in your comment. Let me ssay a few things and forgive me for not addressing more.

            I think this way (and it isn’t me who wrote the quote, but Bailey and Dynasrski) of seeing the numbers on college completion is correct. The numbers are awful for the U.S. The problem is that at this rate (a 4% increase over decades) we will have to wait centuries for the to be equality of opportunity (in college completion) between the kids of the different classes. The upper and middle classes are already at 56% and climbing (and climbing faster than the lower class kids).

            By analogy, imagine if the same were true of U.S. kids test scores versus the rest of the kids in the world. Suppose we used to have 5%nof kids succeed at attaining some high score in math and science and decades later it was 9 %. And imagine during the same time period kids around the world went from scoring that same high score 36% of the time to 54% of the time.

            Would the proper response be, “Don’t worry, our kids improved 80% while the kids around the world improved much less?” No, we would never be educationally equal with the rest of the world at that growth rate, so it would be a big cause for concern. (Unless you don’t care about test scores. But by analogy, I’m assuming we all care about equality of opportunity.)

            I think killing some red tape and taxes on small startups is a great idea. I also think that the government should have a program that covers the interest on loans for people starting their first small business and a program that guarantees those loans, just like first mortgages and student loans. I think the Clinton’s had a similar idea. (To limit the program, we could offer it to people who hadn’t gotten a subsidized student loan or something like that.)

            But with both killing red tape and subsidized, guaranteed small business loans, as you surely know, the devil is in the details.

            And thanks again. I am enjoying your comments greatly. I hope you will do an OP about equality of opportunity at some point.Report

            • Avatar James Hanley says:

              Shazbot,
              at this rate (a 4% increase over decades)

              No, that’s looking at it wrong. Think about an 80% increase over decades. The next increase gets you 7 percentage points increase, not 4. And the one after that gets you 13 percentage points increase. And then you’re at 29%. And the one after that gets you a 23 percentage point increase, and then you’re at 52%.

              If you focus just on a 4 percentage point increase, you’ll understate the actual rate of increase at the current rate. Now, do we want to bend that curve up even more? Perhaps so, but to know how much more we want to ratchet it up, we need to be sure we’re analyzing it correctly.

              The upper and middle classes are already at 56% and climbing (and climbing faster than the lower class kids).

              No, that’s incorrect. The more well off increased at only a 56% rate, less than the rate of increase for the less well off. This is a really important point to get right. The poor increased their frequency of college attendance at a greater rate than the more well off did.Report

              • Avatar Shazbot3 says:

                Hmmm…. We seem to be at an argumentative impasse here.

                Let me ask a question. The study cites that the college completion rate amongst the poor has gone from 5 to 9 percent over decades. Assuming that we know only that fact in the study, do you expect the rate of growth of college completion to increase exponentially instead of steadily.

                It seems to me, if you’re reading of the numbers is correct, we will see exponential growth as follows:

                From 5-9 percent in the first time period (80% growth), from 9% to 16.2% in the second time period (80% again), from 16.2% to 29.16% in the third time period (80% growth), from 29.16% to 52.488% in the fourth time period (80% growth), from 52.48% to 94.4874% in the fifth time period.

                Well, I can see why you think that isn’t flat. It’s a boom!

                But why do you assume the exponential growth of 80% growth from the prior period instead of a flat 4% overall increase in college completion every time period?

                I admit, we might see evidence for the exponential growth if we had the numbers. That would be interesting.

                However, the authors of the study (peer-reviewed and by trained social scientists) don’t look at the data and see exponential growth and signs of encouragement. Moreover, Kenworthy is a social scientist, has seen the data, and he describes the rate of growth as “flat.” Not me.

                I don’t have access to pay-walled journals (I’m guessing as a Prof, you do.) So, I can’t look at the data in the Dynarski paper to look for evidence of exponential growth (i.e. that recent years in the past few decades have seen greater growth in college completion rates than prior years).

                The Times also explains the data on rates of college completion and poverty over time in the U.S. as extremely discouraging and, so to speak, flat:

                http://www.nytimes.com/2012/02/10/education/education-gap-grows-between-rich-and-poor-studies-show.html?pagewanted=2&_r=2&nl=todaysheadlines&emc=tha2

                If you are right, the Times, Dynarski and Kenworthy are all wrong about these numbers.

                Maybe you are, but we will need to see the numbers to prove that so many reliable sources are so wrong.Report

              • Avatar Shazbot3 says:

                Sorry, I see that you do clearly believe the rate of growth is exponential. Why exponential instead of flat and steady?Report

              • Avatar James Hanley says:

                I don’t expect it to continue at an 80% rate, because easy gains come early and later gains get harder. So I’d expect the rate of increase to diminish. How much, I don’t know. It could fall to 70%, or 60%, or maybe even less.

                But why do you keep talking about a 4% increase? There’s been no 4% increase. That’s a misreading of the numbers. There’s 4 percentage points, but that is not a 4 percent increase. A 4 percent increase would have increased the poor’s college attendance to only 5.2%.

                It’s critical to distinguish between percentage points and percent–they’re not the same, and confusing them makes for a confused argument.Report

              • Avatar Shazbot3 says:

                I forgot about this dispute. I get that you think the exponential growth will slow as the low-hanging fruit disappears. No dispute about the low hanging fruit.

                But why would you expect exponential growth (even minus the low hanging fruit) instead of steady growth (which the social scientists looking at the numbers describe as flat)?

                Suppose there are 1000 people in Shaztown. in 1999 1 is on welfare. But over 1 year, 20 more go on welfare. How many should we expect to go on welfare the next year? And the next year?

                A.) We could say that the percentage increase in the past year is from 1/1000 to 20/1000, or a 2000% increase of the p