Megan McArdle: Listen to the Victims of the Free Market
While there are a lot of things on the parties’ agendas that primarily benefit the educated, there are very few that primarily benefit people who aren’t like us. The implicit assumption of elites in both parties is that the solution for the rest of the country is to become more like us, either through education or entrepreneurship. Rarely does anyone discuss how we might build an economy that works for people who aren’t like us and don’t want to turn into us.
From: Listen to the Victims of the Free Market – Bloomberg View
Having read the piece, I have to say what’s a bad omen is how many educated people are in the same boat. I was just talking to a grad from the university where I work (and sometimes wear home the uniform) at the Canadian Tire the other day. He was stocking shelves there, but still fondly remembers getting an engineering degree at our school. Not to put too fine a point on it, but holy crap!
That’s not to mention my friend whose Master’s degree got him a full time stock position at a cheaper retail store, or well, me who can’t even get full time toilet cleaning with my PhD. This isn’t to say I blame any of this on “the market”. More that a whole lot of people who tub-thump for “the market” couldn’t care less about it other than using “the market” as an ideological justification for wealth transfer upwards and wonder why everyone else starts getting a bit queasy when they hear about market liberalism.Report
Paul Campos recently noted that even people who graduated from elite law schools are having a hard time right now. The meritocracy is quickly turning into an aristocracy that takes everything it wants for itself and engages in whatboutery when they are called out for this.Report
Right, this is where I think McArdle is somewhat too optimistic. She’s spot on that the widely-read advocates of market liberalism suffer by not being in professions that are particularly vulnerable. But the other problem is that plenty of people who champion a “free market” are wealthy because one doesn’t exist.Report
A problem is that the mid-20th century does seem to be an unusual one when it comes to socio-economics. The Mid-20th century boom in parts of the world was only possible because of World War II’s sheer destructive magnitude and because many countries made some particularly dumb economic decisions. Without communism and whatever was happening in the new countries than people in the developed world might not have had the prosperity that needs to be enjoyed.Report
Right, but it also wasn’t a self-regulating market in the parts of the world that won out. It was freer trade but not free trade, or “embedded liberalism “as they call it now. Supposedly, that set of policies worked until the 1970s and then “cracked” and was replaced with the neoliberalism of Thatcher and Reagan. I don’t know how well that account holds up. But, the postwar boom could have easily been one in which a handful got rich and everyone else worked to survive, if policy makers had read the tea leaves differently after WWII.Report
To be fair to Reagan, Carter began a lot of the neo-liberalism and Reagan just continued it. Thatcher also deserves some fairness. The previous three Prime Minister of the United Kingdom, Heath, Wilson, and Callaghan attempted more moderate reforms of the United Kingdom’s ailing economy but kept meeting with resistance. This led to Thatcher’s more radical but potentially necessary correction.
Something did seem to happen in the 1970s that caused the Post-War boom to hit a hard spot. Western economies suffered across the board with the United States and United Kingdom taking the biggest hits.Report
Oh yeah, Carter too. And that other guy whose name always escapes me…
The hard spots that economies go through in “embedded liberalism” were taken as proof that neoliberalism is the solution. It would be interesting to compare them to the hard spots of the last 5-10 years, which are taken as proof that we still haven’t achieved a free market economy.Report
Taken by whom?
You’re going to have a regulatory regime in finance. The question would be its precise contours. Unless you’re advocating state banking a la Soviet Russia, your regulatory defects had more to do with institutional inertia, agency capture, and crony politics, not with any set of phenomena on a ‘neo-liberal’ v. ‘regulatory state’ axis. Again, various bad actors at different points were enmeshed in the Democratc Party, among them Lawrence Summers, Robert Rubin, Barney Frank, and the crew at Fannie Mae and Freddie Mac.Report
Thatcher was confronting a quite different situation than was Reagan. Britain had a large portfolio of state enterprises and public housing as well as much more extensive union penetration and a wretched culture of industrial relations. There were some common problems as well (inflation, excessive marginal tax rates) and some problems the U.S. had which Britain did not (wretched school system). Also, the British political order provided the Conservative Party with the tools to enact reforms. Reagan was largely stymied.Report
To be precise, the Carter Administration saw efforts towards removing cartels and mercantile controls in the transportation sector. Carter also worked to have price controls removed in the energy sector.Report
Another explanation I’ve heard is that between the Depression, and then World War II sucking up all the capital, there wasn’t a lot of investment going on for a generation or so, but research was still happening. So when the war ended and capital was freed up, there was a 15-year backlog of innovation to implement, leading to rapid growth afterwards. The post-war boom was really just a reversion to the pre-Depression trend.Report
A lot of post-war innovation had its origins in technologies that were developed for World War II or the Cold War and than moved to the private sector over time so this seems somewhat doubtful. Computers received a big boast during World War II because of the need to do calculations for artillery. The Internet came about because of Cold War concerns about keeping communication up after a nuclear attack among other things. Even microwave ovens have some military origins.Report
Huh. Never heard that before, but it sounds intuitively plausible. Where’d you find it?Report
The post-war boom was really just a reversion to the pre-Depression trend.
Sad!Report
No, domestic product per capita, personal income per capita, and personal consumption per capita in 1941 were about 15% above the levels of 1929. The Depression was over prior to the war as regards production and consumption. The labor market remained troubled. The comparatively rapid growth registered between 1947 and 1973 was pretty much a phenomenon all over the Occident, without regard to baseline conditions.Report
When did Campos note this?Report
When didn’t he note this? The man knows how to ride a hobbyhorse into the ground.Report
The market doesn’t care, because the market only has so many jobs to go around for any given skill set.
Now the elite class, and the academic set, who expounded endlessly on the economic benefits of an expensive economic education while ignoring the supply-demand question, those are the folks who should care, but don’t, because they have jobs, and money, and networks, etc.
I went to school for engineering because my vet benefits paid for it. If I had to do it out of pocket, I would not have gone to university right away. I would have gone to A&P school and been a turbine tech until I’d saved for school, then paid cash.Report
Building an economy for the brownshirts is easy.
But you wouldn’t like that economy either, Megan.Report
I didn’t even bother to read the article. If the headline is incorrect, why bother. We do not have free markets in this country. Jeebus.Report
This is why we mostly shouldn’t use the phrase. Sometimes there’s a point, but here especially not. “We should pay attention to the victims of the market” is surely McArdle’s meaning, since she surely agrees with you that the market is not generally perfectly free.
That sentiment surely isn’t one you object to, on terminological grounds anyway, is it?Report
“That sentiment surely isn’t one you object to, on terminological grounds anyway, is it?”
Nope. Of course we should, especially in a non free market, since it’s likely that gov’t actions generated or worsened the impact on the victims.
I work in a very precise world. It’s rather important in my job. Frankly, it’s just lazy and it contributes to a complete misunderstanding of our current economic system. That’s what cheeses me off about the phrasing.Report
If only there were people or a group who thought the free market was a good thing but needed extra gov supports to function in a humane manner to benefit all. Sadly that creature does not exist at all. Perhaps if workers had strong groups of some sort they could join to fight for their own needs. Alas again that is only a pipe dream.Report
Nice one if a little ahistorical. Many free market advocates have seen labor unions as an inherently anti-market force because they act as a sort of cartel. Many labor unions have also been hostile to market economics and advocated for socialism. Before the New Deal this even included most American labor unions.Report
“join”Report
Yes, join unions. I understand the closed shop aspect of unions some don’t like. But unions are a way for working class people to have a powerful group to advocate for themselves.Report
Closed shops are a very defensible concept. But once in place, “joined” isn’t really the right word anymore.Report
Bonded? Epoxied? Seems good enough to express the idea. Unions give workers a strong voice and the ability to fight for their own interests. Do they screw up…hell yeah. ( insert obligatory insults at police unions). But for many workers, who aren’t cops or prison guards, it is the only way they can band together to improve their situation.Report
The arguments I often here from the free traders is that the decline of people in the United States is small compared to the raises in standards of living that happened in China and other developing nations. This is probably true. Hundreds of millions of people, maybe billions, have been lifted out of extreme poverty.
Yet the Free Traders don’t really have any reactions or answers as to what sort of reactions the people whose jobs went away should react. They often seem flabbergasted by the anger of people who once led comfortable middle class lives on factory jobs with benefits.
The problem is that the working class in the United States have very different needs based on where they live. West Virginia or rural PA demand different solutions than Oakland or New Haven.Report
I am pretty unimpressed by her complaints about GBI. Yeah people who’re on uncertain temporary income streams supplied by safety nets that will eventually run out are depressed and anxious. That people on a GBI would suffer the same reaction is a grand canyon sized leap.Report
My take was different. I thought McArdle’s argument was that there is a very real psychological need for work in humans and that GBI will have the same sort of dependency problems that other forms of welfare will.Report
Nothing, absolutely nothing, says that in a UBI scenario people won’t work. Hell, it’s highly plausible that in a UBI scenario more people would work. You get your UBI and then take a job for 4 bucks an hour doing something to supplement your income. With a UBI in place people would be free to take and offer jobs that wouldn’t be plausible in a non-UBI scenario.
Mcardle seems to think that if people didn’t HAVE to work that they simply wouldn’t.. and I think that’s stealing a hell of a lot of bases.Report
Most criticisms of these kinds of systems go back to the Speenhamland System, which was criticized, if not demonized, as leading to a sort of permanent pauperism. Recent histories of Speenhamland have tended to nuance the picture quite a bit. It wasn’t so widespread, people didn’t stay on for long if they could help it, and it might have prevented a great deal of rioting, if not revolution in England.
I think some of the moralistic warnings of Malthus and Ricardo were probably misguided too- that the fear of starvation keeps the poor thrifty and chaste, for instance. The one reservation that doesn’t get brought up so much now, but was understandably important in the birth years of industrial capitalism, is what if people would still work in a GBI scenario, but there are just some jobs nobody would do without the fear of starvation? I think most likely it would create jobs in the sense that employers could offer lower wages for jobs that have other perks. But who collects the garbage and sweeps the factory floor? I’m guessing undocumented aliens. But are there enough for all of those “shit jobs”?Report
I want to write a whole post on this, but for a lot of jobs, people will do them solely so they can afford to live apart from people who don’t want to do anything.Report
Well Rufus, in a GBI universe you wouldn’t do the garbage collecting and vomit sweeping out of fear of starvation and lack of alternatives but rather out of desire for filthy lucre. In a GBI scenario you’d probably find that part time barristas, used book clerks and other generally pleasant jobs would pay much lower wages but genuinely unpleasant jobs would pay a much higher one. Since they couldn’t force people to work those jobs employers would be forced to entice them. The Janitors would still do the shitty unpleasant jobs; but they’d drive to them in a banging nice car or would spend their time off in a banging nice neighborhood.Report
Sounds fair.
I wonder if they cut my salary for my posh software engineer job?
It’d be annoying, but I could deal.Report
Probably? Any job that gets something like a fair (in the sense of value added to society vs cost paid by the individual) wage now would expect a local pay cut, because the UBI would make up for it.Report
Cut, not necessarily but your taxes would probably be higher.Report
@north
What do you think is a realistic timeline on making GBI happen? 40 years? 50 years? 60 years? How many generations will need to deal with precarious job situations before GBI happens?
I like the idea but it is a solution for the long-term future. We need solutions for the now which is what a lot of people are lacking on.Report
Probably something like 5-10 years to roll it out, depending on implementation details, but significantly longer for people to decide that it’s a good idea. That, I think, is the real problem – getting a GBI going is not actually that hard, but it’s so far outside the Overton window that nobody’s going to start.Report
@guy @north @murali
The outside the Overton Window is exactly what I am referring too.Report
Sure, but the big thing not moving the Overton Window is that by and large there are still plenty of jobs for people in general.Report
Well I don’t know Saul, I don’t even know if we’re at the economy that can sustain a universal GBI yet. We are creeping back down towards full employment after all as we speak.
As Guy noted implementing it would be hard but far from impossible. Getting the electorate to the point where it’s politically possible is by far the bigger task.Report
With some tweaks, your EITC becomes a negative income tax. And a negative income tax is little different from a GBI.Report
“Since they couldn’t force people to work those jobs employers would be forced to entice them. ”
Or, pace Oscar Wilde, they’d use machines.Report
Absolutely, at some price point replacing labor with capital makes sense.Report
Its not that people won’t work, its that there won’t be enough jobs for the people to work at because of automation.Report
Literally no jobs? At any wage over zero? We’d be talking post scarcity or damn near post scarcity at that point.Report
“Once a robot can do everything an IQ 80 human can do, only better and cheaper, there will be no reason to employ IQ 80 humans. Once a robot can do everything an IQ 120 human can do, only better and cheaper, there will be no reason to employ IQ 120 humans. Once a robot can do everything an IQ 180 human can do, only better and cheaper, there will be no reason to employ humans at all, in the vanishingly unlikely scenario that there are any left by that point.”
– Scott AlexanderReport
Hmm I’d only disagree with his pessimism at there being humans at all at that point.Report
I mean, Scott is a rather breathless fan of the whole “superintelligence” thing. He’s not alone. Fine. On the other hand, he’s a psychiatrist by trade. His insight into AI is mostly that he read that one book, plus he was a big poster on a particularly cranky website. So.
(I happen to love LW, but EY is — well — he is a rather singular fellow, I’d say.)Report
I see what you did there.Report
I’m so proud of myself right now.Report
Well, there kinda is the Qatar Phenomenon…Report
Indeed.Report
Assuredly, but there’s a whole lot of messy stuff bundled up in that little country for us to be drawing many conclusions about GBI specifically.Report
Oh, no doubt of that.
But there does seem to be a very real undercurrent of… jeez, I don’t want to say “affluenza” because of all of the stupid baggage of that stupid portmanteau… let’s just say that the whole thing about how crying while mowing the lawn is good for you seems to be somewhat accurate.Report
Crying.. while mowing the lawn? I am lost, sorry.Report
It’s a reference to an old Denis Leary bit.
http://youtu.be/64UzydR9KHQ?t=2mReport
It also ignores that the human need to work can in some cases be satisfied by non-exchange or delayed-exchange work. Is she saying there is a human need to be paid daily (cumulatively over two weeks or whatever) for a set of tasks? Because the investor class that so often expounds that opinion doesn’t seem to view themselves that way.
What I think there is is a human need to feel that humans should not be allowed act like they don’t have a human need to work for daily pay – whether one that comes out of the coercion of enforcing poverty on them, or out of feeling that life is worthless without that structure even when it’s not actually enforced by coercion. That’s what’s being expressed when people talk about the human need to work, but it doesn’t account for the expansion of possibilities for work that is created by alleviating the need to exchange work for daily subsistence.Report
I agree entirely.Report
Look at the Victorian gentry. The British economy created a substantial class of people defined by their not needing to work for a living (with some important marginal cases and general fuzziness around the edges). How did they respond? Some went to a lot of parties. Some shot a lot of grouse. Some drank themselves to death out of sheer boredom. Some gathered into cliques to play stupid interpersonal politics games. And so on. But some self-directed in very creative ways. We tend to look down at Victorian scholarship, and it certainly had its ideological blinders (like ours doesn’t??) but a lot of it was really impressive. Charles Darwin is an obvious example, but even below his level, if you wonder who figured out the taxonomy of South American butterflies, there is an excellent chance it was a group of obsessed Victorian gentlemen. There were lots of other possible avenues: those guys hiking to the South Pole or looking for the source of the Nile, for example.
Or look at me and my early baseball research. I work full time, but this is forty hours a week in an office, not sixty or seventy in a textile mill. I have the luxury of picking an economically useless field of study and running with it, for mere psychological rewards.
I expect that a post-work world would work out pretty much the same way. You will find an awful lot of people spending their time stoned, but also a lot of people freed to do creative stuff, with no telling what direction it would take.Report
Yes, so much this.Report
The question on whether the gentry were working or not working is kind of interesting. The British historian Adam Nicolson wrote a book about the English gentry a few years ago called, predictably, Gentry: Six Hundred Years of a Peculiarly English Class, and it turns out that gentry economics were much more complicated than set back and collect rents while living well. Most gentry had to take at least some active management approach to their lands and many more treated them like business concerns. This is a type of work. The gentry class was also much more fluid than imagined. So the idea that the Victorian gentry didn’t have to work for a living is wrong for the most part.Report
It might be more accurate to say that there is a human need to be occupied and when most people are unoccupied for extended periods of time than the results are not good. The question is whether most people would be able to keep themselves occupied with less than full work but with GBI. The optimists like Richard Hershberger and North say yes. There might be some people who drink themselves to death or use their free time in other negatives ways but more would find a hobby or something and devote a lot of time to it. The pessimists argue that destructive hedonism will be the main response.Report
The pessimists argue that destructive hedonism will be the main response.
Which probably says a lot more about them than anything else. Destructive hedonism is a hell of a lot of work!Report
McArdle has an interesting critique of UBI as a solution, the psychological need to work and do meaningful work at that. Loomis also brought up this criticism. Part of me is doubtful about this. Humans have defined paradise as a land of plenty where you don’t need to work but lack of work does seem to have some serious consequences to. There might also not be another solution besides UBI. Economics is always going to favor doing more things with fewer people. Its the very definition of productivity. Either work will need to be shared so you have one job held by two people with one working before lunch and another after lunch or something else to prevent employers from trying to do more with less. UBI might be a suboptimal solution but it is a solution.Report
What an odd column, McArdle claims that “Instead of trying to figure out something hard, like how to build an economy that provides adequate work for everyone, the idea is to do something easy, like give them checks.“:
(a) Republicans propose tax-cuts and deregulation.
(b) Democrats propose education and child-care.
(c) Libertarians propose guaranteed income.
But the argument for each of these is that they foster an economy that provides adequate work! All of these positions aim to improve the economy and job stability; are always couched in the language of job creation.
And what’s McArdle’s recommendation? Central planning? No, her conclusion is actually that we … have “a national conversation” about jobs. No new agenda, no new topics of discussion, no external model to follow or overlooked metric that we should be focusing on. Just a CONVERSATION about JOBS, where some people do some listening and some people do some talking. Wonderful. The three major ideological streams of the country had the conversation and proposed the above solutions. Now what?
McArdle’s columns always remind of the proposal to double the size of bricks so building houses takes half the time. Maybe the reason something so obvious hasn’t been tried is because there are a lot of non-obvious confounders…Report
@trizzlor
I agree, saying that creating new meaningful jobs is “difficult” is a colossal understatement. Bear in mind that Development Economics has been banging its head on what is technically an easier problem in developing countries for over 50 years.
Creating new employment opportunities for people (especially for people’s whose productive skills are becoming obsolete with new technology) is a problem with no known solution. It won’t take a “national conversation” it will take an unprecedented effort of social science that will still probably fail.
implementing a UBI is politically difficult. Creating new work for the people who are losing it is actually difficult. We might get lucky, and new employment opportunities might appear on their own. But there’s a decent chance there is no solution to this problem.Report
I think you may be misreading McArdle. She starts the post with this:
She did propose a set of solutions and this is a post mostly about how to sell those solutions and how to talk about the costs and the benefits of market liberal solutions.Report
Ah, I did miss this and thanks for pointing it out. But after reading last week’s post I’m still pretty confused. There, she comes out against protectionism. Fine. So the government needs to sell the public on new jobs but (a) it can’t restrict trade because that’s bad; (b) it can’t deregulate or cut taxes because that only helps entrepreneurs; (c) it can’t fund social programs or subsidize education/retraining because not everyone’s cut out for learnin’; (d) it can’t just give out checks because that disrupts work ethic. So, what the hell is left? Her comment section has suggested that people with “below average intelligence” should just be turned into Soylent for the rest to devour.Report
Where does she make the case against C and D?Report
C:
D:
Report
Thanks. I join you in wondering exactly what her preferred policy alternatives look like. That said, I give McArdle credit for not pretending that she has the answers. She’s right. We don’t know what it’s going to take to be prepared for the economy of tomorrow, because we don’t really know what the economy of tomorrow is going to look like. Lot’s of people are promising answers based on the economy of yesterday.
I do wonder if you’re being fair on C. An opposition to get everyone a college education on the cheap is not the same as an opposition to retraining or education writ large. At some point, increasing college enrollment just gets you into a Red Queen situation.
And on D, this used to be very close to my own thinking. I’ve since come around to the possibility of some form of UBI and on cash transfers in general. But McArdle is correct in that cash transfers themselves are no solution. They can be part of a solution, but increasing social welfare absent a dynamic economy is a recipe for Venezuela.Report
Oh I totally agree that the proposals on the table have flaws. My beef with McArdle is that she claims these proposals are being *described* poorly, while grossly misreading the way politicians actually describe them. She claims the focus should be on jobs and job security rather than things that knowledge workers are interested in. But then look at the proposals:
(a) Republicans consistently describe regulation and high-taxes as getting in the way of job creation. Their proposals are all about unleashing the job creators to create more jobs. Government is the problem. Keep more of your money. The whole mythology is built on the idea that a vibrant US economy with unbelievable job growth is just being smothered by layers of government fat.
(b) The Democrats have proposals for all sorts of retraining, including the apprenticeships, as well as the vocational and community college stuff that Obama has been advocating. It’s pretty misleading to claim this is all about college loans. I have no idea where she’s getting maternity leave from, as this hasn’t been a big issue in the campaign, but it should be obvious that paid leave is intended to restore the feeling of job security. McArdle even talks about how job security is just as important as job creation (given that we’re seeing populism rise as unemployment is falling) so it’s especially odd for her to lump this in with other failed policies. That’s not even getting into the Democrat proposals to fund bio-tech, clean energy, and infrastructure that are directly aimed at new jobs (which McCardle conveniently ignores).
(c) As mentioned in the comments above, guaranteed income goes hand-in-hand with abolishing the minimum wage, which means all sorts of novel jobs categories sprouting up in the low-wage sector. Moreover, the expectation is that having a baseline money stream will give people more opportunities to retrain for new jobs, or to apply for more jobs that they’re actually qualified instead of taking the first thing available. And, of course, stress out less about job security because they know they won’t be kicked to the curb.
Now, if McArdle wanted to do a deep dive on each of these issues and explain why it doesn’t *actually* generate jobs, I’d be totally up for that. That would be genuinely informative. But what she’s done here is skim-read each policy, misrepresent their goals, and then call for some vague third way solution. It’s like a #SlatePitch applied to economics: everything you thought you know about jobs is wrong!Report
I think my biggest problem with McArdle’s piece is that the argument she makes seems to assume that these steps are mutually exclusive. However, there’s no reason you can’t do them in concert, and in several instances doing one will make it politically (and even practically) easier to do the other, or take some of the sting out of the downsides.
For the most obvious example, take UBI. If we have a reasonably robust UBI, the rationale for one of the most popular and widespread forms of labor regulation–the minimum wage–essentially vanishes. Now, maybe getting rid of it won’t cause a major upswing in employment, but it’s not crazy to think that employment will increase without it, making it possible that more people can avoid the corrosive emotional and psychological effects of going without work. A UBI will also make it easier for people to get post-secondary education in a timely and effective manner. Sure, it still won’t be for everyone, but at the margins it will help.
I’m not saying this because I think UBI is necessarily a good idea. I’m saying it because there isn’t going to be a single simple thing that addresses the problem, nor should their be. We’re probably going to need to do many things in concert to make the economy work for a larger fraction of Americans.Report
From the article: ” On the other hand, those people could stop being so tone deaf ”
Those? How about “we”? This is a woman who went on the air railing about Obamacare and when pressed on her analysis about the impact of Obamacare on drug invention admitted that what she was saying was all a hypothetical, and that she was against the govt financing of healthcare on principal because she was a libertarian.
It’s great to see her slowly come to her senses. But it would be nice for her to recognize her own role in perpetuating fantasies about the free market. And also, it’s a little convenient that this column comes out now just when the campaign for the Republican nominee for President has turned into one huge Dumpster (r) fire.Report
Rarely does anyone discuss how we might build an economy that works for people who aren’t like us and don’t want to turn into us.
Even *less* often does anyone discuss the fact that such idea is *complete nonsense* even if people were like ‘us’ or wanted to be like ‘us’.
First, by a flip of the coin, I’ll talk about Democrat’s dumbass idea that everyone should get a college education. This…cannot create jobs.
A college education is one of those things that makes you better off, from the job market POV, *comparatively speaking*. But trying to make *everyone* get a college education is about akin to arguing that, in a poker game, *everyone* should get better cards so everyone can win. That…is not how poker works.
The only way to fix the job market is to *expand* it, not to give everyone advantages so they can do better in the zero-sum game of *competing* for jobs. Duh. (That said, a lot of what Sanders, for example, seems to be trying to do is to stop people from going into *debt* when getting their now-required college degree, which I guess is good. Everyone should just be aware this won’t do a damn things WRT the *jobs* situation, all it does is stop everyone from having *mandatory* debt when they enter the job market.)
And now let’s look at the Republican’s idea that more people should be entrepreneurs, which is at least an attempt to make more jobs. Sadly, that’s broken for several reasons.
First, let me point out there are two sorts of entrepreneurs, and they sorta get mixed together. There are the people who *invent* things, who come up with some new model of doing something, and rush in. Let’s call these Type #1
And then there are just people who just…start a hardware store. Let’s call these Type #2.
To address type #1: They are, in many ways, a myth. Sure, it does happen, but nowhere near the levels it seems to be assumed. But perhaps more to the point, there doesn’t seem to be much evidence this would help with *jobs*. That sort of thing is often very disruptive of existing markets. They invent some new process that lets them make something with half the effort, which often means that while *they* now are successful, and can hire some people, but also means a bunch of *other* people just lost their jobs. Their innovation is probably a good thing for the *economy*, but it didn’t really do a lot of ‘creating jobs’.
As for #2…I don’t have anything against small business owners (As in, actual local small business owners, not ‘small businesses’ that are multi-million dollar things.), but the fact is, the job situation barely cares if it’s the local hardware store or the Home Depot out by the interstate. Local businesses often have more slack, and hence have more employees per ‘thing sold’ as the big box stores, but that just means the employees often get paid *less*. (And, wait, does this mean Republicans are *against* big box stores coming into town and causing the closure of down local businesses?)
I think, in the hypothetical Republican universe, X% of people would turn themselves into entrepreneurs, and hire some extra people, and thus the remaining labor supply would tighten, which would result in the remaining people being paid more? Well, I’ll give the Republican props here…their *math* sorta works, unlike the Democrat’s plan which is mathematical nonsense. If a large fraction of people could become self-supporting and remove themselves from the labor market (And hire some more people), yeah, that would actually help.
But, practically speaking, there doesn’t actually seem to be any way this would happen, because there’s no reason we’d *need* more work. There is a finite about of stuff people buy, and changing who sells it to them doesn’t change that. If a bunch of people start successful businesses selling things, that just means the *existing* businesses that sold those things will fail. Yes, there might be some microscopic amount of *new* markets created (There are a lot more people selling and repairing cell phones than two decades ago. Although I will point out that’s not the doing of ‘entrepreneurs’.), but, in reality, the same amount of stuff being sold requires the same amount of people to sell it!
The only ways to create jobs is either a) for the government to actually hire people, or b) for labor’s *demand* to increase, which requires the *demand* for goods and services to increase so businesses need to hire more people to sell more.
Neither party seems to follow this logic at all.Report
>>But trying to make *everyone* get a college education is about akin to arguing that, in a poker game, *everyone* should get better cards so everyone can win. That…is not how poker works.
Isn’t the point of making education accessible[1] to give *our* workers better cards than overseas workers? Isn’t the whole premise of what McArdle calls “market liberalism” that we’re now sitting at a global poker table?
[1] And I want to stress that the Democratic proposals are explicitly NOT to make everyone get a college education. Clinton’s campaign factsheet, for example, is almost entirely focused on apprenticeships, short-term training programs, and community college.Report
Isn’t the point of making education accessible[1] to give *our* workers better cards than overseas workers?
But do these better cards entail having manufacturing jobs or do these better cards entail becoming more like “us”?Report
I think the whole “you’re making people more like ‘you'” framework is just a way to tell people “you think your intentions are good, but I know they’re not”. Which starts the whole conversation in a pretty nasty place.
In my opinion, the typical “ideas class” path is a good four-year college followed by employment where the college learning is relevant (usually through networking), followed by steady growth up the job ladder. So, no, joining a short-term retraining program or a federally subsidized apprenticeship is nothing at all like what the idea class does. On the other hand, if we define “making people like you” to mean giving people an opportunity to find something they like, learn how to do it, and find a job doing it – well, yeah, then guilty as charged.Report
Let’s move away from “I know they’re not” to “I don’t see the goodness of your intentions as particularly relevant to the discussion”.
Still particularly nasty?
On the other hand, if we define “making people like you” to mean giving people an opportunity to find something they like, learn how to do it, and find a job doing it – well, yeah, then guilty as charged.
They seem to be under the impression that they used to have opportunities to find that something, learn how to do it, find a job doing it, then those jobs got outsourced.
Now we’re telling them “we’re trying to give you opportunities!” without really acknowledging that the opportunities they used to have got traded away and we benefitted and they didn’t.
And we’re telling them to go get a degree like we did.Report
No, the opportunities they used to have was to look in the Want Ads and see a bunch of jobs that required no previous experience. Now they’re seeing no jobs, and the jobs they hear about all require having a certification and knowing someone on the inside. In response, some folks are pushing a policy that is intended to give them opportunities to get that kind of certification. That could be “a degree like we did” or it could be an apprenticeship for on-the-job training, or it could be a short-term certification program, or a dozen things in between. These things are only “like we did” in such a broad sense as to be meaningless.Report
Isn’t the point of making education accessible[1] to give *our* workers better cards than overseas workers? Isn’t the whole premise of what McArdle calls “market liberalism” that we’re now sitting at a global poker table?
Erm, what?
If by ‘they have better cards overseas’ you mean ‘the side of the table they are playing on does not have any rules’.
Moreover, people are not losing their jobs to people overseas because they are not educated. The job they have does not require education, either in the US or overseas. The overseas people are winning because they do not have rules.
There are exactly three solutions there: 1) Remove our rules, 2) Somehow force our rules on them, 3) Stop playing with them.
And this Democratic thought seems to be based in this delusional idea that adding the degree magically makes jobs exist, which is just so utterly stupid that I sorta skipped it in my post.
There is *plenty* of unemployment for college educated people. There might be *less* unemployment for them than for other people, but that’s solely because *they get picked first*. They have a *competitive advantage*.
Which is why, again, to repeat myself, means ‘get everyone a degree’ makes no damn sense.
And I want to stress that the Democratic proposals are explicitly NOT to make everyone get a college education. Clinton’s campaign factsheet, for example, is almost entirely focused on apprenticeships, short-term training programs, and community college.
I don’t know why you want to ‘stress’ that like it counters my point or something.
All of those have *exactly* the problem I’m talking about: They make people more competitive in the job market. That is what they do. That is all they do. They do not make more jobs in any sense. They just make it more likely one person will get a job than a different person, and hence they are *completely idiotic* as a government policy to solve anything.
It’s like the lines are too long at the DMV, so you give 60% of people a pass that lets them cut in front four people while they stand in line. And the Dems demand that ever more people get such a pass! (Clinton wants to give out one and two person cut passes also, for people who can’t measure up to the four person cut pass.)
That…is not going to solve the problem. That does not even conceptually *make sense* towards solving the problem. (It does, however, make things pretty shitty for people who *don’t* have those passes.)
Of course, I’m lying. Education actually does have a useful effect on the labor market. Namely, that it appear to be an acceptable way to *keep people out of the labor market*, thus reducing the supply of workers and raising wages. If all those students *weren’t* in college, if they were all looking for work…wow.
But we can’t admit the reason that we’re doing all this is to keep several million people out of the labor market, because the logic question would become: Wouldn’t it make more sense just to pay them to sit at home and watch TV?Report
TIL that Chinese Communist dictatorships have no rules.Report
While they certainly do have rules, it does appear that the Chinese EPA is more lax with its enforcement than the US EPA.Report
I think they just classify smog as a vegetable, like we used to do with ketchup.Report
Mmmm… I love a burger with smog and mustard.Report
TIL that Chinese Communist dictatorships have no rules.
You didn’t know that China had almost no labor protection laws at all, and in fact corporations often behave in a way is indistinguishable from slavery?
Weird, I thought everyone knew that.
Or perhaps you lost something in the analogy, which was not that the overseas players did not have any rules…it’s that their *side of the table* does not have rules. So it can do whatever it wants to their players. Like steal cards from most of their player’s hands and build a good hand to give to a single player, so ‘their side’ always wins, even while most of their players (and hte other side) always lose.
Not the best analogy, granted, but I wasn’t the person who tried to over-extend it to international stuff.Report
This is all premised on the idea that there is a fixed pool of jobs and once all the jobs have been claimed everyone else is SOL.Report
Well if you fix/regulate enough parameters it will lead to only a certain number of jobs available at a specific rate of demand.Report
This is all premised on the idea that there is a fixed pool of jobs and once all the jobs have been claimed everyone else is SOL.
Are…you okay? Do you have a concussion or something?
There *is* a fixed pool of jobs, and once all those jobs *are* claimed everyone is SOL.
This is how ‘unemployment’ happens. Google it. It’s a real thing that could be happening near you!
There is a fixed pool of jobs, that is, unless something happens to create *more* jobs.Report
Just stating your a priori assumptions. Turns out – big surprise – you think they’re self-evident and need not be justified. We can all go home now that you’ve enlightened us as to how the market works.Report
Yes, heaven forbid I believe that things stay the same unless they change. You really showed my a priori there, that I believe in causality, and that amounts of things don’t just jump up and down without rhyme or reason.Report
>>I believe in causality, and that amounts of things don’t just jump up and down without rhyme or reason.
See, this is why it’s useful to state assumptions explicitly. I said your assumption is “a fixed pool of jobs”. And you say “yes, I’m assuming things don’t jump around”. It should be obvious those are not actually the same thing, right?
So let’s try again: do you actually believe that there is a fixed pool of jobs? When Zuckerberg devised a new way for people to look at advertisements and called it Facebook, the people he hired necessarily meant an equivalent number of people was hired somewhere else in the country? And when Zuckerberg says “I’m desperate for more employees with a Cisco certification” and the government creates incentives for people to get Cisco certified; each of the resulting new Facebook hires has to go and find a person to fire in manufacturing or whatever before they start working? Zero-sum, right? Certifications does not *make* jobs…Report
So let’s try again: do you actually believe that there is a fixed pool of jobs?
I have no idea why you think you’re going to get a different answer than the last time I directly answered that question.
Right *now*, there is a finite number of jobs available. Most of them are filled.
Over time, things will happen that will *alter* that number of jobs.
Education of workers *is not one of those things*. (It’s actually a bit baffling that anyone things altering the supply of labor could change what is clearly a lack of *demand*.)
90% of what ‘entrepreneurs’ do, aka, starting a competing business, *is not one of those things*.
Some actual new innovation invented *is* one of those things…and is an incredibly rare thing that happens once a decade and we get *maybe* ten thousand jobs out of. So is, uh, not something we should rely on.
Hell, the population getting bigger, and thus needing more goods and services, has a bigger impact on the number of jobs than ‘innovative entrepreneurs’.
When Zuckerberg devised a new way for people to look at advertisements and called it Facebook, the people he hired necessarily meant an equivalent number of people was hired somewhere else in the country?
I have absolutely no idea why you’d be asking this if you actually *read* what I posted and you originally replied to.
As I said, there are *two kinds* of things that are commonly called ‘entrepreneurial’. The main kinds is a person starting a new business in an *existing market*, which is something like 90% of all ‘entrepreneurs’, which does not create jobs.
Again, to repeat: It is *that* sort of entrepreneurial enterprises (Which are the *vast* majority.) that I say do not create jobs. It is still people selling the same things, in the same amounts, that others were selling, and hence there are the same amount of jobs on average. (Or even less jobs on average, considering that a lot of entrepreneurs are trying to do it *cheaper*, aka, with less labor costs.)
Then there are people who create *new markets* via some sort of innovation, which is basically what Facebook is. Those *do* create jobs.
Well, they do if we ignore the 1600 people who *used to* work for MySpace, and the hundreds of Geocities ex-employees, and all those people who used to work at instant messagers companies, etc, etc. All the various internet stuff that Facebook basically steamrolled over. It’s really more that *the internet* keeps creating and churning jobs than ‘Facebook’ does. But whatever.
The problem is, even if we assume Facebook made all *new* jobs, instead of just mostly relocating jobs…these jobs are nothing. 150 *million* people are employed in the US. Facebook employees 13,000. And, let’s face it, that was the most successful recent entrepreneurial endeavor you could think of, wasn’t it?
IBM, for comparison, has 380,000 employees. Instagram, for a different comparison, has *13*.
I’m not saying these ‘creating a new market’ entrepreneur don’t exist. They do. I’m not saying they can’t, in a small amount, create jobs. They do.
But it’s a pretty absurd thing to think they can somehow create *enough* jobs, or that that is where we should focus on.
And often those new jobs come *directly* at the expense of other jobs as other companies are destroyed, and that gets completely ignored.
(And before anyone says I am against progress, I am speaking *only* in the context of ‘job creation’, and how this is a nonsensical way to *create jobs*. It might be good for other things, that is a discussion for another day, but it’s a crappy way to ‘create jobs’.)
And when Zuckerberg says “I’m desperate for more employees with a Cisco certification” and the government creates incentives for people to get Cisco certified; each of the resulting new Facebook hires has to go and find a person to fire in manufacturing or whatever before they start working? Zero-sum, right? Certifications does not *make* jobs
Facebook hiring people creates jobs. This has nothing to do with education at all. They could hire janitors and it would create jobs.
Facebook putting specific requirements on their jobs does not create any additional jobs. The government encouraging more people to meet those requirements does not create any additional jobs either, but it does creates more competition *for* those jobs. (Which, of course, would drive wages *down*, at least theoretically.)Report
Actually, when you say stuff like:
It sounds a lot like you’re saying that there will never be a pool of unfilled jobs that educational retraining can help fill. Have we moved on to the next stage of the discussion, where you accept that this pool can exist but claim that it’s insignificantly small?Report
It sounds a lot like you’re saying that there will never be a pool of unfilled jobs that educational retraining can help fill.
I have no idea what you mean by ‘never’ there.
There is not *currently* a pool of unfilled jobs (See below) that do not have qualified people to take them, nor has this actually described the state of the US for decades.
There is nothing *theoretically* stopping this situation from existing. But I like to solve problems based on the thing that is actually happening, instead of something that might happen at some point in time.
Have we moved on to the next stage of the discussion, where you accept that this pool can exist but claim that it’s insignificantly small?
There actually is an industry that exists that does not have enough qualified people to fill it: General practitioner doctors.
This situation is due to all sorts of stupidity, most accidental, some deliberate.
And I will stand right here and say: The US government should help train people to become doctors.
See? When ‘lack of skilled workers’ is the *actual problem*, I’m all for training.
Sadly, that’s about the only place that *is* the actual problem. You want to point to another field or two where it’s also true, well, okay, I’m hardly an expert on the unemployment stats of all professions. Perhaps there actually *are* other professions that actually do have a shortage, and if so, the government *should* help train some people for them.
But this clearly doesn’t apply to ‘college degrees’ in general. As should be obvious, if the lack of a college degree was the reason that certain people were not finding jobs, than *almost no one with a college degree would be unemployed*. If the ability of a A+ cert was the reason certain people were not finding jobs, *almost no one with an A+ cert would be unemployed*. (If the lack of a medical degree was the reason that people were not finding jobs, then almost no one with a medical degree would be unemployed…hey, wait. They *aren’t*.)
You can’t stand there and say ‘The lack of X is cause of their unemployment and we will help them get X to solve the problem’, when people who *have* X are also unemployed! Because that fact means there are currently not enough jobs *for people with X*, and jobs are hardly going to magically appear when more people enter that part of the job market.
It’s completely and obviously stupid, and I find myself baffled as to why I even have to point it out.Report
The “problem” with the new economy is that Facebook employs a mere 12,000 people.
GM, by comparison, employs 200,000.
Guess which one is worth more.Report
@davidtc
If only there was a time when the government created a massive works program. Oh right, there was:
https://en.wikipedia.org/wiki/Works_Progress_Administration
The W.P.A. created modern America. It is almost impossible to get the W.P.A. or the Civilian Conservative Corp passed today. Now part of this problem is just that America has pretty low unemployment even if a lot of the jobs now are low wage and service The other problem is that the W.P.A. and C.C.C. only appeals to a small cohort in the Democratic Party. DLC types would be ahghast and the right-wing and right-leaning libertarians would also dislike it.
Yet if you want to create jobs for people who have lost out because of globalization or the recent fiscal crisis (how many college grads or grad school people are underemployed?), I can think of no better way than the W.P.A. or the C.C.C.
Yet infrastructure spending is decidedly out of fashion now.Report
It’s also worth pointing out that the WPA was not intended as a permanent solution, and it had many provision that were specifically designed to make it less attractive than actual employment (so that when jobs came back people would actually want them.) Among them were the fact that WPA employees were not permitted to unionize.Report
@densityduck
I don’t see why the same couldn’t be true now. If workers are losing their manufacturing jobs because of globalization/unionization, doesn’t it make more sense to train them via a W.P.A. type program that revitalizes infrastructure over having them become service workers who say “Do you want fries with that?”Report
Yes, absolutely.
When I realized that many of the things folks complain about wrt inequality are relational goods, that’s when my interpretation of inequality changed significantly.
It’s not about the thing. It’s about the thing as it exists in relationship to other things.
When all Sneeches have stars, stars cease to be a meaningful marker of being special.Report
>>When all Sneeches have stars, stars cease to be a meaningful marker of being special.
But does it matter whether something is special? “Give one man bricks and he can build a home, give everyone bricks and no one can build homes” … doesn’t really sound right.Report
Imagine, if you will, providing a bare minimum of a particular thing. “Food stamps”, say. Can you imagine discussions over whether “Food stamps” should be usable for certain “luxury” items? (Whether they be cigarettes, soda pop, or non-store brand foods?)Report
I’m not seeing the connection…Report
is our obligation to make sure that there is a floor below which no one in society has to live?
Or is it equality?Report
I’d say “equality” isn’t really a sensible societal obligation. It may be a valid aspirational goal (and I think it is), but it is almost certainly going to be in sufficient tension with other important societal goals that we’ll consistently have to compromise around it.
On the other hand, making sure that there’s a certain floor below which no one has to live seems much more likely to be attainable.Report
We had an inequality forum way back in 2012, I think it was, where everybody wrote an essay on inequality and discussed our own takes on it.
Elias Esquith wrote one, Erik Kain, Elizabeth Picciuto, I wrote one…
Brother Rufus nailed it when he talked about how inequality is similar to pregnancy insofar as it can either be a very good thing or a very bad thing depending on how you got there.
I digress. I bring it up because one of the things that came up over and over again was how distasteful it was to start describing the floor. If we wanted to talk about what we, as a society, owed the least of us, it really got ugly because it led, as it would, to haggling over what would and what would not be included and whether it would change over time (like, would we say that something that would be a luxury 30 years ago would be essential to the point where withholding it would be cruel today).
We didn’t really resolve anything.Report
I’m not at all surprised that trying working out what the “floor” should include was ugly[1]. One other nice feature of UBI is it offers some wiggle room around questions of whether to include “luxuries” or just “necessities”, and which is which, since by giving people an amount of money you let them work some of that out by themselves. Still, it’s hardly a panacea. There would be some nasty politics around people using their UBI “wrong”, both in the sense of spending it on stuff large numbers of voters abhor and in the sense of horribly mismanaging their funds and wrecking their lives in the process.
[1] A lot of the most important political questions are unavoidably not-so-pretty.Report
Probably why it’d have to be dolled out, most likely biweekly or monthly, and why the government would have to have some strict rules on garnishing/securitizing it lest the intrepid thieves of Wall Street simply create an industry out of buying the poor’s GBI income stream for paltry lump sum payments.Report
I actually worked at a company that, in an attempt to boost morale because they paid their employees crap, would hand out gold stars to put in their cubes. A month later everyone in the dept had gold stars but morale still sucked.Report
“There are the people who *invent* things, who come up with some new model of doing something, and rush in…They are, in many ways, a myth. Sure, it does happen, but nowhere near the levels it seems to be assumed. But perhaps more to the point, there doesn’t seem to be much evidence this would help with *jobs*. ”
I guess that being the owner and sole employee of a small business isn’t a job, the way you seem to strictly define the term. But neither is it unemployed. And the idea, from what I see, is that people with college educations are more likely to be owner-and-sole-employee of their own business than they are a timecard-puncher in someone else’s organization.Report
I guess that being the owner and sole employee of a small business isn’t a job, the way you seem to strictly define the term. But neither is it unemployed. And the idea, from what I see, is that people with college educations are more likely to be owner-and-sole-employee of their own business than they are a timecard-puncher in someone else’s organization.
Oh, no, I’m counting ‘Owning a small business’ as a job here.
My point is that this isn’t sort of job *growth*.
In an area where people buy a specific number of widgets over time, you roughly need the same amount of people to *sell* those widgets. It doesn’t matter if they’re selling them via big box stores, or in some newly-started small business.
So a good portion of ‘entrepreneurs’, the supposedly Republican solution to the problems in job market…do nothing at all *for* the job market, at best just moving jobs around. If X widgets were being sold before, and X widgets are being sold now, on average the *same* amount of jobs are involved in that.
The only way to increase the amount of jobs involved in the widget industry is for people to want to buy *more* widgets, so more people are need to create, transport, and sell said widgets.
And, yes, there is one way that entrepreneurship can add jobs. If someone invents a new doodad that everyone buys, that does it. Cell phones do comprise a reasonable part of the economy, and their existence has created jobs. But ‘inventing new things that everyone starts buying’, while we like to pretend is what ‘entrepreneurs’ do, is not something that happens that often. (And more often than not, doesn’t really involve ‘entrepreneurs’ anyway.)
Once you get into that sort of thing, into ‘R&D entrepreneurship’, the math gets very complicated. If someone can produce an existing thing with 80% of the work, they can, in theory, lay off 20%of the workforce. OTOH, now that it’s cheaper, they will sell more, which means not only do they need some of those 20% to add to production, but the entire pipeline of transport and sales will have more people in it.
Where the math *isn’t* complicated is the ‘starting a retail store’ version of entrepreneurship. If people are buying roughly the same amount of stuff, than there are roughly the same amount of jobs, and all the jobs did was move around a bit.Report
“If X widgets were being sold before, and X widgets are being sold now, on average the *same* amount of jobs are involved in that.”
Why is “producing and selling widgets” the only kind of job that exists for you?
“If people are buying roughly the same amount of stuff, than there are roughly the same amount of jobs, and all the jobs did was move around a bit.”
Yes, the idea behind widespread education is that you don’t just move the jobs around, and you do find ways to do things better.Report
Why is “producing and selling widgets” the only kind of job that exists for you?
It’s not. That’s just an example.
That objection applies to every industry.
Jobs exist to provide goods and services to people. That is why people are employed.
So we will have, basically, as many jobs that are needed to provide the goods and services that people are buying. If we have too many, competing businesses will spring up and outcompete the businesses that overhired people. If we have too few, either existing businesses will hire more people, or new businesses will enter the market and hire people.
(I always find it weird when I, as someone on the far left, end up explaining how markets work.)
The only exception to this are jobs that somehow exist outside the market, like government employment. And a few weird little parasitical economies that everyone else sorta wishes didn’t exist, like collection agencies and vulture capitalists and patent trolls. (They aren’t really supplying *anything*.)
Yes, the idea behind widespread education is that you don’t just move the jobs around, and you do find ways to do things better.
Does doing things ‘better’ involve having *more* people do them, or *less* people do them?Report
DavidTC your doing a helluva good job here unpacking this stuff IMO.
One of the keys to prosperity, is value production.
What people value, changes. This is where automation, AI, and capitalism3 will eventually hit a 3 feet thick steel wall.
If enough people can’t sell their labor/product/service in the capitalism3 markets they will start using capitalism1 markets again.
They will do this because the capitalism1 markets offer a value.
If everyone was an individual owner operator in a free market system, there would be much more equality, jobs, and oddly enough, more wealth than is generated by the current system.
This doesn’t work for the left. The left has a social preference. There is a preference for grouping together to do things. There is a preference to address market failures as a faction instead of each individual taking externalities and making them internal. There is no belief that it is possible. I’m not saying it is good or bad, it just is what it is.Report
If everyone was an individual owner operator in a free market system, there would be much more equality, jobs, and oddly enough, more wealth than is generated by the current system.
…?
I have to disagree with some of that.
For one thing, everyone being an ‘individual owner operator’ is not really workable in this world, unless you’re using that to mean ‘Everyone owns a share of the company they work for’. (Which is an idea I’ve always pushed.)
If you mean ‘Everyone is working as an individual’…erm, no, that isn’t workable.
And I don’t know what you mean by ‘much more jobs’. You are correct there, but not in a good way. There would be *way too many* jobs that needed filling. The economy would have, like, tens of billions of jobs, because everything would be less efficient.
Sadly, there are *not* tens of billions of people in the labor market, so that system could not, in fact, work.(1) (And if there were that many people, they’d need even *more* workers.)
Meanwhile, there would be a lot *less* wealth generated.
Our standard of living cannot be maintained via individuals, or at least can’t be maintained without things that look like corporations. (*Ownership* of these corporations, OTOH, could easily work some other way.)
There would be equality, though, I’ll grant you that. Sorta Amish-level equality, but equality.
1) An oddly important thing to remember. The amount of jobs would best fit roughly the number of actual human beings seeking work. While having too few jobs suck, having an economy that requires more people working than people who currently exist is also kinda stupid. (And is not a system that we could really end up with.)Report
I will say something here that I’m not looking for an immediate response, just some well thought out consideration.
Consider the technology that has been developed over the last hundred years.
Now consider if that technology was engineered more to facilitate individual owner operators as opposed to industrial level production.Report
“If you mean ‘Everyone is working as an individual’…erm, no, that isn’t workable.”
…why?Report
Transaction costs and specialization?Report
Yeah, what pillsy said.
Trying to make a TV via individuals is incredibly hard, and I don’t mean ‘Trying to make every part’ yourself. (Which is not something anyone could do.)
How do you make a TV? I mean, what’s the premise here? Someone with engineering skill works for years to design something, and then sells the design to someone with a parts shop. That guy then buys some microchips from…the microchip guy? and puts them together and…sells them on consignment in someone’s roadside stand?
(And, again, I find myself oddly doing something that sits at odds with the whole ‘far left’ thing, specifically, explaining how our modern civilization needs corporations.)
Perhaps instead of me explaining how this doesn’t work, @joe-sal could instead explain how it *does*.
Now, WRT to his ‘consider if that technology was engineered more to facilitate individual owner operators as opposed to industrial level production.’, there is some sort of hypothetical ‘What if we built factories that ran themselves that no one worked in or owned?’ question, which is an interesting question.
But that sort of thing not only is not actually possible, it also doesn’t quite seem to be what he’s asking…although I’m not actually sure what he *is* asking.Report
Not really asking a question, just bringing forth an idea that will probably unfold over the next several decades.
To look at how you would most efficiently build a TV in a human driven work cell you would need to understand Single Piece Flow.
Of course if you understand SPF you understand it’s relation to waste and it’s superior efficiency and flexibility.
Now there may remain an argument about the inefficiency of capital formation at each owner operator instead of within the centralized realms of corporations, but I ask, which would be the most beneficial to the workers? Also what is the workers preference?
For a large portion of the future economy, I find this probable, and likely inevitable.Report
Joe Sal writes “[T]here may remain an argument about the inefficiency of capital formation at each owner operator instead of within the centralized realms of corporations, but I ask, which would be the most beneficial to the workers? Also what is the workers preference?”
This is exactly where I’ve been going.
DavidTC writes “Trying to make a TV via individuals…”
Nothing you describe could not be performed by individuals working cooperatively, forming contracts with each other as independents rather than acting as employees of a single entity.
Specialization exists and does indeed increase the productivity of labor, but it does not require A Big Overarching Organization That Manages Everything.Report
Some of the things individuals would need to do in such a system–like negotiation, writing contracts and ensuring compliance, et c.–are specialized in and of themselves. Also, s sort of naive wild-assed-guess, I’d think the model of selling shares in limited liability corporations, which is such a cornerstone of contemporary capitalism, is a lot easier with bigger firms, for a lot of reasons.Report
Nothing you describe could not be performed by individuals working cooperatively, forming contracts with each other as independents rather than acting as employees of a single entity.
I’m completely baffled as to why defending the corporate structure is left to *me* of all people, but either those contracts are going to be as complicated as a corporation, or, no, you really can’t do what corporations do.
It’s worth pointing out that, even *with* corporations, we end up with giant interlocking systems of contracts.
And then we often get interlocking systems of contracts *on top* of that. (I.e., a corporation contracts out another corporation to supply something, and that corporation subcontracts it out.)
The idea you can have anything like the modern world without people being able to do business with ‘an entity of workers’ is just…wrong.
At best, you could make an *actual person* as some sort of figurehead who signs contracts and legally owns everything, instead of a fictional one…but you still have to have employees.
Specialization exists and does indeed increase the productivity of labor, but it does not require A Big Overarching Organization That Manages Everything.
It is almost completely impossible to have a process that results in a car or a microchip or anything of that level of complexity without something like a corporate structure.
Hell, I’m a little baffled at who you think would *own* a microchip fabrication plant. The people who *afford* such plants and the people who can *operate* such plants have almost no overlap. Do you think engineers would…rent the machines or something?
If someone wants to imagine a world without ‘corporations’, it is theoretically possible, because corporations are just artificial people and you could swap in *real* people. It would be very awkward, and completely pointless, but possible.
But you’re trying to postulate a world without *employers*, where everyone just…what, sells things to other people? That is not how the world functions.Report
“Do you think engineers would…rent the machines or something?”
That is EXACTLY what I think.Report
Having a place to rent tools like that is immensely useful to *inventers*.
It is not particularly useful to people attempting to build a car, or a microchip, both of which require very large capital outlaps for equipment, and cannot actually be reconfigured very quickly.
Seriously, address my point. I think most people know generally how car manufacturer works now.
So explain how it works sans a corporate structure, without multiple employees. (As I said, if you want to argue that corporations should all be owned entirely by the workers, and everyone gets a cut of the profits, that’s a fine argument…but it’s not the one here.)
Explain to me how someone is going to rent a machine to construct a car frame and then…sell the frame to the next person in the assembly line? And the someone else can rent that car frame machine and…reconfigure it to their car?
Who…ordered the car? Is someone at the end of this line buying finished cars and driving them to car lots to have them sold on commission? Who makes sure that someone actually put in the brakes…is every single person in this line supposed to inspect the car before they buy it for five minutes to install a single part.
This doesn’t even make any sense conceptually, much less practically!Report
“Seriously, address my point.”
I did. You seem to have this idea that many words are required for an answer.
Why are you so insistent that complex activity cannot occur without a central authority?Report
DD I appreciate your consideration and understanding here. Some folks just can’t see it, and that’s ok.
I think the ‘social thinkers’ don’t really want to change corporatism, they just want to be in control of it. Much like this statement:
“‘Everyone owns a share of the company they work for’. (Which is an idea I’ve always pushed.)”
I’ve only encountered one communist on the left who fully understands the individual owner concept and was agreeable to it, maybe I’ll find another out there some where, but sure as hell ain’t holding breaths.
In the end it doesn’t matter. These ‘industries’ will be built, grow, slow, crystallize, and shatter over and over again. Never quite accounting for the diversity of individual preference, and constantly bending to the uniformity of those wanting control. The constant drumbeat of ‘assets under management’ unfolding.
Maybe someday each one of us will want to own the economies of ourselves, to not be reduced “to a mere piece of a machine”. Again, I find it inevitable, whether 50 years from now or 10,000.Report
@davidtc
IMO telling people to be entrepreneurs and small business owners is a non-solution to the employment crisis. A lot of law schools told their jobless students to “quit your bellyaching and hang up your own shingle.” Of course this would allow the law schools to say “X number of our students are working as lawyers” without needing to care about whether those students were actually bringing in much income as lawyers.
So telling people to be entrepreneurs is largely the same thing. You can say “Look at our unemployment numbers without wondering how many people are actually making a profit.”Report
We kind of touched on this a million years ago.
My worry was that we were moving away from small businesses to a model of Gimungous Corporations and that was a bad thing.Report
@jaybird
I think that happened a long time ago. Way before the New Deal.
Even if everything you said is right about the cost of regulations, I still think there are a lot of natural barriers to entry in terms of capital. Where does one get money for the bar or if you are getting more techie for your Internet Server? Where does one get money for your kegs in your bar example? How about the various tools and services? In law, WestLaw and Lexis don’t come cheap but are necessary for research and that is not a barrier to entry.
I think a bigger stumbling block towards starting your own business is the need to pay rent, a mortgage, buy groceries, stuff for the kids, etc. This is why I don’t think entruprenurship is a cure-all.Report
Yes, a million years ago was *way* before the New Deal.Report
Why in the heck do we need a cure-all?
Can’t a “cure-some” be worth exploring?Report
Jaybird, why do you hate poor people (who can’t meet the requirements for that cure) / love rich people (who benefit despite not needing it)?Report
Jaybird, Damn, I sure do miss that Cheeky fellow.Report
The implicit assumption of elites in both parties is that the solution for the rest of the country is to become more like us, either through education or entrepreneurship. Rarely does anyone discuss how we might build an economy that works for people who aren’t like us and don’t want to turn into us.
Yup, that’s what this election cycle has been ALL about. The long-simmering cultural shit has hit the political fan.Report