Editore"s Note
Tilting at Windmills

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April 2, 2007
By: Kevin Drum

GOOSING THE ECONOMY....It might be a mistake to get dragged into this, but Mickey Kaus responds to yesterday's snark about burger-joint economics with this:

I'm not denying income inequality is rising....My suggestion is only that if you keep the economy going and stop new immigrant entrants from flooding in at the bottom, entry-level wages will eventually rise and people will start complaining (as they did in the late 1990s) about the "U-shaped" economy in which the rich and the poor were gaining faster than the middle.

Set aside the immigration thing. I think the evidence suggests that immigration has — at most — only a small effect on wages at the low end (see here and here), but that's certainly an arguable point. I'm more interested in Mickey's contention, which he's made more than once, that the real key to boosting entry-level wages is to "keep the economy going."

Consider the evidence. The average income of families in the bottom fifth of the population has been flat for more than 30 years, through good times and bad. In the most recent five years of economic expansion, using the BLS data that Mickey points to, it's been even worse: wages for the bottom 10% (after correcting for inflation) are flat. Wages for the bottom 25% are flat. Wages for the median worker are flat. And that was during a period of sustained economic growth. How long is it supposed to take for an economic expansion to turn into a tight labor market? Over the past three decades, the only time the median wage has increased significantly was during the late 90s, and that was thanks to the most intense, highest-flying bubble in a generation. We can't count on that happening again any time soon.

I'm as big a fan of a hot economy as the next person, but the stubborn fact is that economic growth over the past three decades has produced next to no gains for the average worker. And even if it did, what's the magic key to manufacturing an endless expansion? None that I know of. There's a Nobel Prize waiting for the guy who can figure out how to do away with the business cycle.

I happen to think that median wage stagnation has gone on long enough that it's plainly a serious problem and plainly something that needs to be addressed via policy. For some reason, the free market has disconnected wage gains from productivity gains in recent years, and there's no indication that this is going to change on its own. For that reason, I favor things like a higher minimum wage, looser union organization rules, saner trade policy, more labor-friendly tax policies, and — yes — an immigration policy that would have the effect of reducing total immigration.

But just keeping the economy going and leaving it at that? Nobody knows how, and it doesn't seem to work anyway. Unless we're giving up, there has to be more to the answer than just that.

Kevin Drum 11:45 PM Permalink | Trackbacks | Comments (70)

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Comments

Mickey is an idiot.

And first.

Posted by: Fred on April 3, 2007 at 1:14 AM | PERMALINK

Now imagine how scared Kaus would be if the immigrants were _GAY_!

Posted by: Matt on April 3, 2007 at 1:15 AM | PERMALINK

Won't argue with most of Kevin's list -- min. wage, union rules, trade policy, tax policy -- but don't agree we need an immigration policy that would reduce total immigration.

For one thing, immigration policy is different than immigration enforcement. The policy is pretty tight already. Does anybody have any idea how hard it is to immigrate here? Over the weekend I spent some time with a couple who are trying to immigrate from Canada. It's been more than seven years, more than $40K out of pocket, and they still are years from getting their green cards. Tell them that our policy is too lax and they'll give you an earful.

Second point, if you don't think immigration is really a factor in stagnant wage growth, then changing immigration policy is not going to solve the problem.

Posted by: JJF on April 3, 2007 at 1:15 AM | PERMALINK

And even if it did, what's the magic key to manufacturing an endless expansion? None that I know of. There's a Nobel Prize waiting for the guy who can figure out how to do away with the business cycle.

http://en.wikipedia.org/wiki/Freiwirtschaft

Posted by: Old Hat on April 3, 2007 at 1:17 AM | PERMALINK

I think voluntary, small scale experiments with freiwirtschaft are worth implementing.

Posted by: Old Hat on April 3, 2007 at 1:19 AM | PERMALINK

Kevin, remember that what you're calling "the free market" is really a mix of laws, customs and happenstance. Changing the mix of these three could lead to a different result. Calling the current situation "free" gives it a sort of a priori legitimacy that it doesn't deserve. We've made the economy the way it is and, if we want, we can change it. There's nothing particularly free about the current setup that would distinguish it from the range of different setups that a moderate such as you (or me) would have in mind by way of improvement.

Posted by: Charlie Robb on April 3, 2007 at 1:21 AM | PERMALINK

but the stubborn fact is that economic growth over the past three decades has produced next to no gains for the average worker.

1977 - 2007. That the three decades you mean?

Consider a car costing half the median annual salary in 1977, compared to a car costing half the median annual salary in 2007. I'd say that the economic growth over the past 3 decades has considerably increased the value of automobiles available to a median earner. But that's just autos.

In the other threads I have mentioned the costs (compared to median incomes) of effective treatments for breast cancer and childhood leukemia, of effective treatment for heart attacks, and the cost of coronary bypass surgery. The median wage earners of today can buy lots more good stuff than the median wage earners of 3 decades ago.

The big exception is housing. In some parts of the country, median housing prices have hardly changed (Brighton, NY), but in other parts the changes have been dramatic (San Diego, CA.)

Posted by: MatthewRMarler on April 3, 2007 at 1:23 AM | PERMALINK

What are the chances that Kaus is in the bottom 10% of wage earners? The bottom quartile? What are the chances that Kaus' AGI is anywhere near the median?

The pre-Socratic Xenophanes was fond of saying that if horses and cattle had hands, and could make images of their gods, the idols they made would have hooves and horns.

And when philosophers in those days sketched an ideal government, you got governments ruled by philosopher-kings.

Ask someone to sketch an ideal state of economic affairs, and he'll probably sketch one under which he makes out like a bandit.

Posted by: Davis X. Machina on April 3, 2007 at 1:24 AM | PERMALINK

JJF: For one thing, immigration policy is different than immigration enforcement. The policy is pretty tight already. Does anybody have any idea how hard it is to immigrate here?

good points.

It is too easy to immigrate illegally from Mexico (and some other places), and too hard to immigrate legally from almost anywhere else (Philipines, India, China.)

Posted by: MatthewRMarler on April 3, 2007 at 1:27 AM | PERMALINK

I'm going to stick with Adam Smith on this - one way of increasing the wages of labor is to limit the supply. And almost everyone would agree that we want to keep the economy going.

Another way to decrease inequality is the way it was done in the nineteen forties, fifties, and sixties - tax wealth and luxury more than wages, instead of following the exact opposite course.

Ronald Reagan (and his congressional enablers) by trading income taxes for excessive social security taxes played a key role in today's rising inequality.

Posted by: CapitalistImperialistPig on April 3, 2007 at 1:28 AM | PERMALINK

Another way to decrease inequality is the way it was done in the nineteen forties, fifties, and sixties - tax wealth and luxury more than wages, instead of following the exact opposite course.

B-b-b-but that's class warfare.

Posted by: Old Hat on April 3, 2007 at 1:40 AM | PERMALINK

Another way to decrease inequality is the way it was done in the nineteen forties, fifties, and sixties - tax wealth and luxury more than wages, instead of following the exact opposite course.

Of course, the opposite is not class warfare.

It's only class warfare if it affects the rich and their ability to buy yatchs.

Posted by: Old Hat on April 3, 2007 at 1:42 AM | PERMALINK

That argument, MatthewRMarler, is slightly silly. I of course don't disagree that I would rather be in my income bracket now than in 1977, and the same is probably true of basically everyone. But that is only relevant to the topic at hand if you believe that evenly distributed growth would have prevented the invention of the computer and faster cars, a pretty ridiculous claim.

Things are improving for most people based on technological improvements, but the buying power of those in the bottom half is still stagnating compared to the super rich. And that's not because the rich deserve more, its because Republicans have done a lot to make sure they get richer.

Finally, the urban poor in America can't afford cars, much less breast cancer surgery. If anything, they are being left even farther behind because they don't share in the technological advances nearly as much as the rich.

Posted by: Sam L. on April 3, 2007 at 1:48 AM | PERMALINK

Finally, the urban poor in America can't afford cars, much less breast cancer surgery.

Or the rural poor. The poverty on Indian reservations is as profound, or more so, than even the direst inner cities. And the rest of rural America isn't doing so hot.

Posted by: Davis X. Machina on April 3, 2007 at 2:05 AM | PERMALINK

At bottom, labor income is a function of the accumulated capital stock (per worker). Technological advance is capable, potentially, of increasing the bang for the buck, as it were, and energy consumption per worker matters as well (since a lot of what the industrial revolution was about, was substituting fossil fuel for animal and muscle power).

But, ultimately, it is a matter of technology embodied in capital stock, meaning the amorphous accumulation of equipment, knowledge and skills and cultural practice, and organization in its many forms.

For the most part, the difference in wages between the U.S., and, say, Thailand, is attributable to the lack of sufficient accumulated capital stock in Thailand. Half the Thai population is still in low-capital-investment agriculture, producing a mere 10% of that country's total output; the capital stock to employ everyone well simply doesn't exist.

Wages have been flat in the U.S., because the capital stock has been allowed to deplete and deteriorate. Technological progress continues to make a lot of it obsolete. Infrastructure deteriorates. Higher education is made expensive for the young. A undervalued Chinese yuan is tolerated, and all new manufacturing investment is made abroad.

Corporate profits are high, but investment still lags. The classic economic model of monopoly explains why: a monopolist withholds production, raising price by reducing investment and output below the efficient level.

The country needs an investment boom, to increase the capital stock, public and private.

Raise taxes on the top 1%, by a lot, and eliminate the federal deficit as a drag on savings. Pour money into a low-energy infrastructure. Think hard about how to rescue the suburbs from the implications of expensive gasoline, and then spend money, big money.

Replace airline travel within the Northeast corridor with high-speed trains that also provide easy access to the 'burbs in between, for example.

Let inflation rise to 4% or so. An inflation tax will force the massive cash balances floating out there to come home and do some work as investment capital. And, domestic dollar inflation will force China to accept a more reasonable value for the yuan.

Keep short-term rates low, but force long-term rates up -- a normal instead of inverted yield curve is good for smart intermediation and there fore good for investment. Double the size of the SEC; good regulation is good for investment. Reform corporate governance, to allow investment management companies to sponsor corporate directors and take other action to rein in rapacious CEOs; you can't have adequate business investment if job 1 is siphoning off another $10 million for numero uno.

Reinvigorate antitrust. Breakup Big Media, among others. Attack the distribution monopolies.

End the war in Iraq and nationalize health care. We cannot afford a $trillion dollar hole in the desert; we cannot afford to import oil from our enemies; we cannot afford to pour money into a fractured and inefficient health care system. Cap the % of GDP going to health care at 15%, guarantee coverage to everyone, and then argue over how to allocate that pot of money to achieve the best results.

There's a lot of stuff we could do. But, first we have to break the hypnotic hold that the plutocratic pundits have over us. Tax cuts are not a path to growth, people, when they force us to starve the future.

Posted by: Bruce Wilder on April 3, 2007 at 2:21 AM | PERMALINK

The last increase in the min wage was in the 90s.

Posted by: bakho on April 3, 2007 at 2:29 AM | PERMALINK

Bruce -- you've succinctly outlined what should be the Democrats' economic agenda (I would add a big green component of increased incentives for environmental innovation as well as some kind of fair trade agenda). If only we could seriously challenge the entrenched orthodoxies ... I'm afraid that it will take an economic catastrophe (which may be coming).

Posted by: WestCoastWizard on April 3, 2007 at 3:29 AM | PERMALINK

Capitalist - Workers cannot withhold their labor to increase the worth of their work. They're not (and should not be considered) commodities.

Posted by: Everblue Stater on April 3, 2007 at 3:43 AM | PERMALINK

The bottom part of the income distribution experienced gains in the late 1990s, for the first time since the 1970s.

I'm not sure why.

Posted by: Measure for Measure on April 3, 2007 at 3:46 AM | PERMALINK

MatthewRMarler, your persistent attempts to move the goalposts when discussing wage stagnation and income inequality are just a waste of your time because no one here is listening. We're not talking about technological improvements or increases in the standard of living in the abstract. We're talking about the fact that, while the economy has grown immensely and productivity has gone up, real wages have stayed the same or gone down slightly. During this same time, income for the upper 1-10% has gone up tremendously, as have corporate profits. The primary reason that working people have even had access to more money for consumer spending on cars, etc. has been increasing home valuations, home equity loans, and credit card debt. These working people that haven't benefitted from the growing economy and are up to their necks in debt are about to feel some more serious pain if housing keeps taking a dump and the economy goes into recession. It will all become very crystal clear to these people exactly what is going on, and they aren't going to like it. Especially as energy costs keep rising and easy access to credit disappears.

Posted by: OhNotAgain on April 3, 2007 at 8:08 AM | PERMALINK

Gotta include labor market segmentation and job restructuring here. Circuit City is a crude example, but will do the trick. In hotels, hospitals, manufacturing, call centers, and retail, companies are stripping job functions down to the bone so they can be performed by a low-wage worker with minimal training, then contracting out everything else to vendors. This results in flatter org charts, lower wages, and a larger divide between labor and management wages.

Kaus' rising tide of economic growth doesn't touch workers at the bottom of this scale--not because of immigration, but because middle-class workers are being laid off and are now also competing for these $5-8 jobs.

Posted by: Kuz on April 3, 2007 at 9:21 AM | PERMALINK

I'd say that the economic growth over the past 3 decades has considerably increased the value of automobiles available to a median earner.

Yeah, but you're a dishonest, delusional, Republican-water-carrying fool, Marler.

Sure, you admit that your example is "ust cars." But the righty talking point that some consumer products are cheaper now than 30 years ago does not change the fact that median incomes have indeed remained flat for 30 years -- as was pointed out to you -- nor the fact, also pointed out to you repeatedly, that the cost of necessities such as food, housing and health care has *risen*.

But by all means, you and your Republican water carrying ilk please do keep pretending that American consumers are doing great in today's economy. Your porty loses votes every time you mouth those empty platitudes, as it richly deserves to.

Tool.

Posted by: Gregory on April 3, 2007 at 9:29 AM | PERMALINK

To explain the 90's, and it goes in with what Bruce mentioned, what happened is that there was what really is minor (but historically it's massive) readjustment of "investment". Money went out of static investments, such as public stocks, bonds and so on, and went into more dynamic investments like venture capital and IPOs. (Which then become public stocks, but for that first bash, it's much the same thing.) This money then went towards wages, fixtures, services, etc. Things that created jobs and stimulated the economy. So the lower classes were starting to feel the effect, and the wages eventually bump up to the middle class...

And Greenspan put the brakes on the economy and shut the whole thing down really. That's something people like Kaus need to realize. The economy will never grow long enough to raise wages because we won't let it because we think that will result in inflation. (Inflation is a cultural ill, not an economic one, in most cases)

So we need to do it through policy.

The big one, is Universal Single-Payer fuck the insurance companies Health Care. If you read Ezra Klein, he has a good finger on this situation, but what this would do is create higher labor churn between companies..if people didn't like a job they could just go get something else. If a company wanted to keep workers that knew their system/were knowledgable in their jobs, etc. they're going to have to pay higher than "competitive" wages. They're going to have to offer a good work environment as well (and that's a biggie, and probably something that pisses off the Middle-Manager base of the Republican party)

Put on top of increasing taxes of "speculative" investment, and decreasing the taxes of returns of local (and that's important. Building a plant overseas shouldn't qualify) dynamic investment, and card check laws to allow unions to form, and you have the blueprint for a society where your average person has some serious bargaining power.

And if we want a "Free market" solution for it...

That's it.

Posted by: Karmakin on April 3, 2007 at 9:29 AM | PERMALINK

kaus is giving douglas feith a run for his title as dumbest fucking guy on the planet.

Posted by: klyde on April 3, 2007 at 10:10 AM | PERMALINK

I had this in my notes from a labor relations seminar in which I participated last year--

"The administration is saying the only reason people are not sharing in the recovery is they don't have the right skills," said Lawrence Mishel, president of the Economic Policy Institute. But if college graduates are not doing well, Mishel said, "what does that say?"

Bush's advisers say graduates are earning less because their ranks are swelling and they face tougher competition for better-paying jobs. But they see good news in the increase in productivity, and they say eventually wages will follow

"Whether or not new college graduates are making more than they were five years ago, we do know the same people will be making more five years from now," said White House spokesman Ken Lisaius.

However, some experts say wage stagnation could become a permanent fixture for most four-year degree-holders.

Harvard University economist Richard Freeman, in his 1976 book "The Overeducated American," detailed the previous erosion of graduates' wages. Today, he believes that college-educated workers will continue to see their wages erode because of the global labor market. Moreover, the pressure will intensify as China, India and other off-shoring hubs develop their own glut of graduates."

Posted by: consider wisely on April 3, 2007 at 10:56 AM | PERMALINK

I see the facts by looking at the world I have known. One factor here seems to be the conversion of the Physical (work with your body)Economy to the Knowledge Economy (work with your brain) that took place over the last forty years.

There were lots of great factory jobs in the sixties where I am from, but those have been replaced by robots. And to work with your brain in general, you need to go to school and get the right piece of paper. That is the new union card. But school is not for everyone.

I see the economy as having changed, but not everyone can fit into this new economy. They don't want to, or can't, work with their brains. I don't have any answer to the problem.

Posted by: Bob M on April 3, 2007 at 11:22 AM | PERMALINK

'"Gloabalization" was intended to allow American businessmen to replace American workers with low-priced foreign ones. Since american corporations own much of the foreign manufacturing businesses, a foreign worker is simply an employee of an american firm hired overseas to replace an american worker stateside. The congress threw in an added tax sweetener to further facilitate this givaway. NAFTA and CAFTA had the same intent. So much for "promoting" full employment for U.S. citizens. Immigration policy, legal and illegal as well, was designed to do the same. No real serious efforts were made to stop the border crossings. The proof of this is in the number of illegal immigrants who suceeded. Legal immigration in the high-tech sector was a fraud from the get-go. Businessmen simply wanted younger,less expensive, and more pliable employees. Those older native ones wanted to be fairly treated and paid appropriately for a highly-trained engineer. Again, it was the government that legally made this jobs givaway possible. The age-discrimation laws were ignored and tons of young (inexperienced) but low-salaried foreigners came surging in. The immigration laws themselves were violated from the very beginning, proof being that high-tech salary levels immediately took a big dip violating the law's requirement that immigrants were to be paid equal wages. When it was obvious that wages were falling, the congress did nothing.' - Congress's Betrayal of the American Worker
by Richard Backus
http://www.smirkingchimp.com/thread/6348

'In the 21st Century, migrant workers from Mexico, Haiti and Central America now serve the government sanctioned role of restraining wage growth among America's assembly line, service and agricultural working groups. Contrary to the more infamous immigrant xenophobes of the Republican Party, big business owners in the United States prefer a legalized "guest worker" system. That "guest worker" system would permit cheap labor to temporarily enter the United States while preserving the option of throwing that cheap labor away whenever it gets injured, old or demands fair wages or benefits. Furthermore, the neoliberal globalization of capital permits businesses to move rapidly around the globe pursuing the cheapest labor and the fewest regulations, thus adding to the wage-depressing effect.'

The Docile American: The Nexus of God, Labor, Health Care and the Fear to Strike
by Zbignew Zingh

Posted by: MsNThrope on April 3, 2007 at 11:24 AM | PERMALINK

Imagine how scared Mickey Kaus would be if HE were gay.

Posted by: plunge on April 3, 2007 at 11:28 AM | PERMALINK

Why did the low income wages increase in the late 1990s?

One- Congress raised the minimum wage (the last such time) and of course Clinton signed it.

Two- unemployment among urban blacks dropped below 10% for the first time in decades.

Posted by: bakho on April 3, 2007 at 11:41 AM | PERMALINK

Actually, up until last year, the u was an n. The middle was gaining faster than the poor which were gaining faster than the rich. That changed last year. Now I think it's more like an r, but may be a / (rich may have made big gains last year, don't remember if they beat out the middle class though).

Posted by: aaron on April 3, 2007 at 11:44 AM | PERMALINK

'"Every nation has an obligation to limit immigration to a number that will not dilute its workforce, but will maintain a stable middle class - if it wants to have a stable democracy. This has nothing to do with race, national origin, or language ... and everything to do with economics." - Thom Hartmann

Posted by: MsNThrope on April 3, 2007 at 11:46 AM | PERMALINK

kevin is right: it's a mistake to keep a discussion going with kaus, who simply makes things up that he wants to be true and sserts them (the notion, for instance, that there were loads of complaints in the '90s about a u-shaped economy).

as for matthewrmarler, let's help the poor lad out with his inadequate understanding, shall we? matthew, go research the term "hedonic adjustment."

what that means, in short, is that qualitative improvements are taken out of inflation calculations. if we didn't have hedonic adjustments, then median incomes wouldn't appear to have stagnated; they would appear to have declined in real terms.

or, to put it another way, yes, it's true, someone in the same economic position in society can buy a better-made car than he once could. that's not insignificant, but it doesn't change the underlying point: the real purchasing power - the ability to buy more - hasn't moved one bit. a better car doesn't make up for that....

Posted by: howard on April 3, 2007 at 11:48 AM | PERMALINK

For capitalism and democracy to co-exist, there must be at least some fairness in dividing the economic pie. Since 1977 the capitalists have done a good job of controlling the message and the Republicans have done a good job of damping down democracy (voter supression, in roads on the Bill of Rights, possible screwing with election returns etc.), but the chickens are coming home to roost as the average schmucks live out small lives of quiet desperation.

Posted by: terry on April 3, 2007 at 11:48 AM | PERMALINK

Of course, this discussion is overlooking the possibility that many four-year degrees from American universities are disguising people who still can't figure the area of a carpet, the volume of a round tank, the heat content of a liter of water, explain whether antibiotics are good against viruses, or locate Iraq on a map.

I worked in education with a holder of a bachelor's degree who could barely read an article in Newsweek magazine aloud, and she comprehended very little of anything that wasn't about celebrities.

Beyond all that, MsNThrope sounds at times like someone I could work with on an immigration bill. I know that working-class Democrats in my district are at the point of despair over illegal immigration. They have struggled to do everything right and up to standards, but they are being beat out by contractors who have illegal 14-year-olds driving dump trucks down the street without a valid U.S. driver's license. When the kid gets off work he drives his stolen car home without proof of insurance or anything, of course, and he also probably has warrants from California for beating his wife, who is also 14.

If the kid gets busted he is back in two weeks with a new Texas driver's license and a new name saying he is 21. In our state one party will register him to vote and hold his hand until he does. His teen-age wife, too!

Come on, Democrats. If you really want to do something about the immigration mess, get specific about how far you are willing to go and quit name-calling. Not everyone who wants the laws upheld is a xenophobe. We just want laws to mean something.

Posted by: mike cook on April 3, 2007 at 11:50 AM | PERMALINK

Consider the evidence. The average income of families in the bottom fifth of the population has been flat for more than 30 years, through good times and bad.

One problem with that analysis is that you are using income by family. But over the past thirty years, many families have shattered.

Before you had 1950's style families in which the father worked and the mom stayed home with the kids. Poor families may have relied on two workers out of necessity.

Now you have quadrupled out of wedlock childbirths on the low end, and DINK (dual income, no kids) families on the high end, and you get rising income inequality by family.

Posted by: Justin on April 3, 2007 at 11:58 AM | PERMALINK

The underlying problem is that the economy has already been 'goosed' past the breaking point by Greenspan's effort to mitigate the collapse of the dot.com bubble by lowering interest rates to levels below the inflation rate; by vastly increased and unfunded government spending and by a couple of trillion in unfunded tax cuts to the wealthiest.

This has resulted in a completely phony 'recovery' based on asset bubbles and layers of debt piled on more debt. A global credit bubble the likes of which no one has ever seen before. It's an unsustainable hose of cards.


"Recall three central aspects of our concerns about global capitalism's underlying dynamics. First, the problem of 'overaccumulation' (excess investment in relation to the demand for output) - witnessed during the 1960s-90s by declining increases in per capita GDP growth and by falling corporate profit rates (net of interest) - was displaced and mitigated, but at the cost of much more severe economic tension in months and years ahead.

Second, the temporary dampening of overaccumulation through increased credit and financial market activity - especially aimed at real estate until this year, but at other speculative markets as well - goes far beyond the ability of capitalist production to meet the paper values in the foreseeable future.

Third, geographical shifts in production and finance continue to generate severe economic volatility and regional geopolitical tensions, contributing to unevenness in currency values and markets as well as pressure from capitalist markets to penetrate non-capitalist spheres of society and nature, in search of restored profitability." - Global capital still volatile, uneven, destructive/By Patrick Bond
http://www.zmag.org/sustainers/content/
2006-12/24bond.cfm

Posted by: MsNThrope on April 3, 2007 at 11:59 AM | PERMALINK

"And that, given how deeply in debt the US government is, and the US consumer is, would be a down turn that could be with us for a very, very, very long time. What will add to the pain is that while the profit taking classes have been bailed out from the 2000-2002 stock market crash, those who earn wages have never really felt this recovery take hold, not in their pay envelopes, and not in their chances for advancement. Younger people and older workers alike have been stranded, and this is in a time when jobs are going to be easier to find than later on. In fact, this expansion has featured the worst job growth and worst pay picture of any long expansion since the second world war." -
Recession Watch
By Stirling Newberry

Posted by: MsNThrope on April 3, 2007 at 12:01 PM | PERMALINK

what that means, in short, is that qualitative improvements are taken out of inflation calculations. if we didn't have hedonic adjustments, then median incomes wouldn't appear to have stagnated; they would appear to have declined in real terms. - Howard

Indeed.

'Instead, the market is worried, worried, worried about an American recession. We have news for the market. The recession arrived seven years ago and is gathering strength. GDP in real terms is contracting if one deflates it using an inflation index calculated the way it used to be calculated instead of the hedonic, chain-weighted nonsense that the government churns out to ensure that GDP stays positive. If Uncle Sam was still calculating the rate of inflation the way he did in 1970 when US oil production peaked, it would be over 10% per annum instead of the fictional 2.6% that the government claims today.' - Chris Sanders. 'The Fortunate Fifth'
http://www.sandersresearch.com/
index.php?option=com_content&task=view&id=1110


"What immigration really does is redistribute wealth away from workers toward employers." Harvard economist George J. Borjas

Posted by: MsNThrope on April 3, 2007 at 12:08 PM | PERMALINK

>>It's an unsustainable hose of cards.

Er...'house'.

Think about working on anything whatsoever with Mike Cook and runs screaming from the room with hair alight.

Posted by: MsNThrope on April 3, 2007 at 12:14 PM | PERMALINK

"keep the economy going"

= trickle down economics.

Didn't work in the late 70s and early 80s.

Won't work now.

Trickle up is a much better paradigm.

And it works.

Posted by: anonymous on April 3, 2007 at 12:30 PM | PERMALINK

Shorter mike cook: The plural of "anecdote" is too "data!"

Posted by: Gregory on April 3, 2007 at 12:32 PM | PERMALINK

mike cook: Not everyone who wants the laws upheld is a xenophobe. We just want laws to mean something.

I keep hearing this from the same folks who seem to immediately forget "we just want the law to mean something" when it comes to polluters, insurance companies, corporations, the military, and their favorite politicians or political factotums.

Or when they want a US Attorney to pursue bogus voter fraud claims.

What they really mean is "we just want the law to serve conservative interests."

And what they really are is closet xenophobes.

Posted by: anonymous on April 3, 2007 at 12:45 PM | PERMALINK

"For some reason, the free market has disconnected wage gains from productivity gains in recent years, and there's no indication that this is going to change on its own."

The most important phrase here is "there's no indication that this is going to change on its own."The free market is not wholly responsible for the disconnect between wage gains and productivity gains. A national culture that accepts inequality and conservative tax policies that favor the richest Americans deserve equal blame.

In the period you describe, from ~1980 to today, as every one on this thread knows, the ratio betweeen CEO pay and the pay of the front line worker increased from ~42x to ~431x. That pig-at-the-troughing isn't due to the free market, unless you mean free as in "rigged." Americans were gullible enough to hand the reins of power over to folks who argued that 1) government that is the problem AND 2) that "greed is good." And we are surprised that conservatives removed any kind of decent oversight and turned a blind eye to the looting?

When Americans decide that this degree of income inequality is obscene and start expecting the government to establish some ground rules to maintain some order, we will once again see productivity gains translate into wage gains. The fact that 50% of Americans now identify as Democrats may be a sign that the time has come.

Posted by: PTate in FR on April 3, 2007 at 12:51 PM | PERMALINK
... The median wage earners of today can buy lots more good stuff ....MatthewRMarler at 1:23 AM
Every time a discussion on flat wages comes up, you come out to peddle the same tired old crap. Just because DVD players are cheaper, it doesn't mean the middle class is better off. growth of debt in the US. There is a negative savings rate in the US for a reason.
.... and too hard to immigrate legally from almost anywhere else (Philipines, India, China.) MatthewRMarler at 1:27 AM
You are unaware of the large numbers of illegal immigrants from these areas? Go outside and open your eyes.
....Wages have been flat in the U.S., because the capital stock has been allowed to deplete and deteriorate.... Bruce Wilder at 2:21 AM
Wages have been flat in the same ratio that union jobs have been eliminated and good labor jobs have been offshored and outsourced. Workers have to work, multinationals can hire the barest minimum of American workers. Higher productivity has not lead to higher wages. Posted by: Mike on April 3, 2007 at 1:19 PM | PERMALINK

mhr: . . . before Ronald Reagan dismantled it . . .

Amusing how often this lie is repeated, even when it has nothing to do with anything else in the comment.

It's the same kind of denial and deceit that causes conservatives to proclaim that the insurgents are on their last legs, desperate, and in their last throes, and caused them to assert that the US would be welcomed with open arms and parades and that Iraqi oil would pay for the entire war.

Posted by: anonymous on April 3, 2007 at 1:21 PM | PERMALINK
We just want laws to mean something. mike kook at 11:50 AM
Reagan's Immigration Reform Act 1986 among others was an attempt to limit immigration. Business was expected to enforce it. Never happened: Cheap labor is too attractive
...many other proto-marxist Democrat liberal millionaires who weep so hypocritically for those at the bottom. mh rat 12:47 PM
Hypocritical? Helping the poor is the christian thing to do as well is being the correct thing to do in order to keep democracy and capitalism in America flourishing. You really need to read a little history and study the economic causes of revolutions. Perhaps at some point, you may even begin to understand how rightist politicians lie to deceive their followers.


Posted by: Mike on April 3, 2007 at 1:26 PM | PERMALINK

Justin makes a good point: One problem with that analysis is that you are using income by family. But over the past thirty years, many families have shattered.

I have wondered how demographics as simple as the interval between generations, may affect income distribution. With effective birth control changing patterns of fertility, Darwin is starting to affect societies.

Take a simple model: Two women, A and B, born in 1945. Each has only two children. The difference between A & B is that A and her children have babies when they are 18 & 20, they have no particular job skills, and their income puts them in the bottom 10% of the population. B and her children, on the other hand, have babies when they are 25 and 28, they have job skills and their income puts them in the top 10% of the population.

The shorter interval between generations has consequences. By 2005, A and her descendents number 15 people, and B and her descendents number 7 people.

In this simple, simple model, which assumes equal fertitily, zero social mobility, and no immigration impact, the shorter interval between generations results in more people competing for opportunity in the bottom 10% and fewer people competing for resources in the top 10%. The economic effect would be to reduce incomes at the bottom and raise incomes at the top.

Meanwhile, earnest members in the top 10% are arguing for better education and more opportunities to help the bottom 10%. They can't figure out why the underclass continues to increase in size. The upper 10% redouble their calls for improved educational opportunities.

Posted by: PTate in FR on April 3, 2007 at 1:38 PM | PERMALINK
My suggestion is only that if you keep the economy going and stop new immigrant entrants from flooding in at the bottom, entry-level wages will eventually rise and people will start complaining (as they did in the late 1990s) about the "U-shaped" economy in which the rich and the poor were gaining faster than the middle.

So?

First, a "U-shaped economy" of the type descriped is inherently transitory, and, second, the only part of it that is bad, the rich gaining faster than the middle class, is shared with the status quo situation; a U-shaped situation is better than what we have now. Ideally, during an expansion, you want the benefits to be distributed so that less advantaged economic classes are seeing growth greater than or equal to that experienced by more advantaged class. In a recession, you want to see the reverse*: the poor experiencing contraction less than or equal to that experienced by the richer.

So the complaints about those are a lesser form of the complaints about the status quo.

Further, the assumption that if you "keep the economy going" and simply restrict immigration, the distributional effects will eventually change automagically to give more to the poor, resulting in the "U-shaped economy", is spurious. The "U-shaped economy" of the 1990s, for instance, was not a result of a long expansion led by disproportionate gains to the rich that eventually changed to drag the bottom up faster than the middle, it was an expansion that, from very close to its beginning, was broad, experienced across all segments of the economy, but particularly at the top and slightly more at the bottom than the middle. The current expansion has favored the rich almost exclusively not because that's somehow inherent in all expansions and independent of policy, but because policies (especially tax policies) have deliberately been altered to favor rewards to the rich. We'll see an expansion whose rewards are more broadly shared (either in the ideal fashion or the U-shaped fashion) if policy is changed to encourage that kind of distribution of rewards, not simply if we wait long enough and expect it to happen on its own.


* Or, perhaps the exact same thing; if you look at contraction as just negative growth, the two conditions are exactly equivalent.

Posted by: cmdicely on April 3, 2007 at 1:41 PM | PERMALINK
Not everyone who wants the laws upheld is a xenophobe.

I'll believe that about people who want the present immigration laws preserved when they present real, credible, non-xenophobic reasons justifying maintaining them.

We just want laws to mean something.

If you just "want laws to mean something", it shouldn't matter to you if the laws are kept as they are or radically altered, so long as whatever laws exist end up being enforced. "We just want laws to mean something" is no defense of the existing laws.

Posted by: cmdicely on April 3, 2007 at 1:45 PM | PERMALINK

'The failure here isn't in the work ethic of Americans. Rather, it lies with the CEOs, business owners, university and hospital administrators, and government officials—and ultimately, with all of us who benefit from cheap labor—to offer the wages and benefits necessary to attract sufficient numbers of legal workers. - Daniel Gross

Posted by: MsNThrope on April 3, 2007 at 1:48 PM | PERMALINK

"Their presence in the labor market increases competition for low-skilled jobs, reducing the earnings of low-skilled native-born workers. . . . Because of their low earnings, low-skilled immigrants also tend to pay less in taxes than they receive in public benefits, such as income transfers (e.g., the earned income tax credit, food stamps), public schooling for their children, and publicly provided medical services. Thus while the presence of low-skilled immigrant workers may raise the profits of their employers, they tend to have a negative effect on the well-being of the low-skilled native-born population, and on the native economy as a whole." University of Illinois economist Barry Chiswick in testimony before Congress,

"What this is, is a huge redistribution of wealth away from workers who compete with immigrants to those who employ them." George J. Borjas, a professor of economics and social policy at the Kennedy School of Government at Harvard University

"For many unskilled American workers, immigration amounts to imported outsourcing." Harold Meyerson Washinton Post 17May06

>>[Robert E.] Rector asserted that the Senate’s immigration bill, which converts a low-skilled, uneducated population into legal citizens will cost taxpayers at least $50 billion per year in the coming decade

Rector said, “An unskilled illegal work force is a drain, but an unskilled legal workforce is a disaster.”

He explained that current welfare benefits are focused on providing assistance for a low-income, uneducated population with children, which largely resembles that of the illegal workforce. Rectors said giving illegal workers legal status will also give them constitutionally guaranteed access to those benefits.

'Congressional Budget Office estimates that are being used to project immigration-related costs are faulty because the CBO is only authorized make economic forecasts 10 years into the future. Welfare benefit spending for newly legalized low-income workers won’t peak until at least a decade in the future.'
http://www.humaneventsonline.com/blog-detail.php?id=15089
By: Amanda B. Carpenter

Posted by: MsNThrope on April 3, 2007 at 1:52 PM | PERMALINK
It is too easy to immigrate illegally from Mexico (and some other places), and too hard to immigrate legally from almost anywhere else (Philipines, India, China.)

The reverse, however, is also true: it is too hard to immigrate legally from Mexico (waiting lists from there are among the longest of any country), and too easy to immigrate illegally from anywhere else (which is why illegal immigrants from the Phillipines, India, and China are, though less common than those from Mexico, among the most common non-Mexican illegals).

And the important thing, though, is not the absolute difficulty of each, but the relative difficulty. Making legal immigration easier in general and, in particular, easier from those countries where the most desire to immigrate exists and the greatest ease of illegal immigration exists does as much to discourage and combat illegal immigration as making illegal immigration harder (it also enables making illegal immigration harder with less costs, as it allows greater focus in immigration enforcement resources.)

Posted by: cmdicely on April 3, 2007 at 1:53 PM | PERMALINK
The median wage earners of today can buy lots more good stuff than the median wage earners of 3 decades ago.

Except that's not nearly as true as your fuzzy emotional appeals try to make it seem; even with hedonic adjustments as part of the CPI—which accounty for exactly the kind of effects you talk about—the median has been stagnant for quite some time. As has been pointed out, repeatedly, in response to your frequent attempts to trot out this line.

Posted by: cmdicely on April 3, 2007 at 1:57 PM | PERMALINK

The Soviet Union (before Ronald Reagan dismantled it)...

This is not true. How could one US president "dismantle" the USSR after 64 years of western hostility (1917-1981)?

...Street sweepers and medical doctors earned the same number of rubles because, marxist-leninists believed like US liberals do, that income inequality is a very bad thing

In your opinion, everyone to the left of Oswald Spengler and Ayn Rand deserves to be lumped into one giant mass. At a certain point, "opinion" becomes so absurd it really may be sanctioned as hallucinogenic. And the statement is spectacularly, obviosly wrong. You obviously know NOTHING about Soviet society.

After the USSR COLLAPSED, since most social services no longer had an income, yes, a lot of medical doctors were paid nothing at all. But saying it was Soviet policy to pay both street sweepers and doctors the same is pure fantasy.

Are you aware of the fact that there are many excellent economic histories of the USSR? Or are you accustomed to just saying whatever comes to your head, because no one is paying attention?

Movies stars are lefties

Then why do people blow a gasket whenever a movie star says something moderately liberal?

Posted by: James R MacLean on April 3, 2007 at 2:02 PM | PERMALINK

I think Kevin needs to expand his circle of mutual linking friends. For perhaps the best take on the economy today go here.

Clusterfuck

None if this pseudo-intellectual parsing from clucks like Kaus.

The money graph.

The more interesting point in all this, for the moment, is that the media has still not put together the collapse of the housing bubble and the permanent oil crisis. These events will be happening simultaneously. The housing industry, so-called, will never recover because the oil crisis spells the end of the suburban build out. The cycle is over.

Posted by: JeffII on April 3, 2007 at 2:27 PM | PERMALINK

JeffII: I think Kevin needs to expand his circle of mutual linking friends. For perhaps the best take on the economy today go here.

Kunstler? I don't call him an idiot, because his alarmist rhetoric helps him sell his books.

Housing bubble? Peak oil? Gee, who but the great futurist has ever put those two together.

BTW, did you buy his excuse for his failed Y2K catastrophe prediction? Imagine, businesses and gov't agencies putting money into fixing the potential problem before it occurred. And it was all done in secret! (shhhh). Ok, not a secret to anyone who'd ever even heard of the IT/software industry in the late '90's.

Posted by: alex on April 3, 2007 at 2:58 PM | PERMALINK

Housing bubble? Peak oil? Gee, who but the great futurist has ever put those two together.(?)Posted by: alex

Kaus, Drum and the NAHB, to name but three, the latter being the first to always blame any housing issues on "over-regulation."

Posted by: JeffII on April 3, 2007 at 3:25 PM | PERMALINK

I think Anonymous has it right. Mickey has discovered trickle down economics - there'll be no stopping him now.

Posted by: JHM on April 3, 2007 at 4:35 PM | PERMALINK

IMO, the minimum wage needs a COLA. That's the biggest shortfall, of several, in the current bill.

Posted by: SocraticGadfly on April 3, 2007 at 4:42 PM | PERMALINK

The new Missouri law is indexed to inflation. Doc Larry, who posts over at our little blog party is very knowledgeable about the Missouri law.

Posted by: Blue Girl, Red State (aka G.C.) on April 3, 2007 at 5:05 PM | PERMALINK
IMO, the minimum wage needs a COLA.

You know, rather than a COLA, I'd like to see a ratcheting index* to the per capita GDP. (That is, from the reference point, it would increase to keep the ratio of per capita to GDP to minimum wage at or below the level in the starting, reference year.)

Posted by: cmdicely on April 3, 2007 at 5:09 PM | PERMALINK

but the stubborn fact is that economic growth over the past three decades has produced next to no gains for the average worker.

Do most people here actually agree with that statement? is it a statement about economic gains? is there anything in the economy that cost, say, 10% of a median wage in 1980, that today costs 10% of the median wage now, that isn't better quality now?

a couple statistics thought for those of you who like statistics. the CPI and median wage are different measurements of two nearly equal money flows: payments for goods and services, and earnings. Most earnings end up being spent (the big exceptions being savings and taxes.) Most earnings are the result of other spending (the big exception being government workers whose earnings come from taxes instead of expenditures.)

Obviously, because of taxes, savings, repayments, and savings, the two flows of money are not exactly the same, but there is considerable in common.

Both measures are based on incommensurate random samples: the random sample around the country of a "basket" of goods and services (i.e., not the whole economy, or even most of it); and a cluster sample of people.

The median earning is the median of the sample of earnings. The CPI is computed from the mean of the sample of prices of goods. The median earning is a nonlinear function of the sample earnings; the mean price is a linear function of the sample of prices.

There is no good reason to expect any particular relationship between a median of sampled money flows and a mean of a disjoint sample of mostly, but not entirely, the same money flows.

Some of you are trying to create an alternate reality out of the sparse and biased information in the "CPI".

Posted by: spider on April 3, 2007 at 8:37 PM | PERMALINK

more on the basket of goods in CPI here:

http://www.ft.com/cms/s/738d83e0-d687-11db-99b7-000b5df10621.html

It's GB, but the same thing happens in the US all the time.

Posted by: spider on April 3, 2007 at 8:53 PM | PERMALINK
A couple statistics thought for those of you who like statistics. the CPI and median wage are different measurements of two nearly equal money flows: payments for goods and services, and earnings.

They aren't measures of "nearly equal" money flows.

There is no good reason to expect any particular relationship between a median of sampled money flows and a mean of a disjoint sample of mostly, but not entirely, the same money flows.

Again, they aren't even "mostly" the same money flows, and while there is no inherent structural reason that they necessarily would tract together, there is certainly a good reason to prefer that the median wage to improve relative overall price levels which the CPI (perhaps imperfectly) intends to measure, and to adapt policy to acheive that end.

Posted by: cmdicely on April 3, 2007 at 8:53 PM | PERMALINK

Everblue - Capitalist - Workers cannot withhold their labor to increase the worth of their work. They're not (and should not be considered) commodities.

Ever hear of a strike? Though we are now nearly back to the situation described by Adam Smith, where workers were forbidden to combine to increase their wages, but the law encouraged capital to limit them.

But we are a commodity! It's an economic point, not a moral one. A lot of economists pretend wages are not hurt by competition from immigrants, but that's mainly because they are in the thrall of those who want cheap labor. Of course, excluding cheap labor has it's downside too, by increasing our costs.

Posted by: CapitalistImperialistPig on April 4, 2007 at 12:51 AM | PERMALINK

When I was campaigning last Fall (as a Republican, for the state legislature) I was struck by the number of working-class folks who wanted to complain about immigration. All the same, the issue never caught on because neither party would touch it with a ten foot pole. Seattle is an amnesty city, after all, where the police are forbidden by law from even asking if someone they are making contact with is a citizen.

Which brings up my point about the 14-year-old driving the dump truck. He has three different ID cards, all in different names, which say he is 19, 21, and 24. In all the descriptions it is his picture and he is 5'7" and weighs 140 lbs.
In the phoney ID from California he is licensed to drive trucks.

If he gets in an accident, the contractor who hired him will produce a photo-copy of the meaningless license and get off the hook. How is an employer supposed to know an ID is for real? You can get sued for discrimination if you guess wrongly. If the kid is picked up and deported he will be back in a week with a new name working for someone else.

And, of course, meaningless ID's make law enforcement a joke as well. Even serious felony cases get botched up because of the ID problem.

I resolved to approach the immigration issue by just treating every Hispanic I met as a potential voter whether a citizen or not and talking about education issues. I met several Hispanic parents who had this complaint--their children reached high school, spoke English without an accent, were even getting good grades, but were dropping out!

Why? Because the harder-working boys wanted to get jobs and buy cars with big spinning chrome wheels and the girls wanted to have babies.

Some even told horror stories about friends who had been persuaded to borrow lots of money to go to college but were still unable to get a good job. As a former educator, I have a suspicion that grade inflation and social promotions in a way have made university administrators and tenured faculty prosperous. The typical student can pay high tuition (which has soared much faster than inflation since the 1960's) because of easy loan money, federally guaranteed.

So, the hopeful student spends three years in college taking high school remediation courses (disguised) and another three getting a Bachelor's degree. Now they found out the overpaid college instructors who spent all that time preaching about issues off-subject hadn't touched on how really hard it will be to make $85K a year in a world economy, especially if your transcript is full of trendy but easy courses.

Unless you are a university professor, of course, who can make $85K a year pretty easily. They preach socialism, but the most exploited class of all are their own graduate students, who often do most of the work around the university and are paid almost nothing. Never think that hypocrisy doesn't pay.

Posted by: mike cook on April 4, 2007 at 5:47 AM | PERMALINK

"There are many victims in the illegal immigration saga, foremost among them blue collar American workers who are besieged from all sides. The right wing disdainfully views them as mere fodder for the corporate juggernaut. The left wing empathizes with employees’ angst while sacrificing their interests at the altar of political correctness. Trapped in a thirty-five year trend of falling real wages, working class Americans are steadily losing ground. To make matters worse, whenever workers bemoan the pernicious effects of illegal immigration they are smeared as being nativist, as though demanding a fair wage in exchange for hard work somehow reveals malice." David Podvin http://www.smirkingchimp.com/article.php?sid=25804&mode=nested

"[By] not thinking deeply about our immigration policies, we have created the conditions for long-term racial unrest." Carol Swain/Vanderbilt University

Posted by: MsNThrope on April 4, 2007 at 10:53 AM | PERMALINK

But we are a commodity! It's an economic point, not a moral one. A lot of economists pretend wages are not hurt by competition from immigrants, but that's mainly because they are in the thrall of those who want cheap labor. Of course, excluding cheap labor has it's downside too, by increasing our costs.
Posted by: CapitalistImperialistPig

There is practically nothing more expensive over the long run than cheap imported labor.

http://www.wpunj.edu/newpol/issue39/Steinberg39.htm
Immigration, African Americans, and Race Discourse
Stephen Steinberg

...
After 1965, demographic trends favored blacks. The nation's declining birth rate sharply reduced the number of workers, providing for a tight labor market that has always been the sine qua non of black employment. I remember that during the depth of the racial crisis in the 1970s, economists issued reassuring forecasts that, given the sharp decline in the birth rate, labor market conditions would improve for blacks around the turn of the century. But, alas, something happened on the way to the new millennium. The 1965 Hart-Cellar Act was passed, which would result in the influx of over 25 million legal immigrants over the next four decades. Not to mention millions of undocumented workers who gravitated to the same urban labor markets where blacks were concentrated.

Why did the United States open its door to millions of immigrants at a time that deindustrialization was generating unemployment? One answer, or so we are told, is that the huge upsurge of immigration was unanticipated when the Hart-Cellar act was passed in 1965. But even after immigration rose from a trickle to a flood, it came to be viewed as a blessing in disguise, which is to say, a conservative policy in liberal garb. I say this because the champions of mass immigration were not liberals, and certainly not ethnic activists, but free-market economists (now tagged as "neoliberals") who saw mass immigration as a panacea for a variety of economic ills."

[snip]

"There is also a need to take off our political blinders and to confront the neoliberal underpinnings of current immigration policy. There is nothing progressive about flooding the lower echelons of the labor market with desperate immigrants who depress wages for each other as well as native workers. It is also problematic when the nation imports workers to fill higher echelons of the job pyramid, instead of upgrading the skills of native workers. For example, we import thousands of nurses from the Philippines and the Caribbean and then shut down nursing schools that traditionally provided channels of upward mobility for working-class women. Indeed, the traffic in nurses has become an export industry, with the additional irony is that there is a shortage of nurses in the Philippines.

My point is that the left has to get beyond liberal sentimentality on immigration policy, and face some hard choices.
......
To state the obvious, immigration is not a benevolence program for the "huddled masses" of the world, and it behooves us to confront the downside of current immigration policy, not only for blacks, but also for other low-wage earners, including immigrants and their children who are the first to suffer the consequences of the relentless influx of new arrivals."

Posted by: MsNThrope on April 4, 2007 at 11:14 AM | PERMALINK

Part of becoming an adult is to realize that while we may have sentimental value to a few other human beings, to most we had better figure out how to provide them with a good or service they really desire, else they grow weary of supplying us with goods and services for nothing.

Martin Luther summed it up best when he stated that the rich must be responsible for the welfare of the poor, but the poor must provide services acceptable to the rich.

One problem for working class blacks is that the public schools are doing a miserable job of educating white males. Even Asian male boys who have been here for a generation don't make it to college. Historically, plagues and wars are great for the laboring class because they cut the supply of the labor commodity.

When I was a construction contractor, I noticed something else. Middle class people understand that you have a family and need to make a living. Consequently, they rarely squeeze every last dime out of a contract and if complications arise, they use common sense and compromise with you. Rich people and large corporations most often are just nasty--to the point that they end up with an extremely poor product because they badgered you to death on each detail of the fine print and made you so exasperated that you would go below standards in those areas they didn't think about enough.

My complaints about how grad students are treated came from experiences being a t/a at two different universities.

Posted by: mike cook on April 4, 2007 at 11:38 AM | PERMALINK

"But just keeping the economy going and leaving it at that? Nobody knows how, and it doesn't seem to work anyway. Unless we're giving up, there has to be more to the answer than just that."

The biggest impact that would help workers *here* would be to help workers over *there* (China, i.e.)get better pay, working conditions, so that they can earn enough to buy *imported* goods. Big global U.S. based (primarily) companies are influencing governments where they are making a killing off of cheap labor:

http://www.atimes.com/atimes/China_Business/ID05Cb01.html

"..In March 2006, the Chinese government, with considerable popular backing, proposed a new labor law with limited but significant increases in workers' rights. But the American Chamber of Commerce (AmCham) in Shanghai, the United States-China Business Council, and US-based global corporations are lobbying to gut the proposed law. They have even threatened to leave China for such countries as Pakistan and Thailand if the law is passed.

Their aggressive tactics appear to have had an impact. Last December, the Chinese government released a revised draft of the Labor Contract Law with significant changes in contract, collective bargaining, severance, and other rights guaranteed for Chinese workers that would favor corporate interests.

The corporate community quickly claimed credit for these revisions. The US-China Business Council declared the draft a "significant improvement". Individual corporations were also pleased with the results of their lobbying campaign..."

"...China increasingly sets the global norm for wages and working standards as it attracts jobs at both the high and low ends of the production chain. As a result, the hard-won gains of workers in the global North are being rapidly undermined while the aspirations of workers in the developing world are being dashed as China becomes the wage-setting country in many industries.

Some in the labor movement and the US Congress have begun to recognize that simply criticizing the Chinese state fails to address the dominate role of global corporations in the global economy. Roughly 66% of the increase in Chinese exports in the past 12 years can be attributed to non-Chinese-owned global companies and their joint ventures. Foreign-owned global corporations account for 60% of Chinese exports to the US.

Indeed, if the US retail giant Wal-Mart were a country, it would be China's eighth-largest trading partner. The "Chinese threat" is less about trade with China than it is about trade with Wal-Mart and GE. Global corporations move to China to lower labor costs - and they use those lower labor costs as a lever to drive down wages and working conditions for workers in other countries, and even within China itself..."

Posted by: Doc at the Radar Station on April 4, 2007 at 12:13 PM | PERMALINK




 

 

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