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Globalism vs Populism vs Empricism

Throughout much of the developed world we are seeing a resurgence in populist movements, often with an explicitly nationalist and / or anti-globalist focus. Trump’s candidacy in the US, and the recent vote by the UK to leave the EU are the best-publicised of this sentiment, but it is visible in other countries. Pauline Hanson’s political influence has risen from the dead in Australia, and much of continental Europe is seeing flare-ups of nationalism as well.

It’s also worth noting that while the right-wing nationalists are getting the most attention, there are similar sentiments oc the left as well. Bernie Sanders’s campaign relied on a sense that the economic system was rigged against ordinary Americans, and a large portion of the protests against the Trans-Pacific Partnership have come from the left. While the source of the protests is less about migration on the left and more about trade deals, there is a common sentiment running through both groups – that the people running the countries comprising the developed world are privileging an allegiance to an ideal of cosmopolitan global capitalism over the interests of their own constituents.

It will come to no surprise to most of you that I consider this trend toward nationalist populism deeply disturbing. I strongly believe that having fewer restrictions on the movement of both people and trade across borders is good for the vast majority of people in a society – including most of the people campaigning for change. And that belief comes from over two centuries of economists investigating the topic. If the populist resurgence continues, I am concerned that we could find ourselves in a downward spiral where poverty causes populism causes nationalism causes more poverty. This would lead to unstable or opportunistic demagogues growing in power until they begin to collapse or radically alter governments. This is exactly the sort of discontent that could lead to the rise of fascist governments – after all, it has before. I don’t know if something like that could happen again, but I also don’t want to find out.

Many commenters on the web, including here, have argued that whether or not the rising discontent is justified or focused on the right target, it must be taken seriously for the good of liberal democracy. And after dwelling on this issue for a few weeks, I agree. After all, it’s all too easy for someone like me to outright dismiss a lot of the anti-globalisation sentiment that is floating around right now. An education in economics gives you a very good grounding in the various ways trade between countries benefits people, and how nearly all of the popular arguments against liberalising trade are fallacious. That tends to make you dismissive of people who blame their woes on globalisation. Furthermore I’m a government employee living and working in my nation’s capital. We don’t use the term “beltway insider” in New Zealand, but if we did I would be one.

So let’s begin with the idea that there are a lot of people who feel that they are experiencing economic hardship, and that needs to be taken seriously. On the other hand, that also doesn’t necessarily mean that the people opposing globalism (be that in terms of wanting tighter trade restrictions or tighter immigration restrictions) are right either in terms of their conception of the problem, or their proposed solutions. This is usually the point where the debate collapses into mutual recriminations: we call them ignorant, they call us callous and out of touch; we call them racists and xenophobes, they call us sellouts to an international elite etc. Rather than doing that this time, I’d like to try and get at the fundamentals of the economic conditions that are driving this opposition to globalism.

This post won’t be about offering solutions – the economics of this is complex enough that I can’t do it justice in a blog post – it will take a lot of careful empirical work to tease out what is going on here. But what I can do is try to identify what the key research questions are, so we can least start investigating and arguing about the right things.

Question 1: How bad is it really?
A lot of people feel as though things are worse than they were decades ago – the 1970s are a common period used as a comparison. But subjective experience is a poor guide to reality – human memory is notoriously unreliable, and one’s perception of what the past was really like can be biased by nostalgia – when you’re a child the world can seem freer of problems than it really is. The sources of information we are receiving bias our view of the world as well – crime rates have been falling for 20 years, but fear of crime continues to rise. Also, some changes to your standard of living are less visible than others – your take-home pay is a single, visible number, but a bunch of the goods you consume getting steadily cheaper in inflation-adjusted terms is much less obvious.

While these factors are important, we also must be cautious when pursuing this line of reasoning. It’s really easy to trap yourself in a closed loop where every murmur of discontent is dismissed as the product of biased reasoning. In a previous OT post on Brexit, commenter Chip Daniels analogised this form of thinking to Socialist ideas of False Consciousness, and it’s a warning we should take seriously. Just because the anti-globalists might be biased doesn’t mean they are substantively wrong, nor does it mean our thinking is unbiased either. This is why we need to go back to the data to get a handle on how standards of living are changing over time.

Unfortunately, the available data has its own limitations that need to be worked around:

  • GDP is fine for measuring what it was designed to measure (basically a nation’s taxable output), but it provides limited insight into standards of living on its own.
  • Income data is better, especially if you have the whole distribution and not just the mean or median. However, to understand what is actually happening to people’s standards of living, you need to analyse household income data instead of personal income. Unless you live in a country where everyone has to register their residence with the government at all times, and have a means of linking that register to your income data, that is a much harder thing to do than you might think.
  • And even income data doesn’t capture the whole story. For one thing, you need to account for the change in prices over time. After all, your income is only as good as the goods and services it can buy. This is what the Consumers Price Index is for, but the trouble is that there is a known problem with the CPI that causes it overstate price growth as it doesn’t account for changes in product quality or changing spending habits very well. (This is especially problematic if changes in relative prices are causing spending habits to change.) This makes it very difficult to compare standards of living over long time periods. And if you deal with that problem, you can then start worrying about the fact that people at different points of the income distribution consume different goods and services. The price of tertiary education services matters a lot more to the middle class than it does to the poorest people in a country.
  • You also need to account for demographic changes. There are two major sources of demographic bias to standard of living data – age and immigration:
    • People have systematically different incomes at different stages of their life. Income rises with age up until a little before retirement age, then falls. If the population’s age profile is changing over time (spoiler warning: it is), then that can affect an individual’s standard of living without the economy doing anything different.
    • Immigration can bias standard of living data in paradoxical ways. Imagine a worker in a poor country who could earn more money if they moved to the US, but less than the average American. If they move to the US they will lower the average income in the US even if they don’t affect the incomes of any native, due to how averages work. If you’re worried about immigration it’s especially important to adjust for this effect.

So, as you can see, there’s a lot to be done here to work out if the perception is based on reality. And that matters because that tells us whether we have an economic problem, a perception problem, or some other kind of problem that’s being expressed as if it were an economic problem. Only if there is an economic problem to solve, should we be trying to develop an economic solution. And to properly target that solution, we need to answer the next question:

Question 2: Who, specifically is losing out?
Hopefully, the research performed will not only help us determine the magnitude of the problem, but also who specifically is losing out. It’s important that this is considered from as many angles as possible. Most political analyses, at least the ones that are discussed publicly, tend to rely on crude classifications of affected groups, such as:

  • Workers vs corporate shareholders
  • Native-born citizens vs migrants
  • Your country vs foreign countries
  • The 1% vs everyone else
  • The poorly-educated vs the well-educated

But none of these divisions are aligned with the effects of trade or migration very well. The welfare economics of trade is complicated, whether any specific person gains or loses from trade liberalisation depends on a number of variables:

  • Do they work in an industry that is vulnerable to foreign competition? If so, how easily could they apply their skills in another industry? People working in import-competing industries with skills that are difficult to transfer to other industries are the most likely to suffer from liberalised trade.
  • Do they work in an industry which exports goods? If not, do they have skills that could be applied to an export industry if it expanded? Exports and imports tend to rise and fall together, so more imports from overseas means more opportunities for exporters to expand.
  • Are they likely to spend a lot of their incomes on imports, or import-competing goods? A reduction in cost of living is strictly equivalent to an increase in income. The poorest people in a society are often in the best position to benefit from cheap imports.

The story is similar for immigration. What matters is not what broad political demographic someone is part of, but whether the labour of immigrants is more likely to be competitive with yours or complimentary to it, and whether you mostly consume or mostly produce the goods and services that migrant labour tends to produce.

However, on top of all that is another layer of complexity that starts to play in to the political economy of globalisation. Even if you are not directly affected by globalisation much, you may be indirectly affected, and that will depend a lot on where you live. If you live in an area that is dominated by industries that are competing with imports then even if your job is to produce something non-tradeable, you may still suffer because your neighbours have less spending money. This story is less plausible for migration, but if the services consumed by the migrants are sufficiently segregated, you could still see this effect with migration.

Assuming there is a real economic problem here, I think these geographical effects are key to understanding why it is so polarising. If you live in a community that is heavily dependent on a single industry that is dying, then your entire community may be in economic decline. Availability bias would be enough to to make it feel like the entire country was dying – that it needed to be made great again. Conversely, if you live in an area whose main industries have benefited, or not been affected much by globalisation, that same availability bias might make it impossible for you to understand why anyone could think the nation was in decline.

This is just a hypothesis – but i think it merits investigation.

Question 3: Why are the losers losing?
This is the hardest question to answer, but vitally important for developing an intelligent solution. If the analysis I outlined above does identify specific groups whose standards of living have declined, the next step is to figure out why. And by “why” I don’t just mean “the mill closed, so no one can get jobs anymore”. If we want to solve the problem, it’s not enough to identify the proximate cause. We need to figure out what caused the centre of economic activity to leave that community, and why nothing has risen to replace it. Because, make no mistake, the popular narratives do not make sense. Neither trade nor immigration cause persistent unemployment, and the standard version of the “automation is rendering people unemployable” doesn’t really work either.

The thing to understand about unemployment is that there is not a fixed quantity of jobs to be done. This misconception is so common there is a name for it: the Lump of Labour Fallacy. A better way to look at employment is as a cost-benefit calculation. If there is something you can do for someone that is worth more to that someone than you cost to hire, then there is money to be made in hiring you. The market isn’t 100% rational, but someone is going to spot the opportunity sooner or later. So if people are losing their jobs, but no new jobs are being created, we need to figure out where the benefit-cost calculation is breaking down:

  • Is this just the tail end of the recession? If so, the best solution may be to wait it out.
  • Are there institutional or cultural factors that make an area too risky for new investment? This is an explanation that normally applies to why developing countries have trouble growing, and I have some difficulty believing it would apply in most of the developed world. Still, it is worth pursuing as a hypothesis – is it the case that some communities have structured their regulatory system so completely around a single industry that they are no longer in a position to support new industries springing up?
  • Is the problem skill change? Are the people losing their jobs unable to apply their skills to the new ones being created? This could simultaneously result in unemployment and a labour shortage in different parts of the country (which would tie in to a region-based story). It could also result in permanent unemployment of some people, not because jobs have been “shipped overseas”, but because employers may no longer value a person’s skill set enough to justify the cost of hiring that person. This is how technology could cause long-term job loss, by raising the minimum level of skills required to count as having marketable job skills, though I want to emphasise that this is only a hypothetical possibility at this point.
  • Relatedly, is it that people are finding new work, but it doesn’t pay as well as the old work?
  • Is it a demographic story? Rural areas tend to gain population through births and lose it to migration to urban areas. Birth rates have been declining in most developed countries for decades, so we may now be reaching a point where births are no longer able to replace the people leaving rural communities for urban ones. A community needs a certain population to be viable, so falling rural populations may be damaging the economies of small rural communities through attrition.

Which solutions we might need to consider will depend crucially on which, if any, of the above possibilities is happening (or for that matter, if the truth is something I haven’t even thought of). And some of these are a lot harder to deal with than others. In some cases, the best solution may be palliative rather than a cure. But before we can even think about that we need to put broad assertions and mutually suspicion aside and actually figure out what is really going on here because you can’t make good plans out of bad data.


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James is a government policy analyst, and lives in Wellington, New Zealand. His interests including wargaming, computer gaming (especially RPGs and strategy games), Dungeons & Dragons and scepticism. No part of any of his posts or comments should be construed as the position of any part of the New Zealand government, or indeed any agency he may be associated with.

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279 thoughts on “Globalism vs Populism vs Empricism

  1. Great post. I think there are so many interconnecting issues that it is hard to separate and untangle everything.

    Lee has a great point when he says that liberals seem to dream of a world with free movement of people (mainly thinking about refugees) but with restrictions on free trade and capital mobility and conservatives seem to dream of a world with free trade/capital mobility but without free movement of people (or at least keeping free movement to the “right type” of people.) All of this is probably folly. If you have free trade, you are going to have free movement. If you have free movement, you are going to have free trade.

    Very few people want to examine or admit this though.

    Another problem is that trained specialists are not very good at convincing the untrained to the world view. Wonks in general (economic or otherwise) tend towards a more rational and cold language and way of thought that takes away any concept of emotion or self-esteem. For most of my teenage and adult life, free trade advocates (left, right, and libertarian) argued that the price of goods going down would offset any pain from lost jobs or lower wages.

    This is at least partially true but it seems clear that a good chunk of the population is not having it anymore with the “But cheaper Iphones!!!!” argument from free trade.

    Wonks tend to be people who won the lottery so to speak. They were good at school. They got the jobs they wanted. So did most (if not all) of their friends and colleagues. They don’t seem to understand the psychic blow of going from being a factory worker or construction worker with a good union job and benefits to being a minimum wage service worker with no benefits.

    I see a lot of people on the left discuss how we need to make service work as valuable to society and self-esteem as factory work but I don’t see anyone discuss how to do so.

    Another issue is that different groups are less well off for different readings. Recently a lawyer resigned via open letter from the Palo Alto planning commission stating that she and her husband were tired of renting a house with another couple for 6200 a month. Her open letter said that a mortgage on a house in Palo Alto would cost a full-time salary pretax (around 145,000 dollars) and very few people could afford this.

    The woman was interviewed in the Atlantic and her view is that the Boomers decided simply to play “FYIGM” to their children. I can’t say she is wrong. It often does seem like the Boomers got a lot of low-hanging fruit and their children are not going to do as well.

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  2. What if a huge amount of the problem has nothing to do with data at all?

    What if, instead, it’s based on feeling things? Gut feelings, intuitions, and other things that aren’t quite particularly quantifiable?

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    • When Cuba went Communist, it was one of the wealthiest and most developed countries in Latin America statistically. Many Cubans still felt that they were losing out. Statistically and empirically speaking life in 2016 is better than it was in the past people. People have many more options available to them when it comes to consumer goods and leisure activities. This can suggest that current discontent is based on feelings.

      There has to be an objective basis for these feelings though. You don’t get widespread discontent based on emotions alone. We know that in many places the cost of living is going up for things like housing, food, healthcare, and education. People born with a silver spoon in their mouth seem to be reaping all the economic rewards compared to the mid-20th century. Society is changing faster than many can comprehend.

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      • There has to be an objective basis for these feelings though.

        No, no there doesn’t. Or, put another way, what if your objective measure just doesn’t know how to measure feelings? What is the cost for lost or minimized political participation? Some, none, irrelevant? What if your measures of material prosperity are offset by social dislocation or alienation? Is making $6/hr in America the same is making $4/hr in Mexico for the migrant worker?

        Honestly, I think Jame’s post is a really really good framing of things that ought to be scrutinized… I’m just pointing out that the scrutiny won’t (and can’t) yield any sort of empirical direction for policy.

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    • When Cuba went Communist, it was one of the wealthiest and most developed countries in Latin America statistically. Many Cubans still felt that they were losing out. Statistically and empirically speaking life in 2016 is better than it was in the past people. People have many more options available to them when it comes to consumer goods and leisure activities. This can suggest that current discontent is based on feelings.

      There has to be an objective basis for these feelings though. You don’t get widespread discontent based on emotions alone. We know that in many places the cost of living is going up for things like housing, food, healthcare, and education. People born with a silver spoon in their mouth seem to be reaping all the economic rewards compared to the mid-20th century. Society is changing faster than many can comprehend.

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    • I’d put it slightly differently… the data will only show us what might be possible if we prioritize x over y… it won’t tell is why we should prioritize x at all. Or, rather, we’ll have a philosophical argument over why x is better than y; and that’s fine… that’s what we should be doing (though we’re not, really)… but that’s not what the data will tell us – it will just give us elements that we muster for our philosophical argument over why Household Income is a better measure than GDP, but not relevant to urban/rural distribution.

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      • I keep coming back to this:

        https://youtu.be/meiU6TxysCg

        The monkeys who got the cucumber vs. the grape.

        We all laugh at the monkey throwing the cucumber around 1:55. It’s funny.

        Except what we see there is the monkey defecting.

        When you see “huh, that causes the monkey to defect”, it ceases to be funny.

        You know what I see when I see Populism? I see the monkey throwing the cucumber.

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        • That’s right. it’s also why we don’t usually get populist governments, give the populists grapes and everything goes back to normal. If the data comes back that cucumbers are all you get because we’re prioritizing grapes for bangladesh…. better hope that the plexiglass holds.

          Capitalism has a long history of selling out capitalism in the interests of capital.

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      • You’re right that data alone won’t resolve the problem. What it should be able to do is tell us what is actually going on, and thereby narrow down the possible policy responses down just to those that would actually help the problem.

        Once that’s been done, what to do next moves from “is” questions to “ought” questions, and data is no real help there.

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    • Indeed, what was the chief demand of the Occupy movement?

      It was pretty well established that it was *not* basic food, shelter, and personal security. In fact we were told–when we pointed out how many of these people saying “I’m poor” had their own personal pocket computers–that focusing on basic needs was a disingenuous attempt to turn the conversation away from the real issues like

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    • Gut feelings are actually quantifiable. (snark: count the Trump votes.) without snark: there are any number of polls done about how people feel about the economy and their immediate prospects.

      It is actually quite easy to show, quantifiably, that non-college-educated white men feel that they are losing ground.

      And, to be fair, they are! Across many income brackets their wages are flat to declining for something like 40 years! Meanwhile, everyone else — including minorities, women and recent immigrants — are doing better than they did in the past. Now, in many cases that means only that they are catching up to where the white men are.

      But the loss of relative position can sting just as hard as the loss of absolute position.

      (btw, Kevin Drum posts on this issue pretty frequently and I think that his analyses are quite fair.)

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      • Sure. But what was the question that helped kick this off?

        A lot of people feel that the global economy has let them down. How do we figure out whether that is true, and what to do about it?

        The question right there “How do we figure out whether that is true” is the one that has the assumption that I’m wrestling with.

        Let’s say that we come to the conclusion that, no, the global economy has not, in fact, let these people down.

        Then what?

        Just figure out how to explain to these poor benighted people that they’re wrong in a way that they’ll understand?

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        • mmm, I’m rejecting your hypothetical. The loss of relative position is a real, actual harm. And the change in the nature of work is imposing even more real harms.

          The problem is that most every cure that anyone is talking about, both here and in real life, is worse than the disease. Like many liberals, I would like to see wage and environmental standards written into international trade agreements. I also recognize that the likelihood of this happening is very close to zero.

          So your classic Republican solution is to do nothing, your classic Democratic solution is to offer job retraining that does nothing, and both The Donald and Bernie want to start trade wars.

          So, OK, those are all bad ideas. Anyone have any good ones that can pass Congress?

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          • The loss of relative position is a real, actual harm.

            It seems to me that the loss of relative position entails someone else’s gain of relative position.

            Assuming this to be true, we then get to ask about the increase of relative position and ask if it’s a real, actual good. It seems to me that, with this assumption, that it is.

            So then we get to start asking about weighing the increase of the good versus the increase in the bad.

            If more good is created than bad, well… at that point the conversation devolves into an argument over utilitarianism.

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            • “If more good is created than bad, well… at that point the conversation devolves into an argument over utilitarianism.”

              or it devolves into a discussion about the political power wielded by a group of very unhappy voters.

              Trump is offering nationalism (and, arguably, just white nationalism). H. Clinton is offering to bring back millions of jobs from overseas. One idea is kinda feasible but terrible (Trump); the other is mostly fictional.

              Setting aside the rhetoric, if the mainstream political viewpoint of both parties to this class of voters is “Hey, sucks to be you” (which it is), why not give the anarchist a chance? Sure you might make things worse for yourself, but then at least you’ll have the satisfaction of making everyone else miserable too.

              Now, I think that’s nuts. But I can understand why millions of Americans disagree.

              (A successor to Trump, running as a Republican, could easily get a successor to Bernie, running as a Democrat, as a running mate. Just turn down the volume on race. I find that alarming.)

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    • What if a huge amount of the problem has nothing to do with data at all?

      What if you’re part right, and part wrong?

      I’m convinced that at least some of this isn’t *entirely* changes in the system. It is, instead, *knowledge* of the system and ability to communicate with others that are dissatisfied.

      It’s a weird thing…we’re got, in theory, hundreds of years of behavior to study via sociology, and people keep *acting* like all that old stuff is valid.

      But the internet, literally, changed everything we know about how society behaves. EVERYTHING. It is arguable the biggest change in social interaction in *human history*.

      I mean, perhaps there have been a *few* changes that have been so widespread, like female equality, or religious tolerance, but society had *centuries* to get used to those other ideas.

      Now people can just…say things. At no cost. And have every single person on the planet read it. And, for an example of one of the *many* side effects, it means people can trivially form groups with other like-minded people, and include or exclude others as they see fit.

      This is something that, for more of human history, was not only difficult in the practical sense, but the people in charge *actively placed barriers* to, to the point where a good portion of any ‘insurrectionist’ movement was communication with each other, and rest of it was communication with the outside world in getting their story out. That was like 90% of the entire thing!

      And then we got the internet…I mean, I don’t like the term paradigm shift, mostly because most people using it seem to have no idea what a paradigm is, and, even if they do, there is no actual shifting. But this is the paradigm shift to end all paradigm shifts.

      And this is actually just *one* change the internet brought.

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      • One thing I’ve noticed about the internet: It’s confusing our ability to judge “how many” or “how big” something is socially.

        Get on the wrong end of a Twitterstorm, and it feels like the entire world is against you — but it’s probably less than a few thousand. (So, basically “nobody”).

        But it’s a constant drumbeat of criticism, like an entire town had turned against you (except it’s more like one guy from every fifth town decides to write a nasty note. The other 99.9% give no craps).

        So we’re in this weird place where we might think a few thousand keyboard jockeys is “the same as” a few thousand people on a street. We look at situations where it literally is “one guy in a million is writing nasty emails” and decide it’s a movement, and not a fringe.

        It’s like the internet exists to drive home the “silent majority” delusion to individuals, and confuse the senses of everyone else.

        We’ve got no real metrics, no way to compare ten thousand emails, or lengthy reddit threads or whatever, with the mass movements we’re familiar with. (Not to mention the ease of the internet — you can get 100,000 people to sign a petition, but if you asked them to march on Washington 200 would show up. How do you compare that to a group that gets 50,000 to Washington but doesn’t do a petition? Are the more popular or less? More passionate or less?)

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        • Heh. That’s the same paradigm shift of ‘people are able to form groups with like-minded individuals very easily’, but with a different end result.

          And note the ‘can easily find others and form groups’ is just *one* aspect of the giant change that the internet created. One aspect.

          There are also other aspects. Two others off the top of my head: Ability to know any fact known to mankind in seconds. Ability to watch, record, and monitor anything.(1)

          The really odd thing is we sorta refuse to admit everything changed. We seem to think it’s just a matter of quantity, that the internet is letting people do things ‘more’.

          We’re sorta like people who just invented teleportation and keep talking about how it’s going to let us walk from place to place *really quickly*.

          It’s almost amazing how much we have our head in the sand about how the future is going to work.

          1) As I have pointed out, right now, it is possible to stop all crime in this country with an investment of maybe 100 billion dollars. Give everyone wearable front and rear camera, that transmits streaming audio, video, and GPS to a time-stamped server that cannot *ever* be subpoenad, but they can volunteer footage from.

          You have just…stopped almost all crime, and, as an added bonus, made false convictions almost impossible.

          It’s entirely within reach, right now. Might require more cell infrastructure, but whatever.

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      • Well, this gets us to the whole “a ‘problem’ that can not be solved, not even in theory, may have been misdiagnosed as a problem” problem.

        I’ve had it hammered into me that we can’t look at stuff like the heritage list and say that people in the US aren’t really impoverished because 92% of them have microwaves and 83% have air conditioning and trying to compare the average impoverished person in America with one of those French kings is comparing apples to oranges. Sure.

        But if we have a baseline that we agree is entirely relative and should not be seen as something that we agree has a ceiling (or is it a floor? one of those) then we’re stuck dealing with the fact that, yep, in the new and improved everybody-connected-to-everybody world we’ve created, we (as in *YOU* the person reading these words right now) are in the top 10% of the planet and we’re fairly likely to be part of the top 5% and we’ve ever got an off chance at being the top 1%.

        If your income is over $33,000 a year, congrats. You’re in the top 1% of income earners globally.

        Do you feel like a member of the 1%?

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  3. An issue for the United States is that we seem to have much higher ideologically opposed camps as compared to the rest of the world. At least based on my observations, I could be wrong.

    Lee will also point out that European conservatives made their peace with the welfare state and seem to accept that you need universal healthcare. Erik Loomis at LGM points out that European factory owners were much more accommodating to trade unions even during the 19th century.

    The American right-wing and rightish-libertarians remain fanatically devoted to the idea of absolutely zero in terms of a welfare state and they maintain a total resistance to labor unions.

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    • You say this as the tide of fascism rises ever higher.
      Perhaps Brin is right, when he says Fascism is a disease of the center, neither left nor right.
      But the people who speak out, who seethe and chafe under the restrictions that fascism would entail? They have the right to be ideologically opposed.

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    • I kinda envy the way the euro unions and companies work together. I’m not sure why certain US unions & companies have such a hard time finding a way to do the same (it’s been a long time since Pinkertons were the norm), which makes me think it’s gotta be a perpetuating culture within those organizations (I suppose it could have a legal basis, but someone would have to explain why).

      ETA: I know there are unions and companies in the US that do have mutually beneficial relationships. I would bet that if those sets were looked at, we’d find that they are newer companies and newer unions.

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      • I think there are a lot of intertwining historical and cultural reasons that are difficult to unpack.

        1. European conservatives come from a different (and often more aristocratic) version of conservatism. They were just as anti-Communist as any other right-winger and often just as anti-democratic but European society often seems more communally oriented than American society. They also had some form of noblese oblige. American conservatives seem to really believe in the “self-made man” and bootstrap stuff.

        2. If you come from the David Hackett Fisher school, a lot of American conservatism is derived from fierce Cavaliers who believed that they were natural aristocrats and/or Scots-Irish ornery independents. Trade Unionism flourished more among people who were not of English or Scots-Irish origin usually. The union powerhouses always seemed to be minority groups: Jews, Catholics, Germans/Scandanavians, Italians, the Irish, Black-Americans, Asian-Americans, and Latino(a)-Americans.

        But all of that is probably a way of way perpetuating culture.

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          • One thing I have observed is that a lot of the American economy is a pie-eating contest where the prize is more pie.

            The brass-ring entry level jobs (consulting, biglaw, start-ups) with high salaries usually require long hours. Something like 10-14 hour days seem to be the norm. This doesn’t seem to stop or ease down in certain industries. Senior Management and C-Suite officials always seem to keep up with really demanding hours and really no downtime.

            A lot of Americans seem ideologically committed that this is a personal choice and not a policy choice and seem deeply opposed to things that make life and work balance easier like France’s no e-mail after X rule.

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        • Before the raise of the Labor Party during the earlier 20th century, most British business people associated with the Liberal Party rather than the Conservative Party. Only after the Liberal Party collapsed in the aftermath of World War II did British business people start voting for the Conservatives en mass. The part of the Conservative Party composed of peers and gentry did not get along well with the part composed of business people even into the 1980s. Michael Hasseltine, Thatcher’s Defense Minister, was mocked for being the type of person who buys rather than inherits furniture.

          Basically, the European conservative tradition is much more group focused than the American one. Thatcher’s radical individualism was a big break from how the British Conservatives saw the world. This leads them to be more communal and support communal policies more than American conservatives.

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      • German companies think that their government does charity well enough for them to just pay taxes. Of course, German companies also get their way (see Merkel’s auto companies informing her that she was not, under any circumstances, to punish England).

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      • I kinda envy the way the euro unions and companies work together.

        I’m woefully ignorant on the subject, but isn’t this largely a German thing? My impressions are that Thatcher made her reputation by breaking the unions in the UK, and that the French and Italian unions are out on national strikes regularly.

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        • Lee points out that Thatcher was sort of the exception rather than the rule and also that British businesses did not start voting Tory until the collapse of the Liberals after WWI when Labour became the dominant non-Tory party.

          French and Italian Unions seem prone to wildcat strikes especially for transit. Everytime I have been to Italy or France, there has always been some form of transit strike.

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      • Oscar Gordon:
        ETA: I know there are unions and companies in the US that do have mutually beneficial relationships.I would bet that if those sets were looked at, we’d find that they are newer companies and newer unions.

        OK, I’ll bite. What do unions bring to the table to make it “mutually beneficial” which couldn’t be better done if they didn’t exist? What can they do other than not blow up the company?

        The long term experience in the US appears to be that companies with unions go bankrupt.

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        • Worker safety is a big one, of course.

          Demanding a fair return to labor in the face of implacable resistance on the part of capital (go browse This Day in Labor History at Lawyers, Guns & Money for samples) is another. Please keep in mind that the Federal Reserve has consistently failed in its dual mandate of keeping full employment and consistently acted in favor of capital.

          Remember Fordism? If you don’t pay your workers a living wage, eventually you’re not going to have anyone left to buy your product. Outsourcing and offshoring may be necessary in order to stay ahead of your competitors, but who then are your customers?

          Sure there have been sclerotic unions, but American management hasn’t exactly been covering itself with glory either for the last 35 years. Union power is a fraction of what it was in the 60s and 70s. If companies have been failing, management needs to look in the mirror.

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          • Remember Fordism? If you don’t pay your workers a living wage, eventually you’re not going to have anyone left to buy your product.

            Fordism may work at the micro level. I don’t know. But think about it for a moment and you’ll see that it accomplishes little if every firm is doing it.

            If one firm pays workers a higher nominal wage, those workers have higher real wages and many may choose to buy that firm’s products. If every firm pays workers a higher nominal wage, then all those firms have to charge more for their products and no worker is getting a higher real wage.

            This is the fundamental disconnect with living wage arguments.

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            • Doesn’t that implicit assume that the only cost to produce anything is labor? What about resource rents? What about the cut going to the owners of capital? Wall Street?

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              • Doesn’t that implicit assume that the only cost to produce anything is labor?

                Not at all. But we don’t need to assume anything. We can go and look at the industries that employ low wage labor and see what the margins are like. And we can see what happens when those firms have to pay more for labor, how much of that cost increase gets absorbed by hiring less labor, by increasing prices, or by cutting into profits.

                And when you look at the firms that hire low wage labor, you’ll likely find that they are mostly very low margin businesses. Walmart is a famously frugal company. Fast food corporations are probably very profitable, but the McDonald’s corporation does not employ any cashiers or fry cooks; those folks work for individual franchises.

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          • “Remember Fordism? If you don’t pay your workers a living wage, eventually you’re not going to have anyone left to buy your product. Outsourcing and offshoring may be necessary in order to stay ahead of your competitors, but who then are your customers?”

            Fords $5 pay was done to keep labor turnover down. Ford didn’t unionize until ’41, several years later than GM and Chrysler. Much like weekends, people have ascribed this to unions when in fact it is much different.

            You are right that safety has been moved over to unions in most cases, and this is a positive from both the workers and managment posistions. Having workers be in charge of their own safety makes them much more likely to actually obey the the procedures put in place. On the flip side of that, there becomes a tendency in management to manage by contract, which sounds good, but removes the incentives to actually take control of your work force and use both the stick and carrot. The contract is simply the stick.

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          • American management hasn’t exactly been covering itself with glory either for the last 35 years. Union power is a fraction of what it was in the 60s and 70s. If companies have been failing, management needs to look in the mirror.

            The rarest resource in the universe is the attention of upper management. A union has a gun pointed at management’s head which both consumes attention and prevents flexibility. That’s over and above the problem that gov unions create.

            Remember Fordism? If you don’t pay your workers a living wage, eventually you’re not going to have anyone left to buy your product.

            That’s a myth which pops up every now and then, sometimes even by Ford itself. Ford’s problem was retention, average time on the line was 3-4 months, ergo his productivity was crazy low. By increasing pay and reducing hours work, he massively increased his productivity.

            In 1913, Ford hired more than 52,000 men to keep a workforce of only 14,000. New workers required a costly break-in period, making matters worse for the company. Also, some men simply walked away from the line to quit and look for a job elsewhere. Then the line stopped and production of cars halted.
            http://www.forbes.com/sites/timworstall/2012/03/04/the-story-of-henry-fords-5-a-day-wages-its-not-what-you-think/#694490dd1c96

            There are 24 hours in a day and running two 9 hour shifts meant that his factories were sitting idle for 6 hours a day, 2/3rds of a full shift. By going to an eight hour workday and a five day standard work week, Ford was able to run his factories with three shifts, 24 hours a day. Eliminating the half shift on Saturdays meant that, with overtime, FoMoCo plants could run 24/7/365 if he wanted.
            http://www.thetruthaboutcars.com/2014/10/henry-ford-paid-workers-5-day-wouldnt-quit-afford-model-ts/

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        • That really depends on the Union and how it chooses to interact with management. Once upon a time, I was a member of SPEEA. A co-worker of mine, who really didn’t like SPEEA, described it as a “Professional Labor Debate Society”, because SPEEA members, while active, tended toward agreeable relations with the company, as evidenced by the comfortable compensation packages they negotiated for the Engineers, and the lack of professional employee strikes.

          It wasn’t all rainbows and ice cream, but Engineers didn’t worry about serious votes to strike every 4 years.

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          • It wasn’t all rainbows and ice cream, but Engineers didn’t worry about serious votes to strike every 4 years.

            Yes, but no union would also mean no strikes.

            As far as I can tell the purpose of a union is to prevent management from killing/abusing the workforce. That was a real problem before 80 years ago, thus the glorious history of unionism. In the modern era unions appear to be mostly serving as a fund raising arm of the democratic party and advocate for the expansion of government.

            I fully admit that a management which abuses it’s work force deserves to deal with a union, so from that standpoint society needs unionism… but the ongoing reduction of unionization as a percentage of the workforce is the market saying it’s not worth the cost.

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            • “As far as I can tell the purpose of a union is to prevent management from killing/abusing the workforce.”

              There is one other thing unions do well (or are at least supposed.) And that is to keep individual employees from getting lost in the shuffle, so to speak. The larger a company is, the greater the desire to move people around like pawns in chess, or to ignore things like employee handbooks. The union will step in right quick when the preceive the company taking advantage of an employee, either through not being clear on what is being asked, or asking for/demanding things they don’t have the right to demand. Whether this is due to contract or law is immaterial to the union guys, the mainly want to assure that all positives come from the union, to show how great they are for workers. True or not.

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              • I’ve always taken a Chesterton’s Fence approach to unions — from the basics “Why did unions arise in the first place?” to the individual rules “Why do they have such arcane rules at times?” (“That’s not my job” is one it took awhile to understand how that showed up. I had to have actual work experience with managers quite happy to give me 60 hours of work in a week, without paying me 1.5 times my rate despite doing 1.5 times my actual job).

                Then it’s “Is this a problem that’s likely to reoccur?”.

                Because I think there’s a kind of mental…ditch…that’s really easy to get into, to think that “Things are they are right now” is some natural state, some bedrock fact, rather than state built on all the decisions prior.

                I really wish their was a conservative party in the US that said “Hold on, let’s not change things too fast, we might get rid of important bits we’re not even seeing” rather than a reactionary party that longs for the 1890s.

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                • As with all institutions, the problem isn’t keeping old things around, the problem is when questioning why we keep the old thing around is treated as a bad thing.

                  E.G. If I want to question the seniority rules in a union, and I get attacked as someone who hates older workers, or wants to see them all fired, etc., instead of having the rational reasoning explained, then I have to wonder what power or privilege is being protected with those rules.

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                  • Frankly, sometimes they don’t know.

                    History is important.

                    My Dad was union quite a long time, and he was pretty vehement about union rules that he didn’t know the reason for or that was explained in a not-correct but kinda correct way — like “That’s not by job” was “By doing it, you’re denying someone else a job doing that thing”. Which is…sort of correct, but the real issue that made that a constant across multiple unions was because of job creep — trying to overwork individuals to save money. Often without extra pay.

                    It’s not that you’re costing another man a job, so much as you’re getting pushed into doing free work, with your job held as leverage.

                    And it’s not like wage theft has gone away — Walmart just got into deep crap about it, for instance.

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                    • Frankly, sometimes they don’t know.

                      Which is, I argue, part of the problem. If you’ve lost sight of the why, you can’t examine efficacy, because you don’t know. To go back to Chesterton, it’s important to know why the gate is there, so you can judge whether or not the gate is causing more harm than good. If you don’t know, you need to find out. Once you find out, you can reassess if the gate is the optimum means of achieving the desired end*. If nobody ever wrote the reason down, then you need to be brave enough to do some experimentation.

                      There is no shame in saying, “I don’t know, let’s go find out”. There is a problem if asking the question gets you attacked.

                      *50 years ago, the gate may have been the best of a host of bad solutions. Today, better solutions may exist, or the problem is no longer relevant.

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            • One thing I’ve learned is that a lot of the problems that come with unions are regulatory in nature. I’m all for listening to ideas on how we can reform the laws governing unions.

              I also know that a lot of the obvious issues with unions, the ones that make the news and inspire hyperbolic essays, tend to be the result of very large, very old unions that are in the midst of dramatic power struggles with politicians, corporations, and even other unions. I.E. don’t damn the whole over the bad acts of a few.

              But the concept of Unions is something that has value even today, because it does, perhaps imperfectly, balance out the power of the employer/employee relationship.

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              • But the concept of Unions is something that has value even today, because it does, perhaps imperfectly, balance out the power of the employer/employee relationship.

                I think the ‘concept’ of Unions has value as far as keeping management in line. Meaning if management lets things degenerate to the point where a union is needed, then they’ve earned what they get.

                RE: Reforms
                I think being a member of a union needs to be voluntary, as opposed to involuntary. If a union is adding value to it’s members, then that shouldn’t be a problem. If it’s not adding value, then it should instantly be a problem and this is a good way to accomplish that.

                I also think gov unions unbalance the relationship between the employees and the consumer/taxpayer. The ’employer’ isn’t the politician sitting across the table, it’s the taxpayer whose money he’s going to spend. Having a union elect a politician with taxpayer money and then ‘negotiate’ with him on how much taxpayer money he’s going to give them seems corrupt on the face of it.

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                • I’m with you on the voluntary aspect. I understand the concern of free riders, but to me it isn’t sufficient to force membership. I’d be perfectly OK with a union demanding that non-union employees get a less than ideal compensation package.

                  As for public sector unions, that’s a whole different ball game.

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                  • I don’t see why, “You have to join the union to work here,” is particularly problematic as a condition of employment. Is it something some people might find annoying? Well, yeah, but “job” usually connotes something you do that involves tolerating some annoying stuff.

                    As for public sector unions, they are a different matter, but I think some of the ways they differ makes them more, rather than less, important.

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                    • For me, a person with advanced degrees and a varied skill set living in a major metropolitan area with considerable opportunity, it’s not an issue. If I don’t want to be part of SPEEA, I can find work at a dozen different places making about the same money, and without significantly affecting my commute.

                      In rural places, where there is but one major employer, and you have whole populations without out diverse marketable skills…? It’s hard to vote with your feet when there is no where else to go.

                      One of the perverse incentives of mandating union membership is that the union loses the incentive to work for all it’s members, rather than just the hard core loyal ones. The best option many have is to file as a religious objector and send the union dues to a charity. Unions are not amused by such things, and I’ve witnessed first hand how aggressive members can be towards such objectors*.

                      *Union intimidation is still very much a thing.

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                      • In rural places, where there is but one major employer, and you have whole populations without out diverse marketable skills…? It’s hard to vote with your feet when there is no where else to go.

                        I’m not sure why union membership in particular is an unacceptable burden in such a situation. I’m not saying the union will necessarily be good or great or useful. Nonetheless it’s a little weird to say that, because there’s a single employer in the region, it’s important that we undermine the effectiveness of one of the few organizations that even has a theoretical hope of withstanding it.

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                        • I’m not interested in undermining it, I’m interested in keeping it effective for all members. If I have a single employer, or multiple employers with a single union (think UAW), and membership is required, then the union has a monopoly on that labor.

                          I’m not a big fan of monopolies in any arena.

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                            • How would you do that? You’d need to convince a bunch of people to work there, and get them to promise not to join the union or else, what? If you offer to pay them more, the union will know. If you threaten them, you have no way to follow through if they join the union. This even works to my ideal, since now the union will work extra hard to convince those folks the union is a good deal so they defect.

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                            • The problem is that, in practice, hiring a bunch of people who refuse to join the union is an effective way for employers to undermine unions.

                              If management is oppressing the workforce, then the union has a great reason to exist and hiring people who refuse to join the union will be a non-issue because they’ll change their mind.

                              If the workforce is poorly served by the union (which includes simply having no reason to exist or worse, oppressing the workforce itself), then it shouldn’t exist at all.

                              A union is not a good thing simply because it’s a union, it needs to justify it’s existence with something other than rhetoric and ancient history.

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                              • If the workforce is poorly served by the union (which includes simply having no reason to exist or worse, oppressing the workforce itself), then it shouldn’t exist at all.

                                That’s a nice idea and all, but the question isn’t, “Should it exist?” Lots of things exist that are either useless are actively harmful.

                                The question is whether the cure is worse than the disease. The whole scenario that created here is, in fact, one where that seems implausible if the problem is, in effect, excessive market power. You only have one local employer, which is a closed shop, which means everyone has to be a union member… and the problem is the excessive power of the union?

                                What about the excessive power of the employer? Maybe we should just break them up so there’s competition and then one can be non-union or open shop and all the good workers will flock to it because the union is crud.

                                If I don’t care enough to do that, I don’t see why I should care enough to get upset about the closed shop.

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                                • What about the excessive power of the employer?

                                  This concerns me as well. I grew up in rural WI, in an area with a small number of large employers. The power they held was disturbing, as was the lack of opportunity despite their presence. I ran so fast when I turned 18, and never looked back with any kind of regret.

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                                • That’s a nice idea and all, but the question isn’t, “Should it exist?” Lots of things exist that are either useless are actively harmful. The question is whether the cure is worse than the disease.

                                  Agreed, totally, with all of that.

                                  However something taking money

                                  involuntarily

                                  out of someone else’s pocket is, by definition, actively harmful.

                                  I’ve no idea whether or not the typical union can justify it’s existence to it’s typical worker, but I’m sure it should.

                                  Large organizations do what is good for the large organization, even at the expense of it’s members. There needs to be a way to hold them accountable and making it “voluntary” seems like the minimum.

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                                  • Because it’s not involuntary? Doing things that are conditions of your employment is not, generally speaking, involuntary, since you can always quit. The sole reason for arguing that, in this case, is involuntary is there’s only one regional employer, and in this hypothetical it’s really hard to see why the union is the problem.

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                                    • Doing things that are conditions of your employment is not, generally speaking, involuntary, since you can always quit.

                                      Normally the phrase “conditions of your employment” applies to things like…
                                      A: Job description – defining the role, responsibility level (eg Manager, Deputy Manager, Assistant etc).
                                      B: Entitlement – rate of pay, benefits, bonus/overtime rates, etc.
                                      C: Responsibilities: working hours, dress code, reporting illness/absence, annual assessments, complaints procedures, notice periods for leaving/dismissal, requirements to change working hours.
                                      D: General: Depending on the type of job, there might be other conditions restricting the employee taking other part-time work, confidentiality clauses, using company equipment for private use (eg phones, computers, vehicles) general codes of behaviour and adherence to certain corporate practices, health & safety regulations, etc.

                                      Here we’re talking about being forced to financially support a leftist political organization whose economic “services” might be (worse than) useless to you and with whose political/policy goals you strongly disagree.

                                      You get to object to calling it “involuntary” when it’s actually “voluntary”.

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                                      • Here we’re talking about being forced to financially support a leftist political organization whose economic “services” might be (worse than) useless to you and with whose political/policy goals you strongly disagree.

                                        First of all, ‘conditions of your employment’ very often includes ‘You have to spend some money on a certain thing’, which is entirely legal. (As long as it don’t result in someone actually being paid less then min wage.)

                                        But perhaps more importantly, how does this differs with working for a company whose political leanings you don’t agree with how, exactly? Employees, after all, are just as ‘forced’ to earn money for their company as they are ‘forced’ to pay union dues.

                                        Oh, wait, I have an answer: Because in *actuality*, union dues cannot be used for political activities. Lobbying is done with *voluntary* payments that union members make. So that entire premise is a bit insane.

                                        Wait, that’s not right. But I have another difference: Additionally, unions are *democratically operated* by employees, and thus the people supporting them can at least control the sort of lobbying they does, whereas corporations are not and the people working for them can’t control them at all?

                                        Wait, damn, still the wrong answer.

                                        Let me try again: Because unions often support *leftist* policies, which are horrible and no one should ever be forced to support, whereas workers have no cause to complain when the corporation that they work for lobbies against min wage increases or policies that could help them. Those are *conservatives* causes, and hence true and noble and no one can complain about being ‘forced’ to support them as a condition of their employment.

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                                        • Let me try again: Because unions often support *leftist* policies, …

                                          To take a page outa Density Duck’s book, unions don’t support “leftist” policies, they support self-interested policies, same as management does. Since when is self-interest an Anti-American value? I’m under the impression that it’s the ultimate American value, myself.

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                                        • DarkMatter: Here we’re talking about being forced to financially support a leftist political organization whose economic “services” might be (worse than) useless to you and with whose political/policy goals you strongly disagree.

                                          DavidTC: First of all, ‘conditions of your employment’ very often includes ‘You have to spend some money on a certain thing’, which is entirely legal. (As long as it don’t result in someone actually being paid less then min wage.)

                                          DavidTC: But perhaps more importantly, how does this differs with working for a company whose political leanings you don’t agree with how, exactly? Employees, after all, are just as ‘forced’ to earn money for their company as they are ‘forced’ to pay union dues.

                                          The issue is one of consent and who is paying and benefiting. If I’m a worker, the company’s name is on the checks they’re giving me, so clearly I’m getting value from them and I consented to the economic relationship of which I’m taking part.

                                          The Union is a third party. They don’t sign my checks. I don’t make widgets for them. They’re not actually needed (other companies work just fine without unions). I’m forced to deal with them because the union benefits by me doing so, and they have the political power to make me. Whether I personally benefit isn’t even a consideration. If this were sex, this would be rape.

                                          The closest corporate example I’ve seen is the United Way. The United Way comes in every year, and there’s a lot of happy talk about their grand history and all the great things they do for me and the community. What it really comes down to is the United Way wants my money, and they have the political/social power to get the company to put pressure on us workers to give.

                                          IMHO the United Way is an extra, unneeded, layer of abstraction on charitable giving. Me giving money to the food pantry says things about my priorities and lets me evaluate the charity in question for things like corruption. Me giving money to the United Way says nothing, because all they do is give to other charities.

                                          If the company actually forced me to give to the United Way, then the comparison would be total. I don’t personally benefit from the United Way, the money in question would come from my pocket, and I’d have no choice but give.

                                          Of course at the end of the day, after the pretend pressure and ‘togetherness’ talk, the company always folds. They don’t actually attempt to force anyone to give. Making someone give money to a 3rd party purely for that 3rd party’s benefit would be unethical and is in the realm of the government (taxes) and shakedown schemes.

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                                          • The Union is a third party. They don’t sign my checks. I don’t make widgets for them. They’re not actually needed (other companies work just fine without unions). I’m forced to deal with them because the union benefits by me doing so, and they have the political power to make me.

                                            The cleaning company is a third party. They don’t sign my checks. I don’t make widgets for them. They’re not actually needed (other companies work just fine without cleaning companies). I’m forced to deal with them because the cleaning company benefits by me doing so, and they have the political power to make me.

                                            The uniform company is a third party. They don’t sign my checks. I don’t make widgets for them. They’re not actually needed (other companies work just fine without uniforms). I’m forced to deal with them because the uniform company benefits by me doing so, and they have the political power to make me.

                                            The customer is a third party. They don’t sign my checks. I don’t make widgets for them. (I make them *for my company*.) They’re not actually needed (other companies work just fine without customers). I’m forced to deal with them because the customer benefits by me doing so, and they have the political power to make me.

                                            The airline is a third party. They don’t sign my checks. I don’t make widgets for them. They’re not actually needed (other companies work just fine without requiring people to fly around). I’m forced to deal with them because the airline benefits by me doing so, and they have the political power to make me.

                                            The government inspector is a third party. They don’t sign my checks. I don’t make widgets for them. They’re not actually needed (other companies work just fine without government inspections). I’m forced to deal with them because the government inspector benefits by me doing so, and they have the political power to make me.

                                            I’m sorry, but you sound like a complete moron.

                                            You’re required, by the terms of your employment, to deal with *all sorts* of third parties. All sorts off third parties that your company has agreed to work with.

                                            That is, in fact, how the company functions in the real world. A company that did not interact (Aka, did not have *employees* interact with people, as companies do not physically exist) with people outside the company would not be a very useful company.

                                            And comparing it to rape is just completely absurd.

                                            It’s always fun to see how deep a dedication to anti-unionism goes in someone who is supposedly against regulation, though.

                                            So, tell me, should companies be *forbidden by law* from signing a *voluntary contact* with unions that has them agreeing to only hire union members?

                                            If so, does this exclusivity bar only apply to unions, or should restaurants be barred from exclusive contracts with Coca-Cola, and other things like that?

                                            …oh, did you forget a corporation agreeing to a union contract was, of course, voluntary?

                                            Or is your objection more the corporation having *hiring requirements*? Should they be required to hire anyone who applies, instead of people who fits specific qualifications? (For example, qualifications the company has agree to when negotiating with a third party, like employees needing a security clearance, or employees needing to be a member of the union?)

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                                            • And because that was a nice, long post, let me repeat this to *scar this into the flesh* of people who are anti-union:

                                              People who are anti-union are demanding *government regulation* to block two corporate, legally-person, entities from entering into a voluntary contract with each other.

                                              That’s it. That’s everything, simplified down.

                                              They don’t have any real justification of *why* this regulation should exist, beyond vague claims that usually don’t really stand up, and even if they did literally only seem to apply to *this* form of contract, as opposed to any other corporate contracts.

                                              I mean, let’s break that down a bit. A corporation can announce that next year that they signed an agreement with a PAC that everyone’s next salary increase will be reduced by $50 a month, and that $50 per employee will go to that PAC, and that PAC will lobby the government to do X. This is entirely legal since Citizens United (If somewhat petty towards employees, I don’t know why they’d announce or structure it like that! But it is *legal*.), and no one seems to want to do anything about it.

                                              Have the company sign an agreement with a *union*, which then collects dues of $50 a month, and the union being *legally barred* from spending those dues on politician causes, but supports X using additional, voluntary contributions…that is *completely outrageous* and a regulation should exist to prevent it.

                                              Because people shouldn’t be forced to ‘support causes’.

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                                              • People who are anti-union are demanding *government regulation* to block two corporate, legally-person, entities from entering into a voluntary contract with each other.

                                                I’m anti-union, and I’m demanding no such thing. I just don’t think that government should grant them the privileges they do. Yes, I’m aware that you think that on net government hobbles unions rather than privileging them. I just don’t think you’re correct.

                                                Historically, unions relied on violence to block competition and prevent defection. Take the Homestead Strike, for example, often portrayed as some kind of anti-union massacre. What actually happened is that the strikers were violently blocking access to the plant, and when the owners asked the sheriff to intervene, the strikers forced the sheriff’s deputies onto a boat and sent them down the river. At which point the Pinkerton’s were called in to deal with the violent criminals the sheriff had failed to restrain.

                                                That said, if I were less committed to freedom of contract, I could argue for blocking closed-shop arrangements on the same grounds that monopoly and collusion among businesses are banned. As it is, though, I’d prefer that the government simply a) stop privileging unions, and b) not turn a blind eye to union violence and intimidation.

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                                                • Historically, unions capital relied on violence to block competition and prevent defection. Take the Homestead Strike Ludlow Massacre,

                                                  The “violence” argument cuts in more than one direction.

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                                                  • In the case of Ludlow, as well, the violence started with the unions trying to fight off their replacements. In any case, my point is less about whose fault it is than about the fact that that there’s an asymmetry here, where violence is a much more useful tool for unions than for management.

                                                    When a union calls a strike, management will often try to bring in replacements. Violence is a fairly effective tool for interfering with that, for reasons that should be clear. Some unions represent workers who have highly specialized skills and cannot be replaced without great expense. For other unions, the barriers to entry for replacements are relatively low, and violence (either freelance or in the form of labor law) is pretty much their only option for preventing competition.

                                                    Management is playing a different game. If the strikers are really just sitting around peacefully, management doesn’t seem to have a lot of opportunities to use violence to their advantage. Is the theory that if they shoot enough strikers, the rest will come back to work instead of just getting the hell out before they get shot, too?

                                                    Vigorous prosecution of violence hurts unions much more than it hurts management, because unions are in a better position to use violence to their advantage.

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                                                    • Is the theory that if they shoot enough strikers, the rest will come back to work instead of just getting the hell out before they get shot, too?

                                                      Yeah, apparently. Make them an offer they can’t refuse.

                                                      Look, you can focus on violence all you want, but the real issue is leverage, which is a much more politically palatable word since who doesn’t prefer leverage? Sometimes leverage reduces to violence. Sometimes violence is the only expression of leverage. It’s a mixed bag tho self-interest runs thru both of em.

                                                      Desparation makes people desparate, seems to me. Something management is more inclined to take advantage of than labor.

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                                                  • The “violence” argument cuts in more than one direction.

                                                    Ludlow and Homestead were both more than a century ago, they might as well have been on different planets. If we limit the whole “violence” thing to the last 50 or so years we keep it within the current culture and legal framework.

                                                    IMHO management violence or threats thereof from last century should not be used to justify union violence now.

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                                                    • IMHO management violence or threats thereof from last century should not be used to justify union violence now.

                                                      Do you concede, then, that union violence a century ago shouldn’t be used to justify a rejection of unions now?

                                                      It’s interesting to me how a claim that one party uses violence to achieve its ends is, when countered with a claim that the competing party uses violence too, viewed as a justification of union violence.

                                                      How the hell does that happen?

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                                                      • Do concede, then, that union violence a century ago shouldn’t be used to justify a rejection of unions now?

                                                        Yes, absolutely.

                                                        It’s interesting to me how a claim that one party uses violence to achieve its ends is, when countered with a claim that the competing party uses violence too, viewed as a justification of union violence.

                                                        How the hell does that happen?

                                                        Don’t know. What really gets me is how pretty recent threats/violence somehow gets related to century old problems.

                                                        Personally I think the whole violence thing is because they’ve got nothing else to bring to the table. If management isn’t evil they’ve got no dragon to slay, no reason to exist.

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                                                • Yes, I’m aware that you think that on net government hobbles unions rather than privileging them. I just don’t think you’re correct.

                                                  There are entire sets of union tactics that would otherwise be legal that are barred by law, and unions generally follow them. Can’t have sympathy strikes, for a large example. Entire types of unions are barred from striking at all. Unions can’t even *exist* until 30% of the employees have shown an interest in them. They also can be dissolved by the Federal Labor Relations Authority just…because, like the air traffic controller’s union was. And unions are required to represent people who do not want to be in the union, i.e, they cannot negotiate better wages for themselves than non-union members.

                                                  I would list the *other* side, but there, um, is really only one rule. About the only rule is that employers have to follow is not interfere with people trying to form unions. That’s it. That’s the sole privilege unions get, that you can’t fire people from talking about them, or interfere with the voting in certain ways.

                                                  And it’s a ‘privilege’ that is becoming less and less relevant in a world where anyone can communicate with anyone.

                                                  Why don’t *you* list what regulations you think are privileging unions?

                                                  Historically, unions relied on violence to block competition and prevent defection. Take the Homestead Strike, for example, often portrayed as some kind of anti-union massacre.

                                                  Uh, who portrays that as a massacre?

                                                  And when talking about how things are ‘historically’, picking what was essentially the *first* organized labor strike in US history is an odd choice. And not only did the workers lose, but the tactics of the strikers essentially *broke* the Amalgamated Association of Iron and Steel Workers. So it’s not something that would be soon repeated.

                                                  Saying that ‘historically, unions did X’ and citing something that happened in 1892 is a bit like saying ‘historically, an airplane trip was limited to a few minutes at a time’. Unions had only been considered *legal* for about 50 years (Or less, the courts were random for a bit.) and had really only existed for 30, and this was, as I said, quite possible the first *actually* union-based organized strike of any real size in American history, which tried the rather dubious (and illegal) tactic of attempting to seize and hold their factory grounds.

                                                  That tactic generally has not been tried since. I mean, I assume there were a few other cases, but it clearly didn’t work well, and was discarded. Even the future *illegal* activities moved more in the direction of sabotage than trying to hold a location.

                                                  It’s weird, isn’t it, where talking about unions, everyone who is anti-union is all ‘Oh, times have changed, we don’t need a union anymore, ignore all that stuff they fought for the past 100 years, they did good but we don’t need them now’…and then, somehow, when talking about violence, instantly examples of violence from 125 years appears and pro-union people apparently have to defend that.

                                                  That said, if I were less committed to freedom of contract, I could argue for blocking closed-shop arrangements on the same grounds that monopoly and collusion among businesses are banned.

                                                  Again, that’s not what a monopoly is. For a union to be monopoly, it would have to consist of all, or at least a very large fraction, of labor.

                                                  Ironically, if anything is make unions be ‘monopolies’, it’s labor regulations themselves, which restrict them one per-company.

                                                  Incidentally, ‘collusion on wages’ were the ground on which unions were considered illegal until 1840-ish, until it was decided that those common law basis previously used weren’t really that good (And were still English, from over 60 years ago, and frankly 1840 was a little late to still be common-lawing crimes from England!), and if the government wanted unions illegal, it would have to actually make a law.

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                                            • The cleaning company is a third party.
                                              The uniform company is a third party.
                                              The airline is a third party.
                                              The government inspector is a third party.

                                              None of these groups reach into my wallet. Nor do they insist that they have the ability to represent me and make life decisions such as how much I earn nor whether or not I’m allowed to work at all. Nor do they threaten me with violence if I don’t follow their religion.

                                              You’re required, by the terms of your employment, to deal with *all sorts* of third parties.

                                              “Deal with” isn’t the same as “hand over my personal money and follow their ideology”.

                                              I don’t personally have an economic relationship with most of the groups you mentioned. I do have an economic relationship with the company’s customers, but that’s serving as the company’s agent and even there I’m not expected to spend my own money.

                                              I’m sorry, but you sound like a complete moron.

                                              Personal attacks don’t strengthen weak arguments.

                                              So, tell me, should companies be *forbidden by law* from signing a *voluntary contact* with unions that has them agreeing to only hire union members?

                                              “Voluntary contract”? If the union is striking are we supposed to believe the company wants all of it’s workers to strike with the union? Further, companies have very little control over the personal lives and wallets of their employees.

                                              And comparing it to rape is just completely absurd.

                                              Words which describe involuntary relationships where one party is benefiting at the expense of another are usually pretty ugly.

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                          • That is not a monopoly. A monopoly would (in theory) be if a union controlled all labor that was for sale.

                            A union that you have to join to work somewhere is basically the same as a movie theater negotiating an exclusive contract with Coca-Cola. Or, for a closer analogy, an exclusive contract for uniforms employees have to buy.

                            That’s not a ‘monopoly’.

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                            • But it still has the same problem of a monopoly, in that the incentive to appeal to all members is greatly reduced (it only needs to appeal to the most loyal or entrenched members). It exerts a monopoly control in a way that a uniform or software supplier can not. I mean, sure, the theater only sells Coke, but Coke isn’t just working to satisfy the theater, it has to satisfy all it’s customers lest they defect to Pepsi. There are other ways that the analogy fails, like the ease by which a union can be decertified or replaced. If Ford no longer wants to deal with the UAW, they can’t just decide to switch to a better Union when the current contract is up, at least, not without suffering serious, probably fatal costs.

                              As you say, a lot of this is the regulations as they are, and I agree, they did contain the unions in ways where a more unregulated dynamic would be terrifying. I’m not trying to do away with unions, I’m trying to address some of the baked in negatives.

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                              • But it still has the same problem of a monopoly, in that the incentive to appeal to all members is greatly reduced (it only needs to appeal to the most loyal or entrenched members). It exerts a monopoly control in a way that a uniform or software supplier can not.

                                Erm, you seem to be facing exactly backwards here.

                                A *monopoly* of labor would hurt the *purchaser* of labor, not labor who was part of that monopoly.

                                I don’t know what point you’re trying to make here, but it doesn’t have anything to do with monopolies.

                                I mean, sure, the theater only sells Coke, but Coke isn’t just working to satisfy the theater, it has to satisfy all it’s customers lest they defect to Pepsi.

                                I find this completely baffling as some sort of comment on *unions*. Doesn’t *exactly* the same thing apply to any job? At least you can *vote* in a union!

                                But I feel most people do not actually understand what is happening at a union shop. Here is how people should *really* think about a union shop:

                                The union is a separate company that is paid by the company to supply labor. It passes on almost all of the money it makes on to its members. The members are employed by the union, which is a joint collective that they are a voting member of and, in theory, operates for their best interests. (Of course, no organization really manages that perfectly.)

                                Once you think about it like *that*, you will notice your entire perspective changes.

                                If Ford no longer wants to deal with the UAW, they can’t just decide to switch to a better Union when the current contract is up, at least, not without suffering serious, probably fatal costs.

                                A lot of companies have all sorts of long-term contracts they cannot fail to renew, at least not without a lot of prep, without them suffering fatal outcomes. Property leases, for example.

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                                • The members are employed by the union, which is a joint collective that they are a voting member of and, in theory, operates for their best interests.

                                  Isn’t this exactly how it works in some places? With the union doing the hiring for the most part?

                                  A *monopoly* of labor would hurt the *purchaser* of labor, not labor who was part of that monopoly.

                                  If labor was a common good, like a widget, or a robot, then yes, you’d be right – because the widget/robot has no needs beyond maintenance and repair. People are a little more complex, and unions can be structured in ways that are harmful to subsets of their members. Those harmful things are my only real concern, and voluntary membership, or rather, the voluntary withholding of financial support, is one way to signal to a union that they need to work harder (voting is nice, but how many discussions have we had regarding how little a single vote matters or signals, especially in large organizations?).

                                  Again, because people seem to forget this, I don’t oppose unions. I’m nibbling at the margins here, trying to think about how to make them better, not kill them.

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                                • A *monopoly* of labor would hurt the *purchaser* of labor, not labor who was part of that monopoly.

                                  Anyone who has to deal with a monopoly can be hurt by substandard service and by their interests not lining up with your own.

                                  Unions want to pay everyone equally or by seniority, that’s a problem for rockstar employees who are above average. Twice over my career I’ve negotiated 40% pay increases for myself. If I had to take whatever the union standard was, that would have been less.

                                  There’s also the bigger issue which is, what prevents the union from abusing me if it’s a monopoly and I’m forced to be a member? Unions have a rep for intimidation and violence, those shouldn’t be needed if they’re doing something positive for me, rather than a lack of something negative.

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                                  • Anyone who has to deal with a monopoly can be hurt by substandard service and by their interests not lining up with your own.

                                    Unions, again, are not monopolys. They are exclusivity contracts. Being contractually the sole supplier of something to someone is *not* a monopoly.

                                    For a union to be a monopoly, it would have to control *all labor*, or at least the local labor pool that a company wanted.

                                    Hell, if unions *were* monopolies, they wouldn’t have to negotiate at all! They only need to negotiate because companies *can* replace those workers, it’s just a hassle. If there was a monopoly, that would mean the company *literally couldn’t operate* without union workers, and the union could demand whatever it wanted.

                                    Unions have a rep for intimidation and violence, those shouldn’t be needed if they’re doing something positive for me, rather than a lack of something negative.

                                    Unions have a ‘rep’ for that because the rich and powerful make sure they have a rep for it.

                                    There are, indeed, maybe a dozen instances where unions have tried to intimidate people, including the rather horrible Herrin massacre almost 100 years ago, up to the Ironworkers Local 401 recent thing.

                                    There are a much larger number of ‘union violence’ where unions didn’t start it, and were in fact defending themselves, like the Battle of Blair Mountain.

                                    And there’s a much, much, much longer list of violence used against unions.

                                    But here’s the total list:
                                    https://en.wikipedia.org/wiki/List_of_worker_deaths_in_United_States_labor_disputes

                                    That list is *both* union and anti-union violence…but you’ll notice while reading it that a rather large majority of it is anti-union, with very few parts of it being union-initiated. And the description of the anti-union stuff is often literally that the police or National Guard or company employees just fired weapons into crowds of strikers. That’s it. They just decided to…shoot people. Somehow that was…legal?

                                    But, yeah, it’s *unions* with the rep for intimidation and violence.

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                                    • Dark Matter: Anyone who has to deal with a monopoly can be hurt by substandard service and by their interests not lining up with your own.

                                      DavidTC: Hell, if unions *were* monopolies, they wouldn’t have to negotiate at all!

                                      We’re talking about workers dealing with their unions, especially unions they’re forced to join against their will.

                                      So what do unions “negotiate” with their subject workers?
                                      If a worker thinks he’d get paid better if he represented himself, can he?
                                      If a worker thinks his political money would be better spent on the GOP, can he redirect it?
                                      If a worker thinks a different union would do a better job, can he switch?
                                      If the union wants to strike and a worker wants to work, can he still?

                                      The core question wasn’t on the definition of the word “monopoly”, the core question was what happens when the worker thinks he is poorly served by the union and his interests don’t line up with its. Or worse, what can he do if he thinks he’s actually being abused by the union.

                                      That list is *both* union and anti-union violence…but you’ll notice while reading it that a rather large majority of it is anti-union, with very few parts of it being union-initiated.

                                      That’s a list of workers killed. The most recent death was in 1959, and before that 1940, so everything is 50+ years ago and the bulk is 75+ years ago. However that list skips both non-workers killed by union activists and union-on-union violence.

                                      So the 98 tourists burned to death by union activists in 1987 for using the wrong hotel aren’t on the list. https://en.wikipedia.org/wiki/Dupont_Plaza_Hotel_arson

                                      If we limit things to the last 10 years, then we still have things like assault and murder threats because of political views in 2012 (Lansing), and beating up non-union workers in 2013 (Philadelphia Ironworkers).

                                      https://en.wikipedia.org/wiki/Union_violence_in_the_United_States

                                      But, yeah, it’s *unions* with the rep for intimidation and violence.

                                      If we limit ourselves to the last 50 years, then yes.

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                              • If Ford no longer wants to deal with the UAW, they can’t just decide to switch to a better Union when the current contract is up, at least, not without suffering serious, probably fatal costs.

                                The more important question is whether the auto workers can switch unions if they want to. Yours is analogous to “This guy is suing me, and I have no way to replace his lawyer.”

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                                • The more important question is whether the auto workers can switch unions if they want to.

                                  This too. Admittedly I am not well versed in all the various unions out there, but can a workforce swap out a union, or does it have to decertify the existing one first, then go through the process of bringing in a new one? How many competing unions are there? Is there an alternative to, say, the UAW? Can a union splinter, so if I have 45% of the union employees at Ford pissed off at the union, could they form their own or align with a competing union (assuming Ford would be willing to recognize it)?

                                  Or is that a big no thanks to the ‘defanging’ & ‘containment’ spoke of?

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                                  • Admittedly I am not well versed in all the various unions out there, but can a workforce swap out a union, or does it have to decertify the existing one first, then go through the process of bringing in a new one?

                                    The *workers* can swap out unions, but it’s hard to figure out a way that the corporation could. In theory, it could fire everyone (Which would probably a union contract violation, but it won’t matter in a second.), and then hire people suggested to it by a new union, and then those people vote to decertify the existing one (Thus mooting the aforementioned contract violation…I think? There’s no way for the previous union to do anything that I can see.) and create or join a new one?

                                    Assuming that all goes to plan. Alternately, the new employees, finding themselves in control of the existing union, instead demand all sorts of concessions and penalties from the company as punishment for it firing all those previous employees in violation of the union contract. Heh, oops.

                                    How many competing unions are there?

                                    Most of them in the same line of work sorta merge together, especially as employees stay in the same line of work and switch between jobs, they’ll bring their support of their old union with them. If you flip back and forth between two unions for a decade, and they’re voting to merge, sure, why not? There’s pretty much no reason *not* to merge, it brings more bargaining power. It’s why ones that don’t merge end up being affiliates with each other.

                                    There have been a few rare cases of unions fighting each other in trying to win the same employer, and even some violence there. But that sort of thing was 100 years ago, before they were defanged.

                                    Is there an alternative to, say, the UAW?

                                    Not unless they start their own.

                                    Can a union splinter, so if I have 45% of the union employees at Ford pissed off at the union, could they form their own or align with a competing union (assuming Ford would be willing to recognize it)?

                                    No. You cannot form a union with 45% of the workers.

                                    Or is that a big no thanks to the ‘defanging’ & ‘containment’ spoke of?

                                    Pretty much, yeah. The system is set up so that only one union will exist per company, or at least one union per *type* of workers. You have to hit a 50% threshold, and by definition you can only do that once.

                                    People who don’t know anything about labor history assume this is some union trick, to keep from them from having to compete against other unions.

                                    It’s…not. If it was, you’d see unions competing over worker forming a union, to try to get them to join different ones at the start. But in reality most unions, while being pro-people-unionizing, are fairly apathetic about *which* union people join. Also, you’d see new, hip, competing unions, trying to edge out existing one.(1)

                                    No, the ‘one union per company’ is a *corporate* trick, to keep the five best salespeople or the four guys who know how to repair the loading system, or 30% of the entire staff, or whatever small group wants to, from just *declaring* themselves a new union (Even if there already is some other union.), and going on strike.

                                    1) In the real world, operating a union is an *annoyance*, not some sort of money-making position. It’s having to satisfy a bunch of people under you, and constantly work with some corporate overlords that probably dislike you. It’s like running a business, except you don’t really make any money and your sole customer hates you. Yes, occasionally unions are operated by corrupt people solely in it for the money and power…but so are libraries.

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                                    • You should write a book: “Unions: Totally Not What You Think”.

                                      Heck, a lot of fields can’t even legally strike, do a work slow-down, or things like that. Not exactly a lot of bargaining power.

                                      And for the record, my father was union for a long time before he went management. They struck twice in 20 years, and both times were not exactly fun times for the union. They didn’t do it unless it was serious, because fun fact: You don’t get paid for work you don’t do. You have to be really unhappy to give up a paycheck, and spend part of your time picketing and part of your time doing whatever temp work you can elsewhere to keep food on the table.

                                      If a union is striking, they’re serious as all get out. Because that’s a LOT of people not getting a paycheck. That’s why companies try to wait it out — union members generally don’t have a few months salary saved up for a rainy day.

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                                    • 1) In the real world, operating a union is an *annoyance*, not some sort of money-making position

                                      In the real world, union officials earn a LOT of money.

                                      In Washington, D.C., and the 24 states without right-to-work laws, workers can be forced to pay a union in order to have a job. For many Americans, this means paying tribute to aggressively left-wing union officials with incomes ten or twenty times greater than their own.

                                      http://watchdog.org/261142/meet-bosses-americas-highest-paid-labor-union-officials/

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                                      • In the real world, union officials earn a LOT of money.

                                        Here’s a fun fact: All the incomes compared there are *average* incomes of *all* people in that field, not the people in the actual union. Which would seem *extremely* relevant.

                                        Additionally, a lot of those do not have union dues that operate as people think of them. For example, the second highest paid position is in the Directors Guild Of America Inc…which takes a *cut* of earnings. Same with all unions or ‘guilds’ involved with acting. Those unions are paying for their apparently highly paid staff with Tom Cruise’s and Steven Speilberg’s money. The actor’s guild actually distributes money downward, in that it helps provide and subsidize health insurance for actors. Being in the screen actors guild is literally $50 a month if you didn’t have an acting job that month.

                                        And I hate that I have to keep pointing this out to, apparently, everyone…THE AFL-CIO IS NOT A UNION. It is a *federation* of unions. It has no human members at all. That means it, literally, does not charge anyone dues, nor is it allowed to collect union dues from members unions. It instead is forwarded some of the *voluntary* donations that people make along with their union dues. Even in union shops, *no one has to send their money to the AFL-CIO*.

                                        Once you remove the *giant lobbying conglomorate that union members have chosen to represent themselves that isn’t actually a union*, that list get a lot skimpier.

                                        But, hell, let’s pretend with the AFL-CIO for a second, mainly because the AFL-CIO, if it *was* a union, would have 12.5 members, which makes the ‘high main’ math really funny.

                                        Let’s look at ‘Newton Jones’, the guy in charge of dealing with all the Boilermaker Unions in the AFL-CIO. This seems roughly a…’vice president’ position? So you think a VP in a corporation with 12.5 million people is *high paid* at $657,887 a year?

                                        The largest corporation based on number of employees in the US is Walmart. It has 2.2 million employees. The lowest paid vice president I can find makes… $3,006,366 a year. Five times the pay…with an organization that is a fifth the size of the AFL-CIO.

                                        But instead of insanely pretending the AFL-CIO is a union, let’s look at the Laborers Union. That’s half a million members, so already, proportionally, we’re at about a dollar per member, which is already under Walmart size…wait, no, we were comparing to the lowest paid Walmart VP, not the president. The CEO of Walmart made $20 million, for operating a firm five times larger than the Laborers Union

                                        But perhaps Walmart just pays executives a lot. So this is, in theory, a list of the highest paid union bosses. (Despite, again, the AFL-CIO not being a union.) So perhaps we could compare it to a list of the highest paid CEOs…hahah, I’ll just pretend we always did that, and had a good laugh already.

                                        But I have somewhere to be, and it’s pretty clear to me that, going down that list, that these ‘highly paid’ union bosses appear to be paid, at most, ten times what the *average* workers make…and of course, they shouldn’t be paid ‘average’, they should be paid closer to what the *highest paid* union worker is paid, as they are, in a way, management…

                                        …hey, wait, isn’t it the job of the right to complain about how much union workers make? Like here:

                                        http://www.investors.com/politics/editorials/dock-workers-union-demands-hurt-consumers/

                                        Supposed average pay…$147,000 year. I don’t see them on this list, but, hey, a guy who can get everyone an average salary that high surely deserves two or three times it.

                                        Perhaps most important: Union members vote upon the compensation of their president. Yearly. If they did not want them paid that much (Which, again, appears to be somewhat close to what the highest paid *union member* is actually paid. Or sometimes, in extremely large union, two or three times that.)

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                                        • tl;dr

                                          The right:
                                          CEOs make a lot of money for their company, negotiating better deals that the company often could not, playing hardball and relying on connections, increasing the value of the stock

                                          Hence, the CEOs at the top 500 companies getting paid an average of 200 times what their workers make is perfectly fine.

                                          Also the right:
                                          Union bosses make a lot of money for their union, negotiation better worker contracts than they’d otherwise get, playing hardballs and relying on connections, increasing their workers take-home pay. (This is a *bad* thing here, because it’s *workers* making the money instead of stockholders.)

                                          And it’s completely outrageous those union bosses at the biggest unions get paid an average of maybe five times more than what the people they represent get paid!

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                                    • I’ve been the guy sitting across the Union negotiating with them (*)

                                      1-Unions do a lot of good and necessary work. At the very beginning of my career I happily joined my Union, gladly paid the dues, and was thankful for the hard work they did on our behalf. Then I was moved to management and was no longer Union eligible.

                                      2- Union bosses are politicians, just like PTA chairpersons are politicians, or golf club board members, or the lady that directs the Church’s flower arrangements are. Politicians, with few exceptions, are narcissistic, authoritarian, greedy, and mostly arseholes. That’s why I don’t run for the board of my sporting (albeit not golf) club,

                                      3- Notwithstanding (2) above, unions play a necessary and (mostly) useful part in mast industries. The decimation of unions in the USA is actually a very bad development.

                                      4- Union bargaining, at least in my industry, mostly follows the same script:
                                      -Union comes up with 100 requests: 10 are reasonable in nature but not in value; 50 are non starters; and 40 are really laughable (really laughable, not a figure of speech)
                                      – We reject the non reasonable 90 and offer minimal concessions on the 10.
                                      – Union counters by dropping the laughable 40, cutting the non starters by half in value, and dropping a smudge on the reasonable 10.
                                      – We up the ten to near where we think we can go
                                      – they drop the ten to a reasonable value, and insist on some of the non starters
                                      – We agree with the now reasonable ten issues, and throw in one or two symbolic actions on the non starters (like adding vegan options in the yearly company picnic versus a vegan option in the daily cafeteria lunch)
                                      – Pics of the signature are taken and union bosses gloat about how they fought for veganism and the picnic being the first step.

                                      5- Curiously enough, the biggest union fights I’ve witnessed are about personal protective equipment and safe work practices, the reluctance of workers to properly use their PPE, and the union fighting against management disciplining unsafe workers. However, these are normally behind the scenes fights because no Union can actually be vocal against the use of PPE.

                                      (*) Mostly, I’ve been the guy giving the marching orders to the guys that did the actual negotiating-but I did sit down in some of the meetings

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                                      • Relative of mine does safety for a pipeline construction business. By and large, the average worker hates his PPE AND hates the protective gear on any tools as well.

                                        About 80% of his job is random inspections that involve yelling at people for not following bare-minimum safety crap — like keeping their hats on, using work gloves, not taking the guards off power tools, and following stuff like lock-out, tag-out.

                                        I got the impression that the number of incidents that happen despite PPE are pretty small, and the vast bulk of his reportables happen because a worker decided to avoid using the stuff that’s there to keep him safe.

                                        (In fact, he complains there’s a whole macho culture about not using their PPE, that lasts right up until someone severs a body part).

                                        I’ve even seen it in my job. Lots of basic laziness. “I’ll just stand on this rolling chair to reach this top shelf, that sounds like a good idea!”. Even the fabrication people, who should flipping know better, occasionally decide they don’t need to bother with stuff like safety straps. I got to see a lovely video of what happens when you try moving a 1700 lb load on a harness where the attachment point is only rated for 500.

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                                        • Tell me about it.

                                          The worst I remember was a guy that decided he didn’t need to don his full body gear to pour several gallons of chlorhidric acid in the water treatment system. Instead he poured them all over himself.

                                          We took care of all his medical expenses. It took him three months to be able to come back to work, now scarred for life.

                                          And we fired the motherfisher as soon as he stepped back into his job, as they say, pour encourager les autres.

                                          Union was quite unhappy, but they had to swallow it. Our position was that what he did has a gross violation of company procedures, and the fact that he hurt only himself instead of his coworkers was immaterial to the infraction.

                                          We never got to get people to use ALL their PPE, but we did get rid of the most egregious violations after that.

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                    • I don’t see why, “You have to join the union to work here,” is particularly problematic as a condition of employment. Is it something some people might find annoying? Well, yeah, but “job” usually connotes something you do that involves tolerating some annoying stuff.

                      I’ve never been entirely clear why this can’t be solved the other way: Don’t have ‘union dues’…make the *employer* pay the union instead. As part of the union contract, the company literally has to pay $X per employee to the union.

                      But the whole ‘Union dues are $X a month…and BTW, if you join the union, you get paid $X+10 dollars a month more.

                      However, I suspect that *both* that are not legal under under current law.

                      As I’ve said before to the people against unions who want to remove all ‘regulation’ forcing companies to work with unions…go for it, but you have to get rid of *all* regulation of unions. All of it.

                      And you have no idea what sort of monster you’d unleash. When we *last* had no laws against unions, employees had to do all sorts of downright illegal actions to keep them under control….and they can’t get away with having Pinkertons beat strikers anymore. Union regulations *contained* and *defanged* unions.

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                        • In your scenario does the employer have the ability to say “You can quit if you want, but we’re not paying for a union”?

                          In *which* scenario?

                          Are you talking about ‘There are no union rules at all’ scenario?

                          Well, yes, they would have the ability to not agree to a union, unlike now. That is, in fact, the huge thing that anti-union people seem to think is the big regulation that allows unions to exist. ‘The government forces them to agree to the union!’

                          But, remember, no union regulation, so we’re talking about random, mid-shift strikes, just flat walkouts. And sympathetic strikes, don’t forget those.

                          And we’re talking about slowdowns, we’re even probably talking about systemic minor lawbreaking like ‘accidentally’ breakages of machinery and goods and individual strikers, one at a time, getting arrested for blocking an entrance.

                          Right now, companies manage to stop unions because they manipulate the voting to keep it under 50%, *and* because unions and proto-unions have to stay within the rules to be legally recognized.

                          Remove both the voting cutoff (Hey, have you ever wanted a union consisting of 7% of your employees…specifically, every one of them that has been trained to run a certain machine?) and any requirement to stay inside the rules, and well, hell, the union wins. Always. (I mean, maybe you can could *RICO* the workers that break the actual law, but I good luck with that.)

                          People forget that unions existed *way* before they were legally recognized. And people *also* forget that a lot of the time when they lost, it was via corporate behavior that would look *really* bad in this day and age.

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                      • The usual things which are illegal would still be illegal. So no ‘occupying’ buildings against their owner’s wishes, no beating up people for crossing picket lines, etc. Without the threat of violence, I think some companies would simply break the union and that would be that. Without the union actually contributing something to the company or the workers, I don’t think it survives.

                        But, remember, no union regulation, so we’re talking about random, mid-shift strikes, just flat walkouts. And sympathetic strikes, don’t forget those.

                        And we’re talking about slowdowns, we’re even probably talking about systemic minor lawbreaking like ‘accidentally’ breakages of machinery and goods and individual strikers, one at a time, getting arrested for blocking an entrance.

                        Without a union, management’s answer to this sort of thing is “fire everyone involved”.

                        If there are enough workers to make this work, a majority or even a significant minority, then management is so dysfunctional that they deserve to have a union inflicted on them. But it’s not just management which can be abusive and dysfunctional, unions have a sordid history of that sort of thing as well.

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                        • The usual things which are illegal would still be illegal. So no ‘occupying’ buildings against their owner’s wishes, no beating up people for crossing picket lines, etc.

                          Are you asserting that it’s impossible for people to break the law?

                          Without the threat of violence, I think some companies would simply break the union and that would be that.

                          You can think that if you want.

                          I will just look at history, back when we didn’t have any union regulation, and note that unions often won their fight despite having absolutely no legal standing or even existence, and sometimes literally being illegal, and despite companies *and* the government using *extreme violence* against them of the sort they’d never get away with in the modern day.

                          Without a union, management’s answer to this sort of thing is “fire everyone involved”.

                          Let me see if I’m following this? There’s a slowdown, so we fire everyone.

                          And then we spend days hiring new people and, hey, wait, now the people are even slower, and stuff is damaged, and *now* we can’t tell if that’s because they’re untrained or if we accidentally hired some people sympathizes to the last group.

                          But we could, maybe fire them again? Or maybe just people who seem…union-y? I know, we can monitor their communications at work, see if they support a union…oh, wait, it’s not 1905 anymore and everyone is Facebook friends in their free time, so that’s not working.

                          Oh, oh, maybe we can get one of our scabs to be a spy in the union? Except the idea of compartmentalization is well understood at this point, so no one’s going to tell them who *else* is on the inside, or even give them anything that could be legally used against them.

                          Well, this is going *super-well* for the stockholders, which at this point are wondering if perhaps the wrong group of people got fired…and, oh, wait, some union members have bought stock and at the next stockholders meeting are going to force a vote on whether or not to sign a contract with the union…

                          People who say ‘All the unionizing workers will just get fired’ have, I suspect, never heard of the Wobblies, or any of the pre-regulation history of unions, and their idea of labor history started in the 1980s.

                          You put the fucking Wobblies in present day, with modern communication, and non-corporate controlled methods of getting their message out, including videos, and much more liberal rules about free speech and protests, in a world where the FBI can’t just randomly raid organizations and shut down for ‘hindering the draft’…

                          …and it’s a goddamn guerrilla war out there. In a street fight between labor and capital, labor always wins. The entire history of capital has been *avoiding* that fight, for a very good reason.

                          But it’s not just management which can be abusive and dysfunctional, unions have a sordid history of that sort of thing as well.

                          I like how people like to claim that’s comparable. What management has done to worker over the centuries is like eight orders of magnitude worse than what unions have. Yes, literally 10,000,000 times worse.

                          And something like *half* the bad shit unions do is because their management *get captured by the company*, so they just turn into a corporate tool.

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                          • I will just look at history, back when we didn’t have any union regulation, and note that unions often won their fight…

                            This is in the context of management killing people. So yeah, unions won then and they deserved to. And I’ve fully admitted an abusive management deserves the union it gets.

                            Let me see if I’m following this? There’s a slowdown, so we fire everyone.

                            I said, “everyone involved”. And yes, that’s the way it’s worked when I’ve seen it attempted by a small group who figured they were a lot more critical than they turned out to be.

                            Of course if you can get everyone to do it, then we’re back to the union having enough control over the minds and hearts of the workforce to make that happen, and more than likely there’s a good reason for that.

                            In a street fight between labor and capital, labor always wins.

                            They won decades years ago. The abuses which created unions are illegal and high on management’s list of things not to do, mostly they’re a thing of the past.

                            Modern unions mostly exist to create mid 6 digit jobs for their leaders and donations for the democratic party. Where that’s not the case and they’re actually useful, then more power to them and they shouldn’t have a problem convincing the workforce that they’re needed.

                            But this is why you need to constantly bring up crimes and conditions which are decades or even centuries old rather than point to conditions on the street.

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                            • “But this is why you need to constantly bring up crimes and conditions which are decades or even centuries old rather than point to conditions on the street.”

                              There is the small matter where unions don’t have even the small power they do in the US, those same corporations to pretty much the same things they used to do in foreign countries and continually lobby for relaxation of various regulations that were passed due to union pressure years ago.

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                              • There is the small matter where unions don’t have even the small power they do in the US, those same corporations to pretty much the same things they used to do in foreign countries and continually lobby for relaxation of various regulations that were passed due to union pressure years ago.

                                What “regulations” are you talking about?

                                Somehow I doubt we’re going to being “The Jungle” any time soon. https://en.wikipedia.org/wiki/The_Jungle

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                            • Where that’s not the case and they’re actually useful, then more power to them and they shouldn’t have a problem convincing the workforce that they’re needed.

                              The usefulness of a product is determined, in the market, by whether or not people buy it.

                              And you do realize that all unions that exist exist because 50%+1 of the workforce supports them, right? All unions are ‘bought by the market’ of workers at that company.

                              You seem to trying to be threading a middle ground, operating in this universe where unions *with* worker support should exist, but unions *without* worker support shouldn’t exist.

                              But in actuality, all unions exist because the majority of workers at a company want them, and if the majority no longer want them, they merely need to petition the NLRB to hold a decertification vote. All of them have worker support! There are no companies that have unions that a majority of the workers demand out of….well, unless they’re complete idiots who haven’t made any effort into getting rid of it.

                              And now we’re back to the real problem: You feel that people should not have to be in unions if they don’t want to be.

                              But, hey, you know what? I’ll offer a compromise. No more union shops. Corporations and unions are forbidden an exclusivity contract. Everywhere can be ‘right-to-work’. If you don’t want to be in the union, fine.

                              But in return for that, *you* have to demand that unions can form *without* getting 50% of the vote. Unions can just, poof, exist, no vote at all, containing exactly however many people want to be in them.

                              And you *also* have to demand that the union *no longer has to negotiate for people not in it*, unlike how it works now under current law. They negotiate their salary by themselves, you negotiate yours. They negotiate their health insurance, you negotiate yours.

                              Same with whatever safety concerns they want to split off. Although some of those could apply to everyone. I mean, the union wants railing and machine cutoff switches, non-union workers obviously get those for free. But, for example, the union negotiates safety goggles, well, only union members might get provided with said safety goggles.

                              And you’re probably going to be in the poorly ventilated part of the mine. The union said they weren’t working there until it got better fans and whatnot, but, hey, what are you going to do? Quit? We can always hire another non-union guy to do it.

                              And in addition to the safety thing, you should probably be aware you’re going to get paid less than they are. Companies have a certain amount of money they’re willing to spend on labor…and the union just walked off with most of yours, because keeping the union block of 70% of the labor happy is better than keeping the disorganized other 30% happy. What are you going to do…go on strike by yourself?

                              Oh, and you also have to push this in *existing* ‘right to work’ states, which currently do absurd things like require unions to negotiate salary for people who are not in the union and are not paying dues.

                              (I’m not actually sure this setup would be *better* for unions, as opposed to no union regulations, which would be all this *without* ‘right to work’ laws, but it sure would be pretty funny to watch all the people complaining about how they had to be in a union dance in join that they no longer have union dues…and then wonder what the *hell* happened to their salary after the union negotiated a good portion of it to union workers, and, incidentally, away from them.)

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                              • But, hey, you know what? I’ll offer a compromise. No more union shops. Corporations and unions are forbidden an exclusivity contract. Everywhere can be ‘right-to-work’. If you don’t want to be in the union, fine….

                                I’m good with this quote & everything that follows it.

                                The one thing I’ve learned from , in our many discussions of unions, is that a lot of what is unappealing about unions is the result of regulation, either directly, or as an obvious consequence.

                                Before I started this comment, I did some reading, and the interesting thing is this: Public support for the idea of labor unions is above 50%, but it fluctuates a lot. The public also supports right-to-work, even after having the free rider issue explained. However, people, especially young people, don’t want to belong to a union, even if they strongly support the idea.

                                This is where I’m trying to go with my opinion, and it’s one I’ve expressed before in previous discussions – Unions need to evolve, and the old guard doesn’t want to, largely (I believe) because the power and benefits of existing unions tends to accrue to the old guard. I see a similar trend in business, as I expressed in this comment to Saul.

                                When I worked at The Lazy B, the things that I saw that most turned off younger union members were
                                -Seniority rules that granted exceptional benefits to tenure (i.e. rules that were more than just protecting people from getting fired because they make more, have higher medical costs, dodging pension obligations, etc. – especially irksome were rules that associated tenure to access to overtime or career development),
                                -Rules which completely shut out any kind of substantive merit recognition for driven &/or talented employees,
                                -Leadership withholding information regarding, or outright lying about, contract negotiations
                                -And any kind of hint of union members performing social (or worse) intimidation against perceived defectors[1].

                                My thinking is that people understand that Unions can help when it comes to income inequality, in theory. In practice, the perception is that the inequality persists, it’s just now mostly captured by the top tier of the union membership, instead of just the top tier of the corporate hierarchy. Now, again, perhaps this is the consequence of labor laws & union regulations, and we’d need to revisit those in order to improve things, but that would require that unions support those changes, and I don’t think the leadership will. And if such things are completely internal to the unions (i.e. not a consequence of law), then I’m even more certain that the leadership will resist such changes.

                                Which brings me to my final point – no institution, no matter how necessary or beneficial it may have been, deserves to exists just because it once was necessary &/or beneficial. I get the impression from a lot of people who support unions that existing unions should persevere just because they did good work 20 years ago or more. I’m saying that attitude has allowed those existing unions to stagnate and that stagnation has severely damaged the brand, as it were. Union supporters also gloss over the social dynamic that goes on inside a union, and I’m not talking just about intimidation (or the threat thereof), but also the amount of work needed to change old, rigid institutions from the inside, and how effective such institutions are at capturing reformers, or at least at marginalizing them. It’s one thing to say that we can’t simply burn down the government and start over to clean up the corruptions and other unpleasantness, because of the harm that would cause. But unions are NOT governments, and just as I support creative destruction when it comes to businesses, I support it for unions as well.

                                DavidTC and I had a conversation once regarding what is involved in forming a union (it was part of a discussion of NERPs – Non-union Employee Representation Plans) and it struck me then as straightforward in principle, but complicated in practice, which is one reason many employees who wish to form a union invite an existing union – because it makes the legal paperwork much easier. Of course, then you get a lot of the cultural baggage of that union, which a lot of people don’t want.

                                So yeah, I totally agree with DavidTC that the law should allow new (unaffiliated) unions to form with a lot less hassle, at least if people want unions to thrive again. Forming one should certainly be as easy as starting a employment agency (because, let’s be honest, there are a lot of parallels there).

                                [1] Something I saw done by even my rather tame union, as recently as 2010. A coworker of mine was a religious objector and would get regular letters from the union threatening legal action against him because of it (usually as a result of the annual paperwork he had to submit to renew his status). He had already spoken to a lawyer and knew they threats were empty, but still. The tales I heard from some of the younger machinists I knew involved a handful of union members showing up at 10PM at the door of people failing to toe the line, in order to have a ‘chat’. Even if such things are isolated incidents, the actions of a few overzealous members, the fact is that such stories get around, and when the union does not stomp on such tactics as unacceptable (by actually punishing people, instead of just making the proper public statements against), then it is seen as approving of it, at least behind the scenes.

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                              • The usefulness of a product is determined, in the market, by whether or not people buy it.

                                Agreed, but this is an odd thing to say in the context of forcing people to join a union.

                                And you do realize that all unions that exist exist because 50%+1 of the workforce supports them, right? All unions are ‘bought by the market’ of workers at that company.

                                And the other 49% are going to be forced, at legal gun point, to buy the product?

                                That 49% can include entire groups who correctly believe the union doesn’t serve their interests and they can even be abused by the union as long as the 50%+1 is fine with that. These groups can include, the young, the talented, the educated, blacks/asians, and/or entire professional classes.

                                And after having been outvoted and forced unwillingly to join a union, they can continue to be grouped with numbers of people whose interests don’t align with their own and have no recourse.

                                For example, the Michigan Home Health Care workers were forced to join a union by missing the vote (50%+1 being of just the people who voted), and then forced to stay in the union until they got an individual right to leave, whereupon 80% of them did at the first opportunity.

                                Since they worked from home, the union did nothing for their working safety condition, their pay didn’t go up (the union and gov needed to bend over backwards just to give them an employer at all), etc. The union just collected dues and collaborated with pro-union gov officials to keep the captive workers captive.

                                http://www.foxnews.com/us/2014/09/26/michigan-seiu-branch-allowed-to-keep-millions-in-dues-skimmed-from-stealth.html
                                http://dailycaller.com/2014/04/30/after-right-to-work-80-of-mi-healthcare-workers-desert-union/
                                http://www.michigancapitolconfidential.com/16241
                                http://www.btlaborrelations.com/fight-over-unionization-of-michigan-home-health-care-workers-continues-in-federal-court-and-at-the-ballot-box-in-november/

                                Unions can just, poof, exist, no vote at all, containing exactly however many people want to be in them.

                                Sure could. And stage slowdowns, hold completed work hostage, and (as I observed in RL) get fired for that. My expectation is a union would need to pass a minimum ‘power’ threshold to work with management.

                                And you *also* have to demand that the union *no longer has to negotiate for people not in it*, unlike how it works now under current law.

                                Agreed. But my strong impression is it’s the unions which would object to this. ‘Negotiating’ for the freeloaders gives them more power than not doing so. Having a non-union group of workers around making more than the union would be a problem. Which implies the high value people leave the union and do their own thing.

                                And you’re probably going to be in the poorly ventilated part of the mine.

                                :Amusement: If you’re going to describe a situation where the union is actually adding value, then getting people to join won’t be an issue.

                                …then wonder what the *hell* happened to their salary after the union negotiated a good portion of it to union workers, and, incidentally, away from them.

                                This assumes salary isn’t set by the market. Offering people less than they’re worth is a problem both short and long term.

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                                • And the other 49% are going to be forced, at legal gun point, to buy the product?

                                  That 49% can include entire groups who correctly believe the union doesn’t serve their interests and they can even be abused by the union as long as the 50%+1 is fine with that. These groups can include, the young, the talented, the educated, blacks/asians, and/or entire professional classes.

                                  This is not as strong an argument as you want it to be, because, well, this is how democracy works. Unless the 50%+1 vote is approving something that violates a recognized right, you don’t have much to stand on. Of course, the argument that follows is that it violates free association by requiring you to join the union, but IIRC, that argument doesn’t go very far and has already been rejected by the SCOTUS at least once.

                                  If I had to change one bit of current union regs, I would make it so that ‘religious’ objectors are anonymous to the union, and not just hidden, but like HIPAA anonymous, such that it would be illegal for the union to know who was an objector (unless that person publicly revealed themselves) and a successful civil case would have significant damages to the union.

                                  Putting that into practice would probably require a third party to handle the objector status request, and union dues, and making sure that person can’t vote in union elections, etc.; so I’m not sure how much of a burden that would be in practice (probably not much, since the union lawyers could do it).

                                  That would permit people to voice displeasure with the union without having to worry about blowback. I mean, one or two defectors isn’t a concern, but if you suddenly have 20+% suddenly finding ‘religion’, it’s a good bet you aren’t making your members happy and are courting a decert – time to start finding out why.

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                                  • This is not as strong an argument as you want it to be, because, well, this is how democracy works.

                                    This is close to treating unions as governments. There’s something to this as a paradigm (especially for explaining pro-union attitudes), governments are allowed to tax people, use force, and do things to their 49% without consent.

                                    If I had to change one bit of current union regs, I would make it so that ‘religious’ objectors are anonymous to the union, and not just hidden, but like HIPAA anonymous…

                                    If we use the religious paradigm, then those objectors are heretics. If we use a union-is-a-government paradigm, then those objectors are traitors.

                                    As long as we allow a union to force unwilling people to join, imho it’s going to be impossible to prevent the abuse of it’s heretics & traitors.

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                  • Having Union and non Union work contracts is something that exists, at least in some other countries (I’ve never done labor issues in the USA so far)

                    Otherwise, the solution to the free rider is to separate contract bargaining from the other union activities. If you are covered by the contract, you are charged for the bargaining. Otherwise, you don’t have to contribute.

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      • US culture is extremely adversarial. The three branches of government are often said to be opposing. Matters before the court are listed as A versus B like a boxing match, not A with B, like a team seeking a solution. Nearly every achievement is framed as a fight, race, or war. The political memes that resonate and last are ones of opposition to a group (not idea or policy). It should be expected that any disagreement like union / management bargaining will adopt this frame more readily than elsewhere. That is before you even add in the hyper-individualism.

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    • I don’t think that’s exactly correct. “The American right-wing and rightish-libertarians remain fanatically devoted to the idea of absolutely zero in terms of a welfare state and they maintain a total resistance to labor unions.”

      You want to have a welfare state? Fine. Then you gotta restrict immigration. You want free immigration? Then you can’t have a welfare state. Choose one. You can’t have both. I am not anti labor union, in fact, I’m all about free association. The exception is public employees. There has been and is too much “deal” making where the tax payer gets screwed, the union gets they wages, and the politician gets re-elected.

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    • “Lee will also point out that European conservatives made their peace with the welfare state and seem to accept that you need universal healthcare.”

      I would say it is because in Europe, it was always the job of the aristocracy to give the peasants the means to live and it was obvious who the peasants were.

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    • Why can’t it be something as simple as the complexity of the U.S. capital markets combined with the old saying “nice guys finish last”?

      Pardon my exaggerating here, but I’m doing it to make a point…not to attack you.

      You want to take over a company and manage it the way you want it managed and give the workers a greater share of the pie? Great. Assuming that there’s no change in revenues, you’ll now a lower profit margin than the companies in your peer group.

      Now you have a problem. You aren’t making the same kinds of returns relative to your peer group. New capital interested in investing in your sector won’t invest in your company but rather stronger performing peers. Wall Street analysts being downgrading you. Stock price drops. Credit ratings drop. Your investors are pissed off. The number of people taking short positions increase.

      Here’s a great company that’s sucking wind compared to its peer group because senior management has a soft spot for labor unions. The stock is down 50% from it’s 52-week high because no one in their right mind would touch it with a 50-foot pole…well, except the private equity firms that see a very easy turnaround opportunity: acquire a stock at a 20% premium to current price, take the company private, replace management, boot the unions, reposition the company to profitable status, maybe lay off more people and exit via a public offering.

      At the end of the day, the happy campers are the private equity managing partners that take their carried interest all the way to the bank and only pay a capital gains tax, all because you’re too damn nice of a guy. ;)

      Again, I’m deliberately exaggerating but I did so to demonstrate why some of the ideas I hear from people on your side of the political aisle will never fly in real life the way the capital markets function today.

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      • You are right, . This is an example of the tragedy of the commons (or a prisoner’s dilemma). Until the system breaks because the peasants revolt.

        The solution, as Bismarck realized, and passed on to all subsequent German governments, of all types, is to regulate and mandate capital to allocate a portion of the pie to labor.

        It’s noticeable that, except the few years immediately after WWI, Germany has had a very high level of social cohesion and internal peace, even under extreme circumstances like WWII, the post war occupation, or the integration of the FDR and the DDR. Only now, with the refugee crisis, you start to see some previously unheard of rumblings of the hoi-polloi.

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          • Bismarck was a despicable person in the tactics he used. But he was totally realistic iwhen assessing the situation and what the issues were.

            He was not afraid of reality and had no use for those that let feelings substitute data

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      • Doesn’t your example show how the “System” as practiced here is biased against workers and tilted towards big financial companies. They get tax breaks and sweet boss like Saul can’t even treat them better because it will just undercut himself. Treating workers better is a negative in the market and to powerful people so there is no incentive to do it.

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        • You know I’m a libertarian, right? You know I’m not allowed to break ranks with the ideologues and I’m simply supposed to accept the market for what it is. How dare you even ask such a question. ;)

          My short answer is that it’s tilted unfavorably, especially towards certain middle and lower income groups.

          My reservations about minimum wage laws aside, don’t think that it doesn’t bother me to know that people are out busting their asses at jobs and still require public assistance while certain companies (cough: WalMart) not only benefit but continue to flout labor laws.

          I don’t like what I see out there at all.

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        • Treating workers better is a negative in the market and to powerful people so there is no incentive to do it.

          Not “better”, “better than the market wants”. From a corp’s standpoint, ideally they’d be paying every one of their workers Zero. That doesn’t work because the number of people who’d sign on is zero.

          As awful as the market is, all the other alternatives have shown themselves to be worse. The market lifted hundreds of millions of Chinese out of poverty, communism’s gov decrees resulted in mass starvation.

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          • Good thing nobody here is pushing communism. Why should the market be the sole and highest word on what happens? Sure markets are valuable and important and the best engine in general for building economies. But there are a lot of details that maybe the market isn’t’ the best at. That is where other values might be more important than what the market wants. The market, of course, doesn’t actually “want” anything. It’s not a person with emotions and “want” is a desire or emotion. The market is a human designed gizmo.

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            • But there are a lot of details that maybe the market isn’t’ the best at. That is where other values might be more important than what the market wants.

              Open that door and we mostly find out those ‘other values’ equate to ‘political power’, and the person picking up the check is the taxpayer.

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              • That sounds ominous but other than that i’m sure there is much meat to it. Other values could be protection of the environment which could read as an externality. Or safety regs. Or wanting some key military production to be kept in the US. Or not wanting to deal with a particularly nasty dictatorship. So the tax payer could easily benefit from having the environment protected or resources not used up. They could benefit from having a safer work environment. Political power is always a part of a political system. There is no way around that.

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          • No

            The market cannot solve most externalities, the problem of the commons, and other similar issues.

            It can’t. It never could. It does not have feedback mechanisms to tackle those.

            Left to its own devises, Thea issues would kill the market, or the people. Hence regulation on the margins.

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            • @j_a

              The market cannot solve most externalities, the problem of the commons, and other similar issues. It can’t. It never could. It does not have feedback mechanisms to tackle those.

              The problems on the table are worker-pay and employment, for which the market does have feedback mechanisms. The problem here isn’t that the market isn’t working, the problem is that it is working and various people don’t like the message it’s sending.

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              • What about workers safety? How does the market manage that?

                In theory, if people die in my mine a lot, miners won’t work for me, and will work in other mines

                In practice, there’s no other mine in town, or anywhere near, and in this town you are a miner or you deal in meth. Your choice. The mine is not going to pay to improve the safety.

                One of the stated premises of the efficient market model is that there are no entrance or exit barriers. But starving is an exit barrier, so labor is not an efficient market.

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                • J A,

                  One of the stated premises of the efficient market model is that there are no entrance or exit barriers. But starving is an exit barrier, so labor is not an efficient market.

                  Manoman, is this an excellent point. Useful in a whole slew of OT-friendly economic topics.

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                • @j_a

                  One of the stated premises of the efficient market model is that there are no entrance or exit barriers. But starving is an exit barrier, so labor is not an efficient market.

                  Across the entire nation, the number of unemployed is currently between 8 million and 40 million people.
                  http://www.politifact.com/truth-o-meter/statements/2015/aug/31/donald-trump/donald-trump-says-us-has-93-milion-people-out-work/

                  Excluding mental illness, crime, and extreme isolation, the number of people who starved to death last year was roughly zero.

                  Including mental illness (etc), the number was less than four thousand in 2014.
                  https://www.quora.com/How-many-Americans-starve-to-death-each-year

                  What about workers safety? How does the market manage that?

                  At the moment, with government agencies. That’s why you can’t see Orcas swimming with their trainers any more.

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                  • Excluding mental illness, crime, and extreme isolation, the number of people who starved to death last year was roughly zero.

                    Erm, almost no one on the planet dies of ‘starvation’ in anything other than emergencies. Starvation is death from lack of *calories*, which basically requires someone to suddenly have *no* food. It is simply not possible for a rational and free human to literally starve almost anywhere on the planet. You can eat *grass* and get enough *calories*.

                    Most people who die from lack of food do not die from ‘starvation’. they die from *malnutrition*. (Which is what you will die from if you just eat grass.)

                    For example, you don’t die of ‘starvation’ if you don’t get enough iron. You die of (usually) heart failure.

                    Approximately 0.58 people per 100,000 die from malnutrition each year in the US, which means somewhere around 1880 people a year.

                    http://www.worldlifeexpectancy.com/cause-of-death/malnutrition/by-country/

                    This is, incidentally, higher than most of Europe, except for France, which has a *horrific* rate of 2.25 for some reason.

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                    • Approximately 0.58 people per 100,000 die from malnutrition each year in the US, which means somewhere around 1880 people a year.

                      http://www.worldlifeexpectancy.com/cause-of-death/malnutrition/by-country/

                      That sounds about right, and thanks for the link.

                      This is, incidentally, higher than most of Europe, except for France, which has a *horrific* rate of 2.25 for some reason.

                      The “best” countries all report rates of zero, which I don’t believe. Nor do I believe that North Korea does a much better job than France.

                      IMHO what these numbers tell us is that starvation/malnutrition simply aren’t due to economic issues in the first (or even 2nd) world. My expectation is we’re looking at mental illness and elderly shut-ins as the real problems here.

                      France may do a better job reporting it’s numbers than most, or it may do a worse job helping it’s elderly.

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                      • The “best” countries all report rates of zero, which I don’t believe. Nor do I believe that North Korea does a much better job than France.

                        I’ll believe Malta has a rate of 0, but that’s it. (Malta is barely a real country. Kinda surprised it’s on there, as other microstates aren’t.) The next lower rate I maybe believe is Finland, and that’s only because of my just-invented theory that their very poor freeze to death first. I also don’t believe the Ukraine or Serbia, and Russia’s numbers seem dubious to me also.

                        IMHO what these numbers tell us is that starvation/malnutrition simply aren’t due to economic issues in the first (or even 2nd) world. My expectation is we’re looking at mental illness and elderly shut-ins as the real problems here.

                        I think you and I differ there, because I think ‘letting the mentally ill wander the streets without food’ is sorta an economic issue. As is the failure to have any sort of elderly monitoring program.

                        France may do a better job reporting it’s numbers than most, or it may do a worse job helping it’s elderly.

                        It seems like a big part of malnutrition, at least in developed nations, would be how healthy the *cheapest* food is, the food people select when they have absolutely no money. Perhaps all cheap French food is missing one specific nutrient.

                        I mean, we think all it’s goofy how some food just has *random* vitamins shoved it, like ‘Why is there calcium added to my orange juice?’ and ‘Why is there iodine in my salt?’, but that does serve a purpose. Maybe France just…doesn’t do that, and as a consequence, poor people don’t get any iodine and die from whatever disease is caused by that.

                        Or, alternate explanation…France actually has a subset of its population it treats horribly. Just blatant racism, incredibly hard for them to find a job, even stuff like trying to make second and even third generation immigrants *not* be citizens. And it gets tied in with religious discrimination because many of these immigrants are Muslim, and France doesn’t really like religion at all, and their dislike of religion has, in turn, resulted in terrorist attacks, which of course has lead to a sort of downward spiral.

                        I’m wondering to what extent the malnutrition is concentrated there, in the group of people that a lot of the French do not seem to consider truly French.

                        And the third possibility, of course, is that these numbers are actually kinda gibberish. If someone dies of, to take my previous example, heart failure due to lack of iron, some doctors are going to call it just heart failure, and others might go ‘Looks like this was caused by malnutrition’. That seems like it would be determined by general medical practice, which would vary by country.

                        And how exactly could doctors tell malnutrition from just *bad* nutrition? ‘Well, this person died of problems bought on by their diet of sugar-water and fatty foods…but I have no idea if they’re just *bad* eaters, or if they were *poor* and living off the cheapest food.’ Or is malnutrition supposed to include both of those?

                        Likewise…say someone gets a disease, and dies from it. Now, people who are perfectly healthy *can* get that disease, and *can* die from it…but if that, for example, is a 20% morality rate, whereas people in bad health have a 70% morality rate, and someone who lost their job and dies…does that count, or not? Can we even know if they’ve been eating well…maybe they had some food saved up, or maybe not? Maybe they count as half a person?

                        This entire thing seems way too subjective to me, way too much vague boundary conditions that are going to be judge differently from culture to culture and government to government, and impossible to compare.

                        I have a feeling that a lot more people die, or have their deaths *contributed to*, via ‘dietary choices mostly caused by lack of money’ than these charts measure.

                        And I also suspect that it would make more sense compare naturally-occurring (Not including accident or violence) death rates of various income levels, instead of trying to figure out which deaths are ‘malnutrition’.

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                        • RE: France

                          Another possibility is how end of life is handled. The very old sometimes simply refuse to eat until they die. The issue then becomes, how is that written up?

                          RE: And I also suspect that it would make more sense compare naturally-occurring (Not including accident or violence) death rates of various income levels, instead of trying to figure out which deaths are ‘malnutrition’.

                          The death rate across all income levels holds steady at 100%

                          RE: I think ‘letting the mentally ill wander the streets without food’ is sorta an economic issue. As is the failure to have any sort of elderly monitoring program.

                          We’ll have to disagree. Social and/or cultural, certainly, but the issue seems to be unlikely to be one of lack of money.

                          RE: It seems like a big part of malnutrition, at least in developed nations, would be how healthy the *cheapest* food is, the food people select when they have absolutely no money.

                          Locally the cheapest food is basically handed out at church run food pantries. I think it’s mostly potluck (donations from people and businesses… probably including grocery stores). As far as nutrition, potluck wouldn’t be a bad way to go. I assume it’s stuff the stores somehow got oversupplied on, but it’s possible there’s more intelligence involved than that.

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                  • Damn, all these market distortions.

                    In Libertarian paradise we will have no stinky government regulations to limit the ability of trainers to swim with hungry orcas. And definitely no welfare payments to lazy unemployed people. Let their family or their church feed them if they care to.

                    Jokes aside I’m honestly not sure what you are trying to say. Are work regulations, welfare provisions, etc. good or bad? I understood you thought they were bad, but I don’t know anymore.

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                    • @j_a

                      I believe his argument is going toward utility. If we have OSHA, what is the utility of worker safety rules from a union?

                      If I may, the answer is two fold:

                      1) OSHA regs don’t cover everything, and should be considered the bare minimum a company is expected to meet. A union can demand additional rules that go above & beyond OSHA, or that fill in gaps that are specific to the workplace or industry. What the union demands might be patently stupid, but it could also be very smart. Each has to be examined on it’s own merits.

                      2) OSHA inspectors are not everywhere, and they do not materialize out of thin air when called. A union rep, however, is always on site and usually has the power to stop unsafe practices, be they the result of management demands, or just dumb people (and let’s be honest here, these days dumb people probably injure and kill themselves in industrial accidents at a far greater rate than management does by demanding people violate safety rules).

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                      • I believe his argument is going toward utility. If we have OSHA, what is the utility of worker safety rules from a union?

                        More like “marginal utility”.

                        With OSHA (and for that matter, the increasingly ‘office’ nature of work and the shift in culture in the last century), there is less need for union created safety.

                        If it’s unsafe work, and/or if management only does the bare min, then sure, a union can probably justify it’s existence.

                        If it’s safe work and/or if management prides itself on having zero injuries, then the need for a union is clearly less, but presumably the cost of having one would be the same.

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                    • @j_a

                      Are work regulations, welfare provisions, etc. good or bad? I understood you thought they were bad, but I don’t know anymore.

                      The first dollar of something, including gov regulation, is amazingly good. Your city’s first cop, outlawing abuse of workers/child labor, preventing people from starving, etc.

                      However every election we get a fresh group of politicians who need to justify their existence, we’re LONG past the first dollar and deep into negative returns.

                      It’s a good thing to prevent management from killing the workers. It’s a bad thing that management needs an army of bureaucrats and compliance officers who do nothing but deal with their opposite numbers in other companies or the gov. It’s a bad thing that we have a tax code too complex for any human being to understand. It’s a bad thing that we believe a group of gov paper pushers are going to control the banks better than the market. It’s a bad thing that we view job creation as a privilege we hand out to companies.

                      All of these things have invisible costs and retard growth, we badly need growth if we’re not going to be breaking promises about pensions.

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                      • I think your argument needs to be proved on a case by case and regulation by regulation basis. We can discuss if D-F is helping or hindering. We should discuss that.

                        The problem is substituting principles for empirical data. In real life, very few things follow great sweeping principles. And modern life, being more Interconnected and complex than ever before, is a particularly bad place for big sweeping principles.

                        In particular, plenty of people that speak of the awesome power of the market apparently never signed for Economics 102, where we discuss how unlike an ideal market the actual market is. Banking regulations is a good example. Banking regulations are there because there is a ginormous disparity in the ability of the bank shareholders and the ability of the bank’s retail customers(*), and their community, to withstand a bank failure.

                        Now, the USA Tax Code. I don’t know of anything worse.

                        (*) if you look closely you will see many provisions of bank and securities regulations to apply only with respect to the relationship with people/entities below a certain size/net worth (what banks call retail customers). You can be as risky as you want with the net worth (private banking) and corporate customers money. Those differences are there for a reason.

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                        • The US tax code really isn’t that bad — for most people. The places where it’s unfathomably complex are for the really rich and big corporations, who lobbied exactly FOR that complexity. Because it lets them do fun stuff while claiming the opposite. “Taxes are so high!” while paying a fraction of the book rate.

                          There’s also the complexity that just exists because, well, life is complex. There’s some complex as heck financial deals out there — not sure why people expect the taxes to be simple.

                          By and large, the average voter doesn’t really CARE about tax complexity, because the average voter fills out a 1040EZ or 1040A, which you can do in about an hour online. They’re TOLD that’s complex, but 95% of it is either checking for income you forgot about or checking for deductions you might qualify for.

                          I’ve got a more complex than average return (we have salaries, investment income, and independent contracting income — including expenses and the like), and it takes me about two hours to do once a year.

                          If you own a small business it’s probably more complex (especially if you have employees), but in that case — why aren’t you paying a CPA anyways?

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                          • The US tax code really isn’t that bad — for most people.

                            I use turbo tax. Twice in the last several years the IRS has sent me a check because they believe I filled out my taxes incorrectly.

                            I’ve no idea what the problem was, Turbo Tax claimed both times there were no problems.

                            So either the engineers who created TurboTax don’t know how to read the tax code or the IRS doesn’t know how to read it. I’m not sure which alternative is more likely or worse.

                            I have at least three other examples in this sort of thing separate from TT where the black letter of the tax code I’m reading apparently isn’t what the IRS wants to hear. Once again, in each case, I really don’t know what planet they’re on because the black letter is the black letter. Presumably there’s something buried in another document that I simply haven’t read which says something else.

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                            • If the black letter of the law were all that black, there’d be much less need for lawyers.

                              The English language is delightfully imprecise. So even reasonable minds can differ in the correct application of law and regulation to a particular fact pattern.

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                          • The US tax code really isn’t that bad — for most people.

                            Remember when Carly (I think it was her…) said she’d revise the tax code so a return fit on a post-card? We already have that for prolly 80-85% of Murkins.

                            The places where it’s unfathomably complex are for the really rich and big corporations, who lobbied exactly FOR that complexity. Because it lets them do fun stuff while claiming the opposite.

                            Yes. Them and all the other “demographics” that wanted more complexity to save some dollars. It’s not the average American who lobbied for a 6000 page tax code.

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                        • @j_a

                          And modern life, being more Interconnected and complex than ever before, is a particularly bad place for big sweeping principles.

                          Pass a law so complex and long that even it’s authors can’t read it and have little idea what’s in it (or pass several conflicting ones over the years). Hand this over to multiple bureaucracies with conflicting ideas on what to do, give them authority (i.e. guns) to enforce their will, let them build their little empires. Be surprised that the larger players build their own bureaucracies to deal with yours.

                          Now complain about how complex modern life is, and claim that because it’s so complex we need multiple bureaucracies.

                          Expecting things to work better by handing them over to a large, complex, government command-and-control bureaucracy is itself a sweeping principal. Somehow we’re always shocked that there are unintended consequences, poorly aligned incentives, and we ignore the massive cost/overhead which comes with this solution.

                          Banking regulations are there because there is a ginormous disparity in the ability of the bank shareholders and the ability of the bank’s retail customers(*), and their community, to withstand a bank failure.

                          We have FDIC because of this, and that’s great. By all means protect the little guy against the big one.

                          However what we’ve seen is, over time, banks capture their regulators and/or figure out ways to twist those regulations into profit and blow themselves up. Then we step in to bail them out and create new regulations/regulators. We’ve gone through multiple iterations of this.

                          The principled way to handle it without command and control would be to let the banks do whatever they want, and then when we need to bail them out make sure the top three levels of management suffer appropriately for it. Fire them and retroactively take back the bonuses they earned blowing things up.

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      • I’m imagining Chris Farley doing a reading of this post, with a buildup until the end when he’s screaming and then slam-cuts to a reasonable voice (like the bit in “Tommy Boy” where he explains what happens when you buy cheap brake pads.)

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  4. This is how technology could cause long-term job loss, by raising the minimum level of skills required to count as having marketable job skills, though I want to emphasise that this is only a hypothetical possibility at this point.

    I think this is more than hypothetical. I also think the HR desire for credentials as an easy filter compounds this problem. People tend to acquire diverse skill sets over time, but lack any kind of credential for a large number of those skills. In a small community, the interpersonal networks could serve to shortcut HR (manager/supervisor knows what skills a worker has and will hire, or offer a recommendation to hire, etc.). If a lot of the information regarding the talent of a small community is not on paper, an investor, especially an inexperienced one with few connections in that community, would be reluctant to invest. The easy answer is for people to go to school to get the credentials, but we also know that is an easy answer that is anything but. Even if there is a school that could offer the credential, it might not be close, or lend itself to online education, or affordable. Perhaps we need CLEP exams for certains acquired skills credentialing.

    Adding to this, if you have a small community with a single significant source of employment, you very likely have a built in problem of a population of workers who have never had to work to get hired. This is doubly so if the employer had a strong union. People get hired based on those community networks. You fill out the boilerplate job application, then someone in the union, or otherwise employed there, just rubber stamps the application and gets you on the schedule.

    I can’t stress this enough, but getting hired takes work and is a skill. I’d say it’s a perishable skill as well. Finding openings is a skill, writing resumes that work is a skill, doing well in an interview is a skill, etc. And these are skills that change over time – what worked in the early 80’s is not going to work as well today. If the local factory closes, and a large percentage of the employees there have been there for over 10 years and had a very informal and non-competitive hiring process, they are going to be lost trying to find work except at another employer where they know someone and can enjoy an informal process.

    So we have populations of employees who are probably very good workers, quite intelligent in their area, but who lack the credentials and the skills to get hired outside of the small dynamic they once enjoyed. That’s not a problem that will unf@*k itself.

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  5. Enjoyed this piece a great deal. One point to pick on, though. You say, “Income rises with age up until a little before retirement age, then falls.” IIRC, personal income in the US peaks at age 49 or 50, a long time before nominal retirement age. Earlier than that for women. There are a number of reasons for it, the most obvious being that older workers are a partially-protected class (particularly regarding layoffs). Better to not let too many in the door than to have to deal with such problems down the road.

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  6. James, is there any economic data gathering about how individuals perceive the availability of a broad range of means of productions that will sustain a living wage?
    Would the results indicate a economic problem?

    Interesting work, look forward to more.

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      • Dang, I was hoping you would follow. There are a couple things I am trying to touch upon.
        1. Thoroughfares to the cheapest labor markets and automation (locally or not) are flooding local markets with goods that undermine the ability of the local production/exchange to compete through individuals labor.

        2. Local production in developed nations can’t compete do to the ‘liberal democratic’ notion that minimum wages should be set relatively high in developed countries.

        So the effect is that production of tangible products becomes futile in developed nations. Demand is still present with each individual but the ability to engage in production disappears locally. There was some notion that the jobs would just shift to some quantum of sustainable service industries but I question the success of that.

        Economists appear to grasp the idea of subjective value pretty well, what suprises me is they don’t appear to be able to open up that area of thought beyond a very narrow spectrum.

        Let’s say that someone locally wanted to engage in a home based business of producing shoes. As the current economic model exists, the market is flooded with various forms of shoes at a price that reflects globally the lowest labor costs available.

        The economist is cheering yay, at the ability to do these things using government/corporation/policy constructs.

        The guy wanting to make shoes sees it as a negative. Lets say the guy changes to making shirts, and finds the same thing. Both production and exchange are unable to compete at a local level. So the guy looks at making bread, finds out the same thing. Hats, the same thing. Socks, the same thing. Nearly the entire spectrum of products producable by individuals has been undermined by cheap labor versus the minimum wage. This didn’t happen by mere accident either.

        It seems everyone at the 50,000 feet level is cheering success, the guy looking to produce something is saying this thing sucks, how can it be destroyed? Then you end up with a base that is looking to really want to defect in a big way and the guys at 50,000, saying ‘yeah but you guys got it so good’.

        And that wouldn’t be the perfect storm, except that local capital formation sucks also. Where people could set back some wealth to glide through the rough times, that wealth has been replaced by debt. So people aren’t fretting about how much wealth they have left to make it on, they fret about how much debt is accumulating.

        So, in subjective terms the individuals means of production has been fished up. The individuals means of exchange has been fished up. Local tangible capital formation has went negative.

        That’s kind of the three strikes your out, problem. Individuals start defecting until it looks like populism. Which it doesn’t really have to be populism as it doesn’t have to have the ‘we the people’ form of social component, it just has to have enough individuals looking for extreme change.

        I think the greatest errors by economists of this era will be the complete focus on social constructs without considerations of individual construct preferences.

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        • “Let’s say that someone locally wanted to engage in a home based business of producing shoes. As the current economic model exists, the market is flooded with various forms of shoes at a price that reflects globally the lowest labor costs available.”

          And here we have the problem

          The market is not flooded with shoes at a price that reflects the lowest labor costs available. It’s flooded with shoes at a price that reflects the lowest PRODUCTION costs available.

          I don’t see shoes made in a home in Gaza, a place that has lower labor costs than China, of made in a home in Mali, that has cheaper labor costs than Mexico.

          Actually, except for the very high end handmade bespoke shoes that command selling prices of hundreds or thousands of dollars, I don’t see shoes made in a home anywhere.

          I see shoes manufactured in industrial facilities, with outputs of hundreds to thousands of shoes a day. Against the cost of infrastructure and machinery (and the cost of capital to finance it), the cost of labor is not the preeminent driver.

          And, kid you not, every new shoe factory that it’s build will require less and less labor. At this rate, shoe manufacturing will soon be based in Liechstenstein, where taxes and capital costs are very low, and labor is very expensive. Why? Because we will run the factory with one employee and one dog. The employee feeds the fog, and the dog makes sure the employee does not touch the machinery.

          We need to develop solutions to people displaced by automatization (that’s also not going anywhere). Instead, what we are getting are noises about reverting the globalization. Either those making the noises do not understand how production works, or they do and they are playing a con of those that don’t.

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          • And someone will say “pfft, Lump of Labor fallacy, you can always retrain”, and I’m thinking “good luck retraining a 50-year-old who has no skills or education that he didn’t get on the shop floor”

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            • That 50 year old can be retrained, but doing so will probably require a pedagogical approach that isn’t common in common educational institutions.

              This is one area where I think we allow the academy to dodge some manner of responsibility. Even they like to say, “Just send him to school!”, knowing full well that a guy who hasn’t seen the inside of a classroom in 30+ years, and that last one being a high school classroom, will struggle greatly with campus life. Certainly there are exceptions to prove the rule, but the bulk will flounder without significant academic assistance and flexibility, which the school will be loathe to provide.

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              • And it’s worth keeping in mind that maybe people will say “wow, retraining this guy is going to require a lot of one-on-one personal instruction, and that’s going to be expensive, maybe he should help pay for some of it!” And now we have fifty-year-olds with student loans.

                Or people will say “you know, retraining this guy will cost more than he can possibly make before he retires, it’s cheaper to just hand him a dole card.”

                On the gripping hand, even a life of leisure will require some degree of engagement and instruction in how to do something other than watch TV and eat chips all day.

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                • When Maribou was getting her Master’s Degree, I regularly got sent on errands to pick up this or that other thing that she needed to help her study.

                  One of the errands was “can you go to Wendy’s and pick up one of those baked potatoes?”

                  I sighed, got in the car, drove to the Wendy’s and the lady behind the register was in her 60’s. She wasn’t very good at the register and she wasn’t very good with taking my order. She apologized profusely and I said “it’s no problem, not at all, take your time” profusely. The next time I went on an errand that involved Wendy’s, she wasn’t there. I never saw her again.

                  I tried to keep that lady in mind every single time Maribou asked me to get something that would help her study. I’m not saying that I *NEVER* sighed again when she asked me to do something for her that would help, but I sighed less than I was inclined to sigh.

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              • The bigger problem is that the 50-year-old has a mortgage/rent payment and a kid who’s also in college. If they are “lucky”, they’ve saved something towards retirement. How much of that are they going to lose during a two-year retraining period?

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              • Uh yup!

                Perhaps we need to create a standard of disability for the permanently unemployable whose skill set is obsolete and who are too old to retrain effectively or affordably. Let them retire early &/or draw SS.

                Or we need to hit the academy and tell them if they want to keep getting tax money, they need to find a way to help such people get an education/training they can afford. Satellite campuses are always a lot cheaper.

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                  • Perhaps. Not being a Republican, I have no idea.

                    I will say any expansion of SS/SSDI that does not include an increase on the withholding high mark is just going to accelerate the programs insolvency.

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                • I think a volunteer-based early retirement is not an unacceptable partial solution?

                  Every PTA needs help running the lemonade booth. We need folks to be poll workers. There’s a whole bunch of things that need to be done that don’t require a huge amount of training and also don’t require you to pick lettuce.

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                  • I’m good with that, although making it a hard & fast requirement might be a stretch in some areas/cases, but certainly strong encouragement to volunteer is a good idea.

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                    • If you ever go into the UK countryside you might be amazed and the huge amount of work that volunteers do in all areas. Mostly retired people, but several young u employed or underemployed people building some experience.

                      The National Trust, for instance functions, on the shoulders of an army of volunteers, manning, parking booths, selling tea, upkeeping the gardens, and pulling together in the winter clean up. Libraries, museums, theatres, welfare agencies. Volunteers are everywhere. And they stay in their post for years.

                      Germany has (or had) a program where retired professionals that are familiar with old technologies (for instance, old style railroad machinery) volunteer to help in the developing countries with equipment that is no longer maintained by the manufacturer. We used one of those volunteers once. You only had to cover transportation and living expenses.

                      There’s a lot of unpaid volunteer work that retired/semi retired people do in Europe, which they can engage in because the welfare covers their basic needs.

                      There, that’s the dignity problem solved.

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                      • “If you ever go into the UK countryside you might be amazed and the huge amount of work that volunteers do in all areas.”

                        Unfortunately, US labor law has established that if “volunteers” do work that paid employees might be expected to do, then those volunteers are in fact employees, and if you don’t treat them as such (including minimum wage and mandatory break time) then you are subject to fines.

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                        • Is that rule valid for non profits charitable institutions? The National Trust is one such

                          Under that interpretation I cannot volunteer in a soup kitchen. I should be paid the same as the cafeteria lady is paid by the school district (equal pay for equal work). That doesn’t seem to be the case, so what’s the difference?

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                        • Unfortunately, US labor law has established that if “volunteers” do work that paid employees might be expected to do, then those volunteers are in fact employees, and if you don’t treat them as such (including minimum wage and mandatory break time) then you are subject to fines.

                          That’s only true for interns at for-profit, and only for some of them. The government has ruled that *if* interns are basically just employees (As opposed to people getting actual unique education experience), they have to get paid.

                          Volunteering, technically, has *never* been legal at for-profits ever since there was a min wage. Calling actual employees ‘interns’ was just an absurd loophole to get around that.

                          And, in theory, it is still legal to have unpaid interns if their experience is actually educational, although in practice I think most businesses have decided to now pay them just in case. Frankly, a business operating an intern program is supposed to *cost* them money anyway, not *save* them money. The business is theoretically already paying someone to manage and teach the interns, so throwing min wage at the interns isn’t some some crazy added cost, and well worth it as insurance to keep the labor department from investigating just how ‘educational’ the program really is.

                          And some wages also serve to remove some of the social inequality in the entire concept of interns. ‘Sure, we’ll hire you for this great position, but first we need to make sure you’re from a wealthy enough background that you can spend months of your life not earning any money! Oh, also, go buy several really expensive suits!’

                          However, people can still volunteer for both non-profit and government organizations.

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                  • Here we get into some odd situations. I have no interest in running the lemonade booth or putting up with the grief that I recall seeing poll workers get. OTOH, because my retirement plan covers a large part of my health insurance (until I get to Medicare), and most of the income needs, I could undercut people bidding small software jobs except that I have no interest in 60-hour weeks and hard deadlines. On the gripping hand, give me access to a state or local government for six weeks and I can come up with large software needs going unmet because the 60-hour-week hard-deadline people bid far more than the financial resources available. More than once I have been tempted to start a consulting outfit that uses only Boomers in situations similar to mine, looking to augment their retirement but not interested in the grind that conventional employment would entail.

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          • You are correct in production costs. In the end it doesn’t take away from my main point.

            What is the end game in context of individuals access to means of production?

            What is the end game in context of individuals means of exchange?

            What will be produced to trade with the machine?

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            • I don’t think you can exchange production costs and labor costs as if production = labor+small change, so it doesn’t matter what we use.

              Depending on the industry, labor costs go from a negligible rounding error (utilities (*)) to a very large component (burger flipping).

              There’s a lot of manufacturing moving back from China today to the USA because the transportation costs makes local manufacturing more competitive. GE is one of those manufacturers.

              What is not coming back is industrial employment, because, every day, you need less and less people to do the same things. It’s not only manufacturing. My first job, in an electrical equipment small manufacturer, had 10 people doing accounting entries in day books and then copying those in months ledgers. Twenty years later the mimimum number of accountants per company is set by segregation of duties requirements (four, last time I checked). Otherwise, a large company could be run with one or two accountants, since all the transactions get uploaded and updated in the ledger automatically every time anyone in the company looks at them.

              What is the end game? There’s no teleology here, and no end game. The end game of the internal combustion engine was not to destroy the small horse driven family farm of the XIX century, but it did.

              We are in transition to a post large-employer-company environment. Certain personal services like yoga trainers (Matthew Yglesias’ favorite example) police detectives, lawyers, surgeons, flower arrangers, chefs, upper management, in essence, anybody whose job involves a lot of personalized interaction with others, or requires not patterned decisionmaking, i.e. deciding what machine to use next (highway construction foreman, fruit picker, sailor, can be blue collar examples of those) will be spared for the foreseeable future. If you have a job that is repetitive and rules dependent (highway trench digger, Starbucks barista) you are screwed. It will be automated. There is almost no barista that can make a coffee drink better than a Nespresso pod machine, as demonstrated by several blind tastes.

              Ideally, in the short term, you could set up mechanisms that transfer some of the productivity gains from automation to alleviate, subsidize, or put on the dole till death those displaced by automation. The Scandinavians are sort of doing it, so it is possible.

              In the long term, you need to educate people mostly (only) for those positions that will survive in the mid term. Positions that require autonomous decision making on the spot, or that require certain artistry and ability.

              Every minute spent ranting about globalization and how the Chinese took our jobs, is a minute that we are not spending in the real problem.

              (*) And I point to you that labor cost is negligible in utilities even though they employ large amounts of people. Is just that capital cost (and fuel cost, when applicable) is massive compared to labor. (**)

              (**) And even utilities are cutting labor. Intelligent meters make the meter reading guy redundant

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              • And even utilities are cutting labor. Intelligent meters make the meter reading guy useless.

                There are a lot of little downsides to this sort of thing, though.

                The meter reading strikes me as being an entry-level position, once upon a time. You get hired, congrats! We’re putting you on meters. Here’s your route. After a year or two, we’ll bump you up to assistant henchman.

                Now we don’t need meter readers, so we don’t hire meter readers, so we have no way of weeding out the guys who wouldn’t make decent assistant henchmen.

                So when we have to hire for assistant henchman, we have a much weirder process that we have to follow because there’s a lot more to lose from hiring a bad assistant henchman than from hiring a bad meter reader.

                And I’m guessing that that’s happening in every industry that used to have the equivalent of meter readers and now has tech that replaced those once entry-level jobs.

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                • It happens more frequently than you get credit for, but you are right in this case.

                  Regretfully for the meter readers, they have two things against them:

                  1- as a utility, Regulators mandate that you use the most efficient technologies available, and pass the savings to customers (after return on investing in the new technologies). Once the automated option is available, we have to use it.

                  Likewise there was a time girls would take the paper readings from the guys and enter them into the billing system by hand. Now, your bill is being printed by the time the reading guy is getting back in his truck. There’s a lot of value in cutting the billing cycle of several million people even by a couple of hours.

                  2- Intelligent meters in particular have the flexibility to do a lot of things that can, and will in the future, benefit the utility AND the customer, by improving the feedback between the demand and the supply. Lots of inside baseball jargon involved. Even in a non regulated environment, intelligent meters are a good thing for utilities.

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              • This…

                Every minute spent ranting about globalization and how the Chinese took our jobs, is a minute that we are not spending in the real problem.

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                    • Yes, it’s not as snarky as it sounds…I’m wondering if we do have the real problem.

                      J_A’s quoted part is *a* problem, is it *the* problem? Or am I missing something?

                      But then what about the original post?… it seemed to imply that we weren’t sure about the problems…but then we seem to talk as if we do. Which makes me wonder whether we are going to interrogate data to chart a path, or just gather data to support the path we’re on.

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                      • Real in the sense that those jobs that went to China or Mexico or Indonesia were going to go away, even if they couldn’t go overseas. Being able to send them overseas perhaps allowed the jobs to go away a bit faster, but probably not by much, since preventing them from going overseas would have just encouraged faster development of automation.

                        The problem, or one of the problems that are entangled in this mess, is that even though our elites (political, corporate, and academic) KNEW those jobs were going away, they exercised a collective shrug and had no plan for how to deal with all the displaced workers, beyond some nebulous idea that they’d get retrained, or new jobs would fill in, and it would all sort itself out.

                        Which, admittedly, it will, even if nothing is done. If left to it’s own, the market will sort this all out. The problem is that the market cares not a wit for human morale/suffering/etc. The market will collectively figure out what new skills are needed and send out price signals to attract those skills. But the market is not going to magically make it easy for 50 or 60 year old people who have (maybe) a high school diploma, and a handful of skills from a factory floor to stop working and succeed at a conventional academy. The market will consider such people as without value and ignore them as part of the labor pool*. Even if labor price signals were climbing dramatically, that’s not going to make traditional academy curriculum amenable to retraining older, uneducated workers. Or even younger ones, because past a certain point, taking time off for school, and taking the income hit for school, becomes more than many can bear without help.

                        Now, I’m betting that people with PhDs in education know how to effectively retrain older minds that did not have the benefit of a college education at 22, but as long as that population will feel unable to commit the time to school, it won’t matter. This is where our elites should have had a plan, for how to enable those displaced workers to get retrained.

                        ETA: *I’m probably phrasing this wrong.

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                        • “Now, I’m betting that people with PhDs in education know how to effectively retrain older minds that did not have the benefit of a college education at 22”

                          Don’t be on it. Not that Edu phd’s are stupid, or that there is no answer to this question. Simply that to answer that problem, first the question has to be asked. And I am not sure that it really has.

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                          • Fair point, but had TPTB thought about this reality back when globalisation & automation were really taking off, I’m betting we wouldn’t be wondering if the question had been asked and answered.

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                            • I agree with you in theory, but will fall back on the idea that this isn’t something the academy is interested on its own (not sexy.) They would have to have been pushed, probably per your method of withholding funds.

                              This corresponds to TPTB not thinking about this aspect back when we ramped up globalization. This is not something the academy finds sexy, rather, it is something that they would find limiting. The academy is one of the great winners in this whole game, and actually having to identify this as a downside would not have been given priority. (Those individual researchers who choose their own path of research would have not gone down this route as the idea of it would be double plus unsexy. That and TPTB wouldn’t dole out funds for it for the same reason, so new researchers wouldn’t gravitate to it in the hopes of funding a new think tank or whatnot.)

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                              • The academy’s obsession with sexy research (and, likewise, media’s obsession with the same, which obviously drives elements of the academy) is something I suspect we will rue.

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                        • The problem, or one of the problems that are entangled in this mess, is that even though our elites (political, corporate, and academic) KNEW those jobs were going away, they exercised a collective shrug and had no plan for how to deal with all the displaced workers, beyond some nebulous idea that they’d get retrained, or new jobs would fill in, and it would all sort itself out.

                          I read somewhere, and I have no idea where I read it or if it’s true, that a good portion of the ‘NAFTA will not hurt Americans’ economic forecasts when it passed was based on the concept that while NAFTA was going to be basically neutral, or even helpful, to the economy as a whole, all the economic forecast admitted internally that it would would do is give more to the capital investors and less to the workers.

                          Everyone, from the very start, knew there would be less jobs, and more money going to the owner class.

                          But, to even that out, what economics figured we *obviously* would do is make sure the tax code was even more progressive to counter this upward movement of money.

                          And thus they could declare that NAFTA and other free trade agreements wouldn’t hurt Americans…yeah, more Americans would end up unemployed, but we were going to collect a lot more taxes on the wealthy, and so the safety net would be huge, so a bunch of previously employed Americans would be retired early or in some sort of fully-paid for government retraining, or just living off welfare for a few years.

                          We…uh…didn’t do that. Like, at all. In fact, we immediately *reduced* welfare.

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                        • This is where our elites should have had a plan, for how to enable those displaced workers to get retrained.

                          IMHO you’re giving our ‘elites’ FAR too much credit for their competence, foresight, and control over events. Being able to figure out who the market winners are going to be a decade down the line is an exceptionally rare and profitable skill. Saying it was obvious and should have been expected is much easier.

                          Further, how many federal jobs training programs do already we have? 49? 47? Is one more really going to move the needle?

                          http://www.politifact.com/truth-o-meter/statements/2012/may/16/mitt-romney/mitt-romney-said-there-are-49-different-federal-jo/

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                      • There is data, there’s feelings about the data, and there’s even data about the feelings about the data.

                        The data tells us that industrial output in the USA is at a peak level and growing at a faster rate than most anywhere in the world, particularly in high-end high-value equipment capital equipment.

                        The data tells us that automatization has eliminated a majority of industrial jobs. My particular anecdata is 900 out of 1,000 employees in a Peoria Caterpillar facility, with increased output out of 10% of the labor force.

                        The data tells us that the same is happenIng even in China and Mexico

                        The data tells us global trade is not a zero sum game, and generates trillions in added value

                        The data tells us almost all of this value is being captured by the capital and the upper management, almost none by the part of the labor that remains employed, and is a loss for those that lose their jobs.

                        The feelings about the data tells us that If I lost my job in a furniture factory in NC, and all the clothes and shoes I have have labels that say Made in Mexico or Made in China it makes me conclude that the jobs of the people making those things, and my furniture making job, have been moved to Mexico and China.

                        The feelings about the data tell us that I can’t get another job because those illegals are stealing the jobs and depressing the salaries. Only girly jobs like nurse or yoga trainer are available, and I’m no damn girly yoga trainer.

                        The feelings about the data tell us that the solution is to block imports of shoes, clothing and furniture, and kick out the illegals and all those jobs will come back.

                        But acting based on the feelings about the data won’t solve the problem, it will only make it worse.

                        The data tells us that the best we could do as a society is confront and try to solve or mitigate the real problem, automatization bringing forth a transition into a low industrial/high creative jobs society worldwide.

                        The data about the feelings about the data tells us that we should talk plainly and truthfully about the data as a first step to solving the problem.

                        Except that there’s a lot of people that can individually gain a lot of power and money by attempting to solve the “feelings about the data” problem, instead of the real problem the data points out.

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              • Baristas, bar tenders, and waiters might fall under the personalized interaction category. Machines might be able to make a soy latte or take your order but in many of the more hipster or fancy cafes, bars, and restaurants interacting with and watching the staff are part of the package.

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              • I have designed manufacturing plants and oversaw their construction, designed the work flow and picked out the automation. I know about production costs and labor costs. We can unpack this as much as you like, I just run a little loose with my terminology.

                To me you are still looking at this from the outside in, instead of the inside out. That’s part of the problem I am trying to discuss.

                Where does demand for a product come from?

                When your done unpacking that, it typically comes from individuals. When individuals start having limited/no ways to engage in production that they can exchange for products they seek, how do you think that model will sustain?

                My outlook is that it won’t sustain. Jay frames it in the prisoners dilemma of defecting. I stay outside the prisoners problem and just call it non participation.

                So if people decide not to participate in this form of capitalism, how sustainable is it? What threshold needs to be reached before change or even opting out for something else (facism or socialism being only some alternatives)?

                I think people are still under assumptions that specific forms of capitalism/globalism can be forced upon people. These aren’t prisoners, and there isn’t much dilemma.

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                • I understand your criticism. We need to have a population capable of participating as suppliers in the labor market so they can participate as customers in the good/services market.

                  We agree fully on that.

                  But your examples are bad, cloud the criticism you are making, and point to solutions that do not exist as such, because they are solutions to bad examples, and not to real examples.

                  The home shoemaker that can’t make shoes because labor costs in Mexico or China are lower is a bad example. Because the obvious solution to your example is to block imports of shoes from China and Mexico. And now your home shoe maker is happy and can buy coffee at Starbucks every morning.

                  Except not.

                  Because unless he makes high end bespoke shoes (in which case Mexico or China labor is irrelevant) , factory made shoes manufactured inside the Trump Tower in Manhattan will be less costly and outcompete him.

                  Plus if we block shoes from Mexico or China they will block the import of power generators, each worth tens of millions of dollars, manufactured in Greensville SC or Schenectady NY. Because we can’t win a trade war, we won’t start one. So there will be no blocking of shoe imports.

                  Many people are already out of the labor market for the rest of their lives. The only thing we can probably do is to allow them to move into SSD programs. Yes, it robs their dignity. I’m open to other solutions that actually address the problem and are feasible.

                  So my big problem is your shoemaker example. If you are aware of all the reasons why the example isn’t a good one, good for you, but then you shouldn’t have made it. But because there is a lot of people not in the OT commentariat that do not realize is a bad example, they get the wrong conclusions from it, and demand the wrong policies, and we are all worse off. But them, the most!

                  The biggest problem we have is that we have a lot of people, a majority probably, that don’t understand the modern world. Talking about home based shoemakers as if they were real or possible does not help those people understand the real world.

                  Pick an example about a middle aged accountant next time.

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                  • I am not trying to frame this as criticism. The shoe thing was just one example, I went on to list others when that obviously wasn’t viable, and that’s exactlly why I used it!

                    The bigger issue was nearly the entire spectrum of products producable by individuals has been undermined by cheap labor(/automation) versus the minimum wage.

                    Bread I think came the closest to producible, and I used it on purpose because we had a local bakery go out of business last year.

                    At some point I think if people want a healthy economy, they have to leave some products within reach of the means of individual production, or it will get grim. I don’t know what the percentage to give it, maybe 50% or something.

                    The one thing I am fairly certain of is that if near 100% of individual production is beyond reach, people will start looking for change.

                    All out of middle aged accountant examples;)

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                    • I’m not sure if the “individual production” is a key element of what you are trying to say, and I’m failing to understand your point, or if you are just using it in the sense that individual workers, whether they work at home, or in a factory floor, or as Walmart greeters, should be able to make enough to participate in the market.

                      If the latter we are in agreement, but that’s a political problem, not a market one. The market doesn’t care about the welfare of individual workers. There’s no fast price signal that will selfacorrect the problem

                      The solution thus is either some sort of mandated redistribution of gains (German style), higher taxes more welfare transfers (Scandinavian style) or a bloody revolution.

                      But it the individual in his home part is important in your argument, and you mention the words a lot, I apologize but I don’t get it.

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                      • @j_a

                        The solution thus is either some sort of mandated redistribution of gains (German style), higher taxes more welfare transfers (Scandinavian style) or a bloody revolution.

                        As an alternative, how about a per person payment. Say, $5k to $10k, not linked to anything (meaning Bill Gates would get it). Welfare has problems with discouraging work, mandated redistribution of gains probably punishes employment.

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                • “I have designed manufacturing plants and oversaw their construction, designed the work flow and picked out the automation.”

                  PLEASE write a guest post. This sounds incredibly interesting.

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                  • It sounds interesting, but I assure you it is boring stuff.
                    A lot of checking the footprints/capacity of machines and simulating the product running through the line(s). Electrical, compressed air, water requirements.

                    Estimating machine cycle rates/utilization. Inventory space/management. Then after that timing actual performance against original estimates, then tweaking. Checking to see if the suppliers can actually deliver what they agreed to.

                    You do get to meet a bunch of freshly hired new frontline people, and it is good to see their life get better over a few months.

                    Admittedly, I have been away from that scene for a few years.

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              • Certain personal services like yoga trainers…in essence, anybody whose job involves a lot of personalized interaction with others …will be spared for the foreseeable future.

                And I have heard it said that this underlies the angst of the male Trump voter.

                Maybe too simplistic to explain all of it, but I do believe that the evolving nature of work has strengthened the forms of work that women excel at, and diminished the forms of work that women excel at.

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                • Yes, because muscle labor is already obsolete (except perhaps for firemen and some other very specialized jobs) and modern jobs reward the ability to think creativitily, and, in many cases, aesthetically.

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        • I see what your getting at, the problem is that we just can’t have people making things at home unless we want to go back to a 14th Century standard of living – the whole reason we’re so much richer than we used to be is because we don’t have a lot of home production anymore.

          I don’t agree that debt has displaced wealth, there was never a point in history where the majority of people had any significant wealth to fall back on – the traditional solution to bad times coming along was either a kind of social insurance (relying on friends or relatives who were doing better), or failing that starving to death.

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          • The non-redistributionist solution to people experiencing the downside of technological advancement is for seems to be for them to return to some form of substance farming and home production to get by. This is a bad solution. Besides the reason you listed above, most people are going to be bad or horrible at the above. It will lead to an even bigger divide between the winners and losers. Not a good idea.

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          • -“the whole reason we’re so much richer than we used to be is because we don’t have a lot of home production anymore.”

            When the equipment was the same, the cottage (industry) was found to be cheaper in production costs than the manufacturing/mill plant. Not until machines grew in size and process requirements that the cottage industry was found marginally less efficient. One of the issues that occured was that the down stream merchants saw that the upstream producers weren’t working near full capacity, and wanted to control and focus the labor to work nearer full capacity.

            At present human (and human+automation) driven systems are typically reduced to work cells for most products. Once the scale of that cell can be fit into a room in a household, there is no difference in the function. There is however a difference where the wealth is concentrated.

            I am aware few people have seen this or understand it. I am also aware that what has been taught in acedemia over the last 40-50 years would not have touched upon this, or taught in contrast the ‘manufacturing plant’ model.

            -The traditional solution to hard times was to cache excesses in production, this reaches back beyond biblical times of Joseph and the Pharoah. It happened in both social constructs of graneries, but also in individual constructs of cache pits dug by early agrarians, and hunter gatherers. Hunters would cache arrowheads and a variety of stone tools.

            Of course this moved on into feudalism, then into capitalism were much wealth is stored in types of property.

            I am not sure of the economic history of your country, but the one I am in, the economy (more often than not) propogated enough wealth that it could do two things simutaneously:
            1. maintain tangible capital formation.
            2. provide access to production for people to maintain a positive balance of wealth.

            Now maybe people shouldn’t think such things are important or economic problems, but I suppose that is going to be a hard sell if it can be sold at all.

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            • I don’t think we are anywhere near the point where distributed production costs would be low enough to outweigh the economies of scale of mass production plus transportation and distribution channels costs.

              The trend exists, I agree, and it’s worth studying and discussing what the economy will look like then, but when will this become realistic enough that it will impact society, I think we are decades away.

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  7. Another thing to consider is not just economic wealth level, but security.

    Since the 1970s our economy has been increasingly precarious, with the rise of at-will employment, independent contractors, and the gig economy. We have seen defined benefit pensions be replaced with 401ks and in many cases nothing at all.

    For workers to feel a persistent sense of anxiety and fear isn’t paranoia, its a well-founded reaction to the knowledge that no matter how skilled you are or how long your tenure with the company, you can be unemployed and possibly unemployable, at a moment’s notice.

    Fear makes people irrational and ungenerous, prone to things like nationalism and bigotry.

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    • This is a great point, and I’d add to it a topic missing from the list of those affected by trade – at least in the US, the issue seems to relate to intergenerational mobility and relative welfare at least as much as direct competition for jobs. That is, people analyze their situation as it relates to the situation they “should” have. This is why I discount the various studies that show that Trump voters are on average more wealthy than Democrats (and therefore suggest that economic insecurity can’t really be motivating any of their behavior, or at least shouldn’t be) – the question isn’t who is better off, it’s whose relative position has changed and what the trend line is.

      The increase in risk born by workers, and the perception that being native-born (and of the right identity, though that’s not usually spoken) has been devalued over time, are both factors.

      I also find it interesting that most economic analyses that discuss the gains of freer trade or the winners and losers do so exclusively in income or PPP terms. Much of the drive toward those compacts (certainly the EU) was from a desire to avert war, and it doesn’t seem that hard to identify frequency of warfare and costs. For me, it’s probably the biggest “public good” at stake in the whole discussion – and perhaps also enough of a potential cost to drive re-evaluations by the winners of how much they will pay to the losers. But peace is somehow never presented as something that benefits capitalists, and toward which they ought to be willing to contribute; the pie size is determined solely by how much it changes production and income. I’d be interested in an economist’s take on the value of peace.

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    • Yet there seems to be a group that believes this fear and insecurity is a good thing. Recently, I saw a libertarian FEE article on why Taiwan is so good for having a small welfare state. The author was praising that the unemployed in Taiwan simply rent out food stalls for low amounts of money. They search for jobs during the day and hawk at night.

      Never mind that Taiwan is a much smaller country (physically than the US).

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      • If liberty is your paramount concern as it is for libertarians (Look! Its right there in their name!) Then a world marked by fluidity and unpredictability is probably seen as a good thing.

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        • I’d agree with this, to a degree.

          ETA: Finding the maximum amount of fluidity/liberty that satisfies the majority of the population while minimizing negatives/externalities is the challenge.

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      • I wouldn’t go quite that far, but the creative destruction of the market serves an invaluable purpose. If people who make bad investment or management decisions don’t go out of business then capital ends up being put to bad uses indefinitely. Basically, you end up with Japan’s economic doldrums.

        The key is to let failed experiments fail without individual people having to suffer too much for it, especially the employees who didn’t actually make the bad decisions. That’s the source of my neoliberal sympathies – use the welfare system to cushion the worst of the market’s downsides.

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        • I think a lot of people with right-leaning politics disagree with the idea of a welfare system to cushion the worst of the market’s downsides. Look at how often liberals and libertarians argue whether income inequality matters with libertarians and/or conservatives arguing “Besides the homeless, the poorest of 2016 have lifestyles that would be unheard of in 1960 and seem like science fiction.”

          There has to be some strong reason why libertarians find mobile phones and video game systems to be compelling arguments against government and the welfare state but liberals do not.

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          • Paul Krugman would call this treating economics as a morality tale. Many people want to assume that the people doing well economically are doing so because of their virtue and those struggling lack virtue. Welfare measures seem to suggest aid to the evil.

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            • Welfare measures seem to suggest aid to the evil.

              Three of my cousins decided to not get married to the fathers of their kids so they could get more gov ‘help’. Each was open to the family as to what they were doing and why.

              You can think Welfare has issues and enabled bad decisions without pulling irrational emotion into it.

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              • The obvious counter which i’ve seen umpteen times is mom with child and dad splits. Without aid she and the child are in a homeless shelter. Or gov aid enables mom with child to leave an abusive husband. In fact i had a dad complain to me once that gov health insurance let his wife leave him. Sure he was a drunken lout ( not his words, but he admitted to it pretty much) but the mom was dependent on him until the gov gave her food stamps and health insurance. He was ticked at the gov for making her less dependent on him.

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                • Or gov aid enables mom with child to leave an abusive husband.

                  And agreed, this is a good thing.

                  But trying to pretend that all uses of welfare are ‘good’ is not. Welfare is a tool, it can be misused, and people being people, it WILL be misused.

                  One hopes my extended family’s experience was atypical… but all three could be presented as gov ‘success’ stories and were probably counted that way in the stats.

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                  • Yeah every tool that can be used well can, and is, misused. Why are you talking about the last time i used a power saw?

                    It is in the totality of the stories and the goals of the program that we can find success or failure of the program as a whole. That is difficult to find in anecdata.

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    • It’s interesting how you sadly declare that nationalism and bigotry are a response to fears rising from the instability of the 1970s.

      Perhaps you’d rather go back to the 1960s, when nationalism kept global trade from being competitive and bigotry kept the labor supply low, meaning that there were plenty of jobs for white men who were American citizens.

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    • That’s a good thought. The real problem might be an increase in the variability of income which, due to risk aversion, would represent a loss of welfare even if average income hasn’t changed.

      In some ways, that’s a lot easier to deal with than trying to regenerate decaying local economies or working out what to do with people who are permanently unemployable.

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      • Variability of income is a real bread-and-butter kitchen table issue. My income is highly variable week to week and has larger variations seasonally. Yet there’s a line of people expecting a check from me on a clockwork schedule.

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  8. First of all, really, really good post. This ties together a number of things which should be without jumping to some predetermined conclusion not supported by the evidence.

    I do wonder if take home pay (meaning after taxes) is decreasing (as opposed to salary).

    In terms of solutions, the big one is probably “Economic growth”.

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      • Economic growth is a good idea, but only counts as a solution if you can work out how to make it happen.

        Things which increase our economic freedom ranking are probably the place to start. IMHO we have huge economic distortions imposed by the gov. Ergo we have a high return on investment for political lobbying, a tax code which isn’t humanly understandable, and so forth.

        Unfortunately the people responsible for fixing this, the politicians, also have the most to lose if they do because they’d be handing back to the market various “opportunities” for politicians to “help” people.

        This was why I was wondering about take home pay vs income. Income has been stagnant for large groups of people, taxes have probably been going up, it’s possible actual take home pay has been going down… but I can’t find good numbers for this.

        For that matter even ‘stagnant’ is probably pretty bad for a lot of people. IMHO many people spend up to where their income is, so if that income isn’t going up then eventually they’re going to have problems.

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        • Where does the “taxes have probably been going up” part come from?

          For most people federal taxes went down 15 years ago and haven’t moved up since.

          My state property tax rate in Texas went down about 8 years ago, and is about to go down again.

          Glad taxes have been flat for decades, which is a whole different problem because fuel efficiency has starved our infrastructure funds.

          I heard in CA and IL state taxes went up. Probably in dome other places too. As much as that sucks, it’s neither the bulk of tax payments, nor is the bulk of the country.

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          • @j_a

            Where does the “taxes have probably been going up” part come from?

            Federal is only about half of all gov spending. Here’s a graph of state+local spending as a percentage of gdp
            http://1.bp.blogspot.com/_3bGnkNeoPxk/SbEbx4MWJrI/AAAAAAAACfA/AIxIVAJ5tTc/s400/Government-Spending-Graph.PNG

            The trends look a lot like a linear line upwards, and presumably state+local are more prone to have balanced budgets, which strongly implies more taxes.

            This is not proof… but if people feel they’re falling behind, perhaps they are. All that gov spending needs to come out of someone’s pocket, and most local communities don’t have a handy billionaire to soak.

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            • If you are looking at a 1890-2010 graph of expenses as percentage of GDP, yes, taxes have risen a lot

              It’s difficult to read your graph for the period 2000-2010, but on a state/local basis it shows a drop in the middle of the decade, and then returns to the same percentage of GDP by 2010 -in the middle of a recession- which means that local expenditures in dollars actually went down in real terms. The huge spike in federal expenses shows a combination of expenditures flat divided by lower GDP and finally bringing the Iraq/Afghanistan wars into the accounting books.And there is no data in your graph for most of the Obama era.

              So I don’t think you can conclude from the graph that taxes have gone up materially in dollars, or for most of the people, in the last 15 years

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              • @j_a

                So I don’t think you can conclude from the graph that taxes have gone up materially in dollars, or for most of the people, in the last 15 years

                Agreed, I’m not real happy with that chart either. I dug a bit more and…

                http://www.usgovernmentspending.com/state_chart_gallery
                http://www.usgovernmentspending.com/local_chart_gallery

                I think these show pretty substantial increases in local+state spending, mostly between 2000 and 2010 (although it hasn’t gone down since). It looks like state spending basically doubled and local increased by 50%.

                I realize my own biases are creeping in here, if people are upset at an economic problem, my first thought it to look at what the gov is doing and seeing if it’s making things worse… but I think there’s an argument that it is. I haven’t found good ‘after tax take home historical income’ charts, but I suspect they’d show downward trends because of taxes going up.

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  9. What I would say is that if we have an economic problem that rises to that category by your definition, then probably solving that with economic measures is going to be fairly urgent, and a prerequisite to solving resulting perceptions problems.

    But if it turns out that we “merely” have perception problems, it could still very well be that we have problems “we” need tomsolve using… measures. “We” meaning the same authorities that are ultimately reponsible for addressing economic problems. You might agree with that, too.

    Where we might disagree is that I would not *absolutley rule out ex ante* every last measure that either you, or certainly I or someone else, would characterize as an “economic solution” (measure) to help address a perception problem. But, of course, all of that depends entirely on how th ndefinitions ofmthose terms end up being very specifically fleshed out.

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  10. But subjective experience is a poor guide to reality – human memory is notoriously unreliable, and one’s perception of what the past was really like can be biased by nostalgia…

    The other problem with regards to nostalgia is our memories are deeply informed and often projected through our cultural references. And our cultural references are often inaccurate. In every TV show, movie and commercial, the characters always live in much nicer homes than they would likely have in real life. They often have idealized jobs. And their money struggles exist for plotting purposes. Lots of people want to remember the ’50s and 60s as the golden age of the American middle class, but don’t think about how this was a period when America still had people living in wooden shacks without electricity or in cold water tenements with shared bathrooms.

    Likewise, people like to imagine that their role in the past would have been somewhere well above the median household. People watch Mad Men and imagine being an exec like Don Draper or breaking the glass ceiling like Peggy. No one watches and imagines being the guy running the elevator or driving one of the trucks passing below the office.

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    • Thing is, though, even if they did imagine themselves running the elevator or driving the trucks, they probably figured that they could expect a forty-year career of elevators or trucks, with a house that they owned and a wife who didn’t have to work and two kids who had above-average grades, with a pension (and/or Social Security) at the end of it.

      Nobody would imagine that some sharp young thing would find a loophole in employment law and allow the building owner to replace manually-controlled elevators with automatic ones. Or find a way to convince the NHTSA to permit non-crewed vehicles and suddenly there’s no more jobs for truck drivers.

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  11. I’ve been reluctant to comment because though I agree with the premise that perception is reality, and that if people feel they are worse off, this has to be treated seriously and incorporated into the analysis, I also believe that reality is real.

    If some people feel that global trade has been detrimental to them, and that scrapping NAFTA and the WTO and slapping across the board tariffs to Mexico of China (something Trump might have said recently -apologies I don’t follow him) would be a way to improve their situation, well, those people are mistaken. Doing that would be worse for all of us, including them, so we shouldn’t do it.

    It’s not an economic problem. The problem is more or less identified, the recommendations haven’t changed much since the XVIII century, and the data supports those recommendations (for instance, data supports that immigration in the aggregate is positive for the recipient country). It’s not even a political problem.

    It’s an information problem. We live in a complicated, highly interdependent world, with too many things going on simultaneously. And we have a lot of voters that do not know a lot about the world, and do not know how much they don’t know. They have a worldview that at best reflect the 1960s bipolar world they were growing in, and at worst the perspective of most people across history, unaware of what was happening more than a day’s walk away.

    These people claim that manufacturing in the USA has collapsed. It has not. Manufacturing output is as high as it has ever been, and grows faster than most anywhere in the world, except China. Manufacturing employment has collapsed. And it won’t come back. Just like agricultural employment collapsed 100 years ago, when the tractor replaced the horse. Slapping tariffs will only result in the USA being subject to reciprocating tariffs, and then USA manufacturing WILL REALLY fall.

    Even though I understand that people’s complaints need to be respectfully considered, I cannot support any solution that is directed at addressing percention instead of reality.

    At the same time, I know that there are plenty of unscrupulous politicians that are willing to ride that tiger. Après moi, le déluge and all that jazz

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    • Even though I understand that people’s complaints need to be respectfully considered, I cannot support any solution that is directed at addressing percention instead of reality.

      If you do not have a reality problem but a perception problem, then you need a solution that addresses perception rather than one that addresses reality.

      Lest you find yourself in a situation that requires a solution that addresses reality.

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      • I mean, even in the teaser to this post, there are assumptions that assume that the problem is different than what it is:

        A lot of people feel that the global economy has let them down. How do we figure out whether that is true, and what to do about it?

        The teaser for the essay that you can yell at me for not writing: “A lot of people feel that the global economy has let them down. Do we need to worry about them defecting in the pretty sweet prisoners’ dilemma equilibrium that we have worked a couple hundred of years setting up? If so, what do we need to do to strengthen the relationships that allowed us to maintain this pretty sweet prisoners’ dilemma equilibrium?”

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  12. I have been letting this stew a bit in my head before answering, but I think you hit it on the head in this sentence “I strongly believe that having fewer restrictions on the movement of both people and trade across borders is good for the vast majority of people in a society – including most of the people campaigning for change.” Key word being vast. This implies that some are not winning in this situation and indeed feel that they are losing, no matter the trickle down effect of globalism.

    Because for the vast majority of folks, that is indeed what it is. And couple that with a political failure to account for the lost jobs and decay that comes with those job losses. Now, on an economic level, I think that globalism/free trade is a net boon. But I think that because I always believed in trickle down economics. It is, and has always, been painfully obvious that TDE has worked due to the rising levels personal wealth in the US relative to other first world economies, as witnessed by my own eyes through several trips abroad in the early to late ’80’s. But at the same time, we have had the economic issues of the rust belt and all of the social issues that have arrived with that. And those are the political questions that haven’t been addressed, in fact have been allowed to fester. Which brings us to populism, such as Le Pen, Brexit, AfD and Trump.

    They are looking at the questions that the technocrats have given us certain answers to, from a different angle. An angle that questions the moral underpinnings of those technocratic answers. For the answers they gave are, on first glance, very self serving and maybe not what the entirety of the populous feels is best. And if you don’t listen to the people…

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    • Do we need to pose the issue as being either for/against “globalism”?
      That tends to be like asking people if they are opposed to gravity, then smugly demonstrating an apple falling.

      Global trade is not a singular entity; our structure of trade treaties and laws in combination with technology can have an almost infinite variety of forms.

      The example I have used several times is that suppose we couple market access and protection of property with wages and workplace conditions?

      Just this very week, California debated- and voted down- a proposal to make agricultural workers subject to the same overtime laws that everyone commenting here enjoys.

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      • I pose the issue that way for, it seems to me, that is often the way it gets posed in pieces such as this. Of course it can be broken down to its component parts, immigration and free trade, but they do get lumped together in many minds and arguments. Do they have to go hand in hand, as suggests above? Don’t know. I, for one, would love to see some info on breaking the two apart, to help frame the moral discussion.

        My main issue is that technocratic solutions cannot take the place of moral solutions. They can inform them, but the minute you try to replace them, you are attempting to side step the democratic process.

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      • The example I have used several times is that suppose we couple market access and protection of property with wages and workplace conditions?

        Just this very week, California debated- and voted down- a proposal to make agricultural workers subject to the same overtime laws that everyone commenting here enjoys.

        If we can’t pull this off in what is arguably the most progressive state in the nation (and certainly one of the top five most progressive states in the nation), how do you suggest we go about doing this?

        Saying “suppose we couple market access and protection of property with wages and workplace conditions” becomes “suppose we create a battery that can be fully charged in 10 seconds or fewer”. Sure, it’d be *NICE* if we could do that… but we don’t even have a proof of concept for us being able to do that.

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        • My argument is that “globalism” is a constructed entity that is shaped by the political will of its makers.
          Right now that’s a novel argument in most political circles, where we see references to “globalism” the way people used to speak about “progress”.

          There was a time when “Progress”* was viewed an inexorable, inevitable law of the physical universe, so for example, stopping this freeway construction was simply un-possible.

          Once people grow accustomed to thinking of global trade as a malleable, flexible set of negotiated compromises, then it just becomes a matter of political will.

          And as we have seen across the world, political will is highly flexible.

          *pronounced “Proh-gress” in a confident Oxford accent.

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          • And now we are in a place where one of the most progressive (if not *THE* most progressive) states in the union cannot muster the political will to make agricultural workers subject to the same overtime laws that everyone commenting here enjoys.

            And I don’t know what the continuum looks like but if we wanted to explore whether California was more progressive than 20 years ago or less, I’m willing to bet that all of us would probably agree that it’s more progressive than it used to be. (And 20 years ago, it was more progressive than it was 40 years ago.)

            Right? That’s not really controversial, right? (Unless we’re using a circular definition, right?)

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  13. I’d like to echo the “good post” comments, and also echo Saul’s musing in the first comment.

    We basically have free movement of raw material and free movement of capital. We don’t have free movement of labor, and we’re not likely to have it any time soon.

    Now, one can certainly argue that this still works out better for everybody (in fact, Jason K is making that argument elsewhere on the Internet right at this moment, in fact). But I think Jaybird is right:

    The monkey is ready to throw the cucumber.

    Since I’m not convinced at all that restricting goods or capital is a great idea (ignore whether or not it actually works, I think it sucks for the global poor who outnumber all us Americans altogether), and since free movement of labor is off the available time horizon, I think the only approach left in the toolbox that is workable is to convince the monkey that the other monkeys don’t get all that many grapes.

    Which means raising the higher tax brackets.

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    • Which means raising the higher tax brackets.

      And, here’s where I find myself boggling at the conclusions that I’m reaching, it’s not even important if the result of raising the taxes is that revenues go down.

      It doesn’t matter. What matters is that it is communicated that “oh jeez, the rich are paying more in taxes! TAKE THAT!” to the people who find themselves thinking that things aren’t working anymore.

      The solution to this conflict involves splitting the baby.

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      • It doesn’t matter. What matters is that it is communicated that “oh jeez, the rich are paying more in taxes! TAKE THAT!” to the people who find themselves thinking that things aren’t working anymore.

        What makes you think that this is something that can be communicated? And what makes you think that the people who get that message are at all receptive to it?

        You guys have taken the first step and realized how much of this is about perception versus reality, but you still think that perception can be engineered. It can’t. “Blame the rich” and “Blame the poor” are part political strategies and part defense mechanisms.

        As long as people take comfort in blaming the “other,” politicians and partisans will manufacture others for that purpose.

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    • There is more to our structure of global trade than free movement ins’t there?

      I mean, cars are not merely free to move from Japan to America, but the property and capital are protected by newly empowered government forces, the contracts enforced by jurisdictional agencies created by treaty.

      In other words, “globalism” isn’t the absence of something, it is the presence of something new, new government power which never used to exist.

      So why the assumption that criticism of the status quo must mean “restricting” the freedom of capital and goods?

      When IP rights are strengthened, does anyone go around shouting that we are “restricting” the free flow of property?

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      • I mean, cars are not merely free to move from Japan to America, but the property and capital are protected by newly empowered government forces, the contracts enforced by jurisdictional agencies created by treaty.

        Far as I can tell, mostly those treaties are there to prevent the gov from picking winners and losers, i.e. to reduce the gov’s ability to let politics distort economic outcomes.

        The thing about preventing that, i.e. letting the gov pick who wins and who loses, is it won’t be the little guy who benefits (although he will be paying for it). If we’re going to decide things based on political connections, then the way to bet is political connections will trump everything else.

        On the face of it this seems like a good way to make people poorer.

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        • The very act of deciding what constitutes property which is deserving of protection, of deciding what contracts are enforceable or not, and who has standing and in what jurisdiction, are all examples of “government picking winners and losers”.

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        • “Far as I can tell, mostly those treaties are there to prevent the gov from picking winners and losers …”

          Your understanding of Trade Agreements is very faulty, By the time the agreement is signed, both parties have agreed on the winners (industries covered by the treaty) and the losers (industries not covered). The rights of the winners are strengthened. Those of the losers weakened.

          Bananas and the EU is the classical example. The EU excludes bananas from most trade agreements because ex-colonial powers put pressure favoring the agricultural products of their former colonies

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          • @j_a

            dark-matter: “Far as I can tell, mostly those treaties are there to prevent the gov from picking winners and losers …

            J_A: By the time the agreement is signed, both parties have agreed on the winners (industries covered by the treaty) and the losers (industries not covered). The rights of the winners are strengthened. Those of the losers weakened.

            Free trade is politically painful and everyone agrees to how much they’re going to allow. We’d be better off with just turning it on full but whatever.

            However, as imperfect as these agreements are, they’re still FAR better than letting every politician at every level put his finger in the pie and try to ‘protect’ whoever is giving him ‘contributions’ that day/week/month.

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            • “Free Trade” is like “Free Speech”, something everyone agrees to, because no one can agree on what it is.

              Does protecting property rights diminish free trade?

              Does requiring people to register their property with the government in order for it to be protected diminish free trade?

              Whenever people speak of free trade, they almost always also speak, with equal vehemence, of robust protection of property and contract even though those concepts always interact with each other in ways that harm different people’s interests.

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              • Whenever people speak of free trade, they almost always also speak, with equal vehemence, of robust protection of property and contract even though those concepts always interact with each other in ways that harm different people’s interests.

                Expand on this please.

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      • You’re right that there are several things going on in most trade agreements, but one of those things is an actual reduction is government control over who people are allowed to sell goods and services to. If there weren’t tariffs, quotas and similar laws, there would be very little to stop someone selling their goods in another country, they would need to make some adjustments to deal with the new country’s domestic laws, but exporters have to do that now.

        The IP provisions that the US government inevitably tries to insert into every trade agreement it gets within 100km of are a different matter, but I’d really like to see much less of that sort of thing being pushed into trade agreements.

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