EconoMonitor

Great Leap Forward

The Answer to the Unemployment Problem Is More Jobs

Dean Baker, everyone’s favorite progressive economist (mine, too), has an interesting take on our unemployment problem.

Give more paid vacations. (See here: http://truth-out.org/opinion/item/27723-the-paid-vacation-route-to-full-employment.)

The idea is that if all the employed work less, employers will need to hire the unemployed to produce what the already employed won’t be producing while sunning themselves on Florida’s beaches.

Look, I’m all for shorter work weeks. It is ridiculous that labor’s push somehow got stuck a century ago at the 40 hour work week in the USA. Employed Americans work more hours per year than just about any other workforce on the planet.

But, as Joan Robinson once declared, the only thing worse than working as a wage slave is to be unemployed. Just ask the Italians, who now have the highest unemployment rate since they started keeping records. Thanks to the EMU and German fiscal rectitude!

I see shorter work days and more paid vacations as a progressive goal to humanize the work place. More time to enjoy one’s family, recreation, and the arts. More time for self-improvement and community involvement. More time for our wage slaves to enjoy the life of leisure long pursued by the leisure classes.

However, last on my list of arguments for a shorter work week would be the claim that it will create more jobs for the unemployed.

“Job sharing” as a cure for employment makes as much sense as “sandwich sharing” as a cure for the problem of hunger.

As my colleague Pavlina Tcherneva points out, for every social problem except unemployment, progressives advocate a direct solution.

How do you solve the problem of lack of access to healthcare? The progressive advocates single payer.

(Not, of course, Obamacare, which is just a scheme to turn more of your income over to Wall Street’s insurance industry.)

Hunger? Food stamps.

Homelessness? Public housing.

Old age poverty? Social Security.

But Unemployment?

More vacations. Pay the employed not to work.

Unemployment compensation. Pay the unemployed not to work.

Or, more ludicrously, BIG (basic income guarantee). Pay everyone not to work.

What is missing? Jobs. The unemployed want jobs. But progressives will not give them jobs.

Progressives offer hand-outs to the unemployed. Or paid vacations to the employed. Or BIG to everyone!

But no jobs for the unemployed.

Why not? Progressives offer up a variety of excuses. The most common argument against creating jobs for everyone who wants to work is that this is not politically feasible in the USA.

Why? Oh, it would cost too much. Estimates put the cost of a job guarantee with a living wage at 1% to 3% of GDP. Progressives argue you’d never get that much spending through Congress.

Of course, the federal government alone already spends about 3.4% of GDP on anti-poverty programs—mostly to deal with poverty that is in large measure caused by unemployment, involuntary part-time unemployment, and poverty-level wages paid by the nation’s undertakers like Wal-Mart.

Of course, that 3.4% does not eliminate poverty; indeed it barely even scratches the surface. As we’ve ramped up social spending, the only group that has seen a significant reduction of poverty rates is the nation’s seniors—thanks to Social Security.

I do not begrudge our seniors their Social Security. Reduction of poverty among our aged is a shining achievement of Roosevelt’s New Deal.

But we’ve failed all other groups—most notably Americans of working age and their children.

Why? Because we are too afraid to push for jobs-for-all.

Instead, our progressives dismiss job creation and push instead for the supposedly more politically palatable paid vacations, unemployment compensation, and BIG.

Call me crazy, but I think that Americans are far more likely to line up behind paying people to work, than behind a scheme to pay people for more vacations.

Especially if a job at a living wage would eliminate the need for most social spending plus huge subsidies and tax breaks already paid to businesses–trying to coax them to create a job or two.

In one stroke, a job guarantee at a living wage not only eliminates the need for most anti-poverty spending, but it also ensures private sector jobs will pay decent wages. And it eliminates the myriad of public policies that impoverish our local governments as they give tax breaks and subsidies trying to bribe corporations to relocate their factories and warehouses.

Baker points to Germany as an example of the successful use of work-sharing to prevent unemployment from rising. The government pushes firms to reduce hours worked by employees, and then makes up lost wages by essentially using funds that would have gone to pay unemployment benefits. As a result, Germany’s unemployment rate is only 5%–obviously very much lower than the average rate across all of its EMU neighbors.

Nice story, but Baker ignores the real reason for Germany’s success. Germany has pursued the most ruthless “beggar thy neighbor” policy the world has ever seen. It has held its own wages constant since unification, destroying industrial production throughout the rest of the EMU. In other words, Germany simply exported all of its unemployment.

So America is supposed to follow that strategy? To whom should we export our unemployment? Mexico? Canada? This will be much harder since they have not joined a US Dollar Union. Germany’s advantage is that its neighbors cannot depreciate their currencies since they’ve adopted the same Euro.

I’ve noticed that in many of his pieces, Baker mentions dollar depreciation as a possible solution to America’s unemployment problems. The idea is that if the dollar fell against the Euro and the Chinese RMB, we could capture some of the prized manufacturing jobs.

Indeed, “bring back factory jobs” is a nearly universal progressive rallying cry.

I was recently at a conference in Europe where an economist from a highly respected US progressive think tank made exactly that argument. I decided to play along with her. OK, I asked, how many factory jobs do you think we could bring back from China if the RMB appreciated significantly?

“3 million.” Well, I responded, we need about 25 million jobs.

“Yes but there will be a multiplier—the 3 million factory jobs will create demand for output of other sectors.”

Right, I said; so let us say the effect is double—we get 6 million jobs total. That leaves us 19 million short—give or take some millions. What about the rest?

“Well, it is a start.”

I decided this was a chance to talk about a job guarantee…. What about providing a job for everyone who wants to work, at decent pay?

“That’s a nonstarter. With the Republican Congress coming in, you’ll never get that through.”

OK, wait a minute. So you are arguing that we have a better chance of getting the Chinese to appreciate their currency in order to destroy their own manufacturing sector to the benefit of American jobs?

“Uhhmmm. Yes.”

You mean that the progressive position is that it is better to lobby Chinese politicians to act in the interest of the American people, than it is to attempt to lobby American politicians to act in the interest of their own voters?

“Uhhmmmm.”

Such is the sorry state of American progressives. They dismiss the political feasibility of the obvious in favor of supporting second- or third-best solutions with zero chance of success.

To be sure, I am not claiming that a job guarantee is an easy sale. It is hard. It is damned hard.

But it is far more consistent with American values. As readers know, I’m a big fan of George Lakoff (http://www.truth-out.org/progressivepicks/item/27576-george-lakoff-progressives-cannot-succeed-without-expressing-respect-values.)

As Lakoff says, “Cognitive scientists study how people really think – how brains work, how we get ideas out of neurons, how framing and metaphorical thought work, the link between language and thought, and so on. But other academic fields have not been using these results, especially, political science, public policy, law, economics, in short, the main areas studied by progressives who go into politics. As a result, they teach an inadequate view of reason and “rationality.” They miss the fact that our brains are structured by hundreds of conceptual metaphors and frames early in life, that we can only understand what our brains allow, and that conservatives and progressives have acquired different brain circuitry with the consequence that their normal modes of reason are different. What progressives call “rational arguments” are not normal modes of real reason. What counts as a “rational argument” is not the same for progressives and conservatives.”

More paid vacations as a solution to our unemployment problem might seem “rational” to a progressive, but it violates “normal modes of reason”. How is taking more paid vacations contributing to our community? Why should government pay for your extra vacations?

Why won’t the unemployed go out and get their own jobs, rather than forcing me to share mine? How do I know my employer won’t just make me do 40 hours of work in 25 hours? What if Congress reneges on the promise to make up my lost pay? And what if my employer likes you more than me, so that I get sacked and you get my full-time job?

So here’s my puzzlement. Why won’t progressives try to help develop the moral framing to support jobs-for-all? At decent wages.

There is no better anti-poverty program than jobs for those who want to work. Offering a job is a hand-up not a hand-out. Working promotes community. It allows for shared prosperity. We all benefit when everyone works. It is consistent with American values.

We have a half-century of experience with hand-outs instead of hand-ups. Hand-outs have not reduced poverty. If anything, poverty is worse. Inequality is worse. Joblessness is worse.

Hand-outs are not consistent with American values. Hand-outs come with strings attached. Means testing. Drug tests. Sanctions on children. And hand-outs are always kept meagre, consistent with American values.

Putting our nation’s fate in the hands of Chinese politicians is not an answer, either. Truthfully, I do not believe the manufacturing jobs will come back to the US, no matter how high the RMB goes. China is losing millions of manufacturing jobs, too. There will always be a lower cost producer. And it won’t be the USA. In any event, robots take away more jobs than Chinese ever will.

We need policies consistent with American values of work, initiative, self-sufficiency, and productivity. We need policies that promote community-building. We need policies that are within the sovereign power of our own nation—which do not require other nations to operate against their own self-interest. We need policies that can be supported by progressives and conservatives alike. We need to find common ground.

Here’s Lakoff, again:

“Not everyone functions with just one worldview in every aspect of life. Many, if not most, people are primarily either strict or nurturant, but partly the other in some areas of life. I call them bi-conceptuals, since they have in their brains both worldviews – each inhibiting the other – and applying those worldviews to different ranges of issues. With respect to political issues, those who are mostly one, but partly the other, are called “moderates.” But there is no one shared moral or political ideology of the moderate. Moderates differ on what they are moderate about and what their primary worldview is.

The existence of bi-conceptuals is hopeful. Conservatives who hold some progressive policies that are governed by the nurturant worldview, can have that nurturant worldview appealed to and strengthened. But that requires hearing progressive language and thinking progressive thoughts that will strengthen the progressive worldview already there in his or her brain.

In personal interactions, as over the Thanksgiving table with conservative relatives or in your social or business life with colleagues and coworkers, the first thing to realize is that, for the most part, conservatives believe deeply that they are morally right, that they and other conservatives are operating from the right moral principles. They don’t believe that they are immoral, and they don’t believe that right and wrong don’t matter. As moral beings, they want to be treated with respect. And in personal relationships, respect is appropriate.

The question is whether they are bi-conceptual, whether they have partly progressive values. So turn the conversation to an issue defined by nurturance: What have you done, or are you doing, that helps other people or helps your community? What makes you feel good about it? And so on. If there is nurturance there, bring it out and magnify it, and respect it. Try to keep conversation focused on such issues. Don’t try to argue against their conservative positions, and certainly not in their language. Listen. Be patient.

If you must discuss political differences, just be positive, starting with your values and with how you understand freedom and how it arises from citizens working together to provide public resources for everyone. Use your language, not theirs. Stay respectful….

There are deep truths that are known about how brains work, how our unconscious minds work, and the effect of language on the mind and brain. Those are vital truths, because only by mastering and using them can you avoid the traps of laundry list truths, truths that don’t add up to the communication of general progressive values, truths that have given us a Democratic Party that seems not to stand for any overriding value. Lists of truths that are not made meaningful by values are destined to be ignored. Make truths matter. Wed truths to values.”

 

 

 

 

 

9 Responses to “The Answer to the Unemployment Problem Is More Jobs”

tldrDecember 12th, 2014 at 4:25 pm

Very interesting post, I really liked it. I am pretty much as conservative as they come and I think you make some really good points about the current approach and your suggestion. I have to agree with your reasons for not liking the current progressive strategy. And I really agree with you when you say "We need policies consistent with American values of work, initiative, self-sufficiency, and productivity." But conservatives, including me, do not like "make-work" programs, since to us it is another form of handout, another entitlement (to a job whether or not your skills are needed or desired). I am curious as to how you would comment on that point.

L. Randall Wray L. Randall WrayDecember 12th, 2014 at 6:10 pm

tldr: So, if you clean a toilet at McDonald’s, that is NOT “make work”, but if you delivered hot meals to disabled home-bound seniors that is “make work” that you do not think should be done? Can you explain your logic?

tldrDecember 12th, 2014 at 6:35 pm

Thank you for responding so quickly. The example about the McD's toilet cleaner would definitely not be "make work" because an employer wanted it to be done for their own benefit. The case about food delivery is also not "make-work" if the agency desired the work to be done and used their own resources to achieve their objective. Both are effectively jobs demanded by the free market.

A "make-work" program would be the creation of some job which was not desired by the free market. The job is not required or wanted, else it would have already existed. For example, you could create a job in which someone dug a hole all day and piled the dirt beside it, and in fact create a second job in which someone took the dirt and put it back in the hole. It is a silly example, but that would be a sort of extreme example of it.

A less extreme example would be the creation of a government program, like the CCC, which created jobs that the voting public did not demand or desire (else they would have voted to have the jobs done already) but whose primary purpose is to give unemployed people something to do. The argument is that for the same amount of money, these unemployed people are now returning value back to the people by at least doing work for the money. That is what we would call a "make-work" program. I would argue that it is certainly a better option than just a handout, because the total impact to the taxpayer is reduced (some value returned) and because that person is statistically less likely to commit crimes and so forth due to the positive emotions associated with making a useful contribution. So I would agree with you that it is certainly better than a handout.

The point of my comment was not to criticize because I really liked your post. I still am curious as to what you say to convince a conservative to side with your opinion because it is certainly more in line with their values than the current progressive position.

L. Randall Wray L. Randall WrayDecember 13th, 2014 at 8:09 am

tldr: OK so your answer is purely ideological. “Free mkt = good”, “Not free mkt = bad”, “private purpose = good”, “public purpose = bad”.

tldrDecember 13th, 2014 at 1:58 pm

You asked me to explain what we consider to be a make work program, and that is what I did. It is based on a definition. You can call it an ideology I suppose. But it is wrong to classify it as "private purpose = good / public purpose = bad". The example I gave of the food delivery program was for a public purpose and I did not classify it as a make-work program. Public purposes are often very good (military, justice, fire protection, enforcement of contracts, infrastructure, etc). We would call it a make work program if the public purpose was the job itself, not the value it created.

L. Randall Wray L. Randall WrayDecember 14th, 2014 at 8:15 pm

tdlr: Rather than jumping to a conclusion about what kinds of jobs the JG/ELR advocates are proposing, how about actually reading what they advocate? We have never advocated creating jobs that serve no public purpose other than creating jobs. And your insistence that people need to vote for the types of jobs to be created is silly. We have a representative democracy. We vote for the representatives. We very rarely vote for the specifics of any program our elected representatives choose to implement. If we do not like what they decide to do, we can (again, rarely) throw them out of office. Further, it is the Administrative branch that actually implements the laws that create the programs. You are barking up the wrong tree.

tldrDecember 15th, 2014 at 2:45 am

I am sorry for not being clear. I did not mean to imply that we must vote for each thing directly, I agree that would be silly. We of course have our representative government to do that for us more practically, including the Executive branch (I assume that's what you meant by Administrative). Also, I didn't jump to any conclusions. In fact, my original question was specifically to avoid jumping to a conclusion. I wanted to know how you would try to convince a conservative that it wasn't a make work program, or, alternatively, that it might be but that it is a good thing that we should support, speaking to a person with that perspective and opinion. For example, I don't know what JG/ELR is. So far I have done nothing but ask a question and answer yours, because I was interested in your opinions and I felt like we could bridge a gap between us. But your responses have been only to misunderstand or make very incorrect assumptions about my opinion. So I think that's enough for today.

L. Randall Wray L. Randall WrayDecember 17th, 2014 at 7:08 pm

tldr let me remind you that you stated your view this way: “A “make-work” program would be the creation of some job which was not desired by the free market. The job is not required or wanted, else it would have already existed.” This is a highly ideological argument–with no theory or empirical basis. YOU have begun with the argument that the free mkt by itself will provide any job that is not “make work”. Indeed, by your definition, mothering one’s baby is “make work”. Let alone all the provisioning done by government that makes “markets” possible. This is not an argument that an open-minded conservative would make. However, if you are open minded there is plenty on the JG/ELR here at GLF, at NEP, and also at http://www.levy.org.

PZ_December 19th, 2014 at 4:06 pm

"For example, you could create a job in which someone dug a hole all day and piled the dirt beside it, and in fact create a second job in which someone took the dirt and put it back in the hole."

Which is exactly how so called free market operates. Newspaper reporters writing same story millions of times, R&D staff developing same products as dozens of competitors etc. I know some repetition is useful, but think about the waste! Unfortunately there is this idea that free markets employ people efficiently. They don't.