« More Disasterblogging | Main | Happy New Year! »

Blaming The Brown People

The Washington Post has an interesting story out about shifts in the labor market. The highlight is that jobs are less secure than they once were, and that even when you have a job, you're likely to bear more risk in terms of needing to pay for your own health insurance and save for your own retirement, rather than having these things taken care for you by your employer. Strangely, though, the article seems to just assume that the only possible reason anything could be worse in any way is that "foreign competition" is to blame. The authors, in other words, take semi-seriously the claim that everything's fine, but they don't seem to even consider the possibility that things might be un-fine for reasons that have nothing to do with Chinese, Indians, or Mexicans competing us out of our less-risky former economic structure.

The main thing that seems to me to be happening is that we have higher rates of job turnover than we used to, for reasons that have more to do with technological change and policy shifts away from an economy dominated by regulated monopolies and oligopolies. These policy shifts have brought about a lot of benefits, but one of the costs of job churn is that it's made defined-benefit pensions and employer-based health care less viable. At the same time, industries without strong unions offer workers less bargaining power and therefore a worse deal. But the issue here isn't that service-sector jobs are "worse" in some metaphysical sense than are manufacturing jobs. Rather, the manufacturing sector is older, and largely became unionized at a time when labor law was friendly to organization. Sectors that have arisen during the prolonged period in which the legal environment has been hostile to unionization tend not to have unionized workforces and hence produce "worse" jos.

In both cases, though, the answer isn't to go pining away for the good old days. Among other things, those good old days barely existed. The 1970s were hardly the salad years of the US economy, and if you go much further back than that you're talking about an economic structure based on the systematic exclusion of women and African-Americans from broad swathes of social and economic life -- hardly a model we're going to return to. Instead, you need a public sector that responds to the realities of short-tenure employment. Offering health care as a universal guarantee rather than a contingent factor of employment. Boosting, (rather than, as the president proposes, reducing) the public sector's role in offering some measure of guaranteed retirement security. Legal changes that make it easier to unionize new workplaces, so that the jobs we will, in fact, have will be good jobs, rather than having the country fight a hopeless rear-guard action to save the good jobs of the past. Indeed, it seems to me that the Lou Dobbs theory of the economy -- blaming trade and immigration for dislikable elements of the contemporary scene -- is a very dangerous toxin that's extremely counterproductive to sound social democratic goals. By focusing the ire of suffering people on various brown-skinned types both at home and abroad, this brand of pseudo-populism distracts attention from the policy shifts that could actually help and the powerful actors that stand in the way of those shifts. Chinese peasants and India's aspiring professional class are not the bad guys here.

December 31, 2004 | Permalink

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8345160fd69e200d83421ff5753ef

Listed below are links to weblogs that reference Blaming The Brown People:

» The Party of Risk Management (name subject to change) from Pandagon
Matt's got a great post on the fitful nature of the modern labor market. The new generation of jobs lacks the stability and certainty of the manufacturing positions of yesteryear. Nowadays, Americans have more choice in the job market... [Read More]

Tracked on Dec 31, 2004 3:27:48 PM

» Income Instability (Peter Gosselin Does Very Good Department) from Brad DeLong's Semi-Daily Journal: A Weblog
Peter Gosselin continues his excellent LA Times series about income instability and its consequences: Peter Gosselin: By last Christmas, the Saab and Volvo were long gone. The big clapboard house with the wraparound porch was headed for a sheriff's sa... [Read More]

Tracked on Dec 31, 2004 3:56:56 PM

» TNSTAAFL from QandO
Matt Yglesias cites a Washington Post story on the new Labor Market [Read More]

Tracked on Dec 31, 2004 9:02:22 PM

Comments

More like this, and the conservatives won't like you anymore.

Bout time we had the borderless world, with confiscatory inheritance taxes going to the UN to administer the world-wide welfare state. I mean the problem is that guarenteed health-care and secure retirement is not readily transferable for someone moving, without restrictions or significant paperwork, from say Borneo to Mississippi.

You may call me a dreamer...

Posted by: bob mcmanus | Dec 31, 2004 1:03:57 PM

Yes, Bob is right: global economy requires global labor and environmental standards and global social safety net. What can be simpler?

Posted by: abb1 | Dec 31, 2004 1:24:21 PM

Right on.

Posted by: praktike | Dec 31, 2004 1:28:34 PM


In the technology sector, where many workers are employed on a contract basis, I would like to see the development of something akin to a guild system. The guild would serve as an employer of record, handling payroll, taxes, health benefits, and retirement investment, but would also provide mentorship and career guidance, something that is sorely missed by many technology workers.

The basic model is in place today in the form of staffing agencies, but agencies have zero interest in their candidates' long-term interests, and take too large a cut of the pie (typically 25% or more.)

Posted by: snarkey | Dec 31, 2004 1:36:15 PM

Matthew writes: In both cases, though, the answer isn't to go pining away for the good old days. Among other things, those good old days barely existed.

I think that when people look nostalgically back to the 50s (or whenever) compared with today they aren't actually comparing the present conditions in the two eras, they are comparing the expectations in the two eras. Things were not so great in the 50s but people at that time believed in progress, that gradually things would get better (uh...unless the world blew itself up in a nuclear war). They believed that every generation would enjoy a better standard of living than the last generation. They believed that by the year 2000 we would all be flying to work using jet packs, and that there would be colonies on the moon and that there would be intelligent robot servants.

Things are not so bad today, but almost nobody believes that the future will continue to get better and better. Almost no parents (in the US, anyway) are confident that their children will enjoy a better standard of living than they do.

Posted by: Daryl McCullough | Dec 31, 2004 1:40:28 PM

Chinese peasants and India's aspiring professional class are not the bad guys here.

No, of course they aren't. However, it is just basic economics that increasing the supply of something (laborers in this case) relative to demand tends to drive down the price. It seems like to me that the supply of laborers in this world is, for all practical purposes, limitless. The supply of highly trained laborers was once limited, but it is becoming much less so, now that India and China are turning out computer scientists and engineers at rates comparable to or surpassing the US and Europe.

So based on market forces alone, I would expect that the price of labor would drop to what it costs to keep a human being alive (plus the cost of training). Without some kind of government intervention, I can see a future in which everyone lives at the subsistence level except for owners and a small number of people who have unique skills (the top actors, musicians, writers, athletes, brain surgeons).

Posted by: Daryl McCullough | Dec 31, 2004 1:54:33 PM

Daryl: It doesn't work like that. See this Krugman article: http://www.pkarchive.org/trade/ricardo.html

Posted by: Matthew Yglesias | Dec 31, 2004 2:34:44 PM

Matthew,
In practice, it has worked like that.

Cranky

Posted by: Cranky Observer | Dec 31, 2004 2:35:46 PM

Cranky: No, in practice it hasn't worked like that at all. Average wages are higher, not lower than they used to be. Inequality is growing, but so are wages at the bottom and an increasingly large share of the impoverished in America are recent immigrants (and their children) who were even worse off in the countries whence they came.

Posted by: Matthew Yglesias | Dec 31, 2004 2:38:08 PM

Much of what you are talking about is the big shifts in returns to education and shifts in
the share of the pie. For example, since 1980 the percent of national income going to the top 5% of the population has risen from about 15% to around 22%. Part of the loss of the middle class is also in the drop in defined benefit plans and employeer paid health insurance. These are wage cuts that are hidden from most people.

Until we clearly recognize that these things and the shift in Social Security is part of the massive upward shift in income and that is what we should be battleing the upper income groups have a massive advantage in the battle.

The real problem is that essentially everything the Bush adminstration does makes the problem worse and moves us futher along the road to an
upstairs-downstairs society.

Posted by: spencer | Dec 31, 2004 2:39:57 PM

Dag, man, when you're right you're right.

Posted by: Kimmitt | Dec 31, 2004 2:54:17 PM

Matthew,

It is possible for it to be simultaneously true that (1) Trade between two nations increases the net wealth of both, and (2) Trade results in a lower standard of living for workers in one of the countries.

If the net worth of the top 10% of a country increases by say $100 billion, and the net worth of the bottom 90% decreases by $20 billion, that's a net gain for the country as a whole, but not for the poorest in the country.

Average wages are higher, not lower than they used to be. Inequality is growing, but so are wages at the bottom and an increasingly large share of the impoverished in America are recent immigrants (and their children) who were even worse off in the countries whence they came.

That may have been true in the past, and it might continue to be true, but it doesn't follow from any general principles of economics that it will continue to be true. So Krugman's article on comparative advantage is really not relevant.

I don't think it is true that wages for those on the bottom have been rising. They haven't risen very much in recent decades.

Here's a statistic:

Over the 1989-96 period, family incomes were flat or falling in real terms for the bottom four quintiles of the family-income distribution; the share of the bottom four quintiles in total family income fell 2.2 percentage points.

That doesn't give me confidence in your optimism.

Posted by: Daryl McCullough | Dec 31, 2004 2:55:43 PM

I would point out that the passive-voice constructions MY uses to describe changes in labor law ("labor law was [in the past] friendly to organization" ... "the [present] legal environment has been hostile to unionization") are accurate so far as they go, but those changes weren't caused by the weather.

Those changes were the result of conscious decisions, by Republicans and some anti-union Democrats, to take away your right to organize.

This was not MY's point, so I won't harp on it, other than to note that what was done deliberately can also be undone.

Solidarność, and happy new year.

Posted by: alkali | Dec 31, 2004 3:07:24 PM

Also, Krugman's comparison of the theory of comparative advantage to the theory of evolution is not very comforting to me. Evolution relies on unfit individuals dying out. I suppose that's one solution to poverty and unemployment, but it isn't one I would like to participate in.

In general, I don't think Krugman has really thought through the analogy with evolution. Speaking evolutionarily, unrestricted free trade is akin to introducing a foreign species into an ecosystem. A common result is ecological disaster (at least for the original inhabitants, and sometimes for the newly introduced species, as well).

Posted by: Daryl McCullough | Dec 31, 2004 3:10:30 PM

"Chinese peasants and India's aspiring professional class are not the bad guys here."

Perhaps not, but their governments who engage in the kind of systematic, illegal monetary protectionism that has contributed to no small degree to the decimation of our manufacturing and textiles sectors, and now threatens (previously) secure jobs like IT, financial and legal services, etc, can hardly be described as "good guys."

PS It is deeply condescending not to mention infuriating for working and middle class people to be told by Washington establishmentarians and their supplicants what kind of economy they can or cannot have, or should or should not want to have. That's how revolutions start.

PPS You're still living in the 1990s. If you're not going to seriously study economic history, at least go read Kevin Phillips's "Wealth and Democracy" so you have some idea what you're talking about.

Posted by: Joe Blow | Dec 31, 2004 3:23:25 PM

I also found Krugman's essay to be thoroughly insulting. Basically, he is accusing anyone who disagrees with him on this topic to be a fuzzy-minded, anti-scientific luddite. The essay is a psychological analysis of why anyone would disagree with him on free trade.

Posted by: Daryl McCullough | Dec 31, 2004 3:32:32 PM

Over the 1989-96 period, family incomes were flat or falling in real terms for the bottom four quintiles of the family-income distribution; the share of the bottom four quintiles in total family income fell 2.2 percentage points.
1) I'd say the first statistic is a lot more worrying than the second.

2) What happens when you control for stat #1 with (A) changes in family size and (B) immigration? (per Matt's point)

Posted by: Guy | Dec 31, 2004 3:55:23 PM

I'd also like to add that Matt is right -- technological change has probably had a greater impact on the economy than globalization.

Posted by: Guy | Dec 31, 2004 3:56:43 PM

Guy,

I think the two are related. Because of technological change, it's become much easier to shift work to whereever wages are lowest.

Posted by: Daryl McCullough | Dec 31, 2004 4:14:31 PM

Guy,

The statistics I saw didn't factor out immigration, so maybe that is the difference. I doubt that that accounts for the whole difference, though. The fact is that huge numbers of high-paying jobs for those without college degrees have simply vanished in the US, replaced by jobs low-paying service jobs. I don't think unionization will make the difference, though. If it becomes more expensive for WalMart to hire workers, then they will figure a way to hire fewer workers. A lot of stores have already found ways to decrease the number of workers needed---in some grocery stores, you can scan your groceries yourself, pay with a credit card, and leave without ever interacting with another human.

Posted by: Daryl McCullough | Dec 31, 2004 4:19:56 PM

Matt,

Great post.

As you say, work/life is different then it used to be, but going back to the old days and old ways is no solution.

Too many Democrats are stuck in the 1960s, and too many Republicans are stuck in the 1920s. One of these parties needs to get serious about a new model for the 21st century.

Keep up the good work.

Posted by: Oberon | Dec 31, 2004 4:30:08 PM

Daryl wrote:
I think the two are related. Because of technological change, it's become much easier to shift work to whereever wages are lowest.
No doubt. (Though don't think in terms of "wherever wages are lowest" -- think in terms of unit costs of production.) But I'm thinking mostly of things like automation, which has made a lot of jobs obsolete.

Posted by: Guy | Dec 31, 2004 4:36:32 PM

Joe:

Perhaps not, but their governments who engage in the kind of systematic, illegal monetary protectionism that has contributed to no small degree to the decimation of our manufacturing and textiles sectors, and now threatens (previously) secure jobs like IT, financial and legal services, etc, can hardly be described as "good guys."

Surely you're aware that western governments also engage in a significant amount of systematic protectionism - eg, the massive subsidies we pay to our agriculture industries, which could not compete with less developed nations in a fair global market. African nations, for instance, can produce sugar far more cheaply than developed nations do, but are hamstrung by the protectionist policies of the EU and US. If you want poorer nations to open up their money markets, do you also acknowledge that we should drop policies that discourage free, openly competitive agricultural markets?

Posted by: reuben | Dec 31, 2004 4:37:07 PM

"but their governments who engage in the kind of systematic, illegal monetary protectionism that has contributed to no small degree to the decimation of our manufacturing and textiles sectors"

Way too complicated for me to figure out all the variables, but the huge deficits of the last twenty years have made the "pegging" of East Asian currencies and their high export/low consumption policies very expensive.

We may have done poorly, but Japan has done worse. And we may be in trouble, but China may be in worse. And the jobs may come back.

Posted by: bob mcmanus | Dec 31, 2004 4:52:06 PM

Hear hear.

Posted by: Alina | Dec 31, 2004 4:55:50 PM

The comments to this entry are closed.