The Bishop and the Butterfly: Murder, Politics, and the End of the Jazz Age
    David Seaton's picture

    Will this all end with a bang or a whimper?

    By David Seaton on Sun, 09/04/2011 - 4:19pm |

     

    U.S. corporate profits and efficiency are getting absurd. On Friday we saw record quarterly profits of $1,450 billion, making up a record share of GDP at 10.1%. We're also at record corporate efficiency of $15,278.72 -- up 22.3% from last year (...). That last one says it all. Rampant job cuts and salary cuts, with new responsibilities for old workers, during the recession turned corporations into profit-making machines. Stimulative policies from the government and the Federal Reserve helped plenty. New technology also helps with efficiency. Unfortunately there are no signs that corporations are turning revenue into jobs. Business Insider

    The problem with US manufacturing is not that it has been shrinking – despite the “offshoring” of textile and electronics manufacturing to China, US manufacturing output rose by 3.9 per cent a year between 1997 and 2007. However productivity grew 6.8 per cent annually in the same period, so millions of jobs were lost. If manufacturing carries along the same path, McKinsey estimates that it could shed another 2.3m jobs by 2020, while the economy needs to create 21m more jobs to return to full employment. The mini-recovery in manufacturing jobs – 164,000 were added in the six months to April – recently stalled. John Gapper - Financial Times

    Over time, advanced economies will need to invest in human capital, skills and social safety nets to increase productivity and enable workers to compete, be flexible and thrive in a globalized economy. The alternative is – like in the 1930s - unending stagnation, depression, currency and trade wars, capital controls, financial crisis, sovereign insolvencies, and massive social and political instability. Nouriel Roubini - Project Syndicate

    Since Steve Jobs announced his resignation a few days ago, there have been endless (well deserved) paeans to his genius and how sorely he will be missed. However, it seems to me that what the world needs more than anything else right now is not another Steve Jobs, but another Henry Ford.

    This is because the jobs that Jobs has provided are mostly for people with post graduate degrees and what is needed now is what Henry Ford provided: steady, well paying, jobs for people with even less than a high school education. Ford created an entire industry based on the idea that the men that worked in his factories should earn enough wages to buy the cars they themselves made. That concept was the keystone to America's disappearing middle class prosperity.

    The present technological revolution means that workers in today's more advanced and "competitive" industries often need some two years of specialized training to be of any use at all, thus advances in productivity are creating an impoverished subclass of "working poor"... if they can find work.

    Most commentators think that this problem can be solved by improving education to make those entering the work force more "competitive". Certainly education is always valuable even for (or especially for) its own sake. But those who have sweated through four or many more years of university to acquire marketable skills, should not feel smug.

    Those with post-graduate degrees in math and engineering should be looking warily over their shoulders at the advances in artificial intelligence (AI). They might ponder on the programs that today allow computers to defeat the world's most skillful chess players. If we take as a working hypothesis that artificial intelligence is now at about the same stage as personal computers were at the beginning of the 1980s (remember the Commodore 64?)and project the trajectory of AI similarly into the coming three decades they could easily picture their futures as Walmart greeters... if Walmart can find enough paying customers to stay in business... or, more probably, armed with their PHD in math, finding employment as security guards or gardeners at a gated community for (fill in blank)...

    Thus the system seems to be moving inexorably toward eliminating human input except as credit-fed consumers. It doesn't take a rocket scientist to see that this cannot be sustained for very long without a political explosion of some kind... now that credit is crippled, perhaps for good.

    Tragically this explosion probably wont happen in the USA, where it is needed most.

    Most of today's middle class Americans, in contrast to the rioting, overcrowded, ghetto residents of a few decades back, live isolated in places that Gertrude Stein described as "when you get there, there is no there, there".

    In the USA there is really no equivalent to Cairo's Tahrir square or Madrid's Puerta del Sol: a recognized demonstration-drome, which can make governments and societies themselves stop in their tracks. There is no Bastille* to be taken in the United States, just angry, isolated people stewing alone in darkened living rooms, easy prey for the ilk of Glenn Beck and the Tea Party crazies.  It probably will be they who inherit the wind.

    *did you notice how French millionaires, who do remember the sans culottes, and the Paris Commune are lining up to pay higher taxes.


    Cross posted from: http://seaton-newslinks.blogspot.com/

    Comments

    It cannot be a good sign for democracy that the credo of Henry Ford, (surely no friend of progressives) would be hooted out of a  congressperson's town hall today as hopelessly socialistic...That said, where is Richard Nixon (!) (with his guaranteed national income/reverse income tax) when a real leftie is needed (take me now Jesus, I've seen it all...)


    by jollyroger on Sun, 09/04/2011 - 6:16pm

    Those with post-graduate degrees in math and engineering should be looking warily over their shoulders at the advances in artificial intelligence (AI). They might ponder on the programs that today allow computers to defeat the world's most skillful chess players. If we take as a working hypothesis that artificial intelligence is now at about the same stage as personal computers were at the beginning of the 1980s (remember the Commodore 64?)and project the trajectory of AI similarly into the coming three decades they could easily picture their futures as a Walmart greeters... if Walmart can find enough paying customers to stay in business... or, more probably, armed with their PHD in math, finding employment as a security guards or gardeners at a gated community for (fill in blank)...

    David I have been trying to communicate this very message since I started posting at TPM. But you have said it more elegantly than I.

    This is the very reason that it matter not one whit who is in Washington because the Jobs the people here want to return, will never, ever return.

    And the reason why the ones that do exist have a very short life span.

    This is what needs to be worked for by progressives.  Worker Cooperatives.


    by cmaukonen on Sun, 09/04/2011 - 7:33pm

    (faux revolutionary tri-corner hat on)

    You say that our best days are behind us!  I say that this is America bashing, not America boosting.  I say America is exceptional in every way, including being an exception to the laws of economics, physics, thermodynamics, and any other pinko subersersive law that you say will limit our limitless future.  I say "no" to those who look at the pie and ask, "how shall we divide this pie" and "yes" to those who say "let's make the pie bigger, who cares who gets to eat it" (faux rtch off)


    by jollyroger on Sun, 09/04/2011 - 7:54pm

    Ahh...shouldn't that be an aluminum foil hat ?


    by cmaukonen on Sun, 09/04/2011 - 11:35pm

     

    You are obviously part of the brain control conspiracy--it is well known that foil INCREASES the effect of brain wave manipulation...

    Per contra, properly worn (a rakish angle is recommended) the three cornered hat conjures up in the mind of the wearer a constant but subliminal playing of De Falla's eponymous work, blocking all rational thought, including brain wave infiltration.

     

    You are welcome...


    by jollyroger on Mon, 09/05/2011 - 12:01am

    Henry Ford provided: steady, well paying, jobs for people with even less than a high school education.

    I suppose one has to ask what is meant by well-paying.  A Ford worker could hope to get $5 a day.  If a worker put in 6 days a week, 52 weeks a year, this would amount to $1560 a year.  This would be like a worker today making a little over 20K a year. 

    I don't know too many in the labor movement today that would cheer a company coming into a community offering this as a wage in their factories.  And there would be a lot fewer jobs heading to other countries if many working today in the manufactoring industry would be willing to go down to the "well-paid" wages.

    Of course, compared to other jobs at the time, the jobs at a Ford factory were well-paid.  Which is another example that America at this time was a nation of poor people, by and large, and not the middle class nation created by the post-WWII boom.


    by Elusive Trope on Sun, 09/04/2011 - 9:44pm

     This would be like a worker today making a little over 20K a year.

    I'd love to see your math on this.  I think you're short by about a third.  And you're plain wrong about the rest.


    by kyle flynn on Mon, 09/05/2011 - 12:38am

    Aside from the math already provided, just used a CPI calculator to look at the buying power of a dollar between 1925 and 2011.

    Remember - they paid $5 a day not an hour.  I don't see how you could believe that someone making less than 2K a year in 1925  could live like someone making 60,000 today.  That makes no sense.  But if you want to show how you get that conclusion, I'm willing to see it.

    Look at this graph from Visualizing Economics

    You tell me whether the average American worker was different in the 1920s (well before the depression) than today.  Sorry to burst your bubble.

    Remember that one of the things that FDR in 1935 did was institute a minimum wage of $0.25 an hour  and the average salary for a WPA job was a whopping $41.57 a month.  And of course there was no such thing as health insurance benefits and the like.

    So you tell me what I am just plain wrong about.


    by Elusive Trope on Mon, 09/05/2011 - 1:09am

    An assembly line worker at Ford was paid $5 a day in 1914.


    by kyle flynn on Mon, 09/05/2011 - 1:14am

    Which was double what the others were paying.  In 1914 that was huge.  This was close to 35K a year.  But funny thing.  It wasn't until 1929, fifteen years later that the wage was bumped to $7 a day (only to be dropped to $4 a day during the depression).  So there wasn't any cost of living increases for the workers.   In other words, by the 1920s the workers went from what could be considered middle class back to the poverty line. 

    And the fact that $5 a day doubled what others were paying proves my point.  While the Ford worker in 1914 was making 34K, everyone else was making 17K.  which was about the average salary of the American worker.  Eventually Ford would bring its wage in tune with the general wage of the time. 

     


    by Elusive Trope on Mon, 09/05/2011 - 1:38am

    A note about the dollar. I understand that since Nixon took the US off the gold standard the dollar has lost some 98% of its value... that might have something to do with it all. In the 1920s you could eat a hot meal sitting down for about 25 cents I believe. A Coca Cola or a cup of coffee cost only a dime for decades and only 5 cents a bottle for decades before that.


    by David Seaton on Mon, 09/05/2011 - 1:54am

    I have to admit I surprised by the amount of resistance I have encountered over time regarding the notion that America was a nation of the poor prior to the post-WWII boom.  Everything I have heard from my elders, from as late as the 1940s and 1950s were whole communities that could only dream of splurging on a weekend at Disney World.  The big summer vacation was driving to the same rented cabin at the same lake for a couple weeks.  And they were they ones doing well.  When someone in the neighborhood got a tv it was a big deal.  Now we talk about a flat screen tv as a must have and hair care products is a 8.5 billion dollar industry.

    I don't know why it so hard for people to understand that well-to-do so many decades ago is now considered barely making it today.


    by Elusive Trope on Mon, 09/05/2011 - 2:16am

    Geez trope, how young are you? That's the "glorious" late fifties and early sixties in Wisconsin you are describing, the mythical pampered baby boom childhood.

    When our black-and-white TV broke (color was for folks who "had it made," as the saying went) there was no such thing as charging its (always expensive) repair, no such thing as credit cards, only doctors and dentists who extended credit (because health insurance for most was "major medical" only.). Since Dad was often so short on cash before payday that he asked to borrow our babysitting money so he could pay for parking at work, if the TV broke, chances were good it would be no TV for months, like a whole summer. Unless Dad got ambitious and took all the tubes out to test them at the machine at the drugstore. Then he'd come back with a couple of new tubes and scream at us from behind the TV "what do you see, is it straight now?" Eventually he'd give up on us and try to prop a mirror on the chair to see if his fiddling was doing anything, give up, take the tubes back and try to save for the repairman.

    Yes, cabins on the lake, that was the typical middle class "vacation," (but not for most Moms, who would rather have their luxurious sink, hot water and rubber gloves to wash the dishes--mechanical dishwashers were still an expensive new rarity--not to mention decent clean beds and a refrigerator with a lunchbox-sized freezer. )

    And Disneyland was never in most people's cards, out of sight and out of mind, they didn't even bother to advertise it to the middle class, it was their movies that they sold.

    If people want to compare costs to explain this, they should take a look at the adjusted cost of air travel compared to now. Our parents took us to the airport to see well-off people take off on airplanes for entertainment, that was the extent of it. Anyone who had flown on an airplane was a celebrity, a rare and sophisticated person. Traveling out of state by car was also something very unusual.

    My father had a white collar city government job but none of us experienced going out to a tablecloth restaurant to eat until we paid for it or a date paid for it, the local Big Boy's was the special restaurant you got taken to perhaps twice a year and was always regretted by the parental units for the embarassing commotion and expense. Movies were a couple of times a year at the drive-in; going to a movie theater was what Mom and Dad did on a special date (babysitting a luxury); us children each got to go to a movie theatre once, yes, just once, our whole childhood, as a special event with just Mom or just Dad.

    P.S. Like in the 20's, 30's and 40's, soda in the 50's and early 60's was still considered a special "treat," like candy or ice cream. You drank milk, at home and at school.


    by artappraiser on Mon, 09/05/2011 - 4:31am

    The abundance/surfeit of (mostly useless) consumer goods and the availability of endless junk food should not be confused with prosperity. Look instead to savings, a family being able to live reasonably well in that context with a stay at home mom, instead of being raised, latchkey by a TV set... good public schools. Decent jobs that didn't require endless, anxiety-producing, "recycling"... etc, etc. Peace of mind is very important in feeling "prosperous".

    Prosperity can be measured in many ways, but I certainly wouldn't start with the "abundance" of cheap junk bought at Walmart and junk food in McDonalds.


    by David Seaton on Mon, 09/05/2011 - 6:08am

    I remember back in the early 60's, my mom giving me a dollar to buy a loaf of bread at the market. I asked her if she was sure that was enough and she laughed and said that the day bread cost more than a dollar a loaf, we'd quit buying bread! We're at nearly $5 now! Of course, that was back when you could send your 8 year old daughter to ride her bike a mile to the market (in the seedier part of town) without having to worry about her safety, too! My how times change.


    by stillidealistic on Tue, 09/06/2011 - 2:55pm

    Applying the subway ride/pizza slice rule (both 15 cents in 1955--I am told...--and 2.25 today, thats about 1500% inflation, so the loss of value would be from 1.00 to 7 cents, which takes care of 93% of the stated loss, sounds about right.


    by jollyroger on Mon, 09/05/2011 - 2:57am

    Oy, get a load of grandpa talking about the good old days. cheeky

    In the 1920s you could eat a hot meal sitting down for about 25 cents I believe.

    Yeah, a blue plate special at a greasy spoon or a corner tavern, the equivalent of McDonald's today. A slice of meatloaf, mashed potatoes and gravy, canned green beans, maybe coffee included. Beer was extra and you might have to bring your own container.

    And you had to be a working adult to even think of doing that instead of eating beans at home. Oh and forget kids having the experience of eating in a restaurant before reaching adulthood, unless they were upper class or their parents ran that greasy spoon, they were neither seen nor heard in public except for church.

    A Coca Cola or a cup of coffee cost only a dime for decades

    Yet it was considered a luxury to many, reserved for things like taking a girl on a date or taking a child out to a soda fountain to celebrate confirmation or graduation from grade school. Many would rather spend those extra pinched pennies on the moving pictures.


    by artappraiser on Mon, 09/05/2011 - 4:00am

    Oy, get a load of grandpa

    I cannot tell you how grateful I was to arrive at your comment in chief and find that it was directed at David's post and not mine...


    by jollyroger on Mon, 09/05/2011 - 4:21am

    Interesting issue.

    My quick googling gives me Ford's minimum daily wage at $5 in 1914, equivalent to $111.10  in 2008 dollars. Given the eight-hour work days operative at the time, that gives us an hourly wage of $14 per hour (in 2008 dollars).

    In 2010 the median hourly wage was $16.27

    So over that century then national median wage has climbed $2 above Ford's minimum wage.

    sources here:

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

    http://www.bls.gov/oes/current/oes_nat.htm


    by Anonymous (not verified) on Mon, 09/05/2011 - 1:23am

    As I comment to Flynn, this wage was not increased for another fifteen years.  Again, if labor wants to agree to pay freeze for fifteen years, I think management would be all for it.


    by Elusive Trope on Mon, 09/05/2011 - 1:42am

    Well if they first double the minimum wages (as Ford did in 1914) and then freeze them until 2026, that would probably go down well with labor too.

    ;0)

    Another interesting point (at least to me) - that minimum wage we're talking about at Ford went to laborers without college degrees (line workers and mechanics). So the more appropriate comparison is with the average wage now for high school graduates w/o college. And then you get

    annual minimum wage for non-college laborers at Ford in 1914: 27'800 (in 2008 dollars)

    annual average wage for non-college high school grads in 1999: 25'900 (in 1999 dollars)

    (I was too lazy to keep searching for 2010 data on those wages). There the trend is downright scary. Given inflation between 1999 and 2008, probably flat. Despite vast productivity improvements.

     


    by Anonymous Obey (not verified) on Mon, 09/05/2011 - 2:04am

    So two things

    People love Henry Ford in 1914, not so much in 1925.  Same wage, same job.

    If we're talking about jobs that don't need anything beyond a high school degree, does anyone think that there wouldn't be global pressures on taking those jobs in third world countries.

    And then we come back to what is a justifiable wage.  Unions won some victories, but the result were historically high wages for jobs that anyone with a minimum of education could do.  Among those who have secondary degrees (2 years+), there is some (legit?) view that such jobs equate to middle class wages is a bit illogical. 

     


    by Elusive Trope on Mon, 09/05/2011 - 2:27am

    "If we're talking about jobs that don't need anything beyond a high school degree, does anyone think that there wouldn't be global pressures on taking those jobs in third world countries."

    I don't personally buy the 'outsourcing' excuse. Lowering trade barriers selectively on low-skillled manufacturing (and not lowering barriers to immigration and free trade in trades dominated by professional classes) is a choice. Dean Baker goes on about that kind of stuff. Nuff said about that.

    Another point is that much of what low-skilled labor does now cannot actually be shipped off to China. It's local services - cable guy, hamburger flipper, maintenance, retail sales- that is essentially local. So if you maintain high minimum wages like in Scandinavia or maintain aggregate demand and full employment like in Switzerland, you end up with high-school grads making a minimum of 15-20 dollars an hour (depending on where the exchange rate is). And that is with globalization. Globalization just doesn't have much of an effect on these trades.

    Beyond that, I think your insistence on the difference between 1914 and 1925 is quibbling. Inflation was low to non-existent for much of that period (totally flat actually, between 1920-1929). Ford's move was so powerful because it showed that even within the private sector, you could have demand driven growth - give them higher wages, and they will buy the cars they themselves build. It was Keynesianism before Keynes. Exactly how high those wages were, and how far they have or have not fallen since, is secondary. But if you really are adamant about saying how rich and unjustifiably rich the poor are today as compared to the depression, and how rich and unjustifiably so the poor were during the depression as compared to the Irish potato blight, be my guest.

    ;0)

     


    by Anonymous Obey (not verified) on Mon, 09/05/2011 - 3:09am

    But if you really are adamant about saying how rich and unjustifiably rich the poor are today as compared to the depression, and how rich and unjustifiably so the poor were during the depression as compared to the Irish potato blight, be my guest.

    This sums it up the issue.  This is one place where ideology takes over reason.  People want to compare today with the days of FDR and before.  Yet it was an entire different landscape.  Expectations were different. Notions about livable wages were different.  The phrase "they are living in unacceptable poverty" means something different to us today in 2011 than it did in 1925. 

    This is a good development.

    But if one wants to face reality...if I had a nickel for every time I heard from a white collar, college educated person some kind of rant about some high school graduate making 50K+ with benefits unwilling to take a paycut in order to save the business.  Right or wrong, this is a political reality. 

    Personally I;m for what one sees in places like Switzerland.

    What I am not for is idolizing Ford which had reduced its wages during the depression, nor believing that somehow the pre-depression America was some kind of middle-class uptopia that was interrupted by the depression. For all of Ford's Keynesian, it didn't have some middle class utopian impact on the average American.  The typical American in 1910, 1915, 1920, 1925, 1930....was one that we today would call living along the poverty line.  Period. 


    by Elusive Trope on Mon, 09/05/2011 - 3:38am

    Okay, so "we're still not quite back to 1932 level misery... yet" is your talking point.

    I still think that's a pretty odd and uninsightful frame to take to the issue. jmho.

     

     


    by Anonymous Obey (not verified) on Mon, 09/05/2011 - 4:10am

    Actually my talking point in the end is that looking back on some individual in 1914 who chose to pay workers $4 a day instead of $2 (and then basically froze those wages) is a useful frame of reference for what we are dealing with today.  There are some insights to be had in this move by Ford (one of the reasons we can mail with confidence in this country is because for most the rewards of stealing mail does not outweigh the rewards of the salary and job security).

    But a primary point is that Ford made his decision based on what he thought was good for the company, not for the country's economy.  So what one is actually hoping for if one hopes for another Ford is someone whose notions about what is good for the company is consequently and accidentally good for the country's economy.


    by Elusive Trope on Tue, 09/06/2011 - 1:15am

    Well Trope uses the misery base line of Driving to California to pick vegetables with all our worldly belongings packed into a Model A truck. Until we are all (or most all) in that condition, we ain't there yet. 


    by cmaukonen on Mon, 09/05/2011 - 6:15pm

    Alan Blinder has a study out that estimates as many as 50 million jobs in the U.S. are vulnerable to outsourcing, and the types of jobs are rapidly climbing up the wage scale.

    Recently I heard investors talking about new "cloud" software which will eliminate the need in companies to have any computer hardware at all in house. There go all those high wage jobs.

    I think the trend of profitability per employee is astounding but part of what we are seeing right at the moment is typical of the tail end of a recession before demand picks up.

    And of course the worse part of this recession is the absolute loss of the housing industry. Typically a pick up in the housing industry is what brings us out of recession.

     


    by Oxy Mora on Sun, 09/04/2011 - 9:45pm

    Housing is in the toilet, but the basement refinishers are doing hand over fist business with all the move-back college grads...


    by jollyroger on Mon, 09/05/2011 - 12:35am

    On the East Coast, one might imagine the basement refinishers are doing even better refinishing the refinished jobs flooded out by the hurricane/tropical storm that swept through.


    by Elusive Trope on Mon, 09/05/2011 - 1:13am

    Global warming, the contractor's gift that keeps on giving...


    by jollyroger on Mon, 09/05/2011 - 2:51am

    The Republican plan is "unending stagnation, depression, currency and trade wars, (real wars), capital controls, financial crisis, sovereign insolvencies, and massive social and political instability." It works for them. Energizes the Base. Provides opportunity to create targets to blame it all on. Which have nothing to do with the true causes.  It's also useful for the GOP to make sure real national problems are never solved, shows government doesn't work.  For you anyway. Keeps the pot near a boil, a little adjustment, and its boiling over at election time. It's also why we experience a plethora of all of the above every time the GOP gains power in the country.


    by NCD on Sun, 09/04/2011 - 10:44pm

    Here is a nice graph from the NYT:

    The shit hits thefan


    by David Seaton on Mon, 09/05/2011 - 1:47am

    Does the graph reflect the prosperity of the workers for United Fruit Company/United Brand during the 1947-1979?


    by Elusive Trope on Mon, 09/05/2011 - 2:34am

    Just a sidelight, if the productivity increases had not all been usufructed to capital, social security tax revenue would have been far greater, meaning the famous trust fund catastrophe (that does not exist) would be even more of a chimera.


    by jollyroger on Mon, 09/05/2011 - 3:02am

    Here is an article that fit very well with our present discussion:

    http://www.bbc.co.uk/news/magazine-14764357?print=true


    by David Seaton on Mon, 09/05/2011 - 11:04am

    I don't see how any of these disputes about the standard of living in bygone days have any significant bearing on the issue of current unemployment.

    No matter what level of prosperity a society has, there is always more work to be done, and more progress and improvement to be made, than there are people and resources to do it.  Human dreams and visions of improvement always exceed their current capabilities.  When there previous efforts have enabled people to scale to some high point of progress, that only enables them to see the next summit above them.   So when the resources a society does have are left unemployed, particularly its human resources, that always signals some kind of dysfunction.  It represents a kind of collective stupidity.

    Just look around you in your own towns and cities at the numerous things that could be made better with some modest application of material resources and human work.  Think of the improvements in your infrastructure, food supply, health care and education that could be made.   The opportunities for improvement are almost as numberless as the stars in the sky.  Note that many of those improvements are improvements in public goods, public property and public activities.  Thus it would be very irrational to expect the work to be done eventually by private entrepreneurs, since the private sector specializes in the productive utilization of private property for private profit.  The private sector cannot make new profits from transformations of resources it does not own.

    Involuntary unemployment is a social choice, not some kind of natural phenomenon.  It only happens because the society has made bad choices to rely on inefficient economic institutions, institutions that fail to create all of the employment opportunities for useful and productive work that should be created.

    We can't say there is some shortage of non-human resources.  The United States remains a massively wealthy society on the whole.  At the upper end of the wealth and income spectrum, here are gigantic pools of monetary savings that are not being utilized.  These savings are just sitting in savings accounts and low-yield bonds gathering economic dust.  Companies are also now sitting on large piles of cash, maintaining their profit margins so the can pay out consistent rents to their stockholders while maintaining skeleton crew employment levels.

    The whole point of capitalism is supposed to be its built-in ingenuity in finding ways of putting surplus wealth to work in the productive sphere to build more wealth.  That is clearly not happening now in the way it should, and so we need public sector activism to make it happens.  The laissez faire approach has never worked.  All successful modern economies are a vibrant mixture of private sector and public sector activity, and we now need the public sector to get busy and get to work.   If the private owners of the surplus lack the individual incentives to put that surplus to work, the public sector either needs to provide that incentive through legislative re-engineering of the incentive system, or needs to take direct control of some of that surplus and hire people directly to do the things that we all know need to be done.


    by Dan Kervick on Mon, 09/05/2011 - 11:10am

    Very well said, and although I agree with the sentiment, I'm going to pick on one of the details.

    The private sector cannot make new profits from transformations of resources it does not own.

    You must not be thinking of the lumber, mining, or energy sectors… wink

    On a more serious note, on a limited scale R&D has been done that benefits more than just private institutions, most notably at Bell Labs. Of course, if anything they're the exception that proves the rule, and although you might see similar R&D contributions in the future, you're very unlikely to see the type of contributions you're referring to from the private sphere. (I.e., I'm just reiterating my general agreement with you.)


    by Verified Atheist on Mon, 09/05/2011 - 11:33am

    I don't see how any of these disputes about the standard of living in bygone days have any significant bearing on the issue of current unemployment.

    They don't; that's the point. It's comparing apples and oranges.

    It's still interesting to talk about, though. Not the least of which because you see which people fall prey to doing the rose-colored glasses routine about the past. Just like conservatives do:  I.E., if we just went back to having most women do unpaid work, everyone else would have a decent-playing job; if we just went back to one-car families, teenagers wouldn't get into such trouble; if we just went back to Jim Crow, the white working class would have it so much better; if we just went back to strong protectionism and lack of automation, there'd be no need for higher education for so much of populace. And a coke would still be a dime. Etc. After all, when there were only wringer washers, there were a lot of laundress jobs! And when everyone came back from the war and started making a lot of babies, there were a lot of diaper service jobs!

    Mho, you've got the correct attitude for someone who considers himself a progressive--talking about progress.


    by artappraiser on Mon, 09/05/2011 - 3:42pm

    coke would still be a dime

    is this not tautological?  A dime bag is a dime ba-wait, what?  A drink?  Carry on, then.


    by jollyroger on Mon, 09/05/2011 - 4:58pm

    Marx said that Capitalism would finally destroy itself, torn apart by its inner contradictions or conflicts, that this collapse would lead to a revolution, but he was not very clear about what would come afterwards... Certainly we are watching capitalism destroy the middle class, with all its virtues and defects as we see in Art's brilliant paragraph. Will IA begin to do the same thing to PHDs as the steam engine did to craft weavers? If it does, then things are going to happen. We are sure to see some movement take place.

    When everyone is immiserated except the owners of the means of production, then...

    The mistake that Marxist-Leninists made was to hurry the process and have a revolution before Capitalism collapsed.... It has to do it on its own if it is ever going to happen at all.

    The question is: are we now watching a dress rehearsal?


    by David Seaton on Tue, 09/06/2011 - 12:44am

    Will IA begin to do the same thing to PHDs as the steam engine did to craft weavers?

    Internal affairs? wink If and when artificial intelligence becomes a threat to PhDs, I can't predict what would happen next, or even if it would be necessarily bad or good, but I can predict that it wouldn't be a Marxist revolution. Once AI can replace my job, AIs will be able to build better AIs. All sorts of things become possible at that point, both good and bad. Best case scenario: we become free to pursue whatever interests we desire. Worst case scenario: something akin to the Matrix or Terminator movies. Of course, there's a pretty big spectrum of alternatives between those two, but I wouldn't put Marxist-style revolutions anywhere on that spectrum.


    by Verified Atheist on Tue, 09/06/2011 - 6:36am

    I don't think the good and the great will pay anybody a dime more than they have to... check out the favelas, ranchitos and diverse third world slums... that is the future for America if jobs that today require a higher education can be replaced by machines.


    by David Seaton on Tue, 09/06/2011 - 8:02am