Labor Economics

February 14, 2017

The White House isn’t explaining what’s happening to jobs. I once taught labor economics, an issue close to my heart. To some extent, labor is like any other commodity and that’s the problem. Jobs go wherever business can find all the things it needs – the land, transportation, materials, markets, reliable legal relations, at the right prices. And it keeps changing.

We talk about the rust belt as if we did something wrong. Actually we had about a century-long run on the best factory jobs in the country – a ribbon through this state after New York’s government built the Erie Canal and made New York City gateway to the west, turning every city along the Hudson, Mohawk, Erie Canal, and then the great Grand Central Railway into a powerhouse. This area long dominated clothing, technology, science, heavy industry and spawned radio and television networks. Each industry provided resources for newer ones.

But New York’s advantages couldn’t be permanent. For bigger plants with newer methods, business looked for virgin land. Other governments built ports, the Interstates and St. Lawrence Canal, while the aging infrastructure of older cities led firms elsewhere. It couldn’t be permanent. Economic fundamentals inevitably dominate jawboning and presidential rhetoric.

Workers get cast aside unceremoniously. One of my law students was also a human resources specialist at GE, missing class whenever GE announced layoffs. They had long since let the weakest workers go. Now she had to fire the best and it hurt. But big corporations aren’t sentimental.

What’s a city or region supposed to do? The market doesn’t automatically find the next big thing and put it where former employees can get jobs like those they lost. The market didn’t build America automatically. Government changed British rules. Government built a banking system with resources to fund business, and smooth their cash flow – if you read or saw Hamilton, that’s what he was about, government providing what companies couldn’t. Government built ports, canals, highways, and had the railroads built. Government provided public health facilities, water, sanitation, disease control – which became crucial for business. Government invested in schools, and President Lincoln laid the foundation for the modern state university system. President Wilson sparked the country’s first broadcasting system for the war effort. Almost everything in your hands today has government fingerprints on it – the research and development in fundamental physics that led to the lasers, transistors and chips that run almost everything today.

Yes, governments make mistakes. You think private industry doesn’t? Most businesses fail. But only government can provide the fundamentals, the things that all the businesses in the country, region or route need. Only governments are motivated to look beyond individual companies and work for the region.

Governments have been investing in new forms of power. If governments in coal producing states had the sense to invest in emerging industries instead of dying ones, the coal miners might face a much better transition to good jobs than anything presidential jawboning can produce. But government cannot do it if it is afraid to fail.

Governments need to be thinking about what the emerging industries are, what resources will support growth. Not individual businesses that any group of investors could build on their own, but the underlying fundamentals that make broad development possible. And we may only know which ideas work when we try them.

If government thinks small, we all shrink.

— This commentary was broadcast on WAMC Northeast Report, February 14, 2017.

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World-Wide Radiance of the American Melting Pot

February 24, 2015

In this world the grossest of inhumanity is euphemistically described as ethnic cleansing. The mutli-directional genocide of the old Yugoslavia has become routine. Boko Haram takes aim at education and at religious difference in Africa, targeting connections with America and the west. The Islamic State and al-Qaeda in the Middle East, with tentacles into much of the Muslim world, target whoever doesn’t belong and subscribe to their version of Islam or dare question their authority, They have targeted America, England, Spain, France Norway and counting. It is terrifying how quickly decent peace-loving communities have been dismembered and destroyed.

The past is prologue, but can’t be undone. The question is what do we do now. This is partly an ideological struggle because terrorists depend on recruits. How can we handle such a high-stakes ideological struggle? One aspect of that is at home.

Urging the U.S. Supreme Court to end segregation in Brown v. Board of Education in 1954 both the Democratic Truman Administration and the Republican Eisenhower Administration explained to the Court that our respect for people of all races, faiths and national origins were central to American worldwide success, especially in the fight against Communism.

Our melting pot and mutual concern and respect define the best of America. Our unwillingness to give in to bigots and bigotry, racists and racism, our willingness to see, confront and deal with bigotry and racism, our determination to stop it, make our strongest appeal. It is our tolerance, our neighborliness, our welcome to all from everywhere that makes us the shining city on a hill that our Founders hoped we would be. It is not our bloodlines but our coming together to make ourselves and welcome each other as Americans that makes us so. That e pluribus unum is what the world admires. They want our neighborliness; they crave the American idealism that gives anyone and everyone a chance to make a decent living and a decent life. They crave the welcome that glows from our melting pot.

People dream of America in corners of the world where they are crushed as if they are worthless except for the masters’ business, worthless unless they are of the masters’ bloodlines, worthless unless they have something to offer, at least a bribe. We need to keep the dream of the American melting pot alive both for their sakes and for ours.

Our American melting pot is more important than ever to the world we inhabit. But make no mistake it is crucial here at home. If the hatreds that once fanned the Old World and now fan the so-called Third World land on our shores, none of us are safe. We were all melted in that pot and we all live or die together. There is no safety in a cauldron. We have to sustain the values of our shared tolerant American culture.  For all our sakes. We are all beneficiaries.

I pointed out last week that the American melting pot, one of our most fundamental of institutions, was the result of very deliberate decisions to educate us all together, without regard to wealth, faith, gender, national origin or spoken language, and then, finally, without regard to race. And yet, the Court that once announced Brown v. Board of Education is not helping to preserve that centuries-old melting pot. Instead it is making it easier, in some respects even forcing us to re-segregate ourselves by race, religion and wealth.[1] By doing that, the Court is plunging a dagger into the heart of America.

— This commentary was broadcast on WAMC Northeast Report, February 24, 2015.

[1] See, e.g., Ariz. Christian Sch. Tuition Org. v. Winn, 131 S. Ct. 1436 (2011); Parents Involved in Cmty. Sch. v. Seattle Sch. Dist. No. 1, 551 U.S. 701 (2007); Zelman v. Simmons-Harris, 536 U.S. 639 (2002); and see Michelle Alexander, The New Jim Crow: Mass Incarceration in the Age of Colorblindness (New York: New Press 2010); Erica Frankenberg, Chungmei Lee and Gary Orfield, “A Multiracial Society with Segregated Schools: Are We Losing the Dream?”  The Civil Rights Project Harvard Univ. (Jan. 2003) available at http://www.civilrightsproject.harvard.edu/research/reseg03/AreWeLosingtheDream.pdf (June 22, 2007).


For a Better Education

July 1, 2014

A recent headline read, “Slow Common Core.” For quite a long time there has been a backlash against anything viewed as “too tough” for our kids. That is a tendency of living in a democracy. Anything tough for our kids is bad but at the same time they have to get a fabulous education that will equip them for life’s challenges. So the solution is teachers who can make everyone learn painlessly. And therefore, if anything goes wrong it’s the teacher’s fault, not the student’s. Read the rest of this entry »


Taxes

July 2, 2013

I’m tired of hearing that lower taxes will bring new business. Politicians chant low taxes like a mantra that answers everything. Governor Cuomo offers to starve many New York communities of money for services by barring them from taxing new business.

Many places in the world have no taxes, and no business opportunities either. Many places in the US charge lower taxes than New York but do much worse. What’s missing in the low tax nonsense includes markets, transportation, supplies, employees, skills, resources and amenities, the things that make places interesting and fun to live in, the reasons company founders live here, why the bosses live here, and why their employees want to live here. Read the rest of this entry »


Romney-Ryan Rickshaws

October 23, 2012

Both candidates say they want to pull us out of the recession and put people back to work – to create jobs. Jobs, jobs, jobs, the election seems to be about jobs.

President Obama is straightforward Read the rest of this entry »


Sources of American Strength

February 21, 2012

Let’s talk about some basics – the sources of American economic power.

  • We were always an immigrant society, peopled with those who had the drive and courage to leave where they were, cross the ocean and begin again with nothing.
  • Initially we were agricultural. One innovation was small, “republican,” landownership by independent farmers. Their efficiency made everything else possible.
  • We were among the leaders in the banking revolution which simplified and facilitated commerce.
  • The transportation revolution began in England but it had an enormous impact on the American economy because of the sheer size of the country.
  • Our system of democratic schooling  – education for all, rich and poor, boys and girls, immigrants and natives – was revolutionary and made us an international leader.
  • England pioneered the scientific revolution. But America took advantage of the land grant colleges, and with the appreciation for learning that came with both the Christian and Jewish communities that relocated here, America became a major source of invention.
  • Americans led the revolution in manufacturing – inventing and perfecting the assembly line.

Now what? Everything we achieved is out there. Read the rest of this entry »


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