Stop Dumping All the Risks on Blue Collar Workers

June 5, 2018

I have been thinking about all the blue-collar workers who believed that Donald Trump would do a great deal for them.

We often talk about the risks that entrepreneurs face but capitalism does its best to outsource risk to blue-collar workers. If there are environmental problems, poisons in the air or water, blue-collar workers and their children will be the first to become sick – they are the canaries in the coal mines. But the irony is that they are also the first to be affected by any attempt to remedy the situation. Prohibitions may force their workplaces to shut down or lay them off.

Liberals often respond by saying that new methods will create jobs. But blue-collar workers have good reason to assume that any jobs created will probably be for other people. Liberals also argue that the proper method for creating jobs is with public works, renovating American infrastructure, etc. But who’ll get the infrastructure jobs? And even more important, no one has been able to promise those jobs. Obama tried but Congress blocked much of what he wanted to do. Trump promised a huge infrastructure program but he put it in the budgets of the states, not his own budget. In effect American politics has not been able to deliver on that jobs promise for the people whose jobs are at risk.

Other relief programs are more automatic: Except for Puerto Rico, we regularly protect people flooded by major storms even when they should have known better than to build on flood plains. The farm program, whatever its shortcomings, protects farmers with formulas that can be calculated in advance. Unemployment insurance is statutory but often grossly inadequate. Social security and Medicare have been reliable though they have become political footballs. Obamacare still exists despite Republican attempts to kill it. But you can’t feed and house a family on medical care. The earned income tax credit comes annually after April 15.

All of this suggests political winners and losers – we like some folks and we don’t trust others with whatever we might do for them. Government has not been willing to become the employer of last resort, so that there are always jobs and wages, although some candidates are urging it now. A negative income tax has been deemed too expensive. And Trump has spent huge tax dollars on enriching the super rich instead of reducing or eliminating the payroll tax in order to encourage hiring more workers for jobs that pay well. There’s lots that could be done if we have the will.

The result is that our political system has not been willing to care for workers. They are not the only ones our politics has left to hang in the breeze. Our unwillingness to insist on decent, honest and ethical behavior for everything from payday lending to mortgage loans, from manufacturing to toxic waste, leaves masses of people at risk, unable to protect themselves or their families.

We need statutes that protect all workers when employers reduce their workforce. Protections need to be reliable so that people don’t have to fear for their jobs when they demand safe working conditions and decent contractual terms that don’t shift all the risks to the people who are most vulnerable and least able to protect themselves. We need reliable worker protection so that people needn’t fear for their jobs when we demand safe products and safe byproducts of business activity. We need to rethink how we protect American workers so that they don’t become the losers whenever we try to improve the American environment and working conditions for everyone.

— This commentary posted by WAMC on their website on June 5, 2018 but the audio was pre-empted by the Pledge Drive. It was broadcast in its usual spot the following week on WAMC Northeast Report, June 12, 2018.

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The Outdated Economics of Conservative Ideologues

April 26, 2016

Some of you may have been following Shankar Vedantam on NPR or the discoveries of Daniel Kahneman, the Nobel Prize winning psychologist on the Princeton faculty, and their demonstration of the irrational ways that people very naturally and ordinarily reach decisions. Indeed, for quite a long time it’s been apparent that rational decision making often demands too much of people. As Cornell’s Vicki Bogan said in a talk in Albany, the rational choice model of economics assumes that people:

  • Think like Albert Einstein
  • Can store as much memory as IBM’s Big Blue
  • Can exercise the will power of Mahatma Gandhi
  • … [and] make unbiased forecasts

Nobel Prizes have been awarded to psychologists and economists who have been studying human decision making, showing that people literally can’t do what conservative economic theory expects them to. The rational man doesn’t exist, and for that reason, markets often don’t protect us. For both businessmen and consumers, rational choice is often impossible; it’s just too hard. Sometimes things aren’t currently knowable. Sometimes they’re beyond the capacity of individuals, even if institutions can figure it out.

A trip to the grocery store helps make the point clear. Even though much of the information exists, I can’t know enough about all the ingredients of the goods I buy, and their impact on my body, and still take the time to do my work and have a life to live. I have to trust someone or something else. But consumer ignorance shapes what businessmen have to do to survive. Those who cater only to the most informed, cater to small markets and often go under.

One consequence is that the market doesn’t protect us. That’s why workers’ compensation was started many decades ago – workers couldn’t figure out the odds of injury and didn’t have the ability to protect themselves as cheaply and effectively as informed employers could. Government stepped in to move that burden of knowing and choosing from the employee to the employer.

Those are examples. The broader impact of what is now called behavioral economics is that the economic theory of market ideologues is thoroughly discredited nonsense. It doesn’t work. A couple of decades ago there was a big debate about the efficient market theory which claimed that the market had it right even though individuals could be wrong. But they couldn’t tell me whether the market had it right the day before or the day after the crash. In other words it was nonsense on stilts.

That’s one of the reasons the public, all of us, have to get out of the glare of the outdated economics coming from conservative ideologues. It’s one of the reasons why it has been so important that Elizabeth Warren and Bernie Sanders have moved the Democratic Party to the left. That shift also clears the way for Hilary Clinton to return to the roots of the modern Democratic Party in the Great Depression, in Roosevelt’s New Deal, in being a party with heart.

Hilary and Bernie both have a lot to offer, but just as big a key to progress will be the Senate and the House of Representatives, which have blocked Obama’s efforts to push this country toward better, more caring solutions at every turn.

— This commentary was broadcast on WAMC Northeast Report, April 26, 2016.


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