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.


The Chemical Contamination in West Virginia

January 28, 2014

Before moving to Albany thirty-five years ago, we lived in Morgantown, West Virginia – a university town and a mining town. We knew people in both worlds. Our daughter was only seven, but after we moved she got letters from a little friend there who was the son of a miner. Miners lived all around.

Morgantown was very special, but the chemical leak and contamination in Charlestown reveals the naiveté of many in West Virginia and elsewhere in the U.S., who believe that whatever is good for the companies is good for us, that the companies are looking out for our welfare. 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 »


Environmental Patriotism

April 2, 2013

Our two small granddaughters visited us this weekend. For me, their lives have been the most compelling reason to do something about global warming, to accept responsibility and to invest in a better future for them. But there is also the call of patriotism. Many have laid down their lives for this country. Can the rest of us deal with a little burden, a little expense, to save this country from catastrophe? Are we patriotic enough? Read the rest of this entry »


Real Election Fraud

August 21, 2012

Republican efforts to exclude voters from the polls have been in the news lately. A Pennsylvania judge recently decided it was OK to require voters to have photo IDs there. Many states have been doing that.

Indiana anti-voter fraud efforts got the blessing of the U.S. Supreme Court under John Roberts in 2008.[*] Indiana Republicans claimed to be terrified that poor people would show up at the polls fraudulently trying to vote, and worse, they would vote for Democrats. So they required picture IDs. Their claims have been repeated in many states.  Read the rest of this entry »


Supreme Court Plays Guardian Counsel in the Health Care Argument

April 3, 2012

Let’s understand what that argument about the health insurance mandate was about. Everybody agreed that a single payer system would have been constitutionally OK. It would have been based on the taxing power. However toxic taxes are to the public, legally they are not particularly toxic. Everyone admits the taxing power is broad. Read the rest of this entry »


Taxes and the Price of Success

December 13, 2011

With a deal in process about state taxes amid shouts about which state’s taxes are highest, let me point out some basic facts. New York is expensive. My employers had to pay me well when I worked in New York City so that I could afford to live and work there. Same when I worked in Boston. Why? Taxes? Actually that’s not the big issue which is real estate. Read the rest of this entry »


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