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.


Economics, Lawyers and the Risk to American Democracy

April 1, 2014

Ever notice that I frequently talk about economics. What’s a lawyer doing talking about economics? I did read and study economics but there are other reasons why economic issues are dear to this heart.

Lawyers do lots of different things. But for many of us, law is a helping profession. We work with people who are headed for bankruptcy and other events that will turn their lives upside down. We do our best to help them avoid personal tragedies – or pick up the pieces. We don’t think of clients as numbers but as people, most of whom we like and respect. We learn not to think of financial reverses as a judgment about their character, decency or personal value. It happens for all sorts of reasons, often beyond our clients’ control. When it is a mistake, it is often a part of learning how to do business or operate in this world. Some of the world’s most successful people have been through bankruptcy. Up close and personal, we care.

So the national recession wasn’t just a set of numbers for me. It was a catastrophe in the lives of many people. They were passengers on the national ship on a foggy night when the captain  crashed into another vessel. Millions of people went overboard, leaving their jobs and belongings behind. Rescuing people isn’t a choice; it’s an obligation just as it was not optional whether to pick our friends up from the wreck of the Achille Lauro. An S.O.S. has a clear and obligatory meaning.

But there is another reason. One could trace it to a famous French aristocrat who visited and wrote about the U.S. in the 1830s but statistical studies beginning after World War II keep making the point that poverty and inequality are both hostile to the survival of democracy. Historians studied the failure of democracies on multiple continents and reached the same conclusion. Others with different methodologies keep reaching similar conclusions.

It’s not a surprising conclusion. During the Great Depression in the 1930s, many were worried that we would lose our system of self-government, and some advised President Roosevelt to take dictatorial powers, but he refused. Now science has come to support common sense. Poverty can be dangerous, not only to individuals but to society. It makes people desperate and when they are, all bets are off.

With that knowledge, it is painful to me to watch Congress leave the victims of corporate shenanigans in the dirt as if they were so much trash. And as an attorney, it is particularly painful to me to watch the U.S. Supreme Court under Chief Justice Roberts doing everything in its power to play the role of the Sheriff of Nottingham, robbing from the poor to pay the rich. Many of those decisions are complex legally as well as economically but their effect on the fairness of the contracts we sign daily and on the lives of many people are extensive and often tragic. To me, the Roberts Court is threatening our democratic patrimony.

The personal suffering would be enough. The risk to our country is hard to bear.

— This commentary was broadcast on WAMC Northeast Report, April 1, 2014.


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