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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The Future

January 17, 2017

What are the lessons of the election for the future of democracy?

First, leaving part of the population far behind is dangerous. Democracy properly gives everyone the right to vote, so everybody counts. When a segment of the population feels ignored, like those who lost their factory jobs, they sometimes revolt. But it’s easier to destroy what they don’t like than to shape a better future. Many, disliking Hillary and the gridlocked Congress, knocked her and Democrats out of their way, but are likely to regret the results unless the Republicans change and start working for the workingmen they’ve ignored.

For a century, Republicans have been fighting the unions of working people, and the legal protections for working people and consumers with increasing success. Can Republicans change and actually side with those same people. That’s the claim of Trump’s empty jawboning. But his methods will do the opposite.

  • He can’t bring coal back now that other forms of energy are cheaper.
  • He can’t bring steel back when other countries produce it for less.
  • There are opportunities in technology, science, education, research, infrastructure, the environment, and retraining but Republicans prefer to count pennies and dream about a world they can’t have back.

Progress requires investment. But Republicans only support tax relief for the wealthy with prayers they’ll do something useful, not complex and destructive financial maneuvers, mergers, buyouts and monopolization – all strategies for beggaring the rest of us.

I don’t expect Republicans to change their colors.

But political campaigns will change, effective immediately:

  • Candidates will repeat slogans like “crooked Hillary” or “wicked Donald” ad nauseum, expecting people to be more affected by repetition than evidence.
  • Accomplishing something will be downgraded to the level of an accidental coincidence because candidates will expect people to be more moved by rhetoric than reality.
  • Appeals to people’s guns and hatreds will no longer seem self-defeating; instead, appealing to people’s basest instincts and group hatreds will be mandatory.

Is there another way?

The economic polities of FDR, President Franklin Delano Roosevelt, stuck for more than half a century and kept this country depression-free until the recent W years.

Roosevelt understood that policies had to be good for everyone. He designed Social Security so that everyone got it, conveniently, through the post office; our checks came in the mail, although now it’s often direct deposit.

His economic policies got everyone back to work – Roosevelt didn’t shrink from hiring people with government dollars to get them working. He didn’t rely on a private market when it obviously wasn’t working. And he took our economy out of the Great Depression and put it on a powerful footing for an economic surge that lasted the rest of the century.

It’s not about jawboning. It’s about figuring out what will actually get people to work. That’s what America got out of the New Deal. What he didn’t do was turn the rest of us into the serfs and slaves of the wealthy. He didn’t celebrate the kind of jobs done only by those too desperate to refuse endless hours for peanuts, in what we used to call sweatshops and labor camps, no matter how dirty, diseased, dangerous, disgusting, illegal or improper.

Let me end by asking what we will also be doing to reign in global warming, protect Americans,  democracy, and the country we were blessed with?

— This commentary was broadcast on WAMC Northeast Report, January 17, 2017.


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