Nuts, Liars, Suckers and the Rube Goldberg Disease

November 28, 2017

I just heard that Jeff Bezos is worth $100 billion. What is he doing with that net worth? Is he putting it all to work? If not, why not? Ya think if we just gave Jeff another billion he’d put that money right to work putting Americans to work? Why can’t he do that with the $100 billion he already has?

Republicans keep telling us that if they give tax breaks to the wealthy they’ll put it to work, like another billion for Bezos. They have to be either nuts or liars. If you like nuts or liars, that’s your business. But the question is whether we are suckers.

Republicans want us to give the money to people who don’t need it in the hope that now, with even more money they don’t need, they might decide to go to the trouble of running another business and the other business would be somewhere in America and would use people and equipment made in America, or they might find others, like venture capitalists who might use the money in, by and for Americans.

Rube Goldberg, a giant of comedy who died in 1970, certainly would have gone that route in his satirical cartoons. Webster’s New World Dictionary defines Rube Goldberg as “a comically involved, complicated invention, laboriously contrived to perform a simple operation.”

The Rube Goldberg website describes “A Rube Goldberg contraption” as “an elaborate set of arms, wheels, gears, handles, cups and rods, put in motion by balls, canary cages, pails, boots, bathtubs, paddles and live animals – [which] takes a simple task and makes it extraordinarily complicated. He had solutions for How To Get The Cotton Out Of An Aspirin Bottle, imagined a Self-Operating Napkin, and created a Simple Alarm Clock – to name just a few of his hilariously depicted drawings.”

Sound familiar? We could give large tax breaks to people and companies that don’t need it on the prayer that they would use it in helpful, constructive ways, and provide decent, useful jobs to Americans.

Or to get the economy going, nationally or locally, we could just do whatever was needed. Instead of praying someone else would do it with unseemly incentives, we could build roads, bridges, updated electrical grids, schools, universities and water systems, all of which would employ lots of people and provide the resources people and businesses need to function. We might even organize cultural attractions that make places more fun and attractive. Just last week the Times had a front and multipage article on the ways the New York City subways have been starved of maintenance dollars. We’re always postponing maintenance but what do we get for that – paying the rich more for the privilege of being their patrons?

People who tell you that we have to give tax breaks to people who have money lying around that they already don’t know what to do with are either Rube Goldberg creations, nuts or liars. If you like nuts, OK. If you like liars, that’s your business. But the question is whether we are suckers.

— This commentary was broadcast on WAMC Northeast Report, November 28, 2017.

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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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