What You Should Think About Unemployment

June 6, 2011

“Lost time is never found again.”

–Benjamin Franklin

The United States of America is a capitalist country.  Like the uncritical institutionalization of any other -ism, this is unfortunate.  Most of our citizens are neither informed nor passionate enough about economics to actually qualify as ideologues.  Among the rest, it could hardly be said that all of us are capitalists.  Nonetheless, it is the policy of this nation to treat free markets like magical sacrosanct entities.  To tamper with them, however vital and useful this tampering may be, is to commit a serious political transgression.  In spite of frequent invective characterizing him as a socialist, even the sitting President has given earnest voice to the first statement in this paragraph.

As a result, our policies reflect the priorities of capitalists.  Even the slightest of additional business regulation, like a hiatus on deepwater drilling in the immediate aftermath of a major ecological disaster, is often characterized as “the heavy hand of government preventing job growth.”  Never mind the important work to be done in fisheries and the loss of tourism dollars.  The balancing of interests, even legitimate economic interests, is not to be considered when it is possible to make the immediate leap from “mean ol’ guv’m’nt regulated an industry” to “we’re losing jobs!”  A more sensible approach would promote balancing economic interests in those situations where the advance of one impedes the growth of another.  Heck, a more sensible approach would even promote balancing non-economic interests like environmental quality and workplace safety with economic interests.

Alas, a more sensible approach means an approach in which there is less nonsense.  Since nonsense is essential to the exploitation of fears and hatreds that motivate irrational voting behavior, the party out of power will often see and act on opportunities to profit from the popularization of nonsense.  So it is with the nation’s mad and futile dash toward full employment.  Almost every modern American President has echoed the sentiment that ideal conditions would see to it that every adult who wants a job will have a job.  Precious few of them have been astute enough to expand on that sentiment with the observation that not every job is suited to every worker, or vice versa.

Yet this is a crucial observation to getting anywhere near and ideal economy.  Were every unemployed American to take the first position available to him or her, our collective output would be devastated by a combination of underemployment (overqualified people unhappily toiling away at less valuable work than they might otherwise perform) and overemployment (people unhappily enduring jobs so demanding that an inappropriate work-life balance can have serious long term medical consequences.)  One of the constructive functions of unemployment is to give growing employers and active job seekers time enough to get past the first possible employment situation and into a truly suitable working relationship.

Of course, there is much more to it than that.  Eager to achieve short term economic growth while facing increasingly absurd demands from Newt Gingrich’s majority in Congress, President Bill Clinton agreed to a host of draconian measures sheltered under the umbrella term “welfare reform.”  Though states have tailored some of these reforms in different ways, one common outcome of this mid-90s “reform” was a phenomenon known as “workfare.”  The idea is that the government subsidizes the pay of workers hired off welfare rosters so that businesses have more access to cheap labor and the chronically unemployed have more opportunities for “the dignity of work.”  Almost none of these jobs are actually dignified.

Worse yet, it is commonplace for these workfare positions to involve compulsory labor by single parents who are then compensated little more than the cost of obtaining child care for the span of time that they must be on the job.  His personal life is not the only way in which the former Speaker of the House utterly failed to live up to his many loud public commitments to family values.  However much he may have contempt for single parent households, surely taking those single parents out of the home and demanding the best of their energies be put into toil alongside minimum wage employees does no service to their innocent children.  Workfare as a policy may have stimulated a measure of short term growth, but it has also generated developmental and educational problems sure to be a long term negative force working against the cause of sustainable American prosperity.

It is bad enough that, since the start of Ronald Reagan’s Presidency, all real economic growth in the United States has been concentrated in the hands of the most wealthy 20% of our citizens.  Making matters worse is the fact that, during this same time, workers have been caught in the vice-like grip of our hypercompetitive economy.  Longer hours, fewer benefits, and increasingly inhumane conduct by management at businesses both large and small — all of it does much to increase the quotient of misery in this nation.  Economists look only to metrics like the unemployment rate and the consumer price index when attempting to gauge human misery.  They wear professional blinders that prevent them from a deeper understanding of just how much suffering would persist even if unemployment and inflation were to drop back to historic lows.

At this same time, we have conservative political voices calling for measures like a higher retirement age.  Few of them seem to recognize the antagonistic relationship between the quest for lower unemployment and the push for a higher retirement age.  A robust national pension plan or a shorter standard work week might offend some ideologues’ worship of almighty capitalism; but these measures would be relatively painless, even downright joyful, methods of decreasing unemployment.  Enhancements to retirement security policy would make it easier for elderly workers to retire in dignity, which in turn would make it easier for young people to launch their careers by landing suitable jobs right out of school.  Likewise, mandating that large enterprises support ample vacation time and/or a shorter work week would mean that business units would require slightly larger workforces to maintain the same levels of productivity.  This too would be an uplifting way to drive down unemployment figures.

For much of the life of this nation, the American people were influenced by capitalism without falling victim to fundamentalist thinking in the area of market economics.  To the extent that our productive lives actually are influenced by economic thought, that fundamentalist perspective — that worship of the -ism — has festered into a national sickness.  It leaves us unable to even consider a broad range of sensible responses to identified problems.  It leaves us unable to recognize serious problems born of our own extremism.  It is a weakness unworthy of a great people.  Are we, the people of the United States of America, greater than capitalism?  I believe that we are.   Yet I also fear we who embrace this belief are grossly and chronically underrepresented in the halls of power.

What You Should Think About Greed

December 1, 2007

“Greed is a bottomless pit which exhausts the person in an endless effort to satisfy the need without ever reaching satisfaction.”

–Erich Fromm

Roaming the blogosphere provides observers with no shortage of comedic sights. People just making their first efforts at articulating political thought may give off that adorable vibe one senses in little children trying to get their hands around an adult tool. Then again, if the message is sufficiently hateful, they may instead give off that disturbing vibe one senses in little children trying to get their hands around a loaded firearm.

A prime example of this phenomenon is the vast array of instances in which the Gordon Gecko “greed is good” speech is cited as a compelling defense of cutthroat capitalism. Anyone of sound mind who actually watched Oliver Stone’s Wall Street couldn’t come away seeing Gecko as a hero. No doubt he was a complex and charismatic character. Also, in the context of the dramatic moment, his speech was an appeal to idealize cutthroat capitalism. Yet in the broader context of the film, the character was clearly a villain willing to inflict enormous pain and suffering on others simply to add even more money to his own uselessly vast personal fortune.

As a character, Gordon Gecko was an exceptional man. For example, he referenced Sun Tzu in a business context without completely mangling the application of that ancient wisdom. Ordinarily, when an executive or manager invokes that sagacious general, it is just before pulling a monumentally stupid move. The Art of War has much to teach about abstract strategy. Yet it also has much to teach about overseeing armies of slave-conscripts in the midst of deadly struggle. Since that text became fashionable with the MBA crowd, it has done far more to promote the view that free workers engaged in constructive endeavors should be treated like slave-conscripts than it has done to refine the abstract strategic thinking of business leaders.

Likewise, if his words are to be believed, Gordon Gecko was right to call for sweeping reform of management at Teldar Paper. When a private enterprise is taking huge losses while continuing to pay out large salaries to an unproductive legion of executives, change is warranted. Yet his actions represent the exception that proves the rule — not the rule in action. In reality there are plenty of bloated Teldar-style corporate bureaucracies and very little pressure to link pay with performance. Insofar as reality’s Wall Street drives business trends, it promotes the search for cheap labor abroad rather than real restraint in the realm of executive compensation packages.

If popular beliefs about the benefits of cutthroat capitalism were remotely true, then bloated executive payrolls at unprofitable companies would be rare and short-lived. Instead of the tight correlation between productivity and executive compensation that capitalism is thought to promote, year after year in the U.S., executive pay raises consistently outpace overall economic growth, sometimes by a substantial multiple!

Architects of modern capitalism often spoke of “enlightened self-interest.” In a world where capital market activity involves long-term investors taking an active interest in the management practices of companies they partially own, there is at least the theoretical possibility that greed will tend to promote good business practices. We do not live in such a world.

Much of the activity in capital markets today is short term speculation. Investors seek to cash in on growing trends or public reaction to world events rather than build wealth by supporting wise executive stewardship. Even institutional investors, like mutual fund managers, are no longer likely to hold long term positions of any consequence. Though he is held in much esteem amongst financiers and tycoons, virtually no one today emulates Warren Buffet’s practice of actively monitoring the management practices of companies supported by his investments. He has become a living relic of a bygone era.

The end result is an economic dystopia alluded to in Oliver Stone’s film. Corporate raiders gain control of a business, loot it for saleable assets, trim workforces, further cut payrolls by replacing experience and skill with untrained novices, declare an impressive short term profit, then laugh all the way to the bank. It is a strong driving force in the “race to the bottom” — a steady decline in the quality of goods and services. While financial insiders get new piles of money to place alongside the piles of money they already possessed, thriving businesses are gutted and abandoned.

Depending upon economic elites to be consistently enlightened in their pursuit of self-interest makes no more sense than depending upon hereditary aristocrats to be consistently enlightened in the exercise of despotic power. The core idea behind the establishment of the United States was that exploitation of the many by the few could be disrupted through periodic redistribution of power according to the results of a nationwide public process. While this approach to political power is widely embraced, it is hard to imagine many Americans endorsing a similar approach in which wealth would be periodically redistributed.

In fairness, there are some good consequences to economic inequality. Then again, there is a vast range of possibilities between absolute economic equality and cutthroat capitalism. Right now, only the empty promises of trickle down economics answer any demand for social justice. Just imagine the outrage if a group of hereditary political aristocrats answered calls for democratization with flimflam about how their immense personal privilege will eventually spill over to empower ordinary citizens.

Wealth and power are not the same things, but no society that has accommodated extreme concentrations of wealth has found ways to prevent them from also serving as extreme concentrations of power. Some would defend a greed-based competitive paradigm with assertions about human nature. “Communism didn’t work because people are too greedy” goes the propaganda point woven deeply into the fabric of American culture.

If we actually governed ourselves with total deference to human nature, then we might also argue that medicine doesn’t work because people are too vulnerable to sickness or police do not work because people do not possess a natural tendency to comply with statutes. Government is not about shrugging and letting the worst of human nature determine the course of human events. Government is about taking collective action to restrain the worst of human nature and promote the advance of civilization. In short, it is a means to transcend “the law of the jungle.”

Because of the strong connection between wealth and power, a system that is dedicated to rewarding the effective actualization of personal greed is a system that empowers the selfish, the dishonest, the shortsighted, and even the larcenous among us. It should come as no surprise that the end result is a tendency for public officials to wallow in the spoils of legalized bribery while looting the public treasury to subsidize their coconspirators in the military-industrial complex.

I do not contend that an absolute equality of wealth is either attainable or desirable as a matter of public policy. Yet I do contend wholeheartedly that anarcho-capitalist ideology is an immensely harmful set of ideas rooted in falsehoods. These falsehoods are sustained by popular personalities who manage to combine shoddy analytical skills with an excellent ability to manipulate the emotions of their gullible admirers. Even as American civil rights, environmental conditions, economic vitality, public morale, and global prestige are being devoured by the politics of selfishness, millions of voting citizens will perpetuate their habit of endorsing a candidate based chiefly on false promises of fiscal restraint.

I have no trouble agreeing with the consensus of religious teachings that greed, far from being good, should be regarded as an anathema. Yet I also acknowledge that, in specific contexts, subject to reasonable restraints, greed can be useful. We do not need to take “self-interest” entirely out of the American way of life, but it is long past time to restore “enlightened” so as to strike a optimal balance. This balance permits collective action to solve real problems facing real people in our own times while also permitting individual action to produce individual rewards. Decades of policy from dozens of prosperous nations prove that this balance can be achieved. All we need in our own society is the will to make it happen.

What You Should Think About TANSTAAFL

November 3, 2007

“They take the paper,
And they read the headlines.
So they’ve heard of unemployment,
And they’ve heard of breadlines,
And they philanthropically cure them all
By getting up a costume charity ball.”

–Ogden Nash

Low standards of political discourse are immediately evident whenever “there ain’t no such thing as a free lunch” is presented as if it were a relevant and substantial utterance. I make this claim without regard for grammar. “There is no such thing as a free lunch” is more correct only on that level. The most common usage is to uphold anarcho-capitalist ideals, typically in a disingenuous manner. It remains a slogan with much more capacity to mislead than to lead.

Of course, on some level it is also true. Even prehistoric hunter-gatherers, living brief spans still often packed with more leisure time than we long-lived modern folks permit ourselves, had to expend effort for their meals. Risk, sweat, and patience are elements of big game hunting as romanticized by the distortions of outdated anthropology. More realistic studies reveal that feeding stone age tribes rarely required such dramatic efforts. After all, why waste muscle and weapons to kill antelope more easily herded over a precipice? Why bother at all with large animals when small game is caught with minimal effort in nets or pits? In a time of low human population density, epic exertions for the purpose of obtaining food would have been a sign of crisis or a quirk of cultural machismo — not the normal state of affairs.

Still, the process was not effortless. It is with this reality in mind that free food is approached with such hostility by modern economic thinkers. At a downright childish level, political discussions may take place where sharing this insight serves some constructive purpose. Little kids may not understand that there ultimately is some effort involved in the delivery of any good or service by the public sector. Beyond that level it is merely a tool to distract.

“There is no such thing as a free lunch,” in its typical context is an appeal for the outright abolition of all government. After all, it is even more insightful to make statements like, “there is no such thing as a free cruise missile,” or “there is no such thing as a free aircraft carrier.” Yet if someone were to address defense policy from that immature perspective, that individual would develop a serious credibility problem.

I believe wholeheartedly that big ticket defense spending is an ongoing economic disaster that should be addressed with sweeping reforms. I also believe it is best to raise these concerns by looking candidly at the real costs and real benefits of pending procurements. To say, “well, the missile defense shield isn’t free, you know,” is a feeble argument. To say, “well, the missile defense shield is well on the way to costing more than $100 billion without offering an actual capability to defend against missiles,” is much more in line with responsible adult political discourse.

Yet often when initiatives to improve national health or relieve American poverty are addressed by conservatives, they fall back on TANSTAAFL argumentation. A peculiar twist on the love of liberty can be found at the intersection of economics and right wing lunacy. It is thought that liberty is severely abridged by such “unfair” policies as a 50% top marginal tax rate or the enforcement of minimum wage laws. Yet notions like universal health care or expanded educational subsidy are also seen ways of obstructing the liberty of the rich rather than facilitating the exercise of liberty by all citizens.

John Stuart Mill gets dragged into these discussions all too often by conservatives lacking an understanding of the man’s actual beliefs and works. It is true that he wrote On Liberty, a thorough and articulate defense of social libertarianism. What so many ideologues in this area fail to recognize is that the man also wrote On Socialism. To Mill, “the right to swing my fist ends at the tip of your nose” would have seemed a crude way to make a good point. Yet “the right to amass my fortune ends at the point others in society must endure squalor” is at least as valid in interpreting his ideas.

TANSTAAFL thinking relies on a willful obliviousness to social context. Great wealth is thought to be achievable and maintainable as some purely personal act. The essential support of various civic institutions and a stable prosperous society is set aside through deliberate oversimplification of the discussion. This phenomenon seems born of the Red Scare, and it only spills beyond American borders to the degree that shallow self-centered ideology infests the minds of media tycoons and distorts debates abroad.

Never mind the hundreds of thousands of unfortunate families in urgent need of enough economic support to provide a decent home life for their children — let’s make the debate all about welfare fraud cases instead. Never mind the millions of immigrants aspiring to nothing more than a chance to trade honest work for American wages — let’s make the debate all about the anomaly of welfare seekers instead. Just as the Moon can eclipse a much more massive object like the Sun, somehow darkness spreads as economic conservatives manage to eclipse the whole of a major social need by focusing on a tiny subset of dishonest beneficiaries.

Yet the distortion does not end there. Many people will couple TANSTAAFL arguments with assertions that private charity could and would solve all manner of social problems if only the chains of burdensome taxation would be lifted. The sound of chirping crickets will greet those who listen to history looking for examples of anything resembling an optimal social minimum sustained without government support.

Apparently no wallpaper is too thin to prevent cutthroat capitalists from seeing the enormous holes in their own reasoning. Then there is the false implication that wealthy Americans are of one mind when it comes to welfare policy. This facilitates denial of the way perpetuating (or even accelerating) the concentration of wealth deprives affluent liberals of the freedom to live in a society with less contagion, less crime, and all around less human misery than exists under the status quo. Does the Constitution require the unanimous consent of the rich to implement social policy, or might the normal process apply here? No pundit uttering the phrase “limousine liberal” as if it somehow carried the implication “class traitor” should be taken seriously.

While it is obnoxious for a politically conservative fringe to claim to speak for all of America’s wealthy, it is even more absurd for them to contend that cutthroat policies somehow constitute a pro-growth strategy. The argument that poverty relief, universal health care, et al. actually promote growth by dramatically expanding the discretionary income of consumers may be controversial, but it is hardly without merit. By contrast, the argument that promoting concentrations of wealth will stimulate growth through some “trickle down” mechanism is a questionable assertion in times of capital crisis and flat out bogus in most macroeconomic scenarios.

It is true that at least a little effort is involved in obtaining anything worthwhile. Sound insight into economic policy is no exception to this. Why then would any adult substitute “there ain’t no such thing as a free lunch” for some intelligent contribution to a political discussion? I suspect at the heart of it all is a divergence of goals. Responsible citizens use political discourse to seek truth and promote the most informed and thoughtful perspectives on important decisions to be made in our times. Others seem determined to leave any exchange no more informed than they were at the start. Clearly that is not the behavior of a responsible citizen.

What You Should Think About Advertising

November 2, 2007

“Advertising is the art of convincing people to spend money they don’t have for something they don’t need.”

–Will Rogers

Proponents of capitalism, especially in its most extreme forms, seem enamored with economic efficiency. Though love is a positive emotion, it is also no substitute for reason in the conduct of government. After all, love is blind. Thus it is that love of capitalism blinds its most ardent admirers to a host of significant imperfections. Multiple quirks change the daily lives of participants in a capitalist economy for the worse, yet the price of doing business in the private sector is almost never acknowledged.

It is true that capitalism promotes competition between independent economic entities. It is hard to imagine Thomas Edison as a do-nothing layabout who only produced numerous technological breakthroughs out of a craving for personal net worth. Yet it is not entirely ridiculous to suggest that capitalism promotes innovation. In an area where the underlying technology is relatively new, mercenary motives can drive organizations to invest in genuinely useful research and development.

To some degree this is possible in any enterprise. A local pizza parlor may innovate by popularizing an unorthodox yet tasty combination of toppings. An independent gardener may refine pleasing topiary techniques. Is this sort of innovation truly driven by capitalism?

Living by the bottom line typically produces a hugely distorted perception of value. To the gross domestic product, the excellent $12 pizza has no more value than the dull $12 pizza. If one requires quality ingredients and caring employees supported by a living wage while the other can be assembled by unskilled teens content to be paid the legal minimum, corporate players in the pizza business are as likely to put resources behind popularizing the inferior product they are to actually produce the superior product.

This is one of the ways advertising influences the quality of goods and services available in the marketplace. According to theory, capitalism promotes the creation of value by market mechanisms that reward producers of superior products and make it difficult to peddle inferior products. If the world were as simple as a game of Candyland, that theory might hold true. As it happens, reality drives all large scale vendors to engage in marketing — the deliberate distortion of public perceptions as they apply to the desirability of goods and services.

In fairness, sometimes the role of marketing is not to distort. If the most common sort of treatment for sinus congestion among young children is determined to be unhelpful and pose some small risk, the public is served by campaigns to spread information about which rival products rely on other, safe and effective, substances. Yet when is the last time anyone heard of a marketing initiative that was constructed to stop at the limit of providing facts presented in a neutral context? No economic paradigm prevents the dissemination of useful public information. Yet capitalism’s reliance on brand competition motivates the dissemination of public misinformation.

Nowhere is this more evident than in the niche of prescription pharmaceutical advertising to the general public. In the United States (among the very few places on Earth where this sort of advertising is permitted,) billions of dollars are spent every year to promote demand for prescription pharmaceuticals. Yet as a society we have long held to the notion that only licensed physicians should make decisions about who ought to be consuming which prescribed substances. That paradigm along with capitalism does justify marketing that would influence professional physicians’ opinions about commercial pharmaceuticals. However, it does nothing to justify marketing that drives up end user demand for substances with significant, and sometimes hazardous, physiological consequences.

Capitalism is particularly quirky as it applies to American health care. Short of actual medical malpractice, there is little incentive to promote quality. The elite may benefit from a small marketplace of top tier specialists, but even the average American millionaire often relies on do-nothing insurance intermediaries more than the personal reputations of physicians. Quantity has become the essence of profitability. As with overbooking airline flights, overcrowding waiting rooms and streamlining patient-doctor interactions is a winning strategy in purely economic terms. The end result is a strong incentive to avoid the kind of contentious discussions in which a patient convinced his or her personal happiness can be found in a particular pill would instead be better served by some other medication or even a prescription-free approach.

The problem becomes even bigger when traced back to the work of the pharmaceutical companies themselves. Developing a remedy for a lifelong condition becomes a bad direction for large corporations driven by their own bottom lines. On the other hand, a treatment that controls symptoms only through lifelong consumption of a particular substances — now that’s the stuff of soaring profits. So it is that the ballyhooed brilliance of “big pharma” in our capitalist society is keenly focused on the trivial variation in heartburn pills or allergy treatments. Truly heal a man and he will take your medicine for a day. Make him feel better without actually healing him and he will take your medicine for a lifetime.

In the end, it boils down to the gulf between what is real value and what is incorporated into conventional measures of GDP. Home schooling, public schooling, and private schooling are all approaches that have produced great successes and great failures in terms of preparing children to understand the adult world. Under the lens of contemporary capitalism, these activities have very different values. Yet those values are not measured by the scholastic abilities of growing students. Instead they are measured by the transfer of currency and the consumption of resources as the process occurs. Is that really the most sensible way to find value in life?

To be fair, some people have done great things specifically because of a mercenary mentality. An ideal economic paradigm applied to the real world should recognize the power of profit to create incentives. Yet it is far from ideal to recognize that and only that while minimizing or even ignoring the tremendous amount of value brought into this world by people acting on other motives. All that which is bought and sold as part of conventional commerce is really a small subset of all that which is worth having or experiencing.

I advocate legal commerce making all drugs available to sane adults with no intent to victimize others. Yet I do not advocate general audience advertising for any substance with potentially harmful side effects. A society that refuses to service a real demand for alcohol will find criminal elements prospering from that refusal. On the other hand, a society that openly promotes demand for alcohol will find increased levels of drunkenness. There is a middle ground, and it does not take much brilliance to see how it might be reached through sensible public policies.

It is downright staggering the size of advertising and marketing efforts as a component in the prices of everything from name brand soda to newly manufactured cars. This non-trivial component of our economy directly adds almost no value to the human experience. It is true that advertising supports media, but it is hardly the case that there would be no demand for information and entertainment in the absence of advertisers willing to bankroll major media organizations.

In the end all this economic activity makes our lives busier and costlier, but is it really a net good? The answer to that depends on how much one sees the benefits of capitalism, indirectly but necessarily supported by marketing, as good. Free markets have their benefits, but they also have their disadvantages. Among the largest of them is the widespread failure to recognize that, in spite of the terminology, “free markets” actually come with an enormous price that is almost never recognized by defenders of the purest strains of ideological capitalism.