© Copyright 2006 by Anatole Beck and Nicholas Bingham.
Wages, Hours and Years
An exploration of labor economics.
Ill fares the Land, to hastening ills a prey
Where Wealth accumulates and men decay.
1. Introduction. This is a book about the current structure of the labor market and its growing inability to meet the legitimate expectations of the workers in the industrial world. The project stems initially from an inquiry into the supposed problems surrounding retirement and pensions, but grew as we recognized that no way of dealing with these could avoid making changes in an ever-increasing circle of economic factors: working hours, minimum wages, the value of leisure, the impact of globalization, and even those matters that bards in fealty to taxation hold. And each of these, when altered, made imprints on the others, so that any change would have to take in the whole of the economy. And the changes would have to be dynamic, as circumstances changed, and be coordinated like the art of flying an airplane, which requires constant attention and adjustment to avoid dangerous instabilities.
Although the spur to this investigation lay in the shortfall of the method of providing for retirement within the current neoliberal economic orthodoxy (which we will abbreviate as ABM for American Business Model), we have come to see that this problem is merely the most obvious symptom of a far deeper and more destructive failing of that model and of the theory of the Unseen Hand that 18th Century enlightenment believed would always lead to the most beneficial economic outcome. Without detracting from the huge advance of that model over the maladministered pricing of the late imperial period, we now see that the Unseen Hand, through the workings of the Iron Law of Wages and the Tragedy of the Common, and acting without the subtlety of the Ford Doctrine (of which more below), has dealt inefficiently with the phenomenal increases in life expectancy, general health and vigor, and the productivity of the labor resources available in the growing population. In every economy there is more labor than the ABM has found a useful place for under its assumptions and practices. That is a failing that has deprived the human race of an even greater flow of goods and services, together with more leisure, than has been the lot of humankind in the late 20th Century. In addition, this failure has put our world economy into a state of unstable equilibrium that is threatening global economic collapse. This variety of instability has been endemic in progressive capitalism for the last two centuries, with ever-escalating cycles of boom and bust ending in the depression of 1929, which lasted until the Second World War. This cycle has been reignited after the end of the period of reconstruction from that war. The problem of pensions is with us today and threatens all but the very richest among us. But its solution must be found in the more humane and productive use of these labor resources.
All the ways of dealing with the pensions problem that have been suggested in the economic prescriptions in the popular press are based upon an insupportable burden of saving out of a decreasing total wage packet. The reasons for this lie within the axioms of the ABM, which are based on no greater certainties than those of two hundred years ago, and which have led to repeated collapses of the economies based upon them. But this frailty is compounded by things that should be blessings but are transformed into horrors by the weakness of the ABM: long life with prolonged health and the increasing efficiency of the productive process. All the suggested panaceas are unavailing within the ABM. To build a model of what would work, and what would in the bargain give the coming generations a richer, fuller, more prosperous and more productive life requires the scrapping of ABM and the rethinking of the whole basis of capitalist economics. The first task is to find bedrock, a perception of needs and the satisfaction of those needs that would sustain a prolonged period of prosperity and peace while preserving the maximum of individual freedom and choice. We will present such a reworking and show the benefits it would confer upon an economic system now teetering on the brink of collapse.
This new model in turn requires a managed economy, at least to some degree beyond such effects of New Deal legislation as the Fair Labor Standards Act and the Social Security Act of 1938. It does not require full-blown socialism in any sense, but does rely on a community ethic that would prevent the labor market from being dominated by the
Iron Law of Wages. In type, it would be like the rationing of food during World War II. In this case, it would involve the sharing of employment to maximize production, distribution and the enjoyment of the blessings of longer life and health.
Lacking a managed economy, we see the industrialized and industrializing economies following a short-sighted economic program (called by the labels me-first in the United States and beggar-my-neighbour in the United Kingdom) remarkably similar to that of the first quarter of the 20th Century, dominated by the Iron Law of Wages and reeking of the Tragedy of the Common (of which more below). These phenomena, well known but little mentioned in the popular economics media are not usually discussed publicly by economists, but they brought down a fundamentally sound economy in 1929 and are threatening to do so again. Meanwhile, the visible threats are mainly to working people, especially middle-aged professionals and those previously enjoying prosperity in unionized industrial employment.
A clue to the malfunction of economic theory is to be found in the data economists rely upon to measure its workings. In particular, the Gross Domestic Product (GDP) is a
poor indicator of genuine wealth. We shall introduce other indicia of progress in society. In particular, full employment, measured realistically, is a desideratum of the first order, and we shall show how it can be measured and obtained.
However, this is not a manual for a political program of achieving this end. It discusses what is possible in the sense of making the ends meet, but not how to get there. It is the work of mathematicians, though the mathematics in it (in the ordinary sense) is largely limited to elementary arithmetic. However, it is like a mathematical theory in that it is composed of several parts each supporting the others, like an arch or dome, and that it would fail of its message if it attempted to stand piecemeal. These parts are as disparate, it would appear, as the problems of insufficient pensions and juvenile delinquency, among others. Each part is presented separately as preparation for later combination. We pray for your patience in hearing us out. We do believe it would be worth your while.
It is a bitter paradox that the blessings of longer life, greater health, and improved efficiency of labor should be viewed as problems bordering on catastrophe. Yet these factors, together with a form of predatory economics euphemized under the rubric of
the Free Market are resulting in harder access to employment for young people, brutally long working hours for many of those employed, and early involuntary exit from the skilled trades and professions coupled with demands that the onset of pensions be set later in life. There must be a better way, and there is. It will be the role of this book to set forth one such model. We are mere thinkers. We must leave it to the doers to take this model and enact it, if they think it worthy.
2. The Iron Law of Wages. Early in the 19th Century, David Ricardo enunciated the Iron Law of Wages. Stripped of some of its subtleties, it amounted to the observation that whenever the supply of labor exceeded the demand, there would always be people who, in order to get a job, were willing to work for less than the current rate. In many cases, that involved replacing someone who was already working for more. In an economy (UK) that was then unabashedly dog-eat-dog, this would drive wages ever downward. The only limiting factor was the level necessary to sustain life, and in a sense even that was often not a bar. People died of illness, hypothermia, or sometimes actual hunger or malnutrition. When that continued for a period, the labor pool would become depleted and employers would temporarily compete for scarce labor, raising incomes. The buying power of the workers would sustain a temporary boom, but as the surviving children reached employable age, the cycle would reappear. As Marx was to note, the market would be more vicious with each cycle. In 1929 it collapsed completely. Even then, the fundamentals were sound. The factories that stood idle were fully competent as were the unemployed workers, but the shortage of money kept the economic assets from being put to use.
The Iron Law did not rest solely on the rapacious greed of the capitalists. Even those who wished to pay better found they could not do so, or at least they so claimed. We hear the same reports from many employers today. They cite the brutal competition of foreign enterprises paying spectacularly low wages to people for whom even those are a wonder of prosperity compared with their other options. And this is not entirely an exhibition of crocodile tears. While some predators go beating the bushes to find destitute populations they can exploit, other employers find they cannot adequately compete without joining the predators in this “race to the bottom”.
So it was in the 1930s, as the world struggled to find a way to break the cycle. The New Deal sought to break the Iron Law by matching the labor demand more closely to the supply. The Fair Labor Standards Act reduced the work week from 48 hours to 44, with provision for 40 hours beginning in 1945. World War II, with its demand for production, would re-extend the working hours, with time-an-a-half for overtime, from 1942 to 1945. After the war, the labor unions kept the Iron Law in abeyance until 1980. Then regressive legislation acted to disarm the unions and re-institute predatory considerations to the labor market. Still, the boundaries of national economies moderated the change until the advent of globalization, which once again found an almost unlimited pool of desperately poor people as a base to restore it to its former functioning. We will take up the global economy at a later point. However, if we are to have a prosperous economy, we will need to re-establish the concept of a national (or regional) labor pool. Only in that case can we tailor the functioning of production and distribution to the legitimate needs of the people. The “free market” will not do it. That will lead to penury for those here and those there.
3. The Tragedy of the Common. Another theme in the analysis of employment is the Tragedy of the Common. Its classical form involves the village common, where all were allowed to pasture their livestock. With good husbandry, the animal population would grow, until the Common would become overgrazed. Then, almost like the Iron Law of Wages, the weakest cattle would be sold off. But regardless of what anyone else was doing, the best strategy for any individual was to keep as many animals as possible on the Common, with the result being the depletion of the Common’s capacity to support any livestock at all. Only after a prolonged period of recovery could any be pastured there again, and then only very few.
The most spectacular example today is the overfishing of the oceans. A well-known phenomenon is the logistic curve, which shows the rate of production of new fish. When the number of fish of some species is low, the reproductive rate reflects the scarcity of mating pairs. As the numbers rise, so does the rate of reproduction, until the density of fish creates a shortage of food for them. Then many die between spawning periods and the rate of increase falls off. This gives an S-shaped curve, showing a maximum rate of reproduction at a particular intermediary point. Seen as a world-wide industry, it is for the benefit of all that the population of fish should lie as close to that elusive point as is possible. However, as in the case of the cattle, it is always to the benefit of every small fisher to extract as many fish as possible, independent of the actions being pursued by the others. Only some means of limiting the fishing could sustain the catch at the optimum.
It is here that we encounter an argument that describes the necessary limitation as unachievable. If the limitation on fishing were to rely on voluntary cooperation, then it would always be hostage to cheating. In an economic theory that is cued to short-term individual gain, there will always be cheating. The possibility of voluntary restraint is seen as naively utopian. On the other hand, any attempt at enforcement is seen as draconian, leading to the punishing of people for attempting to better their circumstances.
That way leads to the gulags, we are told. Yet our entire civilization is grounded in the subtleties of voluntary compliance, usually so subtle that we do not even notice it. We will return to this theme later.
Meanwhile we note that the paradox of cooperation is taught only briefly in the area of the Tragedy of the Common, but extensively as the Prisoners’ Dilemma, where the personnel are not productive workers but captured felons. That, too, has its subtleties.
The Iron Law of Wages and the Tragedy of the Common do not have a lot of press when we discuss the collapse of the system of pensions after a lifetime of work, but they should. We will see that in greater detail below.
4. The pensions crisis. The problem of pensions, endlessly rehearsed now in the daily press and weekly magazines, is grounded in the wonderful fact that people are living longer, with vigorous good health to a later age. If we persist in retiring people at the age of 65, a date set by Bismarck in 1880, we would find that the proportion of the population above that age is increasing. At the same time, the fraction of them reported as retiring at a yet earlier age is also increasing. This latter datum is deceptive. While there are indeed some who have “made their pile” while relatively young and are not eager to continue with employment they consider onerous, a growing segment consists of people who become permanently unemployed in middle age in response to forces in the free market. This difficulty afflicts the skilled professions most seriously. After years of attempting to find employment in the vocations for which they have spent years or even decades of preparation, some give up the attempt to find that kind of work. Many are forced into positions for which little training is required, while others seek to get by on their savings, if they have any. These may soothe their pride by accepting the definition of retired, rather than unemployed. Among these are accountants, lawyers, and members of the financial community who have continued to be employees rather than achieving a status in the profession that renders them immune to such treatment. Even the status of partner in a legal or accounting firm is no longer proof against this form of joblessness.
At the same time, pension funds are proving unable to sustain such a high proportion of jobless people. It is suggested that people should work longer to carry the weight of this high “retired” figure. Thus the period of unpensioned joblessness would be lengthened at both ends. Various nostra are adduced for this. At the extremes of the class war, we find the suggestion that people should be made to save a large portion of their incomes to cover the looming shortfall or bear the horrid consequences, while at the other end we hear some drumbeats of a doctrine that those who have profited most handsomely from the increased productivity of labor should be taxed heavily to support those who have enriched them. We shall not enter this contretemps, except to measure what is possible. For instance, the heavy loading of skilled work onto people in their first few decades after university, notwithstanding their being besieged with advertisements suggesting that they “live a little”, militates against savings that are not mandated by law. Indeed, many of these young adults are seduced into heavy debt at usurious interest, so that even with compulsory savings their obligations mount faster than their entitlements. We shall examine below some of the realities of this program of employment excess. At the other end, we see the attempt to raise the costs of pensions through taxes on the rich being defeated by their nearly seamless control of governments in “free market” economies through the use of the persuasive powers of the media they own and rule. These same media put their weight behind suggestions that the working classes be “forced” to save as the only viable defense against penurious old age. When we consider that “old age” might begin in the late forties or early fifties, we see that such a saving would need to consume the bulk of their earnings. However, by the reckoning of most of them, even a modest saving is impossible. If they could manage it, there would be no investment that could compare for profit with the paying down of their personal consumer debts.
One proposal involves a subsidy from employers or the State, the latter usually in tax relief. Even with that carrot, the paying down of the personal debt is the better investment, especially for those at the bottom of the tax liability. Conversely, for those with plenty of money and high tax exposure, this is a good way to enrich themselves further at public expense. (It is noteworthy that in securing the adherence of the poor to any public project, the word “force” is usually used while for the rich it generally rests on subsidies or other “inducements”.) If participation is voluntary, the poor will nearly uniformly opt to spend the money on their needs today, even going further into debt. They hope (usually unrealistically) that something will turn up to make repayment either easy or totally impossible. If participation is compulsory, then we would have the various forms of State pension. Considering the amount to be saved, it would have to have graded levels of input, with the poor paying least. It would then need to be subsidized if it were to pay anything like a decent income. This last consideration would tend to have the benefit be in the form of a tontine, where the survivors profit from the investments of those who die younger, rather than an account that can be claimed by the participants’ heirs. There is much campaigning against this feature of the current State pensions.
This brief analysis convinces us that the search for solution through greater savings is illusory. Since our lives will continue to be elongated through the ministrations of greater knowledge in the future, we will have to think in terms of a longer working life. This requires some way of preventing the longer working life from becoming a longer sentence at hard labor. Indeed, in the wake of World War II, it was expected that the advances in the efficiency of labor would result in more leisure and an easing of the burden of toil. This has in fact happened, but not to the extent envisioned. As we will see below, there is a way to construct a pattern of lifelong working so that it consumes fewer total hours with less of them per week over a longer period of years for the same total product. The key, however, is that there must be jobs, and meaningful jobs, for all who want them, and at a living wage. There was a time, not too long ago, when that was a wildly utopian dream. It is achievable now, at least for the one-fourth of the human race living in the industrial nations, and with possible benefits to the others also. It is the purpose of the rest of this book to show that at least the arithmetic can be adequate. Whether the epidemic of greed set loose by the neoliberal economists can be reined in to allow it is a question for politicians, not mathematicians.
Before leaving this question temporarily, it is worth noting that what a worker gets in any pension scheme is a promise for the future that is paid for in the present. None of these is copper-bottomed. A corporation, such as an insurance company, may find itself unable to meet its obligations and could take shelter in bankruptcy. We have seen that happen. Even a government may find itself unable to deliver and unwilling to raise taxes to the level that would be required. That also has happened. Some politicians have sought to make hay from the fears of young people that they will pay in and never receive. That too undermines the confidence that must underpin any such scheme if it is to be viable. There is something to be said for anything that pays as much as possible of its bills in the present, so that the reliance on solvency, either of a business or a government, is needed as little as possible.
5. Unemployment. Every country tends to minimize the level of unemployment to which it will admit. Jobless people are lumped into categories that would exclude them from the count. The largest group used to be married women, who were classified as housewives if they did not have jobs. The fact that many of these would have had them if they had been available to them was soft-pedaled. Today there are more jobs available to them, but some do not pay enough to cover the costs of child-care, so the mothers stay at home. Of course, for reasons that do not make any sense, the value of their domestic labor is not reckoned in the Gross Domestic Product (GDP). We will take up the deficiencies of this measure of wealth later on. People who are forced into early joblessness as mentioned in the past section are not called unemployed. Those who have never worked are usually not counted, nor those who have despaired of finding work, for any of several reasons. Among these are those who embark on criminal careers. They are not considered employed or unemployed. And those in prison (over 2,000,000 in the United States) are also in neither category.
In the United States and the United Kingdom, as in most of the world, a job is not considered property. However to the average working person, even those on a high level, the value of the job as an asset generally exceeds the value of the person‘s home, or any other item of property. If it is lost and not replaced, it is a disaster of the first order. Yet the prevention of joblessness is not a first order desideratum of almost any government. In fact, the variety of economics favored by employers (and thus also business schools and, derivatively, economists) includes the gospel that a certain level of unemployment, which indicates a much larger level of joblessness, is necessary to prevent runaway inflation. This theory is known by the acronym NIARU, for non-inflation-accelerating rate of unemployment. It is a doctrine that puts the whole burden of inflation on the supposed greed of working people, taking no account of the alacrity with which companies raise prices whenever they think they can get away with it. Thus it meets the needs of employers who foolishly believe that low wages are good for them, not only individually but also as a class. Yet it is in periods of full employment that society is richest, fullest and most rewarding for everybody. This condition, despaired of by Ricardo and Marx but advocated by Keynes and Galbraith, comes about from time to time. Then wages can reach their true economic value and manufacturers can find robust markets for their goods.
We will be writing below about leisure. One of the most important things about unemployment is that it is not leisure, except if momentary and supported by advanced social insurance. Not only does it create need, but often breaks up families, leads to various forms of mental and physical disease, provoking violence and divorce, and often leading to suicide. It is distressing that something so destructive should still be taken, in this wealthy age, as unworthy of prevention. Yet in almost every country, and in the world as a whole, unemployment is rife, often afflicting most of the population. There was a time when the assets of society were insufficient to provide a living weal to all. Today most countries could arrange that if they wished to do so, and the same is true even of the world if it were a single economy, which it is not. The plentitude of unemployment is treated as an economic asset by employers who are seeking a way of reviving the Iron Law of Wages. The poverty of others is thought to be money in the bank for them, and they are politically powerful. That is why the recent campaign to Make Poverty History was a quixotic, if heartwarming, nonsense. The easiest place to find this valuable poverty is, of course, the poorest quarter of the human race. But the transfer of employment thence is destructive of the lives of working people everywhere.
Every economy has, at each moment, a maximum demand for hours of labor each week. If we consider only those jobs that create enough value to be worthy of a living wage, that is less, but still more than enough to sustain all those capable of working, with plenty left over for profit, social benefits, and rewards for innovation and entrepreneurship. It is virtually certain that these hours of work, if apportioned more or less equally among those willing to do it, would require a much shorter work week than is now the standard anywhere in the world. That observation, and the value of the leisure thus created, is a charter for a happier and more fulfilled life wherever it would be undertaken. We take up the arithmetic below.
6. Minimum wages. Having dipped our toes into the questions of pensions and unemployment, we will take our first foray into the issue of wages. In particular, we have the issue of the minimum wage. There are many good reasons for advocating a minimum wage that is a “living wage”. While that is hard to define, we will attempt it in a later section. What we start with is an objection that reputable economists, and even outstanding ones, make to increasing that to some level above the ceiling of the “poverty” designation. Our sense of decency decrees that a full-time job should provide enough to sustain at least one adult and one child. The objection is that such a policy is counter-productive, in the deepest sense. Employers paying the minimum argue that any increase would result in the loss of jobs that are not worth more than the present minimum. We observe that every time the minimum is raised, some jobs are lost, but vastly fewer than were so threatened. This is because many of these are worth more than is being paid for them, by one free market standard. We can call the free market value of a job the greatest amount an employer would pay for it rather than do without that labor. The most screamingly obvious example of this is the essential job of cleaning the hospitals, but there are others involved in the production of food and other “menial” jobs in the health professions. It was once held that a plumber or a garbage collector was worthy only of a low wage. Paradoxically, the hardest, nastiest, most biologically dangerous, and generally onerous employment is often filled with desperate people responding to the Iron Law of Wages, and there are some people like that everywhere. Indeed, many of these are paid below the minimum wage, if one exists there. We call these Ricardian wages, to avoid saltier terms that should not pollute an enlightened work. It is these jobs that might be lost by raising the minimum, and they should optimally be few. We can observe this whenever there is a bulge in the labor statistics at or near the minimum wage, for it is unlikely that any such figure, established by fiat, should exactly rest naturally at any number that is responsive to any particular objective standard.
Against the small loss to the GDP, there can be substantial benefits to the economy as a whole, providing that other measures are taken that will prevent a rise in unemployment. These include an increase in needed public works and other services, such as health and education, which are of value to the public. The slogan that one can benefit oneself more by spending a given dollar oneself than by having it spent on one’s behalf by the public is only plausible on the shallowest of levels and hardly worth a bumper sticker. Over 200 years ago, Adam Smith observed that no one who wanted to go on a journey would be able to have his course paved to order so as to make it possible. And no one who today has a cancer can buy the new knowledge necessary to treat it in time to save his own life. Finally, it is rarely the knowledge that will be needed in the present that can be created to order in time for use. Both Keynes and Galbraith, among others, have made much of this; it is not a new idea. In addition, both of them have pointed to the stabilizing effect on the economy of long-range public projects that absorb the destabilizing monies of a boom and help to sustain a whole society in a downturn. But to this we will add the great economic value of the increased leisure that is likely to occur if the length of the work week is shortened to compensate people for working more years of their lives. That is to be seen below.
Finally, there is what we will call the “Ford Dictum”, which is a generalization of a remark made by Henry Ford and which he might have elucidated from the same observation, though we have no record of his having done so. When he was paying the workers in his factory a wage that was double the going rate, he is reported to have said that he wanted his workers to make enough to be able to afford his cars. He did not have enough workers for the extra pay to be redeemed by increased profits. But he might have gone on to urge his fellow industrialists that if they all paid their workers well, they would all prosper. If he did not say that, he should have, because it was precisely when the general wage level did in fact rise that the rich became super-rich, despite their dogged opposition to the unions that made it all possible. The minimum wage of 1938, raised during the subsequent years, had that effect as long as there were governments intent upon maintaining a floor under the feet of working people. That floor is now being swept away by a redistribution of labor that moves jobs from a place where hourly wages were deteriorating in response to a form of erosion that we will identify as the Brazen Law of Profits, a companion in its explosive effect to the Iron Law of Wages. Although the advance in labor efficiency had been shared with working people during the third quarter of the 20th century, the destruction of the labor unions and the circumventing of the progressive legislation that marked the middle third of that century has since provided a deterioration of the lot of workers as opposed to proprietors. With the enactment of the doctrine of globalization, every job that passed from the first to the third world meant a decrease in demand in the former with only a tiny compensating increase in the latter. The bedrock of worker consumers is being eroded, which will soon lead to another economic collapse. We take up this new observation next.
7. The Brazen Law of Profits. Just as the Iron Law of Wages drives workers to compete in the level of income they will demand as the alternative to being jobless, so the transfer of income to the rich and the super-rich creates a kind of reverse effect. As the level of an individual’s income increases, there is decreasing reward for spending it on consumer products, especially necessities. More is on luxuries and increasingly, with ever higher incomes, on things that offer very little pleasure, Also more is spent on the search for status through conspicuous consumption. At the same time, a larger portion goes into what is described as “investment”, but does not create additional production, and does little to drive the creation of goods and services. These “investments” involve the purchase of the results of investments made years, decades, or even generations in the past. In examining this, we recommend The Paper Economy, by David T. Bazelon, published almost thirty years age. To the extent that the money is going into new factories or laboratories, these are in the developing world, where the principal attraction is not new and better methods of production but spectacularly lesser expenditure in wages. These “investments”, which hardly advance the productive capacity of the human race, are stimulated by a higher rate of profit and a greater shift of spending into what Bazelon identifies as certificates of entitlement. As these certificates are held by people, often the heirs of the founders of other businesses, who do not know how to spur creation beyond buying shares or certificates of deposit, the rate of profit would fall, as noted by Marx. However, these “investors” are not interested in the matter of how a business works. They are more accurately called “proprietors” or even rentiers, and often look only at the rate of return. They may shift from one holding to another according to a horizon often no longer than three months. The officers of the businesses in question are pressed, at their absolute peril, to maximize quarterly earnings and dividends. A great fraction of this effort is made in reducing wages. Often they jettison large numbers of employees who embody the corporate memory, with negative effect on the company’s future prospects. Genuine investment is also discouraged, resulting in such things as the eclipse of the automobile industries in North America and Europe in favor of innovative creation in places like Japan and South Korea.
At the same time that the productive capacity of the industrial world is being eroded by the search for higher quarterly profits, a lucrative alternative seems to have opened up in the lending of money to working people to buy necessities and little luxuries, at usurious rates of interest. For those who read only the profit reports, this looks like good business. However, it does so in the face of a threat of general collapse of the banking system, and with it that of the whole real economy. Great swathes of assets presumed to be liquid are at risk of disappearing in a flood of bankruptcies, starting with workers who cannot pay their personal consumer debts, then also the banks that lent them the money, and the national banks that have lent that money to them and the proprietors who have sought those sources of riches. Suddenly, as in 1929, no one will have any money to buy anything, factories and laboratories will close, and things will stop being made. The present generation of proprietors, who do not remember the Great Depression, are driving us all over a cliff by ignoring the lesson inherent in the Ford Dictum. This disaster can be avoided, if at all, only by restructuring the economy to put more money into the pockets of working people, and by finding a modest form of living that does not crush the economy between the Iron Law of Wages and the Brazen Law of Profits.
The unbridled attention to short-term returns on capital by stockholders who do not in any ways concern themselves with the actual details of corporate management, can only result in a new brand of corruption, in which neither the stockholders nor the executives of businesses concern themselves with investment or innovation. It has been a disaster for American and British automobile companies, but as long as the proprietors demand it, that is what we will see. As all our best managerial talent is devoted to this irrationality and as ever more workers are priced out of the consumer market by the Iron Law of Wages (except for what they can borrow), we can expect a new collapse eclipsing that of the Great Depression.
The restructuring of the economy for the benefit of the People generally need not go so far as Socialism. There are some aspects where the needs are met best by public effort, such as the provision of water and public transport. Then there are some where there is a call for regulation to keep natural monopolies in check without nationalization, though these often fail of their aims by being co-opted by the industries they are meant to control. And there is a third mechanism of control, in which the State enters a poorly served part of the economy as a competitor to private enterprise. These “yardstick” efforts are said to be less efficient than the public ones, on the theory that public enterprise is naturally corrupt. To the extent that is true, they will fail to compete successfully and be withdrawn. Otherwise, the private enterprise would have to persist in the face of an effort that is compelled to return a reasonable rate of profit to the State, not much more than the interest on government bonds. We might even join in the public relations competition by referring to this as NIARP, the non-inflation-accelerating rate of profit. The higher return of private profit would presumably derive from the greater efficiency they are said to exhibit.
8. The leisure class. Somewhat over one hundred years ago, the economist and sociologist Thorsten Veblen published his monumental work on The Theory of the Leisure Class. It was just at the end of the Victorian period, when the wealth of the British Empire had manifested itself in a kind of integration of the proprietor class with the remains of the nobility. Over the course of the 19th Century, the workings of empire and the industrial revolution had increased the wealth of the United Kingdom to a previously unprecedented degree and the vast bulk of the increase had flowed into the pockets of these people. There were gains for working people also, but as in the later decades of the 20th Century, these were small by comparison. The military functions of feudalism were largely antique and the preoccupation of the nobility, and then the proprietors as well, was in the pursuit of pleasure and the generation of envy in their contemporaries through the process of conspicuous consumption, a word that Veblen injected into the language. Significant in this enterprise, according to Veblen, was the exhibition of leisure status by activities (such as attendance at five-day cricket matches) that demonstrated the attendee’s independence of the burden of toil. Pursuing this insight further, he extended it to such excesses as the binding of the feet of noble Chinese women, who had to be carried wherever they needed to go, and other details of life that would demonstrate the freedom from having to do things for oneself, or even of having to work at all. Where the roots of the proprietor class may have lain in captaincy of industry or success in business or banking, the succeeding generations of the wealthy included such activities requiring the expenditure of time and money as the playing of polo or the conquest of mountains or unexplored regions.
Some of the most flamboyant parading of wealth has been restrained since the Great Depression, possibly from a sense of their contributions to first the French and then the Russian revolutions. At any rate, there are large clans still persisting on the dividends of economic success many generations ago. Many of these people grow up from birth with the knowledge that they need not lift a finger to maintain themselves in comfort. In truth, some of them do use the leisure to undertake efforts or careers that contribute to art or to knowledge or the needs of the less fortunate, but these are relatively rare. Mostly they live on their assets and are demanding, as in the previous section, on the “earnings” of their commercial paper, of one sort or another. Some must be having difficulty in finding ways of spending their money in a way that will yield genuine pleasure, as indicated by the craze to buy “unique” objects, like the one who paid six thousand dollars at auction for a cookie jar of commercial provenance that had been owned by the painter Andy Warhol. Seen from a lower middle-class viewpoint, it is hard to imagine how much pleasure one might get from that, but the knowledge that no one else could have this very cookie jar must have carried a distinction for its owner that was greater than the apparently trivial value that he/she placed on that much money.
Among the “perquisites” of this sort of wealth is the immunity from the stresses and fatigue that attends the need to earn one’s living. This gives rise to the contemptuous phrase (not totally without envy), “the idle rich”. At the other end of the wealth scale we find a population that is unable or unwilling to work and is dependent on public welfare to avoid death by hunger, hypothermia, or disease. These are occasionally referred to as “the idle poor” and the description is more deeply marked with scorn than the other. Yet in an economy in which the supply of labor exceeds the demand, it would be well for us to consider whether the extraction from the labor market of those who cannot or will not work is not a blessing. It is irrational that our society is so outraged by people “living at the expense of the public” that we are willing to spend larger amounts of money to find a way to force them into gainful employment than we might spend in finding jobs for those who want to work but cannot muster the resources to make themselves more employable. The mechanism for this paradox is easy to understand. Those who do not work, and who are suspected of willfully “burdening others” are seen as “not doing their share”. There is no awareness that being willing to subsist on the dole leaves work for others who might otherwise be jobless. On the other hand, those who need help or, worse still, added education or assets to find work are seen as demanding of others what they should be supplying for themselves. And those who speak most glowingly of the free market in labor as in everything else do not recognize that by their own theory, the value of the job, even the very same job, is greater to the person who wants it than to the person who would rather not have it (or cannot do it). Thus, this anomaly decreases the total utility of the economy we have under study.
In the case of the idle rich, it is clearly beneficial that those who do not want to work should not do so, especially if the work they might elect, if they needed to have some for the purposes of showing themselves worthy of admiration, might involve imposing themselves on the workings of the enterprises that are the fountains of their wealth. In that case, we are happy to dismiss the issue by observing that “it is their money” and allowing them to buy sloth with it if they so choose. The crunch here is that the envy they seem so eager to engender in their economic peers can also be a source of dangerous bitterness in those who work hard and can hardly make ends meet.
But there is another facet to this discussion of utility. It lies in the possible social value of the way the idle rich or the idle poor spend the time not employed in paid work. Many of those who would prefer to live on the dole are women or men who would rather spend the time raising their children, or writing a book, or painting a picture, or working on matters of social value. Not all, of course, but some. It may also be that the person desperately seeking employment has a talent that would be more than commonly valuable to society than the person who might take the job if forced to. Again, not always, but more likely than that the person forced to do it would be a jewel. And, as noted, there are some whose absence from the world of work might be a benefit compared to the job done by someone who does not even need the income and resents being pressured to do it.
In a world that does not lack for the goods and services that the additional labor might produce, it might be best to look with some toleration on those, both rich and poor, who think that they would rather collect the dole than do the work that they think is available to them. This includes Veblen’s “leisure class” and those whose absence from the world of work might be very productive indeed.
9. The shape of the labor market. We note that in those brief periods when there has been a moderate labor shortage, or even a very moderate labor surplus, the level of satisfaction of working people has been maximized. This flows in part from the fact that many are working at or near the upper level of their qualifications, or possibly just a shade above. There is much fulfillment in that “stretching”, and in the respect that it engenders in the workers. This was the case in the United States during the world wars and during the “Sputnik era” when they were pressing to beat the Soviet Union in the race to the Moon. The need for people who could manage computers, e. g., was far in advance of the supply, so that in addition to the few people of that expertise then, many physicists (who had used computers in their researches) were trained to fill in, then chemists, then engineers, and eventually foreign language teachers, librarians, and anyone else who had credentials attesting to their ability to learn. For people in the “knowledge business”, it was a very happy time. By contrast, when there is a substantial labor surplus, we often see highly trained professionals, as we do now, working at jobs that make no use of either their educations or even their talents. For many of these, after they are thought to have been “used up” in early adulthood, the demotion to menial work, or even the dole, is like a prison sentence, decades in length, until they can begin to draw their pensions, whatever these are worth.
Since, in the industrial world at least, we have decided that we will not tolerate the situation in which people actually die of penury, we put many resources into seeing that is at least satisfied, though in truth we often fall short in the level of support that we give to this worthwhile undertaking. In the United States today, there are reported to be 37 million people in families that are continually short of food, and 43 million who have no health insurance, so that they will get emergency medical care only when their lives are directly in danger, and often not even then unless they can reach the right emergency room. Many people who object to the “welfare state” say that they have no qualm about paying the cost of sustaining the jobless, but wish they would do any job, whatever it is, rather than sitting idle and receiving the handout. Since the minimum wage is also often insufficient, the same applies there too. In the late 1930s, much of this function was borne by public works designed to ease the Depression, but there was always complaint about the funding of the idle.
We posit that the most efficacious way of dealing with this problem is to assure that there is meaningful work available for everyone, or at least nearly everyone. At the present time, no industrial nation has enough jobs for everyone, even within the restrictions of maximum hours and minimum wages. Doing so would certainly raise the costs of producing goods and services, particularly those of lowest value. Yet to the extent that this would serve tofill the need for a full employment economy, that would be preferable to most of the public than paying for it through the dole, based on taxes. This could be accomplished by shortening the work week to whatever extent was necessary to have jobs for all. Such a program would have the very salutary consequence of creating more leisure, which we do not value as a luxury and do not reckon into the GDP. The transforming of unemployment, which is corrosive of the public good, into hours of leisure for working people, is a benefit whose value we will try to measure by a “thought experiment” we will suggest below. First, of course, we must make a clear distinction between unemployment and leisure. The value to society of 39 people working 40 hours a week and one unemployed is far less than if the 40 people were each working 39 hours a week. If that is not obvious, then something is deeply wrong with our reckoning. However, it is not all as simple as that. The “rationing” of employment to achieve this end would likely involve increases in wages and a corresponding loss of some of the least valuable jobs. In addition, if the decrease in hours were substantial enough, it would surely result in the introduction of additional people to the labor market, notably women who are now classed as housewives and middle-aged people now classified as “retired”.
A valuable diagnostic in this analysis is the number of people working at or near the minimum wage. Each job has a natural maximum value, the rate at which it will not be paid for, and would disappear from the economy, if that wage had to be paid to get it done. Many of the jobs at or near the minimum wage (or even below) are actually far more valuable than that. A restricting of hours would have the effect of raising the wages of those who have such jobs. (The cleaning of the hospitals is the example always given in this analysis.) As working hours are restricted and the surplus labor begins to disappear, wages at or near the minimum would increase, and this increase would be felt in lesser degree even further up the wage scale.
The model for this sort of rationing of employment can be taken from World War II, during which there was a rationing of food, much to the dissatisfaction of those wedded to the slogan of the “free market”. There were those who had plenty of money, and were willing to pay whatever it would cost to fill their needs better, and others who would gladly have sold at the prices those were willing to pay. But it was recognized that the social costs of this would be disastrous. Such a social tempering of the free market caused prices to remain within the bounds set by the governments of the day, though there were, and would always be, some black marketeering. The same would undoubtedly be true of the rationing of jobs, but modest mechanisms of enforcement could hold that to the minimum that a society could tolerate. We will indicate some such mechanisms below.
The dominating diagnostic in this analysis is the number of hours per week that the economy would demand to fill its needs for goods and services, paid at a living wage, divided by the number of people available for work on that basis. As the wage increases and the hours decrease, more people join the labor pool. At some point, supply meets demand, and the “shape” of the labor market changes. Instead of having a large lump of cheap labor at the bottom of the wage statistics, as today, we would see a “slimming” of those data to give a more even distribution of earnings, petering out at or near the minimum wage. We will examine that prospect in more detail below.
10. The keystone. The basic recommendation in this book is a program of full employment as a basis for social peace and satisfaction, buttressed by an economy that can provide most of the goods and services that people rely upon and vastly more leisure than is now a feature of our economic life. The first boundaries we must set down if we are to defeat the horrors of the Iron Law of Wages is the definition of what constitutes an economy. For the purposes of this exposition, we postulate a territory that is capable of producing the goods and services required by its population and yet is compact enough to enable a central economic authority to provide the employment on a general equality of access. This suggestion is to some extent protectionist and designed to prevent the vast store of desperately poor people in the world being used, via the Iron Law, to impoverish all the world’s working people, as appears to be happening with accelerating volume now. This requires considering the access to employment as an item of property for working people, a concept that has never been introduced into the legal system of any states save a few, and then only partially. Yet as mentioned earlier, to a worker who has a job and who would be hard put to replace it if it were lost, it represents an asset greater than any other and possibly greater than the sum of all his/her other assets. In considering this, we need to delve a bit into the nature of property, not to the deepest philosophical level, but fairly deeply. We do this in a world in which the most arcane of assets are called property, with laws designed to create that definition. In today’s world, a tune may be property, or a slogan, or even the prefix Mc, if applied to certain other words. A man, or a corporation, may own the knowledge in someone else’s head, if the requisite circumstances obtain. One may own the photographic image in the camera of another, if the image is that of the person claiming ownership and the photographer is using it for commercial display.
One communal asset of a whole nation’s workers is a system of employment that protects their access to their jobs. It might reside in such legal structures as the National Labor Relations Act, which protects their right to belong to a union without suffering retribution on that account or to the Fair Labor Standards Act, which lays out the structure for minimum wages, maximum hours and overtime pay. In a real sense, it is as much the property of the nation’s people as the minerals in their subsoil or the crops in their fields. No one would maintain that these last are the communal property of all of the world’s people, to be taken freely by anyone who can gain access to the property in question, by fair means or foul. And a nation’s borders are likewise the property of its people, to be treated under the laws those people legitimately enact.
In recent years, the property value of many nations’ labor laws have been “stolen” by those who use the World Trade Organization to export their employees’ jobs to places where no such protection exists, or where the Iron Law makes wages so meager as to amount effectively to the same thing. And the free import of goods, whether physical or intellectual, that are manufactured under the pernicious use of that Law are a similar theft of that nation’s communal property. Globalization has been enacted into international law and protected by treaties specifically to enable this theft of the communal property of the working people of the industrial nations. In a real sense, those working people are the legitimate heirs of earlier generations of workers that have struggled, often against brutal oppression, to obtain that property. As mentioned before, the buying power of those workers who still retain some of the benefit of those laws is the bedrock of the economic welfare of the world, including that of the proprietors who imagine that they can profit handsomely by exporting the jobs to places where desperate poverty will drive miserably poor people to work for wages that can only be described as “wage slavery”. The protection of the inheritance of the workers of the industrial world is a legitimate concern of those governments that wish to enact it, but might well be the source of a revolutionary fervor in those who come to believe that their birthright has been stolen.
This is not to say that the workers of the industrial world should be reduced to the same degree of selfish depredation suffered by the workers of the “third world” as is evinced in the companies that will hire them for the cost of bare subsistence, which we will refer to as Ricardian wages. Nor, on the other hand, does it mean that there is no legitimate need to assist the third world’s workers in improving their lot in life. We have no argument with the wish to have the whole world reckoned eventually as the economy for which the human race needs to plan and provide. However, this analysis is not intended solely for that ambitious time. We consider that whatever is the economy to be planned for, it can be bettered by the proposal we will make. But even in today’s far-from-perfect world, there is something the industrial world can do to help lift the others without sacrificing the fruits of centuries of progress. Indeed, we will propose later a mechanism for easing the plight of those workers that is far better than their being recruited into the new sweatshops. But that is for later. Right now, we will return to the keystone proposal of this book.
In order to assure that all legitimate workers have equal access to employment (though without necessarily any guarantee of equal wages), we propose a lowering of the work week to the level necessary to engage all the willing workers. In order to make this economically feasible, we also propose to elongate the working life until about the age of 80 as the threshold of retirement . This is in consonance with the increased life expectancy and the greater vigor of older people compared with the circumstances that obtained in Germany in 1880 when Otto von Bismarck enacted the age of 65 in that role (in a nation where most labor was still demanding physical toil). This proposal would involve a diligent monitoring of the specifics of how many people are employed in each of the recognized career groups and comparison with the available labor force seeking employment there. These data should be compiled continuously by a national service that would attempt to match the available people with the jobs seeking workers. Depending on the findings, the work week could be shrunk or expanded, with the complementary goal of always having enough willing workers available to meet the requirements of the employers. The same authority should be able to adjust the minimum wage as conditions indicate. As with the metaphor of flying an airplane, the adjustments should be made gently, perhaps no more than one hour per week and/or ten cents an hour in any one month, with a decent lead time enacted of for any such changes.
There would surely be some griping among those who consider that their higher value to employers should command not only a higher wage but also a greater share of the scarce resource that is employment. This is a natural response, as it is in any situation where the public weal indicates the rationing of any valuable resource whose distribution by price alone would result in social disorder. Yet it seems to us that most people would prefer that to the other obvious alternatives: to allow people to work more and tax them more heavily in order to support those who cannot find work, or to let those jobless die of need. We have noted that we have a social consensus not to allow this last, and those who think otherwise may argue for it but are unlikely to find many supporters. And if one must sacrifice the fruits of one’s labor to support those who cannot or will not work, then it surely must be most satisfactory that one should accept in partial payment the hours of leisure that would attend the yielding up of that part of one’s labor that would pay the cost of creating a full employment economy. Even at that, there would remain a residue of those who would not be working, for one reason or another. But for those who are lifted out of Recardian labor, there would be both a higher hourly wage and a shorter work week. Finally, as the work week shortened and the working life increased, there would be more people willing and able to work the shorter week, so that the lifting of the need to save money to fund retirement would itself be a partial monetary reward for the generosity in sharing the access to employment.
Of course there are details, so many details. As with any complicated plan, these must be plumbed in some detail. We do not claim to have found them all, but we believe that those we have found will, on balance, make this proposal even more attractive, and we give over the following sections to their consideration.
11. Starting slowly. The allocation of jobs should not be made by sudden edict, nor by an absolute prohibition. In the Fair Labor Standards Act, the initial attempt was by requiring overtime work to be paid at a 50 % premium. Over the course of time, that provision became incorporated into the wage packet. Not only was the overtime not a disincentive to longer hours, but many union contracts began to specify a shorter work week with a guarantee of a minimum amount of overtime work. The configuration became an item of collective bargaining, with overtime pay being considered a perquisite of the contract. To use the higher costs as a disincentive, they need to be a regulatory tax, paid by the employer but not received by the employee, so that both would wish it not to be needed. The tax should be dissuasive but not prohibitive. It should start at a modest rate and increase slowly, and eventually be modified as needed to control the labor market for the general good. In the United States it should start at the statutory 40-hour week, with the deterrent tax growing with time. In Europe it should start with the 48-hour week that is now maximal in most of the continent. At the same time, the time limit where the tax should apply should start to shorten. The reduction by an hour a week would not result in a monstrous change in the labor picture, but companies with large work forces would have an incentive for hiring about 2 – 3 % more people. Some of these would come from the involuntarily “retired” with the skills that are needed. Others would come from people employed beneath the level of their skills. This latter would open new jobs in that lower paid cohort. Eventually, the pool of people willing to work for the lower wages, and especially the minimum wage, would dry up, and we would see a configuration in the labor market without a lump of Ricardian labor at about the minimum wage. Except for unintended consequences that might present themselves and need delicate attention, the total wage package would have changed only slightly, except for those jobs where people were available for work at quite low wages and employers would need to offer more realistic wages to obtain the workers they required. To the extent that this happened, the effect on the economy would be to put more money into the pockets of those who would probably be spending it fairly promptly, and that would be good for the prosperity of all.
A small number of jobs would disappear at the minimum wage level, those that were genuinely not worth more than that very meager pay. We will be analyzing the effect of losing that factor of the GDP shortly, and comparing it with the gain in leisure. But at this level, the gain in leisure would come at a modest price in increased labor costs compared with the value of the leisure gained. Especially significant is the gain to those who were previously unemployed, whether officially or beneath the radar, as indicated earlier. Unemployment is not leisure. It is so far from being leisure that many of the retired take up voluntary work from a mixed desire to benefit the human race and a desire to escape the boredom that afflicts many of those when the absence of work robs them of the context in which they had framed their days and their weeks. In terms of social gain, every hour of unemployment that is alleviated and replaced by an hour of additional leisure for a “fully employed” person is a large gain in utility, to be measured against the cost of working fewer hours and thus probably getting a lesser weekly earnings.
The case of a person who leaves a minimum-wage job to take a higher-paid one at fewer hours is subtler. There each hour of work replaces an hour previously assigned to a higher-paid person. If this results in the discontinuation of the minimum-paid position, we need to ask whether there is a genuine gain in leisure. To some extent this depends on the personal needs of the two individuals, and that is difficult to measure. But in the mean, we can do the thought experiment of attempting to assign a reasonable estimate. We begin by asking what any particular person would take as compensation for working an extra hour a week, and what he would pay to buy an additional hour of rest. In some sense, we would expect that these two figures would be nearly the same, and represent the marginal wage rate acceptable to that person. In fact, we would probably find that the figure for extra work is notably higher than what one would pay for the extra leisure. Still, if we were to arbitrarily consider the marginal hour to be worth what the worker was being paid, that could reasonably be expected to miss the mark by about the same proportion over the whole of the wage scale. On this calculation, the gain of leisure in the total of the higher-paid individuals would be worth more than the loss of leisure in the lower-paid, and the gain in leisure by those who move up into the paid economy out of the bondage of unemployment would more than compensate for the loss of GDP due to the increase in the cost of obtaining labor.
It follows that even without any modification in the statutory minimum wage, the economic benefit of sharing the employment in this way would energize the economy and in addition add greatly to the notional value of the increased leisure.
12. Advantages I. The major advantage to the rationing of labor, and the one which initially motivated this study, is the protection of the right to leisure at the end of one’s working life. In the present context, that would require the saving of a vast portion of one’s earnings to cover the gap caused by the decreasing age of nominal retirement and the retreating age of pensionability. This would be increasingly difficult in an economy in which the reward for unskilled and semi-skilled labor is being eroded. In addition, these savings are all in the form of money taken now in exchange for the promise of a comfortable retirement later. The rationing of employment to meet current needs from month to month would substitute the banking of employability in place of at least a large portion of the saving of money. The leisure that would attend this arrangement would be delivered in current hours, not dependent upon the fulfillment of promises in the future. For reasons we will calculate below, that could well be expected to be a work week of three days (24 hours). The beginning of one’s “retirement” would come at the end of the first week of employment, and the product of a lifetime’s work would still be the same. This would come in part from the increase in the productivity of labor that has always attended the shortening of the work week. In addition, and this is very important, the short work week, especially during the vigorous ages between 65 and 80, would be for many preferable to total idleness, even without the financial advantage. There are social benefits in working some, so that many people do volunteer work in retirement, even in jobs that do not fully engage their interests. If a working life of 72,000 hours, spread out over 60 years is as productive as 90,000 hours squeezed into 45 years (and there is good reason for believing that this is the size of the trade-off), then it bespeaks an opportunity to enrich human life that should not be missed.
The next advantage is the benefit of rationing the scarce resource of employment rather than fostering the insecurity and stress that attends a world in which each worker must obtain advantage only by depriving another of more than he himself is gaining. This form of “unseen hand” does not act to the greatest good of the greatest number, or even to the maximum total good. The social benefit is thus maximized by cooperation rather than cut-throat competition.
And the prosperity of the economy as a whole is benefited by putting more of the total wage packet in the hands of those who need it more and will spend more in the immediate future. Again the Ford Dictum. Security of future prosperity eases the choice to spend in the present, replacing the unstable impetus of consumer debt as a way of making consumers out of earners.
Another major benefit concerns the possibility of expanding one’s horizons. There are many people who make a choice between an activity that has special appeal, such as an artistic of entrepreneurial venture, specific religious or political efforts, or further education on the one hand and the security of paid employment on the other. While it would defeat the purpose of this proposal if many people were to take up a second paid job (and this would need some monitoring to deter), something like a 24-hour work week could be combined with 9 university credits each semester to make full-time employment combined with school at more than half time a clearly workable option. In today’s world, the equivalent combination (40 hours of work and 16 university credits) is often hard to manage. Then there are those who would like to start a small business, but cannot find the motivation after a full week’s work, those who would play in a civic orchestra or a neighborhood Savoyard group, run for elective office or preach occasionally in their local church. All these could use the extra time to make life more meaningful, and not wait for the (often illusory) promise of that at the end of their life’s work.
It would be especially salutary if everyone were to accept the conclusion that such a restructuring of the economy would be to the maximum benefit of everybody. Unfortunately, that is not universal. There remains the hope (for most people a delusion) that they can work very hard for a shorter period, become very wealthy, and retire in splendid riches early in life. There are two ways of approaching this fantasy. One is to mandate the format that is believed to be the best for the general population taken as a unit, just as we do when we require rationing. The other is to allow a special escape valve for those who insist upon it, with provisions that would prove unpleasant (but not disabling) if the hope were in fact a delusion. Within reason, some accommodation might be arranged for those who insist upon gambling on the reality of their vision, but not at the cost of allowing them to hedge their bets so as to profit from the prudence of others if they turn out to be mistaken. But that is a detail for later. First we must explore the major results.
13. Disadvantages I. There are a number of untoward outcomes that are considered possible, and we will take the major ones now. First we will consider the cost of labor. It is true that we could expect the average cost of an hour’s work to rise. However, we do not know the degree to which that will be offset by an increase in the efficiency of labor due to the shorter week. That will be discussed in a section of its own. To the degree that the total cost of labor is increased, we reckon that is more than offset by the lesser need for welfare payments. As mentioned before, the increase in wages up the scale makes for more consumer demand than the dole. Thus, there might even be more production, at a greater efficiency. If the benefits of that increase are shared between labor and the proprietors, the net cost of the increased leisure might be small, or actually result in a net gain in GDP as well.
Other concerns over GDP involve the possible loss of minimum wage jobs, and the products they create. This is a serious concern of many serious economists, though we suspect that only a very small portion of those jobs are being paid at their true value, as measured against non-Ricardian free market standards. That is, the work will be paid for at prices that better reflect its actual value. To the degree that this is a valid consideration, it can be dealt with by the process of slow change, which will tell us when we have reached the point that we are losing more than we are gaining. In any case, we are today so addicted to the illusory benefits of cheap labor that employers are complaining that workers in the industrial world will not wash dishes or pick lettuce for any wage. To answer this, we observe that people will clean sewers or pick dates for the right price, if it would be paid. There is no need to import desperate people whom we can exploit for that purpose, especially if we then have to pay survival rations also to the people who would take the jobs under the right conditions. Scare stories about the price of lettuce at a wage we would pay to get it are obviously highly exaggerated, and if not, then lettuce is a commodity we can live without. As the work week shrinks, the number of minimum wage jobs shrinks by the number of those that are paid more. As long as there are a substantial number left, the total remains the same. It is only when the demand pushes up the minimum paid above the required wage that we start to actually lose the labor in question.
An important consideration, however, is the loss of the freedom to work more hours than one’s share, in some sense. As mentioned above, the unseen hand does not enrich those at the bottom of the wage scale. On the contrary, it lowers the average income, as has been noted for over 200 years. The benefits to those at the top are actually substantially less than the losses to those lower down, especially if one considers the cost of welfare payments and/or the losses to everyone due to crime. This will be discussed as a separate section below. And to that we must add the unreckoned cost of misery, disease, and early death. It is sometimes alleged that the high rewards to the rich are necessary to entice them to do the work of organizing the economy. To whatever extent that is true, the rewards to them today are far in excess of the figure necessary for that. Indeed, if more of the overpaid executives would kindly retire early, the opportunities available to genuinely able people would add optimism to the world of the executive class. As for the rentiers, they already reap far more than is necessary to keep them in idleness. The phenomenon of managerial reward has been the subject of much cynical criticism, and will also have its explication later on.
Finally, there is the objection that is hidden in the rubric NIARU, for the non-inflation-accelerating rate of unemployment. This seemingly neutral acronym conceals a doctrine to the effect that only the Iron Law of Wages applied to low-paid workers prevents runaway inflation, and that therefore not only is it good public policy to maintain unemployment at that level, but that there is some public duty on those workers to tolerate those wages in the interests of public order. Anything else, it is sometimes suggested, reeks of “class warfare”. Indeed, if one accepts the axioms of an unlimited “free” market in wages and prices, the argument becomes valid. As prices change, and as expectations rise, wages increase only slowly. For unionized workers, contracts come up for renewal only from time to time, and for non-unionized workers only when they make demands, which are often unwelcome. For those who live on annuities pensions or minimum wages, changes in income are even less fluid. By contrast, prices can be changed every day, according to the whim of the seller, or even more often. It follows that when wages increase from time to time, employers can immediately raise prices to match, or even more. If employers have determined that their rates of profits should not diminish, or even that they should advance proportionately with wages or more, it is within their ability to do that, up to the willingness of their customers to pay it. If that willingness of the customers is advanced by an argument citing increased wages, that often helps the medicine go down. Thus a desire of workers to advance their wages, whether to meet increasing prices or otherwise and the desire of employers to maintain or advance their profits combine to cause inflation, and if each feeds the other, then there will indeed be an acceleration of inflation, unless that should be constrained by some other force. If workers and pensioners can obtain a protection against the erosion due to inflation, as e. g. by a cost-of-living adjustment (COLA) or, even more, a link to the total level of incomes, that would in effect guarantee each labor group in a laissez-faire way a fixed portion of all personal incomes. In the same way, the informal common understanding of sellers guarantees them also such a fixed share, and if the shares thus established total more than 100%, then of course prices and wages will chase each other in a runaway inflationary spiral. The argument that this is all the fault of the lack of moderation in the workers rests on an assumption that the “free” market allows the raising of prices at will by the sellers, unlike the labored process by which workers, pensioners, and annuitants obtain increases. It seems to lump the ability to raise prices with the freedom of speech and religion as fundamental components of human dignity, unbound by social responsibility. There is no doctrine of non-inflation-accelerating rate of profit (NIARP) to balance the call for moderation in the working classes. The suggestion that some mechanism for checking the unlimited option of raising prices should be found to balance the NIARU, putting a portion (or even all) of the moral burden on the proprietors is denounced as “class warfare”. It is, and so is NIARU. We will take up the whole issue of class warfare separately later on.
14. The shrinking work week. The first strike recorded in the American colonies was in 1776. Prior to that time, the carpenters of Philadelphia had worked mainly only in the summer, mostly building houses. They worked seven days a week, from dawn to dark. The strike was for a “civilized” work week of six twelve-hour days, with a rest day on the Sabbath. At some time in the early 19th Century, that was reduced to six ten-hour days, and then to forty-eight hours. There it stood at the onset of the Great Depression The New Deal created, the Fair Labor Standards Act of 1938 (aka the Wages and Hours Act),
which lowered the work week to forty-four hours with a promise of forty hours starting in 1945. As a deterrent to overtime, that was required to be paid at 150% of the regular wage. And there the matter has stood in the United States since that date. Meanwhile, in Europe, the regulation of hours has been scatter-shot, with Germany and France attempting a 35-hour week in the new century. The employers, turning a deaf ear to the benefits of having a prosperous working class, have done what they could to defeat that effort, but have not pushed it much higher than that. In the meantime, the EU had adopted a ceiling of forty-eight hours, about 100 years behind the United States. Even that has not attained the concurrence of the United Kingdom, which demands the right for their employers to extract even more work per week, with all the attendant problems.
With every decrease in the work week, the objections have been the same. The workers would waste the hours in drinking and idleness, vandalism and crime. Many, it was thought, would take second jobs, thus increasing unemployment instead of lessening it. It has never gone that way. Each such lightening of the burden of toil has had the result of improving the quality of life for the working people and reducing the problems of society in providing for that class. The simple truth is that life has become sweeter for most people, and that need has lessened. At the same time, it has been noted that every such reduction has increased the efficiency of labor. A notable example was that of the UK in 1973, when the shortage of oil dictated a three-day week. Instead of the anticipated decrease in production of 40%, the actual figure was 20%. In simplistic terms, it is easier to keep one’s nose to the grindstone when one is nearer to the end of the task, whether it is an individual undertaking or a week’s work. And this observation will be factored into the details of the proposal in this book.
In all economies today there is more labor available than is demanded by the free market in goods and services. The only force tending to hold the Iron Law of Wages in check at all is a communal (and thus artificial) managerial regime that would prevent the destructive forces of interpersonal predation from perpetuating the degree of unnecessary poverty. This would have the effect of increasing the productive capacity of each economy that used such constraints to advance the Ford Dictum, but it cannot work if there are elements within the economy seeking advancement by underbidding the others. It must be said that the natural shortage of material resources would change the mix of goods and services in such a changed economy, probably directing more labor into health, education, community security and other civic values. This in turn would make more labor, and more efficient labor, available for a longer and a healthier life for our posterity. But the expostulation of this must await the analysis (below) of the growth of labor effectiveness.
15. The efficiency of labor. It is remarkable what has happened to the efficiency of labor during the 20th Century. When we consider how much was done by hand only 100 years ago and how much is today done by machines or robots of one sort or another, it is a wonder that we still require even as many days of work in a typical life in the industrial part of the world. It is interesting to retrace a bit of the history of that century to learn first what portion of the gain was obtained by labor, how it was done, and what was the mechanism by which so much has been subsequently clawed back by the employers.
Prior to the Industrial Revolution, all manufacturing was done by skilled artisans working by hand, as the word connotes, and the first big breakthroughs were in the cloth trade, where such tasks as spinning and weaving were mechanized and the labor consisted of the tending of the machines. This was classed as unskilled or semi-skilled, according to the needs of politeness. Yet over the course of the first half of the 20th Century, despite the depredations of the Depression, work began be transferred to the machines. As an example, the engine blocks of motor cars had their pistons and valve guides individually drilled by skilled machinists, with hours spent in the penetration of cast iron. Not long after World War II, Henry Ford II took Walter Reuther, the president of the United Auto Workers, to his new plant, where there was a machine automatically drilling the eight pistons and sixteen valveguides of the famous Ford V8 engine simultaneously, to the level of precision formerly requiring the skilled labor of the machinist. It is reported that Ford addressed Reuther with the challenge, “Do you think you can enlist this worker in your union?”, to which Reuther replied, “Can you sell him a car?”
The advent of such machines offered employers a vast possibility of disposing of whole platoons and battalions of well-paid workers, and were a threat to the recovering economy and to the people who had endured the sacrifices of a World War to protect the fortunes and privileges of men like Ford. The role of the unions was to secure a piece of the benefit for the working people they represented. Through diligent bargaining and the threat of closing down whole industries by strikes, they did manage to get some but not very much. About one third would be a generous estimate. A large part of the benefit in reduced labor costs was effected by a gradual introduction of the mechanization, with the displacement of workers being done through attrition wherever possible, and replacements not being hired. However, this had the effect of passing on the problem to the coming generations, to the chagrin of the future working class.
At this point, we confront the lost role of the unions as representatives of the whole working class. Once the New Deal had taken hold, including the enactment of labor legislation enshrining the role of the unions as protectors of working people, a campaign of red-baiting ensued, starting in 1938. The idea of unions was attacked as communistic, bolstered by the observation that some of the union leaders were, not surprisingly, communists. Some were even Communists. Employers who had been accustomed to think of themselves as masters of the workplace were embittered to find that their power, once sovereign, was subject to public standards of decency and fairness, not to mention safety. This was presented by them as tantamount to Bolshevism, which was not only inconvenient to them but also foreign and thus suspect on those grounds. Many unions had to battle hired strong-arm men, such as the Pinkertons or worse, in order to organize at all. The coming of the war meant that this particular form of class warfare had to be controlled, at least temporarily, and that did indeed happen for the duration of the conflict. But with the end of the fighting and the resumption of the effort to bring down the Soviet Union, which was said to be attempting the subjugation of the whole European continent, this class struggle resumed. At any rate, an understanding was reached between the Republican Congress and the non-communist leadership of the labor federations that the unions would be spared from obliteration only if they would restrict themselves to negotiating the wages, hours, and working conditions of their own members and eschew the broader welfare of the whole of the working class. Indeed, the very words “working class” were taken as the instruments of insurrection and forbidden, and have largely been absent from general use for over half a century. The token of the servitude of the unions would be the expulsion of any officers that were designated as communists by the U. S. Attorney General, who would convene a special department for the purpose. A list of organizations was created, membership of which was taken to be indicative of communistic leanings, and treated essentially as evidence of treason. The unions complied, and became in effect personnel agencies for the employers, with dues paid by the workers.
In this atmosphere it was easy, indeed compulsory, for the unions to sell out the interests of future generations of working people in order to survive, at least temporarily, the onslaught of the accelerated mechanization and disenfranchisement of labor. One result is that in existing areas of employment, even with the most generous settlements with the appropriate unions, attrition would in time erode the size of the workforce and leave all the benefit of increased efficiency in the pockets of the proprietors. A second result is that the existing unions would have no right to campaign on behalf of the new generations of people being hired for new areas of employment. Together, these have meant that opportunities of employment in a unionized setting have become rarer, and a new force, called technological unemployment, has arisen to put muscle back into the Iron Law of Wages. At the same time, the converse of the Ford Dictum acts to deprive the employers of the best part of their market, except for people buying consumer goods with borrowed money that they will never have the means to repay.
As a consequence of these facts, the benefits of increased efficiency of labor fall increasingly only to the proprietors and in many cases act to bar the door to a prosperous life to an ever higher portion of the working class. Thus they fear innovation and new modes of efficiency, while at the same time their own children are shut out of higher education by costs that they consider insurmountable, while uninspired children of the proprietor classes pay the costs of this increasingly valuable certification with ease.
Another facet of the increased efficiency of labor is connected with the shortening of the work week. Over the course of 230 years, this shortening has always been accompanied by an increase in the output of product per working hour. This increase has never been enough to offset the shorter hours entirely, but have softened the cost to the employers of any increase in hourly wages to help support the weekly pay packet. As mentioned before, the three-day week worked in 1973 by British workers in manufacturing industry produced only 20 % less than the regular five-day week by. This reflects the general rule that it is easier to work harder when the end of the day, or of the week, is already in sight. A comparable observation is that no sprinter can run 200 m in twice the time for 100, nor 400 in twice the time for 200. In a similar vein, it is almost certain that a factory worker can do more in three three-day weeks than in two of five days, and can likely at least match the output of three five-day weeks in four of three days. However, it is unnecessary to set the work week by fiat in advance. As the week shortens, so we would see two forces working in opposition: more people would enter the labor force and the number of hours taken to accomplish the same ends would contract. Also, a redirection of wages to needier people would result in a greater demand for the output of industry. As adjustment is made to all these outcomes, the modifications would suggest themselves.
A final source of efficiency enabled by a shorter week is shown by the results created in a factory in France when the 35-hour week was enacted. The owner offered to pay 40 hours’ pay for 35 hours’ work if it were done in three days, and then ran the factory in two three-day shifts, with mixed assignments. She found that by using the fixed assets more efficiently, she could increase her output by 30 % with only an increase of 10 % in her labor force. The fixed costs (machinery, rent, taxes, &c. could be spread over a greater output, yielding more profit.. Indeed, a wage of five days’ pay for the four days Monday-Thursday and another for the three days Friday-Sunday would also likely increase profit. All this falls under the rubric of the greater efficiency of rested labor rather than the overworked kind. It is likely that older workers with greater seniority and no children at home would elect the same pay for the lesser hours, as indicated below.
At one time, an automobile dealer in Berkeley, California introduced an additional five hour shift following the regular working day and paid so that the shorter hours would yield the same daily wage. That did, in fact, attract the older, more experienced workers. It is possible that the same mechanism would again give more profit by more utilization of the fixed costs, so that these would support four shifts: regular at four eight-hour days, weekend at three eight-hour days, late at four five-hour days, and late weekend at three five-hour days, all at the rate paid previously for five eight-hour days. Under appropriate circumstances arrangements like these could maximize the usefulness of machinery, which today tends to become obsolete long before it wears out.
We hold that the whole of the public of a well-managed economy profit most when the benefits of increased efficiency are distributed equitably in the whole population. Manifestly this is not the case when the growth of efficiency results in increased unemployment. On the one hand it is really beneath the dignity of a human being to do the work that a machine will do cheaper and also better. On the other hand, if the result is technological unemployment, there is a contrary analysis. One thing that a machine does much better than a human being is to sit unused accomplishing nothing. The machine’s unemployment does not add to human misery, and the machine has no feelings that we have ever discovered. It does not get drunk or take to other intoxicants to avoid its agony and does not disrupt the lives of people or even of other machines. It does not resort to crime as a consequence of poverty mixed with alienation. It does not beat its spouse and children. It does not become a problem to everyone around it.
This negative analysis does not obtain if instead of creating technological unemployment it were to enrich us all with technological leisure. Then the seeming paradox of the last paragraph would be resolved. It would be a genuine labor-saving machine, rather than a labor-wasting one. If its benefits were widely shared, with some semblance of equality, it could be seen as a blessing by everybody, and we might all see benefit to ourselves in providing the means for advancing the efficiency that so many today see as a threat. In the next section, we show how spreading one’s work over the course of one’s time of vigorous good health would result in the same product for fewer total hours of work per capita in a lifetime, and very likely more product as well.
16. Boredom. At his point, we must take a detour to pay tribute to boredom in the lives of human beings. Prolonged boredom is mind-numbing and soul-destroying. It does not compare in severity to gnawing hunger, grinding pain, debilitating disease, hypothermia or many of the other afflictions of the body or the mind, but it can be a motivating factor driving people to do what they would otherwise eschew. In particular, we call attention here to the plight of people living in poverty or near-poverty on a meager pension, without the means of diversion that they had anticipated in the time leading up to the end of their working lives, often confined in effect to their homes and immediate neighborhoods, and “just waiting to die”. It is remarkable how many of these people would welcome the option of returning to their former employment, even onerous employment that they were delighted to shed, for one or two days a week. It is surprising that such an arrangement could add structure and direction to a life that had become tedious almost beyond bearing. Many people in this circumstance take part-time jobs even less rewarding than those they had recently left, sometimes without pay and often without the company of mates with whom they had established long acquaintance if not friendship. Some volunteer for public service activities in areas in which they had never before sensed an interest.
A testament to the sheer weight of boredom, even in the young and vigorous, can be seen in the reactions of the peoples of Europe to the onset of war in August 1914. It is reported that people danced for joy in the very streets. Accounts of the rigors of rural life lay emphasis on the weight of inactivity that attends the period between planting and harvesting, a burden that is actually lightened by the responsibilities of those who must look after livestock or pursue handicrafts like pottery or weaving.
Many working people are aware of such activities as travel or further education or a long-deferred hobby in the lives of people with some resources in retirement. Sadly, for a substantial portion of the working population, the circumstances of life leave them with neither the resources nor the skills to avail themselves of such opportunities. Even so simple a joy as reading is closed to those who have not polished the skills required over the years, and the cost of books may be prohibitive in a world where the passion for tax reduction has closed so many of the public libraries that were once a jewel in the crown of the Enlightenment. Far better for those people to have enjoyed the leisure that might have enabled them in the years of their vigor to have cultivated habits that could hake life enjoyable ever in constrained circumstances. As with dreams of winning the lottery, the expectation of a comfortable life in retirement must be fulfilled by something more than the absence of toil.
For working people, leisure during the years of youth and the prime of life is, on the whole, much more rewarding than the prolonged periods of inactivity that a long retirement, absent prosperity, has to offer. The power of boredom to empty life of its meaning should not be overlooked in policy considerations for them.
17. Numbers. It is time for a little bit of arithmetic, of the elementary school variety. For arithmetic convenience, we shall take as a standard working year a model of 40 hours a week for 50 weeks a year and a morking life of 45 years for a total of 90,000 hours. In our first calculations, we will consider modifications in this working model that involve 90,000 hours of work from all people who reach the age of retirement, and comment on the relative merits of these. We note the elementary mathematical observation that if A, B, and C are three options and A is preferable to B and B to C, then A is preferable to C.
Our first alternate model is one in which the working week is reduced to 36 hours (as in 4 working days of 9 hours) for 50 years. This delays retirement to the age of 70, yielding about 2,250 additional days of leisure in the first 45 years which are repaid at the rate of 4 days a week for 5 years, totaling 1000 additional days. (The apparent discrepancy is accounted for by the lengthening of the working day by 1/8.) The 10% of loss of wages is at least partially balanced by sloughing the necessity of saving for support in the final 5 years. For the worker, this looks like a good bargain, unless the employment involves strenuous physical labor. Even there, today’s 70-year-olds are healthier and stronger, on the whole, than people of 65 were only 50 years ago. Also, a much smaller proportion of us do the kind of heavy toil that was common even then. Finally, we can make special arrangements for people in those circumstances, as we shall undertake below. It looks like a very good deal for working people. In a final somber note, we observe that this is even more favorable for those who do not live to be 65, and also (but somewhat less) for those who do but do not reach 70.
The employer in this model needs to take on 12.5 % more workers, so the payroll remains the same unless there are also additional sources of profit lurking in the wings. For one, there is the possibility, mentioned earlier, that the week’s work, seen as a whole, would be done more efficiently. Second, there is the possibility of running two shifts, as also mentioned earlier, with the 27 hours Friday – Sunday being paid at the same weekly rate as the 36 hours Monday – Thursday. This would obtain 7 days’ output at the expense of 8 days’ wages, but require only half the output in capital, rent, &c. The question of whether this is a good deal will vary from employer to employer, but even with the 4-day week, the savings from efficiency may ease the burden, as well as the possibility that the requirement of contributing to retirement plans might be less.
For the economy as a whole, the prospect of having good jobs available at a living wage for 12.5 % more people is a consideration of great value, with its promise of alleviating some of the problems we will discuss below.
Once we can scan the books and learn how much benefit this option confers on the employers, we can consider whether it is just to modify this plan by reducing the working day to 8 hours for the same daily wage.
Having digested the benefits of the 4-day week, we consider a comparison of this plan with a working life of 55 years with a reduction of the working day to 8.5 hours and then to 8, in case that had not already been achieved. Note that this would reduce the working life to 8,800 hours. It is hard to believe that the possibilities of increase of efficiency enabled by this shorter work week would not swallow up the difference, especially just counting the hours in the additional travel time. Of course, if that were not the case, then we would need to consider whether the social benefits were worth the extra cost. We will see some of those below. Meanwhile, we would have achieved at least a 32-hour week for 36 hours’ pay and a 25% increase in the size of the work force, assuming that there was that much additional labor available in the population that was not being employed today. If not, the decrease in the work week might be arrested as soon as a labor shortage appeared. Instead, we anticipate that the work week could be shortened again to 30 hours and then to 30 and to 28, before another step to a 27-hour work week of three 9-hour days. We anticipate that the changes in the career patterns would continue even down to a 25.5-hour week to 24 or even less less, as technological advance yielded the blossom that today lies hidden in its bud. But at his point we need some further sharpening of what looks like a rather blunt instrument.
18. Priorities. Now that we see that there are benefits to be gained from shortening the work week and extending the working life for most people, we will put aside for the moment the considerations of those who have special needs, which include retirement earlier than the canonical timetable. The most urgent need is the elimination of the covert unemployment and its reflection in the Iron Law of Wages. So before any other palliatives, we see the reduction of the work week to 38 hours, and a further reduction to 36 as the economic statistics validate its soundness. It is an elementary observation that such a reduction can never be successful if the door to the economy is open to all the desperately poor of the world who are willing to work extended hours for nugatory pay. The claim that we must have such workers to operate the economy cannot be validated until the shortening of the work week begins to create a mild labor shortage. This can be monitored accurately by observing the shape of the wage distribution. As the reservoir of crypto-unemployment begins to be dried up, many of the jobs that today owe their low wages to its existence will be paid closer to their true value. In time, the number of jobs that pay less than a living wage will become small. And that time will be a time of decision for the people of the economy.
It may well be that a further shortening of the work week, say to 30 hours, would not bring into the labor force enough new workers to fill the demand for labor, and that a substantial number of employers find it necessary to pay the tax on overtime that we suggest as a rein on overwork. If that number is small and the tax is being paid on only the additional 2 hours a week, that is a healthy state for the economy. If the need for more work is greater than that, the most obvious choice is between allowing in a modest infusion of immigrant labor or lengthening the work week. It is a choice that can be made by democratic means. On the one hand, the considerations of compassion for the wretched of the earth are frequently heard today in connection with the problem of immigration, and particularly of undocumented immigration. On the other hand, those arguments are typically made by those whose livelihoods are not involved in the redistribution of employment. We do not know what the reaction would be for those who have had the experience of a modest increase in their leisure, at a cost in earnings. It may be that they would balk at working even 2 extra hours a week without a wage premium and overtime tax. Or it may be that their humanitarian impulses would carry them over the threshold to allow some immigration to keep the wheels of the economy turning. In either case, it is an option for the People, in democratic mode, when the realities are actually on the table rather than to be argued out by comfortable middle class editors and parliamentarians in the abstract. For in the present circumstances, there are participants to this debate who have a financial interest in having a reservoir of desperate poor people who will work for whatever wage then can get, and this interest often skews the result.
Assuming that there is no indication of a labor shortage, the reasonable direction is to continue shortening the work week, providing that the requirements of industry are still being met then through increased efficiency and the recruiting of more workers. It is obvious that this shortening cannot go on forever, down to 1 hour a week, say, without its being reflected in decreased production. At some point, it must exhaust the available pool of crypto-unemployment. This will be shown by a complete drying up of people available to work at the minimum wage. As with everything in this picture, there are exceptions. In the debate over the minimum wage, much is made by some employers of how many minimum-wagers are middle class teen-agers who are just working for “pin money” and putting one toe into the work of work. When the employment picture has improved to the point where those are the only ones working for the minimum wage, we will call that full employment, and the time will have come to pass to the next priorities.
The increase of the minimum wage, in a full employment economy, always bears the risk of resulting in decreased employment through the erasing of jobs whose genuine economic value is less than that minimum. Depending on the actual consequences, that might be a destructive result, or not. If a further shortening of the work week were to result in more minimum wage workers being employed at work of higher value, and if the increased leisure was thus being bought for petty cash, it might be reckoned a good deal. In any case, that is something that should be measured in real terms by reading the signs when it happens rather than conjecturing about it in the abstract, especially by people with a special interest in keeping wages low.
When we have reached a stable point where there are few workers made available by a modest decrease in the work week, and if there does not seem a convincing argument that a large such decrease would lead to a new equilibrium, then other considerations begin to show up. One of the characteristics of a shorter work week is the empowerment of people to try their hands at alternative activities that are not in the area of employment. Some people who missed the train of education when they were young and irresponsible might want to use some of the free time to repair the damage. Others might pursue an artistic effort, or a political one, or give the time to more parenting, without yielding the security that goes with a sustaining job. Some might even try an entrepreneurial effort that they never would risk their total income on. Some might even learn that they want to spend more time on that, even with a loss of all or some of the hours that are their share of the available employment. A major portion of these are single parents who want to raise their own children rather than leaving them to carers of indefinite qualification. We take up this question next.
It is interesting to observe that in both the United States and the United Kingdom, when the government has a choice between finding or creating jobs for people who are eager to do them and forcing employment on people who are suspected of being economic parasites, there is usually money for the latter in preference to the former. Deep within this lies a perceived need to “save” the supposed slacker from “a culture of dependence” and uplift them into economic integrity. It is interesting that there is no such enthusiastic desire to force productive labor on the well-educated and pampered heirs of the rich. It is as though the presence of money purifies sloth and idleness corrupts the souls only of the poor. The phrase “other people’s money” comes into play frequently, but there is no sense that pressing people into employment may mean giving them what could be “other people’s jobs”. An interesting example can be found in the results of the miners’ strike of 1984 in the United Kingdom. There Margaret Thatcher, for reasons she no doubt saw as public policy, decided to close many mines that were losing small amounts per miner per day, even though it was plain (and turned out to be the case) that she would be putting huge numbers of miners onto the public dole at greater cost for many years. This was considered affordable. By contrast we have the opinion, held by miners for generations, that mining is a terribly dangerous and debilitating occupation and that they wished their children would be able to do something else. Yet if they had asked that the mines be closed and all of them put onto the Dole as a public health measure, she would undoubtedly have denounced them as economic parasites. It appears to be a common thread in some cultures that the punishment of “sin” is a moral necessity, no matter what the cost, while the costs of compassion are a drain upon the virtuous.
From the last paragraph, it seems to be understandable that these two nations (and some others) are prepared to spend unlimited amounts to punish the sinful, but are parsimonious with educating the poor or saving their lives from illness or producing places where they can afford to live. It is on this foundation, which is plainly cruel and evil in nations that are infused with wealth such as the world has never seen, that we make the next series of recommendations.
In a world such as the one envisioned here, in which employment would be rationed to a degree that some would find disagreeable, the person who voluntarily yields up his/her share of it is performing a public service. As long as the yielding is genuinely voluntary and not compelled by the unavailability of work required by a more pressing reality that can be done in the same time period, that is the case. One pressing reality is the need for the basic means of subsistence. Another is e. g. the need to raise one’s children and care for them. If raising the level of benefit were to induce people to spend their time on parenting instead of claiming a full share of the limited employment, that is good public policy. And good public policy, even for Margaret Thatcher, is reason enough for supporting people in joblessness if that is what it takes. A similar comment applies in the delaying of the onset of one’s pension. If that has the effect of keeping one at the grindstone who has a job he/she is eager to quit, then the tenure of that job is antisocial if there is a shortage of employment. We live by forcing the poor to do things, as mentioned before, that we have to tempt the rich for. That is not how things should be.
Among the things that would confer a benefit upon society if it could be done properly is the raising of children by their own parents. We shall connect with this theme below. If that can be accomplished for many additional children in an integrated society, the costs saved would far exceed those of enabling it, and if we can fit this all into a pattern of consensual participation, that would be excellent.
19. Parenting. In almost every country (and every economy) in the world, there is a problem of population. In the rich countries, it tends increasingly toward underpopulation, while in the poor ones, it is the opposite. We will take up the latter case when we discuss globalization. In the rich countries, it seems to be an artifact of the emancipation of women, their education, and their entry into the work force. We will not take up the broader issue of feminism and the emancipation of women. We note only that many young women of child-bearing age delay that until their late twenties or later and in many cases go childless for lack of having found a circumstance in which they would want to have a child and an appropriate mate. In some cases this is voluntary; in others not. Some of the factors leading to early pregnancy are thankfully less in evidence today, including even forced marriages and forced pregnancies. Others have grown, such as the availability of abortions for those who feel themselves unable to fulfill the obligations of motherhood. For whatever reason, the fact remains. In Europe, these factors appear most powerful in Spain and Italy, where, contrary to the teachings of the dominant religious authorities, the people do not “go forth and multiply”. As one consequence of this phenomenon, it is urged by partisans of liberal immigration laws that economic migrants from the poorer nations are essential to the maintenance of the economic model.
At the same time, we have the phenomenon of allegedly increasing numbers of single mothers, many of whom cannot support themselves and their children without the aid of the State. In some cases these are women who have been abandoned by the fathers of their children. Attempts to secure child-support payments from such fathers have largely met with failure. The resources devoted to supporting the mothers during their pregnancies and in the years of raising the children have been minimal, on the whole. The State storms over the burden on the taxpayers, and in the absence of doing what is needed, merely blames the absent fathers (as well as the absent mothers, in the case of single fathers). The resources dedicated to obtaining the child-support payments are great, and the results are minimal. In the meantime, the stinginess of State support of the single parents, especially the mothers, lays up problems for the future all out of proportion to the pennies pinched. And into this mix come moralists, worried (they say) for the corrosive effect of living on State benefit. They force employment upon single parents in a way that is economically inefficient and also deprives the children of the benefit that most people receive most of the time if they are raised by at least one of their parents.
The earliest of the inadequacies of the State lies in the nutrition of the fetus, through the adequate feeding of the mother. Also, many of the pregnant single women have habits that are destructive to their charges. These include not only poor nutrition but also the ingestion of various poisons, of which the most common are nicotine and alcohol, but also other chemicals whose use is illegal. By some estimates, of all the delicate systems that a fetus must grow in order to develop into a person whose mental labor will be most valuable in this new century, more than half of the endowment written on their DNA at the moment of conception has been lost before they are born. The advent of national health services in Europe has attenuated this problem somewhat, but there is a limit to what free milk, orange juice, and vitamin pills can do to correct other gaps in the mothers’ nutrition. Then much of what does survive is lost in the very first year if the child does not receive the proper inputs, both in food and in intellectual stimulation. Mere child care, if not from a loving and competent source, will in many cases not make up for losing the attention of a dedicated parent. And even if there is one, she/he may need professional help in bringing out the best in the child’s physical and mental equipment. Investment in all these things would assist in creating healthy and productive citizens instead of a population that bears the scars of deprivation and alienation.
If the People can be persuaded to deprive themselves of the dubious joys of censorious commentary on the worthiness of the poor and address themselves to the task of making the best of what could be difficult circumstances, and if there is a shortage of jobs to support those who want them, then the State should recognize that stepping into the role of the absent parents, at least to the extent of “hiring” the single parents for the task of raising their children properly (or even paying what would be the cost of foster care under State auspices) would not only lift the burden of unsuccessful pursuit of those who cannot or will not support their children, but is also an investment against the future costs of including damaged people in their society.
The moralists will prate about individual responsibility, but neglect the observation that if they do not fill the gaps that the incapable or irresponsible have shed, then they are themselves as negligent as those they abjure. A sane person does not rail against the evil done by a volcano or a hurricane. The detritus of pervious generations, caused in some cases by their poverty and in others by their greed, is to today’s citizens the state of nature with which they must contend. They must deal with it at their peril or, more likely, at the peril of their posterity. The task is made much harder by the burden imposed upon us today by the need to support more prisons and more hospitals (including mental ones) because of the failure of earlier generations to address the needs of unfortunates. And in all of this, the greatest opportunity for avoiding harm lies in supporting poor parents, and especially single ones, in raising their children. Yet we must start from where we are, not from where we feel we were entitled to be.
An important lesson was learned by the New Deal of the Franklin Roosevelt administration in the 1930s. Driven by the exigencies of the Great Depression, many parents were abandoning their children to orphanages (often anonymously) as an expedient to secure their survival. The number of these institutions was inadequate, their staffs were in many cases poorly trained and contemptuous of their charges. The cost of supporting them was high, and borne by the State when the resources of private charity proved to be exhausted. Some genius in the Brain Trust observed that paying the parents (usually mothers) to raise the children at a minimal level would not only be cheaper but also provide a level of care that was usually unavailable in orphanages. Thus was born the program of Aid to Dependent Children (later Aid to Families with Dependent Children). In addition to nourishment and (where necessary) housing, this program provided Well Baby Clinics, where these children would be guaranteed a level of medical attention only available in that decade to families with not only jobs, but middle-class incomes. It was a triumph of reason over stereotyped thinking that would be lost in the last quarter of the 20th Century. A similar program, indexed for the standard of living due to the knowledge gained in that great century, would meet the needs of many families, and of the State, today.
The problem of raising children to the level of their potential does not sound much like the problem of paying for the costs of retirement in an aging population. But the two connect whenever single parents are willing to forgo a place in the ranks of the employed in order to raise their own children, if only they could be given the financial means to do so. Not all parents are so willing, even if the means were adequate. The problem of raising a child in isolation can be mentally and psychologically wearing, and it may be that many such parents will do whatever it takes to go work where they are in contact with adults most of the day. We will not take up the moral issues of that choice. We say only that if a decent payment would make it possible for parents to rely on State benefit, we others might well consider it a blessing that someone were willing to carry that load and yield up a place in the standard economy for the gain of someone who wants it..
In the case of couples raising a family while working, the possibility of a three-day week raises alternatives not adequately addressed by our present arrangements. If the two parents can work non-overlapping schedules, then it would be possible for the children always to have a parent available at home. This eases the difficulty in affording a fully competent and adequately trained carer while each parent are at work and also makes possible a fuller participation of each of them in the lives of the children. It is rare that each parent makes enough money to pay the costs of such a carer, given that the carer’s work day is longer than the parent’s (though the parent’s is longer if one counts travel time in delivering and picking up the child) and the payment must pass through two bouts of income tax before being liquid for the carer. Then there is the cost of maintaining two stimulating environments for the child, and overhead costs like insurance. The parent who is caring for his/her own child faces none of these costs. The child is already at home, among his/her own toys in a familiar environment with a loving parent present. No money changes hands and no taxes are paid. No added travel time comes into the equation. Thus, if the work week should reach down to three days, that would open the world of work to many more people, and even if the week were 27 hours, it might well soon be decreased further.
In a modified form, a cooperative arrangement between two single parents to serve by turns as unpaid carers for the children of both in their own homes, while not as neat, could also be a bonus of a shorter week. There is enough adverse comment on the problems of “latchkey” children and how these contribute to alienation and disruption in their lives to overcome any skepticism. Of all the ways of easing entry into the world of work for parents, none comes as near as this to meeting the needs of the children.
20. Alienation. Even in the best provided and most secure environment, the problem of socialization, of the development of growing children into responsible citizens who have not taken up antisocial behavior, is hard enough,. Every step below this level of security and parental discipline renders it more difficult and more liable of failure. Parents, and especially mothers, start with an inclination on the part of the child to do as he/she is told and learn what the parent directs. Teachers complain of the failure to learn by children who are not disciplined at home to do their homework and whose time is not regularized by a parent. Carers, even close family members, are often less successful in these tasks. It is clear that if non-family carers should take their disciplinary duties casually, it would be even harder to expect the kind of attention that such socialization demands. The success of such children in school is always at risk. In addition, there is always the proverbial complaint of children that the tasks they are assigned are too burdensome, and in our current climate of seductive distraction by more amusing options, harder to impose by anyone, and especially by someone whose intrinsic authority is challengeable.
Some of our children do poorly in school, and many of these view themselves as victims, even those we usually think of as privileged. For those with this propinquity, the tendency is accentuated if they think that this victimization arises from their race, or sex, or religion, or poverty, or some other factor over which they have little or no control. In many of our cities we find people who tell each other that the dice are loaded against them, and that even if they work hard, learn, and do well in school they will be prevented from succeeding in life for these reasons. While it helps support this belief if the assessment of exclusion is accurate, it is powerful even if mistaken. What is important is that it is believed, for with it may come a community norm that school (or discipline generally) is a trap, and only a fool takes it seriously. In this, the attitude of the child’s parents, and of the community, is vital. And if the attitude of the wider community is to be gainsaid, it requires the kind of authority that parents in certain sub-populations exert. Those populations do better in this effort than the others.
Probing more deeply, the problem of the balance between individual liberty and social responsibility is a very deep one. On the one hand, we find people who enunciate rigid formulae for how much ( e. g. Puritans) control Society must wield in the life of every person or how little (John Stuart Mill). On the other hand, there is the doctrine that every case must be considered on its own merits, free of dogma, which can be a charter for “situational ethics”, which in its most extreme form can degenerate into mob rule or even lynch law. This is a philosophical problem that has never had a fully satisfactory answer, and as a result serious ethicists have nearly abandoned it. Yet it seems to be the case that young minds will tilt toward anarchy as an antidote to questionable authority and a devotion to principle in this area is an artifact of maturity. The shaping of that maturity must rely on recognized authority and this usually starts with parents.
In any case, we do observe that when people perceive themselves as victims of injustice, the tendency to satisfy one’s needs in compensation gains ground and the perception seems to fuel a taking of liberties that might otherwise lie in check. One of the places where this perception finds its mark is in the inability of young people to find work, especially when those seen as privileged are finding their ways into comfortable professions. Recent  outbursts by Muslim youths in France are examples. The valid perception that those who have neglected their educations because of the belief that nothing they do will earn them success is seen by the victims as blaming them for their own victimization. The combination of lack of employment with lack of parental authority is a recipe for public disorder and crime.
21. Desperation. In recent years we have seen repeated assaults upon the problem of poverty. These assaults take as given that poverty is an ill that foists itself upon people in spite of all we can do. That was certainly the case until the 20th century and fed our concept of economics as “the dismal science” of the management of scarcity. There is more to apportion among the People today, but the problem seems to persist. The perception that we all would obliterate it if we had the power is an unrealistic one. One aspect of this unreality is the hope that failing to give people the necessities of life will “force” them to “work themselves” out of it. But even more sinister is the fact that there are some agents in the economy to whom the poverty of others, and especially the desperate poverty of others, is a vital factor in their operations. Indeed, the presence of desperation is like a supercharger to the Iron Law of Wages. This dirty little secret is never acknowledged, but it is the backbone of the analysis that we need desperate immigrants, especially illegal ones who cannot seek the protection of the laws, as a “resource” in our countries. There is work that is so hard, so odious, so debilitating that in a genuinely free market in which no one is driven by despair, we could only fill those jobs by surrounding them with great rewards of one sort or another. In the ordinary reckoning of market economics, those jobs deserve outstanding compensation. The alternative has always been to look for a source of labor that is without freedom. First there was slavery, then serfdom, then, with the end of those constraints, the “free market” offered the threat of death from starvation or other form of penury as the only alternative. It is not to be wondered that so many of those so afflicted were antisocial and dangerous. Rather, it is remarkable that there were so few.
As the world became richer, the civilized nations found the will to eliminate some of the sources of desperation, but at the same time there were those who needed them as mentioned for their game plan. It is easy to understand how, in an advanced nation, the threat of seeing one’s family die of starvation, disease, hypothermia or lack of medical treatment can drive an otherwise decent person into antisocial activity. There are people who consider strikebreaking beneath contempt, yet in extremis, that might be resorted to to yield some income. It is harder (but not impossible) to see it without the spur of desperation. And if many will somehow yield to this prodding, there are others who will not. The aim of some socialization is to achieve the situation where those who cannot fit themselves into the needs of industry will adjust to that reality. But what if they cannot?
In the course of the past fifty years, our wealthy societies have moved away from the awareness that we need to find a way to integrate them into a decent mode of life, or we will have to join them in facing the consequences. This is expressed by speaking of the “personal responsibility” of such people to find a way of looking after themselves. If we were to give that answer more than a passing thought, we would recognize that there are some people who would take themselves outside the law if necessary to have a life that is more than minimal. Most people in such a bind do indeed keep the public order, but some will not. Of those who do, some will die of need while conforming to social expectations. They are expected to do this without complaining, since “it is up to them to provide for themselves and their families.” The general public increasingly feels that they should find a way to die quietly in a corner without making themselves a nuisance. That is a brutal statement. It usually takes a disguised form in the assertion than anyone who “tries” can “make it” in our rich world of today. That statement is false unless we do what is necessary to assure that there are about the same number of jobs looking for people as vice versa. Such an achievement will not eliminate all antisocial behavior, but it will help. Some people, especially those who view their state as unfairly visited upon them, will turn to crime in extremis. Not all antisocial behavior is generated thus. There are people who will pursue predatory economic strategies even when very prosperous, and in some cases they have the power to make their predation legal and even endow it with respectability, through the use of professional persuaders. Not all desperation leads to crime, as noted above, and not all crime proceeds from poverty, but there is no doubt that in those who are already poorly socialized, it may be a magnifier of other antisocial predilections.
The elimination of poverty will remain an elusive goal while powerful forces militate for its continuation, whether they admit it or not. But a substantial portion of the costs of social dysfunction stems from desperation. Even in the United States today, which is a nation richer in the aggregate than any other in the history of the world, there are 30 million people, 10% of the population, in families that live almost continually with an empty larder, and 42 million (14%) that have no medical coverage. Many people just turn their heads and pretend that they just don’t see. But they see the costs in murders and robberies, prisons and mental hospitals. And they would see the cost in lost lives if they thought the lives of the poor were of value.
22. Crime and Punishment. To the degree that antisocial behavior is rooted in alienation, the attempt to extinguish it that does not flow from integration of the forgotten ones into the more prosperous aspects of the economy must fail. The principal hope of deterring crime, in most societies, lies in the threat of punishment, often of brutal punishment. The belief is that sane people will submit to circumstances that are nearly intolerable rather than allow themselves to be subjected to painful retribution. If we ourselves were sane, we would then have to conclude that anyone who undertakes crime in the face of such a threat must be insane, but that would provide the basis for a conclusion that such a person needs treatment, not punishment. But it is almost never the case that crime is diagnosed as a consequence of insanity, since that would undercut the basis of the belief that the way to deal with it is by punishment. In the words of a slogan adopted to discredit the Enlightenment, “to understand everything is to forgive everything.” And forgiving everything, in the thinking of many people, is to empty life of the only means of controlling dangerous divergent behavior. In saying this, we do not intend to say that we know how to do that, either with punishment or without. When in a favorite phrase, the world says that “you just ain’t nobody at all if you can’t afford a Buick”, we add desperation to people who have plenty of cause, in this capitalist Utopia, for feeling that their lives are empty of what makes it sweet for others. And since almost the only tune that we know how to play in dealing with offenders is to not only to imprison them, but also brand them, verbally, as monsters, it is also not surprising that so many of them cannot get the kinds of jobs and positions of trust that would enable them to rehabilitate their status as citizens and respectable people. Thus, the fact of the brand puts them in an aggravated condition of poverty and desperation, and some are reduced to the belief that life outside the prison is hardly better than inside, and are willing to risk renewed punishment by resorting to crime as a way of life.
It is easy to come to the conclusion that the prison experience is self-perpetuating. If that be so, then perhaps there is no way to cure the criminal tendency once this cycle has begun. But it is also the case that the cost of incarceration is growing, and is consuming ever-increasing portions of our civic budgets, and also our public lands. And many studies conclude that money spent on early childhood programs is very profitable in the form of decreased criminality. Again, we return to the benefits of a program that would make possible more adequate parenting, particularly among those who are already poor. The answers to this analysis include the assertions that it is not for the public to pick up the pieces of inadequate parenting, nor is it the burden of the People to prevent unauthorized pregnancy, or to provide abortions to those who want them, but the joint effect of these states of mind, when effectuated, is to give us streets that are unsafe to traverse and criminals that are more expensive to maintain than university students. It makes no sense, since the public, eschewing the burden early on, must bear it more insufferably later.
All this analysis flies in the face of a deeply-seated inclination to deal with social disorder via punishment, which must be an inherited pattern of response, since it is so generally distributed, over the millennia and over the globe. Yet reason must lead us to attenuate this response as largely unavailing. Whatever we can do to relieve desperate need must help in lifting the burden of crime in economies that are rich enough to afford that policy.
There are exceptions to the observation that punishment tends to be unavailing as a means of controlling antisocial behavior. Some of this is actually thought out and weighed against the presumed costs of punitive action by Society. This includes minor infractions such as overparking, speeding, petty theft, and more serious ones such as fraud, income tax evasion and embezzlement. An egregious example of this tendency can be seen in the approach of the Ford Motor Company to the hazards built into the Pinto model of the middle 1970s. There, the fuel tank was mounted just over the rear bumper, giving the car a classic look. However, it was often the case that if the Pinto suffered a rear-end collision, the fuel would explode, with fatal consequences. It is actually a proven fact that the Ford Company consulted their lawyers for an estimate of the expected cost of the lawsuits caused by the anticipated additional deaths, and concluded that it was less than the expense of making the car safer. After many years, a public-spirited law firm won a judgement against Ford for not only the “cost” of the lives lost, but also a punitive award of ten million dollars for aggravated negligence. Ford screamed bloody murder at the unprecedented award, but finally paid the bill and learned the lesson. In time, the same logic was applied against the cigarette industry. It is in cases like these that punishment bites, at least against malefactors that have assets that can be taken from them rather than the imprisonment that must be imposed upon those who have nothing to lose but their liberty. Even then, the mills of privilege often avail to subvert the judgement, as was attempted in the Ford Pinto case.
A German proverb tells us that “the great thieves hang the little ones.” Many of those who grow up in privileged homes learn the dangerous lesson that their parents (and thus they also) are “above the law”. But it is not these who go without parental care and attention. The criminality that scares the public is of the variety that is exacerbated by poverty and desperation. The financing of adequate parenting would be a good investment, but it must get beyond the heritage of the Puritans.
23. Fear, hope, and hatred. To the extent that there is any socially valid motivation for the regime of punishment, it must lie in the slogan that it is only the fear of it that keeps people (or some people, in common parlance) from yielding further than they do to the temptation to satosfy their temptations. We will set aside the motivations of vengeance, or the cruel pleasure some might get from having escaped the depredations being exercised on the offender. We class these as bloody-mindedness and unworthy of any defense. A stable and peaceful order will not spring from such roots. We note instead the importance of time and resources to those who have expectations from life, and the suffering that goes from the loss of time to imprisonment or assets to fines, not to mention the cost of life in those societies where the barbarism of capital punishment persists. But we must recognize that the expectations do play a role in keeping people in line with social order and the role of hope in sustaining the expectations, even when the hope is not rational. An outstanding case in point surrounds public attitudes concerning the murder of the ex-wife of the footballer O. J. Simpson. There were many who believed that he had done the deed, but what was significant here was the frequent comment by those people that the murder was not only vicious and cruel but stupid, since “he had everything to live for.” Even those who said these words often did not accept the corollary that if in fact he had had nothing to live for, then the behavior would have been more understandable. But we must look at what these words mean. The expectation of a good life is a powerful agent in securing personal adhesion to social norms, and the level of hope is an essential aspect of that expectation. Those who have no hope often have little fear. For those who see their lives as being little better than being in prison, the threat of prison is less potent. In those communities where the sense of unjust victimization is strong enough to sustain a belief that they are excluded from a comfortable and fair share of life’s rewards, the danger of punishment carries much less weight. And when the first punishment, often administered to a headstrong youth, itself erodes these very expectations for the future, this initiates a cycle of offending and imprisonment that can last a lifetime and become increasingly hard to escape.
The burden of hopelessness, or of hope kindled and not fulfilled, can lead to despair and a life full of suffering. Sometimes this suffering is economic, sometimes psychological, sometimes bodily sickness. An alternate course leads in the direction of hatred. While anger and hatred are pathological conditions that can make the bearer a danger to him/herself and others, there are aspects that could be considered less unhealthy than despair, which can rob its victim of his/her personhood. Yet most societies have always had members who were suffering from one or the other of these peculiar symptoms of the absence of hope. To some extent even irrational hope, like that of winning the national lottery, can serve to steer people for a period at least past this mental Scylla and Charybdis. But for the competent management of society, it is humane and conservative of the tenor of life to expend resources in defeating the causes of hopelessness. And into the bargain, we might expect a concomitant decrease in crime and social disorder. One of the chief loci where hope might lurk would be in the most open access possible to the fruits of one’s labor. We have seen that where there are identifiable victim populations, they often find it hard to secure a just place in the world of work. This is especially true where there is a surplus of labor in the society. The belief, whether realistic or not, that one is deprived of a fair place in the job market because of one’s race, sex, religion, or ethnic background (or similarly unfair prejudices) can engender this very lack of hope and subject the victim to one of the two pathologies mentioned. Hatred especially can wreak havoc on large numbers at any one outburst, if the pathology manifests itself in paranoia. We all pay a high price for such injustice, even those of us who are from the favored group. As the instability of the job market creates more of this disorder, those who have employment are seeing more of their earnings being taxed to support the jobless, either on welfare or in the prisons, or in the depredations occasioned by criminal behavior. We can better afford to share the work and the opportunity for a place in a more peaceful and orderly society.
24. Education. Of all the uses that might be made of the leisure afforded by a shorter work week, one of the chiefest is education, and in particular a second chance at it for those who eschewed it, for whatever reason, in the ordinary order of things. Many countries, including many of the advanced ones, carry a burden of sub-populations that take schooling lightly. “I didn’t learn much in school and yet I am a perfectly adapted worker,” is a mantra of many a citizen who is satisfied with his/her place in life. Coupled with resentment over presumed exclusion from the good life for unjust reasons, this can lead young minds to scorn the effort necessary to keep up with the pace of the classroom, especially in today’s highly competitive struggle for acceptance into elite schools leading to gilt-edged diplomas. When life is short and the work week long, those who “miss the train” find it very hard to make up the deficit while trying to earn a living, especially if the living is for a family. But when life becomes long, and if the work week is shortened, the prospect of a second chance becomes more realistic. If the parents’ authority was not sufficient to enforce attendance, homework, and study, adult life will, for some, give the role of the parent into their own hands. If, in their maturity, they recognize the value of the treasure that neglect from Society and/or their parents and/or their teachers and/or themselves has deprived them of, they might have the possibility of making up the loss as a leisure activity and secure something that would be of value to them in the course of the lengthened life that the priests of Knowledge have bestowed upon them. To the extent that this happens, it behooves the State to foster this second chance. It would be a benefit in many ways.
To see an example of such an undertaking, we turn to an American policy called the GI Bill of Rights. This was a law benefiting the eleven million US servicepeople who had survived World War II. It promised a return to the jobs they had had to leave to go to fight, it offered the purchase of a home with zero down payment and on favorable terms, but most spectacularly, it offered the possibility of additional schooling to many who, primarily for economic reasons, would not have been eligible for it in the preWar world. The law was beneficial, but it was not only philanthropic. The US economy was in a difficult position. Civilian manufacturing had been cut back or converted to arms. These were produced in large part by women, who were not conscripted into the armed services. Every GI who got his job back was likely displacing a woman, and many of these were not sanguine about losing the independence their employment had given them. Every veteran who could be placed in a school would ease the job shortage by that much. For those who were in any school, the Bill provided a maintenance grant, which included money for a spouse and/or children if there were any. For those in schools that charged for tuition, the tuition was paid, together with fees and the cost of books. Where housing at school was needed, it was provided. In addition to easing the labor crisis, the Bill turned out to be a hugely successful investment. Although many of the veterans were difficult students, enough of them were successful to raise the productivity of labor, the length of life, the competence of medical care, and the rate of invention to create a huge lesson in the Knowledge Business that has, unfortunately, been largely forgotten. After the task of rebuilding, Europe also followed a similar path, with the third quarter of the century being the period of greatest advance in knowledge-driven economies.
Today, the benefits of higher education are mainly in the accretion of privilege by those whose families can pay the escalating costs of prolonged schooling. Tuition charges have blossomed, reflecting the increasing unwillingness of the State to pay the costs on the scale of the third quarter of the previous century. The added impetus of the race to the Moon is gone, and scholarships for students of outstanding promise have been swamped by the needs of genuinely impecunious candidates. These latter have been recruited into the academies on the basis of a fierce regimen, in which only the deeply needy receive any grant support, while they and the lower middle classes are whipsawed by the need to take out substantial loans at commercial rates and to mix full-time studies with employment that is also frequently full-time. The comparison with the 1950s, 60s, and 70s is dismal. Meanwhile the attendance of so many students better financed but weaker in their lust for knowledge results in a larger corps of university graduates with credentials that no one can distinguish from the diplomas of genuine scholars and thinkers. This last would not be terrible if only the road to true learning were open to all who desired to take it, without regard to financial competence. This latter principle is one that we designate as the universal public library card, which used to be open on an equal basis to all, even those who could well afford to buy the books they wanted to read.
Surprisingly, some of the most progressive moves for catch-up learning are to be found in the least likely places, the most spectacular being the prisons. There, some convicts who are illiterate can be taught to read and some even steered through the maze of elementary and secondary education to the point where they are equipped for university entrance. Indeed, some long-term prisoners actually go further, and appear before parole boards with university degrees earned through distant education. These are often recognized as meritorious and accorded a better chance to remake their lives. It even becomes a rallying cry of the punitivists, who are outraged that convicts should have opportunities denied to the law-abiding. Interestingly, the lesson they take from this is not that the others should have remedial learning available, but that this rehabilitative effort should be discontinued. They do not consider that for some of the cleverer among the disadvantaged, an additional benefit of a life of non-violent crime might be that in the very unpalatable case that they are imprisoned, they might be able to obtain the education that they could never have afforded otherwise.
The principle of the second chance was once a staple of American society, where immigrants would often change their names and embark on a whole new life,. The same was true of fugitives, with certain notable examples. By contrast, the fictional passage of
Jean Valjean was thought rare in Europe and later only enlistment in the French Foreign Legion offered anything like that possibility. However, as the 20th Century progressed, the possibility of a whole new life waned, but the second chance to get an elementary education grew, or a secondary one, or even a university degree. That came later in Europe, but it is still growing. However, it still remains beyond the reach of many. In part this is because of a great change in human life, particularly in the past four hundred years. The age of bodily maturity has not increased since the Stone Age. To the degree that it is dependent on adequate nutrition, it has even become younger. Yet the demands of society keep our young adults in school and we tend to impose upon them an artificial infantilism that is in defiance of their endocrine maturity. This disparity results in conflict between the behavior we demand of them and the urges to take on mature status, mate, marry, and raise a family. These latter urges seduce many of our young people out of educational immaturity into the imagined pleasures of adult life. If and when they wish to devote the leisure that a shorter work week would give them to the further pursuit of the academic life they previously laid aside, it would be to the benefit of the economy, in both the short and the longer term, to foster that. In the short term, it would provide a constructive use of time that might otherwise be used for less socially acceptable activity, and in the long term, it could reduce the incidence of alienation and increase the flow of knowledge in the People. It would be a worthwhile investment. A further investment would be to seek out the most promising of the returning students and to eventually bestow upon them a grant under which, in the lesson of the GI Bill of Rights, they could continue their studies full time while still meeting their adult needs.
Finally, an increase in education can aid in finding rewarding activities in a coming world that will be short of the energy and materials that we currently expend in pursuing our interests. We will take this up at greater extent in a section on that subject, below. In the meantime, we merely note that whatever enables us better to appreciate books, plays, films, concerts and art galleries may play a special role in a world where skiing holidays, scuba diving and world travel are less available.
25. Unions. The question of unions, and of the acceptance of employee status for those who live working-class lives, is a difficult one. There is no doubt that this status is beset by many difficulties and indignities, some of which belong in an earlier and less enlightened time. Among these is the insecurity that employers insist is an essential feature of the productive process, supported by an increasing level of arbitrary and capricious behavior as the power of unions in defending the dignity and security of workers wanes. It has always been so, but these rights were best protected during the third quarter of the 20th Century by strong unions and a mild shortage of reliable labor. Today, the indignities attendant upon employed labor, together with the increasing hauteur of the managerial classes, causes workers to yearn for the privileges of wealth, or at least the imagined status of small businesspeople. It is remarkable how much the hope of escaping a servile status figures in the dreams of working people. What is more poignant, however, is when these dreams are transformed into expectations, for the most part unrealistic, and come to dominate the decisions made by working people, most especially in the voting booth. The refusal to accept the reality of working-class status is in some ways similar to the practice of denial in people who are ill. In many of these, the refusal results in their failure to obtain medical attention, and especially unpleasant treatment that is uncertain in its effectiveness. On the other hand, it also makes them subject to the predation by unscrupulous charlatans who proffer gain without pain. A remarkable example of this in the economic sphere is the tendency of many working people to sympathize with and vote for the representatives of the upper classes whose hauteur they resent, and whose ranks they are desperate to join, even to the point of self-delusion.
The key to the level of dignity that working people enjoyed in the indicated quarter-century was the solidarity of the unions, and it is that that has been whittled away by a number of circumstances, including a certain princely bearing that the entrenched leadership of some unions has adopted. If we are to share the benefits of our labor, we must begin by accepting that very few will achieve a non-servile status except by making that available to all. One way would be by sharing the available work and maintaining the economy in a state of mild labor shortage, leading to the benefits of full employment. This involves a program of working-class solidarity, built on the valid perception that today the words working class refer not only to unskilled labor but also to the highly trained professionals who rely on their earnings as their only support in dealing with the economy. Today these include physicians, teachers, accountants, engineers, lawyers and many others whose place in the scheme of things has been viewed, for most of the 20th Century, as “middle-class” and imagined to be other than we have just described it here. The educated classes are today increasingly subjected to the indignities that already enrage those who work for hourly wages, which we have mentioned above, notwithstanding the fact that things are much better for most than they were one hundred years ago.
One of the wonderful aspects of the posited shorter work week is that it offers employees a more realistic possibility of experimenting with entrepreneurial effort, at least part-time, without losing the degree of financial security employment offers. If working people wish this for themselves, they should want it for their fellows as a way of achieving it. On the other hand, those who want to attain a status where they can lord it over working people are not worthy of having it, by the Golden Rules of Hillel and Jesus,. To the degree that we recognize this wish in ourselves, we dearly owe it to our integrity to try to obtain it for others who are our fellows in this quest.
This brings us back to the unions. They are the mechanism that exists today to find the sense of solidarity that can lead working people to reclaim a part of the dignity that we have sacrificed by adopting the dream of joining the predators. We should be ready to vote for a fairer sharing of the opportunities of higher-value employment, both in the unions and in the general elections. And we would have to accept that the unions that can help us do this are not merely the means of obtaining whatever we can get without exerting the power of our numbers. They are most especially the means of uniting in making our needs and demands known and securing resolution of our dreams and our hopes, to the extent that they are built on a sharing of opportunity.
26. The wretched of the Earth. We cannot pass the last paragraph without taking up the sharing of the benefits of the success of the industrialized world with the people of the poorest nations. In the next section, we will take up the question of globalization and of the opportunities it offers to escape the most miserable forms of poverty we see. There are manufacturers who build factories in the poorest nations where they can obtain for a dollar or two a day labor that would cost over $ 100 in the United States or nearly that in the nations of northwest Europe. Their plan is to sell those products for nearly the price that they would charge if they were made with the dearer labor. Instead of accepting the criticism that they are breaking their neighbors’ rice bowls, they portray themselves as philanthropists, bringing hope and subsistence to lands where these are in short supply. And they have been successful in peddling this image to people who are plenty smart enough not to be taken in. Of course, they are taking into the system of labor reward a great many desperately poor people, people who will do almost any amount of work for almost as little as the employers are willing to pay. This system of unions, that was built by the workers of the industrial world, is like a lifeboat which is the patrimony of those whose forebears have created it and overloading that “boat” with the desperate will surely sink it. It is already beginning to sink, as the wages drawn by unskilled and semi-skilled labor fails to keep up with the increase in prices, even as the rewards of the increased productivity of labor fills the pockets of those who were born to riches. Yet we do not suggest that we close the door to these people’s needs. Instead, we offer a model by which we can share the fruits of our own cornucopia without letting the clumsy “unseen hand” reproduce the agonies of the Great Depression upon the working poor of the richest countries. We conjecture that this model will not be happily adopted by the bogus philanthropists of globalization.
We propose that an amount of money equal to the wages that would have flowed to the wretched of the earth by stealing the jobs of the workers of the richest nations be devoted by those nations to the creation of economic goods and services that are meant for consumption in those poor countries, goods and (mostly) services that are by their nature non-exportable. Notable among these are education, nursing, and social services. To compensate for closing our borders to products made in countries where the wages are at a level that we call disreputably low, we could engage a similar number in these services and goods (like textbooks, schoolhouses and hospitals) that are needed for this unexportable work. Counting a working year as about 250 days and assigning a wage of $ 1 – 2 for each day, and paying this amount for as many waged workers as each advanced nation has, we could far more than make up for any harm that a program of excluding products of ultra-cheap labor would inflict upon those nations and their economies. Indeed, the payment of wages to teachers, nurses, etc. and the construction of schools, clinics et al. offer a nearly unique opportunity to pay the money into the hands of those genuinely in need and at the furthest possible remove from the Swiss (or other) bank accounts of those nations’ rulers.
The easiest programs to start would be the teaching of reading by anyone who can do it for those who wish to learn it. This is the most effective step in raising people from the incapacity that illiteracy represents, and the greatest need is in the education of girls and women, which is sorely lacking in many of the poorest countries. This part of the project is the one most likely to be reflected in decreases in the birthrate, in impeding the sale (or rental) of the bodies of young women and in stopping the spread of sexually transmitted diseases, all of which are enormous problems among the wretched of the earth. From among those who take well to literacy, we should be able to recruit student nurses and eventually also physicians for work in those very countries, where they are desperately needed.
The fact that such programs are almost impenetrable by corruption may make them less desirable from the viewpoint of those who expect to live well on government positions, even among the most desperately needy populations. Those who will not allow these programs without room for a corrupt tariff should have to do without until they will. One of the faults of warm-hearted people who want to “make poverty history” is that they have been feeding the least hungry. This is an example of an economic stratagem in which those who seek subsidies nurture a small army of needy people in somewhat the same circumstances as shock troops, such as farmers who serve as cannon fodder for corporate agribusinesses seeking government handouts, or refugees whose salvation always seems connected with the enriching of those who claim to be their redeemers and leaders. The international corporations who offer the needs of desperately poor people as the justification for the near-slave-labor jobs they bring to the poorest of the poor somehow always seem to be campaigning for arrangements that make them very rich themselves. The provision of health, literacy, and other education to those who have almost none would be a much more philanthropic spending of whatever money was available stemming from concern for the terrible distribution of wealth in our world.
Other ways of helping the poorest quarter of the world’s nations should include the exclusion of programs that undercut their own agriculture. These masquerade as programs to “feed the hungry”. If they were that, the goal could be met by using the agricultural surplus to provide meals, without charge, particularly breakfasts, for children in the schools mentioned above, or even a program to feed the hungriest free. The subsidized food does not do this. Even at prices below the cost of local farmers growing the materials themselves, it requires payment in convertible currency, which is largely unavailable in those lands and can only be obtained by selling off natural resources, often at nugatory prices, to powerful companies from the wealthy quarter of the world. This false philanthropy is a block to advancement, not assistance.
If (e. g.)Vietnam wished to continue to manufacture cheap clothing, and sell it in other countries that have underdeveloped economies, that would be excellent. But it would not involve First World companies charging a large price for them in the First World. No doubt that would still yield a profit in Vietnam, and if the same companies would undertake such a program, it would be philanthropy indeed, but no one imagines that they would extend themselves for only a decent margin of profit. That is not what this globalism is all about.
One mechanism for carrying out this program of protecting the integrity of our own economy while “holding the poor nations harmless” would be to impose a heavy tariff on goods imported from low-wage, union-free countries and earmarking the receipts to pay for the program of schools, hospitals, etc. Thus the taxes that would do the work of protection would be paid by the citizens of the richer nations to level the competitive imbalance, with the proceeds going to do the best for the poorer ones. The hiring of teachers and nurses would do more for them than the marketing of cheap shirts.
We should note that the suggestion here is not necessarily the limit of what we might do to succor the wretched of the earth. We might well decide to go beyond what we do to sustain the degree of amelioration they now obtain by allowing the brutal victimization of their desperate workers. But that is a political question that flows from the amount we are willing to expend from genuine philanthropic motivation, and would have to be enacted by the democratic process. The suggestion here is the minimum that we should do if we want to hold the poorest nation harmless from steps we might take to defend the integrity of our own economic positions. It would do no one good to allow the industrial nations, the demand side of the victimizing arrangement, to become so impoverished that we were no longer consuming the goods now being made that way. The question of further aid goes beyond the remit of this paper.
27. Globalization. One of the major objections to any social control on the imagined invisible hand is that it interferes with the free and natural conduct of the market. This complaint is subject to a bit of subtle analysis. “Free” and “natural” are usually used as words describing the good life. Yet in this context they tend to mean catering to primal urges without the control of law, culture, morality, restraint, or social need. So used, they would tend to sanction slavery, pillage, fraud, rape, robbery, cannibalism, and any of the many social ills that humankind has sought to eliminate over the millennia in the effort to create a world of peace, decency and prosperity. Yet to the extent that we can see the world of today as an advance on human life from the Stone Age or before up to the present day, we can see that the advance of these last desiderata has been accomplished, if at all, exactly by reining in of the tendencies to advance one’s own desires by the victimization of the less powerful. Yet today we see the favorable connotations of “free” and “natural” being ascribed to the primal urges toward greed and predation. Into the process toward the civilizing of life, in the late 20th Century and since, has come the process of globalization, whose principle mechanisms have been the free movement of money and goods, designed to increase the profitability of business by giving free play to the Iron Law of Wages (by nullifying the social gains of the system of labor constructed in the 20th Century in the industrial world) and the financial laws of that world (by conducting as much business as possible beyond the reach of those governments). These arrangements, which facilitate production with near slave labor and unhampered by the payment of social costs in the form of taxes, impoverish the working people of the world and will have the unintended result also of impoverishing working-class consumers and bringing down the whole edifice that also provides the profits of the proprietors.
Now that the nations of the world have been deceived into abandoning the controls of the 20th Century and have agreed by treaty to sanction their neglect, the share of the total product that is represented by wages has shrunk substantially. Already in the United States that share has fallen from about 80% to about 70%, and correspondingly in Europe, Japan, and Oceania. This results from the export of employment from jobs paying over $100 for eight hours’ work to those of $2 or less for 12 hours’. Also, the threat of so transferring employment has made possible the lowering of wages in the advanced lands, with greater grip available to the Iron Law of Wages. Even the relatively few millions of jobs that have already been affected have shown this result. If half the jobs in those nations follow suit, we would see the lowering of the share of wages in earnings fall below 40% worldwide. This would have a devastating effect upon the demand for low-priced goods, which are the very ones now being made in the new factories we are here discussing. At the same time, profits on the goods not being bought would contract, and we would see a spiral in the classical pattern of economic contraction. The very opposite of the Ford Dictum would be in play, as it was in the Great Depression following 1929. The short-sighted race for profits will destroy everything. This will be another case of the Tragedy of the Common. Just as we have recently been warned that we may literally fish the seafood out of the oceans and leave them totally barren of edible animal life, so the mindless pursuit of profit by the cutting of wages may again leave us with a world in which the gross abuse of the mechanisms of greed and predation empty the economies of the human race of their élan vital.
In the industrial world, in the late 20th Century, it was possible for many unskilled and semi-skilled workers in $100/day jobs to be able to afford automobiles. It is not conceivable that $2/day workers will be able to do that, even if the wages were multiplied by ten and the cost of a car reduced by 2/3. And into this mix must come the calculation that the cost of raw materials must rise substantially, even if we consider only those for the most prosperous billion people, and completely out of sight if we imagine trying to provide for the bulk of the human race in a population that will continue to rise for at least several decades.
The argument above might be read as a demand that the bulk of the “third world” must endure the poverty and suffering they are now enduring. That is only partially true. It is the case that if the richest billion demand everything we now have, then there is no room for change in the life circumstances of the others, but it is also true that if we were seeking only a modest amelioration based on a sudden onset of genuine equality, then there is already enough to reach a more comfortable level of survival for the whole world. We do not believe that there is any prospect of the industrial world signing on for such a redistribution of wealth, and the distribution of slave-wage jobs is in any case not going to produce such an effect. So we must approach the question of equalization with a greater degree of subtlety than we have in the past forty years.
The division of humanity into the industrial world and the “third world” is overly simplistic. There are subtleties, and we must address at least some of them. The richest nations, as measured by the gross domestic product per capita, come to over two billion people, and the poorest to more than one. Roughly, they are respectively those with a GDP/cap greater than that of China, and those with less than India. We could denote them by the acronyms of C+ and I- respectively. Between India and China by this measure are the nations of almost a billion people whose circumstances are more nearly equal than the ranges of the C+ and I-. We could call them the circamedial nations, abbreviated M. And then there are India and China, each with millions of very rich people and hundreds of millions of the desperately poor. At more than one billion people each, they represent effectively whole worlds, with each sporting a very wide range of economic circumstances, and must each be analyzed as a sub-cosmos with the capacity to become effectively self-sustaining, even without foreign aid. Even this division of the world’s economies into five large units is a gross simplification, but at least does not lump the needs of Mexico and Brazil with those of Mali and Bangladesh. To the extent that we turn our attention and our resources to the wretched of the earth, it is to the I- nations that we must first address ourselves. And in those countries we need to address first education and health, meaning the needs defined by reading and arithmetic, malaria and HIV. While each such country has its special problems, a broad-brush approach might be to address first those with the lowest incomes, being the most in need and the ones where we can produce the greatest effect with the resources we are prepared to deliver. And, as indicated above, as a trade-off for the delivery of cash into their economies through these programs, we should expect a cessation of the exploitative industries that would wreck the economies of the C+ nations that would be paying the costs. If the human race is to mend this problem as a joint enterprise, the engine of economic vitality must be supported in the process.
We note with sadness that the proposal here does not offer ready relief to those in the most pressing need. If the C+ countries were willing to pay the huge costs involved in spreading equality immediately over the whole world, that would involve wrecking the whole of a basically workable and productive system. It would almost certainly mean the onset of a depression that would dwarf the one of the early 20th Century. On the other hand, it is cruelly hard to ask those who have so little to endure the hiatus as long as would be necessary to include them at a pace that would be consistent with continuing viable operation. At least this much can be said for this option: that it offers to those poor nations a better deal in the present than the slave-labor employment that they have been so well satisfied with this past decade, for an equivalent economic boost, and with social betterment as its direct product. When the world can and will do better, we can always up the ante.
28. Exoslavery and geoscabbing. One of the supposed benefits of globalization is that it offers to the proprietor class the option of pursuing illegal and antisocial activities in the countries where it is somehow debarred by means of the fiction that it is actually going on elsewhere. A current example that is easy to observe is the use of the internet and the credit card system to effectuate gambling where it is forbidden. The use of the card enables the gambler to wager in another jurisdiction where it is permitted while never leaving the place where it is forbidden. There are many places where evasion of the law in this way is severely resented. But it does not begin to compare with the production of goods that are produced by actual slavery to be sold in the enlightened and emancipated world. Not just wage slavery, which at a low enough compensation is contemptible in the extreme, but actual chattel slavery, as by Chinese immigrants imprisoned in factories in Los Angeles who are producing clothing for American and European brands or picking mussels in England at the risk of their lives until the tide comes in to claim some of them. A similar report concerns Chinese prisons, where products are made for export to the industrial nations. There are other places where slavery is known to persist, or strongly suspected. And there are people whose lot, ruled by the Iron Law, is so miserable that they hardly rate as better than slavery. Not as bad as that, but also strongly condemned as antisocial, is the practice of scabbing. In the older version, an employer drives down the conditions of his/her workers and, when faced with a strike or the threat of one, counters with the employment of scab labor (aka blacklegs in the United Kingdom). If there is a strike, then the scab may need to face the unpleasantness of crossing the picket line. But if the scab is actually thousands of miles away in a country where standard working conditions are even worse, he/she never need confront that reality, and the employer can look the other way and pretend not to be a bad boss. When an employer hires a scab, he/she may seek redemption in the illusion that the scab is the more needy worker, since he/she is willing to work for a wage that the unionized ones consider inadequate. Or that the act of employing the scab is a form of philanthropy, giving employment to the jobless. Some of the United States actually have laws that they designate as “right to work laws” that foster scabbing. They pretend to meet the needs of those who want to work, but the laws are for the benefit of the employers, not the workers, so that the proper exegesis of the title is to read the verb “work” as transitive. Whoever uses slaves to produce his/her goods without ever having to deal with the reality of slavery because it is done at a distance by his/her agent, we call that exoslavery. And when he/she uses scabs, or the threat of hiring scabs, also at a distance, we call it geoscabbing. An example of this is when a French auto manufacturer seeks to negate the government’s attempt to spread the work by means of a 35 hour week, and threatens to move the factory to Hungary, where no such strictures would apply.
In addition to these two especially malodorous practices, there are others that are also antisocial, but the actual acts that effectuate them are done, under cover of the globalized economy, in distant lands where they are legal. And in many cases, the actual user of the dodge is someone who can pretend it is not happening. A large portion of this is in the field of accounting to escape government regulation or taxation. An American company buys its insurance from a wholly owned subsidiary in a foreign country. The rates are exorbitant, as a result of which the company has almost no profit in the United States and pays little in taxes, while the subsidiary is in a place where its profit is not taxed. The resulting monies find their way back to the American proprietors by stratagems that also shield them from taxation. One might imagine that all this is an unintended consequence of globalization, or one might see that it is in fact one of the ends sought by those who created that system but never discussed that fact. The argument was always in terms of natural law and freedom. In the cases of the worst excesses, like exoslavery and geoscabbing, that is only a thin mask on a brutal usage.
29. The unseeing eye. As in exoslavery and goscabbing, the unseen hand operates in the domestic sphere to enrich employers at the cost of the employees. In increasingly many skilled fields, young people fresh out of universities or business schools are hired at jobs that demand long hours and a special brand of loyalty to the needs of the employer that are euphemized as “dedication”. This appeal to a virtuous-sounding characteristic is actually a way of extracting more work than usual from people whose salaries (not wages) are higher than the pay for work of similar requirements that are paid by the hour. It is clever to use for such employment young people who are hungry for work on any basis and often have substantial debts that require payment soon. What many of them know is that the jobs are not permanent. In many cases they would not wish to continue in them for a lifetime. But they do not yet have families and responsibilities, are healthy and vigorous, and the money looks good. It has been noted that many of them will continue in this employment until circumstances such as illness make them less attractive to the employer or the need to support a family pushes them to demand better pay and benefits. At that point, usually in their forties or early fifties, they are increasingly being let go and replaced by new graduates. Some are surprised to find that the twenty years or so that they have spent in that employment are not regarded as valuable experience by those who need workers, and that their age will militate against their being hired by others. Various media, such as Fortune magazine or the BBC have covered the distress of the people becoming permanently jobless in early middle age. Some become discouraged after realizing that their age is a nearly insuperable bar to work, except for menial tasks like stacking the shelves of super-markets or department stores. Those who have savings or other exogenous means of support will give up trying and describe themselves as retired. This phenomenon feeds into the reports concerning “the growing popularity of early retirement”. Meanwhile, as more and ever more are losing their places in the economy at earlier and earlier ages, the age of pensionability is being pushed back to preserve the liquidity of the corporations or agencies upon whom people rely for their incomes in retirement.
The issue of workability of the pension system is today the recipient of various nostra, all of which rely on increased saving on the part of the workers. But for a worker to be able to save enough in the 20 – 25 years of early employment to pay for the 25 – 30 years of possible “early retirement” out of a salary that is described as being “starting pay” is cruel beyond measure. Still, it is what the unseen hand of the market is inflicting on increasing numbers of skilled workers and professionals, including accountants, lawyers, and even physicians, who are being driven out of the professions by indifferent employers who are merely acting out their roles in the free market. Not only are they indifferent, but they do not even see what they are doing to these people, since those disappear from their view long before their plight becomes pathetic. Arranging for the employers not to see makes it easy for them to ignore the human dimension of their application of the Iron Law of Wages. In this way the Unseeing Eye of the market directs its Unseen Hand to dispose of workers who have diligently prepared themselves for a lifetime of work by acquiring knowledge and skills that would still be valuable but for the employers’ workings in the blind pursuit of greed. In the process, the employers are also undercutting the demand side of the market. Thus they are pressing the economy toward its direction of instability, as are those who utilize exoslavery and geoscabbing. This way lies the Tragedy of the Common, as surely as the fishing out of the oceans and other ways of sacrificing the weal of the future to satisfy the greatest income in the present. The market does not see. It is an unseen hand directed by an unseeing eye and it is today toying with a market in severely unstable equilibrium.
If the instability of a market that is driving its customers into insolvency matures into panic, as it might do in any year now, and if people who are indebted beyond their ability to pay, even in their present circumstances, should be extracted from the demand side of the economy by their inability to continue buying on credit, then the stampede toward the exit for those who are creditors would be an economic avalanche. Already we see a decrease in the total wage packet of the working class as merely millions of jobs are transferred from $100/day in the richest economies to $2/day in the poorest. When the total of job losses rises to the tens or hundreds of millions, there is no way to preserve the demand upon which all productive effort depends for its customers. That prospect lies today before the Unseeing Eye of the market. And the Unseen Hand is not influenced by the warning that the Unseeing Eye does not deliver.
It is hard to believe that any sane person would choose 90,000 hours of work spread over 45 years as an attractive alternative to 72,000 hours spread over 60 years as a model for a working life, except via the illusion that in that direction lies the possibility of being enlisted into the economic elite and becoming rich in middle age. It is almost, but not quite, as delusional as the person who doggedly buys lottery tickets in the expectation that a future as a phenomenally wealthy person waiting for him/her. The model is even more unsatisfactory if the realistic expectation is for 75,000 hours of work over 25 years, followed by 15 – 20 years of low-paid unskilled labor prior to eligibility for a grossly unsatisfactory pension. It would be reasonable for young people (and those who care about them) to opt for the life of sustained employment over a lifetime at short work weeks, with plenty of leisure each week, substantial vacations, and a reasonable pension after a lifetime of highly constructive work. In a democracy, it is possible to attain that by a legal apportionment of the employment possibilities, which the working people could establish through the revolution that is available at the ballot-box. This comment would be denounced by interested parties as constituting class warfare. So it is, as is the comment itself. We have been living with class warfare for decades, but only one side of that contest has been engaging in the fight.
The idea that the Unseeing Eye creates greater wealth and justice through the work of the Unseen Hand than a responsible democratic apportionment of opportunity is a canard, and its acceptance by working people and other voters is a triumph of ideology over reason. The Unseen Hand was a great advance in thinking 250 years ago, but in view of the blessings heaped upon us by clear vision in the spirit of the Enlightenment, there is a better way to do that sort of thing. We will offer some notions below.
30. NIARP. As mentioned before, the need to avoid inflation, or at least to hold it to a very moderate pace, is an essential of a stable and productive economy. The specter of the inflation of Weimar Germany, and of some of the abortive efforts at socialism in the third world during the past half-century lie ever before our eyes. And this gives rise to the theory of NIARU, the non-inflation-accelerating rate of unemployment, which seeks to avoid this peril by keeping wages low via the Iron Law of Wages. Or at any rate as low as our various minimum wage laws will allow. But over the past forty years, a phenomenal growth in the productivity of labor has flowed principally from the investment in education during the period of recovery from the Second World War. The benefit of this growth has tended to find its way to the proprietor class exclusively, with no participation by the working classes, including the learned professions. If the specter is to be eluded, who may fairly be burdened with the costs? The proprietors would clearly wish to see all of it borne by the workers, and the workers for the most part are not even aware that there is an ideology that taxes only them for this public purpose. When it ever reaches public notice that this is in train, it is through the media owned and controlled by the proprietors, and in those media NAIRU is treated as the only method of controlling inflation that does not run afoul of a natural law, something like gravity or entropy. This law concerns the sanctity of the proprietors’ setting the tolerable level of profits and setting it, for the most part, on the unsound premise that everyone has the right to such a level that is above the average for everyone else. So the Unseeing Eye pushes the Unseen Hand to extract that level for each company, under threat of replacement of the chief executives. This level of profit can be achieved only briefly, and only by further disadvantaging the workers, who must somehow also be the consumers that will keep the system afloat.
A. J. Liebling once famously wrote that “[t]he freedom of the press is very important to the man who owns one.” In any discussion of the level of profit and of the earnings of high executives, it is frequently written by the proprietors in their media that these bloated incomes are essential to keep executive talent working for the benefit of all. It is often suggested that if they were forced to live on pittances like a half-million or a million dollars annually, they would pack their bags and go live in Aruba on the riches they had already banked there or in comparable bastions of previous profit. This argument is made even on behalf of executives who have brought powerful economic configurations to the edge of bankruptcy and over it. Indeed the threat of bankruptcy is a way of unloading large corporations of their obligations to their employees and has recently achieved the status of a finely-honed weapon bring used against workers who took the promises of future performance by their employers as a substitute for their demands for increased compensation in real time. (It is not excessively cynical to observe that in many of these corporations the pensions of the executives have concurrently been banked outside the reach of the bankruptcy courts, and with the aid and connivance of the proprietors.) The Iron Law of Wages, once a notion lost in history, has thus returned with ever-growing strength and is raising nominal profits at the expense of impoverishing the consumers upon whom the stability of the system depends.
It is, of course, the case that the present system of business laws does not include any mechanism to restrain this runaway drive by every stockholder to have “his/her” company pay profits above the average. Indeed it is the case that many of the proprietors who are not actual investors have only the vaguest of ideas about what goes into producing the percentage in the “bottom line” that represents to them the adequacy of their holding. The automatic response of many progressives is to think of taxes, regulations and penalties as a means of restraining this particular threat of inflation acceleration. But the record of these means is that the action of the regulators is slow and cumbersome, while that of the profit-seekers (and their expert consultants) is swift, agile, and obscure. The actions of the controllers are bound by law. By the time new laws have been passed to deal with the shortcomings of the old ones, lawyers, accountants and other finaglers have already found new ways around them. The control of profits requires the same degree of mental flexibility. To illustrate that there are tactics that have not been suggested, much less tried on any general scale, we offer one below.
Instead of being the “Nanny State”, we suggest the idea of the Competitor State, one that would monitor the level of profit and enter the market as an alternative to those who are abusing the flexibility built into the economic model that was such a great advance 250 years ago. Here are some examples: having sold off British Rail in an attempt to rid themselves of the deficits and poor maintenance that were plaguing that government corporation, and in the hope of enlisting the reputed genius of private profit-seeking as a way of doing things efficiently, the government of the day found that the running of the rails was not possible without subsidies to these private operators many times the size of the earlier deficits, and without the anticipated improvement in the service. After the payment of those subsidies failed to modernize the service, and showed up only as large dividends for investors and earnings by top executives, the new arrangement finally blossomed with deadly accidents that were tied to the practice of hiring unreliable sub-contractors (for whom the keepers of the rails claimed no responsibility). The new government was forced to reclaim the tracks, paying an unconscionable premium to the stockholders, but leaving the running of the trains in the hands of companies that are almost as irresponsible as Railtrack, the one now freed of any legal accountability for any new disasters flowing from the condition of the rails and roadbeds. Any failure to perform, even by these private corporations, is laid by the citizens upon the account of the government, which has not escaped this answerability for the failings of others. Instead of heeding the siren call to renationalization , with its overblown acquisition costs, the State could simply charter a train line that would share the tracks with the private ones and act as a yardstick by which the public might find a more economical service. To the anticipated outcry of unfair competition, a full answer could be found in the supposedly greater efficiency of private enterprise. Turning the arguments of the denationalizers back upon them, one could say that any private company that could not function better than the State is hardly worth patronizing. If the State did a better job, the effect on the private companies would be effected by the Unseen Hand they laud so loudly.
Another outstanding example of nationalized competition can be found in the great accomplishments of the Tennessee Valley Authority (TVA) in the United States in the early 20th Century. The Tennessee River had been a source of trouble to the residents of that valley, flooding in spring and settling into mosquito-ridden malarial swamps in summer, flowing too fast in many places to be navigable but not producing usable energy in the hands of any power company. No one would invest heavily in that underdeveloped area. Even the power companies that existed served only small areas from coal-fired plants. The Corps of Engineers of the U. S. Army, partly in response to the unemployment rampant in the Great Depression, built a series of dams that replaced the swamps with lakes, interrupted the life cycles of the mosquitoes, and served as the loci for hydro-electric stations that turned the Tennessee Valley into a showplace of Social Democracy, to the admiration of the whole world. The farms were electrified through the Rural Electrification Authority (REA) and the cost of power there was the lowest in the world. It was so cheap that the Aluminum Corporation of America (ALCOA) moved there to take advantage of the rates for the electrical refinement of their product. The proprietors of the inadequate power systems grumbled at being forced to compete with the greater economic muscle of the U. S. Government, but their complaints were stifled by being bought out at favorable terms. The rest of the proprietor class trembled at the prospect that this example of socialism without expropriation might serve to seduce the masses to support undertakings of the same nature. Indeed, there was some of this until the advent of U. S. participation in the Second World War.
A good first-order indicator of a business making unacceptable levels of profit would be the rate at which the top executives were paid. In general, when proprietors are getting only average returns on their purchase charges, they are not happy to see the managers enriching themselves at their expense. It is when they are raking in the profits that they are sanguine about salaries and fringe benefits amounting to many millions annually. To some extent, these data can be hidden from public scrutiny, but the laws require that accounts be rendered to stockholders, and these must be reasonably accurate or face the threat of prosecution for fraud. In addition, the recipients of large emolument are eager to excite the envy and admiration of their fellows. In many cases that is the principal benefit they actually draw from the bloated salaries and stock options. Of the robber barons who have bought up landed estates the size of counties, this envy and admiration are the principal reasons for owning so much land. To keep government away from taking an interest in their enterprises as possible competitors, it would be prudent for a well-run business to eschew the most acquisitive strategies. The soundest way to do this would be to keep prices low and seek greater market share.
There are certain industries that have inflated their costs and profits, and some of these are in the area of essential goods and services. Outstanding at this time are the pharmaceuticals. The vast balance of their costs are not in research, development and testing of their products, but the advertising and hard-selling, as well as the profits, which are stupendous. A typical advertisement today is a flashy snake-oil type pitch, filled with the well-known sales motivators and addressed to the pharmaceutically ignorant public. Overleaf, for the purpose of protecting the company from legal responsibility, is a statement in small print laying out the nature of the drug, and all the ills that might befall anyone who takes it, thereby imposing on the reader the responsibility for the perilous decision to entrust himself to it. Of course, the advertisement advises the mark to “ask your doctor if Tono-bungay is good for you”, thus imposing on the physicians the task of explaining what the drug is and why they would likely not get the magnificent results promised in the glossy first page. In addition, the material overleaf that is opaque to the mark may well be beyond the understanding of the physician, who is unlikely to have read and evaluated all the cautions from all the pharmaceuticals.
All of this flim-flam is in the service of products that are nearly identical, except for the individual allergies and receptivities of individual patients, characteristics that may not be known even by their personal physicians. All the statins do basically the same thing, and all are infinitesimal modifications of drugs developed in university or government laboratories, except for tiny changes in the compound to enable the company in question to obtain a patent that would enable them to go hunting for credulous consumers using glossy ads. The testing of these drugs for comparative effectiveness is best carried out in government laboratories, as studies have shown that the results of tests in private labs is approximately twice as likely to be positive. Based on public testing, and except where specific proclivities of patients are known, a rank order of drugs would find doctors advised to prescribe one unless the patient had bad effects, then a specific second, then a third, etc. It is a very rare patient that would need as many statins to find an acceptable one as now flood the market. The fractionally valuable drugs could be produced as “orphan drugs” for the few patients who were hard to fit, but there is no need for the turmoil of the market-place. These products are the thread of life for many sick people, and the present mode of hawking them, and the prices attendant thereunto, threaten to rob these desperately ill people of the medicines they urgently need. Although this paper is a recipe for a healthy and productive capitalism, this is one industry that would serve the needs of all the people of the world if it were in the hands of one or several national health services.
Where life hangs in the balance, the Unseeing Eye is an unreliable navigator and the Unseen Hand is a strangulating predator. The same applies, with lesser import, to essentials like transport, education, food, etc. And in a broader sense, the health of the economy is dependent on a modest level of profit, much more so than on cheap labor.
31. Executives. An important footnote to the restriction of predatory pricing by means of governmental competition rather than attempts at regulation concerns the issue of major executives threatening to leave the country and become tax exiles if their huge salaries and fringe benefits are impaired. This threat is tied to the perception that all the heavy incomes are reflections of brilliant management. This is true in some cases, but it is not as frequent as the beliefs of the incumbents. In fact, there is much more to the selection of major executives, especially chief executive officers (CEOs) than remarkable ability to direct a productive company efficiently. The first of these is initial access to a managerial position. This access is mostly obtained through family and interpersonal connections. In some specialties, such as financial officers, there can be a substantial input from a business school, but even that is illusory. The experiences of mathematics teachers (e. g.) are that students in Calculus for Business Students and in the Mathematics of Finance learn just enough to pass them through the examinations, and even those who obtain good marks cannot in general be relied upon to retain effective use of the knowledge supposedly gained even over a summer vacation, much less a lifetime.
As though to underline the deficiencies of the selection process for admission to the executive suite, we have the spectacular case of George W. Bush. He was admitted to Yale University, reputedly on the basis of being the grandson of Senator Prescott Bush, and later to the Harvard School of Business when his father was the Vice-president of the United States. In both schools he left a reputation as a remarkable ignoramus, virtually incapable of learning anything, but he was graduated from both of them, the latter with a Masters of Business Administration (MBA). All of his business activities were failures, except for his success in getting the city of Houston to build a stadium for the baseball team he was connected with, but was selected by the Republican Party as their candidate for the governorship. He did nothing particularly creditable in that office, but his evident lack of managerial qualification did not impede the national party from nominating him for President. And there are other examples in private industry that do not come to the attention of the public. Not every choice of managers is so blatantly dependent on inherited status, but enough is to persuade us that the threat of managers to leave the country is not worth allowing them incomes in the tens of millions of dollars.
The extraordinary rewards heaped upon those who are already wealthy or influential both aggravates the problems connected with inequality and closes the doors of economic opportunity to people with genuine managerial ability who would do the work better for incomes in the range of six figures. The nations of the industrial world have been convinced that the maintenance of a large part of the population on incomes that are barely at the level of subsistence is an essential for economic stability but tolerate the payment of unnecessary bloated reward for work that is, on the average, very mediocre. The same comment applies for those who live on totally unearned income, mostly for the use of inherited money. The control of profits is a much sounder basis than the throttling of wages as a means of preventing runaway inflation.
32. Class conflict. The last two sections point in the direction of the objection that will be raised to any suggestion that the People, through their access to the ballot, can reorganize their economies in a direction that not only increases the output and the general wealth, but also achieves a much more comfortable and rewarding life for the vast majority of the working population. Any appeal to that majority to secure these gains through the workings of democracy is routinely abjured as “class struggle” or even “class warfare”. The suggestion that the alternative is class harmony is a scam. The proprietors have a very close idea of what they want the economy to look like and they will adjust their policies and their lobbying to advance those needs. In addition, they are well disciplined, so that even when their personal or corporate interests run athwart their class responsibilities, they will go with the latter. An example can be seen easily in the effect that employer-paid health insurance in the United States has had on the cost of producing automobiles. This benefit, achieved over fifty years ago through collective bargaining by the United Automobile Workers (UAW) has been blamed for throttling that industry. A few decades ago, the president of the Chrysler Corporation proposed a universal national health insurance system that would relieve that automobile industry from its involuntary role in carrying a large part of the cost of health care in the area around Detroit, Michigan. When the Clinton administration sought to create such a plan, the proprietors rallied against it, and the Chrysler Corporation joined their class fellows. Today, General Motors complains about the same burden but stays in line with the class program of seeking instead to nullify the contracts under which the benefit is paid.
In the 1930s, the New Deal made moves in line with the Ford Dictum to put money into the pockets of working people so as to hasten an end to the Great Depression. Instead of celebrating the fact that someone was finally doing something to revive the economy, the proprietors (and their kept press) noted that Franklin Roosevelt, as a member of that class, was betraying it by not hewing to the line that the key to prosperity was an even meaner suppression of wages. Today, the same press works to convince working people that their advantage lies in the infusion of ever more cheap labor as a way of lowering costs for the employers. The degree of success they have attained is a measure of the profitability of class warfare, especially when they are the only ones engaged in the fighting. We will be advocating the revolution of the ballot boxes in our conclusions to this work.
33. Racing to the stop light. Many of us have seen the phenomenon of cars driving up to a stop light at full speed and then slamming on the brakes to sit and wait for the green light. This racing even occurs when the drivers have every reason to know that they will not arrive in time for an open intersection, but can expect a long time before they will start up again. By comparison, moderate drivers might coast up to the stopping point without applying more than minimal acceleration, saving on both petrol and their brakes. It is interesting that young people today exhibit the same sort of behavior with regard to their lifetime employment, especially in highly skilled professions. There is plenty of reason to know that most of them can expect no more than 20 – 25 years in their first positions before becoming unemployed (and nearly unemployable) in their late 40s or early 50s. (See e.g., Down and Out in White-collar America, Fortune, 23 June 2003, pp. 79-83.) While a few will make it past that first cut into positions of permanent job tenure such as partnerships, even these jobs can no longer guarantee permanent employment, notably in accounting and law. In medicine, the strains of working for a corporatized health maintenance organization is driving physicians into early retirement, and a similar effect has long been noted in the teaching profession, starting at elementary schools and working its way up through secondary schools and even the untenured ranks of university teaching. It is noteworthy to compare this early departure from the world of work to the pleasures that are attested to by those in any profession who can manage to work at part time in their chosen métiers when they are past the time when the unseeing eye can require them to yield their places to young people who can be imposed upon to work extremely long hours or desperate people in distant lands who will do the same, on any available terms, for whatever they can get. It is often the case that such continuing workers are viewed with envy by those who cannot find such part-time work in their professions, either being dismissed or required to work the same long hours until they are discharged. The “lucky” people are often described as selfish, keeping jobs that young people desperately need, but few take the position that the age of attaining this part-time work should be pushed back to whatever level will provide employment for all.
There are short-term and short-sighted reasons why employers would be led by the Unseeing Eye of the market, but it is better for all, and especially for the members of the learned professions, that a high-quality and high-cost education should prepare its participants for a lifetime of work, with possibly periods of in-service retraining to realize the fullest benefits of that education to all the people of the economy. Still, the few who do make it to lifetime employment, even under the current rules of the American Business Model (ABM) , often display unconcern about their discarded fellows. That is the business of the next section.
34. The Devil take the hindmost. It is one of the tenets of the most predatory
forms of the ABM that the system works best when the rule is “every man for himself and the Devil take the hindmost”. This doctrine is most favored by those who have succeeded, even if the only success in sight is the success in being born rich and/or privileged. To some extent this doctrine may have had some validity when the alternative was fealty to a lord, or to an iron-bound set of traditional rules like those that governed the various guilds. But over the decades, the Iron Law of Wages and the Tragedy of the Common pushed the workings of economies to the point where they resemble ever more the “war of all against all” that was described by Thomas Hobbes. The indifference to the welfare of others, aided by the blindness of the Unseeing Eye, led to cycles of boom and bust, culminating in the Depression of the 1930s. The prevalence of distress led to some ameliorations, known as the New Deal, in the underlying predatory philosophy, but as the survivors of that horror died off, the minions of entrenched privilege again established the predatory rules. Today the younger generation is facing the possibility of another economic disaster caused by the impoverishing of the working people who must constitute the major portion of the consumer society that could enable us to continue to grow as far as the resources still in our hands can create prosperity. Where the format of democracy puts the choice of economic system in the hands of the People, those with most to lose are not those who have the most money, but those who have the possibility of prosperity through employment. The future is in their hands, if they choose to make it what they would want. In a system of predation, the loss to the prey is always greater than the gain to the predator. It is in the hands of the majority of the people to insure a better life for most than to hope to be among the favored few who live at the expense of the possibility of “the hindmost”. There are many of the hindmost, and will soon be more, unless the People take control of the conditions of their labor.
The only proper limitation on the amount of labor that each person can have as his/her place in the economy is the total amount that the employers can use and that workers are willing to provide. Once that figure is determined, the only protection against the corrosive effect of the Iron Law is a fair distribution of access to both the market for labor and the market for the goods created by the economy, except for the new shortage of materials in a world teeming with billions of people. The bulk of the People would fare best in such circumstances, and it is within their rights and within their power to obtain such a world, by a revolution at the ballot box. But then there is the problem of the shortage of stuff..
35. Stuff. A certain limitation on the growth of economies is found in the shortage of raw materials. As a touchstone, let us consider the matter of books and paper documents. The population of the world is approximately 22 times as large as that of the United States. The whole world today is straining to achieve the same standard of living as that of the industrial nations. But in a world of books and paper documents, along with other paper artifacts, there are simply not enough trees to provide annually 22 times as much paper as the United States now consumes. If we are to provide knowledge in the form of books for all the people of the world, we will have to find a new way to do it. There are new ways, but they are generally scorned by people exercising their aesthetic prerogatives. As this paper is being written, it is being transcribed onto a memory device the size of a man’s thumb, a device that can contain a gigabyte of memory, the size of a moderately large library. The expenditure of relatively few electrons can transform a kilobyte or so of this memory into a readable page of English text. The device itself, in today’s world, costs about as much as a printed book of several hundred kilobytes. It points the way ahead for defeating the limitations of stuff, at least for the problem of providing books. There are other examples of comfortable and luxurious things that might have to be given up more completely. Still, the matter of the books is important. Some problems will be finesseable, others will not. A book on paper is not the same thing as a book on parchment, or a scroll on parchment. Ask this question of people who have holy texts in those latter formats. A book that is printed can never have the same personality as one that is hand-lettered. Ask the owner of a diploma executed by a calligrapher. In the same way, a note produced on a typewriter or a laser printer does not carry the same message as one that is written in longhand. But there is less difference among these things than between the spoken and the written (or printed) word.
36. The Program. It is time to ask how we might make a transfer from the labor economics of the ABM to a lightly managed economy where balance and coordination are provided by careful analysis and adjustment. The first task seems to be the marshalling of the available labor on a basis of equality to supply the needs of the people. The first step would be the shortening of the work week to four 9-hour days. In doing this, we must be careful to hold harmless those for whom the present minimum wage laws do not provide an adequate living wage. There are various ways this could be done, as by raising that minimum to compensate for the shorter week. Or there could be some financial device, like the Working Families’ Adjustment and/or expansion of the tax-free band governing the lowest incomes. This is not an attempt to eliminate poverty as the first order of business. The first order of business is order in the economy. The gradual shortening will eventually bring into the active labor force many of those who are not employed but not counted as unemployed. The diagnostic for when this is achieved would be the disappearance (or nearly) of people working at the minimum wage. At the same time it would be necessary to keep a close surveillance over the question of which job areas still have workers available and which do not. Those where the labor shortage is least would be burdened by a stiff tax to encourage the hiring of more workers instead of relying on overtime pay. Where the labor shortage is more severe, the tax could be shared by the workers in a move to create an overtime bonus. In most cases at first, we would expect that the availability of positions would be filled by qualified workers that were not yet employed, or by qualified workers holding positions that did not require that expertise. We would expect a period of adjustment as some workers moved from the jobs they had to others that expected more and paid more. At the same time, some of the unemployed, including some of the invisible jobless, would find jobs that had been vacated. When things appeared stabilized, the standard work day could be shortened by ½ hour, for a work week of 34 hours. Another period of adjustment would be required before bringing the work week to 32 hours, and then toe 30 hours and then to 28.
After another settling-in period, we might be ready to change to three 9-hour days. At some point, the changes would fail to bring in enough new labor to meet the total demands of the employers. That failure would be marked by the loss of some minimum wage jobs. If that situation did not remedy itself within a reasonable time, it would signal a need to increase the minimum wage. Not until the stability of the system was threatened by the shortness of the work week should the correction be sought in a higher minimum wage. Presumably, that increase would make more labor available, and the process would continue. When even that would not increase the available labor supply, it would be time to go to the next step.
37. Choices. At some point, the program of increasing the labor force by shortening the work week (with appropriate defenses for the welfare of the most poorly paid) will come to the status where it appears that further shortening will decrease the GNP. At that time, it will become necessary to decide what we would do with the righted and patched boat we call the economy. As a metaphor, if the vessel is seaworthy, where do we want to go with it? In a real sense, this question is political and not economic. In a democracy, the people would have to decide whether they wanted more hours of work a week or fewer, whether they were willing to move in a direction where increased the earnings of extra hours would be taxed away to provide public works or enhance public values, whether they were willing to provide some sustenance for the wretched of the earth beyond the policy of holding them harmless mentioned above, etc. It would be valuable to know at that time how much leisure the program had delivered, and whether the people would rather sacrifice some of that leisure in the cause of other things they also held dear. It would be easier to judge that from that vantage than from the present one. To give some examples of the sort of directions we might take, we enumerate just a few.
At the present time, much is made of how much we should give to the poorest nations in consideration of their human needs. The validity of this claim is only partially undermined by the fact that so much of this argument flows from those who would tend to profit from using cheat labor in the hope of stuffing their pockets yet further with the fruits of human misery. Nor is it extinguished by the fact that many of those who are genuinely motivated by concern for these poorer people are not among the poorest of the industrial world who would pay the most in the form of lost jobs or drastically reduced earnings. It would benefit the richest nations, as the Ford Doctrine indicates domestically, to see them grow and flourish. A program that would bring elementary education, at least four years’ worth, to every country where it is lacking now would be a constructive step in that direction. Once that was achieved, an additional four years for those who seem motivated would be in order. And the delivery of at least one full meal daily to each of the students in question would also be in order. It would require some money, but a small tax on the one-third of the world that is today richer in GPR per capita than China could provide it easily to the one quarter that is poorer than India, to display a few obvious landmarks.
Within the industrialized world, a reversal of the benighted policy that forced parents, especially single mothers, to leave their children in the care of unqualified minders so that they might earn a pittance is destructive not only of the integrity of those families, but also results in more poorly socialized children to populate the future of those countries. A gradual raising of the support levels of such families to obviate the need to fragment them daily would tend to socialize them better and fit them better to take a place in an economically better world. The difference could be made up with a very small increase in the work week, and a program of taxation that would load most of the burden upon those who could afford it with the least strain, and these would be the most benefited by a higher level of social order.
In somewhat the same spirit, a program of structuring the pensions policy to ease the paths of those who do not wish to work when they are older would also deliver more hours to those who would rather have more money and less leisure, and these would also be seen in large numbers in the better-paid ranks, where a small extra tax would come easily out of the extra labor. Especially would this policy redound to the benefit of those whose work is especially tedious, strenuous, or wearing. With the passage of time, we would come to know how many would want to stop early if they had to contend with boredom in exchange.
Progressive economists like Lord Keynes and J. K. Galbraith have argued for the great benefit conferred by substantial public works that are not only gracing our environment but also act as ballast for the cyclical swings that tend to trouble any economy that is basically capitalistic. Among these public works are the maintenance of the built environment and also the advances in education and health that rely upon public expenditure for their growth.
Yet another claim upon the prosperous world is the demand for access to immigration. There are manifold arguments for this, including the search for cheap labor for poorly skilled jobs while those fortunate enough to have obtained superior preparation for economically valuable skills profit from their investment in learning and dexterity. It must be said that this motivation seems mean-spirited, but it is always made in terms of the advance for the poorest immigrants. If it can be done without breaking the rice bowls of the most poorly skilled in the accepting polity, it is a possible direction in which to turn, once that proviso can be attained.
These choices are only a few of those that will bubble to the surface once the wherewithal is created. Certainly all of these are being poorly served today, and at great cost to some of those who are entitled to count on their patrimonies from the work of previous generations in the industrial countries. The realization of stability in the labor economy makes many things possible that today seem either beyond reach or unaffordable.
The most important choice of all, however, remains one between a system of employment in which young people tear at each other to secure jobs whose hours are far beyond their proportional share of the labor the economy demands at any one time, work through the best and most vigorous years of their lives under the rule of the Iron Law of Wages, and then most are cast onto the scrap heap of their chosen profession early in middle age. They then face the harsh choice of competing (possibly with extremely low-paid workers) for jobs demanding minimal skills and paying meager wages until they are able to reach pensions that are increasingly being described as unfundable. The option of having a mixture of light work and much leisure for a lifetime, or until they are unable to do the required task, is not available under the ABM, and will not be unless a minimal amount of planning and economic management is applied over the whole of the economy for the benefit of all. In addition to the unpleasantness of the pattern resulting from the action of the unseeing eye and the unseen hand, there is also the peril of economic collapse. And as we learned in 1929, the continuation of behavior that leads over the precipice can be reversed at any time before the plunge, but one cannot step back when the fall has begun. This comes under a theory that had some currency in the late 1960s and went under the ominous name of Catastrophe Theory, which is beyond the scope of this exposition..
38. The good life. In sum, the sharing of the available hours of work needed by the employers over the course of a long and productive life has the prospect of sweetening the lives of those who are now young enough to gain mightily from it. With almost no difficulty, we could afford a standard work week of 36 hours, even without assuming any of the changes in the balance of supply and demand that would likely ensue from injecting an additional 10% into the ranks of the employed. The earners of poverty wages
represent the most available customers for more production, more than making up for any diminution in the incomes of the more prosperous. However, even if we were not to expand the number of the employed, the prospect of working 30-hour weeks for 60 years to make up the 90,000 hours of a working life would be more comfortable than 40-hour weeks for 45 years. Counting in the civilizing effect of a work week of four 7.5-hour days and its almost certain increasing of the efficiency and staying power of the workers, it should be easy to reach a 27-hour week, especially as more workers entered the labor market in response to the more comfortable calendar. A week of three 9-hour days can be expected to attract enough additional workers to enable the shortening of those days to 8.5 hours, and then to 8.
A 24-hour work week for 60 years amounts to 72,000 hours, in which the productivity of labor can be expected to be enough greater so that only a few additional workers would be needed, if at all. However, the pattern is so much more comfortable than the five days that are today’s pattern that many additional workers would become available. It would be possible to expend the additional labor in the raising of children (including the hiring of more teachers to instruct them in smaller classes) and in educating teen-agers up to and including the universities, in more medical and nursing personnel, and in producing the products that an increasingly prosperous working class would buy. Involuntary joblessness would shrink spectacularly, and with it many of the ills that it brings. The money we now expend in building and staffing prisons could be reduced, and the labor devoted to the building and staffing of hospitals, schools, and universities.
This is not a utopian dream. It is perfectly affordable on the basis of the sharing of the opportunities for employment, while still leaving a huge package of wealth at the upper end of the income scale to act as temptations for the ambitious (not to mention the greedy) to pursue. Even half of the after-tax incomes of the wealthiest few percent of the people would drive the efforts of people like Gordon Gecko (the figure in the film Wall Street who makes the notorious speech declaring that “greed is good”). Indeed, if the road to true prosperity is the earning of a somewhat smaller share of a much larger pie, then the life offered by this cooperative pattern is far richer than the one we now share.
But there is even another factor to be considered. Recent studies have shown that people on all income levels lead better satisfied lives if the economies in which they live are less unequal. Although the ABM boasts a large GDP, the perception of inferiority in those who are poorest within it leads to ills of stress including not only envy, but also the ravages of heart disease and mental illness. The poor of the slums of the United States are richer by any measure of the goods they consume than those of India, and yet they show the signs of poverty, including shortening of life, more starkly. And in studies of the industrial nations, those of Scandinavia are far more satisfied with their lives than the others, with the greatest dissatisfaction being found in the United Kingdom, with the United States close behind. A large measure of this unhappiness must surely be laid to the myth of meritocracy, which tells us that those who are worthy will become prosperous, while those that are poor are worthless and deserve their misery. It is also this myth that sustains the widespread toleration of the bloated salaries paid to many of the Chief Executive Officers (CEOs), salaries that are huge even for officers who are driving their corporations into insolvency by their incompetence. Indeed, while private companies keep their failings from public notice, we see in celebrities how far from merit some of the well-provided are. Indeed, for wealth, indolence, incompetence and irresponsibility there is hardly a member of the human race to rival the present President of the United States for well-provided worthlessness. And indeed, during the 2004 election, he was quoted by one of his professors at the Harvard School of Business as opining that the poor were poor because they are lazy. In these years, we have witnessed an exhibition of laziness and fecklessness unparalleled in any previous President, so perhaps he is an expert of sloth. Still, the poor of the United Kingdom and the United States are burdened with a theory of their worthlessness that is an essential axiom of the American Business Model.
And before we leave this encomium to a system that deals with the surplus of labor by giving enough opportunity to each while asking little of the successful (instead of enslaving them all to the ravages of the Iron Law of Wages), let us remember the crisis that first led us to this analysis, the insolvency of our system of pensions. After a more comfortable working life, the advance of this theory may lead us to even shorter work weeks for those in the last few years before retirement, followed by a pension that is well within the ability of everyone to save for. But it is not a solution to which we will be led by the Unseeing Eye that governs the Unseen Hand. It must be created, and not by the present authors.
39. Democracy. Reaching the goals set forth in this book will require the marshalling of the People to take control of our lives and act in our own best interests. It will involve a halt to the class war that has been waged against the common folk since the Second World War. It will require the majority of the People to recognize what is in their best interests and vote for it, unswayed by the onslaughts of public relations campaigns that the richest have been able to afford and to which the People have responded. And despite the fact that the weal of the richest is also at stake in restoring the integrity of the economy (an integrity that faces immense loss from the directions we have indicated), we can expect that the plutocrats will continue to seek ever cheaper labor via the Iron Law. If we must enter another Great Depression before we can find a leader of the stature of Franklin Roosevelt, we will suffer privations of which we can know nothing today. But until we can find such a leader, or at least restore some semblance of the labor movement that created the Labour Party and the New Deal, we will be faced with governments that are subservient to powerful forces that will work prodigiously to prevent anything as good as the life we spoke of in the previous section. Somewhere there are such potential leaders. If this book can reach them, and if they are persuaded by it, perhaps it will not be necessary to suffer the collapse of our world before we can rebuild it.