Friday, March 1, 2013

Dorian Warren: Criminals, Conservatives, and Oligarchs Are Deepening Inequality | Next New Deal

Dorian Warren: Criminals, Conservatives, and Oligarchs Are Deepening Inequality | Next New Deal

On the first point, Dorian notes the recent Wal Mart bribery scandal and says that when you think of "the lawlessness of Wal Mart when it comes to unionization, I think that's a great example to think about the other ways in which employers have pretty flagrantly violated the law in the last 20 years or so. So when you think about minimum wage, when you think about health and safety, we're in a new environment, and activists who work on this call this 'wage theft.'" He highlights some shocking statistics from a 2009 study that shows how badly low-income workers have been ripped off by their employers and points out that there is a "basic principle of the social contract that when you work at a job you have an agreement with the employer for how much you're going to make... There is a pretty systematic violation of that contract, and that explains at least part of the wage stagnation that we've seen in the low-wage service sector specifically." While updating and modernizing labor laws is important, "monitoring and enforcement of existing wage and hour laws are really important."

Weak I-O policing causes an Iv-B and V-Bi disconnect, Iv employers rip off B workers to survive, those that don't can go broke in a Gresham's dynamic. B workers can also rip off iv employers, leaving them for other employers, stealing, working unreliably when not watched, etc. A social contract needs to be enforced, usually it is Iv agents versus Bi communities making stable contracts. When Iv-B tries to make contracts it is like in a poker game with bluffs on both sides, they are unlikely to be done honestly. 
Where race is concerned, Dorian argues that while it doesn't explain the rise of inequality by itself, "there is a story where race does play a role, and it's a political story." He points out that "for 80 percent of our country's history, the majority of Americans weren't classified as citizens," and that Lyndon Johnson's signing of the Civli Rights Act caused an exodus of white southerners from the Democratic Party to the GOP. He says that "there is a difference between Republican administrations and Democratic administrations, but how you get to a Republic administration has to be part of that story, and that's very much about race and the response of southern whites to greater inclusion into American democracy." This racial backlash in turn helps to shape the policies that further inequality

Viable Opposition: "JOLT"ing America Back to Work

Lastly, how about manufacturing?

While things have picked up significantly since the bottomless pit of the Great Recession, openings in April 2012 dropped to 246,000, down 20 percent from the previous month where openings hit a post-recession high of 308,000.  Keep in mind that we must keep this data in perspective; looking back to the early part of the millennium, manufacturing job openings exceeded 440,000 when this data was first recorded.

Actually, this graph may help explain some of the issues facing those who manufacture things for a career:

Apparently, America just doesn't make things any more, either that, or it takes a whole lot less Americans to make what we actually do consume.

This illustrates how manufacturing job losses have led to higher unemployment since the GFC, with a limited number of these compared to demand of these goods they have gone to cheaper wage countries. The argument is usually that if jobs go to countries better specialized for them then everyone benefits, however in Aperiomics this is only true for Biv countries in a positive sum game. When resources are scarce a job lost to another country may be a Roy negative sum game where that country minimizes their losses, other consumers might minimize their costs by buying cheaper goods from them. However this can now be at the expense of the original workers who don't just fail to make as a high a profit, they can experience losses such as losing their homes over this. For example in a Biv country if someone else gets a job instead of a person then that person can usually get a job somewhere else, this can then be a process where people work where they are most skilled with Pareto optimization. In a Roy country if a person misses out on a job there might not be another one so they might starve or lose their home. This can also be regarded as Pareto optimal, that those best suited to survive do so while others perish. This can then be a version of Darwinism or survival of the fittest. In a wealthy country most survive so the fittest tend to become more wealthy than those less fit, not perish. So in a Roy recession or quasi depression the strategies are different, the government needs to minimize losses to return to Biv prosperity. Letting people go bankrupt or starve is very wasteful as is a Roy economy that used to be Biv. For example in the Great Depression many assets and skills became nearly worthless and so people lost their savings and skills looking for work. When the Great Depression ended then these skills and assets were still degraded when they would have been better off preserved. This is then like a Biv forest going through a drought, plants get damaged by exposure to the elements as the big plants die or get knocked over by Roy animals. The ecosystem can be badly damaged even if it rains next year, the forest might take a long time to regrow and even permanently lose some plants and animals. 

Was the decline of American unions inevitable? Not if you ask Canada.

Was the decline of American unions inevitable? Not if you ask Canada.

Since the 1960s, organized labor in the United States has been steadily decaying. A half-century ago, 30 percent of American workers were members in a union. By last year, that had shriveled to 11.8 percent. Economists have offered up all sorts of theories for the drop, from the shrinking manufacturing workforce to foreign competition that has made U.S. companies more hostile toward unions.

Canada has a more balanced Biv economy, the workers can remain more as Bi instead of fragmenting to B. The US weakened their I-O regulators more which causes more Iv-B business breaking up Bi unions.

An increasingly rare sight.
But a new paper (pdf) from Kris Warner of the Center on Economic and Policy Research suggests that the decline in U.S. labor unions wasn’t simply due to inexorable economic forces. Government policies likely played a big role too. And the easiest way to see this, Warner argues, is by comparing unionization rates in the United States to rates in nearby Canada, “the country that is probably more like the U.S. than any other – economically, socially, and politically.”