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Don’t Like the Left’s ‘Jobs Guarantee’ Idea? Well, the Right Is Cooking Up One of Its Own
In a Wall Street Journal op-ed, researcher Max Gulker offers a harsh critique of a “federal jobs guarantee.” Example: “Temporarily unemployed workers, along with millions of low-paid workers, would be diverted into a complex bureaucracy with no mechanism or incentive to put the workers’ skills and time to their best use.”
Oh, the idea has problems, such as the possibility of these permanent government gigs possibly crowding out existing jobs. (That and many other problematic issues are discussed in an excellent blog post by economist Timothy Taylor.) Still, some folks on the right are cooking up their own idea of a jobs guarantee. In the new book “The Once and Future Worker: A Vision for the Renewal of Work in America,” former Mitt Romney policy adviser Oren Cass argues for what he calls the “worker hypothesis.” This is the idea, Cass writes, that an American labor market “in which workers can support strong families and communities is the central determinant of long-term prosperity and should be the central focus of public policy.”
That’s not the way I would frame things. I think public policy should focus first and foremost on making sure American workers become ever-more productive since that is the key to higher incomes and higher living standards. Labor productivity is the central determinant of a nation’s long-term prosperity. And if there is a mismatch between market outcomes and societal expectations, government has a role there in providing safety net programs such as the earned income tax credit, which promotes work and lifts people out of poverty.
But what Cass presents is actually a “jobs hypothesis,” one that laments American-style capitalism and the disruptive employment churn that comes with its supposed pell-mell pursuit of higher GDP. Too much creative destruction, gang. Not worth the price. What has the globalist “open agenda” of higher immigration, free trade, and offshoring provided other than decades of stagnant wages, the exodus of men from the labor force, unstable families, crumbling communities? In other words, an economy of cheap flat-screen TVs, and massive opioid addiction. Cass: “Yet how does the open agenda, which has already characterized the past generation of American policy, address the critical challenges facing the nation? It does not.” If only policymakers had focused on making sure all those good jobs didn’t leave overseas or go to the wrong people. Washington should have better protected them — “guaranteed” them, if you will — perhaps even if it meant slower economic growth.
Yet a true “worker hypothesis” would focus more on the worker rather than the job. Which makes sense. Since the average person will change jobs many times in a lifetime, policy should focus on their skills and the safety net for when they are between gigs. As Taylor puts it, “We want people to move to continually acquire new skills, which can mostly happen within existing jobs, but sometimes needs to happen between jobs. We want some people to move to new areas, either across their metro area or sometimes to a new state.”
This is also the philosophy behind Denmark’s famous flexicurity system which allows liberal hiring and firing of employees but also offers lots of unemployment income and retraining benefits. Protecting jobs rather than workers, on the other hand, risks a more stagnant economy, such as in France where it is notoriously difficult to fire someone. That nation has an unemployment rate of over 9 percent — Denmark’s is under 4% like America’s — and Nobel laureate economist Jean Tirole has written that the French economy needs economic reform “focused on protecting people, not jobs.”
Indeed, the anti-disruption attitude in continental Europe may well play into why their technology sector so badly trails America’s. This protectionist attitude is also seen in the US where activists have, for instance, attacked Walmart and Amazon for disrupting traditional retailers and their workers. Then there’s President Trump, who famously attacked Carrier for trying to shift some jobs to Mexico. Of course, you are not really protecting jobs over the longer term if the result is a less productive and competitive company (and economy) that eventually sheds workers or doesn’t expand as much as it would have otherwise.
Moreover, it doesn’t take much imagination to consider what might happen when the “jobs first” attitude eventually confronts disruption from automation. Cass argues automation is different from the “openness agenda,” yet he inadvertently outlines just how the philosophical attack on technological progress might proceed.
Published in Economics
When a politician spends someone else’s money on training public school students in AutoCAD, he makes very different spending decisions, and overall generally much worse decisions, than the people would have made if they were permitted to keep and spend their own money.
The politician, who isn’t a businessperson, and who is not spending his own money, and experiences no gain or loss on the investment, neither knows nor particularly cares
The waste goes beyond the taxpayers in the school district. For just one example, it extends to the corporations that hire AutoCAD-trained workers trained at someone else’s expense.
Although these special interests do experience windfall profits, these profits are much less than the losses suffered by the taxpayers of the school district. That is because they make much more inefficient business decisions, if you consider not just their own bottom line but the economy as a whole. I won’t go into this and other inefficiencies for now.
Naturally, there are valid counterpoints to the economic arguments above, and there are of course social values beyond creation of material wealth. But it is impossible to evaluate these more subtle factors without first understanding the basics. The fact that markets never work “perfectly” doesn’t mean they don’t work at all. The above is the basic hard facts about economic reality.
This assumes quality and value remain at the same 1960 rate. They do not. The 3 bedroom house today is not built to the same standards as 1960, not the same code requirements, same materials, etc. Quick question: You get to pick one of 2 houses – the 1960 house, or the 2018 house. Same price. Which do you choose? Why?
Secondly, why *should* a house today cost the same as it did in 1960 (while adjusting for inflation)? Why? Markets change. It’s not cost you’re talking about here, it’s price. Price is not the same as cost.
Inflation is not new. The markets for everything have changed, including labor. One of the reasons houses cost more today is because people are buying them at that price. That means they have the income and resources to do so.
I’d have to see the houses, and the neighborhood, etc.
I haven been complaining, to no avail, about worker training for years. Most bosses have two fears. First, that the expense will exceed the value created by the well trained worker. Second, a well trained worker is more employable and therefore more likely to leave.
The first is a quality control problem. Select training and trainees with care. The second, I have argued is a benefit, not a bug. I want my company to have a reputation as a good place to get good training. It helps me recruit better staff. Some may take advantage, but with most people, it creates an extra dollop of commitment and appreciation.
The school district.
I would pay *way* more for a 1960 school district.
The Reticulator :
“Nobody could afford to have a 60s type life now. We’d have to give up a lot of gadgets and toys in order to have those kinds of social relationship again.”
This argument goes to the heart of the issue.
Gadgets do not make a house or a home. When you cannot afford to get married and have children, because you have no realistic chance of buying a house that will induce that prospective wife of yours to marry you, there is a major society breaking kind of a problem. There are studies out there that argue that family formation is way down because women are generally not willing to marry men who are making less than $40K a year and many men in today’s economy has little prospect of making that kind of money. No amount of gadgets or increase in “standards” will matter in that situation. In my state of California, millions upon millions of middle and working class families would gladly jump at the prospect of buying a 60’s house with 60’s conveniences at 60’s prices rather than living in the tiny hell hole they live in now. BTW, the average price of a house in LA County in 1970 according to the 1970 census was $22,000 – 1/25th of the average price now which is of course way out of the price range most can afford.
All across America, in most Major America Cities, 100% of new apartment complexes built are in the “luxury” price range. Those nice new “standards” and conveniences so praised but some here are only affordable by the wealthy.
Today’s horribly racist and disastrous Progressive “Smart Growth” regulatory and planning policies are squeezing the life blood out of our middle and lower classes. That is a fact. When you discourage blue collar industry and the construction of middle and lower class housing, there is no possible outcome other than a disastrously declining standard of living for the middle and lower classes. No jobs and no housing puts people out on the street. As a result, 17 million people dropped out of the workforce under Obama. Since 2001 suicide rates among working men have jumped 34% during to our insane government policies and the work situation they have produced. Millions have sought to relieve their pain of their work/life situation through drugs, with millions of working age men now becoming more and more unemployable. These Progressive policies have caused an unmitigated social disaster, and no puny “jobs guarantee” that pays next to nothing will fix that. No ifs, ands or buts about it.
JimP,
Given the bizarre drift of the focus of American politics to transgenderism, to MMGW and even an obsession with multi-culturalism to the extent of ignoring the rights of actual American citizens, I think we would be doing well to take the “worker hypothesis” very seriously.
Obviously, the left will be coming up with very different ways to accomplish the goal. We know well that their way doesn’t work. Only a full employment growth economy can be the foundation for fulfilling the worker hypothesis. The rest is icing on the cake.
Regards,
Jim
Easy. The 1960. Because it’s made better. We are looking for a house right now and are frankly looking for anything made before 1900, preferably 1860. If it’s lasted this long something was done right, from location, to materials, to design.
That’s the point. Inflation is not a sign of the value of the house but of the valuelessness of the money.
True, inflation is not new, but it shows a watering down of the money, and the loss of the value of one’s savings. But modern exponential inflation of an unbacked currency as the norm is new. My point includes: If you were able to buy and hold a house in 1960, or to put $50k (ten years’ salary) in the bank for retirement, in 1960 for an overall return of 3% over 58 years, with interest it would be $275k today. But back then it was worth ten years’ salary and all that purchasing power that goes with it. But today, even with the tremendous increase due to the compounding interest, with inflation, it would be worth only four years’ salary. Today, ten years’ household income would be closer to $700k, which would be a much more effective retirement.
Amen. In my community, a suburb of Milwaukee, there’s a new apartment complex that just went in about a mile from us. 2 bedroom, 978 square foot apartments are “starting from” $1525/month. Three bedrooms range from $2150-$2500 (both of those are “starting from” for their square footage.,
Even with property taxes of approx $7000/year, my 3000-plus square foot house costs less than $2000/month. And my house is on the high end of the city property value range.
Miffed, in my hometown of LA, a new single in most new complexes starts around $2500 a month and goes up from there. But the conveniences! Not! Usually with a smallish kitchen to boot.
But in LA, you’re not buying a house for less than that monthly payment, are you?
In this area, you easily can get a nice house for under $200k. (according to zillow, Median Home value for the city is $237k)
Miffed, ancient, rickety, ( 90-100 years old) houses with none of those ballyhooed conveniences in areas in LA not very long ago controlled by gangs where you wouldn’t even want to drive down the street, now go for over $500,000. $200k are you kidding me? Not even close in LA. But that is what happens when you let the Progs run wild.
I don’t know everything about this, but there are at least two big things that might be wrong with this analysis.