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A Labor Day Program for Freeing Labor

Nothing is more central to human flourishing than work.  Other animals expend energy to survive. But man evolved to make conscious toil for food and shelter. This aspect of our heritage is reflected in a psyche that for most still requires work for contentment.  Sigmund Freud was not right about everything, but he was certainly correct that love and work are the necessary conditions of a satisfied life.

While modern America has cleared out obstacles to love, however unconventional, it has put up more and more impediments to work.  Begin with the tax code. It raises most income from labor, not consumption. As a result, the government discourages work more than is required to run its operations. Nor can the decision to tax labor heavily be justified by concern about inequality.  For those who want their taxes progressive, a consumption tax can be made as progressive as an income tax.

Second, minimum wage laws prevent the least talented and able among us from participating in work. The fifteen dollar minimum wage favored by the  2016 Democratic platform would prevent many from earning an honest living.  The effects will be even greater in the long than the short run, because employers will over time then substitute more machines for unskilled workers. We would be outraged if laws prevented some people from marrying. We should be similarly enraged by these laws. If it is thought that some jobs pay less than needed for a dignified life, governments can top up wages through an income tax credit.

Third, as my high school friend Nicholas Eberstadt showed recently in the Wall Street Journal, generous disability laws lead some citizens not to work. A far greater percentage of people are today judged disabled than in the 1950s, although the health of Americans has substantially improved since then.  The result is that the able “disabled” live in isolation with no civic engagement, spending their time watching TV or playing video games.

Fourth, even the Obama administration has complained (link no longer available) that too many states have licensing laws that prevent unnecessarily prevent people from working in their chosen trade.  It is not necessary to study for two years braid hair or to take courses in aesthetics to design apartment interiors.

Labor Day is the traditional kick off of the campaign season.   And we are sure to hear many speeches about the dignity of work and no doubt some about exploitation of workers by employers. If only a candidate would put forward a systematic program to dismantle the government forged manacles that make hands idle.  Move from an income toward a consumption tax, oppose raising the minimum wage, reform disability laws, and streamline occupational licensing!  Such a program would increase personal as well as economic growth.

Reader Discussion

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on September 05, 2016 at 09:56:57 am

I suppose parochial propriety produces seeming mendacity: “Nothing is more central to human flourishing than work.”

I’d rather die than work without enjoying or anticipating private liberty. The liberty to work is essential to human living, but that liberty must be provided by a civic people.

Free-enterprise is the best economic system, and governments that use free-enterprise must understand and maintain the principle of balance. Essential to individual liberty is balance in consumption and asset-building.
Most of all, government should not pass regulations that, out of bureaucratic ignorance, unintentionally bias supply and demand. Demand for goods and service must freely cultivate supplies, and obsolete business should freely disappear from the market place.

Labor expertise must freely adjust to new enterprise and new sectors that replace the obsolete businesses, and governments that try to preserve obsolete goods and services or otherwise manipulate markets beg woe. Increasing consumption of fossil-fuel in order to politically establish renewable energy is defeating, especially if the renewable becomes obsolete before affordable.

Borders matter. It would be nice of the entire world operated so that work was central to human flourishing. But it is not so. Some borders isolate an entire people who are enslaved, for example, by communism, and labor costs there are low. Others are taken by socialism, and labor costs there tend to be high. Others are fooled by “democracy,” the idea that 50% plus one vote can lord-it-over the 50% less one vote. What’s needed is a republican form of government, wherein every newborn citizen is educated by a civic people to continue the cultivation of private liberty for willing citizens. By private liberty I mean the life-long pursuit of the real-no-harm life he or she wants---no imposition of “the good life.” Immigrants must be willing to collaborate for mutual private liberty, and dissidents to private liberty, such as criminals and less, must be constrained.

This way of living can be achieved, because it has been imagined, and a system of operation has been proposed. In this system, citizens are plainly nudged to take advantage of the-indisputable-facts-of-reality respecting flourishing in work and investing so as to build wealth and pursue the life of their real-no-harm personal dreams without early death.

The government that would support this way of living would distribute the gross-national-product so that 1) every newborn is nudged to take charge of his or her acquisition of the comprehension and understanding necessary so as to emerge a young adult in charge of a full lifetime of living, 2) provide every worker the means to both live and save & invest so that he or she can pay for their retirement time, for example, beyond age 68, 3) nudge all adults to pay attention to being not only consumer but part owner in American free-enterprise, 4) assure that, leaving the media free to create and execute their business plans, public attention is drawn to the-indisputable-facts-of-reality and 5) make certain that the USA position on religion is that every citizen’s real-no-harm personal god or none is a private matter, to be pursued in hearts, closets, home, and churches, but in no way influenced by or supported by government.

The USA seems at a nadir, but perhaps 2016 marks the year of ascent.

These ideas are not the objective truth, but comprise a partial statement of an achievable, better future for the USA. A better future has been possible for willing people ever since the civic proposal in the preamble to the constitution for the USA was ratified, on June 21, 1788.

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Phil Beaver
on September 05, 2016 at 11:36:52 am

Sigmund Freud … was certainly correct that love and work are the necessary conditions of a satisfied life.

[But] modern America has cleared out obstacles to love, however unconventional, it has put up more and more impediments to work.

Depends on what you mean by “impediments.”

I’m sympathetic to arguments about the income tax, and have long been intrigued by the X Tax.

And I share McGinnis’s concerns with the minimum wage: If society wants people to have more income, society should bear those costs, not private employers. The minimum wage seems to be a second-best solution, made necessary because better solutions are not as politically palatable: The same factions that oppose increasing the minimum wage also oppose alternative programs.

And yes, some professions face needless licensure requirements.

The more interesting question pertains to disability payments: Do these impede people’s ability to work, or merely remove their compulsion to work? This would seem to be an important distinction to the classical liberal/libertarian—but perhaps not to Freud.

Tyler Cowen’s Average is Over suggests that we’re entering a world with much less demand for labor. This is merely an extrapolation of past trends: Once upon a time, roughly 98% of us would have been employed in agriculture. Today that work has been so automated that only a tiny fraction of the workforce is employed in this manner. And automation is taking over ever more professions. As a result, society can excuse ever more people from the paid workforce. Thus, declining labor force participation rates coincide with unprecedented levels of GDP. What’s not to like?

Well, one problem arises from increasing disparities between rich and poor. The US labor market has always required enormous government intervention to produce desirable results. And in the coming economy, it is unclear that market forces—even fortified with all kinds of government interventions—with be able to produce the levels of income distribution that people will find acceptable. And certainly the labor market will grow ever less efficient as government intervenes with ever greater frequency.

Alternatively, we could eliminate a lot of government interventions--jettison not only minimum wage laws, but also labor laws, sexual harassment and discrimination laws, workplace safety laws, Social Security, and the rest—and replace them with a universal income. Once we make labor into a prestigious hobby, we can stop worrying about workplace exploitation. This would be true liberty at last!

With two caveats. First, there will be the taxes required to drive the system. But given a world of unprecedented wealth, perhaps this kind of intervention would be less burdensome than all the others that we currently endure.

Here’s the bigger caveat: What will happen to a population that is no longer compelled to work? Self-directed people will do just fine, continuing in the paid labor force to earn extra money and to gain prestige. But what about the rest of us? Without a job to compel us into a minimum of social interaction, to help us structure our days, to give us a sense of purpose and belonging, to distract us from ruminating on life’s meaning, etc., what will become of us?

So perhaps we will continue to rely on the labor market—not to achieve traditional economic objectives, but the achieve the many unstated benefits of labor.

Happy Labor Day, all!

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nobody.really
on September 06, 2016 at 10:06:30 am

Here is an interesting little tidbit on Labor:

http://www.nationalreview.com/corner/439701/labor-unions-workers-only-6-percent-support-them

Is this the *government intervention* about which nobody speaks.
Yep, Unions could not exist without government intervention.

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gabe
on September 06, 2016 at 10:21:49 am

[…] a line from a Labor Day blog post by John McGinnis. After noting […]

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“We would be outraged if laws prevented some people from marrying. We should be similarly enraged by these laws.” | The Locker Room
on September 06, 2016 at 16:29:13 pm

By the way, let me clarify that I am not Economist columnist Ryan Avent, but if you've read his book The Wealth of Humans, I wouldn't blame you for harboring the suspicion.

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nobody.really
on September 07, 2016 at 08:49:37 am

Thank you for interesting information. I favor right to work laws.

My dad was a machinist. When I was a child, I recall one strike when Dad friend was shot and killed. We suffered when Dad picketed.

Dad would not be a scab, but he was independent and would not strike if he thought the union was wrong. Twice, he moved our family of four to another state in order to express his views (not walk the picket line). They were hard-nosed Baptists, and Dad had some Scots-Irish, so Mom never worked until all the roost was gone. Then she worked more or less for social interests.

In Charleston, W. VA, Dad rented a dilapidated store front and quickly partitioned it for our family. I guess we were better off in Salt Lake City, because he rented an apartment. We returned to Knoxville, and he moved from railroad machinist to Oak Ridge--AEC. Things got better.

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Phil Beaver
on September 07, 2016 at 08:51:26 am

Sorry: that's "Dad's friend."

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Phil Beaver
on September 07, 2016 at 20:44:42 pm

BTW:

I am not the author of Midsummer Night's Dream, in case you were wondering!

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gabe
on September 07, 2016 at 20:46:37 pm

and just in case anyone missed it, here is a nice little piece wherein SEIU gets its comeuppance to the tune of a $5 million jury award.

Oh how far Labor has sunk!!!

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gabe
on September 07, 2016 at 20:47:17 pm

oops - here is the link:

http://hotair.com/archives/2016/09/07/uh-oh-texas-jury-slams-seiu-5m-damages/

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gabe
on September 12, 2016 at 23:12:14 pm

Well, for what it's worth, here's what Ryan Avent has to say:

"Over the last couple of decades, wages, adjusted for inflation, have scarcely grown throughout a broad range of rich countries – longer in some cases…. The share of income flowing to workers, as opposed to business and property owners, has fallen. And, among workers, there has been a sharp rise in inequality, with the share of income going to those earning the highest incomes increasing in an astounding fashion.

Wages have been rising in the fast-growing emerging economies, by contrast. But even there these other two trends – concentration of income in the hands of capital owners, and in the paycheques of the richest workers – are a growing source of concern.

….Among all [American] men, the rate of participation in the workforce dropped from about 76 per cent in 1990 to 69 per cent in 2015…. [T]hose squeezed out of work often find their lives upended. Stuck in atrophying communities with few prospects, many struggling to find purpose and satisfaction in life; indeed, recent research has turned up an alarming rise in mortality since the late 1990s among middle-aged white Americans, mostly accounted for by an increase in suicides and in drug and alcohol abuse….

….In Europe, one in five adults under the age of twenty-five is unemployed. Across the Organization for Economic Co-operation and Development (OECD), 12 per cent of people aged between fifteen and twenty-nine are neither in school nor work. Some are engaged in illicit activity or are in jail; others are in their parents’ basements playing video games. Much the same is true of the long-term unemployed, many of them older men without much education, who drift around, often drinking to pass the day, lacking much, if any, connection to society at large.

For an awful lot of people, work has become a less certain and often less remunerative contributor to material security. It is a development that makes political forces of populist outsiders, such as Donald Trump and Marine Le Pen, and bestsellers of wonky economics books, such as Thomas Piketty’s Capital in the Twenty-First Century, an analysis of global inequality published in 2014 that flew off the shelves. Work is not just the means by which we obtain the resources needed to put food on the table. It is also a source of personal identity. It helps give structure to our days and our lives. It offers the possibility of personal fulfillment that comes from being of use to others, and it is a critical part of the glue that holds society together and smooths its operation. Over the last generation, work has become ever less effective at performing these roles. That, in turn, has placed pressure on government services and budgets, contributing to a more poisonous and less generous politics. Meanwhile, the march of technological progress continues, adding to the strain.

The digital revolution alters work in three ways. First is through automation….

[And] the digital revolution has supercharged a second force: globalization….

Thirdly, technology provides a massive boost to the productivity of some highly skilled workers, allowing them to do work which it might previously have taken many form people to accomplish….

These trends … are combining to generate an abundance of labour: a wealth of humans….

The global labour force, which … grew by more than a billion workers over the last generation, will add close to another billion over the next. At the same time new technologies will make it ever easier to automate the simple work in factories, warehouse, and shops that has historically accounted for a huge share of global employment. Technologies will also alter fields such as education and medicine, by allowing a few teacher or doctors to do work previously done by many.

The economy, and society, will try to adjust. That adjustment will mean stagnating wages, for many workers, rising inequality, and a tenuous and fading connection to the world of work for many others. Workers are unlikely to take these woes lying down. Something has to give....

In 1930, the British economist John Maynard Keynes wrote an essay describing his view of how the economic future would unfold. At the time, the world was caught in a deepening depression. ‘We are suffering just now from a bad attack of economic pessimism,’ Keynes noted in the opening to his essay, ‘Economic Possibilities for our Grandchildren’….

Keynes believed that, once the world had overcome its Depression, growth would resume and living standards would return to the upward path they’d been on previously. He acknowledged that rapid technological improvement would cause some short-term discomfort (‘a temporary phase of maladjustment’), but urged readers not to lose sight of the big picture:

All this means in the long run that mankind is solving its economic problem. I would predict that the standard of life in progressive countries one hundred years hence will be between four and eight times as high as it is today….

….Time spent working would dwindle to perhaps fifteen hours a week, and then to nothing. And the main problem humanity would face would be just what to do with itself in a world of abundant leisure.
Keynes’s forecast of progress in living standard has proven correct. [R]ich economies have already experienced at least a fourfold improvement in living standards. It seems likely that some will, by 2030, have enjoyed an eightfold rise. Where, then, is the abundance? Where is the life of ease? Where are the fifteen-hour work weeks?

….What we have not managed to do is to allocate the fruit of our production evenly enough to allow broad-based reductions in work hours. We haven’t done that because it is politically a very hard thing to do…. The rich and privileged don’t want to subsidize the poor. The poor may conclude that what redistribution the rich offer leaves an impossibly huge, even unfair gap in the incomes of the haves and have-nots. The poor may also not be content with an economy in which they are effectively unnecessary, kept at peace by a hand-out from the state. [T]he incentive for clever or ambitious individuals to work … might be lost, leading to stagnant growth….

[Why didn’t Keynes anticipate these problems? For 150 years], workers asserted their power and won: the right to organize into labour unions, expansion of the franchise to men without property and (eventually to women, establishment of labour-oriented and socialist parties. By the end of the second World War, workers’ victory over their employers seemed near absolute….

But political winds shifted. Communism provide a poor way to organize an economy. Technological progress and trade slowly shipped way at the power of organized labour. The prosperity of the post-war decades created a propertied middle class – increasingly well-educated and white collar – which over time grew ever less sympathetic to the priorities of the Labour left. [I]ntellectuals like Milton Friedman made and increasingly vocal case for a different, more market-oriented sort of economy. And, finally, the exhaustion of the unprecedented, glorious post-war economic boom and the arrival of the disappointing growth and high inflation of the 1970s crated the conditions for a political break….

Most of us … were born into a world in which this break had already begun. We inherited an idea of work that reflected this long struggle….

Yet … history has not ended; …the political battle over the spoils of economic growth has not ended…. A new political break looms.

[Thus will emerge] a battle between ideas – some new, some recovered from history’s dustbin. It will be an individual struggle – what the hell should I do with my day? How and what do I teach my kids about a life well led? How do I provide for my family? And a societal one – how should we tax the fantastically rich? What does the state owe a middle class whose incomes have not grown for most of the last two decades? How welcoming should residents in advanced economies be to those who wish to move there from other countries in search of better lives, or to poor places that want to sell their goods and services to rich consumers? (And similarly, how passively should the world’s poorer countries accept an isolationist, or nationalist, turn in richer countries?) If we can’t offer our children meaning and identity in work, how do we channel their energies toward healthy alternatives, rather than ideological extremism, or social nihilism?

Ryan Avent, The Wealth of Humans (2016) at 3-12 (citations omitted).

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nobody.really

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