Monday, September 06, 2004

Why is it that knowledge of basic economics seems to be a bar to employment at the New York Times?

Bob Herbert, in his column today:

"American workers are in an increasingly defensive position. In a tight labor market, when jobs are plentiful, workers have leverage and can demand increased wages and benefits. But today's workers have lost power in many different ways - through the slack labor market, government policies that favor corporate interests, the weakening of unions, the growth of lower-paying service industries, global trade, capital mobility, the declining real value of the minimum wage, immigration and so on.

"The end result of all this is a portrait of American families struggling just to hang on, rather than to get ahead. The benefits of productivity gains and economic growth are flowing to profits, not worker compensation. The fat cats are getting fatter, while workers, at least for the time being, are watching the curtain come down on the heralded American dream."

Three points immediately occur:
1. If U.S. unions weren't so powerful, and the minimum wage weren't so high, then both immigration (to get jobs at artificially high wages) and out-sourcing (finding workers who will work at wages that are not so artificially high) would not be such a problem. Herbert's list confuses causes and effects. When I reread the list, I find it truly remarkable that someone with even a high school education could be so fundamentally confused.

2. There is a third group, besides workers and corporations, to consider. That is consumers. If you adjust for quality, and price, the chief beneficiary of productivity gains in the last decade have been consumers. So, as workers many people are little better off. But as consumers, their welfare is steadily improving. At least Marx was smart enough to study economics. Bob Herbert isn't even smart enough to study Marx.

3. This idea, constantly repeated by the hand-wringers and bed-wetters who don't understand capitalism, that the poor are not getting better off, is nonsense. Consider a form of analysis that focuses on individuals: a family comes to the U.S., puts down roots, learns the language, and moves up the economic ladder. Or, a family is born into poverty, works hard and saves, and sends kids to college. Over time, THAT FAMILY and its members get better off. (My family: mom and dad born into abject poverty, no one in family went to college. They scrimped, put three kids into private schools, and now all of us have graduate degrees and six-figure family incomes). That is the American dream; why doesn't it count for "the poor"? Because that family isn't poor any more! If you only focus on the "average" of "the poor", then of course that average is falling, because so many abjectly poor people are coming to the U.S. as immigrants, and people who were poor last generation are graduating to the middle class, where their higher incomes don't count in the average anymore.

If Herbert is right and "the poor" are getting poorer, why is it that so many poor people are becoming middle class? Why is it that so many truly poor people, in other nations, are risking their lives to come here? It is because the U.S. is the greatest wealth creation machine the world has ever known. The American dream is alive and well, unless you are a university professor or an ideology-blinded liberal columnist for the New York Times.


Bora Zivkovic said...

Divine Right of Capital

with a
Digital Face?
An interview with Marjorie Kelly published in the Spring 2002 issue of Too Much, a quarterly commentary on capping excessive income and wealth published by the Council on International and Public Affairs.

Order the book:

By Marjorie Kelly, Editor and Publisher, Business Ethics magazine.

Excerpts from the Divine Right of Capital

An Opening for Change
Understanding the Enron Crisis

A Code for Corporate Responsibility: How Corporate Law Inhibits Social Responsibility

Good Ideas for Pranks Wanted
What can people do to make corporations more responsible? Ultimately we’ll have to change the law. But if that’s where we end up, it’s not where we should start. We start by changing our minds, by changing our internal pictures of reality that tell us shareholder primacy is normal and legitimate. The way to do that is with pranks.

What Can You Do?

Anonymous said...

So what do you think about this?

"Reality Check: Rags to Riches
The American Dream is Less Common in the United States than Elsewhere

Bernard Wasow

The Century Foundation, 3/19/04

How many times have you heard “you can be what you want to be if only you work for it”? The American dream has brought millions to our shores, legally or surreptitiously, in search of upward economic mobility. And, over the decades, millions of children of immigrants or of working-class Americans have prospered and advanced in our competitive economy. But how easy is it for the children of poor parents to become prosperous? Recent evidence shows that there is much less mobility in the United States than most people assume."