Home > Uncategorized > Capitalism doesn’t provide decent-paying jobs

Capitalism doesn’t provide decent-paying jobs

from David Ruccio

quartile

The usual suspects have attacked Bernie Sanders’s proposal for the federal government to guarantee a job paying $15 an hour and health-care benefits to every American worker “who wants or needs one.” 

According to Robert J. Samuelson, “The proposal would add to already swollen federal budget deficits. . .Then there’s inflation. The extra spending and higher wages might push prices upward.”

After listing a number of other “unavoidable” problems, Samuelson concludes:

Americans are suckers for great crusades that make the world safe for the pursuit of happiness. In this context, Sanders’s job guarantee seems a masterstroke. The chronically unemployed need jobs; and states and localities have large unmet needs for public and quasi-public services. It’s a bargain made in heaven.

Back here on Earth, the collaboration looks less noble. The object is to appear good and buy political support. Many of the suggested jobs seem best described as make-work. The irony is that, by assigning government tasks likely to fail, the advocates of activist government bring government into disrepute.

And here’s Ed Rogers:

Democrats want to talk about Republicans living in the past, but the new progressives, as they like to call themselves, are in fact a lot like the old socialists. They want free college, free cash, free health care, new mandates for this and that, and so on. The latest progressive policy du jour to be gaining traction among Democratic Party presidential hopefuls is the so-called “job guarantee.”

What they have in common, in addition to the usual red-blooded American red-baiting, is they both cite a liberal critic of the Sanders proposal, Mother Jones blogger Kevin Drum:

even our lefty comrades in social democratic Europe don’t guarantee jobs for everyone. It would cost a fortune; it would massively disrupt the private labor market; it would almost certainly tank productivity; and it’s unlikely in the extreme that the millions of workers in this program could ever be made fully competent at their jobs.

Let’s face it, Drum is right. The proposal would cost a fortune; it would massively disrupt the private labor market; it almost certainly would lower the official level of productivity; and millions of workers would probably never be fully competent at their jobs.

But that’s only because of how bad things are for workers in the United States right now. According to my calculations (illustrated in the chart at the top of the post), a quarter of full-time American workers currently earn less than $15 an hour. We’re talking about something on the order of 32 million people. And that’s not even counting part-time and unemployed workers. Plus all the workers, whether or not they currently have a low-paying job, who have costly or substandard health insurance.

Employing all those people—at $15 an hour, with medical benefits—would cost a fortune. But not employing them at decent wages already costs the United States a fortune, in individual and social costs. Moreover, there’s no doubt that, if people had a good shot at a federally funded job, they’d be more able to refuse the paltry pay and the indecent kinds of jobs private employers are currently offering. And workers on a federal jobs program might not achieve high levels of productivity—but they would be doing jobs, to repair the economic and social infrastructure, most people would benefit from. Finally, such workers might never become fully competent at their jobs. However, they would develop competencies above and beyond what they can manage to acquire when they’re unemployed or underemployed at their current low-paying jobs.

What Drum and others think is a hard-headed, realistic criticism of a job guarantee turns out to be a stinging indictment of American capitalism itself. The fact that there are “50 million people who would be better off with a government-guaranteed job than with the job they have now” calls into question the way the U.S. economy is currently organized.

That’s what’s really insane—sticking with the existing labor market, not the idea of proposing a Federal jobs program.

  1. rddulin
    May 15, 2018 at 2:00 pm

    Professor Ruccio,
    Have you considered the fact that money for over a thousand years has to be rented to be put into and remain in any economy? There are vast special interests whose income derives from this fact, all lenders, banks, stock market, bond market to mention a few. Society so desperately needs their loans that they are even allowed to create money out of nothing ,no questions ask or answered, to be loaned.
    In economics, a review of dead weight loss helps to define the magnitude of this problem.
    For some people to be paid for producing nothing other producers have to do without.
    Labor is historically in this position. The world has been built by grossly underpaid labor.
    No price discrimination or adjustment schemes can fix the problems caused by debt created money. They just amuse economists while the interest perpetually accrues.
    I put it to you that there is not a problem with social order but with money privilege.
    The price of value has to be measured and money is a tool that can do that very well, if not manipulated for special interests.

  2. May 15, 2018 at 2:08 pm

    If everyone had jobs serving capitalists then the world would simply end more rapidly.

    Also, Bernie grudgingly upped his goal from $10.10 per hour to $15 and that was so long ago that even 15/hr is a joke in the US. Try living with human dignity on $15/hr in prosperous areas of the US.

    That said; I supported Bernie and might do so again.

  3. Calgacus
    May 15, 2018 at 2:13 pm

    The fact that there are “50 million people who would be better off with a government-guaranteed job than with the job they have now” calls into question the way the U.S. economy is currently organized.
    More like 300 million who would be better off. Those crazed by greed and cruelty would not be able to savor the sight of homelessness and desperation. Everybody would be materially and socially better off. What needs to be eradicated is the crazy idea that anybody is better off in any speakable way by one single person being unemployed, that unemployment is in any way natural or helps “the economy”. It has some anti-inflation properties. Guaranteeing jobs has more “anti-inflation” built in.

    That’s what’s really insane—sticking with the existing labor market, not the idea of proposing a Federal jobs program.
    Absolutely right.

  4. May 15, 2018 at 2:19 pm

    Someone needs to look at the economy and the policies that supported/created it during the ’40s. Many called it the “war economy” but it was really an economy created by policies of the federal government to put everyone to work in the “war effort.” There is no mystery in how it was done and yes, the war economy did cost a fortune but the USA emerged from the period as the dominant nation internationally. It was successful because the resources, labor and physical, were available and the government found a way to utilize them with funding that essentially bypassed the central bank. We are in a similar position now, plenty of resources but an unwillingness to spend what is needed to utilize those resources. Bernanke, in his Brookings blog, pointed out the secret, sitting there in plain sight. The federal government has three, not two, options for funding government operations, taxes, debt and money. The third option, money, is the correct option to use when resources are being wasted. Bernanke used Friedman’s term to describe “money” calling it “helicopter money.” Others call it sovereign money.

  5. Robert Locke
    May 15, 2018 at 3:02 pm

    It is not capitalism but the system of governance that matters.. We have codetermination systems of government under capitalism which provides decent jobs. It depends on who decides who gets what.

    • Dave Raithel
      May 16, 2018 at 4:07 am

      Well, ok, you can argue that and I hope you are right; but what struck me in the above is how easily the cited pundits converged to agree: There are useless people. And maybe lots of them.

      That’s a frightening convergence.

  6. Prof James Beckman, Germany
    May 15, 2018 at 5:56 pm

    Capitalism (in America or UK, say) is not an ABSTRACT CONSTRUCT apart from a society. Here in Europe most persons can happily subsist on 14.71 an hour ($ or €). I see persons making less than €10/hr being able to do so, often with odd jobs among the family members. Being an American, it is obvious that Americans at least pay too much for housing, health care & transportation in contrast to most of Europe. The US has also largely forgotten job-training in high school apparently; there is little public transportation; massive racism exists for certain citizens. But the US & UK offer ample opportunity for advancement given energy, focus & marketable job skills. Today the British press recounted the super-rich of the UK, many of them self-made–even one of the James Bond’ actors with well-defined muscles.
    No need to go into the Scandinavian model, nor how most European societies find ways to supplement taxed income with other employment–just as around the world.

    • Ctesias62
      May 16, 2018 at 3:51 pm

      Unfortunately the uk is being gradually subverted by zealots in thrall to the very worst examples of american capitalist ultras. See “atlantic bridge” the fake charity set up with the connivance of current members of the uk cabinet. Their aspirations consist of a 51st state + (doubtless botched) imitation of Singapore. In other words a “neo-liberal”/ “austrian” hell-hole.

      • Prof James Beckman, Germany
        May 16, 2018 at 7:11 pm

        Hi, Stesias62, I don’t know anything about the “land-bridge”. I rather have heard of rich, often foreign, press interests who want to stir up the readership, whatever else these “Lords of the Press” have in store. For people who accept regulation & have a job, Singapore seems to be a paradise. I have spent time there, but it’s not exactly my cup of tea.

  7. Craig
    May 15, 2018 at 8:55 pm

    Integrate the workabilities and applicabilities of capitalism and socialism and the concept of ethics of the new monetary and economic paradigm and you’d have the profit making system of Directly Distributive Monetary Gifting. Would that mean you’d not have lending? No. Does that mean you couldn’t have a job guarantee for anyone who was having trouble finding purpose without employment? No. Would there be more or less employment with the policies of a universal dividend and discounts/rebates throughout the entire economic/productive process? More, by far. Would people become lazy and entitled? Don’t be stupid, anecdotally of course, but generally of course not, especially if we’d have a cooperative effort by the clergy, helping professions and the government to help acculturate people to leisure which is self determined focused effort, NOT idleness. The vast majority of us find purpose in life other than employment with the present onerous and enslaving system. That percentage would undoubtedly go up when the stress, anxiety and the ancient un-examined dictum of “only by the sweat of thy brow shalt ye earn your bread” is analyzed anew within modern technologically advanced productive capabilities.

    Integrate truths, keep on integrating them, integrate them until they result in a thirdness greater oneness. Make the concept behind that thirdness greater oneness the new ethic/zeitgeist that further frees everyone into its beatific chains….until further integrations… enlighten further.

  8. Edward K Ross
    May 15, 2018 at 11:08 pm

    What gets me thinking here is firstly no one mentions that in first world countries like America no one mentions that extreme capitalists have taken millions of first world jobs to third world countries to produce goods that were formerly produced in in the nation that consumes them.

    • Prof James Beckman, Germany
      May 16, 2018 at 10:29 am

      Hi, Edward, yet with the income generated in the third world, it in turn buys from us. Winners & losers in every option we seem to find. Further, the US is just one of the three dominant world economies–with the EU & China–so they can push back economically on an America which also exports enormously. Cat tractors. Boeing Aircraft. Microchips. On & on….

      • Edward K Ross
        May 16, 2018 at 11:46 am

        Hi, Prof James Beckman yes, even I have to acknowledge that there is a place in the modern world for international trade the problem is at what cost to a nations workers of both the first and second world, and who benefits the most from exporting the cat tractors, Boeing Aircraft Microchips, on and on. Some how I seem to think these corporations and their shareholders are the major beneficiaries not the workers .

      • Prof James Beckman, Germany
        May 16, 2018 at 2:00 pm

        Hi, Edward, yes, indeed the world of self-focused economic units brings all sorts of changes. As the unions weakened in the 1970’s/80’s in the US, there was no way to protect jobs or the communities these jobs supported. There are lots of ghost factories across this land, with petered-out mines/oil wells just barely trailing them in numbers as you know.
        Adam Smith realized this as an afterthought. International Capitalism was chiefly on his mind, with all those thoughts about comparative advantages of soil & sun, say. Yet the real UK advantage in the oncoming industrial age was cheaper labor, which of course was a sensitive issue to the Church of England & Smith’s own Scotch Presbyterian, I expect.
        England couldn’t compare with France or Spain, say, on agriculutural output–but all those British clothe & metal factories easily made up for this deficiency as you also know.

  9. Frank Salter
    May 16, 2018 at 6:45 am

    Some empirical facts need to be added to this discussion. I was born in Sheffield. After the great depression, a section of a multi-lane ring road was built to create work for the unemployed. At Barnsley, the foundation stone of a new town hall was laid on 21 April 1932 and was opened on 14 December 1933. These are examples of the Keynesian multiplier in action. The World Bank finances projects for this reason.

    Okun’s law demonstrates the disastrous effects of unemployment. Austerity does not work. Any productive work will improve the economy. It’s a no-brainer.

    • Edward K Ross
      May 16, 2018 at 12:02 pm

      Frank Salter as I have often said having lived through the effects of the Keynesian concepts of keeping people gainfully employed is beneficial both to the nation and its individual people. Where as Austerity policies penalise both the individual and the nation. Recently I enjoyed Asad Zaman’s clarification of the original Keynesian concepts and those economists using his name to validate their spurious claims.Ted

  10. Helen Sakho
    May 16, 2018 at 3:40 pm

    The most wonderful thing about the American constitution, passed onto its people and exported worldwide, is that everyone is perfectly “free” to pursue “happiness” all they want…As for reaching it, that is quite a different matter altogether and open to subjective, personal interpretation. It is a bit like the wonderful song “Hotel California” that expresses this phenomenon beautifully.
    Exported now to the whole world and just around the corner everywhere.
    What a shame that the poor, the starving and the foot soldiers can neither pursue happiness nor check into this or any other hotel nearby.

    • Prof James Beckman, Germany
      May 16, 2018 at 7:07 pm

      Hi, Helen, the Constitution was meant for people coming to a wild new land, from an oppressive place (for them) called Europe with its constant wars & rather fixed societies.
      Europeans constantly came to try their luck & like Mr Trump’s grandfather returned to Europe very rich & independent. Most remained, as he did being rejected as a German for not completing his military service first. That’s the model, I believe, which worked often enough to build a global dream. My point: nothing was expected without large amounts of personal effort–little government support. If things went well for you, good enough. If not, well, no worse off than if you had remained most likely….

  11. Craig
    May 16, 2018 at 6:06 pm

    Obsession with employment and balanced budgets only, as economic “solutions” is so old paradigm. When one realizes that:
    1) the point of sale is a summing and ending point for costs and prices throughout the entirety of the economic/productive process
    2) the point of retail sale is the terminal ending and summing point for all costs and prices for every item or service and also the terminal expression point for any and all price inflation and
    3) double entry bookkeeping which is digital in nature, that is, debits and credits of equal amounts sum to zero, and is also the underlying infrastructure, guiding force and as it turns out the perfect and appropriate means of integrating monetary policies into the economy

    then paradigm changing economic insight occurs.

    • Craig
      May 16, 2018 at 10:12 pm

      And I readily admit that theoretically I stand on the shoulders of several heterodox theorists now like Steve Keen, Michael Hudson, Asad Zaman, David Ruccio and Lars Syll as well as some from the past. All I’m trying to do is bring them, even if kicking and screaming, away from their iconoclastic abstract theoretical musings and into looking at the above present time commercial significances long enough for them to see how the very problems they all identify with current theory….can be resolved by the policies I’m advocating and consequently create a new paradigm. Or we could go on for another futile 5000 years of tweaking, reforming and endlessly discussing the problematic current one.

  12. Helen Sakho
    May 17, 2018 at 2:17 am

    Hello James, thank you and you are absolutely right.
    My comment though, as an addition to your specific account this time – like previous additions to other colleagues’ accounts, was to re-emphasise crucial matters for all Economists/Social Scientists with a Global Conscious – Economics Without Boarders.
    Or we will all be reinventing models governed by funding regimes, misleading our students and their students forever; forgetting, over and over again, that human history is Universal.
    Mathematics and Philosophy (the Mother of all science) are one and the same, thus our PhD titles.

    • Prof James Beckman, Germany
      May 18, 2018 at 7:44 am

      Hi, Helen

  13. May 17, 2018 at 11:37 pm

    Thanks, Democrats for holding together! The Internet is a public enterprise like education and must not become merely a profit center! When the state trusts citizens, citizens trust the state, said Justin Trudeau, Canadian Prime Minister The security state is a distortion of the constitutional state and is marked by the generalization of fear, the depolitization of citizens, and demogogic claims of supreme leaders. Trump created his own reality when he spoke of Iran as a threat to the world and described the 100 missiles as “beautiful missiles.” The Horror clown could bring the world to the edge of the abyss and doesn’t care about the Syrian people, international law, the Children’s Health Insurance or the rights and dignity of the poor. There should be robust discussions of pluralist economics and reduced working hours, post-growth, post-fossil ,, and post-patriarchal economies. Progressive taxation, closing tax havens and sharing the benefits of productivity, dignitalization and information technology could create new revenues and new possibilities. Community centers (like the 26 in Vancouver B.C.) have multiplier and cushioning effects!

  14. Prof James Beckman, Germany
    May 18, 2018 at 8:32 am

    Helen, that went out too fast! We are on the same page. Governments are local but business has folliowed the path of growth in sales & then in controlling costs by going over city, county, state & national borders. If the founders aren’t up to it, their kids or other economic successors normally are. As we all know from the well-known SWOT paradigm, over time we normally find both opportunities & threats in store for us.
    Of course, societies find people who don’t flourish in this situation & bad mouth it. They may be unhappy about issues unrelated to their work by the psychological device of transferring the actual cause of unhappiness. My acid test: be offered a job you like but at a distant locaton for some period of time. New exprense covered & significant pay increase.
    No one will normally not accept. That’s why exchange programs in education normally work, I expect.

  15. David Harold Chester
    May 18, 2018 at 8:45 am

    No matter how much money one pumps into the social system there will still be a limitation that will slow production and result in unemployment and poverty. This factor is the opportunity for access to natural resources. Landowners would rather speculate in the rising price of their sites of land than allow then to be properly used. When there is more money available from the banks the cost of a useful site is raised leading to even more speculation. A sensible government should therefore not permit the banks to follow what the MMT theory suggests, and loans should (almost) balance the returns on debts. And those speculating landlords who are behaving like capitalists, should realize that what they are doing is greedy, evil, morally wrong and they are badly in need of repentance.

  16. May 26, 2018 at 12:26 pm

    The Marine Corp, like all military is based on two beliefs. First, Esprit De Corps. Defined as the common spirit existing in the members of a group that inspire enthusiasm, devotion, and strong regard for the honor of the group. Second, training (or as described by sociologists, socialization). Defined as acquiring skills, knowledge, or experience from others in this group that helps in the practical activities of building and living within societies made up of others inside and outside the group and being employed at useful (though not always profitable) work that benefits that society and its members. This means that all members of a society are responsible for the welfare of one another, including the physical basics, money, health care, education, etc. Capitalism actively removes this responsibility from society. And with it the Esprit De Corps that keeps groups functional and the training that allows groups to construct and operate societies. Humans often imagine things into existence that serve no useful purpose. Worse still humans imagine things into existence that not only serve no useful purpose but harm their creators. Capitalism is one of these.

    • Robert Locke
      May 26, 2018 at 6:58 pm

      Esprit de Corps is often misunderstood in the US. I remember in the 1980s when people used to make fun when they heard that Japanese firms’ employees sang company songs as they gathered mornings to begin their workday. At that time I interviewed an American manufacturer of restaurant kitchen equipment who had a factory in Manchester, another in upstate New York, and another in Japan. He said, when visiting his Japanese employees, unannounced one morning he found them gathered around his photo in the firm’s main building having a sort of pep rally, “This time I’ll improve my sales by 30%, etc, and the like.” His Japanese manager had the owner, Abraham Katz, present a long stem flower to each of the employees. He added, “If I hung my photo up in my New York factory, the employees would throw rotten tomatoes or eggs at it. So esprit de corps is not just a military phenomenon; it has to exist in economic organizatons as well.

      • Prof Dr James Beckman, Germany
        May 27, 2018 at 7:13 am

        Robert, it is/was a part of WalMart’s global operation. I recall when the “Spirit of Arkansas” arriving in California: pre-work “warm-up” & motivation sessions, it was claimied in the LA Times. When I arrived in Germany in 2002 it was the same. The German employees really didn’t cotton to it, apparenty. WalMart escaped from Germany shortly thereafter, more due to the German business competition, I expect.

      • May 27, 2018 at 9:04 am

        Robert, Esprit de Corps is the basis of human groups. It’s the glue that makes groups, makes them work. It’s one of the premier made-up creations of humans. We don’t know when the creating was done, but it was at least 15,000 years ago. It works differently from one culture to another, from say Japan with is pubic displays of camaraderie to the USA with its subdued, sometimes almost apologetic group devotion.

  17. Helen Sakho
    May 27, 2018 at 11:16 pm

    I am afraid the glue has melted.

    • Prof Dr James Beckman, Germany
      May 28, 2018 at 5:45 am

      Hi, Helen, I guess it is up to the states to go for a minimum wage–and most are still in Republican hands.

    • May 28, 2018 at 6:04 am

      Helen, the glue of some groups has or is close to melting. But not for all groups. Which of the groups are still strong? For example, neo-Nazis, evangelical conservatives, Trump supporters. Stronger than ever. Why?

  18. Helen Sakho
    May 28, 2018 at 11:54 pm

    They all share the same glue. Gets stronger and stronger internally and externally.
    They are glued together forever and ever and ever, no matter how may internal or external weaker glues they have directly or indirectly caused to melt.
    A “Melting pot indeed – or in deed”. The final result is always the same.

    • May 29, 2018 at 6:08 am

      Helen, allow me to unpack Esprit de Corps once again. It is “the common spirit existing in the members of a group that inspire enthusiasm, devotion, and strong regard for the honor of the group.” Not the honor of members of the group, but the group. Esprit de Corps is knowledge of where one belongs in the world. Where one will have support and friends, and where one has duties to perform to which one is devoted and to which one will be held to account. Love is a common way for members to feel toward the group, its actions, and its honor. The groups I listed still have all this intact. Not so with other groups. For example, political liberals now are reticent to proclaim their loyalties and duties for fear of antagonizing other groups or losing elections. Looking instead to compromise in each instance. Live and let live among groups sometimes helps build a stronger society when group members expect and receive respect from one another. Otherwise one group or set of groups routinely takes advantage of other groups. Sometimes the only way to earn this respect is through physical combat. We are, in my view nearing that point in the USA today.

  19. Helen Sakho
    June 19, 2018 at 1:54 am

    I agree. And globally, this is already happened and happening, as I am sure you are well aware.

  20. Helen Sakho
    June 19, 2018 at 2:00 am

    You may well be right. And as I am sure you are aware, exceptions aside, this is already happened globally.

  21. Helen Sakho
    June 19, 2018 at 2:01 am

    Apologies for double posting.

    • June 19, 2018 at 8:47 am

      Helen, et al fascists have an advantage when it comes to physical violence. They expect it, they like it, they feel no uncertainty or guilt when using violence. They have no empathy for those they attack or kill. They enjoy inflicting pain and hurting others outside their group. Non-sociopaths can’t do this as well. Often can’t do it at all. Non-sociopaths must become angry enough and create a world where enemies need to be hurt physically and emotionally before they can attack. Not unlike combat training for marines and soldiers. First, they are taught how to kill, in the abstract. Second, they practice killing repeatedly. Third, go into combat with experienced killers. Fourth, described in this exchange from the movie, “The Big Red One,” Griff: I can’t murder anybody. The Sergeant: We don’t murder; we kill. Griff: It’s the same thing. The Sergeant: The hell it is, Griff. You don’t murder animals; you kill ’em.” Then any normal everyday person can kill just as effectively as sociopaths. How many sociopaths are created through this process is impossible to estimate precisely. But it’s not a trivial number.

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