Thursday, March 9, 2017

Derek Thompson — The Most Underrated Story About the U.S. Economy

Wages have been rising faster for the top 5 percent than for the bottom 20 percent almost every year this century.

But in a remarkable reversal, annual wage growth has been greater (as a percent) for the poor than for the rich in the last few years. A new report by the left-leaning Economic Policy Institute found that wages grew faster in 2016 for the poorest quintile than for the richest. The trend was particularly pronounced for white workers. The poorest 10 percent of white workers collectively saw a 5.1 percent raise in 2016, twice as faster as the 2 percent growth among the richest decile percent....

What up with that?

Lower unemployment rate nationally and adoption of a higher minimum wage in some areas.

Exactly what could be accomplished as matter of policy through institution of a job guarantee.

Without a job guarantee, increasing unemployment is felt most at the bottom and lower employment increases competition for scarce jobs, driving down wages.

The JG addresses both by guaranteeing a job for all who are willing and able to work at a compensation rate above the poverty rate.

Atlantic Business
The Most Underrated Story About the U.S. Economy
Derek Thompson

3 comments:

Dan Lynch said...

I would also give credit to the Fight For 15" movement.

The JG addresses both by guaranteeing a job for all who are willing and able to work at a compensation rate above the poverty rate.

That may be true in the imaginations of MMTers, but any real life JG will pay a low wage, and any real life JG will have restrictions on who is eligible to participate in the program. A real life JG will never be a satisfactory substitute for a minimum wage law.

Both the minimum wage law and the JG are examples of "regulated capitalism" that run up against the problem that capitalist societies are run by the capitalists, for the capitalists.

Calgacus said...

A real life JG will never be a satisfactory substitute for a minimum wage law.

Completely backwards. Minimum wage laws are a poor substitute for a JG, because in the absence of a job, the minimum wage is zero. As far as I know, there is no debate elsewhere that a JG is a much bigger change than a minimum wage law, whether one supports either. Disagreeing is as strange as arguing that Estonia is bigger than Siberia. MMTers have mountains of empirical evidence and airtight logic and basic morality for their support of the JG. Opponents pretty much have nothing but non sequiturs and obstinate refusal to look at evidence and arguments and perhaps no imagination at all.

but any real life JG will pay a low wage

Of course a JG will pay a low wage - the lowest wage. So what? Doesn't mean that it won't change everything, because it will, as one sees if one bothers to ponder its consequences. As people right and left understood back in the 19th century, a guaranteed job is the revolution. It is socialism, it is communism. (As capitalism aufgehoben = resolved. Socialism is the truth of capitalism, to put it in a Hegelian or Marxist way.)

and any real life JG will have restrictions on who is eligible to participate in the program.
Absolutely not. Everyone ready willing and able. Period. The immediate provision of value is the work done by the JGers, who are performing charitable acts for, subsidizing the rest of society. Why would any sane society restrict this? No reason at all.

Neither the JG nor minimum wages are "regulated capitalism". Capitalism is an untrue concept. Capitalism is a side effect of the regulations, which are more fundamental in every way. The problem is people thinking of capitalism as something real or natural and regulation, government, intervention as something put on top of it. The reverse of the truth, the reverse of what everybody knows and believes in their practical life, in practical reasoning, as opposed to the crackpot theoretical reasoning most highly developed in mainstream economics, which gets everything backwards.

Tom Hickey said...

To distinguish the JG from minimum wage laws, I would call it a floor wage. It is functionally a minimum wage offer that firms must compete against to draw labor from the buffer stock of employed.

IMHO, a JG is a necessary on it of departure in the deconstruction of capitalism (bourgeois liberalism) and the transition to a socio-economic system that transcends the paradoxes of liberalism that arise in bourgeois liberalism.

But it doesn’t address significant institutional factors that privilege the "right" of private property and "sanctity" of contracts relating thereto over human rights and human dignity.

Assuming liberalism as in ideal, major institutional revision is also required to effect a transition from capitalism as bourgeois liberalism to a soico-economic system that optimize liberty, egality, and community in order to harmonize social, political and economic liberalism. Egality signifies equality of rights and opportunities, therefore absence of institutional privilege.

Bourgeois liberalism maximizes economic liberalism at the expense of social and political liberalism, which gives rise to paradoxes of liberalism and a great deal of illiberalism.