Lars P. Syll — Marx and the Matthew effect

If you are unfamiliar with the Matthew effect (Wikipedia).

Lars P. Syll’s Blog

Marx and the Matthew effect

Lars P. Syll | Professor, Malmo University

Mark Thoma — Full Employment Alone Won’t Solve Problem of Stagnating Wages

I fear this trust that market forces will eventually raise wages will lead to disappointment. Inequality has been increasing for over three decades, and during that time we have been at or near full employment many times. Yet, wages over this time period have been flat. As noted by the Economic Policy Institute, “Since 1979, the vast majority of American workers have seen their hourly wages stagnate or decline—even though decades of consistent gains in economy-wide productivity have provided ample room for wage growth.” The idea that market forces alone will increase wages sufficiently to offset increasing inequality is not supported by the evidence from these years. There’s more to the story than market forces.…

Until workers recover the bargaining power they lost with the decline of unions and the rise of globalization, it’s hard to imagine a reversal of the forces pushing us toward stagnating wages and ever higher inequality. It’s not market forces alone that are determining the split of income between those at the top of the income distribution and those below, it’s also the institutions that determine who holds the cards in negotiations over wages. Presently workers are not faring well.

To me, what we are seeing is reminiscent of the “Just Price Doctrine” popularized by St. Thomas Aquinas in the Middle Ages. According to this view, “The just wage meant that rate of remuneration which was required to enable the worker to live decently in the station of life in which he was placed; and thus, if one may so express it, such a wage, representing reasonable decency, was made a first charge on industry.”…

Solving the problem of lack of bargaining power that puts workers at the mercy of the “decency” of those they negotiate with is not easy. The ability of traditional unions to negotiate over wages has been undercut by globalization, technology, and the threat of offshoring, though unions – to the extent they still exist – do retain some value as a source of political power.

But one thing is clear. So long as we continue to believe that market forces and the attainment of full employment will solve the problem of stagnating wages and rising inequality, so long as we fail to recognize that workers need a level playing field when bargaining over wages, inequality will continue to be a problem.

Especially when one of the chief "contradiction of capitalism" is asymmetry of capital/profit share and labor/wage share. See Michal Kalecki, "Political Aspects of Full Employment".

"The rent is too damn high."

Distributional issues will be difficult if not impossible to address effectively without reference to economic rent and rent-seeking, and how the ability to extract rent arises from power and class. This undercuts the mainstream rationale of distribution based on marginal productivity and just deserts, which is why it is marginalized as "Marxist" and off the table for discussion in mainstream economics. So far heterodox economists other than Marxists and Marxians have been reticent to pick it up. However, it is a principle reason behind market "imperfection" being endemic and market failure being recurrent, something that mainstream economists have not be able to address successfully without taking rent into account.

The Fiscal Times
Full Employment Alone Won’t Solve Problem of Stagnating Wages
Mark Thoma | Professor of Economics, University of Oregon

Coen Teulings — Why does inequality grow?

The income inequality has increased worldwide in recent years. This column discusses the role of technological progress, globalisation, and the liberalisation of labour-market institutions on the growing inequality. The liberalisation of labour market institutions has made labour markets more flexible and created many jobs. But beyond a certain point, the net effect of further liberalisation might be negative for society.

VoxEU
Why does inequality grow?
Coen Teulings | Professor of Economics, University of Cambridge; and CEPR Research Fellow

Leo Gerard — When the Boss [VW] Wants a Union, But the [Tennessee] GOP Says ‘No’

The GOP is all about freedom—for corporations, that is. Republicans believe, for example, that business should be free from the kind of government regulation that would prevent chemical companies from spewing poison into West Virginia drinking water.

When it comes to freedom for workers, though, the GOP is all about squelching that. Republicans believe workers should not be free to form labor unions, that they should not enjoy freedom of association, that they should be denied their right to collective action.

In These Times
When the Boss Wants a Union, But the GOP Says ‘No’
Leo Gerard, United Steelworkers President

Jeff Cox — Why Underemployment May Be Worse Than It Looks

But what often doesn't get as much attention [as the BLS report] is the monthly labor count that the experts at Gallup conduct.

Gallup reports that 17.2 percent of the workforce is underemployed, a startling number compounded by its divergence from the government's count. While the rate is down from the 20.3 percent peak in March 2010, it has remained maddeningly high over the past three years even as economists tout the strength of the U.S. economic recovery.

From a broader perspective, the Gallup measure actually has increased from its 15.9 percent multi-year low in October 2012.

CNBC NetNet
Why Underemployment May Be Worse Than It Looks
Jeff Cox | Senior Writer

See also Ashe Schow, Recovery woes: America's second-largest employer is a temp agency at the Washington Examiner.

Behind Wal-Mart, the second-largest employer in America is Kelly Services, a temporary work provider.

Friday's disappointing jobs report showed that part-time jobs are at an all-time high, with 28 million Americans now working part-time. The report also showed another disturbing fact: There are now a record number of Americans with temporary jobs.

Approximately 2.7 million, in fact. And the trend has been growing.

No benefits. No unions. No bargaining power. Labor at the beck and call of capital. The neoliberal dream is replacing the American dream and becoming the American nightmare.

Lord Keynes — US Inflation Rates (1946–1987), Keynesianism and Stagflation

Lord Keynes explains Seventies stagflation in terms of 1) wage pressure due to increased labor bargaining power, 2) dismantling of commodity buffer stock policies, 3) collapse of Bretton Woods, and 4) oil crisis. Bookmark it.

Social Democracy for the 21st Century

US Inflation Rates (1946–1987), Keynesianism and Stagflation

Lord Keynes

David Edwards — World’s richest woman suggests $2 a day wages for Australian miners

The world’s most wealthy woman is warning that firms are in danger of having to abandon iron-ore mining in Australia if wages are not cut, pointing out that African miners are “willing to work for less than $2 per day.”

In a video recently posted on the Sydney Mining Club website, 58-year-old Gina Rinehart — who has amassed a $18 billion fortune through iron-ore prospecting — said that Australia could be more competitive by emulating Africa.

“We must be realistic, not just promote class warfare,” the billionaire explained. “Indeed, if we competed at the Olympic games as sluggishly as we compete economically, there would be an outcry.”

“The evidence is unarguable that Australia is indeed becoming too expensive and too uncompetitive to do export- orientated business,” she insisted, adding that “Africans want to work. Its workers are willing to work for less than $2 per day.”Under current exchange rates, $2 a day in Australia is worth about $2.04 in U.S. dollars.

You can't make this stuff up.

The Raw Story
World’s richest woman suggests $2 a day wages for Australian miners
David Edwards

Dick Meister — The Billionaires Bill of Rights

California's Proposition 32, on the ballot this November, would severely limit unions' election spending while leaving corporations free to spend as much as they like.

AlterNet
The Billionaires Bill of Rights
Dick Meister | DickMeister.com

Loading the dice.

Mark Thoma — The Need for Countervailing Power

Like Brad DeLong, before the recession started I could not have imagined that policymakers would fail to put the unemployed first and foremost in all policy decisions. I was sure the unemployed would come before inflation, before banks, before debt reduction and contrived fights over the debt ceiling. How could we possibly turn our backs on millions of struggling households, especially when doing so creates so many additional long-run problems for individual households and for the economy as a whole? Nothing else would be more important than putting people back to work, and we would, of course, come together and mobilize in a national war against high unemployment.

But I forgot something. With the decline in unions in recent decades, the working class has lost both economic and political power....

Finally, we could try to provide (or at least not discourage) a countervailing force, something that replaces the role that unions played for the working class. I'm not completely sure what form this institution should take, workers lack both economic power in wage negotiations and political power to shape legislation in their favor, or how it could happen short of fed up workers finally demanding change. But workers need to have their interests better represented, and the need for a new institution of some sort is clear.

Read it at Economist's View
The Need for Countervailing Power

by Mark Thoma

ELR as countervailing force to the LLR? And maybe get rid of the laws that repress labor bargaining power, e.g., by suppressing collective bargaining?

Peter Cooper — Free to Live a Good Life

An important aspect of a Basic Income Guarantee, whether implemented in isolation or alongside a Job Guarantee, is the freedom it would give all people to make ethical life choices if they were so inclined. In the absence of an unconditional basic income, anyone who lacks independent means is essentially compelled to seek employment on terms set by employers. Private-sector employers, in turn, cannot be concerned with ethics or morality to the extent that this compromises profit. To indulge in ethical behavior not dictated by law or profit considerations would only see the enterprise lose out to others willing to do whatever it takes to get ahead of the competition. The provision of an unconditional basic income to all would free people to take employment only when, in their view, it served a socially beneficial purpose. This alteration in relative bargaining power could then be expected to encourage more ethical behavior by employers to the extent that workers were attracted to more fulfilling and socially beneficial roles, even when at lower pay than the alternatives.

Read it at heteconomist

Free to Live a Good Life

by Peter Cooper

Now we are getting somewhere, says the philosopher.