Wages and Power

One of my first posts, back on the old blog, was about my estrangement from progressives circa 2006 because they neglected five key issues:

What you’ll notice missing from this list are any proposals that would seriously alter the relationship of citizens to massed economic power. Before you say, “Oh the Mad Biologist is going off into lefty bizarro world”, keep in mind that most of the problems we face, from healthcare, to information privacy, to environmental degradation, stem in part, if not entirely, from the imbalance between capital and labor, or between capital and the individual citizen. Here’s what you don’t hear about very much in the lefty blogosphere:

1. The necessary and morally just role of government in moving towards (if not reaching) full employment.
2. A more progressive income tax (leaving aside the issue of how much revenue should be generated).
3. More tax revenue from corporate sources.
4. Raising wages, particularly of those in the service industries (which are the fastest and largest sectors of job growth, such as it is under Little Lord Pontchartrain).
5. Affordable housing, for both homeowners and renters.

I was for this stuff, including full employment and higher wages, long before it was fashionable (note that full employment is top of the list). An economic hipster, we are.

So it’s good to see Krugman writing this, albeit at the tail end of the 2013 (boldface mine):

Some people would have you believe that employment relations are just like any other market transaction; workers have something to sell, employers want to buy what they offer, and they simply make a deal. But anyone who has ever held a job in the real world — or, for that matter, seen a Dilbert cartoon — knows that it’s not like that.

The fact is that employment generally involves a power relationship: you have a boss, who tells you what to do, and if you refuse, you may be fired. This doesn’t have to be a bad thing. If employers value their workers, they won’t make unreasonable demands. But it’s not a simple transaction. There’s a country music classic titled “Take This Job and Shove It.” There isn’t and won’t be a song titled “Take This Consumer Durable and Shove It.”

So employment is a power relationship, and high unemployment has greatly weakened workers’ already weak position in that relationship….

Now think about what this means for workers’ bargaining power. When the economy is strong, workers are empowered. They can leave if they’re unhappy with the way they’re being treated and know that they can quickly find a new job if they are let go. When the economy is weak, however, workers have a very weak hand, and employers are in a position to work them harder, pay them less, or both….

As some leading progressive economists have pointed out, however, full employment is itself a populist issue: weak labor markets are a main reason workers are losing ground, and the excessive power of corporations and the wealthy is a main reason we aren’t doing anything about jobs.

On the one hand, I’m glad Krugman wrote this. On the other hand, I’m dismayed by the number of ‘progressive-ish’ economists who seem to think this is a novel insight, whereas, for most Americans during the last couple of decades, this is simply known as reality. I can understand not getting this in the mid-1990s, but we’ve had years to figure this basic problem out. Low wages and high unemployment are simply the result of greed on the part of owners and rentiers, not some ineluctible and fundamental force of nature.

Better late than never, I suppose.

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2 Responses to Wages and Power

  1. I am having a lot of difficulty wading through your language. To me, those five points you mention DEFINE progressives, especially contra the liberals who (in my opinion) are overly focused on social issues at the expense of economic justice. Your mileage may vary, of course, and we certainly agree that the economic state of this nation needs a great deal of work going forward.

  2. Pingback: Meet the New Silicon Valley Boss, Same As the Old Boss: Putting the STEM ‘Crisis’ In Context | Mike the Mad Biologist

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