Barbara Ehrenreich's poignant Preying On The Poor provides us with an all-too-accurate picture of The Poor as chronic victims of a hard-hearted Business Class. It is a sad reality that many of us are forced to experience on a daily basis.
The urge to Do Something about this atrocity is strongly felt by nearly every Democrat, but what is that 'something' that ought to be done?
I happen to be one of those 'economists' who believes that the best way to solve problems like this is through the marketplace. Instead of passing innumerable acts of legislation to deal with specific examples of corporate meanness, I suggest that an effort be made to influence the marketplace in a way that would actually give economic power to The Poor.
From my perspective, when it comes to the issue of Poverty, progressive intellectuals have been asking the wrong questions. Instead of asking, "What can be done about [name a specific act of economic victimization]?", we should be asking, "What would an economy look like if it ideally served the economic interests of the poor?"
That is the question I attempt to answer in Make The American People Richer, an article that describes the major features of an economic agenda that would provide The Least Among Us with an economy that is always providing optimally for their needs.
An excerpt:
Members of America's Privileged Class misperceive their true interests primarily because they do not understand the very important distinction that must be made between Financial Wealth and Real Wealth. To better understand this distinction, simply imagine what it would be like if everyone were to somehow become extremely rich in dollars one day and then we all decided to retire and live off of our accumulated 'wealth.' What we would soon discover is that we would actually possess no real wealth at all, because no one would be producing anything of value that we could buy.
The only reason why money has any value to us is because it gives us a claim on the productive efforts of others. How wealthy you actually are depends more on what others are doing---or not doing---than it does on your personal accumulations of paper notes. The Real economy is the productive behavior of people; it is the actual goods & services that people are producing and trading and consuming. When we speak of the "Wealth of Nations", we are not talking about the amount of currency they have in circulation; we are talking about their productive output. The only economic question that should ever matter to us, as a society, is how might we act to increase our production of real wealth?
Indeed, but what kind of job-creating effort are we talking about that would provide The Poor with
the ideal economy that they could ever hope for? The answer: Congress could commit itself to achieving the goal of creating and then indefinitely maintaining a chronic
LABOR SHORTAGE in the United States.
Creating a sustained labor shortage is not something that is difficult to do. All that is necessary is that Congress increase the federal government's spending on economic investments and valuable public services. It needs to keep increasing its spending on this production of real wealth until all of the unemployment in the economy is 'sucked up.'
And after it has done that, it needs to still spend a little more, thereby creating an economy where there are more jobs available than there are people to fill them. In order to get the people it needs to produce additional public wealth, the government would of course offer higher wages, benefits, working conditions to attract those who are already employed in related industries.
The private sector would thus be forced to compete with the government for workers who now have other options. At first, private employers would simply offer higher wages and extra benefits, but then some thoughtful firm-managers will realize that it might be a good idea for them to start treating their employees with respect, and to start exhibiting more patience with their employees and even to adopt a conciliatory tone in their efforts to make their employees happy, to give them additional reasons to remain with the firm.
In a labor surplus economy, there are more workers looking for jobs than there are jobs available. Employers/managers know this, which is why they are all too eager to use threats and anger to motivate their employees. They know that their employees have few options. They can sense that they have a power advantage and so they exploit it.
But in a Labor Shortage economy, the tables are turned. Employers would discover that they don't need to threaten their employees with termination to motivate them. Anger is the easy way, the lazy way to manage people. Show people that you value them and they will often knock themselves out just to win an appreciative expression of approval.
The simple truth is that there is nothing society could do for the underprivileged that would be more kind, more helpful, or more generous than to maintain a Labor Shortage for them. It would provide poor and Middle-Class Americans with both an increase in the amount of real wealth they consume AND a dramatic improvement in their Economic Security. No, it wouldn't provide specific-job security, but it would provide employment/income security.
And what about the troubles of organized labor? Well, it turns out that
nothing would benefit organized labor more than a sustained labor shortage. Finally, unions would have the negotiating leverage they need in order to obtain good contracts. Fear of job loss would no longer be a reason to avoid union participation. Heck, employers would probably even say that they want their employees to have a union if it would make them happy.
Everything that unions say they want for their members would be achieved through the creation of a sustained labor shortage. How could they not want to pursue this goal as THE KEY to everything they want and need as advocates for wage earners?
If union organizers could ever get their heads around the idea of creating a Labor Party, it would be insane for them to not make the creation of a labor shortage THE centerpiece of that party's economic agenda.
With the kind of government 'intervention' I am recommending, 'market forces' are used to effect positive results, making most of the 'band-aid' remedies that the Democratic Party has been historically associated with unnecessary. If Congress were to maintain a labor shortage, there would no longer be any need for such 'do something' initiatives as minimum wage laws, unemployment insurance, welfare, and even food stamps.
With jobs easy to obtain, people will always have the option of simply working for the money they need...right? (Yes, of course those who are not able to work would be provided for...)
What we are talking about is not some kind of idealistic dream that could never happen. It has happened, during WWII, when the government eliminated all unemployment by increasing its spending dramatically on military procurements. The same thing could easily be done with spending on cleaning up the environment, on upgrading and modernizing all components of the nation's infrastructure, roads, sewers, bridges, mass transit, public facilities of every sort, government hospitals, government-paid physicians, etc.
Of course, the Corporate Elite will protest loudly that business owners wouldn't be able to make enough money to stay in business, but none of those complaints will be true. Owners who don't want to settle for a Normal Profit would be free to abandon their market share to those who can still see a reason to own a [modestly] profitable business. But in spite of the many and various spurious arguments they will raise in their efforts to discredit the idea of a labor shortage economy, they will not be able to deny the true benefits that it would generate for all the economy's participants:
So once again, what are the benefits of creating a Labor shortage? Well, they are at the top of the chart. If we focus our attention on what is happening to the Real Economy during a Labor Shortage, it soon becomes clear that we would be enjoying an outcome that is true economic perfection. All those who are able-bodied & able-minded would be producing something of value. In such an economy, the production & consumption of wealth would be optimized. Investment would be optimized. When production & consumption & investment are all at optimal levels, society gets to experience an ideal economic achievement.
Yes, it is true that The Poor would be very well off if only Congress would create and sustain a labor shortage for them. But there's something else about this idea that might not be obvious at first: the Labor Shortage Economy that would do so much for The Poor and Working Class would also be the best possible economy for this nation's wealthiest citizens.
This becomes apparent when we focus on the REAL economy, and not on money flows and the number of digits in your annual income. It is simply not possible for the wealthy to become better off---in real terms---than they would be in a full-employment economy. They would still have the highest disposable incomes in the land, which will still give them the same claim that they now enjoy to the scarcest goods and services that our domestic economy is able to bring to market.
But in addition to the luxuries that they would still be able to purchase (only at lower prices), they would also benefit from the great improvement in the nation's infrastructure, from the cleanup of the environment, from the disappearance of blight from impoverished neighborhoods, from the reduced threat of crime [now that everyone is working]. And consider: they would be able to brag to the rich people in other countries that the Rich in America know how to 'take care of' their poor people; they are all working, most of them on projects that are making the physical appearance of America a wonder to behold.
All of these examples of increased public wealth will be there for the wealthy to enjoy, even though they would be paying much higher tax rates to pay for all that additional REAL wealth they'd be consuming.
For more on the various concerns (including inflation) that critics will raise re: a Labor Shortage Economy, check out the rest of the article.
James Kroeger
Nontrivial Pursuits