Another Slice, Please

Oren Cass penned a column for The Atlantic, titled Economic Piety Is a Crisis for Workers. It's an interesting piece although it quickly becomes predictable; the title seems geared at obscuring the point long enough for people to begin to read. Change "Economic Piety" to "The Welfare State," and you'll have a pretty good idea of where the article goes.

There are at least three possible outcomes when a society has a number of people who are unemployed due to a level of productivity that renders their labor redundant. They are not mutually exclusive, and so any or all of them can exist at once over a large enough group of people.

One is Privation. In effect, those people who are unemployed or severely underemployed simply suffer the effects of being unable to earn enough income to meet their physical needs, whether that homelessness, malnutrition, poor health due to lack of treatment and/or whatever else may be visited upon them. Another is Transfers. This can be government transfers, in the form of welfare, but it may also be private charity or dependence of friends or family who have the resources to support them; with or without requesting or requiring some form of work to support the household in return. The other outcome that occurs to me is Inefficiency. In this case, the society comes up with a way of doing less with more, or at least producing less, per capita, than they otherwise could, but still paying people sufficient wages to support themselves.

Inefficiency strikes me as the least visible of these outcomes. People may not realize that there is, in effect, a bunch of busy work going on. Mr. Cass' "productive pluralism" is effectively a form of inefficiency. It asks that society structure itself such that excess labor is limited, if not eliminated.

An emphasis on labor-market health also changes the analysis of trade and immigration policy. In consumer-welfare terms, unconstrained trade and immigration appear to be unmitigated goods. Not so from the worker’s perspective. How society draws borders around its labor market matters a great deal, and imbalances take a serious toll. A high level of trade can be beneficial, but a large trade deficit is a problem: It represents a dramatic expansion of labor supply with no accompanying expansion of demand. A high level of unskilled immigration, likewise, is unwise amidst concern about the limited opportunities available to the existing unskilled workforce.

This seemed to be the primary point of the article; a call to limit trade (imports mainly) and immigration in the service of forcing American society to need people to do work who are, at current levels of productivity and trade, surplus. It's redistribution, in the same way that government taxation to find transfer payments is redistribution. The difference is in this case, the public is made to pay higher prices for good and services so that domestic workers will have enough demand to make employing them profitable. There's also call for economic autarky (self-sufficiency) in the sense that the United States should not specialize in some things, while allowing other nations to specialize in others. Instead, the nation should have productive capacity in everything, and seek to maintain competitiveness in all sectors.

It's an interesting perspective. And it's not unique. My impression of Japan is that there is a lot of inefficiency in the system. There were a number of people I encountered whose jobs seemed to be little more than providing them something to do. I like to tell the story of "The Wall Of Shoelaces," from my experience in a Japanese department store. When a broken shoelace means that four people spring into action, you really see what a culture devoted to top-notch service is all about. But it seemed pretty clear to me that a number of jobs were there as a means of keeping people "off the streets," as we put it in the United States.

But the reason that we don't have this sort of society here isn't that we have the wrong government policies for it. It's that the people who own businesses understand that having someone assist me with finding the right shoelaces for my shoes costs more than making me do the heavy lifting myself. And since business owners and shareholders are generally unwilling to accept less in dividends and the public is unwilling to accept paying higher prices, there is a push to cut costs. And having four people on hand to help me find the right color, style and length of shoelaces for my shoes (not to mention changing out the laces for me) costs significantly more than having me figure it out and change my own shoelaces.

And this, for me, is where the analysis wanders back into standard faith-based economic territory. Part of the problem might be that Mr. Cass is basically promoting his new book, The Once and Future Worker. Explaining how one deals with the incentives to reduce the workforce to the lowest level that can produce goods and services for paying customers and allowing someone else to pick up the costs for the unemployed isn't covered in the column. And while I understand that perhaps the hope is that people will read the book to find out, I'm not interested in reading the entire volume just to see if he gets around to it.

I also wonder what is supposed to happen to all of the people, especially the unskilled workers, who currently make their livings doing the work that Mr. Cass would see onshored again, and that migrants would be blocked from accessing. It's one thing to argue that we made an error in importing poverty in order to raise the standards of living of those who remained employed. It's quite another to propose exporting that poverty back to the nations from which it came. Given the protectionist tactics that it will take to revive things like the textile industry, it's hard to understand why other nations would want to trade with us. Not to mention that in order to compete with China, working conditions and wages would likely have to look something like China's. We might be able to force Americans to buy products made in the United States at wage and benefit levels that remove the need for subsidization of the workers with government transfers, but it's less clear why people in other countries wouldn't decide to pay less for the made-in-China model.

And I guess in the end, this is the thing that I'm suspicious of. I understand as well as anyone else that our current model of funding consumption through transfer payments and onshoring poverty is unsustainable in the long (or even perhaps medium) run. But changing the incentives for the system we have is going to require more than simply looking for ways to force domestic capital to give higher returns to domestic labor. Mr. Cass presents "Economic piety" as the habit of funding a destructive idleness among people who need to be laboring in order to be happy and healthy. But the focus on the economic pie (See what he has done there?) is perhaps more accurately viewed as being about funding corporate profitability, with the idea that if corporations do well, that they will hire more people to do work.

Changing that conception of society is going to be difficult in a world that's set up to see efficiency as the end-all and be-all. Changing economic policy is unlikely to be up to the task.