Tag: economics

Celebrating Labor Day

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Labor Day. observed on the first Monday in September, is celebrated in many other counties on May 1st as International Workers’ Day.  Americans thought that holiday had overtones of socialism, so a different date was chosen.  This holiday weekend marks the end of summer, not too far from the autumnal equinox (the pagan holiday of Mabon) on September 22nd.  For many years the week after Labor Day was time for back to school, but in many states, public school schedules have been shifting as schools experiment with shorter summer vacations and longer breaks during the year. Our state went back to school at the beginning of August.

Labor gets short shift under capitalism.  Labor is a commodity, bought and sold in labor markets, the price being determined partly by supply and demand and partly by power or lack thereof.  The federal minimum wage of $7.25 an hour has been unchanged since 2009. At that rate, a full -time worker (40 hours a week for 52 weeks) would have a gross income of $15,170 before deductions, like social security tax and maybe even health insurance.  The poverty ceiling for a single adult is $15,650, In most states, that wage would be barely enough to rent a one-bedroom apartment, with nothing left for food and other necessities.  Among workers paid by the hour, 843,000 workers were paid the minimum wage OR LESS in 2024.

Regardless of our income, work or labor takes up a very large share of our lives. At some time between ages 16 and 22, people typically enter the labor force, and stay there with breaks for unemployment, health issues, domestic responsibilities and other reasons, until age 63 (typically 62 for women, 65 for men). Many people spend that long stretch of their lives working at a job that they find physically demanding, boring, high pressure or long hours.  Or at least not the answer to “What I want to do when I grow up?”—our favorite question for small children.

 Work or labor is a part of life, but not all of life.  Many of us view our labor as primarily a way to put a roof over our heads and food on the table. It can provide those essentials,  but our work can and should be more than that.  It is interesting that labor gets a negative religious cast. When God evicts Adam and Eve fromf the garden, She says that Adam shall earn his bread by the sweat of his brow and Eve shall suffer in bringing forth children (labor). Economists share that biblical perspective, that labor is suffering for which we must be compensated by some reward—bread or a baby among other possibilities. Labor or work is equated with suffering. 

Yet some of us are privileged to choose  whether to work or not because of inherited or acquired wealth.  Better yet, many of us to choose work that enables us to harness our gifts and our passions to engage in a vocation. Even a vocation has its downsides—a difficult boss or customer or client, tasks associated with the job that are distasteful, or other drawbacks. I used to joke that if I was paid for the distasteful side of my work as a college professor, then I was being compensated for grading papers and attending committee meetings!

Those who are fortunate enough, or wise enough, experience their work as a vocation at which one can excel and through which one satisfies the need to be useful, do develop and parcixe one’s skills,  and to have a community of fellow workers. Almost any kind of work can be a vocation, whether it is cleaning houses or raising chickens or putting out fires or managing a household or teaching grooming dogs.

 Sometimes we make the wrong choice. When I went to seminary at age 59 to study theological ethics after an early retirement from teaching, I met an ex-lawyer at orientation. “What are you doing here?” he asked.  Jokingly, I said,” I’m doing penance for 30 years of teaching economics.”  (I really liked being an economist and still do!) He nodded. A candidate for the ministry, he said he was doing penance for seven years of practicing law. I was just seeking a way to broaden and redirect my efforts as an economist, but he was making a much bigger change. As my former department chair Bruce Yandle used to say, if you try, you can fit three careers into a lifetime.

I was fortunate to work part-time early and late in my 50 year career. I continued to do public policy work and teach two graduate courses, one each semester, in an interdisciplinary program in Policy Studies. That light schedule freed me to do other things—travel, community leadership, writing. That’s one way of having a career AND a life.  It comes with a lower income, but when your children are grown and your mortgage is paid, it doesn’t seem to matter as much.

Labor is one of the ways we find meaning and purpose in life.  All kinds of work deserve our respect, and opportunities for the workers to feel useful and to have some degree of autonomy. And a decent wage.

So on your last visit to the beach before the start of college football, falling leaves, and shorter days, do something fun. You’ve earned it!

Tariffs Again?

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Donald Trump is not the only president to wax ecstatic over tariffs.

Here is what Wikipedia had to say about the so-called Tariff of Abominations two centuries ago: ” The Tariff of 1828 was enacted on May 19, 1828, and aimed to protect Northern industries by imposing high duties on imported goods, with rates reaching as high as 50% on certain items. This tariff was designed to bolster American manufacturing by making foreign products more expensive, thereby encouraging consumers to buy domestically produced goods.”

 It was signed by soon-to-be departing President John Quincy Adams but enforced by Trump’s favorite president (other than himself) Andy Jackson.  When John C. Calhoun argued that the Port of Charleston didn’t have to enforce a tariff the state disagreed with (the Nullification doctrine of states’ rights), Jackson said he would send federal troops to enforce it.  He also refused to renew the charter of the nation’s central bank, the Second Bank of the United States, because the bank’s president had supported his opponent in the 1828 election. (Sound familiar?)  While there was some compromise on tariffs, the combination of the two led to a severe recession in the 1830s.

Fast forward to the 1920s.  The Smoot-Hawley Tariff was enacted in 1930 and signed by President Herbert Hoover, just six months after the stock market crash on Black Friday in October 1929.  To quote Wikipedia again, “Hoover signed the bill against the advice of many senior economists, yielding to pressure from his party and business leaders. Intended to bolster domestic employment and manufacturing, the tariffs instead deepened the Depression because the U.S.’s trading partners retaliated with tariffs of their own, leading to U.S. exports and global trade plummeting. “The combination of financial disaster and disruption of world trade repeated itself, plunging the nation into a severe depression.

Apparently, it takes a hundred years to repeat the same mistakes. Trump’s tariffs and quarrels with the banking system, both with the Fed chair and with trying to loosen the already loose bank regulations that led to the financial disaster of 2008, look all too familiar to anyone who has more than a nodding acquaintance with U.S. economic history.

As philosopher George Santayana famously said, “Those who cannot remember the past are condemned to repeat it.”

Efficiency: First Among Equals

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Brace yourself, dear readers.  My economist self wants you to hear my confession.

For many years I taught introductory economics, as well as more advanced classes. I taught the introductory classes because a colleague and I had a multi-edition principles text, and it was important to road test it regularly. In one of the earlier chapters it was customary to introduce the claim, which was in most mainstream textbooks, that economics was value-free. Economics was just a set of tools for making choices about how to use resources wisely that was useful for all of us as workers, owners, consumers and citizens. A few pages later, we introduced them to goals, which we insisted were not values.  Microeconomic goals (WHICH WERE ASSUREDLY NOT VALUES!! were efficiency, equity, and freedom. The next semester, students were introduced to the macroeconomic goals (WHICH WERE ASSUREDLY NOT VALUES!!) of full employment, price stability (as opposed to inflation) and economic growth.

Having defined the goals, it was easy to discover and implement decisions processes, anticipate the effects of changes in the marketplace or in government policy, and prepare our students for life in a capitalist society.

If economics were a religion (which it might be), my heretical self might be seeking penance for the sin of inflicting this mindset on innocent adolescents, but I was just expounding on doing what my colleagues and I routinely taught.  If I were to start over, I would hope that some of those students would question who set these goals.  At least for macroeconomics I had an answer. The Employment Act oi of 1946 created a Council of Economic Advisors to serve the president and guide him in pursuing these “self-evident” goals.  Actually, I feel less penitent about the macroeconomic goals, although the powers that be seem to worry more about price stability than full employment and never question the conflict between growth and sustainability. But it is the microeconomic goals that I feel called to challenge, and especially the presumed incompatibility of efficiency and equity.  (Freedom we will save for another day.).

Not all goals are created equal.  Efficiency is the primary goal, equity gets a greeting card on some holidays, and freedom is loosely defined and somewhat hard to pin down.  Efficiency is defined in economics in either of two ways getting the most (most WHAT?) out of our available resources or satisfying our wants/needs/desires at the lowest possible expenditure of time and effort. Want to insult an economist? Just tell him (more hims than hers) that his proposal or idea pr practice is INEFFFICNENT.  You will not get nearly the same reaction if you claim it is inequitable.  In fact, Economist Arthur Oken argued that these two goals are constantly in conflict. Equity means a leveling of incomes and assets, but it threatens efficiency because it reduces work incentives.  Some of those who pay more taxes to provide benefits and those who receive more government benefits will just drop out of the labor force. A  nation of idlers! Parasites on those who continue to work and pay taxes! Reducing work incentives Is clearly inefficient.

Efficiency versus equity is another false binary.  We need both.  As a result of this false idolatry of efficiency we have an income distribution that is more like that of a third world oligarchy than a prosperous democracy.  The very rich can use their wealth to redirect government policies to their benefit rather than the needs and desires of the confused and misled majority.  We have outrageously expensive health care costs and a severe shortage of affordable housing, a minimum wage that has not been increased since the Clinton administration, falling life expectancy and a growing environmental crisis.  Other nations that choose to strike a healthy balance between these two goals are more prosperous and more democratic.

When we name these “goals” as the values that they are, values that are the driving forces in our political economy, the choices are much clearer.  The values of efficiency and equality that both support a healthy economy and a democratic polity are not enemies, but partners.

Read my 2023 book, Passionately Moderate: Civic Virtues and Democracy, available from amazon in paperback and Kindle formats.

Head or Heart Again

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Before the election in 2025, I wrote a political post about head and heart and the role each played in our choice at the ballot box.If you speak Myers-Briggs, you might call it Left Brain/Right Brain, T or F for short. No,. that’s not true/false, it’s another dichotomy, thinking/feeling. Or sometimes reason and emotion. We could take on all of he four Myers-Briggs binaries–introvert/extrovert, Intuition/Sensing, and Judging/perceiving, and judging/perceiving, but let’s save those for another day..

We use both halves of our brains, sometimes one more than the other, although we tend to have a preferred first response. A classic example is being at the scene of the accident. The T, left-brained person sees it as a problem to be solved. Everybody out of the car? Police? Do we need a medic? Meanwhile, the right-brained F is feeling empathy and compassion and trying to offer comfort..At our best, we humans try to cover both bases. But if not, we can pair up, the left-‘brained person (more likely a man but not necessarily) can problem solve while the right-brained persons offers consolation and hope.Ultimately, everyone at the scene will engage both halves of the brain.

Challenging the assumed superiority of thinking or reasoning or logic over empathy or affection or compassion led to some useful answers to bothersome questions in multiple fields of thought. I am mainly aware of the the effect of this challenge to my own academic discipline, economics, but I am sure it has influenced other and ethics.( Or as one of my economist friends said, shouldn’t that be economics or ethics?)

The standard textbook in economics introduced the young scholar to homo economicus (economic man), the basis of a simplistic model of how we make economic decisions about money, spending, working, marrying, having children, investing, retiring. and so forth. Homo economicus has two sterling qualities. He is a fully informed master calculator who can do cost/benefit analysis in his head, or occasionally on a spreadsheet. And his sole goal is to maximize his personal self-interest, to get as much out of life as he can with the least expenditure of effort or money.or both. I personally find this person to be rather obnoxious, but I have encountered people who do seem to conform to that model much of the time….

There has always been an undercurrent in economics suggesting that the average actual human does not exactly conform to that model. That undercurrent can be traced from Adam Smith’s Theory of Moral Sentiments (a precursor to his Wealth of Nations) through Keynes’ animal spirits to Daniel Kahneman’s Thinking Fast and Slow. Kahneman’s work earned him the only Nobel prize in economics awarded to a psychologist. Back in the 19th century, Charleston Dickens satirized economic man in his novel Hard Times, in which a paterfamilias subjected his family to cost-benefit analysis of every decision and couldn’t understand why his wife gave up and his children left home at the earliest opportunity.

What were those challenges to homo economics? First of all, most of us can only acquire a limited amount of information about all the details of all t he choices we have to make every day. There goes the assumption that our hero is fully informed. In fact, we make better choices when we employ what is called bounded rationality, limiting our options to a small number.. Second, we often lack the complex calculation skills to determine which choice would most meet our needs an desires. Finally, many of us feel that there is more to life than narrow self interest. There is family. There is culture. there is community. There is play. There is being in nature. Some of the best things in life really are free! We care with and for others and they do the same. It’s called altruism, and it messes up those tidy one-person decision models concerned only the decider’s self-interest..

There are lessons in this rethinking of our model of human choice that impact public policy choices as well as our personal choices.If we rep;lace Homo economics with homo not so sapiens, we find that we may need to revise the way we present choices to citizens and taxpayers. The first Medicare drug coverage programs offered way more choices than sick people and their caregivers could adequately evaluate. People often need a default that can make a decision for them if they forget or can’t decide. Usually the default is the one that works best for the average person. Making wise choices is itself a demand on our scarce resources of time and attention that might be better–or more joyfully!–employed elsewhere

A 20th century British philosopher, Mary Midgeley, applied the same challenge to to the practices in many fields ofdeveloping “universal”;explanations, including philosophy, history, biology and ethics–even physics in its evolution from Newton to Einstein! These theoretical models must be qualified by the diversity of context and circumstance, diversity and complexity, that challenge overly simple explanations to life’s complex questions.

Lie my blog? You may like my book. Passionately Moderate: Civic Virtues and Democracy. Available from amazon in paperback and Kindle formats.

More Than One Principle

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More Than One Principle

I have been reading two interesting books on the evolution of 20th century American economics in the late 20th century that have confirmed some of my worst suspicions of the harm that has been done by my profession. One was Democracy in Chains by Nancy McLean, a history of the growth of the anti-government public choice school.  The other is The Economists’ Hour by Binyamin Applebaum, a history of the growing influence of monetarism and market-worship  and its influence on public policy. It would be a shame if these books were read only by economists, because their critiques are very discouraging about the future of our democracy, our society, and our economy.

As an economist, I was assured by my mentors and colleagues that our profession was value-free, merely a set of tools for making decisions. We told our students in lectures and textbooks that there were six measures of a well-functioning economy: efficiency, equity, and freedom for microeconomics and  growth, price stability, and full employment for macroeconomics. But when push came to shove, the pursuit of some of these indicators trumped the others, suggesting that they were not neutral measures of performance but in fact values that should guide our economic policies.

Efficiency and freedom trumped equity, price stability and growth trumped full employment. Over time, those priorities have resulted in low inflation, and growing inequality.  Growth, supposedly, would resolve that conflict.  In the Kennedy years, the favorite saying was “A rising tide lifts all boats.” And one dissident remarked, “but not those already under water.”  One might reasonably ask whose interests were served by that rank ordering. The law is on the side of the rich. Or, ,as Anatole France wryly observed, “The law, in its majestic equality, forbids rich and poor alike to sleep under bridges, to beg in the streets, and to steal their bread.”  

Who gains from freedom? Those who have the most control over resources, who want to be able to  use them as they see fit.  Who gains from efficiency? Those who control the increased profits resulting from greater efficiency. Who gains from equity? The rest of us.  Who gains from growth? Despite trickle-down and supply-side theories, there is no mechanism that ensures that the gains from economic growth will be widely shared across all sectors of society.  Price stability is highly prized by those who are lenders or owners of other financial assets, but a bit of inflation reduces the burden on debtors. Full employment empowers workers, but a “reserve army of the unemployed” (to borrow a phrase from Karl Marx) ensures  that the labor market will favor the owners over the workers.  What happens when unemployment is low? Well, for one thing, Amazon loses a union election!  And wages rise, as we have observed in the last six months, as employers have to compete for a dwindling supply of workers.

Who loses from creating mistrust in government, promotion of individualism rather than community, demonizing the poor and undermining democracy? Ultimately, all of us.  Economics has become a very short-sighted profession whose cost-benefit analysis does not lend itself to the promotion of peace, equality, democracy, environmental sustainability, and trust in one another, our institutions, and even our survival.

It was not always so.  As late as the 1960s, economics affirmed all six of those goals as qualified positives along with a need to find a balance in tradeoffs among them.  The government was seen, not as a power-hungry monster but rather as the check on the excesses of capitalism, a balancing mechanism that guaranteed access to the basic necessities of life and opportunity for all who were willing to work. No, it was not a golden age by any means, particularly in is failings of racism and sexism. But it was an era when the best minds went into science, engineer, medicine, teaching and other helping professions, not into finance.  As poet William Wordsworth observed, “Getting and spending, we lay waste our powers.” Perhaps it is time to reclaim our society from the economists and restore the pursuit of material wealth to its proper sphere as a means to an end rather than an end in itself.