Sorry my friend (and I do admire your work) but I can’t let this statement go. It begs us to find a middle ground for reasons only you can answer. It’s the type of thing a defeated exponent would use to gain at least a Pyrrhic victory (like saying, “US tariffs may not be economically viable, but it got the world’s attention”).
No my friend, there is nothing wrong with a free-market system, namely, laissez-faire capitalism.
Conversely, there is nothing right about communism.
Please don’t say that again. But if you do, please tell us what is wrong with a free-market economy.
Those low paying jobs are intended to be for young people who are just getting started. There are tons of great jobs open right now. Just gotta want to work.
I worked a low-paying job in my youth (likely also considered "shitty" by outsiders, but I was grateful for the opportunity). The question becomes how do we solve the issue of people seemingly stuck in low wage work? I don't think people who care for the elderly in nursing homes should be paid so poorly, but who is going to pay them well? Are we, as a society, willing to turn over sizable portions of our annual income for that to happen? I think the rage and snark in these types of replies comes from the frustration of facing the reality that our society simply values, for example, watching grown men (and women) toss a round ball through a small, elevated hoop far more than it values the care and well-being of some of our fellow citizens. That is a tough mirror to face.
I too worked a number of these jobs when I was younger. Putting aside the possibility of moving up in the organization (management), few with any knowledge of economics think these jobs should pay a livable wage.
How do we give people the opportunity to move out of these roles? Every "solution" I can think of involves higher taxes and giving the government more control. If higher taxes solved poverty we'd have eliminated poverty decades ago. That doesn't mean we should stop working on the problem, it only means that higher taxes isn't the solution.
The great thing about living in a free market democracy is we're free to spend our money where we like. Don't like athletes making a lot of money? Don't go to the game, watch them on tv, or buy merchandise. Take that money, start a charity or GoFundMe, and help those you want to help (i.e. the poor, nursing home employees, whatever). The fact that athletes make the salaries they do is an indication that people value the services they provide.
However, there is a silver lining that few will acknowledge, being poor isn't what it used to be:
- Eighty percent of poor households have air conditioning. By contrast, at the beginning of the War on Poverty, only about 12 percent of the entire U.S. population enjoyed air conditioning.
- Nearly three-quarters have a car or truck; 31 percent have two or more cars or trucks.
- Nearly two-thirds have cable or satellite television.
- Half have a personal computer; one in seven has two or more computers.
- More than half of poor families with children have a video game system such as an Xbox or PlayStation.
- Forty-three percent have Internet access.
- Forty percent have a wide-screen plasma or LCD TV.
- Ninety-two percent of poor households have a microwave.
Thanks for justifying the existence of shitty, low-paying jobs. Having worked in nonprofits helping people that often had more than one shitty, low-paying job, and seen what it does when families can't afford the basics that would let them live in dignity, I can't agree with the analysis. But you obviously had fun writing it, setting up straw man arguments. Alas, I'm not a communist (though it's looking better and better) or necessarily advocating for a higher minimum wage. Though that's a start. How about this: subsidize low-income people just like we subsidize "defense" contractors by promulgating wars? The money won't disappear into offshore bank accounts, because it would be spent in low-income communities. Rising tide lifts all boats kind of thinking. Or communism, if you prefer. But it's not communism when money goes to corporations. Puzzling.
There is a far better argument for better wages. The market isn't allocating labour effectively, so allow incentivised pay systems to reach down to the bottom. Over a decade ago, there was an Undercover Boss in the UK. It featured a CEO/finance director trying to get to the bottom of why cleaners at a particular static home site were getting paid double the wages. An enterprising supervisor had introduced local ads, works trials, method study and team-building sessions. The workers were completing four times the work at superior standards. They were also happier than most cleaners, and felt more valued and appreciated in their work!
This is the dark side of capitalism- the class-based assumption that leadership skills can achieve what would normally be gained through incentives. It simply doesn't work- one of the reasons why the UK is so unproductive is because our industrial and service sectors ignored the findings from the British Standards Institute back in the seventies which showed that proportionally incentivised pay systems resulted in an average increase in productivity of 50%- more, with the method study and high morale system.
An operator in the top 10% at a given task will always be roughly four times as productive as the median worker. The corporations know this, which is why they always advertise vacancies at the same time they are getting rid of workers. Some of them, like Amazon are really good at the method study side- but they are effectively leaving money on the table by not incentivising pay adequately and not aiming for high morale. It's not the only progressive policy which can increase profitability- the deployment of part-subsidised physio can also increase productivity and drastically reduce employer liability insurance.
I know in a perfect world that people would want to pay people more or use transfers to alleviate relative poverty for moral reasons. To an extent, and by varying degree, most Western countries already do the latter- even America with the EITC. But one can always trust corporations to operative in their own self-interest and pursue the bottom line. The problem is that many hubristically imagine that they are doing quite well in terms of human productivity. This is simply not the case. Even the better ones could drastically improve their profitability with incentivised pay systems and smart high morale systems.
And a more efficient system of heterodox economics doesn't just apply to line workers. I have friends in government who have told me stories about offices with 25 people, where two workers do 50% of the work. Allocating people to the right jobs (for them), also makes people happier. One of the core findings on male happiness in particular, relates to feeling valued in the workplace. Just as relevant, the market should be ruthless enough to push people towards work for which they are better suited, and away from work for which they are singularly unsuited- otherwise we will quickly find ourselves in a post-Soviet dystopia of stagnating living standards. Some argue this is already happening in the UK and Canada, with America sure to follow.
Incentives and bonuses shouldn't just be for the 'talent'. It's surprising how many people ignore the genius that was F. W. Taylor when it doesn't suit their purposes.
Hi, just to comment briefly on your stat use re life expectancy variable factors comparisons etc. Moscow stats for men were very variable before, during, and post ' glasnost', as far as I am aware. I do know there was a time in the late 90s where stat for particular county areas in the UK, for males was very low, and within a point or 2 of Moscow, in the same time period.
Yes, I know the data is old, but the Soviet Union fell over 30 years ago so I had to go with what was available.
Comparing data from Russia during the 90's wouldn't work because they were no longer a communist country by that time.
Trying to use China instead is also problematic because unlike the Soviet Union they're more of a capitalist dictatorship than they are a communist country, despite claiming otherwise.
Thanks Philip - I s'pose I was just thinking of data per se, re demography, rather than power system in top tier of societal political decision makers & govt. of respective land block / nation-state- within that particular time reference.
I worked for a company a few years back which paid annual bonuses. When I started bonuses were based on individual, department, and company performance. A decade later it was just department and company performance. As you might expect when raises and bonuses are the same regardless of individual performance productivity and morale suffer.
The problem with Joe's suggestion, that we "subsidize low-income people" is that most countries have social safety nets that already do this (ex. Child benefits, food assistance, housing subsidies, etc.). There is no doubt that these programs help but continued existence of poverty always results in cries to increase the subsidies.
The inability of society to conquer poverty leaves us with two distasteful choices:
1. Live with the fact that there will always be some level of poverty and continue to tweak the various programs aimed at addressing it.
2. Increase subsidies (and consequently taxes) to the level where "shitty low-paying jobs" earn enough to make a living wage.
Honestly, short of communism I don't know how #2 is possible.
In the 1970s in the UK, it was not unheard of to have a family with 2 or 3 children, 1 full-time worker ( before minimum wage laws came into place ( apart from particular sectors of the economy, e.g. agricultural workers on full time contracts)), that was not a household in debt.
Consumer credit availability and international plastic tat shipping was in it's early stages.
There was a media splash /uproar when Margaret Thatcher stopped universal free milk in state primary schools.
Now many British people have no dentist.
Times change but many people these days are so addicted to screen interaction I reckon there is quite a bit of collective oblivion to what is going on beyond their own personal experiences.
Which in many ways are dependant on 4 things - their income - their mindset - their location on the planet -& - their state of health.
There is an option 3. Most welfare systems tend to act as a strong disincentive to work. Some have called it the tax/income/welfare dead zone, or various derivations. It's basically when it's more profitable to remain inactive on welfare than to start part-time or key-time work.
Most Western transfer/welfare systems recognise this fact. Many have tried to reform, but the simple fact is whatever the national system the efforts have always fallen short, because they are burdened by past legacy and the efforts of a bureaucracy actively trying to save their jobs by maintaining a dependent client base.
Both Milton Friedman and MLK were in favour of a negative income tax system which could work just as easily to subsidise low income work, as provide welfare to the unemployed. Sure, there is still a disincentive to work, but it's much milder than existing welfare systems, because the subsidy only gets removed slowly as an unemployed person re-enters the workforce, at a rate of 25% to 33% of each dollar earned, rather than withdrawing welfare with the first dollar earned, or at an arbitrary threshold (for example, 14 hours a week). It's basically UBI, but without being hugely expensive and a leaky (inefficient) bucket.
It's would also be hugely more efficient from a bureaucracy standpoint. Standard sources will tell you that American mandatory spending for non-medical welfare costs about 5% of the budget. That's bullshit- do they include pensions or other future liabilities? Building costs? Insuring the workforce in the workplace? Fire and other safety measures? How about federal oversight mechanisms, legal and compliance costs? Because an NIT subsidy could be run automatically through a payments system closely linked to tax, it's probably possible to shave off 20% of non-social security, non-medical, non-housing mandatory spending on bureaucracy savings alone. Between more people working at least part-time and more people being eased into the workforce through the removal of stronger disincentives to work, it might even be possible to be a little more generous.
Plus, the public sector is inherently inflationary and a waste of labour. The redeployment of bureaucrats to the private sector would somewhat increase overall prosperity. That doesn't mean that there aren't jobs in the public sector which are inherently valuable to society- just not bureaucratic gatekeepers and paper pushers.
UBI has been piloted all over the place, but as far as I'm aware NIT hasn't been trialled a single time in the Western world. That means two things. First, it's likely to better in terms of results than standard welfare. Second, the bureaucracy sees it as an existential threat.
Remember, the bureaucracy prefers dependent clients over part-subsidised low income workers. One of the factors for the IRS staffing increase was going after EITC recipients for reclaims of minor overpayments, based upon earnings. They've been doing it for over a decade, because from the states point of view, more dependents equals more people voting for an expanded institutional state.
Think of it this way- there are currently a large number of people for whom work doesn't pay and/or full-time work isn't ideal- women in particular- but for many pursuing hopes of eventual creative success or with other commitments a 15 to 30 hour work week, would likely be ideal. Family carers are another category (I'll declare an interest at this point:)). The bureaucracy in most countries wants these people dependent, rather than semi- self-sufficient.
Previous politicians have tried to reform the systems, but they are always the gentleman players competing against professional obstructers. None have done a great job, or even a good job.
“Neither capitalism nor communism is perfect”!!!
Sorry my friend (and I do admire your work) but I can’t let this statement go. It begs us to find a middle ground for reasons only you can answer. It’s the type of thing a defeated exponent would use to gain at least a Pyrrhic victory (like saying, “US tariffs may not be economically viable, but it got the world’s attention”).
No my friend, there is nothing wrong with a free-market system, namely, laissez-faire capitalism.
Conversely, there is nothing right about communism.
Please don’t say that again. But if you do, please tell us what is wrong with a free-market economy.
Not to a civilized man. Of whom, proportionally, there are fewer and fewer.
Those low paying jobs are intended to be for young people who are just getting started. There are tons of great jobs open right now. Just gotta want to work.
True enough but education and training do matter.
People born poor do faces challenges, but to blame poverty on the existence of low paying jobs is simplistic to say the least.
I agree.
I worked a low-paying job in my youth (likely also considered "shitty" by outsiders, but I was grateful for the opportunity). The question becomes how do we solve the issue of people seemingly stuck in low wage work? I don't think people who care for the elderly in nursing homes should be paid so poorly, but who is going to pay them well? Are we, as a society, willing to turn over sizable portions of our annual income for that to happen? I think the rage and snark in these types of replies comes from the frustration of facing the reality that our society simply values, for example, watching grown men (and women) toss a round ball through a small, elevated hoop far more than it values the care and well-being of some of our fellow citizens. That is a tough mirror to face.
There's a lot to address in your reply.
I too worked a number of these jobs when I was younger. Putting aside the possibility of moving up in the organization (management), few with any knowledge of economics think these jobs should pay a livable wage.
How do we give people the opportunity to move out of these roles? Every "solution" I can think of involves higher taxes and giving the government more control. If higher taxes solved poverty we'd have eliminated poverty decades ago. That doesn't mean we should stop working on the problem, it only means that higher taxes isn't the solution.
The great thing about living in a free market democracy is we're free to spend our money where we like. Don't like athletes making a lot of money? Don't go to the game, watch them on tv, or buy merchandise. Take that money, start a charity or GoFundMe, and help those you want to help (i.e. the poor, nursing home employees, whatever). The fact that athletes make the salaries they do is an indication that people value the services they provide.
However, there is a silver lining that few will acknowledge, being poor isn't what it used to be:
- Eighty percent of poor households have air conditioning. By contrast, at the beginning of the War on Poverty, only about 12 percent of the entire U.S. population enjoyed air conditioning.
- Nearly three-quarters have a car or truck; 31 percent have two or more cars or trucks.
- Nearly two-thirds have cable or satellite television.
- Half have a personal computer; one in seven has two or more computers.
- More than half of poor families with children have a video game system such as an Xbox or PlayStation.
- Forty-three percent have Internet access.
- Forty percent have a wide-screen plasma or LCD TV.
- Ninety-two percent of poor households have a microwave.
Thanks for reading and for the comment AP.
Thanks for justifying the existence of shitty, low-paying jobs. Having worked in nonprofits helping people that often had more than one shitty, low-paying job, and seen what it does when families can't afford the basics that would let them live in dignity, I can't agree with the analysis. But you obviously had fun writing it, setting up straw man arguments. Alas, I'm not a communist (though it's looking better and better) or necessarily advocating for a higher minimum wage. Though that's a start. How about this: subsidize low-income people just like we subsidize "defense" contractors by promulgating wars? The money won't disappear into offshore bank accounts, because it would be spent in low-income communities. Rising tide lifts all boats kind of thinking. Or communism, if you prefer. But it's not communism when money goes to corporations. Puzzling.
There is a far better argument for better wages. The market isn't allocating labour effectively, so allow incentivised pay systems to reach down to the bottom. Over a decade ago, there was an Undercover Boss in the UK. It featured a CEO/finance director trying to get to the bottom of why cleaners at a particular static home site were getting paid double the wages. An enterprising supervisor had introduced local ads, works trials, method study and team-building sessions. The workers were completing four times the work at superior standards. They were also happier than most cleaners, and felt more valued and appreciated in their work!
This is the dark side of capitalism- the class-based assumption that leadership skills can achieve what would normally be gained through incentives. It simply doesn't work- one of the reasons why the UK is so unproductive is because our industrial and service sectors ignored the findings from the British Standards Institute back in the seventies which showed that proportionally incentivised pay systems resulted in an average increase in productivity of 50%- more, with the method study and high morale system.
An operator in the top 10% at a given task will always be roughly four times as productive as the median worker. The corporations know this, which is why they always advertise vacancies at the same time they are getting rid of workers. Some of them, like Amazon are really good at the method study side- but they are effectively leaving money on the table by not incentivising pay adequately and not aiming for high morale. It's not the only progressive policy which can increase profitability- the deployment of part-subsidised physio can also increase productivity and drastically reduce employer liability insurance.
I know in a perfect world that people would want to pay people more or use transfers to alleviate relative poverty for moral reasons. To an extent, and by varying degree, most Western countries already do the latter- even America with the EITC. But one can always trust corporations to operative in their own self-interest and pursue the bottom line. The problem is that many hubristically imagine that they are doing quite well in terms of human productivity. This is simply not the case. Even the better ones could drastically improve their profitability with incentivised pay systems and smart high morale systems.
And a more efficient system of heterodox economics doesn't just apply to line workers. I have friends in government who have told me stories about offices with 25 people, where two workers do 50% of the work. Allocating people to the right jobs (for them), also makes people happier. One of the core findings on male happiness in particular, relates to feeling valued in the workplace. Just as relevant, the market should be ruthless enough to push people towards work for which they are better suited, and away from work for which they are singularly unsuited- otherwise we will quickly find ourselves in a post-Soviet dystopia of stagnating living standards. Some argue this is already happening in the UK and Canada, with America sure to follow.
Incentives and bonuses shouldn't just be for the 'talent'. It's surprising how many people ignore the genius that was F. W. Taylor when it doesn't suit their purposes.
Hi, just to comment briefly on your stat use re life expectancy variable factors comparisons etc. Moscow stats for men were very variable before, during, and post ' glasnost', as far as I am aware. I do know there was a time in the late 90s where stat for particular county areas in the UK, for males was very low, and within a point or 2 of Moscow, in the same time period.
Up to date quantitive data would be useful.
Hi Nancy. Thanks for the reply.
Yes, I know the data is old, but the Soviet Union fell over 30 years ago so I had to go with what was available.
Comparing data from Russia during the 90's wouldn't work because they were no longer a communist country by that time.
Trying to use China instead is also problematic because unlike the Soviet Union they're more of a capitalist dictatorship than they are a communist country, despite claiming otherwise.
Thanks Philip - I s'pose I was just thinking of data per se, re demography, rather than power system in top tier of societal political decision makers & govt. of respective land block / nation-state- within that particular time reference.
Excellent reply Geary!
I worked for a company a few years back which paid annual bonuses. When I started bonuses were based on individual, department, and company performance. A decade later it was just department and company performance. As you might expect when raises and bonuses are the same regardless of individual performance productivity and morale suffer.
The problem with Joe's suggestion, that we "subsidize low-income people" is that most countries have social safety nets that already do this (ex. Child benefits, food assistance, housing subsidies, etc.). There is no doubt that these programs help but continued existence of poverty always results in cries to increase the subsidies.
The inability of society to conquer poverty leaves us with two distasteful choices:
1. Live with the fact that there will always be some level of poverty and continue to tweak the various programs aimed at addressing it.
2. Increase subsidies (and consequently taxes) to the level where "shitty low-paying jobs" earn enough to make a living wage.
Honestly, short of communism I don't know how #2 is possible.
In the 1970s in the UK, it was not unheard of to have a family with 2 or 3 children, 1 full-time worker ( before minimum wage laws came into place ( apart from particular sectors of the economy, e.g. agricultural workers on full time contracts)), that was not a household in debt.
Consumer credit availability and international plastic tat shipping was in it's early stages.
There was a media splash /uproar when Margaret Thatcher stopped universal free milk in state primary schools.
Now many British people have no dentist.
Times change but many people these days are so addicted to screen interaction I reckon there is quite a bit of collective oblivion to what is going on beyond their own personal experiences.
Which in many ways are dependant on 4 things - their income - their mindset - their location on the planet -& - their state of health.
There is an option 3. Most welfare systems tend to act as a strong disincentive to work. Some have called it the tax/income/welfare dead zone, or various derivations. It's basically when it's more profitable to remain inactive on welfare than to start part-time or key-time work.
Most Western transfer/welfare systems recognise this fact. Many have tried to reform, but the simple fact is whatever the national system the efforts have always fallen short, because they are burdened by past legacy and the efforts of a bureaucracy actively trying to save their jobs by maintaining a dependent client base.
Both Milton Friedman and MLK were in favour of a negative income tax system which could work just as easily to subsidise low income work, as provide welfare to the unemployed. Sure, there is still a disincentive to work, but it's much milder than existing welfare systems, because the subsidy only gets removed slowly as an unemployed person re-enters the workforce, at a rate of 25% to 33% of each dollar earned, rather than withdrawing welfare with the first dollar earned, or at an arbitrary threshold (for example, 14 hours a week). It's basically UBI, but without being hugely expensive and a leaky (inefficient) bucket.
https://www.niskanencenter.org/universal-basic-income-is-just-a-negative-income-tax-with-a-leaky-bucket/
It's would also be hugely more efficient from a bureaucracy standpoint. Standard sources will tell you that American mandatory spending for non-medical welfare costs about 5% of the budget. That's bullshit- do they include pensions or other future liabilities? Building costs? Insuring the workforce in the workplace? Fire and other safety measures? How about federal oversight mechanisms, legal and compliance costs? Because an NIT subsidy could be run automatically through a payments system closely linked to tax, it's probably possible to shave off 20% of non-social security, non-medical, non-housing mandatory spending on bureaucracy savings alone. Between more people working at least part-time and more people being eased into the workforce through the removal of stronger disincentives to work, it might even be possible to be a little more generous.
Plus, the public sector is inherently inflationary and a waste of labour. The redeployment of bureaucrats to the private sector would somewhat increase overall prosperity. That doesn't mean that there aren't jobs in the public sector which are inherently valuable to society- just not bureaucratic gatekeepers and paper pushers.
UBI has been piloted all over the place, but as far as I'm aware NIT hasn't been trialled a single time in the Western world. That means two things. First, it's likely to better in terms of results than standard welfare. Second, the bureaucracy sees it as an existential threat.
Remember, the bureaucracy prefers dependent clients over part-subsidised low income workers. One of the factors for the IRS staffing increase was going after EITC recipients for reclaims of minor overpayments, based upon earnings. They've been doing it for over a decade, because from the states point of view, more dependents equals more people voting for an expanded institutional state.
Think of it this way- there are currently a large number of people for whom work doesn't pay and/or full-time work isn't ideal- women in particular- but for many pursuing hopes of eventual creative success or with other commitments a 15 to 30 hour work week, would likely be ideal. Family carers are another category (I'll declare an interest at this point:)). The bureaucracy in most countries wants these people dependent, rather than semi- self-sufficient.
Previous politicians have tried to reform the systems, but they are always the gentleman players competing against professional obstructers. None have done a great job, or even a good job.
Thanks for the comment and link Geary. I particularly liked this line:
"The redeployment of bureaucrats to the private sector would somewhat increase overall prosperity."
No doubt!
Of course, by that I meant changing the nature of their labour, as well as its source!