Minimum Wages, Bargaining Power, Poverty, and Work

December 1st, 2013 at 10:13 am

Arin Dube has a great piece in the NYT today on the minimum wage, covering all the bases in that aged debate.

Key points:

–As the total workforce has become older and better educated, so has the low-wage workforce; the idea that the minimum wage provides a bit of extra spending money for middle-class teenagers is wrong.  This insight helps explain the grownups you see featured in recent retail and fast-food strikes calling for a higher minimum.

…if most minimum wage workers were middle-class teenagers, many of us might shrug off concerns about their wages, since they are taken care of in other ways. But in reality, the low-wage work force has become older and more educated over time. In 1979, among low-wage workers earning no more than $10 an hour (adjusted for inflation), 26 percent were teenagers between 16 and 19, and 25 percent had at least some college experience. By 2011, the teenage composition had fallen to 12 percent, while over 43 percent of low-wage workers had spent at least some time in college. Even among those earning no more than the federal minimum wage of $7.25 in 2011, less than a quarter were teenagers.

–The main argument against moderate increases in the minimum wage is one of unintended consequences: workers who get the raise will be priced out of the labor market.  Dube reports careful, innovative research that shows that claim to range from false to way overblown.  Summarizing his own recent work with various colleagues, Dube reports findings that use:

…nearly two decades’ worth of data and compare all bordering areas in the United States to show that while higher minimum wages raise earnings of low-wage workers, they do not have a detectable impact on employment. Our estimates — published in 2010 in the Review of Economics and Statistics — suggest that a hypothetical 10 percent increase in the minimum wage affects employment in the restaurant or retail industries, by much less than 1 percent; the change is in fact statistically indistinguishable from zero.

There are careful studies that find larger negative impacts, but they are small in that a) they’re close to zero, and b) as such, they confirm that even if there is some job loss or reduced hours as a result of the increase, the benefits to affected workers far outweigh the costs.

Look, at the end of the day, what policy makers really need to be looking for are ideas that most efficiently reduce wage and income inequality.  That’s a main reason why I’ve been so stuck on full employment, as it perfectly meets that criterion.  It’s highly inefficient to stay stuck in this mode of underutilized labor resources (i.e., high unemployment) and as we show in Figure 2.7 in our new book on full employment, tight labor markets are highly equalizing.   They provide low-wage workers with some of the bargaining power they severely and increasingly lack.

Same with the minimum wage.  In fact, its introduction in the Fair Labor Standards Act of 1938—75 years old this year—was predicated on this premise.  Left unattended, the vast imbalance in bargaining power between wage setters and the lowest-wage workers would drive their wages down to privation levels, and thus Congress sets a wage floor.  It complements that wage floor with other policies, like the Earned Income Credit, to help raise the paychecks of low-income workers to level wherein they can get closer to meeting their families basic needs.

Of course, many policy makers do not in good faith on the issue, today’s crop especially (during the Reagan years, the real value of the minimum fell by 30%).  That’s one reason why, as Dube documents, there’s so much action on minimum wages at the sub-national level.

In my view, there’s nothing wrong, and a lot right, with the idea that work for able-bodied adults is an important pathway out of poverty.  But the only, and I mean ONLY, way that works is if ample living wage jobs are available to all comers.  If labor demand in the low-wage sector outpaces, or at least tightly matches, labor supply.  If the minimum wage is set at a supportive level and other work supports, like the EITC and affordable health care, are solidly in place.

Otherwise, “work as a pathway out of poverty” is nothing more than a cruel construct, mindlessly repeated by ideologues with little connection to the real world.

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39 comments in reply to "Minimum Wages, Bargaining Power, Poverty, and Work"

  1. smith says:

    Two benefits missing from discussion of minimum wage

    1) Some jobs will be eliminated, to which we might in some cases say good riddance. One would hope a higher minimum means some jobs are not productive enough to make sense. Society would then reallocate resources or time accordingly. A good scenario might be more expensive burger flippers raise fast food prices enough to nudge a little more home cooking, which might be healthier. That also might necessitate a movement for lower work hours. Investment in fast food chains might be redirected to renewable energy. Trouble is labor is such a small portion of the mass produced meal, the $2/hour increase proposed is liable to add just a few cents to the cost. Instead, if you’re struggling to pay the baby sitter/child care the minimum, suddenly an essential cost rises, while middle and upper earners hardly notice. (maybe an argument for expanded day care).

    2) A higher minimum usually eventually if not immediately tends to bump everyone up the payscale, an important reason why the ruling classes often oppose it. (in the same way 25% of all private industry jobs (vs. government employment) were unionized in early 1970s affected all wage earners, whereas the 6% today is most often a source of envy (or derision as overpaid, privileged, and irrelevant)

    If polls are to believed, the hike is hardly a brave call for Obama to support.
    http://www.nytimes.com/2013/11/08/business/10-minimum-wage-proposal-has-obamas-backing.html

    “In July, on the fourth anniversary of the most recent minimum wage increase, Mr. Harkin and Mr. Miller stepped up their effort, citing a poll by Hart Research that found that 80 percent of Americans support increasing the minimum to $10.10. The Hart poll found that 92 percent of Democrats, 80 percent of independents and 62 percent of Republicans backed their proposal.”

    Finally, worth mentioning lowering taxes on lower incomes, or expanding EITC, is a bad idea in all cases (reinforcing a system that pays workers too little, creates too little demand, and penalizing businesses paying a fair wage), but especially so during high unemployment when tax dollars could create jobs with infrastructure repair, aid to states. With high incomes under taxed, it’s not trickle down, it’s trickle across, and robbing middle income Peter to pay underpaid and underemployed Paul.


  2. Kevin Rica says:

    “…nearly two decades’ worth of data and compare all bordering areas in the United States to show that while higher minimum wages raise earnings of low-wage workers, they do not have a detectable impact on employment.”

    In other words, the demand curve for low-wage, low-skilled labor is inelastic (vertical or near-vertical labor demand curve). Approximately, the same number of people will be employed even at much different wage rates.

    Let me share an important insight that a well-known, labor economist (who I will not identify here) shared with me. The economic literature showing the benefit of the minimum wage estimates that labor demand is extremely inelastic (above). But the literature showing that immigration does not depress wages all estimates that labor demand is extremely elastic (horizontal or near-horizontal labor demand curve). There is no way to reconcile the two. Either one or the other must be wrong. They cannot both be simultaneously correct.

    If one tries to do both at the same time; a No-Immigrant-Left-Behind or “Comprehensive” Immigration Reform aka “amnesty by another name” tolerating large-scale illegal immigration, or increasing legal immigration AND increasing the minimum wage, there is no doubt about the outcome.

    The minimum wage will determine the quantity of labor demanded and each new immigrant will cause a one-for-one increase in unemployment (either open unemployment or a withdrawal from the labor force).

    We have already seen a dramatic decrease in the labor force participation rate over the last decade. I fear it will become much worse.


    • Perplexed says:

      Have you seen this Dallas Fed paper? http://www.dallasfed.org/assets/documents/research/pubs/gonetx.pdf

      Mark Thoma posted it on his site the other day with a link to this FT article about it: http://www.ft.com/intl/cms/s/2/f877cb66-57d0-11e3-86d1-00144feabdc0.html


      • Kevin Rica says:

        Perplexed,

        I have not read it, although I read the FT article. You can guarantee yourself a favorable write-up somewhere in the press if you do some sort of pro-immigration paper, even though 99.9% of academic articles will never get comparable treatment. If they had reached the opposite conclusion, the article would have been ignored.

        The whole idea behind it is absurd. It sounds like a recycling of Giovanni Peri’s hypothesis that poorly-educated, American menial workers who lose their jobs to uneducated immigrants suddenly develop “communications skills” (they write coherent paragraphs and business plans) simply because they are English speakers. How much more implausible an hypothesis can one imagine? Leontief’s brilliant AEA presidential address (1971) “Theoretical Assumptions and
        Nonobserved Facts” captured this in the title. Is there any real evidence that this happens? It’s not even an hypothesis, much less a fact. It’s an absurd assertion. Anyone (including the Dallas Fed) who would cite it has lost all credibility.

        Unrestricted immigration did not work well in California which for decades drew huge numbers of migrants from other states because of both climate and job opportunities. Now the air quality is better but people are leaving the state because of the economy and the state teeters on bankruptcy. Californians are voting with their feet. If you want to read a great book by a different UC-Davis professor, read “Importing Poverty” by Phillip Martin (Intro by Jared’s buddy, Ray Marshall). It’s real nitty-gritty applied economics that explains the damage done to America’s rural economy by the constant employment and replacement of immigrant labor at poverty-level wages.

        Texas’ current prosperity (at the top end) is more likely due to the higher price of oil over the last decade and the fact that George Mitchell, a Texas native, “cracked the code” on fracking (sand is the magic ingredient) and opened up the Eagle Ford and Barnett formations.

        But if you believe this part of Rick Perry’s Texas miracle, how many of Rick Perry’s other policies should we adopt? Get to the bottom line and Texas’ poverty rate is the 46th worst of the 50 states. http://en.wikipedia.org/wiki/List_of_U.S._states_by_poverty_rate

        And it could get worse: http://www.statesman.com/news/news/demographer-warns-of-increasing-education-costs-as/nSmLS/


    • smith says:

      I’m not getting the logic here. If you think immigrants take jobs from Americans by working for less, amnesty and higher minimums could only help. Legal workers are less likely to be exploited with lower wage offers than illegals. Higher minimums would also attract native speakers, who in turn would usually win out over foreign workers absent wage differentials.

      There is literature that says immigrants cost Americans jobs, despite other literature that says that doesn’t occur. Keep in mind there are two different effects, one on wages, one on jobs. Also, all the literature studying the effects are seriously flawed. (Reading David Card and his equations)

      Regarding elasticity, the wage differential offered by immigrants is usually much larger in absolute and as a percentage of prevailing rates than the proposed increase in the minimum. So the demand could be inelastic for the small increase in the minimum, but elastic for the large differential (meaning lower by 1/4 or 1/2, $5/hr) offered by immigrants.

      Again, in a normal functioning economy, immigrants help the economy grow, their presence makes the economy larger, often extra motivated and hard working.

      I would add, employer sponsorship which conditions entry on employment, threatens deportation on dismissal, and obliterates whatever notion there is of a free labor market, is the real enemy, not immigration per se. Toss out the huge expansion planned of this corporate welfare provision from the new reform bill and watch support vanish. Obama, Sen Schumer and the labor unions, all have cut this deal, agri-business and tech want it, and you wonder why wages are stagnant?


      • Kevin Rica says:

        Smith, I agree that you don’t get the logic of the supply and demand model.

        But the basic idea is that if 500 qualified people apply for 700 jobs, wages go up. Workers can pick the 500 best offers.

        If 700 people apply for 500 jobs, employers pick those who will work for less or accept the worst working conditions. Legalizing 300 of them does not change the math. Deporting or preventing 300 of them from apply does change the math.

        It’s the numbers that count. Changing the legal status of the guys standing by the Home Depot just allows them to walk into any business and offer to work for the minimum wage (assuming the business is even covered by the minimum wage provisions of the FLSA – many immigrants work in the industries that aren’t). Then all the legal workers are threatened — “If you don’t take a pay cut or give me any lip, I’ll replace you by that immigrant at the back door.”

        The reason that unskilled labor earns big bucks in North Dakota has nothing to do with legal protections. It’s just supply and demand. There really isn’t much housing (or shelter) in the Bakken formation, so labor is scarce.

        None of you hypotheticals trump the fundamentals of supply and demand. And if you don’t understand that — you are correct; You don’t follow my logic.


        • Jonas says:

          If you think that the labor market is entirely governed by bog standard demand-and-supply models right out of Principles textbooks, you might just be unreachable. While these ham-handedly simple models might reasonably describe the market for labor in one firm, one cannot simply aggregate several of these and call it ‘the labor market.’ The ceteris paribus assumption will no longer hold, for one. In our discipline, stomping around and yelling ‘supply and demand! supply and demand!’ is the last refuge of those without real arguments.


          • Kevin Rica says:

            Jonas,

            What’s your discipline? Whitchcraft? Making up a theory (which you haven’t specified) to fit your policy prescriptions is not discipline.

            The only logical consistency you get doing it your way is that your facts and theories flow immediately from your conclusions.

            If you think that the S&D theory might apply to a single firm — you have absolutely no idea what the theory is.

            Do not tell me your imaginary big brother will beat me up. You haven’t articulated any theory (logical or illogical).


          • Jonas says:

            It’s not my ‘theory.’ Take it up with Krueger and Card. It’s not exactly their ‘theory’ either; their empirical work showed that exogenous wage increases in a regional labor market (fast food in NJ/PA) led to no fall in employment. Now, if you want to argue that this result cannot hold because ‘supply and demand! supply and demand!’ then you’re arguing against facts, an affliction for which there is no certain cure.


          • Kevin Rica says:

            Card I will take up with any day.

            I don’t know specifically what Krueger and Card paper or theory you are discussing.

            If “their empirical work showed that exogenous wage increases in a regional labor market (fast food in NJ/PA) led to no fall in employment. ”

            It sounds like they are referring to imposition of a minimum wage or a union pay agreement. That has nothing to do with immigration. So I don’t know how this supports any belief that immigration won’t either depress wages or increase unemployment.

            However, if they are correct, (and i suspect that is true) then immigration will just increase unemployment one-for-one.

            Not only should you not “criticize what you don’t understand,” do not cite it either.



          • jonas says:

            My whole point is that simple Principles models are often inadequate to describe the real world. If you don’t like that, or you’d rather take a few more ad hominem whacks at me, fine.


          • Kevin Rica says:

            Jonas,

            I’ve only glanced at the article, but I fail to see the direct relevance of the article to immigration (Do a word search, neither “immigrant” nor “immigration” appear in the article.)-other than to demonstrate the point I made in my first post above: “The economic literature showing the benefit of the minimum wage estimates that labor demand is extremely inelastic.. But the literature showing that immigration does not depress wages all estimates that labor demand is extremely elastic (horizontal or near-horizontal labor demand curve). There is no way to reconcile the two. Either one or the other must be wrong. They cannot both be simultaneously correct.”

            Krueger and Card implicitly take the first position. No serious economist (including the authors) is going to read a general refutation of the basic supply demand model into this study. Besides, the paper does not directly address immigration. Do a word search, neither “immigrant” nor “immigration” appears in the article.

            The point is Jonas, you cherry pick to get the answer you want. You would be fine with the basic supply demand model if you liked the conclusion. You are free to criticize ideas on their merits, but that is not what you do.

            Ad hominem is belittling your argument because you made it. Now, if you think that I am implicitly belittling by making fun of your arguments — that is something different (harsh maybe, but fair).

            ‘The cause of lightning,’ Alice said very decidedly, for she felt quite certain about this, ‘is the thunder—no, no!’ she hastily corrected herself. ‘I meant the other way.’

            ‘It’s too late to correct it,’ said the Red Queen: ‘when you’ve once said a thing, that fixes it, and you must take the consequences.’


        • smith says:

          Unlike nearly all supporters of immigration, I readily admit that immigration can have an unwanted effect on non-immigrant workers (unemployment, lower wages).
          I would also admit that changing the status of millions of illegal workers can also change the labor market in non-beneficial ways for non-immigrant workers (new competition in previously excluded work categories and wage levels).
          I concede that just the very fact of an increasing supply of labor would tend to lower wages or cause some unemployment.
          The fact immigrants usually come from lower wage countries adds to the effect (low and high skill)
          The fact that many immigrants aren’t proficient English speakers adds to the effect.
          The fact that there is prejudice or a natural inclination to hire from similar backgrounds also leads to compensating inducements to hire with offers to work for less pay.

          None of that takes away from the fact that immigration in a healthy economy can benefit everyone. More workers for more work, the economy expands faster and without causing inflation. Immigrants are very motivated, which the Sunday Times points out actually drains other countries of needed resources.

          Does the new reform bill meet any test of rational economic policy? Yes and no. Ending illegal status with amnesty and eventual citizenship is good, policies that deter hiring illegals are good. Greatly expanding temporary worker programs and employer based immigration which harms labor markets is bad.

          The upshot is business gets more cheap labor, Democrats look the other way to gain votes, unions sell out to gain membership eventually, illegal immigrants become legal but not free, high skill insourced double and triple in number, in the middle of high unemployment and wage stagnation. Durbin and Grassley wanted protective measures, but were dismissed.

          Not happy, especially that no one else is offering this nuanced critique, or speaking up forcefully. I favor immigration of free unfettered labor.


          • Kevin Rica says:

            Smith,

            You are nuanced up until the last sentence. Until that point. I could agree with a lot you were saying.

            However, we do not have a healthy economy so your stated prerequisite is not fulfilled.
            And the experience of the last 40 years hasn’t proven the immigration of unskilled labor to be any sort of an elixir.

            The last sentence, in effect, advocates merging the U.S. and Haitian labor markets. That is not nuanced. There is a stark difference between nuance and a smoke screen.

            I’m an old-fashioned Truman Democrat and I put the interests of America’s working poor first. I do not think America should have any working poor. THAT is the source of our disagreement.


        • smith says:

          “I favor immigration of free unfettered labor.”

          Allow me to clarify. By unfettered I mean once admitted into the country, immigrants should be free to sell their labor in the free market. Their admittance to the country should not be conditional on the assent of a prearranged employer, which obviously undercuts any wage bargaining power. They should not face deportation if their employer ends their employment, which precludes any attempt to stand up for their rights, or organize. Striking immigrant workers who were an essential part, if not the essential part of the labor movement, faced unemployment, strike breakers, non-existent strike benefits, clubs and bullets. But generally, they did not face deportation.

          I favor immigration but the actual number and distribution is subject to debate and current law. For now, either you have to have close family, you win the 50,000 person lottery, or you are hired for temporary work that an employer claims could not be filled by non-immigrants. Currently that’s the only way in. The new law would limit family and enlarge temp workers, end the lottery and 7,000 per country per year limit.

          The new law has some extra sham provisions that purport to limit impact on the unemployed and labor mobility. If you like the current law, you’re just gonna love the new reform.

          Again, temp workers can’t vote, quit their job, organize, protest, complain, demand a raise, start a business, often need employer sponsorship for 6 to 10 years just to gain their freedom.


          • Kevin Rica says:

            Smith,

            You make a good point.

            However, there is a history in immigration law of making immigrants meet certain qualifications and then failing to enforce them the second someone arrive or just waiving the restriction. I KNOW firsthand that the “Bunny Rabbit Book” is used to test functional literacy.

            If we issue immigrant visas based on someone ‘s job qualifications and the proof a a suitable job offer, that WILL be gamed. If someone is here because of his purported talents as a neuroscientist who will develop a cure for MS, then he should be deported if he takes a $9/hr job cleaning test tubes at a different lab.

            We enforce the conditions of labor contracts and we should enforce the terms of labor visas.

            I am in favor of making the receipt of middle-class wages and benefits (including employer-paid, unsubsidized health care) a minimum qualification for immigrant status.



    • smith says:

      I keep writing replies to someone who appears to be a strong opponent of immigration, but my central point is missed.

      I say: temp visas, work visas, conditional immigration based on job offers, immigrants filling jobs employers claim can’t be filled, immigration dependent on skill levels or demand for skills, immigrant status dependent on continuing employment, all these are bad and represent the worst aspects of our current immigration system. All are to be vastly expanded if the new bill is approved.

      Using immigrants to fill in-demand skills prevents wages from rising ever anywhere for anyone. Making entry to the country conditional on employment eliminates any normal bargaining power
      in negotiating compensation. Having deportation be the result of unemployment or losing one’s job further undercuts any bargaining power, labor rights, and affects other aspects of the employer employee relationship which can put the non-immigrant at a disadvantage. It’s not free labor.

      All the provisions that purport to protect American workers, (employment based immigration) have the opposite effect, creating a non-voting, non-free, labor pool competing non-immigrants. Employer sponsored immigrants and work visa recipients can not start a business or create new jobs. It can easily take five to ten years to gain their freedom.

      To address some specific comments left:
      “If we issue immigrant visas based on someone ‘s job qualifications and the proof a a suitable job offer, that WILL be gamed.”

      Not WILL, they are gamed now, so end them, admit the same people but without the indentured servitude status.

      “We enforce the conditions of labor contracts and we should enforce the terms of labor visas.”
      The very nature of a labor visa prevents any fair bargaining over wages, entry into the market itself is conditional on accepting whatever the employer offers. Deportation if terminated affects the relationship in all matters. (new law gives only 2 extra months to find other work)

      “I am in favor of making the receipt of middle-class wages and benefits (including employer-paid, unsubsidized health care) a minimum qualification for immigrant status.”
      The new law would move in that direction, trying to drive immigration towards higher skills, as if there is any shortage of high skilled labor, or evidence of rising wages for the middle class.

      I repeat, let people immigrate, and let them be free. That’s what America is supposed to be about. The present dual labor system promotes wage stagnation and inequality. The new law would expand that.


    • Lawrence says:

      Perplexed, the point you raise was an interesting one. But you’ve got the research wrong. (Borjas is the go to guy here). Immigration effects the supply of labor and an increase in the supply of labor moves along the demand curve. It effects low wage workers and wages did decline for primarily for women and Blacks it did not have much of an effect on employment, or unemployment. And it should have because the minimum wage plays a role. The minimum wage effects both supply and demand and the first paper along these lines by Kruger and Card actually found an increase in employment when the min wage increased. The two areas don’t say what you think they do. Both found little effect on employment. Probably because these markets are always operating sub par with lots of vacancies and turnover.


      • Perplexed says:

        Is this in response to the the Dallas Fed paper or in response to smith’s comment above? Do you have links or references to the Borjas work?


  3. Mark Rothschild says:

    Two points addressed to Jonas in defense of Kevin Rica. The Card/Krueger paper has been exposed as junk economics.

    Compare the published Card/Krueger paper:

    http://www.uh.edu/~adkugler/Card%26Krueger.pdf

    Then read the exposé of their amateur methodology here:

    http://blog.heritage.org/2011/08/30/liberals-laud-alan-kruegers-fatally-flawed-minimum-wage-study/

    Of course, I do understand this does not refute your (Jonas) core argument re supply/demand.

    Second point:

    As David Autor shows in the following paper (critiqued by Jared) we have an existential problem in this country and it is not the low wages of the poorest workers. The problem is the inexorable shrinking of the middle class of wage earners as their labor is replaced by clerical automation, outsourcing and globalization.

    http://www.bostonfed.org/economic/conf/conf52/conf52d.pdf

    Read Autor’s paper. You will see that the wages of the poor are not declining. Why? Because there is strong demand by upper income earners for the services they offer.

    The threat is existential because in our democratic system a grossly bifurcated class structure will unavoidably lead first to political gridlock, then economic decline, and lastly to civil strife.

    All the elements are coming into place for the growth of a lumpen bourgeoisie – underemployed, downwardly mobile, socially disengaged, angry and receptive to anti-democratic methods.


    • Perplexed says:

      -“angry and receptive to anti-democratic methods.”

      Yes, and there will be the libertarians, Tea Partiers, and other anarchists ready to serve them up with anti-democratic solutions. DINO will never achieve the results of a true democracy. The urgency of this will only increase as the power to change it declines. Its not getting any earlier:

      http://www.ted.comtalkslawrence_lessig_we_the_people_and_the_republic_we_must_reclaim.html


      • Kevin Rica says:

        It’s like the 1945 World Series: neither team has the talent to win.

        Before Chuck Schumer moved in, that body used to belong to a Democrat!


      • Mark Rothschild says:

        Perplexed,

        I had a devil of a time finding the target of your link (it did not work), but I did eventually find the TED talk by Lawrence Lessig: We the People, and the Republic we must reclaim.

        Apparently you felt that it refuted some of the points in my post, so I’ll address my reply to it.

        Frankly, I found his talk pedestrian, hackneyed, and full of conventional false statements like “The Framers gave us what they called a republic, but by a republic they meant a representative democracy.”

        Statements like these can be found everywhere in today’s media, but nowhere in the historical record of what any of the Founders of this country actually wrote.

        The same Constitution that requires a “republican form of government” to the states also is quite comfortable excluding from the franchise (depending on the state), not only blacks (free or slave), Catholics, Jews, Indians, non-citizens, felons, and women, but also non-property owning free white males.

        Can anyone believe that the Founders did not know the difference between a republic and a democracy?

        In his talk Lessig bewails the influence of moneyed interests in politics, and recruits Founders like George Washington to make his “they meant a representative democracy” point while forgetting that GW was the richest man in North America when he guided this country to freedom from Great Brittan.

        From your reply to my post one could draw the conclusion that you think that “libertarians, Tea Partiers, and other anarchists” are all cut from the same cloth. Do you really think that libertarians are equivalent to anarchists?

        If Lessig would study history more closely he would see that plutocracy always and everywhere grows out of a ground prepared for it by “democracy”, for plutocracy always needs the pliant herd to work its will upon.

        For those interested (not recommended!) the Lessig link can be found here:

        http://www.ted.com/talks/lawrence_lessig_we_the_people_and_the_republic_we_must_reclaim.html


        • Perplexed says:

          Mark Rothschild,

          My apologies for the bad link & thanks to you for posting the corrected one.

          “Apparently you felt that it refuted some of the points in my post, so I’ll address my reply to it.”

          Quite the opposite really, I was merely pointing out that some of your prognostication were already becoming the reality, even if it is not well understood just how they are manifesting themselves.

          “’The Framers gave us what they called a republic, but by a republic they meant a representative democracy.’

          Statements like these can be found everywhere in today’s media, but nowhere in the historical record of what any of the Founders of this country actually wrote.”

          Here I beg to differ. Dr. Lessig’s description of what the founders were attempting is quite accurate and comes pretty directly out the “Federalists Papers” (I’m not certain, but I believe much of the discussion about the choices between a democracy and a republic appeared in Federalists #10). Possibly I’ve been tuned into the wrong channels and reading the wrong sources, but I see very little substantive discussion of these issues in the media today, and certainly nothing of the quality of discourse that occurred in the 18th century; nothing even close.

          “From your reply to my post one could draw the conclusion that you think that “libertarians, Tea Partiers, and other anarchists” are all cut from the same cloth. Do you really think that libertarians are equivalent to anarchists?”

          Precisely! Not only do I think that, I assert that anyone familiar with the history of the anarchists movement (particularly the history of the movement in 19th century Russia,- for a brief summary, see here http://dwardmac.pitzer.edu/Anarchist_Archives/worldwidemovements/anarchisminrussia.html) would likely come to the same conclusions. I have tried to call attention to that history on this blog here: http://jaredbernsteinblog.com/how-did-fiscal-policy-get-turned-upside-down/#comment-1565499 and elsewhere, and on Krugman’s blog here: http://dwardmac.pitzer.edu/Anarchist_Archives/worldwidemovements/anarchisminrussia.html

          You’ll find the underlying ideologies of the Tea Partiers and libertarians here http://dwardmac.pitzer.edu/Anarchist_Archives/bakunin/stateless.html in a paper that was published long before Ayne Rand was born. And I believe that wikipedia even has some discussion of the origins of libertarianism in French anarchism.

          Anarchism and democracy are mutually exclusive, adoption of one precludes the existence of the other. Democratic Republics & Social Democracies are viable; anarchistic democracy is a paradox. Our solutions are likely to be in preventing the corruption of our Democracy, not in undermining it with anarchism. That’s what makes eliminating the corruption of our Democracy the first thing on the way to addressing our most important problems as Lessig so cogently argues in this TED talk and in his book.


          • Mark Rothschild says:

            Hi Perplexed, I think that your moniker might be truly eponymous.

            I did follow all your links. I read your summary of the libertarian/anarchist nexus and I can say that as a self-described libertarian I did not recognize myself from your description.

            There are a very small number of libertarians who do describe their philosophy as anarcho-capitalist. I am not one of these, so I can’t do justice to a defense of that philosophy.

            However, all libertarians embrace capitalism and individual liberty from the state. None are in the least interested in so-called social anarchism – really more accurately described as anarcho-syndicalism which was broadly part of the socialist movement of the 19th century.

            Libertarians like me are often described as minarchists — a term that just means we favor a very small state. We advocate the rule of law, but we oppose laws that create victimless crimes. We oppose the equalitarianism of the nanny state because our reading of history teaches us that the nanny state eventually morphs into a totalitarian state.

            As for Ayn Rand, she is a great inspiration for many libertarians, but she never described herself as such. She termed anarchism a “naive floating abstraction” and believed in the necessity government.

            And although she never described herself as a libertarian, the core sensibility of our movement can be discerned from reading her novels. I especially recommend the novella Anthem (1938) if you want to get inside the mind of a modern day libertarian like myself or those I know.

            Michael Bakunin figures largely in your understanding of libertarianism, but I don’t know any libertarians who have anything good (or anything at all) to say about him.


          • Perplexed says:

            Mark Rothschild:

            -“I think that your moniker might be truly eponymous.”

            No argument here, but what you are probably not understanding (based on your comments) is the source of that perplexity. It truly confounds me how so many people can be so ignorant of what is really relatively recent history. Its all written down, it doesn’t have to be “discovered” or even researched, that work has already been done. Those that read fictional novels and then believe that they have obtained and understanding of history in the process are quite “perplexing” to those who understand what the sources of their “knowledge” are.

            -“I did follow all your links. I read your summary of the libertarian/anarchist nexus and I can say that as a self-described libertarian I did not recognize myself from your description.”

            That’s why I bring this stuff up. My guess is that most re-branded anarchists (Libertarians, Tea Partiers, etc.) haven’t a clue what the sources of these ideologies are and how they create a paradox with democracy. One key is to understand the different definitions of the word “liberty” that are being used. For Libertarians, Tea Partiers and other modern anarchists “sects,” “liberty” means “liberty from being governed,” just as Bakunin explained. People who chose to be governed by a democracy on the other hand, reject that notion, they’re convinced that they have the right to govern. That’s what makes it “undemocratic” at its very core; its an unresolvable paradox.

            Ayne Rand didn’t make this stuff up, it was very likely the dinner conversation at her home when growing up (it wasn’t the proletariat that moved to the Crimean Peninsula to finish high school when the revolution started). Rand simply repackaged and sold it to a group of people on the other side of the ocean that were so insular they couldn’t be bothered with studying the history. (She assessed her “target market” with uncanny accuracy).

            While I have no doubt in your statement that you “did not recognize myself from your description,” you may want to know that those who actually know something about this history can recognize you quite clearly.


    • Lawrence says:

      Actually the Card Krueger paper has been confirmed by a whole series of papers. On the other hand this research led to a closer look at research that found employment losses and it was found to be flawed in that the effects attributed to minimum wage hikes were the result of broader terns that should have been controlled for statistically. It’s unfortunate that you trust Heritage for anything in economist. It really dumbs you down.


      • Mark Rothschild says:

        “Actually the Card Krueger paper has been confirmed by a whole series of papers”

        I’m doubtful, but i’ll read those papers if you can provide a few links.

        Of course everyone has a point of view, Heritage included.

        No need to “trust” if we have the data.


  4. Mark Rothschild says:

    You are asserting that modern libertarians are the ideological progeny of Bakunin’s anarcho-syndicalist tradition.

    But, what of Bakunin’s ideas do libertarians accept?

    Just being against the state does not make one an anarcho-syndicalist.
    Anti-authoritarian movements abound in the historical record and anarcho-syndicalists don’t have any corner on this tradition.

    Your argument would be more persuasive if you could show statements made by Bakunin that are similar to statements by libertarians.

    For example, here is Bakunin on a few choice subjects. Can you find anything written by a modern libertarian that is in any way compatible to these famous statements of principle by Bakunin?

    >
    Freedom Must Go Hand-in-Hand With Equality. I am a convinced partisan of economic and social equality, for I know that outside of this equality, freedom, justice, human dignity, morality, and the well-being of individuals as well as the prosperity of nations are all nothing but so many falsehoods. But being at the same time a partisan of freedom – the first condition of humanity – I believe that equality should be established in the world by a spontaneous organization of labor and collective property, by the free organization of producers’ associations into communes, and free federation of communes – but nowise by means of the supreme tutelary action of the State.

    The Difference Between Authoritarian and Libertarian Revolution. It is this point which mainly divides the Socialists or revolutionary collectivists from the authoritarian Communists, the partisans of the absolute initiative of the State. The goal of both is the same: both parties want the creation of a new social order based exclusively upon collective labor, under economic conditions that are equal for all – that is, under conditions of collective ownership of the tools of production.
    <

    More like this at: http://dwardmac.pitzer.edu/Anarchist_Archives/bakunin/stateless.html

    Anarcho-syndicalists, Marxists, Fascists, social democrats, and so forth are all dissimilar varieties of the same collectivist tradition. Standing against this collectivist tradition is modern libertarianism.


    • Perplexed says:

      I’m not quite sure how you just missed these parts, but below are a couple of examples of where the “dismantle the government, starve-the-beast, the government is the enemy” ideologies came from. The Title of the paper is “Stateless Socialism: Anarchism.” Here’s a quick summary of some of the “flavors” of Russian Anarchism (from the Black Banner (Chernoye Znamya) group to the non-violent, non-resistant Tolstoyism. The view of anarchism as a proponent of violence is actually quite misleading. Just as with totalitarianism, communism, fascism, and democracy, violence is a means to an end; its ultimately “Machiavelian” in almost all cases.

      http://dwardmac.pitzer.edu/Anarchist_Archives/worldwidemovements/anarchisminrussia.html

      While Ayn Rand might provide some entertaining fiction, if you really want to understand the Paul Ryan’s, Eric Cantor’s, Ron & Rand Paul’s, and Mitch McConnell’s of the world, you need to understand Bakunin, Tolstoy, Znamya, Kropotkin, Proudhon, Malatesta and Reclus et.al. Do you really think Greenspan’s “shock” when he discovered that financial markets really do need to be regulated was a result of his extensive training in economics? And if you want to understand either McConnell’s legislative strategy or Paul Ryan’s budget calculations, you need to understand Machiavelli as well.

      Under the ruse of the “Randian” philosophy, Anarchism in the U.S. has already had much greater political success and impact than it ever did in Russia. “Shrinking government,” “drowning the government,” and “starving the beast” are all Anarchist objectives. Greenspan was the chairman of the FED, McConnell, Ryan, Cantor, and both Pauls are elected members of Congress, Mitt Romney came dangerously close to being elected President. What I’m suggesting is its about time we at least brought this out into the open so Americans can decide if what they really want is Anarchism. Would Americans really be voting for “Tea Party Conservatives” if they understood that they were voting for Anarchy INSTEAD of Democracy? I seriously doubt it. Maybe it should be a conscious choice instead of a deception? Our ability to govern democratically has been brought to a practical standstill; is it just a coincidence that this is the primary objective of Anarchists? If you believe that, you don’t understand what you’re up against.

      How is that economists can reach “all the way back” to 1776 to discuss Adam Smith and yet have no clue that libertarianism is merely a “Trojan Horse” for Bakunin’s philosophies that were published less than a hundred years afterwords?

      Here are few excerpts your browser may have missed when you clicked on the link:

      “State Socialism Rejected. The carrying out of this task will of course take centuries of development. But history has already brought it forth and henceforth we cannot ignore it without condemning ourselves to utter impotence. We hasten to add here that we vigorously reject any attempt at social organization which would not admit the fullest liberty of individuals and organizations, or which would require the setting up of any regimenting power whatever. In the name of freedom, which we recognize as the only foundation and the only creative principle of organization, economic or political, we shall protest against anything remotely resembling State Communism, or State Socialism.

      Organization of Productive Forces in Place of Political Power. It is necessary to abolish completely, both in principle and in fact, all that which is called political power; for, so long as political power exists, there will be ruler and ruled, masters and slaves, exploiters and exploited. Once abolished, political power should be replaced by an organization of productive forces and economic service.

      Notwithstanding the enormous development of modern states – a development which in its ultimate phase is quite logically reducing the State to an absurdity – it is becoming evident that the days of the State and the State principle are numbered. Already we can see approaching the full emancipation of the toiling masses and their free social organization, free from governmental intervention, formed by economic associations of the people and brushing aside all the old State frontiers and national distinctions, and having as its basis only productive labor, humanized labor, having one common interest in spite of its diversity.

      The Program of a Free Society. Outside of the Mazzinian system which is the system of the republic in the form of a State, there is no other system but that of the republic as a commune, the republic as a federation, a Socialist and a genuine people’s republic – the system of Anarchism. It is the politics of the Social Revolution, which aims at the abolition of the State, and the economic, altogether free organization of the people, an organization from below upward, by means of a federation.

      There will be no possibility of the existence of a political government, for this government will be transformed into a simple administration of common affairs.

      Our program can be summed up in a few words:

      Peace, emancipation, and the happiness of the oppressed.

      War upon all oppressors and all despoilers.

      Liberty, justice, and fraternity in regard to all human beings upon the earth.

      Organizing of a society by means of a free federation from below upward, of workers associations, industrial as well as a agricultural, scientific as well as literary associations – first into a commune, then a federation communes into regions, of regions into nations, and of nations into international fraternal association.”

      Most of the differences between modern (mostly U.S. versions) of anarchism lie in their rejection of the notion that inheritances shouldn’t be allowed, and that this whole notion of “equality” should incorporate a much more malleable definition of “equality” than what Bakunin,et.al. were suggesting. This makes the modern forms a much better fit with plutocracy than the earlier definitions and helps a great deal with funding objectives.

      If you read some of the other writers mentioned above, you’ll see the common theme I mentioned in another reply, “liberty” and “freedom” to all of the anarchist sects means “liberty from being governed.” Most non-anarchists operate under a different definition of the word and don’t really understand that “libertarians” and other anarchists are talking about “liberty” from them and their “democratic rules.” This is was underlies the ludicrous belief that anarchism (in any of its forms) can be combined with democracy into a “workable” combination. Being “stateless” and rejecting the legitimacy of any minority (however broad the representation) to establish rules and “govern,” is in itself a rejection of democracy (along with any other form of government). It is, at its very core, undemocratic. The ruse has gone on too too long and is causing much more damage than ever would have come to be if Americans had understood this history rather than learning what they think is history from entertaining novels based “utopian fantasies.”

      Show anarchism is working now or has ever worked anywhere in the world at any time in history, and then lets have a discussion about whether or not to try it. This “implementation by obfuscation” strategy that is now under way is incredibly destructive. Its combination with plutocracy is down right scarey!


      • Mark Rothschild says:

        Perplexed,

        Statements such as:

        > The Program of a Free Society. Outside of the Mazzinian system which is the system of the republic in the form of a State, there is no other system but that of the republic as a commune, the republic as a federation, a Socialist and a genuine people’s republic – the system of Anarchism. It is the politics of the Social Revolution, which aims at the abolition of the State, and the economic, altogether free organization of the people, an organization from below upward, by means of a federation.
        <

        are obviously (to me) made by someone who is using the word "Anarchism" for what is now-a-days called anarcho-syndicalism, a collectivist Utopian program hostile to private property rights.

        Although It is true that both anarcho-syndicalists and anarcho-capitalists talk about abolishing the state, that is about as far as the comparison will hold, and their differences are much more significant.

        Yes, I do understand your point re libertarians: “dismantle the government, starve-the-beast, the government is the enemy” and that libertarians are not as mesmerized by democracy as we are concerned about individual rights. All that is true, but it does not mean that libertarians want to negate government, only that we put individual rights first.

        Libertarians are not interested in (referring to your quote) "communes", "people’s republics", or "the Social Revolution".

        Of course, I don't claim to advocate for other self-described libertarians. Just my own opinion.

        One last thing, I really do want to point out that repeatedly calling libertarians "anarchists" is a type of ad hominem bullying. It is the kind of abuse of language that tends to cut off discussion rather than encourage a cordial exchange of ideas.

        If you think that libertarianism and anarchism have some similarities then you should say so without setting up an equation that says libertarians=anarchists.

        I do thank you for your lengthily replies, and BTW Seasons Greetings!


        • Perplexed says:

          Mark Rothschild,

          -“…are obviously (to me) made by someone who is using the word ‘Anarchism’ for what is now-a-days called anarcho-syndicalism, a collectivist Utopian program hostile to private property rights.”

          These words were written and published by Bakunin before Ayne Rand was born and she & others tried to re-brand the underlying ideologies to suggest that they were compatible with capitalism and should therefore be named something else, like Libertarianism, Tea Partyism, Randism, or any of number of other proposed marketing gimmicks and fictional stories. Ultimately the ideologies are the same, and the term Anarchism covers them all pretty well, with the possible exception that those trying to sell the idea that anarchism and democracy are compatible; they are more than willing to give up on the more humanitarian aspects of the original anarchists to improve funding prospects with the oligarchs who can’t quite go along with the lack of inheritances that the original anarchists deemed was critical.

          -” I really do want to point out that repeatedly calling libertarians “anarchists” is a type of ad hominem bullying.”

          There’s is nothing ad hominem about anything I’ve said here. Any judgmental aspect of “Anarchist” is of your own making. I’m likely much more sympathetic to the plight of the late 19th/early 20th century anarchists than you probably understand. I found Tolstoy to be one of the most humanitarian focused people and writers not only of this period, but of several centuries. But these anarchists were proposing anarchism as an alternative to Tzarism and other tyrannical forms of government, existing and proposed, whereas today’s anarchists = Libertarians = Tea Partiers are promoting anarchism and plutocracy (at least as long as the money keeps flowing) as an alternative to democracy. I have no similar sympathy for their “cause,” and believe their suggestions that anarchism and democracy are compatible is a ruse, an extremely dangerous ruse for a democracy; and I welcome any opportunity I come by to expose the deception. IMHO, anarchism survives and grows here only due to the deception, as I would guess (or like to believe I suppose) that most Americans would reject it outright as an alternative to democracy if they realized what it was that “liberty” actually meant to anarchists. (But they would actually have to read the history for that to happen so there’s not much risk of it coming to be).

          I don’t know the source of your negative connotations toward Anarchists are but i suggest to you that if you choose to read the actual history of the period instead the fictional novels that you’d find it quite fascinating; you seem to be genuinely interested in the topic. You might then also come to understand the Libertarian = Anarchist = Tea Partier relationship and decide if its a “cloak” you feel comfortable wearing. Re-branding it and combining it with plutocracy really won’t alter it much. Its still incompatible with democracy. I can’t think of an example where its been tried and worked and its doing terrible things to our democracy at present. So you may be able to convince yourself that these “new & improved” versions are really something different but I doubt you’ll convince many of those that actually know this history.

          Thanks for the opportunity to have this discussion, as I mentioned before I’m convinced its an important one to have so the American people can really understand what’s inside the Trojan Horse of Libertarianism and Tea Partyism.

          As I mentioned in my last comment: “This ‘implementation by obfuscation’ strategy that is now under way is incredibly destructive. Its combination with plutocracy is down right scarey!”

          Seasons Greetings to you as well!


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