Thursday, January 24, 2019

What Conservatives Get Wrong About Labor Markets

I've blogged Oren Cass's new book, The Once and Future Worker: A Vision for the Renewal of Work in America.

I haven't read it yet, so I can't say if it's good or bad, but James K. Galbraith's got a review up at Foreign Affairs.

Caveat Emptor.

See, "The Trouble With the “Working Hypothesis”":

Oren Cass, domestic issues director for Mitt Romney’s 2012 presidential campaign and a writer for National Review and other journals, has produced a conservative's treatise on the social and economic ills of America, and what might be done to repair them. The Once and Future Worker, published in November, holds that a social philosophy based on consumption, equality, the welfare state and quality of life achieved through regulation—the essential vision of a liberal century from the Roosevelts through Richard Nixon—should be scrapped for more solid values: work, family, country, one might say. Above all, Cass believes in a society and culture rooted in the pride and pleasures of productive labor. “[The] argument at its most basic," he writes, "is that work matters. More specifically, [the book] offers what I will call the Working Hypothesis: that a labor market in which workers can support strong families and communities is the central determinant of long term prosperity.”

Thus the labor market, in Cass’s view, is the proper medium for delivering a work-friendly world. And the trouble comes when politicians, especially Democrats, “trample” on the market. The Democrats’ “actual agenda,” according to Cass,
centers on the interests advanced by its coalition of labor unions, environmentalists and identity groups. Its policies rely on an expectation that government mandates and programs will deliver what the market does not. This agenda inserts countless regulatory wedges that aim to improve the conditions of employment but in the process raise its cost, driving apart the players that the market is attempting to connect. Better market outcomes require better market conditions. Government cannot command that workers be more valuable or employment relationships be more attractive, but by trying, it can bring about the reverse. The economic landscape is pocked with the resulting craters.

The vision of a labor market offered by Cass is Deist; it is the idea of the clockmaker, of intelligent design. Its Western roots lie in pre-revolutionary France, which borrowed the theme from classical China and Confucius. In the English language, it owes much to that great figure of the Scottish Enlightenment, Adam Smith. Supply and demand work like Yin and Yang: natural law and celestial harmony prevail in the equilibrium between two fixed and immutable, separate yet inseparable social forces—in this case the employer and the employed, the capitalist and the worker. The latter seeks a job; the former offers one. A bargain is struck at a given wage, when the employer decides that the worker is worth his keep, and the worker decides the wage is worth the leisure foregone. Work and production follow. The “abandonment of the worker” lamented by Cass began when the government intruded in the labor market by, among other things, creating social insurance, supporting unions, and introducing regulations to protect the environment.

Thus Cass criticizes environmental laws, going all the way back to the Clean Air Act of 1970, for killing jobs. He attacks “adversarial” unions and proposes that they be transformed into non-confrontational “co-ops” concerned with how to “optimize workplace conditions.” He finds fault with the U.S. educational system for promising an equal chance for all, and suggests that it should embrace tracking and begin funneling students deemed less able into vocational training at an early age. He supports the exclusion, to a degree, of foreign workers and products. He promotes the big idea of a wage subsidy to persuade employers to take on low-productivity workers whom they might otherwise shun. And he favors decentralizing welfare policies to the states in order to promote experiments, diversity, and local measures appropriate to local needs.


Each of these proposals builds on the mental model of a labor market, in which it is the interaction of supply and demand that set wages and determine levels of employment. Clean air and water (and workplace and product safety) regulations raise costs to business, forcing them to move offshore or close down. Therefore, to cite two examples offered by Cass, standards for particulates or mercury should be rolled back. Unions have already achieved what their members reasonably need, and now only serve to prevent the labor market from reaching its natural balance. The result is wages that are too high and jobs that are too few. And employers should be subsidized to create jobs on the principle that if labor is cheaper, they will hire more of it rather than invest in capital improvements.

These measures would supposedly increase employment. But even if one accepts that premise, one might first ask, “Does America really need more work?” Americans have the highest labor-force participation in the industrial West. They work the longest hours and enjoy the shortest vacations. The United States is, notoriously, a working country. And it has a pretty good record on unemployment too, with by far the fastest recovery to near-full employment from the Great Financial Crisis of any major economy.
Keep reading.