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Monday, May 26, 2014


Sheryl Mitchell wrote a long and very valuable comment on the three-part little essay I posted under the title "A New Conversation."  Since I am not sure whether visitors to this blog can be counted on to read the comments, I will reproduce it here before replying to it.  Here is what Sheryl Mitchell said:

"I have followed these posts with interest. This is a very important topic. I am surprised though that in your analysis there is no mention of a guaranteed annual income as a means of addressing inequality. I think this idea deserves more attention than it gets and that it compares favourably with unions as a solution to the problem.

"The chief problem that I see with unions is that they are hostage to market forces at various levels. At the level of the industry or specific plant, they are hostage to the cycles that affect that industry. When business is booming you may get a better deal than you do when things are slow, and when a nice long strike might be quite welcome as far as the bosses are concerned. But where is the justice in that? At a more macro level there is only so far that you can push wages for certain kinds of unskilled or low skilled labour before you start to affect employment, either because the employer passes through the higher cost, reducing demand, or goes offshore, or sees profits reduced to the point where the business shuts down in whole or in part. (Of course, small gains, like the one that you were proposing for employees at McDonalds, are unlikely to have this effect. But that’s the point, your proposed salary is hardly a princely income, especially for a family with kids.)

"Your example of McDonalds is instructive. The firm is highly profitable, they are probably as capital intensive as they can be right now (therefore, few ways to replace front end staff with machines), and they can't send the front end jobs to India or some other low wage venue. This is as good as it gets. So, it is probably true that McDonalds workers can appropriate some of the return on capital for themselves, without really affecting employment or demand. But I stress: this is only good for MCDONALDS workers and for workers at firms like McDonalds. What if the firm is not so profitable, or what if there is a lot more room to replace American workers with machines or with low wage workers offshore?

"This points to an aspect of unions that is often overlooked. An effective union has a monopoly on the supply of labour to the firm. This creates a kind of partial property right, or claim, on the capital of the firm. The higher union wage can be seen, as in your example, as the workers being given "a piece of the action." I think that this explains why the great union success stories of the past were all in monopolistic or oligopolistic industries, like automobiles or steel: there was plenty of profit to go around, and smart employers bought peace by paying their workers middle class wages. But as those industries faced greater competition, well...we see the result. Today, only government offers unionised workers the kind of monopoly position that seems to be necessary to deliver a middle class lifestyle. (Although as you point out in an earlier post, with your school teacher and policeman, what we think of as middle class and the reality are two very different things. These are such simple insights, but so rarely made. I wonder how many tenured Marxist professors have ever made this calculation or ever realised that they are in the 5%!)

"To sum up, my concern with unions as a solution to the problem are that they are too hostage to market forces and, where they are successful, it is usually because they are simply sharing in monopoly profits--an unsavoury prospect to say the least.

"I am running out of time and probably space, but I do see the guaranteed annual income as a better solution, far less subject to market forces and benefiting from the ability to average out costs and benefits across the entire economy."

This is a splendid comment, absolutely spot on, and rather better articulated than my original essay, if I may say so.  I agree with it completely.  A guaranteed annual income is certainly the better solution to income inequality.  Indeed, if I may with some embarrassment confess to my less elevated secret thoughts, quite often during my morning walks I amuse myself by imagining that I have been granted magical powers of one sort or another which I then use to correct all the evils in the world.  One of the things I do with these magical powers is to enforce a guaranteed minimum income on the American economy by stealing vast sums from the very rich and distributing it to the very poor.  [I think of this as my Robin Hood day dream.]  My off the cuff guess is that to accomplish what I wish I would have to steal between one and one and a half trillion dollars a year from the top 1%.  [There are complications in this fantasy occasioned by the fact that not all of the money of the very rich is in cash, but needless to say my fertile imagination solves those problems as I stride along.]

Well, I can barely conceive of a practical way to get the Congress to raise the minimum wage from starvation level to poverty level.  It is beyond even my powers of fantasy to conceive of a realistic political path to the enactment of a guaranteed minimum income funded by an annual redistribution of more than a trillion dollars from the rich to the poor.

Sheryl Mitchell is absolutely correct that as things now stand, the ability of even militant labor unions to capture a portion of profits in the form of higher wages is severely limited, but I simply don't see any alternative that holds out even a whisper of hope.

Now, Mitchell or others might object that since I am not a union organizer [and never have been, save in an extremely minor way when the faculty of the University of Massachusetts successfully unionized], perhaps my time would be better spent theorizing about genuine solutions rather than making compromises even in my speculations.  There is a good deal to be said for that argument.  Perhaps the only contribution someone like me can make to the struggle for a decent life is to try to bring real solutions into the public conversation through such media as this blog, so that at least the idea of a guaranteed annual income is once again part of that conversation. 

At any rate, I thank Sheryl Mitchell for what lit crit types call the "intervention."  It was extremely useful.


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