Labor and Innovation

This passage from a fascinating piece by Gavin Mueller at Jacobin encapsulates the questions and contradictions facing labor today:

"I think it’s a mistake to celebrate automation, a process which has such a devastating effect on the working class. Instead, we should encourage people to oppose the technologies they rightly see as threatening their existence, whether it’s academics being proletarianized by MOOCs, truckers threatened by Google’s smart cars, DJs made obsolete by Pandora algorithms, or even our savvy longshoremen, who are being forced to give up those hard-won benefits (and who are currently accused by management of engaging in some machine-breaking of their own). 

Here’s a post-work imaginary for you. What if, instead of depending on capitalism to give us all the machines we need for a socialism without scarcity or drudgery, we put the installation of technology on hold until “after the revolution”? Under socialism, automation processes could be guided, controlled, and implemented by workers themselves, in ways that would improve their lives without destroying their communities. Socialism, not capitalism, will get kids out of the mines and away from the drive-through window. And we can’t create that future until we stop the present."

First, let me briefly indulge my neoliberal sellout side by observing that MOOCs, smart cars, Pandora, and so forth represent genuine improvements in the lived experience of humans who use them. Above and beyond any quantifiable added economic value which we might measure, having access to these goods is an objective victory for human welfare.* That fact needs to be acknowledged, and by failing to do so, Mueller's argument opens itself up to a litany of trivial, fish-in-a-barrel reductios: should we oppose Wikipedia for the threat it poses to professional encyclopedia writers? What about opposing the printing press for the threat it posed to professional scribes? There needs to be some recognition of the concept that innovation creates societal value (a regrettably clinical term for a warmly humanist concept) which should, to the furthest extent possible, be considered independently from its near-term negative effects on displaced workers.

Nevertheless, pointing to societal value, particularly "long-term" societal value, is cold comfort to a trucker newly replaced by a Google computer, and rightly so. Given the short time scales in which we find ourselves able to seek out happiness and human fulfillment, it's not at all incorrect to say that the rise of smart cars will impose very real misery on a broad swathe of people even as it creates wondrous and undeniable happiness elsewhere. It may very well be rational, then, for a given trucker or truckers as a class to follow Mueller's advice and vehemently oppose the implementation of smart cars, to the extent that such opposition is actually effective in the short run.

We thus have two contradictory effects of disruptive innovation:

(a) the marvelous society-wide value it creates;
(b) the limited, short-term, but undeniably disastrous suffering it tends to impose on specific classes of people. 

(a) is adulterated and rendered hollow by (b), while the results of (b) act to constrict (a) because rational actors affected by (b) will resist innovation to the extent possible. A response to disruptive innovation should accept and attempt to resolve this tension. What Mueller gets right is the crucial role of an empowered, united labor movement in creating that response. What he gets wrong is what the response should be.

Consider his several historical examples of broadly Luddite actions undertaken by workers:

Marx documents how in the seventeenth century, machines like looms and mills were often banned because their introduction caused such social upheaval that it spooked those in power (in one case, the inventor of a mechanized loom was assassinated by nervous authorities). By the nineteenth century, once capital had gained the upper hand, workers repeatedly assaulted the machines that had become instruments of violence against them. When destruction wasn’t on the table, workers quit in droves. The introduction of the assembly line in 1913 caused mass desertion in plants owned by Henry Ford, who had to scramble to deal with an astonishing 380 percent employee turnover rate. Waves of worker revolts in the 1960s and 1970s struck at the instruments of production. In 1975, a gang of pressmen at the Washington Post held their foreman hostage while they meticulously destroyed and burned the computerized press that had just made them obsolete.

Mueller seems to use these actions as useful examples for modern-day labor to follow. What he evidently neglects in doing so is that each of these initiatives were obvious and unmitigated failures. While it's debatable whether the workers' actions were actively counterproductive to their own interests, they certainly weren't effective: the looms, assembly lines, and computerized printing presses thrummed on apace. The Luddites, famously, failed; but Mueller's prescription is for more of the same. He wants workers to rage ineffectually against innovation until the "revolution" descends, ex machina, to save the day. He wants to minimize (b) by constraining (a) in the hopes that the conflict will resolve itself on its own. 

The appropriate response, in contrast, should be blindingly clear: We need to maximize (a) by minimizing (b), which means shifting the calculus of threatened workers so that it's not rational for them to attempt to halt innovation. How? I'd start with the following: 

1. An empowered labor movement that can both wrest the surplus economic value of innovation away from capital and improve the experience of workers in less strictly monetary ways, such as workplace conditions and increased guidance over corporate decision-making.
2. Aggressively redistributionist taxation and a robust regulatory regime to supplement labor in accomplishing the goals of (1).
3. A strong welfare state to serve as a bulwark against near-term unemployment and poverty caused by innovation.
4. A well-equipped, forward-looking public sector that works to create long-term societal prosperity in the ways markets are ill-equipped to accomplish, such as through education, physical infrastructure, scientific research, and funding of the arts.

Clearly the above agenda lies somewhere on a continuum between socialism, social democracy, and capitalism**; exactly where you place it depends on your ideological cant. Equally clearly, the above is not revolutionary in a meaningful sense with respect to the current situation in the United States--arguably, we had a fair if flawed approximation of it in the touted postwar golden age, and few would label the pre-1973 U.S. anything but a capitalist society. But I think a society in which the above were present would meaningfully fulfill Mueller's desire for a system in which "automation processes could be guided, controlled, and implemented by workers themselves, in ways that would improve their lives without destroying their communities" without requiring a wave of Mueller's magic revolution wand.



*Note that the point is not that the new technology is necessarily an unadulterated improvement over the displaced one. To take one example, few would say that Pandora is a strict improvement over a DJ. It's just that having access to Pandora or a DJ is a strict improvement over having access only to a DJ, just as the invention of recording represented a strict improvement over needing to rely on expensive live performers to hear music. I'll anticipate the obvious objection: to the extent that Pandora reduces access to DJs, such as by degrading the status of DJing as a culturally relevant occupation, that's an indication that on a society-wide level people actually do prefer Pandora to a DJ. 

**To anticipate an objection to this framing, I note that the often-invoked distinction between economic systems and systems of governance is deeply problematic--arguably, by ignoring the inescapable role of government in the economy, such a distinction reinforces the intellectually barren concept of the free market. An economic system does not exist independent of a political context, and vice versa. 

Inequality, Part 2

Seeing Inequality for All, featuring Robert Reich, provided a fine springboard for discussion of my last post. I won't delve into the film in detail, but I'll make reference to it in answering my own previously posed question: namely, moving beyond intuitive concerns about fairness, what are the specific problems that extremely income inequality creates in a society, and what are the most important and effective arguments in favor of the contention that such inequality is detrimental?

Here are my candidates, in no particular order:

1. Arguments about the economic ramifications of the diminishing marginal propensity to consume. Reich addresses this concept through his interview with the wealthy capitalist, who points out that the bulk of his income is devoted to savings rather than to the purchase of goods and services. Reich, in broadly Keynesian fashion, more or less treats the economic implications as self-evident: consumption is necessary for strong economic performance, so a broad-based middle class with a high propensity to consume is more conducive to growth and stability than a top-heavy distribution.

2. Arguments about the diminishing marginal utility of wealth. Reich doesn't address this issue; it's quite separate from, though related to, the above, which is relevant by virtue of its negative economic effects. What matters here, in contrast, is the intrinsic ethical inefficiency that extreme inequality implies. To the extent that a higher income increases utility--such as by enabling enriching life experiences and by creating an abiding sense of stability and security--the salutary effects of each additional dollar earned fall off drastically at extremely high income levels. Conversely, each additional dollar produces a much higher degree of personal well-being at low income levels. In a naive fixed-resource account that ignores the role of economic growth, the utilitarian case for redistribution is therefore straightforward and incontestable. Complications arise from (a) effects on growth, such as through incentive structures; and (b) ethical considerations about the justness of redistribution. Both are fascinating topics which I'd love to discuss further.

3. Arguing that inequality leads to an increased likelihood of speculative bubbles and financial instability. Reich addresses this in the context of consumer debt, but it's a two-sided issue; Matt Yglesias has a strong summary here.

4. Arguments that inequality leads to the capture of the political system. Inequality produces strong ethical considerations about the distribution of political agency: to the extent that wealth correlates with power and voice, and to the extent that we consider equity in power and voice to be necessary to democracy, inequities in wealth undermine democratic governance . It's worth noting that, arguably, what's really problematic here is the susceptibility of the political system to the influence of wealth in the first place, but that's a pragmatically meaningless distinction. Reich explores this issue fairly thoroughly.

Now for what I consider to be bad arguments against inequality:

5. Concerns about the intrinsic justice, or lack thereof,  of an unequal distribution of resources: an appeal to "fairness." This is really the weakest argument, both rationally and politically, and the ethical side is better addressed by reference to the above, especially #2 and #4. Fortunately Reich doesn't lean on this.

6. Pointing to stagnating wages at the middle and bottom of the income distribution. This is where it's crucial to disentangle concerns about inequality per se with concerns about the broader state of the economy. Reich sort of brings the two points together by discussing how the doctrine of maximizing shareholder value lends itself to wage and workforce reductions, but he doesn't address the larger tension here, which accompanies a lot of discussions about inequality. Namely, what's problematic about a working-class family struggling to make ends meet is not, strictly speaking, the inequality of the situation, i.e. the fact that a mega-rich upper class exists; the problem is that the working-class family is subjected to an objectively poor quality of life. A world in which the incomes of working- and middle-class families rose dramatically would represent a status quo improvement even if the incomes of the top percentiles rose in even greater proportion, rendering the society more unequal. Inversely, a more equal society with objectively poorer living standards for everyone would represent a decline from the status quo. In other words, concerns about the level of inequality in a society should be secondary to concerns about the well-being of the least advantaged: it's a case of values being more important than ratios. This is a somewhat controversial contention, admittedly, especially in light of #4.

I hope to follow this post up by addressing arguments in favor of inequality's beneficial effects, and by elaborating further on #5.

Discussion!

"Rising inequality" is a political and economic truism, and, empirically speaking, is a real phenomenon (though tempered substantially by the recession):

http://en.wikipedia.org/wiki/File:GiniPlots_USA.png
http://www.finfacts.ie/artman/uploads/3/Top-decile-income-share-US-feb192010.jpg
http://inequality.org/wp-content/uploads/2011/01/global-population-and-wealth-shares-2010.png
http://www.imf.org/external/pubs/ft/fandd/2011/09/images/milanovic1.gif

I think it's worth thinking carefully about why income and wealth inequality is considered problematic. When issues of equity and resource imbalance are concerned, it's easy to succumb to deeply held but largely implicit notions of justice and "fairness" that, in my view, deserve closer scrutiny than we usually accord them. Clarifying the reasoning behind our instinctive abhorrence of inequality should help us reckon more effectively with the (very real) intellectual contingent that looks neutrally, or even favorably, on income disparities.

So, a question to my co-blogger: why, precisely, should we be concerned about global and intranational inequality? I obviously have my own thoughts on this, but I'd like to bounce them off of your response in service of a larger point.

Means Testing

This post by Peter Frase (h/t Wonkblog) on the pitfalls of a means-testing welfare state is well taken. Frase concerns himself mostly with the political vulnerability and inherent ethical tension of non-universal benefits, but there's also the obvious and thorny policy problem that means testing imposes an effective penalty on additional earnings at low income levels. Obamacare's exchange subsidies, for example, which are calculated based on income, impose a de facto marginal rate of about 15% by Kevin Drum's calculation. Medicaid, of course, creates heavy distortions by cutting off benefits sharply at a given multiple of the poverty line. Nongovernmental program designs, such as need-based financial aid, can create similar problems--under a certain level of income, any additional earnings are effectively vaporized by an equal reduction in benefits. I would actually be really interested in studying the real-world effects of these distorted incentives; they may be small in practice (though I doubt it), but it's that issue, rather than metaphysical concerns about justice, that should really undergird Frase's claim that "ultimately, means tested benefits tend to make the poor less free and less autonomous than the affluent."

I do take issue with one aspect of Frase's characterization of the politics of means testing:

"The fact that the state must adjudicate these issues–and must do so continually over time, since a person’s status is constantly subject to change–means that benefit recipients are constantly subject to arbitrary bureaucratic domination. Universal benefits, on the other hand, require relatively little meddling in people’s lives: in a country with universal health care, the only consideration for the state is whether or not you are a citizen."

It would be nice if this were true, but universal benefits seem to be just as subject to legislative whims as means-tested ones. Medicare, which is not means-tested, has certainly come dangerously close to the Congressional chopping block (on the beneficiary side, that is; Obamacare, of course, contains about $700 billion in provider-side cuts), and may not be out of danger yet. Social Security, too, was one strong Democratic Congress away from being stripped to a shadow of itself in George W. Bush's second term. I suppose by "bureaucratic domination" Frase may be referring more to the regulatory side than to Congress, but it's definitely not the case that universal programs are blessed with intrinsic stability. Frase's overall point, however, is vindicated by the fact that universality seems to correlate well with popularity; as he says, Medicare and Social Security are famously resilient--not for lack of trying on the part of the right--while the means-tested Medicaid, food stamps, and TANF programs are perennial targets of budget-cutting zeal.

It's absolutely the case that future welfare state projects should eschew means testing, for all the reasons Frase cites plus the inherently suboptimal policy tradeoffs that means testing entails. I'm not particularly concerned by the Obamacare subsidies; they're a necessary evil in a bill full of necessary evils, and I think their political impact will be heavily muted by the fact that so few loud voices, particularly on the right, have actually bothered to understand or explain the workings of the bill in the course of their demagoguery. They also affect a rather small proportion of the population, and the de facto marginal penalty they impose is pretty, well, marginal. But going forward, the left should work to create universal and universally popular benefits. Single-payer health care, universal childcare and preschool, a guaranteed basic income, and what you might call a carbon dividend (straightforward universal redistribution of the proceeds of a carbon tax) all represent fruitful areas of focus for the left, as they would combine superb policy with the political and ethical benefits of non-means-tested programs.

Why False Equivalence demeans journalism and is detrimental to Democracy

False Equivalence, as applied to American journalism, is the noxious, yet ubiquitous, unspoken requisite that mainstream media outlets present "both sides" of a story, as though they both possess the same ideological or factual merit.  In the frenzied and frantic push to appear unbiased, the news media often skews objective facts, inhibits intelligent and productive debate, and fabricates opposition opinions. Because of this phenomenon, the public largely receives hallow, twisted, and unhelpful tip-of-the-iceberg reporting from the media that leaves them wholly uninformed.

For example, let's look at this Washington Post article published yesterday, on the eve of the government shutdown. Do the journalists focus on the non-controversial and easily understood fact that a small faction of obstructionist right-wingers are successfully holding the federal government hostage over ideological and irrelevant grounds? No. Instead, the article leaves the reader with the impression that each political side has a legitimate argument against the other; that somehow, blame can be bestowed upon members of both parties, or worse, Congress as a whole. So, rather than being filled with righteous rage against an extreme wing of the Republican Party, scores of Americans are instead imbued with the apathetic, "Gumm'nt cant do anything right, lol" disillusionment that leads to lukewarm libertarian purgatory (more on that later). 

Am I biased? Of course. Each time an issue presented in the media, a bias is present. What a journalist chooses to report on is in itself a bias. Often, facts are just facts; there is no counter-argument or meaningful opposing opinion. If  the media wasn't so afraid of being accused of bias, and instead embraced it as an inevitability, False Equivalence would not be such an omnipresent menace in journalism. Presenting information as it is, without the contrivance of superficial counter-argument for the illusion of balance, is essential to an informed electorate and a flourishing Democracy. 

Hey, check this out! 

Test!