I’m gratified that the regular commenters here at The Glittering Eye have deduced where I have been going with several of my posts over the last week or so. I’ll try to knit the various threads together in this post. I won’t include supporting links for what I’m about to say; you can seek them out for yourself.
Over the period of the last 30 years educational policy is what has passed for an industrial policy in the United States. Over that period we have trebled our real spending on education without a great deal to show for it. That has been true under Democratic administrations in Washington as well as Republican.
There is clearly a consensus in Washington to the effect that the economy of the future depends on workers with high levels of cognitive skills. Those are the workers that can benefit from a college education—people with about the top third in skills and habits of work and mind.
The sad fact is that not everybody will be an accountant, engineer, software developer, lawyer, or physician. Some don’t have the interest. Some don’t have the cognitive ability. Many have other personal, work, or social skills people who are accountants, engineers, software developers, lawyers, or physicians probably won’t develop. How many is that? The best guess is that something between 60 and 85% of the population. That being the case there is obviously a grave mismatch between the economy that’s evolving and the population we have. The options for dealing with that are limited.
What we have been doing is trying to change our population to suit our economy—in my opinion perverse in the extreme as well as futile since regardless of how many highly skilled workers we bring into the United States, the old population remains, their wages pressured from the top by the newly-arrived skilled immigrants and from below by illegal immigrants, refugees, and the unskilled sponsorees of the skilled immigrants.
What to do? There are several alternatives: replace the old population with a new one which is pretty monstrous, try to make life better for the large proportion of the population who aren’t going to be accountants, engineers, etc., or change the economy.
Many of the proposals that have been emerging from the progressive end of the Democratic Party have been targeted towards that second goal. A universal basic income is unworkable. For one thing it’s too darned expensive especially since the proposals being put forward don’t “carve out” existing programs but “pile on” top of them. And then there is Franklin Delano Roosevelt’s advice from his State of the Union Address in 1935:
The lessons of history, confirmed by the evidence immediately before me, show conclusively that continued dependence upon relief induces a spiritual and moral disintegration fundamentally destructive to the national fibre. To dole out relief in this way is to administer a narcotic, a subtle destroyer of the human spirit. It is inimical to the dictates of sound policy. It is in violation of the traditions of America. Work must be found for able-bodied but destitute workers. The Federal Government must and shall quit this business of relief.
It is not merely a question of what it is called. People have a social and psychological need for a job and no UBI check will ever fill.
Other proposals include guaranteed jobs programs and wage subsidies. I can’t prove it but I suspect they will all run afoul of the functioning of the market which operates even in the most command economy.
I think we need to change our economy. I think we need more farming, more primary production, and more manufacturing not less. I think we would have more if the web of subsidies and regulations, not just ours but those of our international trading partners, were not so dense.
With modern computer networks, de-centralized economic federations become trivial to organize. In fact communication technology now overwhelmingly favors a bottom-up approach over the top-down late 19th Century system we still have. We can finally stop wasting the undiscovered talent and ideas that go to rot.
The answer is always more human creative liberty.
Ah. A form of syndicalism. Big Business, Big Government, and Big Labor will all be bitter opponents of such a method of organization. It’s not a question of “how to” (the one you address in your comment). Rather it’s a question of how do you get there from here?
BTW economist Arnold Kling has written about such a system from the right.
As usual, I have only personal experience to draw from. I remember one day I was making a milk delivery to a convenience store, and saw a truck with a pressure washer and water tank mounted. On the trucks side door was a sign, “We clean garbage cans” and a phone number. I went inside and mentioned it to the store manager. I thought it was crazy, you don’t clean garbage cans, you replace them, but the manager smiled and said to me,” Whatever you want to do for people, you’ll find some people willing to pay for it.”
Also, one of the fastest growing profitable businesses in this town turns out to be Asian women expanding their fingernail business into toenails and full foot cleansing for $25 plus tip.
These places are packed!
I don’t know where the future will go, but it doesn’t belong to handwringers or welfare queens.
So far as I can see we begin quietly. Big Business and Big Labor are like the Borg: they attack only that which they view as a threat.
We need some changes to banking laws so financing is available. Also, incentives and education. New York State now has a law on the books offering a 100% capital gains tax deduction to owners that sell their business to their workers. Those workers will then need help figuring out how to organize and how to stop thinking like employees.
We don’t demand the Big Boys change. We just ask for a little piece of the action and stay beneath their notice.
Until it’s too late, that is.
Farming? Don’t see it. Big farms rule. Probably room for a few more micro farms growing the latest specialty mushrooms or herbs for the well to do, but that won’t give us big numbers. Manufacturing? Assume trade barriers decrease. Manufacturing goes wherever it can be done cheapest. If this is in the US it will be because it is automated. Robots win. All for fewer regulations on small business but not sure how much difference it makes. You need to get the wealth out of the hands of the 0.1% who control everything and back to people who would use it to invent stuff. How do you do that when that group controls the people who make our policies and they own the media that influence our politics and culture?
I am pretty negative about this. I think our best shot will actually be some significant technology breakthrough(s).
Steve
“consensus in Washington to the effect that the economy of the future depends on workers with high levels of cognitive skills.”
The Department of Labor projections does not agree. They predict most job openings will be for low skilled workers.
https://www.bls.gov/emp/tables/occupations-most-job-growth.htm
I meant the White House and the Congress.
Also, go back and look at that table again. 2016 is the past. The four jobs with the highest projected percentage growth that are not in health care are software developers, market research analysts, financial managers, and teacher assistants. Most very low end jobs (laborers, wait staff) are projected to have less than 10% growth over 10 years.
They think that fast food will grow, too, but I think they’re wrong about that.
By primary production I assume you mean mining, refining and all widgetmaking except final assembly?
The first two require a huge change in regulatory posture. (Steve). I think steve overstates it, but the third will require plenty of design engineers, process engineers, robotics guys and software guys etc……plus laborers. My experience suggests it will be tilted. But all three will be better than the wholesale jettisoning of our manufacturing base.
Lastly, for the umpteenth time, focus on megatech changes like electricity, computers and internet if you like. But vast amounts of R&D and incremental improvements occur with boring blocking and tackling investment. Torching the .1% won’t help that.
Farming. Separate mass farming like grain and meats, steve, from veggies, fruit and nuts. Plenty of smaller farmers, brokers and packers in the latter.
More broadly, how do you dictate the economy? Is it not better to stop things like subsidizing Big Education, catering to the enviro nuts, and setting managed trade policies? That’s dictating winners. After that, things will sort themselves out.
Don’t dictate the economy? Does that mean we are going to stop having lower tax rates for capital gains? No tax breaks for money earned overseas? Don’t provide special protections for LLCs? Patents are going away? Do away with tax breaks for companies that move from one state to another?
Steve
As usual, steve, your thinking is muddled, bordering on incoherent.
The capital gains tax rate should be zero, the income that produced “capital†has been taxed. More broadly, I’d eliminate all the Rube Goldberg provisions in the code. You apparently start from a mindset that income is first the States’, and any relative preferential tax treatment is a gift. A straight progressive system, due to practical reasons, not equity, that caps any individuals tax to income ratio at 25% would be best.
I can guarantee you that all we have today is ripe for manipulation, and a politician’s dream.
As usual you are biased by what works best for you personally. The rate at which we set cap gains taxes is a choice. It might influence our economy. Setting it low certainly makes wealthy people a lot wealthier. Evidence that tit leads to growth is pretty weak. There are other, much stronger influences.
Steve