Wednesday, 8 February 2012

"Out of Touch"?

One of the common arguments thrown at me is that I am out of touch with "reality" and that all my economics comes "from a textbook" (which is odd, since all my economics has been learned on the job). Specifically, I can't know what the effect of unemployment means to the people to whom it happens. This is especially true when I argue against Labour protection. Of course to a leftie, all Tories are only in it for the benefit of "the rich" and the poor are simply a source of sustenance (as we eat their babies). This is an example of brute prejudice of the lefty, but it needs dealing with.

First up. Left wing "economics" usually puts motivation above effects. So you get a minimum wage which I believe destroys the life chances of the most vulnerable and traps people on benefits. Lefites, by supporting this policy hurt the poor, whom they claim to be helping. Then the left argues that anyone opposing this policy is "in league with fat-cat bosses " or "wanting to recreate the workhouse" or some such arrant nonsense. This crap usually comes from highly privileged lefties, often who've got significant private wealth, and a secure, professional job. They are almost always university educated, and wouldn't know a hard days labour if it smacked them in the face.

I am not of the working class. I am a public-school educated stockbroker. I would be the last to deny my privileged upbringing. My parents made enormous sacrifices for my education. But I did not take internships in offices when at university, I worked on Building sites as a hod-carrier (go on. Find me a harder job...), I mowed lawns for the council, I worked as a Courier and rickshaw driver in Edinburgh and I have worked in a factory. Lest I give the impression that I am a horny-handed son of Toil, the factory in question was owned by my father. This does not mean I got an easy ride, quite the opposite. It means the Foreman delighted in giving me the shittiest jobs, then telling dad about it, and if I didn't work harder than others, it reflected badly on him. Something to pick up at Chettles, a meat rendering plant where the air is thick and emetic? Guess who's going to be driving there, scraping the rotting residue of carcass off a motor, then doing the preparation when it gets back to the factory? I once spent 3 days inside a Boiler scraping soot off the inside before it could be serviced. I sweated black for a week. I know working people do this every day. But this means I do know the honest satisfaction in standing your round after a hard day's work. I am also a currently a non-commissioned Officer in the British Army. The Idea I have no idea about what the working class thinks, or that I exist in some "ivory tower", is ridiculous.

If there is one thing about what the working class thinks, it isn't what lefties think they should think. The contempt the actual working class is held in by the average Hampstead leftie is proportional only to the degree with which they romanticise the workers' struggle, of which they know nothing save that which comes from books written by other Hampstead lefties. The people who have the most extreme opinions of those living off the benefits system, for example are the benefits recipients' neighbours. The working class are almost universally economically protectionist, anti-immigration and socially extremely conservative. Lefties don't like this. They don't like this at all. The working class have never been forgiven for failing to rise up and destroy "capitalism".

So. My belief is that a booming economy is the best protection for a worker. That high taxes and high government spending slow growth and reduce the surplus which can be spent on working conditions. Minimum wages hurt the poorest most. Job protection reduces the number of jobs.

I don't hold these opinions because I am unaware of the suffering of unemployment or hard industrial working conditions. I know both from personal experience. I've been made redundant more times (3) than any of the lefites who accuse me of being "out of touch". I just got on with it, and always found another job. And this leads to an important thing to know about unemployment. It isn't a lump of people, out of work permanently. 10% of unemployed people find work every month, even in a recession. The unemployment number is rather the pool between two fast-flowing streams: people losing jobs, and people gaining them. People lose jobs at a relatively constant rate over the business cycle, it's job CREATION which fluctuates wildly. So, broadly, while the left focuses on protecting jobs, they ignore that policies to achieve this reduce job creation by making people riskier and more expensive to hire. I think this focus wrong.

I hold these opinions because I believe them to be the best way of delivering the results - full employment and high wages - we all want. There are no answers in economics, only trade-offs. So you want high minimum wages? You must accept unemployment. You want job protection? Then you must accept lower job creation. Is that a "price worth paying"? You can have high debt-financed public spending, but this tends to slow growth, reducing the pie to be shared, to the detriment of all. Suggesting that a recession has positive effects on productivity doesn't mean I think unemployment is a "price worth paying", merely a short-term inevitability. Generous, means tested benefits damage the incentive to work & save. So much left-wing rhetoric denies the existence of these trade-offs, believing passionately in a free economic lunch courtesy of high taxes on "the rich".

I wish lefties could stop using the ad-hominem argument of questioning the motives of the "right wing" and focus instead on the effects of policies and debating where the trade-offs should be. The problem for the left is that to acknowledge the existence of trade-offs would destroy the rhetorical defences they've built. Economics isn't a dry subject, only of interest "in theory". It is the study of the use of scarce resources, the effects of incentives in the real world. Denying economics exists, and denying the existence of trade-offs it studies makes debate very difficult.

Update: QED 1 QED 2



22 comments:

Murray Rothbard (@LibertarianView) said...

I agree with pretty much everything you say. The problem that I find with many on the left is that they are economically illiterate.

Many still cling to the Marxist labour value theory and think that workers are denied the fruits of their labour if they are paid a wage.

A lot of the errors in their political ideology would be avoided if they increased their economic understanding.

However, I doubt I will convince many to read Human Action, or Man, Economy and State!

Anonymous said...

You are wasting your breath, anyone who knows anything about economics knows you are right but the left can never admit they know nothing of the working class and never, ever admit they are wrong. That's why they could never understand why Margaret Thatcher got so many working class votes. I am old enough to remember when the Labour Party really wanted to improve the education and life chances of working people. Not for a long time now, they seem to equate working class with the not wanting to work class that workers loathe. Then though, most had some experience of work that most of our politicians lack now. The rise of the professional politicians is the worst thing that ever happened to us.

Luis Enrique said...

there's a lot I sympathise with here, especially the distance between what the self-anointed champions of `the people' think, and that the people think. And the presumption of moral superiority.

But I think you might be guilty of paying too much attention to the stupidest of the left. Easy to do - there are a lot of stupid lefties about. But if you wanted to, you could pay equal attention to the stupidest of the right, plenty of them about too, and find much to object to.

However, I think you should be aware that some of the things you regard as hard economic reality, trade-offs, aren't as supported by economic theory or empirical evidence as you think. The impact of high taxes and public spending on growth, for example. I could dump a ton of citations on you, if you like. This isn't a bad start:

http://www.challengemagazine.com/Challenge%20interview%20pdfs/Slemrod.pdf

You are correct that (some) lefties ignore trade-offs, but righties have their own blind spots too. Most actual economists self-describe as left-wing, you know, suggesting those who think hard about trade-offs don't necessarily lean right as a consquence.

Luis Enrique said...

oh, that link didn't seem to work. If you are interested try googling

the truth about growth and taxes interview with Joel Slemrod Challenge Magazine

Jackart said...

Fair comment. I agree there are idiocies prevalent on the right, where everything tends to be blamed on the EU, and and unwillingness to accept the reality of high pay reflecting high power not high performance, or the extent to which luck and parentage defines your status in life, for example.

I do point these out. But, perhaps inevitably, I find the rhetorical blindness of the left more annoying.

Jackart said...

And most economists self describe as "liberal" not left-wing, mainly because the US right wing, most of it, is busy driving off at 100mph down an alley with a brick wall at the far end with the word GOD written on it.

I couldn't reasonably self-describe as "conservative" in the US these days, because I'm capable of rational thought.

Anonymous said...

I am sorry, but what a self-serving piece this is.

First: good for you and your experiences. They prove absolutely NOTHING. You imply if not say that the only "leftists" are people who have no relations to the working classes, perhaps have never served in the military, so forth and so on. You of course have no factual basis for this prejudicial statement, but what the heck! Lets re-enforce conservative stereotypes!

Second: You make many assertions and act as if these assertions were factual claims. For example, high minimum wages must lead to unemployment. Nice right-wing orthodoxy, but of course the private sector is not the only sector - in theory everyone not employed privately could be employed publicly. Yes, I am cognizant of all the other issues that would result from such an arengement, but the simple fact is that this is possible, and thus your assertion that a high minimum wage must equal unemployment is false. You could have qualified it, in fact, you should have, but you didn't. The fact that you failed to qualify any of your assertions shows that your willingess to actually think about certain questions is non-existant. You are a creature of orthodoxy, of the current social constructs, unwilling and unable to bring them into question.

No one in the elft denies the existance of economics. We merely understand its limitations, and its fairy tails, tails you obviously hold dearly, so dearly in fact that challenging their validity is something that lies outside your ability to imagine.

Jackart said...

Ah, Anon. You are clearly a semi-literate fuckwit.

There are such things as links, and if you follow them, I back my "assertions" with much more detailed argument.

The fact is, it isn't "right wing" orthodoxy, it's "Economic orthodoxy" to suggest that if you increase the price of a thing (in this case labour) you cause less of it to be bought. High minimum wages raise unemployment.

Left wing "economics" which denies these trade-offs as you do is merely an intellectual excersise in trying to prove water flows uphill.

Ralph Musgrave said...

Lefties are totally schizophrenic in that they leap to the defence of the ultra-far right, i.e. Islam, while foaming at the mouth at the moderately far right: the British National Party.

Muslims believe in killing the authors, cartoonists and publishers they don’t like. The BNP does not.

About 20% of Muslims in the UK think that anyone leaving their movement should be killed. No BNP member believes this, far as I know.

Muslims believe in treating women like dirt. The BNP does not.

Mark said...

The problem with discussions of class in Britain is that despite the name, "working class" has almost nothing to do with economic position and everything to do with accents, how you drink your tea and what TV you watch. Every single member of my family works and yet I don't want to be working class.
This is because to the extent that "working class" really means anything at all, it means "ill educated".
And the reason why they are ill educated is that they have no interest in learning.
The right wing have managed to form an alliance of the uninterested and the self interested - I don't think left wingers are out of their minds for being frustrated by that.

Jackart said...

Ralf Musgrave. Just because Islamic nutters are worse, doesn't make the BNP OK.

Mark. Lovely. My point is the Left have contempt for the working class, you deny this by calling them disinterested and ill-educated. The latter is true, mainly because of left-wing education policies, the former isn't true, something you'd know if you'd ever met any.

The other half of my argument is that the left believe the right's economic view to be malign, not just wrong. You then describe it as "self interested".

There's a hilarious lack of self-awareness in your comment, which proves the point I made in the post. You may be reasonably well educated, Mark, but you're obviously thick. QED.

David C said...

A very good and convincing post Jackart. My only suggestion for improvement would be that you could be less rude to the people who come here to comment.
Some of them may be deluded but there's no need for 'fuckwit' or 'thick', you'll start to sound like George Monbiot if you're not careful.

Mark said...

I wouldn't say I'm "calling" the working class ill educated - that's pretty much the only meaningful definition the word can have in modern Britain. (I'm certainly not calling them "disinterested", was that a pedant trap?)

My point is this - the left exists to promote the cause of the worker - that is the vast majority of people in the country who work. We shouldn't get overly excited if one particular sub-group of the population disagrees with their ideas, no matter what they happen to be called. Especially if that group is renowned for its love of ignorance.

So, what are the alturistic policies that the right are proposing that will return us to full employment (preferably some point before our deaths)?

Jackart said...

A strong, growing economy is the best protection for a worker. That simply can't happen with a huge debt burden. The cuts may cause short-term pain for long-term gain.

Altruism (with other people's money) is, as Alexander Tytler observed, what renders democracy (as Greece & Italy have just found) unstable.

So. The left may THINK minimum wages, and tough labour protection laws benefit the worker. I think they're wrong. You may think the left exists for "the worker" but for reasons I lay out in my post, the left's view of "the worker" is hopelessly ignorant and romantic. The Labour party exists now for the public sector salariat, and the welfare classes. "the Worker" is just the tax cow milked to pay for it.

The point is to you, and the rest of the left, it's simply axiomatic that Austrian-school economics is the rich being "self interested". This saves you having to debate whether we're right, preferring to sit smug in your own self-righteousness.

Finally. Whether or not a fiscal stimulus (which is what people who want slower cuts are arguing for) is possible, the evididence appearst to be that it becomes markedly less effective when debt reaches 80% of GDP. When debt reaches 120% of GDP growth stops.

There is simply no alternative to the cuts. This is for 'The worker' as much as for me.

Thornavis said...

Mark.
I'd probably count as "ill-educated" having attended a bog standard secondary modern in the sixties but I certainly don't come into the category of those not wanting to learn. From what I've seen of those who have had the misfortune to attend the bog standard comprehensive I think I got the better deal. I've not noticed that those who haven't been well educated are necessarily any less willing to learn than anyone else, the world is divided, it seems, between the curious and the un-curious and class and education seem to make no difference to that. I suspect what you mean by uninterested in learning is actually our old friend false conciousness, people are stupid because they don't see things the way you do, the fact that you seem to think that self-interest is a necessarily right wing attribute rather confirms that.
Why do you think that altruistic policies are the key to full employment ? Odd idea that.

Jackart said...

Thornavis, you're not "ill educated". Your spelling and punctuation are better than mine! "Why do you think that altruistic policies are the key to full employment ? Odd idea that." Good question!

Mark...

Skimmer said...

The labour movement owes its genesis, and soul to a time when the sole employer was often an exploitive mill owner. In those times losing access to possibly the only source of gainful employment in the area was a catastrophe.
This situation existed in many mining towns until the recent past, and the Labour movement certainly hasn’t forgotten this bygone era.

I once met a really nice bloke at a party who worked with the Labour Party, and one of the Unions. He was a sound guy, so in positive way I tried to push the suggestion that the Unions could do allot more to assist their members with day to day life – collective bargaining for insurance or mortgages, pension advice etc, he couldn’t hear it. All he could fathom was conflict between worker and employer, refighting the lost war of the 80’s.

I think there are many parallels between the Labour movement and the Confederate pangs in the Southern States with their harkening to a lost war.

People believe what they want to believe. The Union guy was a really decent bloke, and genuinely just wanted to help people (he certainly wasn’t in it for the money), insisting that one day I would need them to fight on my behalf with the organs of a mighty company. The prospect of saying ‘sod this’ and walking into another job was just alien. I might as well have tried explaining evolution through natural selection to a Baptist Church in Alabama.

People have very strong defence mechanisms around their core perspective. Even an honest attempt to wrestle with an opposing insight is very troubling for the ego, and typically meets with defensive rejection techniques. When I hear a well meaning person on Newsnight spouting what I consider to be complete bullshit, I find it hard to listen too.

I like to think that I have intellectual honesty, but most people don’t even try. Witness the apologetics that defended segregation.
“Where questions of religion are concerned, people are guilty of every possible sort of dishonesty and intellectual misdemeanor.”
— SIGMUND FREUD, THE FUTURE OF AN ILLUSION

Jackart said...

Skimmer, Good comment, I made a similar point here.

Mark said...

I agree that there are people from all kinds of backgrounds who are intellectually curious and prepared to study hard - but for me, possessing this quality instantly disqualifies them from workingclassdom. (My feelings on this matter are probably due to my own lower-middle class background - culturally rather than economically "middle class".)
The important point is that one particular group of accents shouldn't be used as a trump card over left wing ideas, because in economic terms they are no different to anyone else.
I'm not sure that full employment is desirable, but i think policies should be alturistic because we don't actually need that much from each other anymore - you can say, "leave it to the market", but we can scarcely take any more marketable goods.
My personal view is that if someone has such low productivity that they cannot be employed under a minimum wage system, do we need what they will be bringing to market? Might there not be some work they can do for society, employed by the public sector, that is of more value to us?
If not, why insist on sending the poor person out to work at all? Why is lost production due to "laziness" worse than production lost to a lack of demand? At the moment, we supposedly have both, perhaps an indication that we should be concentrating less on working for things people don't want.
Finally, I have to say, this debt business strikes me as very odd. What exactly is the disaster we are trying to avert by limiting public spending and raising taxes?
What is the mechanism for government debt slowing growth?

Jackart said...

With every comment, Mark, reveal more of your confusion.

"I'm not sure that full employment is desirable". You don't understand the economic concept of "full employment", which varies but generally around 2-5% unemployment depending on labour market flexibility. UK's rate of high home ownership for example increases the rate below which unemployment can't fall. People lose jobs all the time. "Full Employment" is when employers are competing for staff, not potential staff competing for jobs. This drives up wages, and if the imbalance is too great, it's inflationary, which is why interest rates get raised to cool business investment.

"What exactly is the disaster we are trying to avert by limiting public spending and raising taxes?" Look at Greece or Italy at one extreme, or Japan at the other.

"if someone has such low productivity that they cannot be employed under a minimum wage system, do we need what they will be bringing to market? Might there not be some work they can do for society, employed by the public sector, that is of more value to us?" No. You clearly don't understand the concept of "value" in an economic sense either. Someone who's marginal cost of labour is less than his production isn't worth hiring. But with a CBI or negative income tax, he'd still get a job and be worth employing.

The idea that this person could do something "more valuable" in the public sector as if that's immune from the laws of ecomimics demonstrates a profound misunderstanding. Yes the public sector can and does waste money employing useless people to do non-jobs. That's the problem, not the solution.

V said...

Leftists will always question your views with the smear. I'll leave it to Bastit to explain

“Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists conclude that we object to its being done at all. We disapprove of state education. Then the socialists say that we are opposed to any education. We object to a state religion. Then the socialists say that we want no religion at all. We object to a state-enforced equality. Then they say that we are against equality. And so on, and so on. It is as if the socialists were to accuse us of not wanting persons to eat because we do not want the state to raise grain.”

Mark said...

I'm afraid I can't agree with your views on the laws of economics. Competition might make production more efficient, but it doesn't neccesarily make the things we produce more valuable. There is a limit to the things which can be bought in a market - and is the work of a surly call center worker really more valuable than a happy park keeper? (For that matter, is the work of a bank executive more valuable than that of a happy park keeper?)
As for value, a lot of our decisions aren't made entirely on an individual level, but are influenced by society. Before doing small things, people often don't think at all. This is why it is dangerous to give buyers much power and workers a small amount. We can't be certain that the work done by powerless low production workers will be of any value at all in a market, because the people doing the buying don't really care. The workers have no choice.
This is why we should give the workers more power. I agree with a citizens basic income.

Obviously, we can't be certain that the work done in the public sector is valuable either, but I don't think anyone is claiming that "the government is always right", in the same way that some claim it is always wrong. It seems clear to me that in Britain, the lack is currently in public services.

BTW, Japan is a reasonably nice country. Italy and Greece are in the Euro.

There was an error in this gadget