TO HEAR MANY CONSERVATIVES DESCRIBE IT, the relations between labor and capital ought to be a frictionless market, where each side negotiates for a piece of the profits generated. Here’s the actual “Market” for labor, absent some counter-balancing force to stand up for labor:
Worker: “Hey, Boss. Looks like the company is thriving — I was hoping I could get a raise.”
Boss: “What business is our profits to you?”
Worker: “Well, me and some of the other guys just thought—”
Boss: “‘…the other guys’? Are you trying to make trouble, Peabody?”
Worker: “No, sir. It’s just that a lot of us feel that—”
Boss: “Don’t speak for anyone but yourself, Peabody. Now, look. I realize you work hard, and I appreciate that. But the thing is, my second yacht needs a helipad, plus I need the vacation house on the Riviera. Not to mention, our shareholders will kill me if I spend more money on wages. Let’s talk again next year.”
Worker: “But sir, I can barely feed my family as things stand right now. What am I supposed to—”
Boss: “Peabody, I have work to do. Show yourself out. Oh, and if I catch wind of you stirring up trouble among your co-workers again, you’ll be looking for another job. Do we understand each other?”
Worker: “Yes sir, better than I ever have before.”
When unions were strong and wages were high during the 30 years after the war, real (inflation-adjusted) median wages maintained a steady climb. In other words, everyone shared in the good times. In the 35 years since 1980, wages have mostly moved sideways or declined, and the vast majority of the benefits of economic growth have gone to the top of the income scale.
Look at the chart of productivity and wages after the Second World War:
For 30 or so years, workers got raises in line with productivity. If they produced, say, 2 percent more per hour, then they would earn 2 percent more per hour. Other things being equal, that would produce no inflation and increase demand in the economy by 2 percent. That, roughly speaking, is what the economy looked like during those decades.
There was lots of talk about a “rising standard of living.” You don’t hear that phrase much today, because it is no longer true. Even if you include total compensation – things like health care and other non-wage benefits – the pattern still holds: they closely tracked productivity for 30 years, and then became decoupled.
This decoupling can be thought of as the reversion to form of capitalism. As Paul Krugman remarked in an article almost 15 years ago:
“(T)he middle-class America of my youth is best thought of not as the normal state of our society, but as an interregnum between Gilded Ages. America before 1930 was a society in which a small number of very rich people controlled a large share of the nation’s wealth. We became a middle-class society only after the concentration of income at the top dropped sharply during the New Deal, and especially during World War II. The economic historians Claudia Goldin and Robert Margo have dubbed the narrowing of income gaps during those years the Great Compression. Incomes then stayed fairly equally distributed until the 1970s: the rapid rise in incomes during the first postwar generation was very evenly spread across the population.
“Since the 1970’s, however, income gaps have been rapidly widening. (Thomas) Piketty and (Emmanuel) Saez confirm what I suspected: by most measures we are, in fact, back to the days of ‘The Great Gatsby.’ After 30 years in which the income shares of the top 10 percent of taxpayers, the top 1 percent and so on were far below their levels in the 1920s, all are very nearly back where they were.”
Krugman goes on to lay a good part of the blame for the widening gap between the top and the rest at the feet of changing social mores:
“(E)conomists trying to understand growing inequality have begun to take seriously a hypothesis that would have been considered irredeemably fuzzy-minded not long ago. This view stresses the role of social norms in setting limits to inequality. According to this view, the New Deal had a more profound impact on American society than even its most ardent admirers have suggested: it imposed norms of relative equality in pay that persisted for more than 30 years, creating the broadly middle-class society we came to take for granted. But those norms began to unravel in the 1970s and have done so at an accelerating pace….
“In the 1960s, America’s great corporations behaved more like socialist republics than like cutthroat capitalist enterprises, and top executives behaved more like public-spirited bureaucrats than like captains of industry. I’m not exaggerating. Consider the description of executive behavior offered by John Kenneth Galbraith in his 1967 book, ‘The New Industrial State’: ‘Management does not go out ruthlessly to reward itself – a sound management is expected to exercise restraint.’ Managerial self-dealing was a thing of the past: ‘With the power of decision goes opportunity for making money… Were everyone to seek to do so… the corporation would be a chaos of competitive avarice. But these are not the sort of thing that a good company man does; a remarkably effective code bans such behavior. Group decision-making insures, moreover, that almost everyone’s actions and even thoughts are known to others. This acts to enforce the code and, more than incidentally, a high standard of personal honesty as well.’”
The kind of reforms I’ve advocated in this space over the years – increased unionization, more steeply progressive tax rates, more government regulation of capital markets, and so forth – would go a long way toward restoring those social norms Krugman mentioned, and encouraging a fairer deal for the American worker.
Matt Talbot is a writer and poet, as well as an old Benicia hand. He works for a tech start-up in San Francisco.
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Matt I do not know where you have been in your life. But it sure was not in the work force that made America after WWII Matt your article is an insult to wiorking Americans. What you do not understand is that the American workforce made what you enjoy today. Sorry Matt I have never seen such an anti American article as this.. It just enforces your Socialist ideals. You \Bernie, Elizabeth and very recently Hillary are just not up to standard. Matt just where do you get this info that you are supporting? Matt I am sorry to say but you are clueless and for sure very anti American. Matt grow up. . Just where did you lift this info from Matt. It is for sure not anything you even understand. From now on I am going to call you the lifter of very bad info. Matt you should give a detailed explanation followed by a very detailed apology. Do you have it in you? Matt how could you write this type of an article without any research. You just lifted it all from some Socilaist anti American. Matt this is low but I do believe you may be able to go much lower.
Bob asked: Matt just where do you get this info that you are supporting?
Bob, Paul Krugman is one key source for Matt.
This three minute interview with Krugman explains a lot and it is all (except for the initial question) in his own words.
…and God forbid we should take the words of a Nobel Prize Winner in economics seriously!
He also has admited his mistakes which are many. He is not to be taken seriously. You can I will not. I assume J you do believe Matt does lift all his material without credit or references. . Not good.
There was a time when the Nobel Prize was widely acclaimed by all to be a great honor.
That time ended long ago. Consider these past Nobel ‘Peace’ prize winners:
Barrack Obama (2009) – He had only been in office a short time. His post award actions made the award a joke.
Al Gore (2007) – His Academy Award winning power point presentation, which helped make him a mega millionaire, has now been thoroughly debunked and his predictions made to look ludicrous.
Jimmy Carter (2002) – The award was viewed by many as a slap at Bush more so then simply a way to honor Carter.
And of course:
Yasser Arafat (1994) – Yasser was a terrorist who never denounced his terrorist past and continued to promote terrorist actions against Israel long after winning the Nobel ‘peace’ prize. He was reportedly worth hundreds of millions of dollars. Much of it money skimmed off of US Funds of benevolence sent to Palestinians by the aforementioned Jimmy Carter.
No, winning a Nobel price these days has become something not worth what it once was.
Interesting that your condemnation of the Nobel Prize lists only a few of the peace prize laureates that the extreme right has condemned. What about Martin Luther King, Ralph Bunche, Linus Pauling, Nelson Mandela, Desmond Tutu to name just a few. The left condemned the award to Kissinger.
The fact is that the Peace Prize is often controversial.
You only bring this up in an ineffective attempt to discredit Krugman because Krugman is so effective in pointing out the consistent nonsense from ideologues who can’t let facts get in the way of their idiotic pronouncements on economics
Let’s consider your list:
Ralph Bunch – 1950
Linus Pauling – 1962
MLK – 1964
Desmond Tutu – 1984
Mandela – 1993
Let’s also reconsider my comment: ”There was a time when the Nobel Prize was widely acclaimed by all to be a great honor.”
All the fine men you named were awarded the NPP prior to the date of the earliest recipient I named.
I also note you do not defend the awarding of the prize to any of the men I named, nor do I condemn the awarding of the prize to any of the people you named.
As to the discussion at hand; Paul Krugman, I would encourage you to listen to the link I posted in which he admits to some very serious errors.
I would also note the Krugman’s Nobel, for his work on trade theory, was awarded in 2008. Long after the Noble Prize lost the respect of many people for making some grievous errors in judgment.
Nice attempt at changing the subject. Frankly, I don’t think my views of your list are important, nor do I think yours are.
I note that you changed your claim that “winning a Nobel price these days has become something not worth what it once was” to “lost the respect of many”.: you changed a flat out statement with no basis whatsoever to “many” people think like you do. Apparently you realized how silly your claim was.
Your point is even sillier when you consider the difference between a Peace Prize, and an Economics Prize (correctly noted by others to not have been one of the original established by Nobel, but nonetheless prestigious). The latter is based on published work and selected by a group of peers. The former has been controversial for decades. Yes, controversial even when it is given to a previous Nobel Laureate (Linus Pauling) who was awarded it for his work to ban atmospheric testing of nuclear weapons, which was based on scientific work that showed unequivocally that the tests were killing people exposed to radiation downwind and around the world (and for that work, his passport was revoked, he was interrogated before the House UnAmerican Activities Committee and he was the subject of a concerted effort to fire him from is tenured position at Caltech). No, for “many” the Nobel Peace Prize has been controversial for decades, not just recently as you wrongly claim.
And the fact remains the Krugman is highly effective in pointing out the ridiculous claims and errors of people who learned economics from a novelist or cling to outdated and discredited economic theories, and particularly effective when their claims and theories are discredited by facts, as they so often are. You may hate his views for ideological reasons, but he remains very good at pointing out nonsense of those who put ideology before economic science..
Although I may not agree with you on what fields are deserving of a “Nobel” branding (economics not being one of them); I do appreciate some of the spot-on comments you made above.
Greg, A point to consider is how some commenters praise other commenters “for restoring some common sense to the distraction.”., whilst wildly tossing red herrings about as well as denying claims made.
I would like to point out to the readers how quickly this discussion has been changed from one of rationally discussing opposing views to one of personal attacks.
Matt has previously asked for civility in these discussions, but apparently his request has fallen on deaf ears.
Examples of the attacks:
“you realized how silly your claim was.”
“Your point is even sillier when you consider..”
“people who learned economics from a novelist…”
“You may hate his views for ideological reasons”
The inability to carry on a discussion without resorting to infantile comments, such as the above, is typical of what we see from people so confident in their views that they will not consider the views of any others, as well as those unable to offer supporting examples of their positions.
For example: Where has Krugman’s prognostications been proven to be accurate? (I have given five examples of Krugman’s self-admitted errors)
This part is particularly amusing:
I note that you changed your claim that “winning a Nobel prize these days has become something not worth what it once was” to “lost the respect of many”
The obvious point made is that the Nobel Prize is not worth what it once was simply because it has lost the respect of many people. This seems to have been missed.
I would still welcome a defense (as opposed to embarrassingly futile personal attacks) of the Nobel Prize Committee, as pertains specifically to their presentations made to those I named.
Minus the defense, or admission of errors made, one must assume that the presentation made to a terrorist, as well as the others, is one to be supported.
Why would this be?
Why would anyone not condemn the praising of a man who was an unapologetic terrorist, as well as one who became wealthy, to the tune of hundreds of millions of dollars (some (CBS News) say over a billion), while simultaneously claiming poverty for his ‘nation’?
Once again trying to change the subject.
Pointing out that your claim is silly is not a personal attack, as it describes the claim, not the claimant. There is a difference.
“People who learned economics from a novelist”: Are you saying that you would be among that group? That would surprise me; I had no idea that you would take that personally since I had no idea you would be among those who learned economics from a novel.
“You might.hate his views” I can see how one might take that personally, I should have said “One might hate his views…” to be clear that I was using the general, not the specific personal pronoun.
As to your “obvious point” that because your claimed “many” have lost respect for the Peace Prize, the Economics Prize is not worth what it was, how do you measure “many”, or “worth”? Have you considered that the number of people who used to have no respect for the Peace Prize because MLK received it but have since changed their views? They might be rather numerous–perhaps they outweigh the “many” you claim. And you still have never explained what the Peace Prize and its committees have to do with the Economics Prize, or why one would judge one based on the other. They are separate.
Finally, as I said before, I don’t care what your opinions are about the people on your list, nor do I think mine are important. But your claim that someone must hold some opinion or other (that you chose to pronounce and assign to them) because they decline to comment on each and every thing you post is, well, silly.
As to your remarks about “infantile”, isn’t that getting personal?
Finally, as I said before, I don’t care what your opinions are
Then why do you continuously post back to me?
It seems some of the thinking here is as muddled as home-made sauerkraut.
Let me try to explain again:
The Nobel Prizes in all their categories are lumped together by common and various names and are awarded by committees of the organization: Nobel Prize.org .
One prize listed is awarded for economics, and is so listed at the above link.
The most prestigious/famous prize, the Nobel Peace Prize (NPP), has become a joke to many. As such the NPP has been diminished and by association the value of all other Nobel Prizes, under various categories and names have also lost credibility to many people.
The awarding of such prizes should be based solely on merit and not be politicized by a leftist ideology. Once Nobel.org began to politicize the awarding of it various prizes, those opposed to the ideology promoted lost respect for the organization.
That does not seem like a difficult concept to grasp, but clearly it must be for those willing to promote ideology over merit. Krugman’s award being one example in that category and the four men I named being an example in the NPP category.
I have yet to see you condemn the award to Yasser Arafat, which then would lead one to believe you thought the award was deserved.
If you carefully read Nobelprize.org, you will see they distinguish carefully between Nobel Prizes and “the Prize in Economic Sciences” (not Nobel Prize, simply the Prize). They are separate and always have been. I get it: you don;t like Krugman or his views. But you make no sense whatsoever when you claim that the Economic Prize is somehow tainted by the Peace Prize, because you disagree with the award to some of those winners.
And once again, I don’t care what your opinions are ABOUT THE PEOPLE ON YOUR LIST (you left that part out when you quoted me so that you could change the subject again). But your claim that someone must hold some opinion or other (that you chose to pronounce and assign to them) because they decline to comment on each and every thing you post is, well, silly. And wrong.
Krugman did not win a Nobel Prize (or a Noble Peace Prize).
the implication of Matt’s chart (which may be correct) is that increases in productivity should generate commensurate increases in wages. What if those productivity gains were used to offset inflationary costs (which certainly happened dramatically in the 1970’s) or increased competition from abroad, such as Japanese automobiles during this same time period and beyond? Indeed, using productivity gains to address those issues might well have saved jobs that otherwise would have been lost. In any case, I would argue that looking at such a wide timeframe on this subject suggests much more information is needed.
Mr. Peabody needs to organize his fellow employees and bargain with the company, “united we stand” ring a bell ? Strikes are not easy, I’ve been in two. and I understand they are tough due to bill’s to be paid. All business cares about is money, whether it is a Dollar or a Yen . They have proved to me patriotism comes last
Does the Nobel Prize in Economics not count? First awarded in the 60’s.. Maybe I am wrong. Please explain so I can better understand.
There is no such thing as a Nobel Prize in Economics. Look it up.
Kaufman wine the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. This award is not considered a Noble Prize in the traditional spence, and in fact, is treated separately, as it is not one of the prizes that Alfred Nobel established in his will in 1895, Nor are the recipients chosen by the Noble Committee.
*Krugman won
Paul Krugman 2008. Nobel Prize winner but not the Nobel Peace Prize. I do not think any of the readers suggested he won a Peace Prize. Please explain. Thank you.
Anyway you look at it , it is one of the six. It is memory memory of the so named prizes. But it is still consider a Nobel Prise in Econimic Sciences. Cannot get around it. Call it what you want it does not matter.
No, but a reader did suggest the Noble Prize and Noble Peace Prize were synonymous. As well as subjectively suggesting the former has lost credibility. Which is ludicrous, at best.
What you are saying is correct. As I have said before. It is considered by many as a Nobel Prize and is considered by many as one of the six. Others may not agree with that but so what. He is considered a Nobel Prize winner weather in the memory of or what ever. That is how he is referred to along with Freidman. Sorry call it what you want. But the term Nobel is attached to the award. So it is a Nobel Prize.
That it is how it is “incorrectly” referred too.
BTW – I won the Super Bowl.
BTW – I’m not a worshipper of public figures. I’ll leave that to the more pedestrian amongst us.
Bob,
Part of what is frustrating about trying to have a rational discussion is how erroneous comments can be made, such has:
“No, but a reader did suggest the Noble Prize and Noble Peace Prize were synonymous.”
That suggestion is not to be found in this thread, yet the statement seems to be made with an air of confidence.
Bob
The discussion regarding ‘Nobel or not Nobel’ is one point that can easily be conceded.
If we look at Krugman’s website we see he refers to himself as a “Nobel Prize winner”. This then means that in addition to be in error many times in his economic theories (as he himself admits), he also is misrepresenting his academic achievements and falsifying his resume. This makes him a liar, but one who will still be defended by his supporters.
in addition to be in
Correction: “in addition to being in….
It is very simple. Everyone refers to Freidman and Klugman as Nobel Prize winners. As they also do. As DDL says if that is wrong so are all their econ stats. I was AT Super Bowl 1. That is a true statement. The only issue is it was not called the Super Bowl then but everyone calls it that and will celebrate as such It is over..
“The Economics Prize has nestled itself in and is awarded as if it were a Nobel Prize. But it’s a PR coup by economists to improve their reputation.” – Peter Nobel
“Like several other members of his family [Peter Nobe], among them Marta Helena Nobel-Oleinikoff, he is a fierce critic of the Bank of Sweden’s prize in Economics, and what he and his family sees as misuse of their family name by the awarding institution. He argues that no member of the Nobel family has ever had the intention of creating a prize in economics.”
But, no! Let just Ignore details, nuances and facts.
In essence, the Nobel Prize has been highjacked by a corporate institution. Sounds like America.
Good. I am a very proud American. Are you?
I’m not sure it matters what Krugman has done or earned in the past. If indeed he is endorsing government expenditures as a solution to economic decline or malaise the last several years have utterly discredited him. We have not had the expected recovery from the “Great Recession” and yet have amassed an additional $8 Trillion dollars in debt during these years. If we simply took a fraction of that amount and gave it to the 99% (in the form of across the board tax cuts) it would have greatly increased the actual take home wages of millions and brought about much more income “equality” than anything that was done to address this issue.
I like your comment.
Thank you Reg, for restoring some common sense to the distraction..
Greg you did make a personal attack on me. You then blamed it on jet lag. I can take personal attacks but I do believe when folks make personal comments and then try to cover them up or say they did not make them AS stated is a little overboard. You are not in the group. I do use terms that some call personal attacks but they are not. Enviro Greenie, Liberal Socialis etc. Those are just political identities. Being called a Facsist is not, it is very personal and I do not like it. Making comments about ones habits as if they are fact is another. Some do that. I do believe Greg DDL has been attacked for his leanings and for that reason only. just as I have. If that is how a very few want it. I am all in but it will not last because it will all be deleted. If name calling is how we all want it I have plenty. Greg I do not think that is how you want it. Facts, opinions and political statements are fine if they are kept clean. Go to far and now Bob Livesay will go on the attack also. I have no problem either way. I can go at it as well as anyone. I have no problem nor will I monitor someones comment. The editor does just fine.Say what you want and take the comeback it any. Move on if not interested. To me contribute as you like but do expect comebacks. No problem but be prepared for the same. This is a good run.