Map of life expectancy at birth from Global Education Project.

Monday, September 04, 2017

Some true facts for Labor Day

We celebrate Labor Day at the beginning of September because of course we can't participate in that commie May 1 celebration. Anyway, here are a few points to remember when you hear politicians talking.

Coal mining: The reason there aren't nearly as many coal mining jobs as there once were is not because of environmental regulations or restrictions on mining on federal lands. Coal mining jobs started to disappear decades ago, because of automation. Back in you great grandparents' day, miners used to dig out coal with picks. Nowadays coal is removed by giant machines that do the work of dozens of men. And the demand for coal is falling, mostly because of competition from cheap natural gas. Coal provided 52% of U.S. electricity a decade ago but now it's down to 30%. The growth of renewable energy will drive it down further. Even Robert Murray, a coal baron who hates environmental regulations because they interfere with his ability to get even richer, and thinks global warming is a hoax, doesn't think there's anything the president can do to bring back coal mining jobs.

Trump has consistently pledged to restore mining jobs, but many of those jobs were lost to technology rather than regulation and to competition from natural gas and renewables, which makes it unlikely that he can do much to significantly grow the number of jobs in the industry, said Murray. “I suggested that he temper his expectations. Those are my exact words,” said Murray. “He can’t bring them back.”
 Manufacturing: This is a similar story in that technology accounts for much of the decline in manufacturing jobs in the U.S. This is nothing new, of course. When the U.S. was founded, the majority of people were farmers (or farm slaves). Now, we eat a lot more than we did back then (for better or for worse) but only about 2% of the population work in agriculture. There used to be lots of jobs for stable hands and horse shoers as well, but now most horses are just rich people's toys.

In fact U.S. manufacturing output per capita has been basically steady since WWII, even as employment has fallen. The jobs that have gone to China and Mexico of course matter as well, but the upside for U.S. workers is that they get to buy a lot of stuff really cheap. I had a table fan that was maybe 20 years old. The knob that turns it on and off broke off so I controlled it with pliers. When that finally stopped working I went to WalMart to buy a new one, figuring it would cost maybe $25. I bought one for $11. Made in China, but better than the old one. Instead of mostly plastic, it's mostly steel. It can spin at higher speed, it pushes more air, and it's more compact. It may seem surprising that it's worth it to ship these things 10,000 miles to sell them for $11 but that's how cheap it is to make them.

Manufacturing output is in fact growing in the U.S. As manufacturing becomes increasingly automated, the wage differential is less important than the knowledge differential. With a technically educated workforce, we may still have fewer manufacturing jobs than we did in the 1980s, but we'll have better ones. We'll still be buying cheap stuff from China, however, unless the president decides to screw American consumers with a trade war.

Taxes:  Rich people are not job creators. Letting them keep more of their money by not taxing them will not create any jobs. Not a single one. Jobs are created by demand. When people have money to spend, and spend it, on goods and services, that's when investors step in to create more jobs to meet the demand.

If you cut Scrooge McDuck's taxes, and he says "Oh boy, I have more money to invest, I'm going to open a weeble factory," and it so happens that there are already enough weeble factories to meet the demand, his weeble factory will go bankrupt, and whatever jobs he created will be gone. Or, possibly his weeble factory is more efficient and a different one goes bankrupt; but in that case, there are fewer weeble manufacturing jobs than before.

In fact, recessions and depressions are shortages in aggregate demand. People aren't spending enough money to keep each other employed. Letting rich people keep more of their money is counterproductive because they tend to spend a smaller proportion of their income than do low and moderate income people. Sure, they'll buy the occasional solid gold toilet seat, but they can't spend all of their money and they don't want to anyway because they like being rich.

In order to create demand, and create jobs, you have to put money in the pockets of low and moderate income people who will spend it. The best way to do that is to raise taxes on rich people. Then you can put the money to work investing in good stuff that will make us richer and happier in the future. There's a lot of talk now about roads and bridges, but mass transit, education from pre-school on up, a smart electrical grid than can make use of sustainable energy, all kinds of great projects, will put people to work directly, and put money in their pockets that they will then spend to put even more people to work. If you cut rich people's taxes, rich people will be richer. And you will be poorer.


Anonymous said...

I value and look forward to your posts on public health and health care policy, from a public health perspective.

Don Quixote said...

As usual, "Anonymous" is a snarky misanthrope. Apparently he has nothing better to do than haunt this site. Needless to say, if his wife hasn't left him long ago, he's having no sex.