Why labor unions have lost their moxie

A lot of U.S. economic policy is distorted by the belief that manufacturing jobs are a magic bullet against declining incomes. Manufacturing’s false promise of a decent payday punctures that illusion.

One of the dumb, predictable responses to articles like this is “We need a stronger union movement”. Sorry, but no. Declining manufacturing wages aren’t an effect of the weakening of unions and can’t be reversed by strengthening them. Explanation follows.

Unions only help if the underlying economic situation is that the employer is able to charge a great deal more for the amount of product generated per worker-hour than the worker is getting – there is headroom for the worker’s wage to expand into while the manufacturer still makes a net profit. (If the manufacturer doesn’t make a net profit the business collapses and nobody gets paid.)

During the age that manufacturing nostalgisists remember nostalgically, this was true. For most of that period (roughly 1870-1970), the capital goods required to manufacture in a way price-competitive with the U.S. were so expensive that almost nobody outside the U.S. could afford them, and in the few places that could they were mainly preoccupied with supplying their domestic markets rather than the U.S. World War II prolonged this period by hammering those “few places” rather badly.

In that environment, U.S. firms could profit-take hugely, benefited by being scarce suppliers not just to the U.S. but (later on) to the whole world. And unions could pry loose enough of that margin to make manufacturing jobs comfortably middle-class.

All that ended in the early 1970s. A good marker for the change is the ability of the Japanese to make cheap cars for export and sell them for the U.S.

In the new world, the profit margins on manufactured goods narrowed dramatically. The manufacturing firms could no longer effectively ignore overseas competition in the U.S. domestic market. U.S. consumers no longer had to to pay the large price premiums required to sustain domestic manufacturing wages at pre-1970 levels, and they jumped right on that option.

In this environment, unions don’t help because they have almost no negotiating room. If they bid up workers’ wages, the jobs will evaporate or move overseas – not because corporations are being “greedy” but because they can no longer charge the prices that would allow such high wages to be sustained. Too much foreign labor and capital is ready to pounce on the first hint of price-taking.

The only place unions still have anything like that kind of headroom is in service industries where the jobs can’t easily be moved. This is why service-employee unions are the new powerhouses of the labor movement.

240 thoughts on “Why labor unions have lost their moxie

  1. What has amazed me in the last ten years is how unions have failed to understand, that to protect the local workers, they have to improve their *foreign* comrades’ work places, thereby making production globally more expensive and thus reducing the race to the bottom. Also putting more dough in the globalized worker’s hand means expanding the demand and thus also working against the current trend.

    Another possibility would be to abolish all taxation of labor to regain a competitive labor cost level. I don’t know if that would be enough savings though.

  2. This is why service-employee unions are the new powerhouses of the labor movement.

    And, of course, government employee unions, which not only work for entities that cannot be moved, but can work to reelect (or not) the same people who pay them. It’s a positive feedback cycle that leads to all the current and coming municipal and state bankruptcies.

    I’ve often wondered if manufacturing unions might work better if they were more oriented toward quality: “All of our members have proven skills and will make your factory more productive.” Instead, union practice seems to be featherbedding and making it difficult or impossible to fire bad employees.

  3. Finally, an esr post I can weigh in on as a (sort of) topic expert – for a very generous value of “expert”, of course.

    As a current union member employed in the manufacturing sector, and fairly recent union shop steward, it has been my experience that the basic thrust of Eric’s thesis is broadly accurate, within the confines he established. There are a great many different and opposing, on both sides of the labor/ownership matrix, factors that add complexity to the relationship the manufacturing industry’s participants have jointly developed, but none of that fundamentally alters the points made in my opinion.

    I do think that modern union leadership (at all levels) are missing an opportunity to improve the memberships condition by not focusing more on creating mechanism’s that add value to individual employee job-related capabilities. I’m not saying this very well, but training/education and a means for acquiring technology that improves a given workers productivity (or broadens that same workers range of potential expertise) seems a useful effort for unions to pursue, if only to continue the membership’s ability to continue paying union dues at both a higher rate and for a longer period of time.

    By modifying the modern union structure to combine a job placement service with a membership continuing education function, any union would expand its potential membership base along with its contracting relationship with additional businesses. Yes, I have had this precise “discussion” with my local’s “leadership”; I still pay dues so they can’t actually throw me out, but the question has been broached.

    There historically has been, and continues to be, a valid service to be provided to individual workers who have to negotiate serious issues with organized businesses, often under stressful or less-than-fully-informed circumstances. If for this reason alone, I suggest there will continue to be a legitimate function for unions to provide to all participants of the marketplace. It remains to be seen if any of the involved interests will actually seek to do so.

  4. @Will – the real money isn’t so much in the education but in the credentialing. Look at colleges – everybody needs a college degree in order to get a job, yet not the education. If the union becomes the de-facto credentialing standard for whatever type of work it is, you have a much greater growth and longevity potential.

  5. Nothing here is news to me, but I thought Eric missed a couple of angles.

    PapayaSF beat me to the punch on one of them — government employee unions (which I would like to see banned, since government entities have no profits to protect and will collude with them to screw taxpayers — a problem we’re now seeing all over California as pension-underfunding becomes an issue). It’s no coincidence that government agencies are the only employers who did not stop offering defined-benefit pensions when ERISA was enacted.

    The other issue is, in my experience (and I’ve worked for union shops) that unions, once securely in place with the right to collect dues, don’t really do anything for most workers except to “go through the motions” at negotiating time. The real purpose of unions is not to get their members better pay or working conditions. The real purpose is to extort money from the workers (of all parties) to spend on Democratic politics. I doubt that Obama could have been elected without this outrageous legalized extortion — which is #1 on my list of New Deal era Supreme Court rulings that need to be overturned yesterday.

  6. @Garrett – My point wasn’t so much about the union making money as it was about the union creating new ways to help the membership to increase their value to current or potential employers.

    I believe doing this would have the added benefit of attracting new members to the union without the existing members having to fund efforts to do that, so a minor two-fer.

  7. jdgalt: Note that federal government employee unions are only legal because of an executive order by JFK. Another executive order could ban them.

  8. @jdgalt – You live in California still, don’t you?

    Your “other issue” is actually a consequence of “closed shop” legislation more than it is a generic union effect. I live in Texas now (having moved here from Cali 20+ years ago) and the distinct union experience between the two states is quite remarkable.

    I felt your pain and appreciate the bitterness it engenders; it’s not necessarily the default experience, if we don’t let it be.

  9. A union’s only legitimate justification for existence is to represent its membership’s interests within the context of the terms of the labor agreement each member is contractually a party to. Two points about that:

    1. The union has an obligation to operate as a stable, responsible service provider to the membership.

    2. An under-acknowledged aspect of point #1 is that the union member is as obligated to abide by the terms of the fore-mentioned labor agreement as is the company.

    Current union structural models don’t take these mutual obligations into account very well.

    Unions ought to be an independent business the members have stock in, not a political or social experiment.

  10. > One of the dumb, predictable responses to articles like this is “We need a stronger union movement”.
    > …
    > Too much foreign labor and capital is ready to pounce on the first hint of price-taking.

    The followup, dumb, predictable response is “We need to pass laws protecting our domestic manufacturing,” to which my response is “Did they stop teaching Ricardo’s law of comparative advantage in school these days?”

  11. The interesting thing about the unions also doing the training and credential peddling would be that it pushes Unions back toward what used to be called “Guilds.” Of course, they wouldn’t have as much power as the old guilds did because they also relied on keeping that knowledge secret.

  12. I work as a temp for a subcontractor at a big plant. If the temps start to organize, the temp agency lets us go, but say it works. Then the contractor lets the subcontractor go, but say it works. Then the big plant lets the contractor go, but say we organize the whole plant. Then the whole plant does a runaway shop to another state, but say we organize the whole country. International runaway shop.

    It’s not that bad for unions, it’s worse. Because the corporations aren’t set up to cut and run from unions, that’s just a nice bonus. Corporations are running from self-righteous vandals with the force of law. When JFK broke US Steel he wasn’t a union man. When Nader’s Raiders cut Detroit’s Big Three down to size, or broke nuclear power, they weren’t union men. When a couple of trial lawyers paid off some local Democrats and broke our light plane industry (this is personal, I want my flying car and retards broke her momma) they weren’t union men, they were criminal lawyers. When Clinton took a couple hundred million from Microsoft’s competitors to sic the Justice Department on Microsoft and break the Dot.com boom, he wasn’t a union man. Corporations break unions because they know unions respect the old Liberal-Labor alliance, and liberals break industries.

  13. Eric, you might want to take a look at relative wages of semi-skilled workers in industry from 1900 to 1990. It’s my understanding that for most of that time–through about 1980–factory wages ranged from the top end of “lower class” to the bottom end of middle class. It was the electricians, the pipe fitters, the welders–skilled labor–that did well.

    But in during the high inflation 1970s union contracts got written to take inflation into account, and when Reagan broke the back of inflation in the early 80s the contracts didn’t change fast enough, giving workers 12 and 13 percent raises for a couple years until the contracts ended and the companies realized what happened.

    When I was a kid in the 1970s, factory work was what you did when you failed at school, that or collect garbage. By 1990s it was “good middle class work”, which historically was bullshit.

  14. Mr. Brown:

    My uncle was a Union Electrician from the late 40s or early 50s until he was forced to retire in the 80s. I have a in-law who’s an Iron Worker. Both of those unions provide apprenticeships, sort of certifications and help their members find work. That is a fair way of doing things. Well, as long as they’re willing to compete with non-union members.

  15. How does Germany thrive on manufacturing still, then?

    Might be related to them having the best engineers in the world……

  16. >How does Germany thrive on manufacturing still, then?

    They specialize in classes of manufacturing where human engineering has a particularly high value add and train the best engineers in the world to provide it. This is a different specialization than the U.S.’s (capital mass – though it helps that our engineers are nearly as good, and in some fields like software rather better) or China’s (cheap labor and high-volume low-margin manufacturing)

  17. > They specialize in classes of manufacturing where human engineering has a particularly high value

    Interesting. I’ve never heard this characterization, but the first examples that come to mind, optics, automobiles, firearms (although, I’d say the US nearly matches Germany here) all support this.

    How would you characterize Japanese engineering?

  18. >How would you characterize Japanese engineering?

    Clever but imitative. The main strength of the Japanese has always been that they paid very serious attention to process improvement and consistency of product quality. They learned this from an American named W. Edwards Deming who could barely get a hearing in the U.S.

  19. >>How does Germany thrive on manufacturing still, then?

    >They specialize in classes of manufacturing where human engineering has a particularly high value add and train the best engineers in the world to provide it. This is a different specialization than the U.S.’s (capital mass – though it helps that our engineers are nearly as good, and in some fields like software rather better) or China’s (cheap labor and high-volume low-margin manufacturing)

    the cars they produced don’t seem that much different from american or japanese cars

  20. >the cars they produced don’t seem that much different from american or japanese cars

    The differences used to be much larger, trust me on this. :-) American and Japanese cars have gotten a whole hell of a lot better under competitive pressure from the Germans.

  21. I beg to differ, Federico…if you look at cars at more than just the driver’s level, you see the differences.

    American engineers take engineering as a discipline that balances cost and quality and results seriously. They do well, and make good products, for the most part, but occasionally quality has slipped when they concentrated on cost too diligently. This is improving, though.

    Japanese engineers, as Eric said, are a bit imitative..but their special is quality. It’s no accident that Toyota and Honda consistently lead surveys of new car quality. The Japanese pay attention to details that Americans sometimes tend to brush off as insignificant.

    German engineers, to an American’s way of thinking, overengineer badly. They pay more attention to results and less to cost. They never use one part where 19 will do, if the 19 will do the job more completely or with fewer edge cases. The results can be thoroughly impressive, or head-shakingly finicky. Working on German cars, the average mechanic will find himself looking at something and saying “Germans. Go fig.” every so often. One way to spot this trend: look at service manuals. Germans put torque specifications on everything.

    Which do I prefer? Well, I just bought another Mercedes…

  22. They specialize in classes of manufacturing where human engineering has a particularly high value add and train the best engineers in the world to provide it.

    Actually Germany has a lot in common with the US. They have a very diversified production with a lot of unskilled jobs in manufacturing too, and like the US they have an extremely low minimum wage to support those jobs staying in Germany. Only very recently was the minumum wage raised to 8,5 Euro (up from about 7), of course to a whole cacophony of warnings from the industry about how that would spell the end of German manufacturing. The term “working poor” has been commonly used in Germany, as in the US, to describe those on the minimum wage.
    In Denmark, where I live, and where the collectively bargained minimum wage is about twice the German one, interestingly manufacturing jobs are now being moved back at quite a large scale. 28% of companies that had moved their production abroad have now moved it back, citing dissatisfaction with the level of errors and delays in the foreign production as well as better quality in the domestic production.

  23. We’ve actually started getting manufacturing moving back to the US as well, for similar reasons, but the primary reason is that we have so much cheap energy right now that energy intensive processes are cheaper here than elsewhere. Also, the new manufacturing here tends to be capital intensive with much more automation and fewer people actually working on the lines. An example of this comes from Australia, http://www.eevblog.com/2014/11/19/eevblog-684-ness-smt-maufacturing-assembly-factory-tour/ << This is a capital intensive PCB manufacturing line with very few workers operating it.

  24. “We’ve actually started getting manufacturing moving back to the US…[but] the new manufacturing here tends to be capital intensive with much more automation and fewer people actually working on the lines.”

    Put another way: we are moving towards a manufacturing renaissance in the US, and it will create some high-paid, high-skilled jobs, but nothing like the number of middle-class-wage jobs that existed in factories in the 1960’s and 1970’s. Many writers on the subject of US manufacturing have assumed that more manufacturing automatically means a lot more high-paying jobs for medium-skill work, but that’s just not so.

    I do not see any signs of high wages for modest-to-low skilled work anywhere in the world today, nor do I expect to see them any time soon (if ever). Post-WWII was an anomaly. Unfortunately, that period lasted long enough to set expectations on what US middle-class living standards and labor/employer relationships “should” be, even though that model is no longer sustainable.

    There was a good short article in the Economist a week or two ago that castigated political leaders all over the West for failing to stand up to voters and tell them that the old order is not coming back.

    http://www.economist.com/news/united-states/21632599-politicians-need-stop-pretending-angry-voters-globalisation-can-be-wished

    “[The American Dream] looms large in American politics. So much voter disquiet is linked to nostalgia for hazily-remembered golden decades when factories offered jobs for life, baby booms filled maternity wards and millions of families enjoyed the fruits of post-war prosperity (though women and non-whites may recall those years a bit differently). But coal mines, steel mills and factories have closed throughout the rich world, in countries with very different governments, labour laws and environmental rules. What all faced was an explosion in global competition, followed by a second wave of automation… In rich country after rich country, under governments both of the left and of the right, the biggest worry for voters is that middle-class incomes are stagnating and the job-for-life is dead.”

  25. “Foreman says these jobs are going boys,
    And they ain’t coming back
    To your hometown”…

  26. On automation—there’s a reason why current introductory accounting textbooks mention that in many types of manufacturing in the US, labor costs are simply abstracted into overhead for being too small to bother breaking out.

  27. The only place unions still have anything like that kind of headroom is in service industries where the jobs can’t easily be moved. This is why service-employee unions are the new powerhouses of the labor movement.

    Are you thinking of the SEIU? Because a lot of its members are government employees. Government-employee unions are the largest unions, and the only ones with growing memberships. The first (NEA), third (AFCSME, and sixth (AFT) largest unions are government employees, also 18 to 23, 29, and 30. Several other big unions include government employees.

  28. @Cathy:

    This is why we really need to work on fixing up the education system. The time when barely-high-school-graduates could find a job is quickly coming to an end. Even some service sector jobs are being automated away. What will be left is skilled labor and high tech jobs. For the skilled labor, they need to have some sort of vocational training. The high tech jobs will need some level of engineering training. The governments current solution for the decrease in jobs is to pull people over to the red tape and compliance economy where not much value is created, but jobs are added. If instead we trained ridiculous numbers of engineers and skilled labor we could multiply that out and increase production significantly. Every technician could do a job of 50-100 unskilled factory workers. This means more products available than we had before. Of course, it’ll take time to both create those skilled workers and technicians, and to bootstrap the plant assets up to fully employ them.

  29. “If instead we trained ridiculous numbers of engineers and skilled labor we could multiply that out and increase production significantly…of course, it’ll take time to both create those skilled workers and technicians, and to bootstrap the plant assets up to fully employ them.”

    Nice idea, but I do not believe that any realistic amount of American industrial expansion could absorb triple the number of engineers we have now. You would simply drive down the wages of engineers and have a lot of unemployed engineers.

    This assumes that there are enough students who have sufficient intelligence to make good, solid engineers. I’m sure we could produce more than we do today, but not that many more.

    Also, if you want more people to study engineering, increasing engineering wages would be a good market signal and likely cause more people to enter these fields. One reason many people, including me, left engineering is that we could make more money elsewhere working less hard, under better working conditions.

  30. >Are you thinking of the SEIU?

    As a major example, yes. I’m aware that a lot of its members are government employees.

  31. All of this seems to basically simplify down to “decency is a weakness”. Which is true, as far as it goes. But that could be fixed by having a consumer base that cares about it and is informed enough to vote with their dollars… if not for the odd allergy that conservatives have to consumer boycotts.

  32. >An Alternative Theory of Unions

    True. And 100% compatible with my take, as Paul would doubtless recognize.

    Does it surprise anyone to hear that Paul Graham is both a libertarian and a friend of mine? Libertarians are good at this kind of analysis; it goes with the intellectual territory.

  33. > that could be fixed by having a consumer base that cares about it and is informed enough to vote with their dollars… if not for the odd allergy that conservatives have to consumer boycotts.

    In the short term, you have a coordination problem. If not enough people boycott, the attempted boycott has virtually no effect and everyone who attempted to boycott loses (presumably they have to pay higher prices or accept lower quality products or something – it’s hard to imagine a company producing inferior, more expensive products staying competitive for very long)

    If you force the issue, (presumably through a combination of minimum wage laws and protective tariffs, but there might be other ways to do it), you’re starting to throw the advantages of free trade away. And if you artificially keep the cost of human labor too high, eventually companies are going to start replacing the more expensive humans with automation.

    You could probably tax automation too, to try to keep its cost higher than the cost of human labor, but at that point, if your economy is still so well-off that you can afford all of this, you might as well just give everyone a stipend at the unskilled laborer rate and let them go home and do something else.

    I’m pretty sure this is the premise behind the basic income guarantee, which looks like a bad idea today, but might end up being a good idea in the hypothetical insanely-wealthy (by today’s standards) future. It’s pretty hard to come up with a moral framework that supports redistributing money in the US, while so much of the 3rd world is worse off, though.

  34. Cathy says:
    “There was a good short article in the Economist a week or two ago that castigated political leaders all over the West for failing to stand up to voters and tell them that the old order is not coming back.”

    There’s lots of things that Politicians aren’t willing to stand up and tell voters. They all boil down to “You have to do homework before you can go out and play”.

    * Most Semi-skilled manufacturing jobs are gone forever. The best you can hope for is to develop some specific medium to high level skill, whether it’s programming or cordwaining, weaving or engraving. As automation drives down the relative costs of necessities (or it would in a free market), it leaves more room for the artisan. This isn’t going to happen all at once, but semi-skilled labor is the bridge between the poor and the lower middle class and as there’s less and less need for the assemblers and wrench turners, factories will move to cheaper and cheaper places. Eventually this might be Africa’s savior.

    * You can’t take enough from the rich to make poor people middle class. For two reasons–one is that there just aren’t enough rich, and the other is that middle class is a way of life, not a balance in a checkbook. Just like (allegedly) the majority of Lottery winners who blow it all and wind up right back where you are.

    * Social Security is a ponzi scheme, and will fail, and no amount of transfer (see first bullet point) will fix it.

  35. When a union has a specialty which can be taught via apprenticeship programs it has a reason to exist. Good examples are the construction unions such as Pipefitters, Electricians, Ironworkers, and Millwrights (there are others of course). The Germans do apprenticeship programs in Manufacturing. A union without value added programs simply make no sense.

    I worked on capital projects in electrical control and power for 25 years with mostly union labor. When we had the occasional nonunion contractor win a job we had to take extra care checking work quality. They usually had one good trained man for an entire crew. It made for some slow inefficient jobs. You get what you pay for.

    As mentioned above public unions are really on soft ground. Another Reagan coupled with a strike could easily doom them……

  36. * Social Security is a ponzi scheme, and will fail, and no amount of transfer (see first bullet point) will fix it.

    It isn’t, really. It differs from a Ponzi scheme in several significant ways:

    1. There’s no pretense that the payout money is coming from some super investing strategy, or from anywhere but the payments of new members. This is the fraud at the heart of a Ponzi scheme. Madoff actually produced statements for his clients, listing purported stock transactions that had been made with their money, so they could see where their profits were coming from; the only problem was that these transactions were fictitious. One investment adviser cottoned on to Madoff years before he was exposed, simply by looking for a stockbroker who had done business with him, and not finding any. So long as everyone understands that there are no investments, that the money they’re paying is going to pay out the old members and that the money for their eventual payout (if they get one) will come from new members, there’s no fraud. Social Security is open about this.

    2. There’s also no outrageous return rate, far higher than anyone could get by their own investment prowess, which is what induces them to entrust their money to the schemer, but which should tip them off that there’s something wrong. On the contrary, the expected rate of return from Social Security is usually less than what one could expect to make oneself.

    3. The key difference, which is what explains how Social Security can be honest about #1 and #2, while Ponzi schemers can’t afford to be, is very simple: unlike Messrs Ponzi and Madoff, Social Security doesn’t have to induce people to join, it has the power to compel them. If Ponzi & Madoff had such a power they could have made their schemes work too.

    In truth, far more closely than a Ponzi scheme, Social Security resembles an enormous modified tontine. Remember that when it was introduced the retirement age was deliberately set higher than the average life expectancy. Most contributors were expected to die before receiving anything, and many more were expected to receive payments for only a short time. The classic tontine reserves all the money for the final survivor; this modified version divides it among all those members who make it to some advanced age.

  37. As mentioned above public unions are really on soft ground. Another Reagan coupled with a strike could easily doom them……

    Can you say “President Scott Walker”?

  38. Can you say “President Scott Walker”?

    I can and would love to. We could do far, far worse, and would be hard pressed to do better.

  39. > In the short term, you have a coordination problem. If not enough people boycott, the attempted boycott has virtually no effect and everyone who attempted to boycott loses (presumably they have to pay higher prices or accept lower quality products or something – it’s hard to imagine a company producing inferior, more expensive products staying competitive for very long)

    Er, the point of the scenario I am proposing is that the consumer base, or some portion of it, values intangibles like “being produced in America” or “not using sweatshops” above a strict race to the bottom on price/quality ratio, and thus to accept inferior or more expensive products forever. But the dogmatic “boycotts are evil” idea from the right prevents this from becoming an acceptable way for customers to make decisions, prevents companies from advertising this – in Australia, for example, there has been a recent attempt to make such campaigns actually illegal.

  40. >@William O. B’Livion “Most Semi-skilled manufacturing jobs are gone forever.”

    I think most people on both sides of the aisle accept this as a fact. The problem comes in when you start asking the question “why aren’t the people who would have had those jobs better off without them?”

  41. @Milhouse
    “* Social Security is a ponzi scheme, and will fail, and no amount of transfer (see first bullet point) will fix it.

    It isn’t, really. It differs from a Ponzi scheme in several significant ways:”

    No, it is a kind of insurance. Which is exactly the name it has in some countries (e.g., unemployment insurance). The intention is to share/divide the risks.

    Pension schemes are mixed. There are “Pay as you go” schemes that are dangerous as they can give out more entitlements than there will be future income. Then there are (compulsory) life insurance schemes that have all the pros and cons of life insurance, e.g., how to manage people who did not earn enough to survive on the pay-out.

    My country, the Netherlands, has a minimum wage like state pension (pay as you go) combined with a (partially) compulsory life insurance component for above minimum pensions. The whole system has been adapted to demographic changes by increasing the retirement age and to the stock market crises by adapting pays-outs to capital returns. Currently, it is still solvent against the expected courses of the future economy and population developments.

  42. @esr
    “[The Germans] specialize in classes of manufacturing where human engineering has a particularly high value add and train the best engineers in the world to provide it.”

    You miss the most important aspect: Their world class vocational training.

    Not only do the Germans train good engineers, they train all technical people down to the lowest menial level very well. That will only work if you pay even the lower tech people well. Else they will not earn enough to repay their education in taxes. That is where the unions come in.
    http://www.theatlantic.com/business/archive/2013/02/president-obama-wants-america-to-be-like-germany-what-does-that-really-mean/273318/

    @esr
    “>An Alternative Theory of Unions

    True. And 100% compatible with my take, as Paul would doubtless recognize.”

    There is absolutely no connection between this theory and how unions work in, e.g., Germany. But the German unions are neither closed shop nor as belligerent.

  43. IMO, what we see is the approach of the “Star Trek Society”. Since more and more jobs are better done by machines, less and less people will be able to do something of monetary value for society, so they will rely on guaranteed basic income. Only a minority will be required to work to keep the whole system going. Needless to say that these few will end up very rich.

    The challenge will be to make the transit as little painful as is possible (and give the majority “the goods of fortune in moderation”), and somehow keeping the uneducated masses occupied with something not dangerous (at least to others). Those with brains will always find something positive to do (arts, adventure, studying).
    Maybe someone proves the concept of a reactionless drive and opens up space for mass colonization. A new frontier will provide work for the idle hands that otherwise would become the devil’s tools.

  44. >IMO, what we see is the approach of the “Star Trek Society”.

    This is wrong in very basic ways.

    It is actually original canon that there is no money in the Federation, because Gene Roddenberry didn’t know shit about economics and didn’t understand the need for a unit of account or price signals. This was a mistake so stupid that many versions of OST canon ignore it, and later versions of Trek imply there is money in circulation. But: no unit of account, no UBI.

    Second…I think I’ll blog about the “Thatcher limit” instead of explaining it here.

  45. @Winter

    No, it is a kind of insurance.

    Insurance against what? Growing old? Everyone does that, unless they die first.

    Which is exactly the name it has in some countries (e.g., unemployment insurance). The intention is to share/divide the risks.

    What has unemployment got to do with Social Security?

    There are “Pay as you go” schemes that are dangerous as they can give out more entitlements than there will be future income.

    And that is exactly what Social Security is, except that there are no future “entitlements”. Congress can change the payouts, or eliminate them entirely, whenever it likes, and nobody would have any legal recourse.

    Then there are (compulsory) life insurance schemes that have all the pros and cons of life insurance, e.g., how to manage people who did not earn enough to survive on the pay-out.

    Um, life insurance pays out only to the dependants of those who don’t survive! And one doesn’t “earn” the size of the payout, one buys it.

    The whole system has been adapted to demographic changes by increasing the retirement age

    In other words, restore it to the tontine it was founded as. The problem with a modified tontine as I described it, one that doesn’t wait for all but one of its members to be dead, but instead pays out to all members who survive to a specified advanced age, is what do you do if they all prove unusually long-lived, and all or most of them reach that age. This is what has happened to Social Security; nowadays nearly everyone can expect to collect on it. Raising the age to a few years higher than the average life expectancy would put it back to the basis on which it was founded, and how it was expected to work.

  46. @Random832

    Er, the point of the scenario I am proposing is that the consumer base, or some portion of it, values intangibles like “being produced in America” or “not using sweatshops” above a strict race to the bottom on price/quality ratio, and thus to accept inferior or more expensive products forever.

    And that is a ridiculous premise. Most consumers don’t care about those things, and very much care about their own bottom line. Most consumers can’t afford to just buy whatever they like regardless of the price, so the only way they can join such boycotts is by sacrificing their own quality of life. The only way such boycotts can work is if they are enforced on people against their will.

    But the dogmatic “boycotts are evil” idea from the right prevents this from becoming an acceptable way for customers to make decisions, prevents companies from advertising this – in Australia, for example, there has been a recent attempt to make such campaigns actually illegal.

    Rubbish. Absolutely rubbish. There has never been any such attempt, and nobody is even proposing such a ban. What’s illegal in Australia is secondary boycotts, and quite rightly too. Secondary boycotts are evil, because they impose the primary boycott on people who are not interested in supporting it. If you want to boycott someone or something, persuade people who agree with you to join you; don’t blackmail people who don’t share your ideology into joining you by threatening to boycott them as well if they won’t.

  47. By the way, secondary boycotts are already illegal in Australia, so there’s no need to ban them, but the ALP wrote an exception into the law for leftists’ favoured causes, so it’s legal to run a secondary boycott if it’s “substantially related to environmental or consumer protection”. In other words, one law for the left and another for everyone else. That is disgusting, and the Abbot government ought to repeal it as soon as possible.

  48. @Milhouse
    “Insurance against what? Growing old? Everyone does that, unless they die first.”

    Maybe you could read up on life insurance and pension plans. Things are not as simple as you seem to think.

    > “What has unemployment got to do with Social Security?”

    It is part of it in some/many countries. Your view of social security seems to be overly limited.

    > “And one doesn’t “earn” the size of the payout, one buys it.”

    Yes, and what?

    You might learn a lot if you read up on social security and pension plans in other industrial nations. It seems many of your convictions are dictated by the shortcomings of the US system.

  49. >What’s illegal in Australia is secondary boycotts, and quite rightly too. Secondary boycotts are evil, because they impose the primary boycott on people who are not interested in supporting it

    The distinction between primary and secondary boycotts is artificial – a product doesn’t stop being made out of wood just because it’s been sold through a middleman. The fact that consumers don’t buy directly from loggers shouldn’t mean they don’t have a right to an opinion.

    And why is it that you libertarians are all about freedom of contract until people use it in ways you consider “evil”? Not buying from someone is not coercive.

  50. Also it’s ironic that you say in the same breath that consumers don’t care about these things and that we need special laws to prevent them from being informed about them.

  51. @Winter, “Social Security” is the name of a specific program in the US, which it should have been clear from context that people were talking about.

  52. The distinction between primary and secondary boycotts is artificial – a product doesn’t stop being made out of wood just because it’s been sold through a middleman.

    I don’t think that’s what “secondary boycott” means. It means boycotting B because B is not boycotting A, your intended target. If your target A is (say) users of endangered rainforest wood, then boycotting anything made of it, even sold through a middleman, is still a primary boycott. So boycotting a store that sold some furniture made of that wood would still be OK, but not a boycott of another company that bought anything from that store.

  53. > I don’t think that’s what “secondary boycott” means. It means boycotting B because B is not boycotting A, your intended target.

    I understood it to mean “A boycott of Nike is a secondary boycott of all shoe stores that sell Nike, even if you’re happy to buy Adidas from them”.

    > So boycotting a store that sold some furniture made of that wood would still be OK, but not a boycott of another company that bought anything from that store.

    I still don’t see why that’s a problem (freedom of contract and all that), but… even if I’m refusing to buy the very same thing from the other company, it’s not OK? How the hell can anyone ever boycott anything, then – they’d just sell it to someone else and you’d have to buy it from them.

  54. There is no number of degrees of separation that should make a refusal to buy a product made of rainforest wood a “secondary boycott”.

  55. > So boycotting a store that sold some furniture made of that wood would still be OK, but not a boycott of another company that bought anything from that store.

    Also, how do you draw the distinction between boycotting them for selling the furniture (OK, according to you) vs boycotting them for buying the furniture to put on sale (not OK, according to you)?

  56. Secondary Boycott

    A group’s refusal to work for, purchase from, or handle the products of a business with which the group has no dispute.

    A secondary boycott is an attempt to influence the actions of one business by exerting pressure on another business. For example, assume that a group has a complaint against the Acme Company. Assume further that the Widget Company is the major supplier to the Acme Company. If the complaining group informs the Widget Company that it will persuade the public to stop doing business with the company unless it stops doing business with Acme Company, such a boycott of the Widget Company would be a secondary boycott. The intended effect of such a boycott would be to influence the actions of Acme Company by organizing against its major supplier.

  57. @PapayaSF In addition to the problem with requiring someone (presumably the state) to decide who you “have no dispute” with, how does that definition not fit these scenarios?

  58. And remember, we’re fundamentally talking about prohibiting speech acts. There’s no coercion involved in a consumer boycott – no-one’s going to even know if I buy lunch at Chik-fil-A (which is, by these definitions, at best, a tertiary boycott – the “actual” dispute is with the Family Research Council, which receives money from WinShape, which receives money from Chik-fil-A’s shareholders)

  59. Sorry to drop out of this for now, but I think we’re drifting off-topic, I said what I wanted to say about secondary boycotts, and I’ve got to get to work….

  60. >And remember, we’re fundamentally talking about prohibiting speech acts.

    Nobody is proposing that secondary boycotts should be banned by force – only that they’re wrong. I think part of the reason for your confusion is that you don’t understand that, to libertarians, “should be banned by force” is a different category from “wrong” – and much smaller.

  61. >@esr, Milhouse was, but maybe he’s not a libertarian.

    Correct, he’s a religious conservative. I know him in meatspace.

  62. I don’t really understand your argument. It seems you are saying the the cost of capital was high enough that wages were elastic enough to consume the pressure of unions to stretch them up.

    But if that were the case, why did a competitor not come along and vacuum up the extra profits by producing the same thing at a lower cost (that is to say the wage cost component is lower), and either a lower price, allowing higher sales, or a large profit margin.

    Capital isn’t much different than anything else. If you have a large capital barrier to entry but you can demonstrate the profitability of a business (and showing a parallel business with cost inefficiencies is a way to do so) then capital can be raised at a cost. Depending on a whole variety of variables, the cost of that capital can be more or less than the opportunity cost of the capital sunk in the existing company.

    I think the reality is something slightly different: namely transaction costs. Unions live on these, since, for example, the transaction cost of letting everyone go for their wage increase demands are larger than the cost of those same wage increases. Workers can get together to force the cost to be multiplied by the membership, rather than allowing a divide and conquer approach.

    Some of the commenters above seem to think this is a bad thing. I don’t at all. I think it is smart. Lots of organizations are built in these transaction cost spaces, and I think everyone who sells, whether products or labor, has a perfect right to use any legal means to maximize the value they get for that product or labor.

    Where it becomes a problem is when they start using force. When they start intimidating people, blocking entrance ways, or using vandalism to increase the cost of not giving them when they want. Or alternatively when they start rent seeking with governments.
    I think that on the whole the theory of unions, collective bargaining, apprenticeship programs, imprimaturs of quality, are all good things. The problem with unions is not the concept of unions, it is that they tend to be run by communists.

    As to why unions are on the decline? I think a lot of it is to do with increased communication flow and the broadened opportunities that new technology offers. These things are all very good at reducing transaction costs, which makes that an uncomfortable place to live.

    However, one thing I agree with: I don’t think government employees should be able to unionize. The bargain there is completely different and it just demands corruption. For example, I think that teachers’ unions have done immense damage.

  63. >I don’t really understand your argument. It seems you are saying the the cost of capital was high enough that wages were elastic enough to consume the pressure of unions to stretch them up.

    I seem to have been unclear. The cost of capital enters the model mainly as a reason that U.S. firms could expand overseas and become suppliers to the world facing only weak competition. That meant they could profit-take heavily, so their margins were high, so there was plenty of headroom for wages.

  64. esr
    > I seem to have been unclear. The cost of capital enters the model mainly as a reason that

    And the USA is special in that regards for what reason? Because of its vibrant capital market? So perhaps the internationalization of capital markets is part of it — which again really comes down to transaction costs — how much does it cost for a Mexican to borrow money verses an American?

  65. >And the USA is special in that regards for what reason? Because of its vibrant capital market?

    Yes, but the sheer size and wealth of the U.S. domestic market was as important, possibly more so. It is well known to economists who study international trade that a large, steady home market makes the best launch platform for an exporter. As I’ve pointed on G+, this is the same advantage the Chinese are now exploiting, though they’re held back by a dodgy financial system seriously poisoned by bad loans.

  66. A comment Random832 made earlier got me thinking:

    the odd allergy that conservatives have to consumer boycotts

    My immediate thought in response to this is that conservatives boycott stuff all the time; the difference is that they don’t make as big a deal of it as liberals who boycott stuff. For conservatives, it’s more of an individual action.

    Note: I don’t really believe this; it was just my opening thought. Selection bias is at work here. Any liberals who boycott individually aren’t going to show up on the usual radar; there could be a lot of them, so it’s unwise to characterize liberal consumer boycotts as being typically public, vocal affairs. The characterization matters, because a lot of people are annoyed by such boycotts, for the same reason people get annoyed at religious proselytization. (Indeed, there are instances of conservative boycotts, and they get a lot of sneers for being cases of “the church banned this”.)

    There’s a problem lurking here that I think merits more effort, and I don’t know how much has already gone into it. It has to do with the lack of feedback in the case of individual boycotts. A classic free market has lots of these, but in contrast, suppliers have very little information about them, because they “look like nothing” – like a scientist adding one chemical to a complex mixture and noticing the one type of reaction that does occur, and ignoring all the other reactions that could have happened, but didn’t. Such is the case with the consumer not buying the product you offered. There could be many reasons: he had zero demand for it; he had zero knowledge of it; the price was too high; someone else offered a cheaper one; a better one; a faster one; the problem your product solves could be solved another way (see cheaper / better / faster alternative); the consumer doesn’t like some part of your business or personal practices; etc. A supplier has no convenient or precise way of measuring which dogs won’t eat the dog food for which reasons.

    The most obvious methods I can think of getting this feedback are expensive: market studies, customer surveys, stuff like that. Only large businesses can afford them. The rest probably make do with spotty data. (Likely one of the big benefits of single large orders, versus lots of smaller ones. If a big fish tells you he won’t buy, he’ll tell you why – a large chunk of valuable certainty.)

    This mechanism is expensive because individual, small-scale consumers must spend effort providing feedback which is disproportionate to the size of their orders. If you’re ordering $20000 in widgets, it’s worth your while to tell a potential supplier why you’re buying elsewhere, because that supplier can justify paying enough for that information (say, by talking to you over a nice lunch on their nickel) to make it worth your time. If you’re a small-scale consumer, they can’t do make it work. The CIO of Del Monte can’t buy you lunch and discuss why your misgivings about agriculural labor conditions justifies your avoiding his green beans. He could spend a couple of cents at best, and your time is worth more to you than that.

    So this is the problem facing individual consumers and their suppliers: there’s no solution that

    * gives suppliers feedback from individual consumers
    * gives suppliers more accurate feedback for smaller-scale transactions that beats the current status quo
    * values individual consumer time enough to justify their feedback
    * doesn’t resort to soft coercion (shaming) of consumers

    I can’t help but feel this problem will crumple under technological effort someday. And I keep thinking about what the solution might look like.

    My current vision is of a tool that lets consumers define their purchasing conditions in a way that extends across all their purchases, rather than being case by case as it is now. So for example, if you decide you don’t like any company that stipulates non-compete rules for its employees, you put that in the tool, and it understands the concepts of labor-employer contracts, clauses, and non-compete restrictions in a standard way that doesn’t depend on how artfully the lawyer phrased it. Other conditions can be as sophisticated as you want, provided they’re definable programmatically – laborers’ hours or wages,whether they get paternity leave, whether the CEO is Lutheran or hides his political donations, you name it. You can even organize them in convenient ways, such as assigning a point value to each to signify its importance, or making some conditions contingent on others – if a supplier does A, that matters a lot, unless they also do B, in which case it doesn’t matter to you at all, etc. The point is: all the rhetoric is boiled away, and these are what you say are your purchasing criteria.

    This tool would be usable to consumers to advise them in purchasing decisions for even relatively cheap products, because it would apply across all of them – the tool would gather the information automatically whether you’re buying a house, a diamond necklace, a cubic yard of concrete, a pearl necklace, or chicken soup. It would be useful to suppliers because those conditions would be made available to them (presumably anonymized and reasonably uncounterfeitable), enabling them to know exactly how many sales they would gain or lose for a given price or business practice. The tool would likewise have ways for suppliers to publish their own non-repudiable information, in a way that is amenable to searching, and also verifying.

    This tool would be about as valuable as each user cares to make it. The better you articulate your purchasing preferences as a consumer, the better the advice you get. The better you outline your practices as a supplier, the better sense you get for how many units you’ll move. And the more open you are about either, the more consumers you may attract, or supplier choices you may find.

  67. The U.S. domestic market was large, but also protected by physical trade barriers. A manufacturer in England or Germany or Japan had to be significantly lower-cost than an American manufacturer to be able to sell in the U.S. because shipping costs were high. But as shipping was a relatively free market, once all those WW2 shipyards had nothing else to build, shipping costs came down; then fell even faster with containerization, and the margin by which a non-Canadian manufacturer had to beat their American competitors narrowed.

  68. > My immediate thought in response to this is that conservatives boycott stuff all the time; the difference is that they don’t make as big a deal of it as liberals who boycott stuff. For conservatives, it’s more of an individual action.

    My basis for saying this was my own perception that:

    When conservatives boycott something, the liberal media reaction is disgust at the values that are the basis for the boycott (they boycott oreos for the rainbow ad, media coverage is all about how terrible they are for being homophobic)

    When liberals boycott something, the conservative media reaction is disgust at the concept of a boycott (oh no what about all the poor minimum wage workers at the chik-fil-a franchises that will lose their jobs how dare you ever change your buying habits for any reason other than pure cost vs value and cause your values to be realized as economic pressures in the free market)

  69. Roger that.

    Again, though: a lot of people are annoyed by such boycotts, for the same reason people get annoyed at religious proselytization. IOW, it’s not conservative disgust at the concept of a boycott per se, but rather more specifically at the concept of an organized boycott. I know of no conservative who resents a liberal (or anyone for that matter) who elects not to buy a certain product, if the conservative had to ask why in order to find out. If the boycotter goes out of their way to make sure the conservative knows, however…

  70. >the conservative media reaction is disgust at the concept of a boycott

    Strange! I don’t think I’ve ever observed this.

  71. > Strange! I don’t think I’ve ever observed this.

    I did say it was my perception, and I don’t have anything at hand to cite. Honestly, my perception may have been shaped as much by other commenters on other websites who identified as conservative as by actual articles, but it just stuck out as bizarre [since they were opposed to, basically, people having the right to decide where to spend their money] so stuck in my mind more than it deserved to. It does fit, though, with what Milhouse has said here, and with the political position underlying the Australian law that we were discussing (I don’t know how Milhouse personally defines “secondary” boycotts, but the law itself apparently defines them so broadly as to include any consumer boycott of a manufactured product. Catch-22: You can’t boycott the manufacturer because you don’t buy from the manufacturer, and you can’t boycott it in stores because that’s secondary.)

  72. the law itself apparently defines them so broadly as to include any consumer boycott of a manufactured product. Catch-22: You can’t boycott the manufacturer because you don’t buy from the manufacturer, and you can’t boycott it in stores because that’s secondary

    *SIGH*…. IANAL, but that’s not what “secondary boycott” means. If you want to boycott (say) Chilean sea bass because it’s endangered, you can boycott the Chilean Sea Bass-o-rama stall in the fishmarket (which bought it from the fishermen), or boycott the restaurant (which bought it from the Chilean Sea Bass-o-rama stall), or boycott the cannery that cans it, or the supermarket that sells the cans. It is a secondary boycott when you boycott a company that had steak dinners at that restaurant, or if you boycott a company that only buys trout at a different stall in the fish market, or if you boycott the power company that supplies electricity to the fishmarket/restaurant/cannery/supermarket.

    In other words, if you have a dispute about Chilean sea bass, it’s OK to boycott anyone who buys or sells it, up and down the entire chain. The “secondary” aspect means that you are not allowed to drag other parties into it, who aren’t directly involved. Make sense?

    Also, I believe the bans on secondary boycotts only apply to organized boycotts. If you want to boycott A, and A does business with B which does business with C and on down the alphabet, no legal authority is going harass you if you boycott Z because of their tenuous connection with A. Nobody cares. But a labor union would be prohibited from an organized boycott of Z due to their extended connection with A.

  73. I personally don’t support organized boycotts because I consider them a bit too negative. I personally avoid buying certain things because I don’t want to give them my money, but it’s not something I’m trying to force on others. What I do like is “procotts” or “buycotts”, where you organize a campaign to support something by buying the products.

  74. >I did say it was my perception, and I don’t have anything at hand to cite.

    But you could be right. Every so often, after I’ve been lulled into believing conservatives actually get it about free markets, I trip over something that reminds me that most actually … don’t. More of them are pro-free market because it’s a way to tribally demonstrate against left collectivism than because they really understand market economics.

    Mind you, I think tribally demonstrating against left collectivism is a good thing and I wish there were a lot more of it. But I could do with conservative support being a bit more mindful. Ah well, I suppose there’s an adverse selection here; the ones that clue in become libertarians.

  75. > In other words, if you have a dispute about Chilean sea bass, it’s OK to boycott anyone who buys or sells it, up and down the entire chain.

    But your dispute is on the subject of fishing it, not selling/possessing/eating it.

    And I don’t trust any government hostile enough to free speech to ban any kind of boycott to use your definition, anyway.

  76. Jessica: “And the USA is special in that regards for what reason?”

    Chiefly because at the time this happened, the U.S. had 50% of the entire world industrial capital (factories, etc.), because WWII had destroyed most of what existed outside the U.S. Before WWII, that figure was about 25%, and after the reconstruction of Europe and Japan, it dropped back to about 25% again. With the rise of nations that have industrialized for the first time post-WWI (Korea, China, etc.), that figure is undoubtedly even lower today.

    The dominance-by-50% was not sustainable, but it lasted long enough for Americans to believe that that type of economy and labor market was normal, and that they were entitled to it. (*Ugh* — if there’s one word that needs to drop out of usage, it’s “entitled/entitlement” in all its forms.)

  77. Most of the union members that I have known in my life were “true believers.” They had adopted a mental state (and fealty to their union) that served as an override on their rational mind. This did not make them bad people in my view, but it prevented us from having a rational conversation about anything that they viewed as a threat to their herd. For many of them, the survival of their herd was more important than any other consideration, except perhaps for well-being of direct family. This penchant for mental programming also tended to make them more adaptable as assembly line workers.

  78. > The dominance-by-50% was not sustainable, but it lasted long enough for Americans to believe that that type of economy and labor market was normal, and that they were entitled to it.

    But at the end of the day, the real per capita GDP has gone up 270% since 1947. Why doesn’t a rising tide lift all boats?

  79. All boats did get lifted. Did the average poor person in 1947 have a car, a TV, air conditioning, lots of clothes, a phone (much less a cellphone or a smartphone), a longer life expectancy, and too much to eat? They do now.

  80. esr, you are clearly right about the theoretical shortcomings of the human society in the Star Trek universe.
    But what remains is: what do we do with all the people that have nothing useful to do or contribute to society? What happens when anything that 80% of the population can possibly do to earn them money can be done better and cheaper by robots/machines?
    Mind, I am a Libertarian at heart, as much as a Central European can possibly be, but how will a (mostly) liberterian society deal with this problem?

  81. @Kurt B
    ” What happens when anything that 80% of the population can possibly do to earn them money can be done better and cheaper by robots/machines?”

    This means that products are not scarce anymore, so should have vanishing prices. However, the same has happened with water. When water is abundant, but concentrated and defendable, those who control it will rule and submit the population to servitude.

    In a sense, you see the same with music. Musicians are a dime a dozen. Even good musicians. However, until very recently (and in many respects, still) access to a wider audience is controlled by a few entities who create artificial scarcity and pocket almost all of the profits.

    Something like this has already happened with MS Windows OS. Copying an OS has next to no cost at all. So, Windows should have a negligible cost. However, Windows got a monopoly on PCs and MS “owned” every copy of Windows, so they could extract all utility of Windows from those who used it. And they did. During the nineties and early 2000s, MS extracted most of the monetary value of productivity increases due to using PCs from the companies that used it. (in price and by externalizing maintenance costs)

    With this robot utopia, we will see this too. Those who control (“own”) the robots will be able to extract servitude from the rest of the population. Just as MS did with all the PC makers.

    Maybe libertarians have some way to get around their sacred “ownership” concept. But if not, a libertarian utopia with robots will mean a few people “own” the robots and the rest of the population will be paupers who will have to serve the masters to get anything.

  82. Winter has succinctly explained why free-market economies always degenerate into effective feudalism, as per Chomsky.

  83. @Winter:

    Only that the masters will not need the “paupers” to serve them. Robots will do it better and more reliably.
    “Plumber? I don’t need no stinking plumber. The house fixes itself.”
    Replace plumber with cook, gardener, whatever.
    Probably the only business still working in the usual manner will be all kinds of sexual-oriented services.
    The problem not being how to feed/clothe/house the out-of-work masses, but how to give them a purpose in life. Short of sticking them in uniforms and sending them off to kill each other.

  84. @Jeff Read
    “Winter has succinctly explained why free-market economies always degenerate into effective feudalism, as per Chomsky.”

    Curious, I hardly have ever read anything from Chomsky. But these ideas are not particularly new.

    Btw, I am of the opinion that Free Markets require strong “states” (could be feudal lords or other power, hence the scare quotes). Markets need protection from all kinds of entities that would try to capture (and rob) them. But that should not be a surprise.

  85. @Kurt B
    “Robots will do it better and more reliably.”

    There will always be services better done by humans.

    For instance, slaves were not used economically in the Ottoman empire. Only as status symbols and to fight. But that was also true in feudal times. Most of the people in a feudal court where there as entourage to impress. There rest was there to fight.

  86. @Kurt B
    “The problem not being how to feed/clothe/house the out-of-work masses, but how to give them a purpose in life.”

    Serve the master and fight for his attention and praise should be ample purpose. Look at the court of Louis XIV.

  87. >Mind, I am a Libertarian at heart, as much as a Central European can possibly be, but how will a (mostly) liberterian society deal with this problem?

    I don’t know yet. But just because I don’t know doesn’t mean there isn’t an answer; humans are tremendously adaptable and free markets are a better discovery mechanism than I am. My counsel to anyone worried aobut this is to remember the early Industrial Revolution, when precisely the same sorts of fears were raised about industrial production. They were mistaken then; probably the doomsayers are mistaken now.

    I note that the people advocating Universal Basic Income are recapitulating Marx’s mistake. He observed that history repeats itself, first as tragedy and then as farce. UBI is the farcical version of Marxism.

  88. >But if not, a libertarian utopia with robots will mean a few people “own” the robots and the rest of the population will be paupers who will have to serve the masters to get anything.

    That’s silly. According to your own premise, the robots will be cheap to produce and duplicate. You don’t get a pyramidal political structure from that kind of economics.

  89. @esr
    “That’s silly. According to your own premise, the robots will be cheap to produce and duplicate. You don’t get a pyramidal political structure from that kind of economics.”

    The same holds for OS’ and music where those who depended on it for a living were subjugated to the “owners” of the code and the distribution channels. This was also the case with water for irrigation in Egypt, Mesopotamia and China.

    You could be right, but only if everybody could produce the robots themselves and would not need some (big) easy to control facility. You have written yourself about the way easy to defend income streams from oil would turn a country into a dictatorship.

  90. >You could be right, but only if everybody could produce the robots themselves and would not need some (big) easy to control facility.

    That is where things are headed. Inexpensive 3D printing gets all the press, but inexpensive computer-controlled milling machines will probably be as important or more so. The maker culture is pushing this kind of decentralized production hard, and rather successfully.

  91. @esr
    “I note that the people advocating Universal Basic Income are recapitulating Marx’s mistake. He observed that history repeats itself, first as tragedy and then as farce. UBI is the farcical version of Marxism.”

    Every experiment with basic income showed that it worked:
    http://basicincome.org.uk/2013/08/health-forget-mincome-poverty/

    http://www.spiegel.de/international/world/a-new-approach-to-aid-how-a-basic-income-program-saved-a-namibian-village-a-642310.html

    http://www.globalincome.org/English/BI-worldwide.html
    (Note that the example of the Netherlands in wrong. We do have a guaranteed minimum income, but only for those that have no other sources of income or possessions. It is part of our social security package)

  92. @esr
    “That is where things are headed. Inexpensive 3D printing gets all the press, but inexpensive computer-controlled milling machines will probably be as important or more so.”

    When will the copyright lobby strike to close these all down?

    They did change all the hardware to prevent copying bits in many products. And more are to come. See where iOS, Android, and OSX are going.

  93. Why is it that UBI sounds like a political perpetual motion machine?

  94. UBI persay has little to do with Marxism – Friedrich Hayek mentioned it as a possibility in the context of a classical liberal society. Yes, many advocates of UBI make specious arguments, and have unrealistic views of what it could pay for. But the notion of having a basic grant that anyone could tolerably subsist on (provided that they’re willing to move to a low-cost area, and of course allowing for earning extra income through work) is broadly sensible, and far preferable to other kinds of redistribution. The EITC tries to do something similar and it has few drawbacks, but it’s hardly a complete solution.

  95. >When will the copyright lobby strike to close these all down?

    They can try. They won’t succeed. If this sort of suppression were feasible, the gun-grabbers would have banned home ownership of traditional machine tools decades ago, because they can be used to produce weapons.

  96. >But the notion of having a basic grant that anyone could tolerably subsist on (provided that they’re willing to move to a low-cost area, and of course allowing for earning extra income through work) is broadly sensible,

    No, it’s actually quite suicidal. I see I need to blog about the history of U.S. welfare and the Thatcher Limit. Sigh…

  97. @esr
    “No, it’s actually quite suicidal. I see I need to blog about the history of U.S. welfare and the Thatcher Limit. Sigh…”

    Now, US welfare has been shown to be just as dysfunctional as their other institutions.

    The US has shown itself to be unable to keep a working public transport system up nor to introduce comprehensive health care. Their school system is unable to educate students without crippling debts and excludes many able students for financial reasons. And these are only the complaints from US citizens themselves. Their police “justifiably” kills 400 people a year (and probably an equal number or more “unjustifiable”). Much More than Canada, Australia, and the EU combined.

    All of the above goals have been achieved by many other industrial nations. Just start with Canada, and then go the round through East Asia and Western Europe.

    And contrary to what US conservatives always claim, none of the poster childs of welfare, Canada, Scandinavia, North West Europe, or even Japan, are close to bankruptcy or a North Korean death camp state.

  98. The US keeps a working public transport system up in places where it makes sense: the densely urbanized Northeast. Elsewhere, it’s an expensive boondoggle that American leftists keep pushing to be more like their Eurosocialist idols, and when it’s shown not to work in American cities, the Left shrugs and starts pushing to outlaw the American Dream.

    The American public school system is a classic case of union capture and cronyism with those who are supposed to keep it reined in. The result is a tripling of constant-dollar per-student costs with no concomitant improvement in results.

    If you attack a cop and he shoots you, then that killing is justifiable. The question to ask is not why there are more killings by cops, but rather why more people attack cops to begin with. For that, you need look no farther than thug culture.

    And how many of the counties you cite would discover they couldn’t afford their massive redistribution programs if they had to pull their own weight of national defense and medical R&D?

  99. > That’s silly. According to your own premise, the robots will be cheap to produce and duplicate. You don’t get a pyramidal political structure from that kind of economics.

    They’re cheap for the people who own land and raw materials, not for the people who have to pay rent. What incentive does the person who has the ability to produce robots to give any to anyone who doesn’t?

  100. Probably the only business still working in the usual manner will be all kinds of sexual-oriented services.

    I have no doubt that convincing fuckbots will be built as soon as they become practical.

    If you want a GFE, that’s a harder problem to solve and safe for human workers for the foreseeable. But not all providers can do that well, and there are going to be a lot of working girls put out of work by silicone-skinned robots that look like anime girls…

  101. > that look like anime girls…

    Ugh, have you seen the pictures of people wearing those masks? The uncanny valley is not even a little bit sexy.

  102. Why is it that UBI sounds like a political perpetual motion machine?

    Why is it that libertarians predicting the demise of the welfare state sound like Christian fundamentalists predicting the Rapture?

    The facts on the ground are that the welfare state works. Not only does it work, nations and even U.S. states with greater wealth equality function much better than those with less — lower crime, better education, better infrastructure, and the citizens are healthier, happier, and longer-lived. It may not be politically viable here in Murka, but that’s a problem with Murka, not the welfare state.

    The libertarian response is, “Enjoy your utopia while it lasts, Eurosocialists, any minute now the chickens will come home to roost once you run out of other people’s money!” But the more time goes on, the more the flaws in the American system become apparent and the more dismal the USA looks compared to Canada, Germany, Scandinavia, etc.

  103. About the post Robots-can-make-anything society. I knew I had read it in a SF story which concluded it would result in a slave owner’s society. Here it is:

    A for Anything by Damon Knight

    https://en.wikipedia.org/wiki/A_for_Anything

    An anonymous inventor sends copies of the “Gismo” through the mail to hundreds of people. Civil society immediately collapses; as one news commentator says: “The big question today is: Have you got a Gismo? And believe me, nothing else matters.” The story jumps to the year 2149: the society we know has been replaced by a society of wealthy minority supported by slavery. Access to Gismos is jealously guarded by a handful of strong men. The story is told through the eyes of Dick Jones, the son of the leader of Buckhill, a compound in the Poconos. Jones is coming of age and is about to be sent to Eagles, another, larger compound in the Rocky Mountains, for military training. Jones is initially presented as an unsympathetic character: spoiled, impulsive, hot-headed. In his final day at Buckhill, he insults a cousin who then challenges Dick to a duel; Dick kills him, and has to be ushered away in secret the following morning for fear of retribution.

    Jones arrives at Eagles, a fabulous city built into a mountain. Like Buckhill, Eagles is run as a slave society; but Jones is startled to realize that the Gismo is used to duplicate slaves, and that the most trusted slaves have been copied hundreds of times. Status among citizens is determined by social connections, and, for males, by skill at hand-to-hand combat. The author takes care to show us the seamy side of Eagles; for instance, the Boss relaxes by dropping slaves from the top of a tall tower and watching them plunge to their death via closed-circuit television. This may be done because it is suggested that all but the very best of slaves are “recycled” at about 30 years of age but with a 300 slaves for every freeman ratio at Eagles, some slaves live much longer.

    There are hints from Jones’s father in Buckhill that the slaves are contemplating revolt. In Eagles, Jones is introduced to a secret society that debates the merits of the slave culture and that plans a revolution, with the collaboration of a disaffected member of the ruling family. Jones is enthralled by the arguments he hears. At these meetings, the reader discovers that once the Gismo was sent out and the initial battles were fought, almost no scientific advances were made because the Gismo could do everything. It is hinted that some saw the time of chaos as a chance to advance space exploration but some people from the meetings say that it was all theory and nothing was ever built. But before the revolution can be put into action, the slaves revolt, killing most of the free citizens in Eagles and Buckhill, including Jones’s family. Jones is forced to choose between his allegiance to kin and his yearning for a better society. In the end, Jones chooses to turn against the slaves so that he can become “The Man” at Buckhill replacing his murdered Father and getting society back to where it was when he left for Eagles.

  104. >What incentive does the person who has the ability to produce robots to give any to anyone who doesn’t?

    Who said anything about “give”? Cheap is cheap. Markets work.

  105. >The facts on the ground are that the welfare state works.

    Right, if by “works”, you mean “produces vicious parasites who burn down their own neighborhoods when they get in a snit”.

  106. Jeff, if you want to live in a European utopia, you know where to find Europe. Leave America for those who appreciate freedom.

  107. >A for Anything by Damon Knight

    Ah, a minor classic of the SF novella. I’m very familiar with it.

    It’s very vividly written, but even as a twelve-year-old – well before I knew any economics – I thought there were puzzling gaps in the logic. The premise of the story is that duplicators are cheap and easy to to make. So … um … how do you keep all those slaves in subjection? What’s to keep them from running off, replicating food and weapons, and killing your slavecatchers? At minimum there ought to be something like the Central and South American cimarron towns in such a a world, only much more effective because they wouldn’t be starving and lack for tools. But actually it did not seem to me that the “Anything Goes” slaveholding society could be stable for more than a couple of weeks before the ‘masters’ met grisly ends.

    Knight never addresses any of this. He writes as though we’re supposed to treat the link from duplicators to slave society as an axiom, but the more I thought about that the less it made sense. Then I learned some history and economics, and more about the organization of power and production in historical slaveholding societies, and it stopped making any sense at all.

    For “Anything Goes” to work, the duplicators have to be expensive and difficult to make.

  108. Right, if by “works”, you mean “produces vicious parasites who burn down their own neighborhoods when they get in a snit”.

    Again, that only seems to really be a problem here, as with the Ferguson riots. Even the French car-burning riots from a few years ago didn’t produce a mayhem level above that of a typical Tuesday in the American inner city.

  109. “Even the French car-burning riots from a few years ago didn’t produce a mayhem level above that of a typical Tuesday in the American inner city.”

    [citation needed]

    Or are you seriously arguing that the typical Tuesday in the American inner city has a car-burning riot?

  110. @esr
    “It’s very vividly written, but even as a twelve-year-old – well before I knew any economics – I thought there were puzzling gaps in the logic.”

    IT is not that I consider it a work in economic model building. It is just that the premisses is far older than we tend to acknowledge. From the top of my head, I gave a few better, real life, examples where vanishing costs still lead to a captured market with high prices.

  111. @esr
    “Right, if by “works”, you mean “produces vicious parasites who burn down their own neighborhoods when they get in a snit”.”

    The UK and France have seen riots. The rest of Europe hardly. If we look at the countries with the most extensive welfare systems (e.g., Scandinavian countries, Germany, Belgium, Netherlands), they have not seen such riots since maybe the end of the last war. (but you can refresh my memory)

    And the UK and French riots had strong race overtones. They were more like Ferguson in that they took place in minority neighborhoods with strong animosity towards the police.

  112. @ Winter re: blanket criticism of US dysfunction

    I think this attitude is primarily a psychosis on your part. All countries have problems, and given that the US is quite large (geography, population, economy), we tend to have large problems too. But that doesn’t mean we are inferior to all the other countries you cite.

    Perhaps you Europeans are still feeling a little bit inadequate because the US had to bail out your ass twice in the last century. And frankly, because you no longer have much of a military or warrior element in your national identity, your countries would be easy to conquer again. Have much of your arrogance is latent fear due to impotency?

  113. I find the notion of UBI about as believable as perpetual motion: even if it appears to work, I would bet money that someone is hiding some key bit of information from someone. In a sense, it’s worse: in a nation-sized economy, it’s much easier to hide the information.

    The welfare systems of Europe likely work because of two major reasons: one, the people in each respective country want to help the people in their respective countries, and two, they get the lion’s share of their national defense guaranteed by the expense of the United States.

    The first point implies that they’re not a case of a welfare system causing that country to succeed, but rather its own culture. I suspect that if you tried to impose such a system everywhere, it would fail (require massive enforcement, run up costs, etc.) exactly in those countries where the culture rejected it, and would be unnecessary in exactly those countries where the culture didn’t (some sort of support structure for the less well off would already be emergent). Since culture derives from a lot of other factors, it can be hard to point to any one trait as the cause, although there are some major hallmarks: homogenous ancestry and religion being foremost in my mind, and sheer size being an influence on the former. (Choose any European country with a welfare system that appears to be doing well, and compare its population with that of the US. Now envision a scenario where all those nations attempt to centralize all those welfare systems on a single standard. I recommend using the economic history of the EU as a guide. For extra credit, consider a scenario where each US state, or even each town, were left to create its own welfare system without federal-level interference – but hold that thought until point two.)

    Economist Kevin Williamson points out that Sweden – the popular example for citation as a socialist success story – has a very permissive (I almost called it “liberal” my mistake) policy for taking a day off work and citing sickness as the reason. The overwhelming majority of sick days end up being on Mondays or Fridays, right next to the weekend. Peculiar. The effect is a gradual erosion of public trust – of the culture that ultimately dictates whether any welfare system would succeed or go bankrupt.

    The second point is a big part of why the first point even holds for as long as it has. Lift that umbrella of protection, and see how long things go before every one of those nations feels the need to protect its fragile systems and wealth from people who wish to take it, or from the immigrants who will flux in when the government can’t enforce quotas or borders as easily. They’ll have to spend money to guarantee protection, and that money will have to come from existing wealth. Either the welfare system will be drained, or quality of life from one or more of the non-beneficiary quintiles will. That will necessarily affect that culture’s tolerance for its status quo.

    One may ask what value the US even sees in spending so much money on defense of a continent that isn’t as keen on defending itself as it is on spending that money on welfare for its own people. The primary answer for me is: well, that’s American culture for you. (Not that I expect Jeff Read to understand it. You know, there’s something deeply ironic about a guy who cries greed and “butthurt” because Americans won’t spend their wealth the way he wants them to.)

  114. @TomA
    Then look at Canada.

    There seems to be a Russian proverb that runs “Stupid people learn from their mistakes, smart people learn from the mistakes of other people”

    All countries have problems, indeed. But the Greek are not carpetbombing the internet telling the world how to run their government finances, nor are Brazilians telling us how to run our police. But here are many who tell us how to run our social security, finances and economy.

    In most cases, people will acknowledge that they can learn from others. In some countries, people feel so special, they think they cannot learn from the mistakes of others.

    Note that the dysfunctions I noted are those brought up by people from the USA. For each of them you can fill a room with publications and studies from the US. And for each of them there are a dozen or more countries that solved them much better than the USA. Often, Canada is such a country.

  115. I think the very first bias I would like to disappear from everybody’s mind who discusses poltics online is that even if an idea is good in a given country, it does not mean it would work the same way when transplaned somewhere else. It is entirely possible, in fact, likely that e.g. the Swedish welfare state has the kinds of results it has because it is coupled with Swedish history and culture and other circumstances, and without that it would have entirely different results. I mean transplanting the same ideas even inside Europe does not really work – the very same ideas that made Denmark a nice place caused an utter disaster in Italy, largely because passionate Italians exploit the bugs of the system with a fury that hyggelig Danes don’t.

    The default assumption, the Bayesian prior should be that every culture evolves a government and politics system that fits it best, and it must find the sources for improvement inside itself – in the sense that it can borrow technical ideas but not any of those things that get philosophically debated.

    In a sense, transplanting ideas is not simply wrong but more like impossible and all that happens that the existing system will be painted differently, and the paint will be human blood. Transplanting Socialism to Russia merely created a new kind of Tzarism except ten times worse, transplating Socialism to Italy merely created the mother of all Mafias and transplanting it to America would make yet another version of the Wild West. Meanwhile it worked well enough in Sweden because they already had a weird kind of Military Socialism around 1600 or so – the idea was that out of every 5 farmers, 1 serves in the army and the others are forced to till his lands for free. This is why history and culture matters.

    Note: this should also make it immediately obvious why exporting democracy is not a good idea – how much more blood will be spent until everybody accepts Iraq needs a Saudi style monarch?

    This also means why capitalism should not be exported to cultures that retained pre-capitalistic, pre-rationalistic cultural elements, it ends up being a form of industrial feudalism.

    Socialism, capitalism and democracy should largely stay where they were invented.

    The issue is with human pyschology. Almost everybody has one of the following fallacies during such debates 1) my idea is so great that it should be universalized 2) my country is better than your country, or its opposite 3) the grass is greener on the other side. Of these 3) makes the most sense sometimes (as it has the least amount of self-serving bias) but remember what happens when you try to transplant grass without a good deep level of soil.

  116. Meanwhile, I find the notion of haves defending cheap robotic labor from have-nots to be as believable as both UBI and perpetual motion. Not for the same information-hiding reasons, though – this is a hypothetical scenario (so far).

    Jubal stuck his shovel in the ground and sighed, letting the sweat he worked up cool him down a bit. He could tell he was going to be talking for a while, and it helped if he got his mind ready. Finally, he straightened up, shifted his overalls, and began.

    Either cheap robotic labor is so cheap that the haves could shower the have-nots with it without a care, or it’s not cheap enough to make that affordable. If the former is true, we’re done – any have-not can call for a supply drop and join the party. So assume the latter.

    The latter implies that there is some cost incurred in the creation of that labor that can’t be supplied by that labor in turn. In other words, it has to be done by non-robotic labor. Therefore, there is demand for non-robotic labor. That labor may come out of the haves for a while, but then you’d quickly progress to universal cheap labor. So let’s assume that labor comes from the have-nots. But that just means there is now a demand for have-not labor. So either there’s something “have-nots” can trade for, or labor is so plentiful that they don’t need to trade in the first place. QED.

    There are a few cracks of note here. One is sinister; another is benign.

    The sinister one is that the haves may fear that if the have-nots get access to all this labor, they’ll turn on the haves. I have to ask why in the hell a have-not with sudden access to all the labor and wealth he used to pine for would feel the need to go warlording against the haves when he is essentially now one of them (not to mention the hilarity of setting your own cheap robotic warbots against a group presumably owning warbots of its own), and if irrationality is your answer, well, then I’d say you have a problem whether you’ve got cheap labor or not.

    The benign one is that the labor in demand is not within the skill set of the have-nots. Admittedly, that’s been a problem for much of human history. In that case, there’s something you have to remember about human brains: they’re remarkably pliable, wondrous things, arguably the most wondrous in the universe known to date. They’re natural problem solvers; if the problem is tough, they just build up “solution pressure” without apparent limit (other than lifespan, and if they’re dead, they don’t care) until the problem gives in.

    Labor in demand for creating more cheap robotic labor is a problem, and it will be foremost in the minds of many of the have-nots; the haves will see to that. It will be scarce, so the price will rise until either the haves can’t afford it (unlikely, given that they already have some cheap robot labor) or the have-nots figure it out, which depends on that solution pressure. Yes, it’s a made-up term; I use it to refer to all the other problems that that labor problem will break into, and their solutions – people learning how to perform that labor, how to get that labor to where it is needed, how to keep those laborers fed and happy until they get there, and so on.

    Some people may not be cut out for the type of labor the haves are demanding, but that’s okay; they undoubtedly can work on one of the secondary problems. They can learn some part of that labor, and how to teach it; they can move other people around; they can cook for them or clean their house; there’s plenty to do. They can be part of the solution pressure. (Stop bringing up the robots; we already established they’re not quite that cheap to have around.)

    It’s kinda funny, when you think about it. All these little secondary problems are often brought up by people trying to justify why they can’t afford to learn what it takes to work in the new economy. “It’s not cheap,” they say. Well, if it ain’t cheap, that’s the market trying to tell you there’s money to be had by doing that instead. And if you still think people won’t want to do it, I suggest you tell that to Ford in the next tenement over. I noticed him eavesdropping, and he ran inside just a minute ago. I think I can hear drill noises…

  117. @ESR

    > More of them are pro-free market because it’s a way to tribally demonstrate against left collectivism than because they really understand market economics.

    I am pretty sure that in case of American conservatives most are not really conservative as much as nationalist (this was the late John Lukacs’s hypothesis) and as far as nationalism goes it is largely about supporting capitalism if it makes your team the overdog who fucks and opposing it if it makes your team the underdog who gets fucked. And I mean it in the status / prestige sense.

    You lived in Italy. You can probably easily imagine Italian nationalists who feel constantly hurt they cannot get a decent job without speaking English because the business owner may be a foreigner who does not even bother to learn Italian and similar prestige losses / low-status signals. Global capitalism is largely the game of the Anglosphere at least culturally, prestige-wise, and while this imagined Italian nationalist still sees the atheist-internationalist left as his main enemy and will grudgingly tolerate capitalism as a lesser evil, does not like it much.

    National prestige plays a much, much bigger role in the acceptance of capitalism than any rational person likes to admit. The Japanese get it – e.g. they have acquired Columbia Pictures ages ago but they are not going to advertise it, they make sure everybody who represents the company in public is as American as apple pie: they don’t want to piss of nationalists. They understand how incredibly powerful and dangerous that is.

    All this is just the usual evolutionary testosterone pathways. We are hardwired to want our team to win and not even necessarily win something practically useful, just basically prestige points, gloire. This is why nationalism is powerful, it is the largest kind of team sport with actual armies and blood. Currently global capitalism is awarding prestige points to Anglosphere while everybody else is a bit annoyed how the kids want to go to McD not to some locally traditional food. This makes nationalists in the Anglosphere support it and everywhere else well at least have conflicting views about it. It is pretty much a penis measuring contest however due to evolutionary endocrinal reasons penis measuring contests are pretty much the most important thing out there for the vast majority.

  118. There’s two problems with the UBI idea in the US, and especially with comparing it to Welfare in the US. 1. We have a massive infrastructure of existing welfare programs, and 2. We have a minimum wage.

    The problem with welfare in the US is that it actively discourages work because it violates the principle that earning more money should never leave you with less money, and that’s exactly what happens when you start working while you’re on welfare. Eliminating welfare and putting in UBI would fix this problem with welfare. The other problem is that with a higher minimum wage, many people are simply not economical to employ, so even if we had the UBI and no welfare, many people would be unable to find work to supplement the low UBI. UBI might work if you got rid of both the other welfare programs and the minimum wage. The UBI is taking care of their “living wage” after all, so the money they earn from work is simply gravy. If people are unable to find work because they’re too expensive to employ, they’ll never gain the skills they need to be worth employing.

    I’m still not sure if it’s the correct course, but it’s a better course than existing welfare and than minimum wages.

  119. @Paul Brinkley
    “Either cheap robotic labor is so cheap that the haves could shower the have-nots with it without a care, or it’s not cheap enough to make that affordable.

    If the resources are easily hoarded and defended, the more profitable approach is to exclude everyone and let them pay, even as serves and courtiers.

    See how the OPEC countries handle the oil income. They spread some crumbs over the population, but keep the bulk for themselves.

  120. I think the very first bias I would like to disappear from everybody’s mind who discusses poltics online is that even if an idea is good in a given country, it does not mean it would work the same way when transplaned somewhere else. It is entirely possible, in fact, likely that e.g. the Swedish welfare state has the kinds of results it has because it is coupled with Swedish history and culture and other circumstances, and without that it would have entirely different results.

    One method people use to try to glean more meaning in cases like these is to look at these cultures when they immigrate into a different political structure and see what happens. America ends up being a common testbed (high net migration rate coupled with high population means there are large groups of immigrants to study); Australia and Canada also stand out IIRC (their rate is about twice America’s, though their populations are lower). So, for example: Americans in Canada; Indians in Australia; and Swedes in America.

    To the extent that you can reasonably rule out mixing of immigrants with the indigenous, you can get reasonable results about cultures functioning within other social structures.

  121. > No, it’s [UBI] actually quite suicidal. I see I need to blog about the history of U.S. welfare…

    In a Sufficiently Wealthy Society, I think it could work. Of course, this isn’t a very strong argument for adopting now, since if there really was that much wealth to be had, I’m willing to bet that a private charity would pop up to do exactly this. (If we’re going to assume that governments can be benevolent, it seems ridiculous to also assume that individuals won’t be.)

    Also, I’m willing to bet basic income could work decently in a futarchy. If certain kinds of welfare were to actually improve a state’s long-term economic prospects, this information should be reflected in the prediction market prices.

    Is basic income suicidal in a democracy? Yeah, I’d say there’s a sufficiently high chance that poorer people will keep voting themselves money. But if you’re making the claim that it’s suicidal in general, well… I look forward to reading that blog post.

  122. If the resources are easily hoarded and defended, the more profitable approach is to exclude everyone and let them pay, even as serves and courtiers.

    See how the OPEC countries handle the oil income. They spread some crumbs over the population, but keep the bulk for themselves.

    This isn’t actually evident. OPEC is not the world’s only oil supplier, so their control over the income is necessarily limited. Not only that, but their member nations are sovereign entities; they can cheat on how many “crumbs” they spread – and they did, overwhelmingly often.

  123. > I note that the people advocating Universal Basic Income are recapitulating Marx’s mistake.

    Perhaps I missed something here. As a libertarian that supports the UBI (though I tend to call it “guaranteed minimum income”), I think some parts have been glossed over.

    We in the US already do something worse than the UBI/GMI: the welfare state, with all its bizarre qualifications and points by which it can be gamed and authoritarian program administrators micromanaging the lives of those participating in the programs (welfare, SSDI, AFDC, health care subsidies, etc etc ad nauseum).

    The point, IMO, of the UBI, is to consider the federal expenditures on all of these programs as one single, giant bolus of funds, and from that bolus eliminate all the administrative overhead, all the three-ring-binder-reading fed employee sycophants, all the micromanagement of the populace, and replace it with direct, cash grants to every citizen. No more blowing huge percentages of “program funds” on the lackeys that administer those programs. No more “here is $50 to spend on food, $200 for health insurance, $15 for your child’s vision care, $110 for winter heat assistance, $5 for vegetables and $350 for housing”, where that $730 subsidy to an individual is coupled with about the same amount to pay government-union wages to the no-value-added government employees that hand these checks out once a month.

    Since we are already granting these huge amounts of money to anyone who can fog a mirror (with the government drones grafting their cut off the top at every level), why not cut out the middle man and just issue the funds directly to individuals, “sink or swim, this is what you get, make it last, or don’t, Uncle Sugar won’t be back til next time”?

  124. Oh, and another thing:

    Me: Either cheap robotic labor is so cheap that the haves could shower the have-nots with it without a care, or it’s not cheap enough to make that affordable.

    Winter: If the resources are easily hoarded and defended, the more profitable approach is to exclude everyone and let them pay, even as serves and courtiers.

    That assumes the have-nots had something to trade, which is precisely what the original scenario assumed wasn’t true. If they didn’t have anything to trade, there’s no incentive for the haves to limit supply and raise the price, since there’s no affordable price anyway. And if demand follows any sort of typical curve demands do, there would be more money had in lowering the price and raising the number of units sold.

    Seriously; this is econ 101. It’d be stupid in a very obvious way to sell only 100 units at $10k apiece rather than sell 100,000 units at $100 apiece, which is to say, at least one of the haves would notice this and the cartel pressure would be insufficient to keep them from breaking ranks and offering the lower price. (And we’re talking about cheap robotic labor here, after all; it wouldn’t be centralized, and therefore not easy to defend.)

  125. In a Sufficiently Wealthy Society, I think it could work. Of course, this isn’t a very strong argument for adopting now, since if there really was that much wealth to be had, I’m willing to bet that a private charity would pop up to do exactly this. (If we’re going to assume that governments can be benevolent, it seems ridiculous to also assume that individuals won’t be.)

    I agree. That’s what I was getting at in my earlier post: “would be unnecessary in exactly those countries where the culture didn’t (some sort of support structure for the less well off would already be emergent)”. If there were that much wealth, you wouldn’t need the laws; people would be throwing it around like software at The Pirate Bay.

  126. @Paul Brinkley
    “That assumes the have-nots had something to trade, which is precisely what the original scenario assumed wasn’t true.”

    Humans have always their submission to trade. Power is the ultimate incentive and motivator.

  127. Power projection is too expensive to justify. And who the hell needs human submissives, if I have robots?

  128. Power projection is too expensive to justify. And who the hell needs human submissives, if I have robots?

    “Some men just want to watch the world burn.”

  129. “…and if irrationality is your answer, well, then I’d say you have a problem whether you’ve got cheap labor or not.”

  130. > Yeah, I’d say there’s a sufficiently high chance that poorer people will keep voting themselves money.

    I think this is a silly argument. First of all, people in a democracy don’t even vote for their perceived self-interest, generally speaking (Economist Bryan Caplan has written extensively on this). Secondly, the median voter is not even much of a net-recipient under _realistic_ UBI proposals – she’s pretty much as well off as before, or maybe she even has to fund it a little bit. Rather, she supports this kind of UBI because redistributing some income to the poorest in an efficient way has significant positive externalities that affect her directly. (You can actually get a glimpse of this by looking at heavily unionized societies – the very subject of this post. Yes, unions were quite distortionary in and of themselves, but they did help the poor adopt at least some middle-class values).

  131. Would someone please explain to me how the mere existence of Sufficiently Cheap Robots causes:

    1. Everyone who does not own one to suddenly lack all resources of every kind.

    2. The complete abandonment of preexisting economies by those who do not own a robot.

    3. The perfect hivemind among robot owners, causing them to absolutely refuse to sell a robot at any price or to give one away (they are cheap remember).

    Until you answer these questions the Doomy Scenario of Infinite Doom is incapable of holding water.

  132. > First of all, people in a democracy don’t even vote for their perceived self-interest, generally speaking (Economist Bryan Caplan has written extensively on this).

    I was under the impression that most people will vote in their perceived self-interest, but are often bad at recognizing what that is. (I remember reading “The Myth of the Rational Voter”; did you have another paper in mind? I’m always up for reading some more Bryan Caplan.)

    > Secondly, the median voter is not even much of a net-recipient under _realistic_ UBI proposals

    So what’s to stop the median voter for voting for a higher level (briefly sustainable, but long-term unrealistic) of basic income?

    Honestly, I’d prefer to live in the world where basic income could work; and it seems like a much better idea than the US’s current welfare state. I just have some serious concerns about longer-term sustainability. (I think it’s fair to say it’s a lot harder to end a government program than start one.)

  133. > So what’s to stop the median voter for voting for a higher level (briefly sustainable, but long-term unrealistic) of basic income?

    There gap between the two is just too large, really. (I can see why you would be confused, since many proponents of UBI are quite naïve about its possibilities and fail to get this important point.) Actually, you might as well ask why we _aren’t_ soaking the rich with high taxes already, given that voters are ultimately in control and they would welcome some tax breaks for themselves. The sensible answer is that, at some level, they know well enough that it wouldn’t work, and that a society where genuine wealth creators are welcomed makes everyone better off, including themselves. The real challenge with UBI is not the idea persay, so much as getting to the point where it can replace the patchwork welfare system we now have.

  134. It’s funny how we’re talking about robotic labor and the UBI together here, as the only reason that I even marginally support the UBI is because of the potential for cheap robotic labor taking everything over. There’s lots of ways of dealing with the problem where most people are unemployable, but the UBI is one of the more palatable, and would allow people to bootstrap their way up into automated production if they needed to. Again, eliminating the patchwork welfare state and greatly hobbling the minimum wage would be a necessity as well to make people competitive in areas where the robots are marginal.

  135. >Is basic income suicidal in a democracy? Yeah, I’d say there’s a sufficiently high chance that poorer people will keep voting themselves money.

    That’s what I meant, yes. The hogs vote themselves more slop until the system hits the Thatcher limit, having run out of other peoples’ money.

  136. > > So what’s to stop the median voter for voting for a higher level (briefly sustainable, but long-term unrealistic) of basic income?
    >
    > There gap between the two is just too large, really.

    What counts as “welfare” in the United States is a matter of some debate. But based on a cursory internet search, $1 trillion looks like the upper bound of how much money is currently spent on welfare per year. Divide that by the US population and we can guarantee everyone about $3,000.

    I don’t know if you can live on $3,000 a year, but I’m pretty sure it would be miserable to try.

  137. “The hogs vote themselves more slop until the system hits the Thatcher limit, having run out of other peoples’ money.”

    I am continually surprised that most of the Western democracies have not reached this point yet. I guess there is more OPM out there than I realize.

  138. >I am continually surprised that most of the Western democracies have not reached this point yet.

    They would have decades ago, if not for governments’ ability to pile up and then hide massive amounts of debt.

  139. > $1 trillion looks like the upper bound of how much money is currently spent on welfare per year. Divide that by the US population and we can guarantee everyone about $3,000.

    That’s not how a UBI actually works, though. With a UBI, people are “taxed” with a phase-out rate, starting from their _first_ dollar of income. It can even be a fairly high rate, say 60%. The point is that it should never be a rate of 100% or more, but even 60% is quite okay, since most folks will be earning more than that and will thus face lower marginal tax rates. So really, much of the “spending” aspect of it is quite fictitious – it’s kept in check by the phaseout.

    And the amounts can be lower than you might realize – keep in mind that a UBI would most sensibly be federal, and broadly set for the low-cost areas of the country. Smaller localities (perhaps higher-cost ones) could top it up with something EITC-like, if they don’t want low-income folks to move out.

    Kazriko, a UBI is just how you redistribute income in an economically sensible way. The “robotic labor” case is just one extreme example of a high-inequality society where doing that might be sensible, but there might be others. (Economist Tyler Cowen talks about this in his book “Average is Over”.) For instance, there is a pretty big controversy about the lack of educational achievement among low-income folks in the U.S. – if that problem turns out to be intractable even with improvements in schooling etc., income transfers are the next best solution.

  140. “For instance, there is a pretty big controversy about the lack of educational achievement among low-income folks in the U.S. – if that problem turns out to be intractable even with improvements in schooling etc., income transfers are the next best solution.”

    Uh…this one’s very much in the category of “no fucking way!” it amounts to rewarding the destructive thug culture that tells its victims that education isn’t a good thing because it make you less authentic.

    Paying people to actively avoid education is a very fast road to hell.

  141. > That’s not how a UBI actually works, though.

    Yes it is. That’s exactly what the U stands for.

  142. @Cathy
    ““Health care costs [in Canada] are rising toward 50 per cent of provincial budgets and are crowding out spending on other priorities.””

    But health care costs in the US are way higher than anything anywhere in the world, whether you count in absolute terms or as a fraction of GDP: 16% in the USA vs 10.4% in Canada. The USA have the most expensive health care system in the world and are not even able to reach everyone. The bang for buck in the USA is pretty low though.
    http://www.commonwealthfund.org/~/media/Files/Publications/Issue%20Brief/2011/Jul/1532_Squires_US_hlt_sys_comparison_12_nations_intl_brief_v2.pdf

    @Cathy
    “I am continually surprised that most of the Western democracies have not reached [the Thatcher limit] yet.”

    Because it does not exist. The finances of the welfare states, like Sweden, Germany and the Netherlands are pretty healthy. Probably more so than those of the USA.

    This whole Thacher limit is a fiction based on a fairy tale. There is no relation with the real world.

  143. @esr
    ” The hogs vote themselves more slop until the system hits the Thatcher limit, having run out of other peoples’ money.”

    Then look at Germany, and a host of other countries like them for some real voter behavior. It never happens.

    It seems the ideas of voters floating around in Libertarian circles are completely imaginary and ideological. Real voters simply do not act like that at all. That also explains why Libertarians hate empirical research in social and political sciences: It gets in the way of ideology.

  144. Jay Maynard – Maybe. As I said, it’s quite controversial. What we desperately need is some way to reward folks for _rejecting_ violent, thug culture. Ideally, the prospect of good education and a productive job would be enough – but what if they aren’t? ISTM that we can’t reject that possibility out of hand – and a baseline income you can count on no-matter-what (providing you stay out of trouble with the law, obviously) would encourage folks to move closer to civil, middle-class values.

  145. Winter, there are plenty of dysfunctional “democracies” in underdeveloped countries. (This is why the whole idea of neo-cons bringing the ballot box to Afghanistan and Iraq was so terribly misguided.) The real discriminant is classical-liberal values, which are quite firmly established in North-Western/Central Europe. esr’s thesis is that large amounts of redistribution (including via UBI) will inevitably corrupt these desirable values, at least in the long run. It’s a sensible theory, although it can certainly be disagreed with.

  146. @guest
    “It’s a sensible theory, although it can certainly be disagreed with.”

    I disagree with Eric’s ideas because they are based on imaginary behavior by fictive people.

    When you look around, the simple economic theory of the utility maximizing individual is wrong as the utility they try to maximize is wrong and the maximizing that the individual can do is much more limited than is acknowledged.

    Moreover, the libertarians come up with all kinds of predictions that simply never pan out in the real world. The Thatcher limit is a fairy tale, just as most of their analysis of voter behavior. And do not start me on their ideas of a society based on contracts.

    The min-income is a case in point. All the empirical data points towards a simple conclusion: It works. There are huge practical and organizational problems (societal even), but it worked every time they tried it. Eric’s ideas cannot account for that.

  147. I think a 60% phaseout rate would probably be too steep to actually encourage people to work. A good 25-30% of the paycheck will be devoured by the ever expanding federal/state/local/medical insurance/other withholding. If they go to work and earn an extra $500 per week, and lose $125 of it to withholdings, then turn around and lose $300 in other benefits, then their net improvement from all that work is a mere $75. That’s almost as dysfunctional and counterproductive as our current welfare system. At 30%, that would be $225 in extra benefit from working. (They might get some of that $125 back in services or tax refunds, but that won’t help them THIS week.)

    Of course, once it tapers off like that, it’s not really universal basic income anymore, but something closer to the EITC, or other Negative Income Tax schemes. That’s something that Milton Friedman argued for. You sacrifice the decrease in paperwork and overhead of the UBI for cost savings on the money you’re not distributing to better off people. Again, I don’t know the correct path, but if you found a way to spread the EITC out into smaller installments then it might serve as a welfare replacement.

  148. Kazriko, yes, I was a bit sloppy there. A rate as high as 60% would only work as a _total_ tax rate. If you get $200 net from $500 gross per week, that’s a 60% total tax. And any redistribution scheme has to be paid for somehow, so some kind of phaseout will always be there – UBI vs. NIT is just semantics. The advantage of having a relatively steep phaseout is that you avoid giving out free money to a whole lot of working middle class folks who are relatively well off anyway, _and_ you can keep marginal tax fairly low for them at the same time. Economists have come up with models of “optimal taxation” that bear out this particular point.

    I agree that paying the EITC in installments could be an improvement, for behavioral reasons. It would make EITC a lot more salient as a reward for working, which is what it’s ultimately intended to be.

  149. @Guest
    GDP per captia for the USA is ~ $50k which is approximately equal to the median household income. The mean household income is around $70k.
    http://www.mybudget360.com/how-much-do-americans-earn-what-is-the-average-us-income/

    Poverty level in the USA is set at $23k for a household of four. $23k is 33% of $70k. So, just giving everyone a guaranteed minimum income would take a tax level of 33% on hopusehold income. The other taxes for government etc. would come on top.

    Note that this min-income would do away with all welfare, most pensions and a lot of the other support payments, around half of the current total (federal and state) tax spending. That would be around 12% of GDP. At 25%, the USA collects the third least taxes in the world (just above Chile and Mexico). So there seems to be ample room for a UBI.

  150. I was under the impression that most people will vote in their perceived self-interest, but are often bad at recognizing what that is. (I remember reading “The Myth of the Rational Voter”; did you have another paper in mind? I’m always up for reading some more Bryan Caplan.)

    Caplan’s well-supported argument is that, in fact, many people vote against their own economic or political self-interest so that they can feel noble about “selflessly” promoting policies that they delusionally think will help other people. Whether you want to call ego-stroking self-interest gets into the sort of stupid word games Ayn Rand played with “altruism” and “selfishness”.

  151. @Christopher Smith
    “Caplan’s well-supported argument is that, in fact, many people vote against their own economic or political self-interest so that they can feel noble about “selflessly” promoting policies that they delusionally think will help other people.”

    It is called “morals” and it is what people do who want to do the “right” thing. Whether they are delusional or not is an empirical question you obviously have not fully researched.

    I know, there are economic theories that assume people have no morals. These describe societies of psychopaths. The funny thing is, that there are no societies of enlightened psychopaths, there are only psychopaths.

  152. It is called “morals” and it is what people do who want to do the “right” thing.

    Yes, “right” belongs on quotation marks. The actual right thing to do to help people is to find out what will really help them, but that’s a lot of effort to go to when instead you can just cast a vote for something that sounds good, which has essentially zero marginal cost to you.

    Whether they are delusional or not is an empirical question you obviously have not fully researched.

    Not personally, no. Caplan did and presented very clear results. On a number of policy questions with clear empirical results, most voters believed discredited claims.

    I know, there are economic theories that assume people have no morals.

    Perhaps, but free-market economic theories do not assume that people have no morals; they function without assumptions about people’s morals. The advantage of harnessing competition is that the system doesn’t require universal goodwill and inherent work ethic. On the other hand, economic theories that do assume that people are good founder on the rocks of the first few freeloaders.

  153. Why must the funding for a UBI come from taxation?

    We have the world’s reserve currency. Issue greenbacks, pure fiat money, legal tender in the US. Not debt currency as through the Federal Reserve, but straight up greenbacks, printed as necessary on orders from Congress to meet the funding required to implement the UBI.

    We already do something similar by running a deficit (with, I might add, negligible inflation even after gigantic bailouts and trillions of increase in the FR’s balance sheet, and the associated interest and principal payment requirements).

    I know the immediate complaint against this is “but, inflation!” It hasn’t happened yet, and by all means should have years ago.

  154. @Cathy
    “I am continually surprised that most of the Western democracies have not reached [the Thatcher limit] yet.”

    @Winter
    “Because it does not exist. The finances of the welfare states, like Sweden, Germany and the Netherlands are pretty healthy. Probably more so than those of the USA.”

    So all those countries have balanced budgets? I’m not arguing that US finances are necessarily healthier than the other countries you list; I believe all of them are running unsustainable deficits. I may be wrong on some countries whose economics I don’t closely follow, but there are plenty that are in real trouble (France is an obvious example in Europe).

    It doesn’t matter if a major, or even 100%, of the citizen voters in a state support a specific policy if the money to pay for it isn’t there. Over the last few decades, this has taken the form of borrowing from future production. Done for investment purposes, borrowing makes sense; but sustainable entitlements (if such can exist) need to be paid for out of current production.

    Eric, re: your comment about a mountain of hidden debt, it can’t be hidden so well that the Street doesn’t know it’s there. So interest rates should reflect that pile of debt. I don’t see how all that money can ever be paid back, so at some point one would expect high inflation, default, or crippling taxes and stagnation. All of these represent risk of not getting money paid back.

    So why aren’t interest rates much higher?

  155. >So why aren’t interest rates much higher?

    I don’t know. Some magical belief that governments will pull a rabbit out of a hat seems afoot.

  156. @ Cathy – “So why aren’t interest rates much higher?”

    A large fraction of the US federal debt is short term and must be rolled over frequently; i.e. replaced by new debt instruments. If interest rates were allowed to rise significantly, then the government would become insolvent very quickly, as most of the tax receipts would be diverted to pay interest, leaving almost nothing left for normal operating expenditures and entitlement payments. In other words, a high interest rate would quickly induce a government collapse.

    In this scenario, the Federal Reserve Banks go down with the ship (i.e. a collapsed government leads to a collapsed economy, leads to a collapsed tax base, leads to default on Treasury bonds); consequently bank interest rates must remain very low for years (if not decades) to come.

    Our situation is somewhat like that of an alcoholic on his final bender; either he hits bottom and discovers AA, or never wakes up. Hitting bottom is the inevitable consequence of fiscal insanity, but sooner is less painful than later. Unfortunately, our political system is structured to favor kicking the can down the road. If we’re lucky, the bottom won’t occur until after we’re dead.

    This is also why so many young people are grabbing for all the immediate gratification they can get. They know that the party will eventually end and they will inherit a mess. Get it while you can.

    The real losers will be the hard-working, salt-of-the-earth, differed-gratification, savings account, middle class productive workers. The good news is that many of them are well armed.

  157. @Cathy
    Germany seems to run a surplus. The Netherlands runs a 3% deficit. The debts are below GDP. I do not have the exact numbers in my mind. Somewhere between 60-80% of GDP.

    I have no idea where the debts should be hidden. Our pension funds have around a GDP worth of assets. Our private debts are too high, mainly mortgages. That is troubling. One reason our economy is lackluster is because people are paying off their debts like crazy.

    Interests for goverment bonds are low. Our state occassionally pays negative interest. So the creditors do not perceive troublesome hidden debts.

    Actually, we tend to pay taxes at levels that sustain our welfare pretty well. And healthcare is not even paid out of tax money.

    So I am rather mystified where Eric suspects these hidden mountains of debt.

  158. @TomA
    The USA could inflate itself out of debt, or simply default. Argentina has done both in the past.

    The truth is, the financial and bond markets do not work like you think. Read the “Cash Nexus” by Neil Ferguson. His “The Ascend of money” is good too.

  159. My thought is that the “quantitative easing” means inflation is showing up as a stock market bubble and higher prices for high-end art, rare cars, mansions and penthouses, etc. But there is also regular everyday inflation, as anyone who goes to the grocery store knows. Not all of that is due to the CA drought and (until recently) increased fuel costs. And they keep rejiggering the measures of inflation, all of which result in lower readings.

    A recent discussion.

  160. > The USA could inflate itself out of debt, or simply default. Argentina has done both in the past.

    How’d that work out for them?

    I don’t actually believe the USA’s debt is unsustainable (I do believe Japan’s is), but you’re holding up Argentina as an example?

  161. > If interest rates were allowed to rise significantly, then the government would become insolvent very quickly

    And what stops it from doing so? Or, rather, what prompts people to keep buying them at the low interest rates, therefore allowing all this “must be rolled over frequently” to actually happen?

  162. @Christopher Smith
    > Perhaps, but free-market economic theories do not assume that people have no morals; they function without assumptions about people’s morals.

    Free markets are markets where people are free to make their own choices. The influences on these choices are many and varied, and certainly their moral sensibilities are one fairly strong component.

    Unfree markets such as regulated and highly taxed markets are, in fact, the ones that assume people have limited morals. The very underlying premise of an unfree market is that people will not freely choose to do that moral thing, and so must be forced to do so. So it is unfree markets that assume the worst about people.

    For example, in a free market I am free to use my money to help the poor in my neighborhood, or help the poor starving overseas, or buy overpriced coffee to help poor farmers, or help the dogs at the local animal rescue. In an unfree market it is assumed that I am not a sufficiently decent person to do so, and that even if I did use my money for charity I would allocate it wrongly.

    So an unfree market uses various mechanisms to forcibly take money from me and then use it for charitable actions that comport with the values of the politician distributing the money, rather than my values, and of course he takes a cut for himself and his cronies to pay for their putative generosity. And to add insult to injury, this same politician then takes credit for this charitable giving, making it out that he himself is such a kind caring person because he has forcibly used my money to help people, and in so doing prevented me from using that money to help people.

    These types of government mediated charity are the absolute worst kind. The hurt me because they substitute the frustration and work involved in taxes for the pleasure of giving. They hurt the recipient who thinks of entitlements rather than charity, and is disempowered, buried in victimhood and made dependent. And it hurts society by being the most inefficient type of charity in existence, and by allowing the arrogation of power to some of the worst people in the world, and gives them way to much control over my life and the lives of those that are “helped” and confuses the beautiful societal gift of generosity and caring with obligation and duty defined and imposed by the worst kind of people.

  163. Winter on 2014-12-01 at 03:47:20 said:
    @Milhouse
    >>> Me: “* Social Security is a ponzi scheme, and will fail, and no amount of transfer (see first bullet point) will fix it.

    > >Milhouse: It isn’t, really. It differs from a Ponzi scheme in several significant ways:”

    > No, it is a kind of insurance. Which is exactly the name it has in some countries
    > (e.g., unemployment insurance). The intention is to share/divide the risks.

    No, it is not. Not in the US. It is an entitlement and a defacto pension. It is a pension paid not out of savings or investment, but as a transfer tax from the currently working.

    This isn’t debatable, it’s a statement of fact. There is only one test to collect SS, are you at the right age. You can collect early (62) and get some percentage of your full entitlement, you can start collecting on time and get a larger percentage, or defer it a few years and get the full thing.

  164. @ Winter – “The USA could inflate itself out of debt, or simply default.”

    The former has been done numerous times in the past. Politicians are deathly afraid of trying the latter. None of this is comprehensible to me, but the best explanation I have heard is that this strategy is a form of fiscal warfare being wages against China, with the intent of creating rising expectations in the masses.

    @ Random832 – “And what stops it from doing so?”

    The Federal Reserve effectively regulates interest rates by controlling the volume of Treasury bonds sold in each auction.

  165. Random832 on 2014-12-01 at 01:15:19 said:
    >@William O. B’Livion “Most Semi-skilled manufacturing jobs are gone forever.”

    > I think most people on both sides of the aisle accept this as a fact.
    > The problem comes in when you start asking the question “why aren’t the
    > people who would have had those jobs better off without them?”

    Because there was nothing to replace them, and people don’t like to do what they don’t have to do.

    People without jobs, even if you give them a roof, 3 squares a day and free circuses, still *want* more, and still need something other than endless sitcoms to fill the hours. People without skills or the drive to get the skills wind up on mind (and body) altering chemicals, getting in fights and procreating without consideration of the offspring–we see this across all races and most cultures.

    In places like the Netherlands that are less diverse than a B’Livion Family reunion (seriously, everything from South Africa blacks to Chinese to northern European Catholics, italians, Albanians, Copts, Amerinds. From a Special Forces type to a Texas Goth/Punk and moderate liberals to me) this is maintainable because people *care* about the opinion of the rest of their tribe. In the US there’s about a million tribes, so no one gives a hoot about what the *other* tribes think of htem, they just flash their gang sign and keep on going.

    When you subsidize people’s very existence you don’t get Liberace, Van Gogh and Gaudi. You get Gangsta Rap, Graffiti and “Burn this Fucker Down”.

  166. @Random832
    I added Argentina as an illustration of what happens.

    Its not nice. A century of debt-default cycles (and resistance to social change) changed Argentina from a rich to a poor country.

  167. > The Federal Reserve effectively regulates interest rates by controlling the volume of Treasury bonds sold in each auction.

    Why do people buy them? If people did not buy them at the interest rate, they would have to have higher interest rates to sell any.

  168. I know the immediate complaint against this is “but, inflation!” It hasn’t happened yet, and by all means should have years ago.

    *quizzical look*

    I’m certainly observing plenty of inflation. Food and energy prices have increased dramatically over the last decade, though a massive supply increase of petroleum brought about by fracking has brought gas prices down to only about 20% above where they were in 2008. (Electricity’s still high.)

  169. Fracking has also poisined many of the precious artesian wells in the deought-prone American west.

    Hope it was worth it!

  170. >@esr, Milhouse was, but maybe he’s not a libertarian.

    Correct, he’s a religious conservative. I know him in meatspace.

    Actually I am a libertarian. And I suppose in a pure libertarian state secondary boycotts would be reluctantly allowed, just as all sorts of obnoxious things must be allowed. I did write that I approve of Australia’s ban on secondary boycotts, and I do approve of it, in the context of a state that bans many things it shouldn’t. If you’re going to go around regulating trade, at least the regulations should be sensible and just. Most are not, but this one is. So if Australia ever decides to start getting rid of regulations it should start with all the stupid and unjust ones, and once they’re all gone then we can talk about this one.

  171. On Public Transportation: I would second the notion that you need large, dense populations for public transportation to work well. I have noticed a significant difference between Northampton, England’s bus system, and that of Birmingham’s and Nottingham’s systems: the latter are more extensive and more reliable than the former. Even then, though, bus systems do not compare to having access to a car, even if you mostly park your car in one area, and then walk a lot (as I did when I was a missionary in England).

    Capitol Region in New York, and the Wasatch Front in Utah (Provo, Salt Lake City, and Ogden, and the valleys these three cities reside in) have similar population densities as Northampton, and the bus system is about on par with that density. It isn’t that great.

    Now, consider a few things: the Wasatch Front in Utah contains about half (or is it a third?) of Utah’s population. The entire State has about three million people; the entire State is about four times the size of Great Britain. My mother-in-law lives about 250 miles away in a desert, in a little town of maybe 100 people (with the nearest towns of maybe 1000 people about 20 miles away). Is it any wonder that people here in the West aren’t all that thrilled with the idea of public transportation? It simply isn’t practical!

    On Unions and Competition: We would do well to remember the role that regulations play in preventing competition from arising. It is my understanding that around the time of the New Deal, FDR brought together the three biggest car corporations–Ford, Chevrolet, and Chrystler–and encouraged them to create regulations that would pretty much ensure that there would only be three car companies. Ford apparently bowed out, and barely made it, while all the other car companies disappeared. To this day, any company that wishes to make cars, but not be crushed by regulations, must keep the number of cars produced every year to a very small number.

    Between this, and the desire to grow fast, that Paul Graham described, it is easy to see how Labor could demand higher wages, without competition there to push prices down (and thereby allow room for companies to continue to earn profits).

    On Social Security Being a Ponzi Scheme: It should be remembered that (1) the very first people who received payments–even though it amounted to only pe. Furthermore,nnies–nonetheless received *fantastic* returns; (2) while some have claimed that Social Security maintains perfectly clear accounting of where the money is going, it nonetheless was founded on the idea that the money you put into it is somehow invested, and that, because of this, you are entitled to the money that you will receive (instead, the money goes straight into the general fund, like any other tax, and when you are pulling money out of the system, you are merely being given the money that the current generation is putting in); (3) the system is clearly dependent on people paying in; if there’s a new generation that’s smaller than the old one, then that generation is going to be greatly burdened; (4) the idea that Social Security is a tontine certainly is attractive (and to some extent, it’s probably true), but it’s been sold as a retirement plan, and is now a disability plan as well, among other things; it’s going to be politically difficult (especially after promising so many people that they will get their money back) to push the retirement age up to the expected life expectancy; (5) one huge difference between a Ponzi scheme and Social Security is that you’re forced to pay into Social Security, even if you don’t believe it’s moral or sustainable, while Ponzi schemes are strictly voluntary affairs.

    So while Social Security is probably strictly not a Ponzi scheme, it’s close enough that I’m not going to quibble over anyone who says it is, and will likely even support the assertion myself.

  172. @Milhouse – just to be clear… do you approve of me not being able to boycott (to use PapayaSF’s example) chilean sea bass because my grocery store does not directly employ fishermen and my real dispute, in the eyes of the state, is with the fishermen alone? Or do you believe that the Australian law being proposed does not have this effect?

    The reason this seems so alien and un-libertarian to me is tht, in my opinion, boycotts (of any kind, whether secondary or not) should be the absolute first thing any libertarian should be in favor of, since A) it is a free market mechanism for people to signal their preferences against some behavior [rather than, for example, voting to have the state ban that behavior directly or having the state be required to determine whether someone has standing to sue for it] and B) the act itself being banned is fundamentally a free speech act and increases the information available to people, and good information is a fundamental part of the free market.

    To me, a right to boycott and to share information that might make someone want to boycott someone is absolutely necessary to the functioning of a free market in ethics, as an alternative to having the state tell everyone to do based on what people vote that everyone should be required to do / not do.

  173. Fracking has also poisined many of the precious artesian wells in the deought-prone American west.

    Hope it was worth it!

    Source: Gasland?

  174. And the alternative to a free market in ethics is a deontological system of ethics defined by the state – i.e. intrusive regulations in all aspects of life.

  175. >Its not nice. A century of debt-default cycles (and resistance to social change) changed Argentina from a rich to a poor country.

    Have you ever stopped to look at what *caused* the debt-default cycles? It really is educational. Really, you might learn something. How does a wealthy country (at the beginning of the 20th Century Argentina was a first world nation) wreck its own economy and generate such enormous public debt that it crushes everything? But I repeat myself….

    Hint: It wasn’t resistance to ‘social change’. Rather the opposite.

  176. *SIGH*…. IANAL, but that’s not what “secondary boycott” means. If you want to boycott (say) Chilean sea bass because it’s endangered, you can boycott the Chilean Sea Bass-o-rama stall in the fishmarket (which bought it from the fishermen), or boycott the restaurant (which bought it from the Chilean Sea Bass-o-rama stall), or boycott the cannery that cans it, or the supermarket that sells the cans. It is a secondary boycott when you boycott a company that had steak dinners at that restaurant, or if you boycott a company that only buys trout at a different stall in the fish market, or if you boycott the power company that supplies electricity to the fishmarket/restaurant/cannery/supermarket.

    My understanding of the concept is that you can boycott the product, and thereby the original manufacturer with whom you have a problem, but you cannot boycott the restaurant or supermarket in order to pressure it into joining your primary boycott. The supermarket isn’t interested in your political agenda, and shouldn’t have to be. If it sees the product is unpopular it will stop carrying it; if the product remains popular, because most consumers don’t agree with you and continue to buy it, then it will keep carrying it, and it’s wrong for you to coerce it (and all those consumers) into dropping it.

    Now if you have a problem with the supermarket itself, over something that it has actually done, that’s a primary boycott, but you can’t boycott it just for declining to join your primary boycott.

  177. But your dispute is on the subject of fishing it, not selling/possessing/eating it.

    So don’t buy it. Try to persuade others not to buy it. Try to persuade merchants not to carry it. But if they are not persuaded, don’t blackmail them by threatening to boycott them too. Accept that they don’t agree with you and move on.

  178. > Try to persuade others not to buy it.

    THAT IS EXACTLY WHAT A BOYCOTT IS!

  179. To be more specific, the act of not buying it is the boycott. The act of trying to persuade others not to buy it is the act of organizing a boycott.

  180. > Now if you have a problem with the supermarket itself, over something that it has actually done, that’s a primary boycott, but you can’t boycott it just for declining to join your primary boycott.

    And why isn’t buying the sea bass “something that it has actually done”? You’re putting the state in the position of deciding what kinds of dispute are real.

  181. @Greg
    “Hint: It wasn’t resistance to ‘social change’. Rather the opposite.”

    I am not a student of Argentina society and history, but my understanding was an inability of resolving the conflicting demands of the agricultural big landowners, the urban industries, and the agricultural and industrial workers.

    Resolving these social problems was put off by showering borrowed money and unleashing military violence. In the end, it did not work, and it still hasn’t.

  182. A common mis-perception about Social Security has been mentioned here, namely that when it was put in place life expectancy was much lower. This is true, and useless to know. Life expectancy *at birth* has gone up dramatically since then. Most of this is due to a reduction in infant mortality. However, life expectancy at age 18 or 21 hasn’t changed nearly as much. The only conclusion I can draw is that Social Security was indeed a fraud right from the start. The tax used to pay for it has tripled since inception – it never would have passed if people knew it was going to be a 19% income tax.

    I’d previously run across some better tables than this, but it will have to do for the time being:

    http://www.ssa.gov/history/lifeexpect.html

  183. @Milhouse
    > Now if you have a problem with the supermarket itself, over something that it has actually done,

    I think the problem he has with the supermarket is that it does business with someone odious.

    For example, if my clothing store bought clothes made from cotton picked by slave labor I would feel perfectly at liberty to boycott the clothing store, and encourage others to do likewise in order to pressure them to stop buying that stuff. I wouldn’t just not by cotton products from them, I wouldn’t buy anything from them.

    That seems to fit your definition of a secondary boycott, and I think I would have a perfect right to do that and encourage others to do so, in fact I think it would be almost a moral imperative for me to do so.

  184. > I wouldn’t just not by cotton products from them, I wouldn’t buy anything from them.

    I also want to point out that even if not buying cotton products [or rather the particular brands you know/suspect to be produced by slave labor] doesn’t fit the Milhouse definition of “secondary boycott”, it seems to clearly fit the Australian one.

  185. I’m going to have to go with Random832 and Jessica here. A secondary boycott – that is, a boycott of any economic entity on grounds of your perception of any aspect of their business practices – is not only permissible by libertarian free-market standards, but may sometimes be the only way to express your preferences as a market signal. That includes trying to get others to boycott with you. You can even badger others as often as you have the energy for it. And you can threaten boycotts to other economic actors if they don’t go along. In all cases, all you’re doing is declaring who you won’t engage in trade with, and you always have that right.

    The checks on this behavior are built-in. One: if you “chaincott” enough times – boycott Healthy Choice because you don’t like their labor conditions; boycott ConAgra because they own HC; boycott Campbell’s because ConAgra owns them too – you may find your own market choices dwindling to a point you find onerous, and you have to cutoff the chaincotting earlier. Two: if you try to persuade others to boycott, they’re naturally permitted to refuse, and you may even get blowback. (One more time: some people find boycott calls annoying for the same reason they find religious proselytizing annoying, even as some of them may embrace it.)

    I even think a boycott due to one’s perception of the target’s personal dealings is permitted. Case in point: when people threatened a boycott of Firefox while Brendan Eich was employed there, I thought it was ill-advised, but I also thought it was perfectly permissible from a free-market standpoint.

  186. Re: the boycotting debate

    All government regulation is an effort to exert control over its domain; and secondarily, to modify the behavior of its citizens. Anti-boycotting laws are no different. They are part of the slippery slope of nannyism that infects all governments over time. Government is cancerous by its nature, and without strong checks & balances, it will always grow until its kills the host.

    The boycotting debate is not fundamentally about freedom of choice & action in support of personal ethics, but rather a symptom of the advancement of the nannyism disease.

    The Garner tragedy currently in the news is a direct result of a recent nannyistic law banning the sale of individual cigarettes and a politician then ordering the Police Commissioner to proactively enforce this ordinance two days prior to Garner’s unnecessary arrest. In that instance, the focus has largely been on racism and police misconduct, and thereby ignored the root cause. I hope Garner’s family sues the State of New York for governmental malfeasance and wins. Not holding my breath.

  187. @Paul Brinkley >You can even badger others as often as you have the energy for it.

    How does this fit with your use of the phrase “soft coercion” earlier? I’ve noticed that one of the tactics used to make opposition to various things such as boycotts, strikes, and certain kinds of contract sound like it’s consistent with libertarianism is to characterize them as coercive.

  188. Secondary boycotts can be appropriate. So can shooting to kill.

    Both are breaches of civility. Both are justifiable only in extreme circumstances, when the problem addressed is universally recognized.

    The wrong in the Eich case was that secondary boycott was invoked for an issue in which it was not so justified – thus an illegitimate assertion of moral authority. Compare to the Islamist vigilantes who claim authority to punish alleged insults to Islam by violence.

    Sometimes the principle of civility leads to compromises that may seem morally intolerable. Some anti-slavery zealots rejected the U.S. Constitution or even practiced open rebellion. Some anti-abortion zealots feel much the same way today.

  189. > Both are justifiable only in extreme circumstances, when the problem addressed is universally recognized.

    For universally recognized problem, no-one would ever need to boycott.

  190. @Rich Rostrom
    > Both are breaches of civility.

    I don’t agree at all. I think boycotts, and many types of secondary boycott are the very essence of civility. I don’t have a personal relationship with those cotton pickin’ slaves, but surely it is civil and gracious in the extreme to support and stand with people who are being abused when you don’t know them, they don’t know you, and you pay a cost for doing so. It might be rather rude to the store, but the hell with them, they buy stuff made with slave labor.

    And of course, exactly the same applies to shooting people who need to be shot.

    >The wrong in the Eich case was that secondary boycott was invoked for an issue in which it was not so justified

    I don’t agree. From some people’s perspective Eich was a guy who was trying to help promulgate a form of horrible oppression, FWIW, I’d be among those people. He was to be the CEO of a company, and some people might be so offended by him that they don’t want to do business with that company.

    The problem in the Eich controversy is the outrageous laws that forced him to reveal that which should have been a private matter — namely his support for a political viewpoint.

    Let’s say that instead of Eich, Firefox had promoted someone who wrote a book advocating that black people should go back to the jungle where they came from. Would we be justified in protesting Firefox’s promotion of this person by refusing to use their product? Would we be wrong to encourage others to do so?

    People have a perfect right to spend their money how they want and encourage others to do so. And as with all things in the free market there is an equilibium. A perfect example of that was the Chick-fil-A controversy. Their support of the anti gay marriage politics was much more strong than Eich’s and they too suffered a boycott. However, those who advocated the hetero marriage only point of view organized a conflicting “appreciation day”, and I believe the boycott has been extremely beneficial to Chick-fil-A.

    Illegitimate boycotts are as good at harming companies as book bans are at keeping books from being read. Thank you Barbra Streisand.

  191. Me: You can even badger others as often as you have the energy for it.

    Random832: How does this fit with your use of the phrase “soft coercion” earlier? I’ve noticed that one of the tactics used to make opposition to various things such as boycotts, strikes, and certain kinds of contract sound like it’s consistent with libertarianism is to characterize them as coercive.

    Well, when I mentioned “soft coercion”, it was in reference to a desired feature of a solution to a problem, namely, that one would like to more effectively express a market signal when choosing not to engage in a particular exchange without resorting to soft coercion other economic actors. Or, more bluntly, I would like to declare why I’m not buying someone’s beans, without having to shame everyone within earshot into not buying them as well. And a big reason I want to avoid shaming is precisely what I said later: it exposes me to blowback, which undermines my effort to correctly influence the general demand for those beans.

    (I say “correctly influence”, because if I want to treat it like a switch and say “no one should buy these beans!”, I’m Doing It Wrong; rather, I really want to say “this condition should count for this much against buying these beans”. I would hope fewer beans sell, but not necessarily none at all. Other consumers may know things I do not.)

    To get at where I think you were going: fellow consumers should have the responsibility to resist or accept my badgering or soft coercion. But at the same time, from the frame of reference of an outside observer, there’s a chance I’m misleading them – say, by acting in a way that earns their trust, and then following with a statement that if they don’t boycott as I wish, only on my authority, then they’re not acting in their best self-interest. The usual form of that (shaming) is something I should expect to fail most of the time against a rationalist, but most people aren’t rationalists.

  192. Fracking has also poisined many of the precious artesian wells in the deought-prone American west.

    Bulldust. That is just an outright falsehood.

  193. @Milhouse – just to be clear… do you approve of me not being able to boycott (to use PapayaSF’s example) chilean sea bass because my grocery store does not directly employ fishermen and my real dispute, in the eyes of the state, is with the fishermen alone? Or do you believe that the Australian law being proposed does not have this effect?

    I do not approve of that, and to the best of my knowledge Australian law does not have that effect. By the way, there’s no “proposed” about it, it’s been the law for a long time, but the ALP and its allies put in an exemption for their politically favoured causes, so you can ignore the law but I can’t. That’s just not right. The current government is proposing to remove that exemption, and treat all causes equally.

  194. The reason this seems so alien and un-libertarian to me is tht, in my opinion, boycotts (of any kind, whether secondary or not) should be the absolute first thing any libertarian should be in favor of, since A) it is a free market mechanism for people to signal their preferences against some behavior [rather than, for example, voting to have the state ban that behavior directly or having the state be required to determine whether someone has standing to sue for it] and B) the act itself being banned is fundamentally a free speech act and increases the information available to people, and good information is a fundamental part of the free market.

    Primary boycotts have that effect. Secondary boycotts are just bullying, and have the effect of distorting the market by giving false signals about people’s preferences. If only those who agree with you about the sea bass boycott it, then sellers get a good idea of how much demand there is, and how much sea bass they should produce. If the boycott becomes popular, i.e. the product has become unpopular, they can reduce production, which is what you want. But if most people disagree with you, and continue to want and buy sea bass despite your campaign, the fishermen will know to keep catching it. Secondary boycotts distort this signal, by creating a large class of businesses that don’t buy sea bass, not because their customers don’t want it, but because they’re afraid of offending you. The result is that too little sea bass is caught, and the customers who still want the stuff have to compete for the artificially reduced supply, if they can even find somewhere that still sells it. You chalked up a victory, not by persuading the public but by bullying businessmen who don’t care about your cause and are just trying to make a living.

  195. And why isn’t buying the sea bass “something that it has actually done”? You’re putting the state in the position of deciding what kinds of dispute are real.

    Becuase not joining your boycott is not a legitimate reason to boycott someone. Not eveyone has to agree with you. You have no right to dictate to someone else, who doesn’t share your values, what they should do. You think catching sea bass is wrong; I don’t. You can boycott it, but you have no right to blackmail me into joining you.

  196. A common mis-perception about Social Security has been mentioned here, namely that when it was put in place life expectancy was much lower. This is true, and useless to know. Life expectancy *at birth* has gone up dramatically since then. Most of this is due to a reduction in infant mortality. However, life expectancy at age 18 or 21 hasn’t changed nearly as much.

    That’s just obvious bulldust. Everyone can observe with their own eyes how life expectancy at the end of life has gone up dramatically. People used to expect to die in their 60s. 80 was old. Now we expect almost everyone to live into their 80s.

  197. I think the problem he has with the supermarket is that it does business with someone odious.

    Whom someone else does business with is none of your f—ing business.

    I wouldn’t just not by cotton products from them, I wouldn’t buy anything from them.

    You can buy or not buy from whomever you like, but if you organize a boycott of the store because of whom they do business with then you’re a bully and a blackmailer, and you have abandoned all moral right. They don’t find that person odious, and they have no obligation to do so. As far as I’m concerned, if you do that then you’re odious. Maybe I should organise a boycott of you, and demand that the store stop selling to you. Now what is the poor shopkeeper to do? He doesn’t care one way or the other, all he wants to do is make a living, but you insist on dragging him into our political disputes.

  198. I also want to point out that even if not buying cotton products [or rather the particular brands you know/suspect to be produced by slave labor] doesn’t fit the Milhouse definition of “secondary boycott”, it seems to clearly fit the Australian one.

    As far as I know, no, it doesn’t. If you claim otherwise, cite your sources.

  199. Two: if you try to persuade others to boycott, they’re naturally permitted to refuse

    Not if they want to survive. Their margins are small, and they can’t afford to have anyone organise a boycott against them. And if you’re a union boss, they know that you can put them out of business, so they feel compelled to go along with whatever you demand.

  200. Let’s say that instead of Eich, Firefox had promoted someone who wrote a book advocating that black people should go back to the jungle where they came from. Would we be justified in protesting Firefox’s promotion of this person by refusing to use their product? Would we be wrong to encourage others to do so?

    Firefox shouldn’t have to know or care what opinions its employees hold, or what books they’ve written. It shouldn’t have to inquire into its employees’ private lives. And a company that refuses to promote someone because he’s racist is exactly the same as one that refuses to promote someone because he’s homosexual. If it wants to have such a policy, let it have it, and if you don’t like it you can boycott it; but if it refuses to have such a policy it shouldn’t have to, and you have no right to try to force it into having one. The default state for every business on every issue should be “I don’t care”, and no business should ever have to pay a penalty for not caring about someone’s pet issue.

  201. > Secondary boycotts distort this signal, by creating a large class of businesses that don’t buy sea bass, not because their customers don’t want it, but because they’re afraid of offending you.

    Who cares why – if they don’t buy it then it is a true signal.

  202. > You can boycott it, but you have no right to blackmail me into joining you.

    Again with characterizing free market choices as coercive. You do not have a right to have me do business with you.

  203. > The default state for every business on every issue should be “I don’t care”, and no business should ever have to pay a penalty for not caring about someone’s pet issue.

    Boycotts are a free market solution for the problem of corporations being amoral. The non-free-market solution is intrusive government regulation.

  204. “And a company that refuses to promote someone because he’s racist is exactly the same as one that refuses to promote someone because he’s homosexual.”

    Bulldust. You don’t want to have a racist promoted to manage people. He or she would be a magnet for discrimination lawsuits and bad publicity. There’s a strong business case for not promoting.

    OTOH, refusing to promote the gay guy can’t be made into a business case; you’re just violating civil rights laws there.

  205. > Secondary boycotts distort this signal, by creating a large class of businesses that don’t buy sea bass, not because their customers don’t want it, but because they’re afraid of offending you.

    Who cares why – if they don’t buy it then it is a true signal.

    No, it is a false signal. The consumer demand for the product is still there, as strong as ever. It’s the middlemen who are not buying it, not because they don’t want it or can’t sell it, but because you’re threatening them.

    > You can boycott it, but you have no right to blackmail me into joining you.

    Again with characterizing free market choices as coercive. You do not have a right to have me do business with you.

    No, but I do have the right not to have you organizing a boycott to destroy me, when I have done nothing to offend you.

    You do understand what blackmail is, don’t you?

    Boycotts are a free market solution for the problem of corporations being amoral. The non-free-market solution is intrusive government regulation.

    Corporations being amoral is not a problem, and doesn’t need a solution. And this has nothing to do with corporations, anyway. A shopkeeper is not a corporation, and is not amoral, but he needn’t share your opinions, and shouldn’t have to care about your issues.

    I looked up the Australian law, and you’re wrong. The definition of a secondary boycott is when a person, in concert with a second person, engage[s] in conduct that hinders or prevents a third person supplying goods or services to, or acquiring goods or services from, a fourth person (who is not an employer of the first or the second person), [and they do so] for the purpose of causing substantial loss or damage to the business of the fourth person. (I’ve slightly recast the wording to make sense as a sentence.) The exemption that currently exists in the law, and that the government proposes to eliminate, applies if the dominant purpose for which the conduct is engaged in is substantially related to environmental protection or consumer protection. This is blatant political favouritism, giving a special privilege to the concerns of the previous government’s political allies and letting them do as they please while the law applies to everyone else.

  206. “And a company that refuses to promote someone because he’s racist is exactly the same as one that refuses to promote someone because he’s homosexual.”

    Bulldust. You don’t want to have a racist promoted to manage people. He or she would be a magnet for discrimination lawsuits and bad publicity. There’s a strong business case for not promoting.

    OTOH, refusing to promote the gay guy can’t be made into a business case; you’re just violating civil rights laws there.

    The gay guy can be a magnet for bad publicity too. And there’s no reason someone should attract lawsuits just because he has racist opinons. So long as he takes care not to break the law he’s doing nothing wrong. If people sue just because of his opinions, they’re wrong, and should be sanctioned by the courts.

  207. > hinders or prevents a third person supplying goods or services to, or acquiring goods or services from, a fourth person (who is not an employer of the first or the second person), [and they do so] for the purpose of causing substantial loss or damage to the business of the fourth person.

    In what way does this not include refusing to buy the fourth person’s products, and only the fourth person’s products, from the third person?

  208. Because you’re not buying the fourth person’s goods from anyone, and you’re still buying anything else from the third person. The third person is irrelevant here.

  209. The point of this law is to prevent things like boycotting Rush Limbaugh’s advertisers, in order to force them to stop advertising on his show. If you have a beef with him, boycott him, and try to persuade his advertisers to boycott him, but if they say no you must accept that. Threatening to boycott them is blackmail.

  210. Threatening to boycott them is blackmail.

    Calling this “blackmail” is begging the question. Why should I be forced to do business with someone who supports causes I oppose?

  211. @Milhouse
    > Whom someone else does business with is none of your f—ing business.

    It is my business if they want to have a relationship, such as a retail relationship, with me for sure. If I were having a relationship with some person and it turned out that they liked to hang out with prostitutes and gang bangers, I think that would be a good reason to terminate my relationship with them, I also think I would be obligated to share that information with any of my friends who wished to have a relationship with that person too.

    > You can buy or not buy from whomever you like, but if you organize a boycott of the store

    What is the difference between me choosing to buy or not buy, and me encouraging others to make the same choice as me? Is all sales and marketing bulling too? Is all campaigning to change people’s minds bulling also? There is absolutely nothing wrong with encouraging people to make the same choices you make, it is no more or less than the very essence of free speech, whether that speech is commercial, political or philosophical. Am I bullying you by trying to convince you that secondary boycotts are perfectly legitimate? After all, in the unlikely event that I convinced you, the effect would be that you might hurt poor small business owners when you started to put your new found belief into action. Perhaps I should be banned from this blog for making an argument with such putatively unfair consequences?

    > Maybe I should organise a boycott of you, and demand that the store stop selling to you.

    Go ahead, make your case. It is only bullying if I am forcing you to do something you don’t want or using deception to change your mind. Convincing without menace is the opposite of odious.

    > all he wants to do is make a living, but you insist on dragging him into our political disputes.

    I’m not dragging him into political disputes, I am saying he is a bad person for buying stuff made with slave labor. He has no right to my money or anyone else’s, it is his obligation to convince me that his products will benefit me, and that he is the right person to buy them from. He can fix the problem by stopping being a bad person.

    If I boycott someone for knowingly selling stolen goods should I feel similar compassion on this guy who is ‘only trying to make a living’?

  212. @Milhouse
    > Firefox shouldn’t have to know or care what opinions its employees hold, or what books they’ve written.

    That is a ridiculous point of view. Of course they should. Employers care all the time about what opinions their employees hold. If the candidate for CEO thought that the web was a conspiracy to corrupt the minds of young people, and he had the stated intention of destroying the web by whatever means necessary, would that view be important for Mozilla to consider? So if some views are material and some are not then it is an argument over whether a particular viewpoint is material, not whether any viewpoint is material. Much as if a woman will sleep with a guy for a million dollars she is a prostitute, the rest is just negotiating the price.

    If the CEO thinks black people should go back to the jungle, then the board has every good reason the be concerned that their many black employees would be either disquieted by that view, or worse discriminated against, and that is certainly material. If Eich had promoted exclusively “traditional” marriage and Firefox had a specific policy of treating homosexual relationships the same as marriage, then his views could indeed materially impact the employees of the company. In technology companies one of the primary concerns is talent retention, so this sort of thing is certainly important.

    I don’t think the deal with Eich was justified, in fact I think it was ridiculous for a lot of different reasons, but if you think that means that a board of directors should not consider a CEO’s private views I could not disagree more. And especially so for a CEO since his public performance is absolutely critical to the performance of the stock, which is the primary concern of any board of directors.

    Perhaps in a better world things would be different, but stock prices are determined in _this_ world.

  213. Christopher Smith
    > Calling this “blackmail” is begging the question.

    I have often wondered about the concept of “blackmail” in a libertarian context. I’m not at all convinced that many things called “blackmail” should necessarily be considered criminal. Of course somethings are “your money or your life” for example, or “pay me protection money or I’ll burn down your store.”

    But, if it is “I have these legally obtained letters proving you are a homosexual, pay me a thousand dollars a month and I won’t make them public.” Should something like that be illegal? Or “I have documentary evidence that, should I bring them to the police would cause you to be prosecuted for a serious crime. However, if you pay me a million dollars I will give you every copy.” Should that be criminal? Or “you cheated on your wife with me, I have letters and photos to prove it. Give me a new car and I’ll not tell.”?

    All of these just sound like regular negotiations to me. Kind of scuzzy for sure, but it isn’t obvious to me that people should go to jail for making deals like this since all the threatened actions are perfectly legitimate.

  214. Threatening to boycott them is blackmail.

    Calling this “blackmail” is begging the question. Why should I be forced to do business with someone who supports causes I oppose?

    They don’t support causes you oppose. They just don’t oppose them. That’s the default position for any business, and one you should respect. But in any case, nobody’s forcing you to do business with anyone. All you are restrained from doing is organising a boycott against them. What you do with your own money is your business; when you conspire with someone else, that becomes the law’s business, just like any conspiracy in restraint of trade.

    By the way, you do realise, don’t you, that a blackmailer is threatening to so something he has every legal right to do. Doing it is legal, but threatening it do it is not. It’s a very peculiar law, and yet it accords with most people’s sense of justice. In Libertopia, blackmail would probably be lawful, because it’s difficult to articulate a case against it. But I don’t think anyone wants it to be lawful, so I would say that in the process of turning any modern state into Libertopia the law against blackmail should be among the last to be repealed, not the first. Wait until we’re almost there, and then debate whether to go the final step.

  215. @Millhouse
    > all he wants to do is make a living, but you insist on dragging him into our political disputes.

    Millhouse, I was wondering, as a conservative Christian, do you recognize that these women just want to make a living, and would you drag them into your political and religious views on sex (which I don’t know, but extrapolate from the “conservative Christian” moniker.)

    “Nine massage parlors peddling sex in Brooklyn were shut down after a nearly yearlong probe by cops and the DA’s office, officials said.”

    http://nypost.com/2014/12/05/cops-shut-down-nine-sex-dens-after-yearlong-probe/

    One wonders that the police don’t have better things to do with their time than spend a year on this.

  216. Jeff Read on 2014-12-02 at 05:00:42 said:
    > Winter has succinctly explained why free-market economies
    > always degenerate into effective feudalism, as per Chomsky.

    You mean as opposed to Socialism/Communitarianism/Fascism and all the other leftist isms that *start off* in effective feudalism, rather than at least giving folks a chance at freedom?

  217. Jessica, you wonder why the police don’t have better things to do with their time than spend a year on shutting down nine massage parlors peddling sex in Brooklyn. Selling sex at massage parlors is illegal. The police are doing exactly what they are paid to do! Being a conservative Christian is not relevant.

    Regarding social causes, boycotts, Firefox and Milhouse’s comments: It is entirely acceptable for workers (union organized or not) to strike. It is their livelihood that concerns them. There are rules and negotiators; all sides want order and a prompt resolution. Boycotting or more specifically, pressuring Rush Limbaugh’s advertisers because you don’t like what Rush says is very different and is harmful to non-constitutional free speech. It isn’t illegal, but it is coercive. Brendan Eich’s forced resignation was a similarly bad thing, and sets a dangerous precedent. It makes highly troubling incursions into privacy. Shark’s fin soup and sea bass consumption is despicable but legal. Crowd sourced social movements frighten me because they manifest the potentially bad aspects of a labor strike much more than the good. So-called open society is not what some think it is. Anarchy in the form of irrational mob rule and intimidation is repressive just as much as totalitarian regimes and corporatized government.

  218. @Ellie Kesselman
    > Selling sex at massage parlors is illegal. The police are doing exactly what they are paid to do!

    The police are given discretion on what crimes they charge, and there are plenty of crimes for them to address. So why did they pick on these women who are, after all, engaging in a mutually agreed upon transaction? There are far more serious crimes for the police to work on, and evidently they committed a huge amount of resources to it. These types of prosecution are political in nature. They are general to bolster some elected official’s props as a moral crusader. I think most people would rather the police were picking up muggers and house breakers. I don’t think you will find too many actual cops who really want to shut these places down, except insofar as their is any force, such as unwilling participants. They have to be told to do so by their political masters.

  219. You mean as opposed to Socialism/Communitarianism/Fascism and all the other leftist isms that *start off* in effective feudalism, rather than at least giving folks a chance at freedom?

    Have you been paying attention? The most “socialist” European countries — particularly the Nordic countries — have considerably more social mobility than the United States.

    Some data you’re bound to ignore from the OECD.

  220. That’s a recent phenomenon, and it’s directly related to the US’s precipitous decline in economic freedom over the last couple of decades and the consolidation of power due to increasing regulation. Some of those “socialist” European countries are almost as, or more economically free than the US now. http://www.heritage.org/index/heatmap . “Socialist” Canada is actually significantly more free now than the US.

    Also, I suspect that the quality of education across the board has a good deal to do with it. The US has also had a drastic decline in educational quality. The wealthy can afford to pick their schools, while those that are poorer are stuck with the one that they are bused to. Some of those “socialist” European countries have systems where the funding for education follows the student, and have more freedom at the local level for schools, so they have a real competitive education system going, whereas the US under the iron grip of the teachers unions, prevent real competition between schools to a great extent.

  221. wth is ‘social mobility’?

    That’s the opportunity for someone born in a particular socioeconomic status to move up or down over her lifetime. Most studies that I’ve seen look at quintiles, note that the quintile bounds are relatively stable, and thus conclude that individuals aren’t moving between the quintiles.

  222. @Jim Richardson
    “wth is ‘social mobility’?”

    From rags to riches, from paper boy to millionaire. The opposite of “born with a silver spoon in his mouth”.

    How to estimate it? A quick-and-dirty test is to look at the background of the rich and mighty, e.g., those sitting in congress or the board rooms of big companies.

  223. How to estimate it? A quick-and-dirty test is to look at the background of the rich and mighty, e.g., those sitting in congress or the board rooms of big companies.

    This is a good way of getting a sample of a couple hundred out of millions, filtered for people who make news, particularly people who make news for making news.

    Fortunately, you don’t really have to settle for quick and dirty. The US Treasury Department actually publishes reports of movement among quintiles, based on actual tax returns.

  224. >That’s the opportunity for someone born in a particular socioeconomic status to move up or down over her lifetime. Most studies that I’ve seen look at quintiles, note that the quintile bounds are relatively stable, and thus conclude that individuals aren’t moving between the quintiles.

    That’s overlooking something extremely obvious- people move between quintiles naturally during their lifetimes, simply as part of their life (and career) cycle.

  225. That’s *income* or *economic* mobility, and as noted, it’s pretty easy to find the numbers for the US, broken down by quintile. Use of the term “Social” seems to be a bit odd.

    If we are discussing what % of the population moves from one income quintile to another, it would seem to be pretty important to normalize for the size of that quintile change. That is, if moving from the the middle of bottom quintile to the second means a 100% increase in income, or merely 10%.

  226. That’s overlooking something extremely obvious- people move between quintiles naturally during their lifetimes, simply as part of their life (and career) cycle.

    Apparently it’s not obvious enough even to the researchers, much less the journalists and other politicians quoting them.

  227. “That’s overlooking something extremely obvious- people move between quintiles naturally during their lifetimes, simply as part of their life (and career) cycle.”

    Yeah, I started in the workforce some 3+ decades ago, making (if memory serves) about $550/mo. Needless to say, I’ve moved up a quintile or two in the intervening decades.

  228. My first job was somewhere around $250 per month 2 decades ago. (~15 hours a week) I’m making enough above that now to be in the top quintile. I doubt a 16 year old kid these days would have as easy of a time getting a job with the minimum wage and other cost of employment increases since then, so their prospects of getting into that top quintile are probably worse.

    My parents weren’t in the top quintile, I think they were near the middle one even though they both worked, and I’m the only one in my household that works.

  229. So to be clear – you believe that in the absence of labour unions, workers did not receive market clearing wages between about 1870 and 1970?

    That seems like a tremendous climb-down from what I had understood to be your belief in free market economics.

  230. >How does Germany thrive on manufacturing still, then?

    First, do they? According to the World Bank, 31% of German GDP comes from industry compared to 20% in the US, so industry produces a minority share of both countries’ income. (note all figures in this are from 2011 since there is not reported industry share of US GDP after this).

    The US also has a larger GDP per capita than Germany, at $49,855 versus $40,980. So the US derives $10,000/capita from industry while Germany derives $13,000/capita.

    http://data.worldbank.org/indicator/NV.IND.TOTL.ZS

    I think a lot of the view of Germany as a peculiarly more industrialised country than other western democracies is just an artefact of perception. German goods tend to be purchased by private households rather than firms, but are expensive enough for those private householders that they are major purchases: things like cars, white goods, tools, etc. People don’t care who makes generic commodities like oil, and don’t know who makes goods that are above an individual’s budget or interest like aircraft engines. The US has enormous “real production” companies in both industries to which Germany has no equivalent.

  231. >So to be clear – you believe that in the absence of labour unions, workers did not receive market clearing wages between about 1870 and 1970?

    Not sure who you’re addressing here. If it’s me: broadly speaking I think they did receive market-clearing wages (modulo some exceptions like the Davis-Bacon act). But market conditions were structurally different in important ways that Paul Graham and I have addressed.

  232. “Not sure who you’re addressing here. If it’s me: broadly speaking I think they did receive market-clearing wages (modulo some exceptions like the Davis-Bacon act). But market conditions were structurally different in important ways that Paul Graham and I have addressed.”

    However you slice it, your view is that unions enabled workers to be paid more in this time without reducing the supply of employment. In other words, workers were being underpaid in the market.

    Graham’s argument is not as overtly anti-market but I am not sure I accept his implicit and unsubstantiated claim that a greater percentage of the workforce was employed in ‘startups’ than now.

    It seems much more plausible to me that manufacturing workers were paid the market rate, that manufacturing workers continue to be paid the market rate, and that manufacturing workers in the 1950s and 1960s did not earn better salaries than today because of unions because they did not earn better salaries than today at all. People in the US live better today than in the 1960s. Examples of very high paid union workers, like UAW members, are unusual and abusive, reducing the supply of labour and increasing costs for consumers in a zero sum game that hurts other workers.

    What has changed is that manufacturing has come to be seen as a bottom rung employer that anyone can aspire to. This was probably not true in the 1950s and was even less true in the 1900s, with casual farm labour taking the bottom of the job status ladder. People forget that manufacturing workers don’t look with hindsight like the bottom of the status tree because they weren’t.

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