In response to my Nickel and Dimed posts, my old friend Roderick Long referred me to his original review of the book. Highlights of Rod’s review:
Ehrenreich went “undercover” to document the lives of the working poor and the Kafkaesque maze of obstacles they face: the grindingly low wages; the desperate scramble to make ends meet; the perpetual uncertainty; the surreal, pseudo-scientific job application process; the arbitrary and humiliating petty chickenshit tyrannies of employers; the techniques of intimidation and normalisation; the mandatory time-wasting; the indifference to employee health; the unpredictably changing work schedules, making it impossible to hold a second job; etc., etc.
None of this was news to me; I’ve lived the life she describes, and she captures it quite well. But it might well be news to those on the right who heroise the managerial class and imagine that the main causes of poverty are laziness and welfare.
Of course the book has its flaws…
But Ehrenreich’s misguided diagnoses and prescriptions occupy at most a tenth of the book. The bulk of the book is devoted to a description of the problems, and there’s nothing sneerworthy about that. And libertarians will win few supporters so long as they continue to give the impression of regarding the problems Ehrenreich describes as unimportant or non-existent. If you’re desperately ill, and Physician A offers a snake-oil remedy while Physician B merely snaps, “stop whining!” and offers nothing, Physician A will win every time.
Rod’s solutions:
First: eliminate state intervention, which predictably works to benefit the politically-connected, not the poor. As I like to say, libertarianism is the proletarian revolution. Without all the taxes, fees, licenses, and regulations that disproportionately burden the poor, it would be much easier for them to start their own businesses rather than working for others. As for those who do still work for others, in the dynamically expanding economy that a rollback of state violence would bring, employers would have to compete much more vigorously for workers, thus making it much harder for employers to treat workers like crap…
Second: build worker solidarity. On the one hand, this means formal organisation, including unionisation – but I’m not talking about the prevailing model of “business unions,” conspiring to exclude lower-wage workers and jockeying for partnership with the corporate/government elite, but real unions, the old-fashioned kind, committed to the working class and not just union members, and interested in worker autonomy, not government patronage.
I’ve had similar debates with Rod before, but I still can’t resist responding. Verily, I do “heroise” the managerial class. And at least in the First World, I do think that irresponsible behavior (partly fueled by the welfare state) is the main cause of severe poverty. Specifically:
1. Management quality is vital for productivity – and measured management quality really is high in First World countries. Contrary to stereotypes, poor countries have very little big business. Instead, their economies are dominated by “informality” and self-employment. So yes, I am most grateful to managers for doing their jobs – especially given all the abuse that intellectuals and activists have heaped upon them.
2. In rich countries, non-work is the main cause of severe poverty. A small percentage of non-workers are seriously disabled or genuinely can’t find a job. The overwhelming reason for non-work, though, is behavior that intuitively seems highly irresponsible. Such as? Not searching for a job. Not showing up for work on time – or at all. Having impulsive sex. Committing crimes. Sloth (“laziness”) is one poverty-inducing vice, but don’t forget lust and wrath.
3. There are, of course, many full-time workers who – like Ehrenreich and most of her co-workers – end up moderately poor. How is this possible? I endorse the standard economic explanation: low-paid workers are, on average, low-skilled. Since they aren’t very productive, employers don’t bid much for their services.
4. Why, though, do low-skilled workers endure such unpleasant working conditions? Again, I endorse the standard economic explanation: making work more pleasant costs money – and low-income workers don’t want to take a pay cut to get more pleasant working conditions.
5. Rod apparently rejects both textbook stories. Instead, he blames the government for using “taxes, fees, licenses, and regulations” to prevent the poor from “starting their own businesses rather than working for others.” While I would be happy to see “taxes, fees, licenses, and regulations” go away, I’m afraid there’s little reason to think this would sharply increase the poor’s rates of self-employment or small business ownership. Why not? Because it’s far from clear that regulation on net penalizes small businesses relative to big businesses. Yes, some regulations impose fixed costs, which discourage small business and self-employment. However, many regulations specifically exempt small business. Furthermore, it is much easier for small business to evade regulation. I wouldn’t be shocked if self-employment and small business became somewhat bigger under laissez-faire, but Rod’s confidence that this effect would be big is wishful thinking.
6. I totally agree with Rod’s view that government hurts the poor by suppressing economic growth. Because government hurts almost everyone by suppressing economic growth.
7. I’m honestly puzzled by Rod’s desire to see the poor start their own businesses. Romantic thinking aside, most people lack the competence for self-employment. With or without regulation, it’s incredibly hard. I get that Rod has seen the ugly side of low-skilled employment first-hand. But what about the ugly side of low-skilled self-employment? Instead of bosses mistreating you, you’re mistreated directly by customers. If you can actually get some customers, which is like pulling teeth. Imagine how bleak Ehrenreich’s book would have been if, instead of trying to find a bunch of low-skilled jobs, she tried to found a bunch of low-skilled businesses! Without her savings, she probably would have ended up homeless.
8. I’m even more puzzled by Rod’s desire to “build worker solidarity” and support for unions. The standard economic story says that unions are labor cartels; they improve wages and working conditions for members at the expense of other workers and the rest of society. While I’ll defend the legality of unions on libertarian grounds, they’re nothing to celebrate. The best I can say is that without government help, very few people will belong to unions. Indeed, even with hefty pro-union regulations on their side, private sector unions have almost disappeared in the U.S. But isn’t solidarity nice? Not solidarity with large, unselective groups like “workers” – and not when you build solidarity by scapegoating employers as exploiters and managers as bullies.
9. General observation: If you know a little social science and a lot of libertarianism, Rod Long’s story sounds great. If you want to sell libertarianism to leftists, his approach is plausibly more persuasive than mine. Alas, if you take the time to learn more social science, Rod’s story isn’t tenable.
READER COMMENTS
John Alcorn
Oct 24 2019 at 10:26am
Bryan,
Thank you for the comprehensive outline of your analysis of poverty, psychology, and institutions in prosperous nations.
Your analysis can be extended also to skilled workers, beyond poverty. Long experience in advising bright, career-motivated students at selective colleges leads me to conclude that the majority of them lack the desire, ability, or knowledge to become productive outside a corporation or other organization. They become productive and develop skills via employment in organizations. (And, as your book, The Case Against Education, establishes, they gain employment in organizations via the degree.)
Josh
Oct 24 2019 at 11:16am
It would be interesting for someone to do a “competing” book where a left wing person like Ehrenreich with noble intentions is set up as the owner of a business with low skilled workers like the ones Ehrenreich works at (I’m not sure how you actually could do that in practice, but details…).
What I predict is that the noble intentions will quickly give way to the reality that as an owner, many of your low wage workers really are out to screw you (not intentionally, but just by trying to do what best for themselves at your expense). You may soon find that people aren’t working as hard as they claim to, or that drugs are becoming a problem for some workers, or that some people randomly call out necessitating random schedule changes, or that your interviews aren’t filtering out the bad people requiring more ridiculous application processes. And your noble intentions to pay all of them $15 an hour might quickly get crushed under the weight of modest sales.
In general I think most business owners don’t want to be jerks. They want to be nice to their employees, but they quickly find that they get taken advantage of and find it hard to prevent it without doing stuff that seems jerky to an outsider. And overall most of them don’t have nearly as much profit coming in with which to absorb these problems (let alone give large raises) as many people assume.
Thaomas
Oct 24 2019 at 11:36am
What are the policy implication of whether poverty is 10% the fault of the poor or 90%. I both cases it seems that we the non-poor would want to do what we can to help people change their poverty-generating behaviors (but how?) and reward their poverty-escaping behaviors (wage subsidy/minimum wages in cases of labor monopsony).
Increase economic growth? sure, although there are disagreements about how. (I think taxing rich people more to reduce the structural deficit is easier that redesigning a bunch of regulations to make sure that each has a positive cots benefit evaluation though both are good.)
BTW, I did not take the remark about “heroizing” management as directed at Libertarians, but rather the “makers/takers” rhetoric.
IVV
Oct 24 2019 at 12:55pm
I only imagine that online marketplaces like Etsy have decreased the cost to self-employment, but do we really hear about Etsy success stories or just organizations that use Etsy and/or Amazon as a platform for their already-successful business?
Mark Z
Oct 24 2019 at 3:25pm
Someone should write a corresponding book to Ehrenreich’s about what it’s like to actually run your own restaurant, and we can compare how much more pleasant it is than working on the waitstaff.
In any case, I think Long is partly right that in some industries regulations especially harm small businesses (barriers to entry of course, but also there are often ‘economies of scale’ in regulatory compliance), but the main beneficiaries of loosening such regulations wouldn’t be low income workers, but rather the very managerial class he criticizes. Line workers probably aren’t the ones most likely to start their own businesses; rather, it’s the McDonald’s franchise manager who might instead start his own restaurant, or the executive who might start his own company instead of working his way up the corporate latter.
Matthias Goergens
Oct 25 2019 at 6:22am
Well, regulations like minimum wage laws also often outlaw that option.
Keith
Oct 28 2019 at 2:55pm
I always considered this to be as much a benefit to large businesses as to small ones. The way most of these restrictions are enforced is that you become “big” once you have a certain number of employees. Therefore, if you are a small business looking to expand part of your calculus will be “what additional expenses do I incur for hiring these people and can I actually afford it?”. Therefore the exemption actually acts in much the same way as welfare benefits do for the poor. They create a huge marginal tax once you reach a certain income point, hence penalizing becoming more productive. The exemption works the same way. This obviously helps larger established firms at the expense of upstart competitors.
N. Joseph Potts
Nov 3 2019 at 12:06pm
This is one “Like” for this article.
As for the one (Long’s) it discusses … well, it takes all kinds (of libertarians), I guess.
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