Technological disruption, then, isn’t a new phenomenon. Still, is it accelerating? Not according to the data. If robots really were replacing workers en masse, we’d expect to see the amount of stuff produced by each remaining worker — labor productivity — soaring. In fact, productivity grew a lot faster from the mid-1990s to the mid-2000s than it has since. So technological change is an old story. What’s new is the failure of workers to share in the fruits of that technological change. I’m not saying that coping with change was ever easy. The decline of coal employment had devastating effects on many families, and much of what used to be coal country has never recovered. The loss of manual jobs in port cities surely contributed to the urban social crisis of the ’70s and ’80s. But while there have always been some victims of technological progress, until the 1970s rising productivity translated into rising wages for a great majority of workers. Then the connection was broken. And it wasn’t the robots that did it.
What did? There is a growing though incomplete consensus among economists that a key factor in wage stagnation has been workers’ declining bargaining power — a decline whose roots are ultimately political. Most obviously, the federal minimum wage, adjusted for inflation, has fallen by a third over the past half century, even as worker productivity has risen 150 percent. That divergence was politics, pure and simple. The decline of unions, which covered a quarter of private-sector workers in 1973 but only 6 percent now, may not be as obviously political. But other countries haven’t seen the same kind of decline. Canada is as unionized now as the U.S. was in 1973; in the Nordic nations unions cover two-thirds of the work force. What made America exceptional was a political environment deeply hostile to labor organizing and friendly toward union-busting employers.
And the decline of unions has made a huge difference. Consider the case of trucking, which used to be a good job but now pays a third less than it did in the 1970s, with terrible working conditions. What made the difference? De-unionization was a big part of the story. And these easily quantifiable factors are just indicators of a sustained, across-the-board anti-worker bias in our politics. Which brings me back to the question of why we’re talking so much about robots. The answer, I’d argue, is that it’s a diversionary tactic — a way to avoid facing up to the way our system is rigged against workers, similar to the way talk of a “skills gap” was a way to divert attention from bad policies that kept unemployment high. And progressives, above all, shouldn’t fall for this facile fatalism. American workers can and should be getting a much better deal than they are. And to the extent that they aren’t, the fault lies not in our robots, but in our political leaders.
Better Capitalism
Ignore the platitudes & barbs thrown out there about socialist policies. That’s only a label used for political posturing: America-is-not-a-
For over a year, Business Insider has been exploring why we need “Better Capitalism” and how we can achieve it. It started with the rejection of the shareholder primacy theory that grew in popularity in the late 1970s and became the norm beginning in the ’80s. It’s led to a short-term focus on profits above all else, and we’re arguing that this has come at the expense of stakeholders like workers and communities, and has been a significant factor in the country’s out-of-control wage-and-wealth inequality. We’ve found that there is an increasingly loud call to tie profits to purpose, and it’s not just a moral argument. To make sense of where we are today and where we should be headed, we’ve gathered some of our favorite books on the economy and the role of business in society.
Fix It or Lose It!
When corporations run the government as what is basically happening now, corporate profits take priority over the general public good: this-is-what-happens-
But it’s not a typical defense of millennials. Harris, who is a millennial (as am I), makes no attempt to undercut the complaints of baby boomers — namely, that millennials are anxious, spoiled, and narcissistic. Instead, he asks: What made millennials the way they are? Why are they so burned out? Why are they having fewer kids? Why are they getting married later? Why are they obsessed with efficiency and technology? And his answer, in so many words, is the economy. Millennials, he argues, are bearing the brunt of the economic damage wrought by late-20th-century capitalism. All these insecurities — and the material conditions that produced them — have thrown millennials into a state of perpetual panic. If “generations are characterized by crises,” as Harris argues, then ours is the crisis of extreme capitalism. What I focused on is millennials as workers and the changing relationship between labor and capital during the time we all came of age and developed into people. If we want to understand why millennials are the way they are, then we have to look at the increased competition between workers, the increased isolation of workers from each other, the extreme individualism of modern American society, and the widespread problems of debt and economic security facing this generation.
It is a defining shift in our society, and millennials have been forced to grow up and enter the labor market under these dynamics, and we’ve internalized this drive to produce as much as we can for as little as possible. That means we take on the costs of training ourselves (including student debt), we take on the costs of managing ourselves as freelancers or contract workers, because that’s what capital is looking for. And because wages are stagnant and exploitation is up, competition among workers is up too. As individuals, the best thing we can do for ourselves is work harder, learn to code, etc. But we’re not individuals, not as far as bosses are concerned. The vast majority of us are (replaceable) workers, and by working harder for less, we’re undermining ourselves as a class. It’s a vicious cycle. It’s a matter of scale, right? The levels of inequality we’re seeing now are pretty extraordinary. One of the big things I allude to in the book is this question of human capital. The burdens of capital production have been shifted more and more onto workers and their families — they get fewer benefits and less support. The state helped with many of these things in the 1960s and ’70s, and before that, corporations actually picked up a lot of the slack.
But now you have individual workers, individual students, taking on this burden of making themselves into the workers the economy needs them to be and taking on all the expenses of that. Which is why so many millennials are drowning in so much student debt, while at the same time their educations are becoming less valuable in the market, which is hyper-competitive, heavily pro-business, and constantly changing. Most of these are working-class parents who are looking at an economy where the gap between the haves and the have-nots, between workers and capitalists, is growing bigger and bigger every day, and where the middle class is basically disappearing. So they feel like they have to give their kids the best shot they possibly can, just so they can catch up and not fall even further behind.
In the United States, economic policy is ostensibly a matter of democratic governance, but for too long antitrust has been viewed as a technocratic matter best left to experts. This is a mistake: Excessive corporate size and power can be linked to many voter concerns, including stagnant wages, the invasion of privacy, the rise of fake news, the demise of the middle class and an unresponsive democracy. Antitrust is especially salient today because we witness the tremendous power of the tech monopolies firsthand, in our daily lives. Nearly everyone uses Facebook, Google, Amazon, Apple and Microsoft, and nearly everyone can see how smaller businesses have been hurt by their dominance. Nearly everyone has an opinion about whether they are too powerful, whether they know too much, whether they ought to be admired or feared. Add to these concerns the dangers of agricultural monopolies, rising costs for cable and broadband, and anticompetitive drug pricing, and it is clear that for Ms. Warren and other presidential hopefuls in the Democratic field, the problem of monopoly power should be a central issue — perhaps the central issue — in the 2020 campaign.
Though every Democratic candidate is against President Trump and in favor of working Americans, antitrust is an issue over which the candidates have real disagreement.Antitrust law is not an instrument of socialism or of unfettered capitalism; it seeks to protect markets from abuse by their participants. Indeed, they once did: Today’s interest in excessive corporate power recalls a time — 1912, to be exact — when antitrust policy was the central economic issue in the presidential race. Then, as now, the nation faced consolidated industries, widespread inequality and political radicalization. And then, as now, the public deserved the opportunity to decide what to do about that.
Yet for all that both men accomplished, neither changed the fundamental direction of the American economy. By the end of Obama’s eight years, G.D.P. growth was still disappointing. Middle-class and poor families were still receiving less than their fair share of that growth. Median household wealth was lower than it had been two decades earlier. In the most shocking sign of struggle, average life expectancy has declined in recent years. Rich Americans, on the other hand, continue to thrive, amassing Gilded Age-level concentrations of wealth. The resulting frustration helped make possible the rise of Donald Trump. This history suggests that the Democratic Party’s economic agenda needs to become more ambitious. Modest changes in the top marginal tax rate or in middle-class tax credits aren’t enough. The country needs an economic policy that measures up to the scale of our challenges.
Warren was also the first high-profile politician to call for an annual wealth tax, on fortunes greater than $50 million. This tax is the logical extension of research by the economist Thomas Piketty and others, which has shown how extreme wealth perpetuates itself. Historically, such concentration has often led to the decline of powerful societies. Warren, unlike some Democrats, comfortably explains that she is not socialist. She is a capitalist and, like Franklin D. Roosevelt, is trying to save American capitalism from its own excesses.
The future of the republic does not actually depend on the relative sizes of Medicare, Medicaid and the private market. It may, however, depend on whether Americans’ incomes and living standards are consistently rising. In the months to come, I hope that every other 2020 candidate offers answers to the questions that Warren has taken on: How can corporate America again help create a prosperous, growing middle class, as it did from the 1940s through the 1970s? How can the power of giant corporations — over consumers, workers and smaller businesses — be constrained? How can the radical levels of wealth inequality be reversed? How can the yawning opportunity gaps for children of different backgrounds be reduced? How can the next president make changes that will endure, rather than be undone by a future president, as both Obama’s and Clinton’s top-end tax increases were?
Perhaps the biggest reason to be hopeful about Warren’s larger agenda — separate from her fate as a candidate — is that it’s popular. Americans are deeply divided on social issues like abortion, religion and, to some extent, immigration and guns. But a clear majority favors a wealth tax. A clear majority favors universal child care. A clear majority favors aggressive government action to check corporate power and create decent-paying jobs. On economic issues, as Warren says, “The progressive agenda is America’s agenda.” To other 2020 candidates, I’d say: Be ambitious. Tell the country how you would end the new Gilded Age and improve people’s lives. Presidential campaigns are the time for big ideas.
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