Saturday, December 19, 2009

Renouncing Market Capitalism

After deep thought and profound soul searching I have decided to renounce market capitalism. It has become clear from the past year that under regulation in every industry led the economy to the brink of collapse, with unemployment in the US surpassing 10%--almost the highest it has been since the great depression. I confess that I, as a recovering neo-classical, spent too much time advocating that policy should be geared towards increased productivity and efficiency and not enough time focusing on how it should be geared towards increasing jobs. I no longer believe the labor market is intrinsically stable without serious government intervention. I propose three policies that I believe will bring the unemployment rate close to zero basically overnight without the government incurring huge expenses.

Policy number 1: Set a maximum on the percentage of media you can buy online.

When I was a heartless capitalist, I thought of amazon.com and other giant online retailers as a godsend. They increased public good by decreasing the real price of books, CDs and basically everything by cutting out the middle man (the retailer) and thus decreasing overall overhead and labor costs embodied within the product. I unemotionally witnessed retail book stores and media outlets go out of business (The Bookshelf anyone?). “If people valued retail book stores they would continue to shop at them and they wouldn’t go out of business”, I argued. That seems so cold now. To remedy the problem and increase the number of jobs in the media retail sector I propose a regulation on the amount of media each person can purchase online, say 50%. Every time you buy a book or DVD, you must provide your social security number, whether online or in the store. A central database tracks your individual purchases and anytime you go over your online allotment you get hit with a huge fine, or perhaps it just doesn’t let you make the purchase. This would create so many jobs! Firstly, there would be more bookstores constructed, therefore construction jobs would increase. Jobs would be increased in the media retail industry as more people are hired to service the demand for media not online. Several high paying IT jobs would be created as a giant tracking database is set up and then privacy is maintained. People would have to get out more to buy media so you can expect increases in the transportation sector—more bikes, cars and busses produced, more gasoline consumed etc.

Policy number 2: Make all retail stores hire a welcome person.

As a capitalist I used to shop at Walmart. Whenever I walked into the store and was greeted by a welcome person I thought to myself ‘man I don’t want to be doing that when I’m retired’ and ‘what an inefficient use of labor’. Surely if Walmart didn’t hire people to greet their customers they could save the $6 an hour they pay them and pass those savings onto their customers and shareholders. Such inefficiencies drove me crazy! Now, however, I realize that this is what we need in our country, more workers that are basically unproductive. I propose that every retail store and restaurant be required to hire a greeter. Overnight you would create the number of jobs equal to the number of stores in existence multiplied by the number of shifts each store is open.

Policy number 3: Require all cars that are being driven on the roads be no older than 5 years.

I saw a Toyota advertisement the other day that said something to the effect that the majority of Toyota cars sold in 1990 are still on the road today—19 years later. At the time I thought to myself how great that was. By making reliable long lasting cars, Toyota has reduced the number of cars people have to buy saving them tons of money in their lives. But isn’t our auto manufacturing industry hurting from this? Wouldn’t Ford and GM sell a lot more cars if none of the cars sold in 1990 were still on the road today? I propose a law requiring that all cars driven on public roads be newer than five year old. Think of the jobs this would create! Not only would it create thousands, perhaps millions, of auto manufacturing jobs, steel production jobs, ore mining jobs and plastic manufacturing jobs, it would increase auto dealer jobs. There would need to be more factories and dealerships built so there would be an increase in construction jobs. The new cars have to be transported so there would be an increase in transportation jobs—more truckers, more truck manufacturing, more barge manufacturing etc. The law would need to be enforced so there would need to be more police patrolling the streets for old cars. The justice system would see higher traffic so there would be more jobs for judges, lawyers and clerks. The old cars would have to go somewhere so there would be huge job increases in waste management. Surely nonprofit environmental groups would be outraged by such waste and excess use, so they would hire more people. Because many unemployed people would now have jobs, they could spend more money eating out and on entertainment so these industries would also see boosts in employment. I actually can’t think of a single industry that wouldn’t see an increase in jobs.

These are my first thee ideas. If after these have been implemented the unemployment rate isn’t at below say 3%, just let me know, I can come up with these ideas all day long.

-Andrew, the job creation think tank

1 comments:

Ryan & Liz said...

Andrew,

Welcome to the brighter world of institutional savvy economics. You seemed to have taken a Marxist turn here by which I mean you have correctly deduced the problem but the remedy seems off. May I humbly offer a couple of ideas as someone who cares and is beginning to think deeply about job quality and creation.

1) Laws that impose individual mandates should be avoided in favor of laws that place restrictions on corporations and marketplaces. Harnessing the power of the market is best when industry and corporations are regulated to constrain egregious behavior but still allow them the freedom to innovate processes and products. This also has the nice side benefit of avoiding government encroachment directly on individual liberty in favor of allowing the government to check corporate power. You will notice the Constitution says nothing about checking corporate power. Reasonable since industrial scale capitalism just didn't exist then. This has been the reason that the commerce clause has built out orders of magnitude more than any other section. The efforts by the right to try and equate corporate freedom with personal freedom is the most dangerous (in my opinion) sophistry in politics. It has even reached down into segments of many religious denominations.

2) To root of the employment problem is rooted in job quality and socioeconomic inequality. We have destroyed middle class jobs in the US by decimating the institutions that helped spread productivity improvements broadly. The US economy has increased productivity hugely in the past 20 years. The problem is those gains have gone almost entirely to the upper 10%. If these gains had been more evenly spread across the work force we would have more robust, stable consumer spending and thus more stable demand. We can talk about what those institutions are and potential remedies some time if you wish. However, your remedies are actually pointing toward job creation that are basically poor quality jobs: greeters and bookstore jobs. I would guess that the warehouse and distribution jobs created by Amazon are probably better jobs than service jobs they have replaced. Propping up the car industry is a tough one. The US car industry has been so mismanaged over the last 30 years it is hard to defend their decimation and I am not sure this is a market that we want to goose for environmental reasons.

3)If you want to look at some models I would, of course, suggest Germany who probably came out of this recession the best of any country. They have created a nice foundation of high quality jobs and work and employment institutions that spread productivity broadly while still maintaining economic flexibility.