Grasping for an Understanding of Unemployment

Every month we hear a new report on the nation's unemployment rate.  It has now been between 8.5 and 10 percent for two years now.  It evokes the Battle of Verdun in 1916, where over 300,000 men died in battles that only shifted the trench-lines mere meters at a time -- in both directions.  So the situation is essentially stagnant, with a sizable population now permanently unemployed.  Many are older, and few have retirements to look forward to.

This is the news we hear, in the language that we hear it.  However, when trying to understand a problem, it's sometimes better to think about it in more general terms than how we've been conditioned to interpret it.  So this begs the question, what is unemployment?

It may seem ridiculous, even taboo to ask this question when the answer seems obvious, and there is palpable emotional tension in discussing its effects.  But suppose you were trying to explain unemployment to an alien.  How would you describe such a concept?

You'd first have to explain what an economy is, how it works, and why the system is set up such that people are liable to starve when it suddenly becomes unprofitable to feed them -- despite the fact that many other fundamentals have remained the same.  The same people are still alive, with or without the same skills, with the same materials in the world, etc.  When people must work in order to eat, what is to be done when you have a substantial population that cannot find the work necessary to feed themselves?

Unemployment is first and foremost defined as a relative value, not an absolute one.  Suppose that 30 percent of a given population has no arms or legs and are just torsos.  Also, they are deaf, mute, and blind.  They are people, and their disabilities preclude them producing much of anything that can be commoditized.  Therefore, to simplify things, we can expect that unemployment in such a community will never be less than 30 percent.  Suppose that this rate remains constant over centuries.  Such a community would likely not even count the torsos as being unemployed because that could be taken for granted.  Therefore the unemployment rate in such an economy (assuming that all non-torsos work) would be zero, even though not every person is working.  So unemployment does not exactly represent who is working versus who is not working.

In the above example, a fundamental constant (the non-working torsos) became a new normal, leading to an assumption of 100 percent employment.  All those able to work were working.  But what were those hard-working people working towards? Assuming that the above society values every human life, it is logical to assume that some able-bodied people are diverting their efforts toward tending to the torsos in their midst.  Let's assume that 15% of the working population is engaged in such services.  This means that a substantial amount of capital produced is being committed to a class of consumers that produce nothing.  In a sense, there is a wealth distribution taking place in order to meet the social imperative of caring for the torsos.  

The state typically sets a goal of having as many people working and receiving income as possible -- just not necessarily productively.  Much hullabaloo is made about nonproductive workers in the public sector, but somehow the army is almost always overlooked, even though profligate weapons spending tends to attract the ire of some groups.  Just how productive is the army? Soldiers receive paychecks doing things that usually have little if any productive value to their parent nation.  This is all the more fascinating today, as hundreds of thousands of public employees returning from Iraq find themselves suddenly without income, and having to re-enter the civilian workforce.  You can bet that that will add to the unemployment figure.

How might those soldiers have been employed if not for being deployed overseas, if at all? Without setting a goal of near-full employment (that is, employing workers just for the sake of it), how many people would be working? Would they even be working consistently? Well, that would ultimately depend on the market, and whether or not hiring labor was more profitable than doing without it.

In the colonizing and imperializing days of yore, states saw idleness as a serious threat to public order. Many European kingdoms made a policy of literally shipping their idle populations overseas, just to keep them from lingering in their domain.  After all, it got expensive having to cut off their ears and keep them in prisons.  Nowadays, it can be argued that the state just tosses bags of money to the idle to keep them participating in the economy.

Today, the state's role in regulating the economy towards this end manifests itself in the mandates of the Federal Reserve, which are:

1) Be the lender of last resort in order to prevent bank runs.

2) Keep inflation low.

3) Sustain maximum employment.

The problem with unemployment is that it simply does not describe capital relationships and distribution.  It is easily manipulated and our tendency to continually monitor it has probably not helped our understanding and stewardship of the economy.  As a result, every major policy decision is being weighed through the lens of whether it will ultimately add jobs or subtract them.  Since unemployment ignores value in favor of sheer quantity, perhaps it really is just a number.

Foreign Aid for Foreign AIDS

There has been a movement recently to cut all foreign aid from the U.S. budget.  The argument is logical enough.  With the economy stagnant and Americans struggling at home, it is said that we ought to care for our own before committing to improving the lives of anyone overseas.  This argument also encompasses military engagement and nation building in some circles.  It has become an increasingly more populist stance to take in America's newly declared war on spending, and it is a fundamental plank in Ron Paul's "non-interventionist" platform.

The arguments in favor of such a policy are strong, even sensible with respect to nations like Pakistan and Afghanistan, where our aid dollars do nothing but strengthen the corrupt people in their government.  In some African nations, our aid to the impoverished has actually helped to trigger civil wars where criminal states pillage their own people.  As with all donation schemes, oversight of the funds is paramount to success.  From supporting oil oligarchs in the Middle East to paying for President Diem's concentration camps in South Vietnam, the negative consequences of U.S. aid have often been conspicuous abroad.

However, to end foreign aid entirely could prove a grave misstep whose effects would be conspicuous locally.  I am not referencing direct government aid or humanitarian relief, which are steeped in fraud; I am referring to initiatives like President Bush II's Emergency Plan for AIDS Relief (PEPFAR).  This, by the way, is not to suggest that PEPFAR has either been entirely free of fraud (it hasn't) or completely effective (it could definitely be improved).

Funding the prevention of HIV overseas is not just a humanitarian effort, it is a matter of enlightened self-interest.  In today's interconnected world, a person can go to sleep in Zimbabwe and wake up in Prague, and then take a train to Paris.  The only way to avoid interacting with people outside of America would be to shut down every seaport and airport in the country.  Therefore, it is in our national interest that the spread of dangerous and deadly diseases abroad be mitigated if we have the resources to do it.  This, incidentally, is also one reason why I believe in both universal healthcare and municipal firefighting.  When one person's problem (whether through irresponsibility or not) is eminently contagious, it is prudent to put out the conflagration first and wag fingers later.

Bush II once said, to paraphrase, that we are fighting the terrorists overseas to avoid fighting them in the streets.  Now, I do not necessarily agree with this credo...but substitute "terrorists" for "deadly diseases," and it makes far more sense.  As Edgar Allen Poe's The Masque of the Red Death demonstrates, the Red Death claims even Prince Prospero in the end.

You might be a public worker if...

I remember a time (November 9th, 2009) where I was picking up somebody from JFK airport.  I had arrived there solely by rail -- not a small feat considering the 2-hour commute and multiple transfers -- and resolved that I would not be returning home with my guest via the same method.  The plan was to take a taxi home, paying in cash.  Immediately after we left the terminal, we were practically ambushed by a livery cab driver offering to jet us home for $45.  I didn't know it at the time, but that was approximately $20 more than it would have cost to take a yellow cab to our destination.  Not in the mood for frugality (and having anticipated spending that kind of cash anyway), I accepted, and we got into the car.  Overall, it was a swift, uneventful ride.

Some time after I got home, I recounted the experience to my mother, who hissed that I should not have  taken a ride from a livery cab, and that I certainly shouldn't tell my stepfather, a veteran taxi driver.  I remember her saying that livery cab drivers "take food from [my] mouth," referencing the illegal competition they pose to yellow cab drivers like my stepfather.  I didn't think very much of it at the time.

About a week ago, Governor Andrew Cuomo (who is a very popular executive, I should note) signed a bill that would allow for livery cabs to be hailed on the street, and increase the number of yellow cabs (medallions) by 2,000.  My stepfather was apoplectic.  This bill harms him in two ways:

1. It increases competition, leading to fewer fares per shift.
2. It drastically decreases the value of his medallion, a prized asset nominally valued around 600K at the least.

On both counts, he has cause to be upset.  However, his anguish stems not from any governing principles that reflect the service he provides, but from his particular economic interests being attacked.

The state (city, in this case), in association with powerful investors, attempts to protect people like my stepfather from rabid competition they would otherwise experience.  Any attempt to break their monopoly is understandably met by stalwart reaction.  Thus the very visceral animosity between yellow cabs and livery cabs.  Medallion owners are a protected class who have a vested interest in keeping the supply of taxis low.  The city, responding to both public demand and promises of greater revenue (mostly from projected, probably optimistic medallion sales), is accordingly going to increase supply.  It hurts my stepfather and other non-corporate medallions as well as corporate medallions, but that's the name of the game. Outsiders would say the system which benefits my stepfather is corrupt, and I am inclined to agree on principle.

However, this is not to say that my stepfather is lazy or coddled.  Nothing could be further from the truth, as he is by far the single hardest worker I have ever known, and likely ever will know.  He purchased his medallion many years ago, when it was comparatively cheap, and held onto it like any other investment.  Unlike the majority of medallion owners, my stepfather actually does the labor himself, often working 18-hour days and, in the past, even sleeping in his cab.  Like most such personalities, my stepfather tends to lean Republican, and watches only Fox News.  Given the venom that that network spews toward public employees, this is the ultimate irony -- my stepfather is one of those protected public workers, and doesn't even realize it.

His asset is a car given special value only by the state, and is otherwise no different than the livery cabs.  The medallion is an artificial commodity much like real estate during the housing boom.  Both staked their value on the state distorting market fundamentals.  Clearly, the demand for cab services in the outer boroughs outstrips the supply, but the city's cap on cab supply (buttressed by an entrenched investment class) has led to a black market of livery cabs; some of which happen to engage in price gouging as a result of minimal competition.

Good, well-meaning people can work for monopolies (good or not, I count myself among them), and good people can break them as well.  It forces one to consider what side they're on in the profession they've chosen.  Are they on the side of choice, or are they on the side of institution? Democracy, always on the lurch, tends to favor the former.

Natural Law and Human Nature

http://thefrontierlab.org/occupy-wall-street

Phrenology was, in part, based upon the notion that the shape of a person's skull was indicative of their character.  As one might gather, there were quite a few character traits associated with the most minute cranial features.  Phrenology has, of course, been discredited (to say the least) and is now considered a pseudoscience.  I'm willing to guess that few people haven even heard of it before this post.

However, the superficial assumptions of phrenology are alive today in the fields of psychology, sociology, and so-called political science.  I tend to bristle when something that is not in fact science nonetheless demands that it be recognized as such.  There is a tremendous danger in conferring the legitimacy of science onto a field that attempts to explain human behavior.  It has the double effect of discrediting science while providing justification for arbitrary decisions as though those decisions were derived from natural law.

We have sociologists from all political teams attempting to correlate different mental illnesses with different ideologies.  Liberal-leaning sociologists and psychologists have long since exited the realm of diagnosing illness -- real, crippling illness -- and instead have become the Old Guard of secular moralism in America.  They single out the people that find the most effective ways of accumulating capital and invariably deem them as narcissists, sociopaths, and myriad other mythical designations.  Yet it seems as though the vast majority of Americans that do not reach such social heights has been overlooked entirely.  Most of the time, such persons are written off as victims of one social force or another.  Empathy is normally reserved for the under-served, and is withheld from what they deem the over-served.

Those that call themselves liberals rail against greed as though it were an element on the periodic table poisoning their water supply.  What is greed? What is self-interest? And, better yet, how can there be such a thing as zero self-interest? Absent some form of mind-altering substance (e.g. ecstasy), almost everyone senses their own existence and is conscious of their interests.  This is true of most humans, and it is a quintessential human trait.  Are we to understand greed only in retrospect? When an act of self-interest results in some form of destruction, is that when we point our fingers and invoke the greed curse?

The vitriol with which the liberal left attacks the highly affluent is matched only by that with which the Republican right attacks the statistical majority of Americans.  During the Gilded Era, the new philosophy of Social Darwinism was invented as an explanation for the distribution of haves and have-nots.  It was regularly stated (and accepted as scientific fact) that providing some form of welfare to the under-served was against natural law and promoted inferiority in society.

The party of "Greed is good," has little problem with personal greed when it is exercised on the grandest and most lopsided of scales (that is, in business), yet shrieks when those with less profess their wants (and, in some cases, needs).  At best, benefits to society from such massive greed are byproducts.  It is not as though most people who become entrepreneurs do so with the motivating knowledge that their actions will be justified by one freshwater economist or another.  They do it for the money, obviously.

Therefore, there is a kind of morality to the libertarian business model.  Their faith in property rights taking precedence in all legal disputes (indeed, possession is 3/4ths of the law) contains the assumption that there will be virtuous businessmen that practice some form of ethics.  I'm sure there are many such examples, but business is ultimately about competition, about cutting off your opponents at the knees and being at least slightly more ruthless than the next man.  It's a jungle, and I maintain that, regardless of the positive social byproducts of big business, it is disingenuous to idealize every man at the helm of a large corporation.  As much as I find libertarian and laissez-faire positions appealing, positive notions of that philosophy are grounded in assumptions about human nature that are as utopian as the communist chimera with which they do battle.  Libertarians seem to believe that society ought to be run by Hank Hill, from the late great King of the Hill.

Yet some seem to believe that Hank runs the business world already.

This brings us to The Frontier Lab's insipid analysis of the Occupiers.  What distinguishes the Occupier who desires a middle-class lifestyle from the tycoon who desires to run the world? Why is wanting more preferred over wanting less? How is one type of "greed" morally justifiable while the other is not? Could it be that it is because the Occupiers do not think as big as the tycoon? Is that why The Frontier Lab is convinced that they "win" when America "loses?"  Evidently, greed and self-interest are not the only dimension through which today's conservatives view the world.  For if greed were categorically good, there ought to be a philosophical problem with attacking Occupiers for wanting things or being covetous in general.

Most maddening to me about this piece is how its conclusions are touted as "scientific."  Social science is not science.  I'll say it again.  Social science is NOT science.  This designation is abused by both the right and the left to support their ideology as one that somehow derives from natural law.  But human nature and natural law are incompatible.  You cannot quantify greed, you can't test it, and you cannot study human nature when your views will be strongly influenced by the fact that you're a human yourself.  There is no rhyme or reason for why human beings behave the way that they do.  Sure, there are "theories," but most of them boil down to assumptions steeped in ideology.  And do you know why that is? I'm not sure, but it seems it's just in our nature.

Diederik Stapel, the world's most honest social psychologist.

Introduction

I will be as pithy or unabridged as necessary.  I will post whatever content strikes my fancy.  This is the flux of information and ideas through my head unchained.  There are no limits.  Nothing and everything is sacred.