Thursday, September 4, 2014

SCIOD 13: Beggars, Cranks and Feather Beds

Indeed? Wealth is everything, men are absolutely nothing? What? Wealth itself is only something in relation to taxes? In truth, then, there is nothing more to wish for than that the king, remaining alone on the island, by constantly turning a crank, might produce, through automata, all the output of England. -- J. C. L. S. de Sismondi, Nouveaux principes d'économie politique
The image of Sismondi's hypothetical king cranking out all of England's production recalls J. M. Clark's remark about armchair theorists grinding out misleading results. Sismondi has been portrayed at times as yet another kind of crank. For example, in their textbook, Labor Economics, Pierre Cahuc and Andre Zylberberg magically transformed Sismondi's sarcastic criticism of Ricardo into a "fantastic prediction" stemming from Sismondi's far-fetched "notion that technological progress destroys jobs."

Not all economists disdain cranks, though. In a 1934 BBC radio address, Keynes affirmed his allegiance with the heretics, "descendants of a long line of heretics who, overwhelmed but never extinguished, have survived as isolated groups of cranks." Four years earlier, in volume 2 of his Treatise on Money, Keynes declared his "strong sympathy with the school of writers of which Tugan-Baranovski was the first and the most original, and especially with the form which the theory takes in the works of Tugan-Baranovski himself, and of two American amateur-economists (cranks, some might say), Rorty and Johannsen."

Beggars occupy a lofty, strategic, albeit overlooked, station in the canon of political economy. It is, after all, "the beggar, who suns himself by the side of the highway," who supplies the conclusive illustration of Adam Smith's principle that the rich "are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants." As mentioned above, in Petty Foggery and Political Arithmetick, beggars also were fodder for John Graunt's skepticism about proposals for employing them productively. Likewise, Charles Davenant, in An essay upon the probable methods of making a people gainers in the ballance of trade, discoursed optimistically on the prospects of putting beggars to work.

Featherbedding (sometimes feather-bedding) erupted onto the lexicon of American slang in the late 1930s and escalated to a full-scale moral panic by 1943. Prior to 1938, there was no occurrence of the term in the Washington Post, the New York Times or the Wall Street Journal. Just before U. S. entry into World War II, the National Association of Manufacturers adopted outrage over "time paid but not worked" as one focus of a multi-pronged anti-union propaganda campaign. Other quarry included the union shop, absenteeism, union finances, strikes and the 40-hour work week.

At the beginning of February 1943, Barron's magazine published an article whose title alleged "'Featherbedding' hampers the war effort." Reader's Digest printed a condensed version in March. Congressional committees held hearings and even the Assistant Attorney General for the Roosevelt administration, Thurman Arnold, added his voice to the chorus of denunciations of featherbedding by organized labor. Senator Sheridan Downey of California described the Reader's Digest article as unfair and misleading, pointing out that:
… there are approximately 500 railroad engineers and firemen who have what we call a fast blue-chip run. The article in the Reader's Digest discussed that particular group of 500 men as though its members worked under conditions typical of those of hundreds of thousands of other railroad workers.
Featherbedding was defined by its detractors as one of the multifarious, nefarious union restrictions on output (motivated, allegedly, by a false belief in a fixed amount of work to be done). Arthur Ross noted sardonically that the evils of featherbedding were "customarily illustrated" by a "Chamber of Horrors" whose exhibits "remain about the same from year to year and from decade to decade." Labor lawyer Henry Kaiser called it "folklore."

Over the years, labor leaders and their sympathizers repeatedly disavowed the intention to restrict output. Four decades before the World War II featherbedding flap arose, the U. S. Commissioner of Labor launched an investigation into claims publicized by the National Association of Manufacturers that union work rules imposed restrictions on output. The 932-page Special Report of the Commissioner of Labor. Regulation and Restriction of Output found that union regulations affecting changes in work organization, methods or materials only resulted in "restrictions of output" when compared to some hypothetical level that might presumably be attained if employers could impose their efficiency plans at will – assuming the employers' schemes were well-founded (which often they weren't).

David F. Schloss – who, in 1891 coined the expression, "the theory of the lump of labour" – reviewed the Labor Commissioner's report in the Economic Journal for December 1905 and concurred with its conclusion that "the question of restriction of output in Great Britain is not as simple as it has been supposed to be."

Some 60 years after the U. S. Labor Commissioner issued his report on alleged restriction of output, Ivar Berg and James Kuhn critically examined economists' definitions and use of the featherbedding term:
Most employers and many economists define and use the term "featherbedding" in such a way as to condemn work rules and practices without a full consideration of all the facts. The condemnation rests upon a definition that assumes causes and consequences highly questionable in the light of work experience. 
Because the charge of featherbedding embarrasses unions and puts workers on the defensive, one can understand why employers use it whenever it is to their bargaining advantage. But why some economists should use the term to play the employers' game is harder to understand. Not being involved in the heated encounter between union and employer, economists might be expected to be wary of so value-laden a word as "featherbedding" and to examine its meaning and implications carefully. Often, however, they define and use "featherbedding" in a way indistinguishable from employers. 
These definitions of featherbedding assume, first, that only workers and union work practices lead to "featherbedding"; second, that these practices are wasteful and inefficient; and third, that since they are wasteful, emotion, not reason, prompts workers to "featherbedding." None of these assumptions is self evident except to those who affirm what they set out to prove. 
Few observers of business would be so bold as to assert that only workers engage in featherbedding practices, since many employees—managers as well as workers—try to minimize their expenditure of effort and to increase their leisure and privileges on the job. If "featherbedding" is peculiarly a worker and union activity, then its essence inheres not in the activity itself but rather in an employer's (or economist's) judgment. Only as employers object to some employee practices and ignore others can an outside observer determine what featherbedding is.

1 comment:

Eric Blood Axe said...

Featherbedding in britain , when I was young , was the practice of hiring workers to fill a position, which no longer existed, but which had been covered by the Union contract.