Wednesday, March 11, 2015

How the 'Conomist Got His Lump

THE 'Conomists' lump is a hideous hump
    They pedantically teach at the U.;
But uglier yet is the slump we all get
    When we swallow this muck that they spew.

Rudyard Kipling's "How the Camel Got His Hump" is a Just-So story. It is Just-So 'scrutiating cutesy, patronizing, colonialist and moralistic. Idleness is condemned and loyal obedience to one's master is extolled.

When the diligent dog, horse and ox complain to their master, man, about the slothful camel's shirking, man tells them they three "must work double-time to make up for it." You see, there was only so much work to go 'round (with the world so new-and-all) and if some of it couldn't be spread thin onto the camel, then that part had to be humped up on the other three. 

Dorning Rasbotham's confident assertion that "a cheap market will always be full of customers" is another Just-So story. Unlike Kipling's fable about the camel, Rasbotham's tale has become a staple of economic dogma. 

No evolutionary biologist would sneer at the general public for their lack of erudition regarding the fact that the camel's hump was "brought upon [his] very own self by not working." Yet that is precisely the refrain that economists repeat ad nauseum. Even economists who claim to reject the "unemployment is always voluntary" placebo are loath to repudiate the seductive cheap-market-full-of-customers creation myth and article of faith.

UPDATE: I have been informed in a comment that "a cheap market will always be full of customers" is "obviously and strictly true." Well, tell THAT to Squire Rasbotham, Mr. blissex. Dorning Rasbotham apparently didn't think it was so "obviously and strictly true" because he chewed up 18 pages of his pamphlet before getting to this supposedly obvious and strict truth.

Of course the Sandwichman suffers from the obvious and strict rhetorical disadvantage of actually having read the text in question. It is always much easier to assert things and claim they are facts than it is to present evidence and show how that evidence supports a hypothesis. (That is why we are doomed, DOOMED!)

For the edification of those who suppose they knows everything they needs to knows about Rasbotham's Theorem from its conclusion (without reading his pamphlet or knowing what his premises were) here is a brief recap of the argument:
  1. The interests of the poor should have the highest priority (after all, what would become of the rich if there were no poor people to till their grounds, and pay their rent?);
  2. There is not so great a difference between the real interests of the rich and the poor;
  3. Trade is a large and difficult subject that requires deep thought, long study, extensive reading and large experience to form a true judgment;
  4. Machines distinguish men in society from men in a savage state. There are many examples showing how machines invariably benefit people;
  5. All improvements at first produce some difficulty but many receive the benefit while only a few suffer, probably not much and hopefully not for long (they should be grateful for the opportunity to make a sacrifice for their fellow man);
  6. Trade will find its own level. Those thrown out of their old employments will find or learn new ones. Those who get a disproportionate gain will soon find many rivals and lose their temporary advantage; (take that, Bill Gates!)
  7. There is a disposition among people to be unduly alarmed by new discoveries;
  8. Even if machines (or globalization or the hypertrophy of the finance sector) are evils they are necessary evils. We might as well make the best of them;
  9. This would be a prosperous time for the poor, if only they weren't so inclined to carry their money to the alehouse;
  10. Anyone who disagrees with the above truths is a irreligious, conscienceless scoundrel; and (drumroll),
  11. That "there is only a certain quantity of labour to be performed" is a false principle.
  12. Because -- ta-da! -- a cheap market will always be full of customers!  


Anonymous said...

«"a cheap market will always be full of customers"»
«the "unemployment is always voluntary" placebo»

Oh please this is a real dumb way to conduct this argument, and it plays so well in the hands of conservative Economists.

Because the two statements above is obviously and strictly *true*, if the metric is *employment*, and prices are indeed low enough (including zero and negative).

Because if USA unemployed workers were willing to accept a wage of $1 per day, $1 per month, or $1 per year, or to pay a suitable "fee" for being employed, it is obviously and strictly *true* that they would all be employed. An old lady may want to employ 10 care helpers if their wage was $1 per day. Indeed that's how it works in less developed nations, where a very large percentage of workers are servants on tiny monthly wages.

And if unemployed workers were willing to pay the going "fee" (a negative wage) to be employed, I am sure the markets would flexibly adapt and for-profit employment providers would come into existence to satisfy such demand for employment.

Of course using the metric of *employment* is shamefully hypocritical, because if people really were interested in just being employed, they would indeed be happy to accept $1/month for the sake of being employed, or to pay the going "fee" for the privilege of working a job.

The shameless hypocrites who talk about employment really mean *good incomes* instead of employment, and indeed while giving employment to anybody who wants a job is very easy if they accept $1/month or pay for the privilege, it is finding a way to give all those who want a *good income* a well paid and productive source of earnings, which may be a job, that is quite hard.

Prevaricating by saying "employment" when meaning "good income" only plays into the arguments of those who then are legitimately entitled to take "employment" literally as the goal, regardless of whether it provides a good income or costs money.

Anonymous said...

«An old lady may want to employ 10 care helpers if their wage was $1 per day. Indeed that's how it works in less developed nations, where a very large percentage of workers are servants on tiny monthly wages.»

A hundred years ago or even more recently in "advanced" countries like the UK 30-40% of working age people were employed as house servants, usually for subsistence plus a tiny cash allowance.

Sandwichman said...

"Oh please this is a real dumb way to conduct this argument..."

Have you read Keynes's General Theory of Employment, Interest and Money? In it he explains why it ISN'T "obviously and strictly true." Marx also explained why is isn't obviously and strictly true.

Sandwichman said...

Of course, if your first premise is that it is "obviously and strictly true," then your conclusion will inevitably also be that it is obviously and strictly true. That is a tautology. Nothing I can do about that.

Anonymous said...

Keynes and Marx were discussing the difficulty of giving every willing labor supplier "good incomes" not just "employment", as they were assuming prevailing wages or at least subsistence wages.

Conservatives economists take "employment" literally and it is really indisputable that all the unemployed in the USA today would be in "employment" if they were willing to pay every month to have a job or to work for free or for $1/month. Most would not survive for long, but as long as they did they would be in "employment".

Sandwichman said...

If you will read my post -- rather than jump to conclusions -- you may notice that I don't use the word "employment" that you get so excited about. I refer to the "unemployment is always voluntary" placebo and you seem to think this opens the door wide for interpreting my post in a conservative enabling way. I suppose one could also say that since I use words, I'm only encouraging the devil to also use words.

You are getting all worked up about what an interpretation of an interpretation of an interpretation might lead to. Relax. Take a deep breath. Read what I wrote. Stop there. What I wrote means what it says, not what you think somebody else might twist it to mean. If some conservative jerkpile twists my words, I'll take care of the rat, myself.

Peter T said...

Actually, as someone who has spent a lot of time in India, the ability to hire a lot of people cheaply does not lead to full employment. It does produce a large servant class, but also a large pauper class. But Dickens (and Marx) both knew that.

But mainstream economists want to play with their models....

Myrtle Blackwood said...

A factory initially makes 5 cars per day. Processes are changed to increase output. Production goes up to 10 cars per day. Eventually the use of an army of robots increases car production to 1 million cars per day.

More and more money goes to the owners of the car production units and less and less to fewer and fewer workers....but quite quickly the market for cars drops notably.

The problem of production has not been solved. An excess of labour is created whilst industry draws more heavily on unrenewable resources of energy and materials. The content and nature of economic growth is crucial.

The conventional solution appears to be (in a world that is neither resource depleted nor polluted) is to simply give more and more money to unemployed workers....and/or pay them to create luxuries for the new class of super-rich.

The trouble with such is that people have souls. Industry needs to satisfy criteria which is not purely 'economic'. Also basic needs, such as housing, cannot be met with small weekly stipends of money that are used to fulfil other fundamental requirements for existence.