Duh, the answer is no. But Alex Tabarrok at marginal revolution, http://www.marginalrevolution.com/marginalrevolution/2009/08/inefficient-journal-submission-policies.html#comments, told his microbiologist wife that if she submitted a paper with correct Reference formats she would be signaling that she is a "newbie," with nobody who knows anything doing that in economics. She followed his advice only to have her paper rejected upfront. He complained about an "inefficient equilibrium" of journal policies in the hard sciences, only to have lots of hard scientists point out that it is two lines of LaTEX to change formats. Of course, few economics journals require LaTEX, and few economists use it Now it is true that econ journal editors generally tolerate submissions not in correct formats, which get "fixed" later if accepted, and a majority of submissions do come in that way. But it is no signal of intelligence, experience, or anything else impressive for several reasons.
1) It is a pain in the ass for editors to ask accepted authors to fix this later, and is costly in time if the journal staff has to do the fixing themselves.
2) If anything, journal editors are somewhat sympathetic to "newbies" trying to get tenure and publish out of their dissertations.
3) Trying to signal that one is "experienced" by any means is a lost cause unless the editor has heard of the submitter. If the editor has not heard of the submitter and realizes the person is experienced, this simply counts against them, a loser who has been around but so pathetic or unproductive or worthless that that they are unheard of by the editor. If the editor has not heard of someone, better almost to be a "newbie." (Although, of course, showing multiple citations to one's own work in respectable journals in the paper can offset such an impression.)
3) Having correct Reference formats may signal that the paper has been submitted first to the journal, which sometimes strokes the egos of editors.
4) Of course, worse than simply having incorrect formats (which is tolerated in econ) is having sloppily incomplete or incorrect references, with papers cited in the paper not there or papers in the references not cited, or misspelled names or incorrect years or paper titles, etc. This is just incompetence and signals such pretty clearly. Bottom line is that References that are complete and accurate and in proper format signal professionalism, not some damning lack of experience.
Saturday, August 22, 2009
San Quentin vs. Higher Eduction in California
No words needed; the numbers speak volumes.
Thanks to Seth Sandronsky
http://michaelperelman.wordpress.com/?attachment_id=1219
Thanks to Seth Sandronsky
http://michaelperelman.wordpress.com/?attachment_id=1219
Friday, August 21, 2009
Open Letter to the Queen
Your Majesty,
We, the undersigned, noted with interest the letter to Your Majesty of 22nd July 2009 from the British Academy in which they respond to your question about how the current economic meltdown was missed. They talked of a "failure of the collective imagination of many bright people" and a "psychology of denial".
The Academy wrote "It is difficult to recall a greater example of wishful thinking combined with hubris." You will be aware of HRH The Prince of Wales's speech on 9th July 2009 in which His Royal Highness focused on far more serious examples of wishful thinking and hubris. We are writing to you because we are concerned that the British Academy's letter focuses on one particular aspect of current insecurity, namely financial, failing to address the wider context of more serious macro issues facing mankind. We are also writing to the Academy to invite them to debate these issues with us.
Symptoms of a much greater systemic failure
We live in tumultuous times. Many developed world citizens are losing their livelihoods. The effects on the world's poorest will, as ever, be dreadful. However we are surprised that the Academy has not addressed anything outside the narrow remit their letter covered. Far greater insecurities threaten the world's poorest due to our effects on the natural world.
The letter ignores the physical constraints which are central to this bubble and indeed most bubbles. It speaks of "the bigger picture" and of "individual risks being small" and "the system as a whole being vast", yet, for us has a limited horizon.
Our premise is that our current economic malaise is symptomatic of a far more serious systemic failure to acknowledge what Archbishop Rowan Williams has identified in saying "It has been said that 'the economy is a wholly-owned subsidiary of the environment'. The earth itself is what ultimately controls economic activity because it is the source of the materials upon which economic activity works".
Energy underlies everything – Scylla and Charybdis of peak oil and climate change. The underlying cause of the current economic meltdown is a multi-generational debt-binge inextricably linked to a concomitant multi-generational energy-binge. The Academy's letter focuses on some "imbalances in the global economy". However, the key to addressing our current situation is to recognise the far more serious imbalances between our insatiable hunger for energy, its finite nature and the environmental pollution in its use.
Energy is the lifeblood of any economy. Our exponential debt-based money system is in turn based on exponentially increasing energy supplies. It is therefore clear that the supply of that energy deserves our very highest attention. That this attention doesn't appear in the Academy's analysis is deeply worrying.
The impending peaking of production of oil and other hydrocarbons, along with the resulting peak in food production and everything on which oil relies, is now widely accepted. Leading UK companies including Arup, Scottish and Southern Energy, Solarcentury and Virgin have warned that a peak in cheap, easily available oil production is likely to hit by 2013, posing a grave risk to the economy. On 2nd August 2009, the International Energy Association's Chief Economist, Dr Fatih Birol, warned of an oil crisis in 2010.
The letter refers to the "overheating economy" but gives no mention of the effect and cause of the overheating of planet Earth. Climate change is now recognised by the world's scientists, political and business leaders as the most serious threat to mankind and is described by Sir Nicholas Stern as "the greatest market failure of our times". On an almost daily basis we get increasingly urgent signals that unstoppable, runaway climate chaos is almost upon us.
Members of The Prince of Wales's UK Corporate Leaders Group on Climate Change, including AXA, Shell, Tesco, Unilever and Vodafone, have now repeatedly asked politicians for more urgent action on climate change.
Growth versus prosperity
The Academy's letter mentions unprecedented global economic growth - yet it fails to mention the rapidly escalating environmental destruction caused by this insatiable growth. It also mentions the poor of the developing world who have been brought out of poverty to 'prosperity'; but not the far greater numbers condemned to an increasingly inequitable world and the ravages of peak-food and climate change.
Not just for ourselves, but also for the poor and disenfranchised, we in the rich world must now seek to redefine 'prosperity' and shift away from blind growth to an economic development fit for our damaged world. The distinction between quantitative 'growth' and qualitative 'development' is key.
A reverse gear for atmospheric carbon is needed and energy use must be radically reduced and redirected where it is most needed – into investments in a radical transition to a zero-carbon economy and the alleviation of poverty. However, the current Marshall-plan, to pump yet more economic growth, with a green veneer, risks plunging us headlong back into climate chaos.
As Professor Tim Jackson, author of the Sustainable Development Commission (SDC) report 'Prosperity Without Growth?' says: "Faced with the current recession, it is understandable that many leaders at the G20 Summit will be anxious to restore business as usual. But governments really need to take a long, hard look at the effects of our single-minded devotion to growth - effects which include the recession itself..... The myth of growth has failed us. It has failed, spectacularly, in its own terms, to provide economic stability and secure people’s livelihoods".
The letter talks of a "general feel-good factor", but doesn't address the fact that, in the developed world, general wellbeing long ago ceased to be linked with GDP growth. In July, The Prince of Wales called for an end to the "consumerist society where growth is an end in itself." His Royal Highness also said that "progress has come at a price" and that it "depends on how you define both 'growth' and prosperity’...in our modern situation these 'ends' have become dangerously confused with the 'means', to the point where, now, wealth, innovation and growth have become the final goals."
The debate is changing
Sir Jonathon Porritt says in his recent report Living Within our Means : "In their bones, world leaders know that if the global economy keeps growing at around 5% per annum (as it has done over the last couple of decades), then its game over for human civilisation as we know it." Adair Turner, past head of the CBI and now Chair of the FSA and Climate Change Committee, says in Do Good Live Have to Cost the Earth that we need to "dethrone growth'.
Despite the sclerotic nature of our politics, a notable few political figures are beginning to engage with the 'progress beyond growth' debate. These include President Horst Köhler, President Barroso, EU Environment Commissioner Dimas, OECD Secretary General Angel Gurria, David Cameron, the Swedish centre-right and President Sarkozy's Stiglitz Commission.
Beyond rhetoric there has been little deeper debate in politics about these issues. As the Sustainable Development Commission puts it, "We see [today] a society and a Government whose primary objective is still the achievement of economic growth as conventionally understood and measured, with as much social justice and environmental protection as can be reconciled with that central goal. We envisage a society whose primary goal should be the wellbeing of society itself and of the planetary resources and environment that sustains us all, with economic objectives shaped to support that central goal rather than the other way around."
Yes we can
Things can change. Harvard Professor John Quelch’s 2008 study Too Much Stuff says: "The mass consumption of the 1990s is fast fading in the rearview mirror."
Our current form of corporate-consumer-capitalism has been shown to be what many of us knew it was: a fundamentally flawed system which badly needs updating. Jeremy Paxman has asked if we are seeing the "end of capitalism". Martin Wolf of the FT has said that "the dream of global free market capitalism is dead". Bank of England Chair Sir Mervyn King has agreed saying Wolf's comment "strikes a chord."
Thomas Freidman said recently in the New York Times "Let’s today step out of the normal boundaries of analysis of our economic crisis and ask a radical question: What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it's telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall — when Mother Nature and the market both said: 'No more'."
Thankfully there is a vibrant debate in civil society on these issues. Groups like Transition Towns, described by Jeremy Leggett as 'scalable microcosms of hope', and digital democracy Moveon.org, Getup.org, Dosomethingaboutit.org.uk, Localeyes.org and 38degrees.org.uk are giving individual citizens and collectives a new voice and real power in politics of change.
An invitation
It would appear from the British Academy's letter that they are not aware of the rapidly growing and vibrant debate around these issues. We agree with them about the need for "authorities with the power to act" and for appropriate levels of regulation fit for the task in hand. Their prescription is to consider how they "might develop a new, shared horizon-scanning capability". We will invite the Academy to join with us in a public dialogue about these issues and ask them to consider how this 'new capability' can make its primary horizon the the issues we raise in this letter.
We will of course report findings of such debate to Your Majesty.
Yours faithfully
Phillip Blond, CEO, ResPublica; Alain de Botton, Philosopher; Tom Burke CBE, co-founder E3G; Professor Herman Daly, Maryland University; Geraint Talfan Davies, Chairman, Institute of Welsh Affairs; Professor Lord Anthony Giddens; Stephen Hale, CEO Green Alliance; Andy Hobsbawm, Chair Agency.com, Founder dothegreenthing.com; Rob Hopkins, Founder of Transition Towns; Prof Tim Jackson, SDC; Tony Juniper, Author and ex Executive Director, Friends of the Earth; Professor Melissa Lane, Princeton University; Neal Lawson, Chair, Compass; Jeremy Leggett, Chair, Solar Century; Peter Lipman, Chair, Transition Network; Jules Peck, Partner, Abundancy Partners; Robert Phillips, Co-author, Citizen Renaissance; Sir Jonathon Porritt OBE, ex Chair, SDC; Mike Robinson, CEO, Royal Scottish Geographical Society, Chair, Stop Climate Chaos Scotland; John Sauven, Executive Director, Greenpeace; Anthony Seldon, Master, Wellington College; Matthew Taylor, CEO, the RSA; Professor Peter Victor; York University, Canada.
(Can't Stop) Endlessly Spouting Chapman II
by the Sandwichman
In 2001, the Government of Queensland further summarized Sandwichman's summary of Chapman's theory in its submission to the Australian Industrial Relations Commission's Reasonable Hours Test Case. At 400 words, it's the shortest comprehensive summary of Chapman's theory I know of.
In 2001, the Government of Queensland further summarized Sandwichman's summary of Chapman's theory in its submission to the Australian Industrial Relations Commission's Reasonable Hours Test Case. At 400 words, it's the shortest comprehensive summary of Chapman's theory I know of.
5.2.1 Theoretical review
The study of the relationship between work intensity and fatigue owes much to S.J Chapman's theory of the hours of labour, where in 1909 Chapman demonstrated market failure in the determination of working time. This argument initially involves the establishment of a concept of 'optimal hours'. The main points of this argument can be summarised as follows:The second half of this argument explores whether the free market can arrive at the 'optimal' length of day, and can be summarised as follows:
- a mass of evidence indicating that reductions in hours of work had not led to proportionate declines in output;
- in modern industry fatigue was increasingly less physical in nature and more a combination of psychological and physiological as a result of specialization and increased need for mental concentration;
- the reduction of hours allowed better-rested workers to produce as much or more in the shorter hours;
- the total value of the output would initially rise as the working day increased but eventually the total output as well as the output per hour would decline as the working day became so long that it prevented adequate recovery from fatigue for workers;
- this is the case because, beyond a certain point, each additional hour of work would be contributing to the output of the current day's total output but at the expense of the following day's output capacity; and
- the intensity of the work involved would dictate the point at which total output begins to fall and thus the length of the 'optimal' working day.
- the maintenance of a long-term optimum by employers would require short-term restraint;
- each individual employer could never be certain of reaping the benefit of their restraint as another firm could potentially entice the employer's well-rested workers away with a wage premium;
- therefore the optimal output work time is a form of investment without equity;
- simultaneously, Chapman assumed that workers would choose a longer working day than was prudent (although not as long as the working day preferred by employers), primarily because of a general short-sightedness that would mean workers would consider their immediate earning capacity more than their long term earning capacity; and
- the outcome in a free market situation would therefore be one where employers and employees acting in self-interest would each tend to select a working day that was longer than the 'optimal' hours.
Wednesday, August 19, 2009
Flash: The Head of the Bank of England Confesses
"As I look back, it now seems that, with all the thought and work and good intentions, which we provided, we achieved absolutely nothing ... nothing that I did, and very little that old Ben did, internationally produced any good effect -- or indeed any effect at all except that we collected money from a lot of poor devils and gave it over to the four winds."
Boyle, Andrew. 1967. Montagu Norman (London: Cassell): pp. 327-38.
Boyle, Andrew. 1967. Montagu Norman (London: Cassell): pp. 327-38.
(Can't Stop) Endlessly Spouting Chapman
by the Sandwichman
Here's a shorter summary of the Chapman model, originally published in "The 'lump-of-labor' case against work-sharing: populist fallacy or marginalist throwback." from Working Time: International trends, theory and policy perspectives and reposted on MaxSpeak in 2006.
Chapman revisited the issue of the hours of labor in his presidential address -- delivered in Winnipeg, Manitoba -- to the British Association for the Advancement of Science, Section on Economic Science and Statistics (1909). That analysis came to be considered the "classical statement of the theory of 'hours' in a free market" (Hicks 1932: 102n.; Nyland 1989). Arthur Pigou restated Chapman's argument in Economics of Welfare (Pigou 1952; 462-469). Alfred Marshall referred to Chapman's analysis as authoritative, as did Lionel Robbins (Marshall 1961: 695; Robbins 1929: 25). Concluding his footnote reference to Chapman and Pigou, Hicks declared, "There is very little that needs to be added to the conclusions of these authorities." Very little, perhaps, other than the strange occurrence that although Chapman's argument has never been challenged, economists today are oblivious to its major conclusions. Most are unaware not only of the theory's authoritative status but even of its existence.
Unlike [John] Rae, Chapman saw no particular danger in workers' views -- "fallacious or otherwise" -- about the mechanics of distribution (Chapman: 365). On the contrary, Chapman suggested that such attitudes probably had protected workers "against the injurious consequences of short-sightedness."
Chapman began his discussion of the hours of labor by reviewing the mass of evidence that reductions in the hours of work had not led to proportionate declines in output. Chapman attributed the phenomenon to the fact that as production methods become more intensive, workers require more leisure time to fully recover from the fatigue of work. He emphasized that in modern industry fatigue was increasingly psychological, resulting from the demands of modern industry for specialization and mental concentration as well as from the workers' attitude toward leisure rather than from the strictly physiological demands of the work. When the hours of labour were reduced, the better-rested workers were often able to produce as much or more in the shorter hours than they had previously in longer hours.
The total value of the output from standard working days of different lengths would thus initially increase as the day became longer but eventually the total output -- not only the output per hour -- would decline as the standard day became too long to allow the worker to recover sufficiently from fatigue. Beyond a certain point, each additional hour of work would continue to add a quantum of output to the current day's total output but only at the expense of reducing the next day's hourly pace. What that point was, Chapman maintained, depended on the intensity of the specific production methods and thus would vary in response to changes in those methods.
Having established the idea of an optimal length of standard working day that would maximize output, Chapman next turned to the questions of whether such an optimal length would likely be established by the workings of a free market and whether the optimal length of day for output coincided with the optimal length from the perspective of the workers' welfare. His conclusions in both cases were negative.
From the perspective of the employer, Chapman argued, the optimal length of day for output could only be achieved if all employers acted in enlightened accord. This is because the maintenance of the long-term optimum would always require some short-term restraint. A single employer could never be entirely certain of reaping the benefit of that restraint. Another firm could always potentially offer a small wage premium and hire away the first firm's well-rested workers. For employers, the optimal output work-time would thus be a form of investment without equity:
In the two decades following Chapman's address, his demonstration of market failure in the determination of working time led to systematic empirical study of the relationship between fatigue and work intensity. According to Nyland (1989), however, attention to the question of work intensity faded during the 1930s and after, largely because "the fact that worktime had both a temporal and intensive character made it difficult to utilise marginal productivity theory to determine the return on various factors of production" (1989: 33). As a simplifying abstraction, economists assumed that the given working day was of optimal length. Eventually, the hypothetical -- and antithetical -- status of that assumption came to be overlooked. Economists negligently reverted to a pre-Chapman faith that unencumbered market forces would spontaneously lead to the establishment of an optimal length of work time.
Here's a shorter summary of the Chapman model, originally published in "The 'lump-of-labor' case against work-sharing: populist fallacy or marginalist throwback." from Working Time: International trends, theory and policy perspectives and reposted on MaxSpeak in 2006.
Chapman revisited the issue of the hours of labor in his presidential address -- delivered in Winnipeg, Manitoba -- to the British Association for the Advancement of Science, Section on Economic Science and Statistics (1909). That analysis came to be considered the "classical statement of the theory of 'hours' in a free market" (Hicks 1932: 102n.; Nyland 1989). Arthur Pigou restated Chapman's argument in Economics of Welfare (Pigou 1952; 462-469). Alfred Marshall referred to Chapman's analysis as authoritative, as did Lionel Robbins (Marshall 1961: 695; Robbins 1929: 25). Concluding his footnote reference to Chapman and Pigou, Hicks declared, "There is very little that needs to be added to the conclusions of these authorities." Very little, perhaps, other than the strange occurrence that although Chapman's argument has never been challenged, economists today are oblivious to its major conclusions. Most are unaware not only of the theory's authoritative status but even of its existence.
Unlike [John] Rae, Chapman saw no particular danger in workers' views -- "fallacious or otherwise" -- about the mechanics of distribution (Chapman: 365). On the contrary, Chapman suggested that such attitudes probably had protected workers "against the injurious consequences of short-sightedness."
Chapman began his discussion of the hours of labor by reviewing the mass of evidence that reductions in the hours of work had not led to proportionate declines in output. Chapman attributed the phenomenon to the fact that as production methods become more intensive, workers require more leisure time to fully recover from the fatigue of work. He emphasized that in modern industry fatigue was increasingly psychological, resulting from the demands of modern industry for specialization and mental concentration as well as from the workers' attitude toward leisure rather than from the strictly physiological demands of the work. When the hours of labour were reduced, the better-rested workers were often able to produce as much or more in the shorter hours than they had previously in longer hours.
The total value of the output from standard working days of different lengths would thus initially increase as the day became longer but eventually the total output -- not only the output per hour -- would decline as the standard day became too long to allow the worker to recover sufficiently from fatigue. Beyond a certain point, each additional hour of work would continue to add a quantum of output to the current day's total output but only at the expense of reducing the next day's hourly pace. What that point was, Chapman maintained, depended on the intensity of the specific production methods and thus would vary in response to changes in those methods.
Having established the idea of an optimal length of standard working day that would maximize output, Chapman next turned to the questions of whether such an optimal length would likely be established by the workings of a free market and whether the optimal length of day for output coincided with the optimal length from the perspective of the workers' welfare. His conclusions in both cases were negative.
From the perspective of the employer, Chapman argued, the optimal length of day for output could only be achieved if all employers acted in enlightened accord. This is because the maintenance of the long-term optimum would always require some short-term restraint. A single employer could never be entirely certain of reaping the benefit of that restraint. Another firm could always potentially offer a small wage premium and hire away the first firm's well-rested workers. For employers, the optimal output work-time would thus be a form of investment without equity:
The reforming employer would run the risk of paying the whole cost of the labour value created by shorter hours and getting little in return; other employers might secure and exhaust the new labour value and no permanent good would be effected (1909: 361).From the perspective of the worker, the optimal length of day could, for all practical purposes, be considered to be shorter than the optimal length of the day for output. Chapman considered three elements in assessing the optimal day for the worker:
- the wage, which Chapman assumed for the purpose of analysis to exactly equal the worker's marginal productivity;
- the marginal value of leisure, which Chapman assumed to vary in response to changes in the level of wages; and
- the disutility of work, which Chapman assumed to also be a function of the length of the working day -- during some intermediate period of the working day, Chapman assumed that work could often be experienced as pleasurable.
In the two decades following Chapman's address, his demonstration of market failure in the determination of working time led to systematic empirical study of the relationship between fatigue and work intensity. According to Nyland (1989), however, attention to the question of work intensity faded during the 1930s and after, largely because "the fact that worktime had both a temporal and intensive character made it difficult to utilise marginal productivity theory to determine the return on various factors of production" (1989: 33). As a simplifying abstraction, economists assumed that the given working day was of optimal length. Eventually, the hypothetical -- and antithetical -- status of that assumption came to be overlooked. Economists negligently reverted to a pre-Chapman faith that unencumbered market forces would spontaneously lead to the establishment of an optimal length of work time.
What "Academic Standards"?
by the Sandwichman
Posner writes at the end of his column:
Be that as it may, below is an as yet unanswered email the Sandwichman sent two days ago to David Ellwood, Dean of the Harvard Kennedy School of Government regarding "the question of the ethical responsibility of academic economists":
Professor has 'lumpy' reasoning
Do Europeans really harbor an uncanny delusion that there is a "fixed amount of work to be done?" Do the resulting policies they espouse discourage hiring and reduce employment? That's the verdict pronounced by Harvard Professor Edward Glaeser. In an op-ed published last week in the Boston Globe, Professor Glaeser claimed that European policies restricting working hours are based on a lump of labor fallacy and are detrimental to employment.
Glaeser's parroting of the hoary fallacy claim is ill informed – and callous. The allegation has a curious history, originating as a yarn about workers' propensity to withhold work effort and evolving into reactionary textbook dogma about the futility of combating unemployment through reducing the hours of work.
One problem with the fallacy story is that there is no evidence for it or credible theory behind it. Unless, that is, countless repetition of unsubstantiated and implausible assertions counts as both theory and evidence. Here is some history:
In 1891, British lawyer and journalist, David Schloss, coined the phrase, "the theory of the lump of labour" – and decried it as a fallacy – in an article discussing workers' objections to piecework. As applied to shorter hours and unemployment, the theme originated with a Scottish journalist, John Rae, a proponent of shorter hours. Because reducing hours raised productivity, Rae discounted it as a remedy for unemployment. An American economist, Charles Beardsley, soon demonstrated Rae's argument to be inept.
At the turn of the twentieth century, the National Association of Manufacturers, under its militantly anti-union president, David Parry, raised the fallacy claim (minus the productivity gain) as its battle cry in the fight against legislation to establish an eight-hour day for government contractors.
In 1902, a U.S. Industrial Commission, appointed by Congress, concluded that, "there can be no question respecting the desirability of fewer hours, from every standpoint… arguments for reduction need no qualification from the standpoint of the workers and little from that of employers." John R. Commons, a founder of American labor economics, was principal researcher for that commission.
On August 26, 1909, Sydney Chapman presented what came to be regarded as the definitive theory of the hours of labor for neo-classical economics. Chapman's theory affirmed and gave algebraic expression to the conclusions of the U.S. Industrial Commission. Such notable economists as Alfred Marshall, Cecil Pigou, Lionel Robbins and John R. Hicks lauded Chapman's theory as authoritative.
In 1926, automaker Henry Ford introduced a five-day, forty-hour week in his factories. His rationale echoed arguments for shorter hours articulated some 60 years earlier by labor organizer Ira Steward. Six years later, at the height of the depression, economist Dorothy W. Douglas praised Steward's theory as "a philosophy of American wages and unemployment that sounds strangely apposite today." What most impressed Douglas was Steward's argument that long hours, low wages and unemployment lay at the root of economic depression.
Meanwhile, opposition to the Black-Connery thirty-hours bill came from 'orthodox' economists who also insisted that the proper way to stimulate economic recovery was to cut wages and slash government spending – positions few economists today would endorse. In 1937, the NAM – reversing itself to claim credit for an outcome it had long and adamantly opposed – erected billboards across the U.S. boasting the "world's shortest working hours" as the free enterprise fruit of the "American Way."
Toward the end of World War II, John Maynard Keynes wrote to the poet, T.S. Eliot, explaining that "the full-employment policy by means of investment is only one particular application of an intellectual theorem" and that the "ultimate solution" for unemployment was working less. Keynes had outlined these views two years earlier in a Treasury Department memorandum on "The Long Term Problem of Full Employment."
The above is only a sampling. Nevertheless, first-year economics students are diligently taught to "refute" a fallacy almost no one actually upholds. Never mind the allegation itself is bogus, incoherent and obstructs thinking about how to combat unemployment.
In the world outside Professor Glaeser's Harvard classroom there were 35,000 fewer private sector jobs in the U.S. in July 2009 than there were ten years earlier. One would hope economists would climb down from their lofty pulpits long enough to check their facts – and their dogmas.
Tom Walker
Vancouver, BC, CANADA
Tom Walker is author of two historical studies: "The 'lump of labor' case against work-sharing: populist fallacy or marginalist throwback?" and "Why Economists dislike a lump of labor."
Posner writes at the end of his column:
This raises the question of the ethical responsibility of academic economists... who write for the media or join the government, either to adhere to academic standards in their nonacademic work or to make clear to the public that they are on holiday from those standards.Sandwichman would like to know just what academic standards these are? Academic economists make shit up all the time, both in their nonacademic work and in their academic work. The only academic standards I know about for academic economists is "don't rock the boat" and "go along to get along".
Be that as it may, below is an as yet unanswered email the Sandwichman sent two days ago to David Ellwood, Dean of the Harvard Kennedy School of Government regarding "the question of the ethical responsibility of academic economists":
Dear Dean Ellwood,
I note that the Harvard Kennedy School website has posted Professor Edward Glaeser's Boston Globe op-ed from August 8. While I welcome Professor Glaeser's viewpoint and substantially agree with his argument regarding the efficacy of the Cash-for-Clunkers program I am writing to inform you that Professor Glaeser's piece also contains a egregious item of misinformation and misrepresentation with reference to the so-called "lump-of-labor fallacy", the alleged motives for recent policy initiatives in Europe regulating the hours of work and the outcomes of those policy initiatives.
I have extensively researched the quasi-fraudulent nature of the lump-of-labor fallacy claim and have published the results of my research in two scholarly publications, one in a peer reviewed journal, the Review of Social Economy and the other in the anthology, Working Time: International trends, theory and policy perspectives, edited by Lonnie Golden and Deborah M. Figart. I should point out that my 2007 article, "Why Economists Dislike a Lump of Labor" received over 400 abstract views last month making it the top ranking article in that category on the Research Papers in Economics website. Below is the abstract for that article:----------------------------
"The lump-of-labor fallacy has been called one of the “best known fallacies in economics.” It is widely cited in disparagement of policies for reducing the standard hours of work, yet the authenticity of the fallacy claim is questionable, and explanations of it are inconsistent and contradictory. This article discusses recent occurrences of the fallacy claim and investigates anomalies in the claim and its history. S.J. Chapman's coherent and formerly highly regarded theory of the hours of labor is reviewed, and it is shown how that theory could lend credence to the job-creating potentiality of shorter working time policies. It concludes that substituting a dubious fallacy claim for an authentic economic theory may have obstructed fruitful dialogue about working time and the appropriate policies for regulating it."
After I read Professor Glaeser's op-ed in the Boston Globe, I emailed him offering to debate hiim on his lump of labor assertions. I received no reply. I also wrote a an op-ed article in response and sent it to the Boston Globe. I have also received no reply from the Globe. I am writing to you to request that, in the interest of balance and of critical scholarship, you post and publicize my response to Professor Glaeser's lump-of-labor claims on the Kennedy School website. I am pasting the text to that response below. I look forward to your positive response to this request.
Yours sincerely,
Tom Walker
Professor has 'lumpy' reasoning
Do Europeans really harbor an uncanny delusion that there is a "fixed amount of work to be done?" Do the resulting policies they espouse discourage hiring and reduce employment? That's the verdict pronounced by Harvard Professor Edward Glaeser. In an op-ed published last week in the Boston Globe, Professor Glaeser claimed that European policies restricting working hours are based on a lump of labor fallacy and are detrimental to employment.
Glaeser's parroting of the hoary fallacy claim is ill informed – and callous. The allegation has a curious history, originating as a yarn about workers' propensity to withhold work effort and evolving into reactionary textbook dogma about the futility of combating unemployment through reducing the hours of work.
One problem with the fallacy story is that there is no evidence for it or credible theory behind it. Unless, that is, countless repetition of unsubstantiated and implausible assertions counts as both theory and evidence. Here is some history:
In 1891, British lawyer and journalist, David Schloss, coined the phrase, "the theory of the lump of labour" – and decried it as a fallacy – in an article discussing workers' objections to piecework. As applied to shorter hours and unemployment, the theme originated with a Scottish journalist, John Rae, a proponent of shorter hours. Because reducing hours raised productivity, Rae discounted it as a remedy for unemployment. An American economist, Charles Beardsley, soon demonstrated Rae's argument to be inept.
At the turn of the twentieth century, the National Association of Manufacturers, under its militantly anti-union president, David Parry, raised the fallacy claim (minus the productivity gain) as its battle cry in the fight against legislation to establish an eight-hour day for government contractors.
In 1902, a U.S. Industrial Commission, appointed by Congress, concluded that, "there can be no question respecting the desirability of fewer hours, from every standpoint… arguments for reduction need no qualification from the standpoint of the workers and little from that of employers." John R. Commons, a founder of American labor economics, was principal researcher for that commission.
On August 26, 1909, Sydney Chapman presented what came to be regarded as the definitive theory of the hours of labor for neo-classical economics. Chapman's theory affirmed and gave algebraic expression to the conclusions of the U.S. Industrial Commission. Such notable economists as Alfred Marshall, Cecil Pigou, Lionel Robbins and John R. Hicks lauded Chapman's theory as authoritative.
In 1926, automaker Henry Ford introduced a five-day, forty-hour week in his factories. His rationale echoed arguments for shorter hours articulated some 60 years earlier by labor organizer Ira Steward. Six years later, at the height of the depression, economist Dorothy W. Douglas praised Steward's theory as "a philosophy of American wages and unemployment that sounds strangely apposite today." What most impressed Douglas was Steward's argument that long hours, low wages and unemployment lay at the root of economic depression.
Meanwhile, opposition to the Black-Connery thirty-hours bill came from 'orthodox' economists who also insisted that the proper way to stimulate economic recovery was to cut wages and slash government spending – positions few economists today would endorse. In 1937, the NAM – reversing itself to claim credit for an outcome it had long and adamantly opposed – erected billboards across the U.S. boasting the "world's shortest working hours" as the free enterprise fruit of the "American Way."
Toward the end of World War II, John Maynard Keynes wrote to the poet, T.S. Eliot, explaining that "the full-employment policy by means of investment is only one particular application of an intellectual theorem" and that the "ultimate solution" for unemployment was working less. Keynes had outlined these views two years earlier in a Treasury Department memorandum on "The Long Term Problem of Full Employment."
The above is only a sampling. Nevertheless, first-year economics students are diligently taught to "refute" a fallacy almost no one actually upholds. Never mind the allegation itself is bogus, incoherent and obstructs thinking about how to combat unemployment.
In the world outside Professor Glaeser's Harvard classroom there were 35,000 fewer private sector jobs in the U.S. in July 2009 than there were ten years earlier. One would hope economists would climb down from their lofty pulpits long enough to check their facts – and their dogmas.
Tom Walker
Vancouver, BC, CANADA
Tom Walker is author of two historical studies: "The 'lump of labor' case against work-sharing: populist fallacy or marginalist throwback?" and "Why Economists dislike a lump of labor."
Posner’s Attack on Romer
With hat tip to Mark Thoma, let me cite a couple of lines from Richard Posner. First:
Did he even read Romer’s analysis before attaching her? Yes, the stimulus kept output from falling even further. In fact, check this out from Posner:
That’s right boys and girls – Posner recognizes that the economy was in a free fall. But it appears (just maybe) that the free fall has stopped. Isn’t that what Dr. Romer said? So how is this intellectually dishonest?
Update: Brad DeLong has a number of suggestions for Mr. Posner including actually reading what Dr. Romer wrote on this topic.
Romer answers the question in her title: "Absolutely." And despite the reference to "five months" in the subtitle, her focus is on the second quarter of 2009 (April, May, and June) and her claim is that the stimulus had a dramatic effect on output and employment during that quarter. I do not think her analysis is responsible, and I am concerned with the fact that academic economists, when they become either public officials or public intellectuals (like Paul Krugman), leave behind their academic scruples.
Did he even read Romer’s analysis before attaching her? Yes, the stimulus kept output from falling even further. In fact, check this out from Posner:
Let me make clear at the outset that I support the stimulus, though I wish it had been better designed. I support it for two reasons. The first is that, given the state of panic of the economy last winter, and the limited efficacy of the measures already taken to arrest the economic plunge
That’s right boys and girls – Posner recognizes that the economy was in a free fall. But it appears (just maybe) that the free fall has stopped. Isn’t that what Dr. Romer said? So how is this intellectually dishonest?
Update: Brad DeLong has a number of suggestions for Mr. Posner including actually reading what Dr. Romer wrote on this topic.
Tuesday, August 18, 2009
Terrorist T-Shirts
How can people have been arrested for wearing anti-Bush T-shirts, while assault guns are ok?
Kim Dae-Jung, RIP
The human rights leader and dissident of South Korea who was sentenced to death by the military dictatorship in 1980, spent many years in jail, and was tortured, has died at 85. He came to serve as president of the nation, 1998-2003. During his term he made the first visit by a South Korean president to North Korea, making agreements for some degree of opening between the governments, some of these now being rolled back by the current government. He received the Nobel Peace Prize for his efforts, a truly admirable man.
One of the signs that wackos were in charge of US foreign policy during the Bush administration came early on in March, 2001. President Kim went to Washington to meet the new US president. Then Secretary of State Colin Powell was operating on the assumption that US policy would be a continuation of what had been going on in the last year or so of the Clinton administration that supported Kim's diplomatic efforts with the North. An hour before his meeting with Bush, the meeting was suddenly cancelled, which led to a loss of face by Kim and a major collapse of favorable attitudes towards the US in South Korea that have not recovered since. We now know that this was due to Cheney and Rumsfeld's interventions, especially by Cheney, who argued to pressure the North Koreans more aggressively because they would collapse like the Soviets 20 years ago. Of course the outcome of this inane policy was that they got nuclear weapons and have not yet collapsed. In any case, I am prepared to join others here in South Korea in mourning the death of this heroic leader of theirs who was so stupidly humiliated by the Bush administration.
One of the signs that wackos were in charge of US foreign policy during the Bush administration came early on in March, 2001. President Kim went to Washington to meet the new US president. Then Secretary of State Colin Powell was operating on the assumption that US policy would be a continuation of what had been going on in the last year or so of the Clinton administration that supported Kim's diplomatic efforts with the North. An hour before his meeting with Bush, the meeting was suddenly cancelled, which led to a loss of face by Kim and a major collapse of favorable attitudes towards the US in South Korea that have not recovered since. We now know that this was due to Cheney and Rumsfeld's interventions, especially by Cheney, who argued to pressure the North Koreans more aggressively because they would collapse like the Soviets 20 years ago. Of course the outcome of this inane policy was that they got nuclear weapons and have not yet collapsed. In any case, I am prepared to join others here in South Korea in mourning the death of this heroic leader of theirs who was so stupidly humiliated by the Bush administration.
Did William Petty (1623-1687) pioneer the carbon tax?
It is stable, easier to measure, hard to game
"Of all the Accumulative Excizes, that of Harthmoney or Smoak-money seems the best; and that onely because the easiest, and clearest, and fittest to ground a certain Revenue upon; it being easie to tell the number of Harths, which remove not as Heads or Polls do: Moreover, 'tis more easie to pay a small Tax, then to alter or abrogate Harths, even though they are useless and supernumerary; nor is it possible to cover them, because most of the neighbours know them; nor in new Building will any man who gives forty shillings for making a Chimney be without it for two."
"Of all the Accumulative Excizes, that of Harthmoney or Smoak-money seems the best; and that onely because the easiest, and clearest, and fittest to ground a certain Revenue upon; it being easie to tell the number of Harths, which remove not as Heads or Polls do: Moreover, 'tis more easie to pay a small Tax, then to alter or abrogate Harths, even though they are useless and supernumerary; nor is it possible to cover them, because most of the neighbours know them; nor in new Building will any man who gives forty shillings for making a Chimney be without it for two."
Monday, August 17, 2009
"You never want a serious crisis to go to waste."
In the famous words of Rahm Emanuel, the crisis is doing its work very well. One might have expected that people would be picking up the pitchforks to demand change; instead, they have been whipped up to demand more of the same. Can anybody here imagine what would've happened if lefties had tried to hold their own tea parties at Republican meetings? People got arrested for wearing anti-Bush T-shirts.
As a result and crisis management of Rahm Emanuel, the United States continues its rapid degeneration in fine fashion. Here at home, we're about to begin the first of our furloughs was the beginning of the semester. Presumably, we have to sign some paper agreeing not to do any work, probably to protect the state of the university from any kind of legal liability for forcing us to work without pay. Thinking about a twist on next week's lecture during such times would be some kind of violation of a legal contract.
Gov. Arnold is on a tear, pushing for an undermining of the state pension plan.
Hopefully, health care reform -- now rebranded as insurance reform -- will be dead. I assume that the major reform will be to reduce the funding of Medicare.
Obama said that the choice is between hope and fear. He should have used the past tense. Either through political incompetence or some deep-seated neoconservative instincts, he has dashed any hopes -- at least, the hopes of any rational person. In many ways, we have the third Bush administration -- secrecy, war, and the coddling of the rich and powerful.
In the Confiscation of American Prosperity, I wrote: "Since the election of Franklin Roosevelt in 1932, every Democratic administration with the exception of Lyndon Johnson’s has been more conservative -- often far more conservative -- than the previous Democratic administration. Similarly, every elected Republican administration, with the single exception of George Herbert Walker Bush’s, has been more conservative than the previous Republican administration." At least, Obama has made sure that I will now have to revise a second edition.
As a result and crisis management of Rahm Emanuel, the United States continues its rapid degeneration in fine fashion. Here at home, we're about to begin the first of our furloughs was the beginning of the semester. Presumably, we have to sign some paper agreeing not to do any work, probably to protect the state of the university from any kind of legal liability for forcing us to work without pay. Thinking about a twist on next week's lecture during such times would be some kind of violation of a legal contract.
Gov. Arnold is on a tear, pushing for an undermining of the state pension plan.
Hopefully, health care reform -- now rebranded as insurance reform -- will be dead. I assume that the major reform will be to reduce the funding of Medicare.
Obama said that the choice is between hope and fear. He should have used the past tense. Either through political incompetence or some deep-seated neoconservative instincts, he has dashed any hopes -- at least, the hopes of any rational person. In many ways, we have the third Bush administration -- secrecy, war, and the coddling of the rich and powerful.
In the Confiscation of American Prosperity, I wrote: "Since the election of Franklin Roosevelt in 1932, every Democratic administration with the exception of Lyndon Johnson’s has been more conservative -- often far more conservative -- than the previous Democratic administration. Similarly, every elected Republican administration, with the single exception of George Herbert Walker Bush’s, has been more conservative than the previous Republican administration." At least, Obama has made sure that I will now have to revise a second edition.
Hours of Labour 12
by Sydney J. Chapman (translated and condensed by the Sandwichman)
Let me now summarize my main conclusions, and humanize them by restoring the moral and social elements from which our premises were to some extent abstracted. I have hitherto spoken of progress in such terms that the critic would have some excuse for charging me with narrowness of vision. Progress is not summed up in improvements in productive methods that reduce the cost of things, nor in these improvements combined with the application to production of ideas that render work pleasanter and more educative. Nor is it wholly, or in bulk, summed up even if we add improvements in distribution (resulting in a more satisfying sharing of wealth) and a greater responsiveness of production to the needs of the community. The essentials of what most of us really understand by progress are to be found only in the world of consciousness – in the spiritual constituents of the universe. I mean something we cannot exactly define if we are not philosophers – and hardly then – but something implying a full living, with understanding of life and its surroundings, including its ethics, and a living with volitional powers strong enough to enable us to follow our lights. As all this is actually, though vaguely, desired in some degree by humanity generally, it is no doubt covered by the satisfactions measured in demand, but the admission of its reflection on one plane cannot be regarded as its adequate inclusion in our social philosophy.
The most important aspect of the question of the length of the working day consists in its relation to the most intimate constituents of progress. Let us call progress in this sense "culture" – a term, perhaps the best of the single terms available, to convey my meaning. Now the world appears to be so designed that culture has on the whole a proportionately important place in the most primitive economic conditions. The hours of labor in such conditions may be long, but work is not so continuously absorbing that social intercourse during work is impossible, while variety of experience, contact with nature, and the calls made on initiative afford that intimacy with life as a whole, and that evocation of moral forces, which must be obtained in later stages of civilization largely through systematic education and books. I have argued above that each step in civilization brings intensified specialism. Work is by no means rendered non-cultural ultimately, but its cultural aspects are specialized, as are its objective aspects. Interest may be deepened on the whole, but it is no longer diffused; the need for thought and purpose may be no less than before, but the thought and purpose are of a confined character. The intensification of economic life that is implied is in itself all to the good, but the community must lose something of culture unless corresponding with this intensification there is an expansion of leisure and a specialized use of leisure for the purposes of culture. Certain expressions that have come into common use would seem to be significant of the needs and dangers of an industrial society highly advanced on the technical side. Thus we speak of the "cultured" classes and the "leisured" classes. For the attainment of culture, leisure is essential today as it was not in the past in quite the same sense, "culture" being broadly defined. I need not say that a "progress" that meant the "specializing out" of leisure for the sole enjoyment of one class would not commend itself to any reasonable person; and I do not discern any danger of "progress" of this sort; but there is some danger lest the growing importance of leisure generally, and of a proper use of leisure, should not be fully realized. Tangible things force themselves upon our attention as the more intangible do not, and some of us who have an economic bent of mind get into the way, in consequence, of thinking too much of the quantity of external wealth produced and too little of the balance between internal and external wealth. In ultimate terms, to those who care to put it that way, all wealth is life, as Ruskin insisted. There hardly appears to be any risk of a general underrating of external goods, but there is some risk of an underrating of the new needs of the life lived outside the hours devoted to production – which should themselves be, not a sacrifice to real living, but a part of it – and of an underrating of the dependence even of productive advance upon the widespread enjoyment and proper use of adequate leisure and an adequate income.
Let me now summarize my main conclusions, and humanize them by restoring the moral and social elements from which our premises were to some extent abstracted. I have hitherto spoken of progress in such terms that the critic would have some excuse for charging me with narrowness of vision. Progress is not summed up in improvements in productive methods that reduce the cost of things, nor in these improvements combined with the application to production of ideas that render work pleasanter and more educative. Nor is it wholly, or in bulk, summed up even if we add improvements in distribution (resulting in a more satisfying sharing of wealth) and a greater responsiveness of production to the needs of the community. The essentials of what most of us really understand by progress are to be found only in the world of consciousness – in the spiritual constituents of the universe. I mean something we cannot exactly define if we are not philosophers – and hardly then – but something implying a full living, with understanding of life and its surroundings, including its ethics, and a living with volitional powers strong enough to enable us to follow our lights. As all this is actually, though vaguely, desired in some degree by humanity generally, it is no doubt covered by the satisfactions measured in demand, but the admission of its reflection on one plane cannot be regarded as its adequate inclusion in our social philosophy.
The most important aspect of the question of the length of the working day consists in its relation to the most intimate constituents of progress. Let us call progress in this sense "culture" – a term, perhaps the best of the single terms available, to convey my meaning. Now the world appears to be so designed that culture has on the whole a proportionately important place in the most primitive economic conditions. The hours of labor in such conditions may be long, but work is not so continuously absorbing that social intercourse during work is impossible, while variety of experience, contact with nature, and the calls made on initiative afford that intimacy with life as a whole, and that evocation of moral forces, which must be obtained in later stages of civilization largely through systematic education and books. I have argued above that each step in civilization brings intensified specialism. Work is by no means rendered non-cultural ultimately, but its cultural aspects are specialized, as are its objective aspects. Interest may be deepened on the whole, but it is no longer diffused; the need for thought and purpose may be no less than before, but the thought and purpose are of a confined character. The intensification of economic life that is implied is in itself all to the good, but the community must lose something of culture unless corresponding with this intensification there is an expansion of leisure and a specialized use of leisure for the purposes of culture. Certain expressions that have come into common use would seem to be significant of the needs and dangers of an industrial society highly advanced on the technical side. Thus we speak of the "cultured" classes and the "leisured" classes. For the attainment of culture, leisure is essential today as it was not in the past in quite the same sense, "culture" being broadly defined. I need not say that a "progress" that meant the "specializing out" of leisure for the sole enjoyment of one class would not commend itself to any reasonable person; and I do not discern any danger of "progress" of this sort; but there is some danger lest the growing importance of leisure generally, and of a proper use of leisure, should not be fully realized. Tangible things force themselves upon our attention as the more intangible do not, and some of us who have an economic bent of mind get into the way, in consequence, of thinking too much of the quantity of external wealth produced and too little of the balance between internal and external wealth. In ultimate terms, to those who care to put it that way, all wealth is life, as Ruskin insisted. There hardly appears to be any risk of a general underrating of external goods, but there is some risk of an underrating of the new needs of the life lived outside the hours devoted to production – which should themselves be, not a sacrifice to real living, but a part of it – and of an underrating of the dependence even of productive advance upon the widespread enjoyment and proper use of adequate leisure and an adequate income.
Sunday, August 16, 2009
China vs. the US: Class Warfare
In July, Chinese workers murdered beat an executive to death in protesting an immanent privatization of their steel mill.
Canaves, Sky and James T. Areddy. 2009. "Murder Bares Worker Anger Over China Industrial Reform." Wall Street Journal (3 August)
The state responded by halting the sale.
McGregor, Richard. 2009. "Killing of China Steel Plant Boss Halts Sale." Financial Times (26 July).
Now the money is being returned to the intended privatizer
Bradsher, Keith. 2009. "Bowing to Protests, China Halts Sale of Steel Mill." New York Times (16 August).
While not condoning violence, the role of the state is interesting here. China is not always known for respecting the interests of those who stand in the way of what we in the United States call economic progress. I would assume that a violent military response would occur here (unless the union would reorganize as a bank). Instead, the Chinese negotiated with the workers.
I assume that some sort of punishments will be meted out, but even so, I am amazed at what happened.
Here is the latest from the NYT
Canaves, Sky and James T. Areddy. 2009. "Murder Bares Worker Anger Over China Industrial Reform." Wall Street Journal (3 August)
The state responded by halting the sale.
McGregor, Richard. 2009. "Killing of China Steel Plant Boss Halts Sale." Financial Times (26 July).
Now the money is being returned to the intended privatizer
Bradsher, Keith. 2009. "Bowing to Protests, China Halts Sale of Steel Mill." New York Times (16 August).
While not condoning violence, the role of the state is interesting here. China is not always known for respecting the interests of those who stand in the way of what we in the United States call economic progress. I would assume that a violent military response would occur here (unless the union would reorganize as a bank). Instead, the Chinese negotiated with the workers.
I assume that some sort of punishments will be meted out, but even so, I am amazed at what happened.
Here is the latest from the NYT
A Chinese provincial government halted the privatization of a state-owned steel mill on Sunday, apparently capitulating to thousands of workers who protested last week and took an official as hostage. The protests, in Henan Province in central China, were the latest sign of increasing labor activism in China’s steel industry, the world’s largest and a cornerstone of China’s construction-dependent economy. Three weeks earlier, rioting workers beat to death an executive who had been overseeing the sale of another state-owned steel company, Tonghua Iron and Steel, in northeast China’s Jilin Province, to a private business. The privatization of Tonghua was immediately postponed after that death.
The newspaper China Daily reported on Saturday that the police had tried to break through the ranks of workers on Friday in the latest incident, at the Linzhou Iron and Steel Company in the city of Anyang. China Daily did not say whether the police had been successful. Government agencies at all levels have been reluctant to use overwhelming force against protesting workers.
The official Xinhua news agency said that the workers had decided on Saturday to halt their protests, which had attracted up to 3,000 participants at a time, after a government mediation team agreed to reconsider the takeover; Xinhua did not mention what became of the official who had been held hostage.
Xinhua said that the Fengbao Iron and Steel Company had already paid $26.5 million of the $38.1 million it bid at an auction to acquire Linzhou Steel, which has 2,995 workers. The $26.5 million will be refunded, Xinhua said, citing an unidentified local official.
The success of Linzhou’s steel workers in blocking privatization could embolden workers in other industries, experts on Chinese labor issues said on Sunday. “It is no longer possible to push through privatization regardless, without considering the workers’ interests,” said Geoffrey Crothall, a spokesman for the China Labor Bulletin, a labor rights advocacy group based in Hong Kong.
In a sign of high-level interest in the recent unrest, the government-sponsored All-China Federation of Trade Unions has posted a prominent series of commentaries at the top of its Chinese-language Web site under the heading, “Corporate restructuring: participation of the trade union is essential.
In halting the privatization of the Linzhou mill, Xinhua said, the province’s government and its Communist Party committee issued a decision that, “Issues regarding the future of Linzhou Iron and Steel Co. Ltd. and benefits of its workers should be decided by its workers’ congress.” Chinese law has long required that privatizations be approved by the affected company’s workers’ congress. But local government officials and company managers have frequently been able to rig the approval until now by running the congresses themselves, Mr. Crothall said.
The global economic downturn has severely hurt the steel industry, which may be feeding labor unrest in the sector. Chinese steel exports were down 15.4 percent in the first half of this year. The Chinese government is also locked in a series of disputes with Australia over iron ore imports for steel production, the most notable of which led to the arrest of four Rio Tinto executives on accusations of bribery and trade secret infringement during price negotiations with Chinese steel makers. Rio Tinto has strongly denied any wrongdoing.
On Thursday, faced with a glut of steel-making capacity and many small steel companies vying to buy iron ore, Beijing officials ordered a three-year moratorium on the construction of any new steel mills or the expansion of existing mills.
But Beijing has had less success in its efforts to force a consolidation of existing steel mills, a step that might strengthen their bargaining power with the handful of multinationals that dominate the global iron ore business. Local and provincial government agencies have been wary of losing control of businesses that are often vital to their economies, and many workers are opposed.
Yet many older, less efficient steel mills are deeply troubled. The Linzhou mill is 40 years old and has not been operating since March because its sales fell, it ran short of cash and it failed to meet environmental standards.
... during the big shift toward private ownership from 1997 to 2001 [at] least 30 million workers at state-owned enterprises were laid off then, but local protests did not spread.
Talk (about fiscal policy) Is Cheap
Paul Krugman makes an interesting observation about Germany’s fiscal rhetoric and policy:
In other words, the Finance minister may be silly enough to advocate fiscal restraint during a recession but at least their actual policies avoided Herbert Hoover economics. In our country, the Republicans are also advocating Herbert Hoover economics but we are lucky enough to have smarter heads running fiscal policy today.
But consider this – Republicans also say they are for long-run fiscal restraint, which might be a very good thing if we actually had been practicing it for the past 28 years. Also, Republican led governments pushed fiscal irresponsibility over this period.
there’s a dissonance between what Germany says and what it does: the Finance minister denounces Keynesianism, but at least according to the IMF Germany’s actual stimulus package is quite substantial
In other words, the Finance minister may be silly enough to advocate fiscal restraint during a recession but at least their actual policies avoided Herbert Hoover economics. In our country, the Republicans are also advocating Herbert Hoover economics but we are lucky enough to have smarter heads running fiscal policy today.
But consider this – Republicans also say they are for long-run fiscal restraint, which might be a very good thing if we actually had been practicing it for the past 28 years. Also, Republican led governments pushed fiscal irresponsibility over this period.
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