Fordy Hours

by the Sandwichman

There seems to be a bit of a buzz around Utah's 4-day, forty-hour workweek. Last Friday, Scientific American posted an article, "Should Thursday Be the New Friday? The Environmental and Economic Pluses of the 4-Day Workweek,". Then on Monday, the New Republic's environment and energy blog, The Vine picked up on "The Case For A Four-Day Workweek," channeling the Scientific American piece. Tuesday it was Derek Thompson's Atlantic magazine business blog echoing TNR echoing SA in "In Praise of the Four-Day Workweek." Today the "A Four Day Work Week" meme surfaced at Andrew Sullivan's Daily Dish.

What's wrong with this picture? For starters, the four-day, 32-hour week was the big story back in 1957. That's more than a half century ago. Chevrolets had big tail fins, then. Remember? There's nothing sacred about 40 hours. But there appears to be an apprehension that there is something sacred about that number. Hey, that's the length of the workweek that Henry Ford introduced in 1926, one year before he introduced the Model "A" Ford. "The five day week is not the ultimate, and neither is the eight hour day," wrote Samuel Crowther in 1926. The forty hour workweek is, at best, a "Model 'A'" workweek.

Will you ever work a four-day week?

Do you really want a four-day week
By Sid Ross and Ed Kiester
Parade Magazine, September 1957

Will you ever work a four-day week?

Vice President Nixon thinks you will. During last fall's Presidential campaign, he predicted an industry-wide four-day schedule “In the not too distant future.”

Walter Reuther, president of the United Auto Workers, thinks you should. Next year, he has announced, he will ask auto manufacturers to place workers on a shorter workweek without reducing their pay. Battle lines already are being drawn.

But do you really want a four-day week? Is it really “inevitable,” as the UAW likes to suggest, in view of automation and increased production? Or is it more likely to disrupt all of America — its jobs, its homes, its schools, its likes and dislikes?

One of the “hottest” controversies in the U.S. today is wrapped up in the answers to these questions. To find them, PARADE talked to industrialists, labor leaders, Government spokesmen, economists, sociologists, psychologists, educators, clergymen— all of whom have a stake in a four-day week. Briefly, here are highlights from what they had to say:

Some Differences of Opinion

• Most Americans don’t want a four-day week, even at the same pay, according to the Trendex News Poll and the American Institute of Public Opinion.
• Increased productivity will make the four-day week a strong possibility by 1970, a Department of Labor expert says, if workers prefer it to extra income.
• A four-day week might be short-sighted. We Americans, some economists and industry groups claim, could double our standard of living in 25 years by staying on a five-day week.
• If a change comes, it will be gradual, beginning in assembly-line industries and working down to service jobs like police, hospitals, stores.
• Many workers probably would take a second job in preference to a third day off.
• Some businesses probably would have to adjust, but others would boom: sports equipment, vacation resorts, garden supplies, gasoline, autos.
• Prices probably would increase further; crime rates might rise. Family breakups might be more widespread. But, conversely, some families probably would be drawn wore tightly together.
• The whole question may be decided not by workers but by their wives. Do you think,’ one psychiatrist asked PARADE, “that American women can stand to have their husbands underfoot three days in a row?”

And women, according to the American Institute of Public Opinion (the Gallup Poll), are more opposed to the shortened workweek than men. Gallup’s figures show that 67 per cent oppose the idea (after all, their workweek wouldn’t be reduced) while only 54 per cent of men do.

Trendex, surveying union members, learned that 47 per cent favored a five-day week. Nearly 30 per cent wanted a four-day week now, and 14 per cent suggested keeping the five-day schedule a little longer, but voted for a four-day week eventually.

Most workers told Trendex they need more income, not more free time. When the poll suggested a choice between a four-day week at present pay levels or a five-day week with increased pay, most workers voted for the pay raise. Businessmen point also to Akron’s rubber workers, who work a six-hour-day, six-day week.

They are openly opposed to returning to a five-day schedule. Reason: More than a third of them use their free time to hold down a second job.

Some industrialists— and some labor leaders —think the Reuther campaign is aimed not at more time but at more money. (Ford’s top negotiator, John Bugas, has called the plan “a smokescreen,”) The UAW, these sources say, wants to work the same number of hours but wants overtime pay to start earlier. In any case, they contend, the auto industry is unlikely to grant a four-day week next year.

“We could work a one-day week right now,” says a spokesman for the National Association of Manufacturers, if we wanted to give up a lot of things. But of course no one does. Adds Dr. Solomon Fabricant, a New York University economist: “I doubt that a four-day week is likely in the near future without a reduction in pay — and people won’t pay the price.”

But by 1970 things may be different. Increasing productivity will make four days at slightly higher pay a strong possibility, according to Charles D. Stewart. deputy assistant secretary for standards and statistics of the U.S. Department of Labor. Even then, would you want to work four days—or shoot for more money by working five?

Three Months Off at a Time?

The answer: No one is certain. Some union officials think you might prefer to stay on a five-day week and take the extra time off in long week ends or three months off every five years. When Trendex asked one machinist how be felt about a four-day week, he replied, “With a four-day week, I’d have another day at home with nothing to do.”

What would you do with an extra day off? Many businessmen predict a further boom in leisure-time industries. More families would tackle the mushrooming outdoor sports, like boating, skiing, skin-diving.

Husbands would attempt new and more involved do-it-yourself projects. Movies would draw more customers, more television sets would be sold, sports events would play to bigger houses.

The nation would need more highways because more people would use their spare time to travel. More cars and more gasoline would be sold; vacation resorts would be overrun. (But one businessman points out, logically, that more leisure requires more spending money. Could you afford a four-day week?)

A switch to four days’ work would give you more time with your family, but this is a two-edged sword, PARADE was told repeatedly. One psychiatrist predicted a four-day week would mean more broken homes. “There are a lot of marginal families based on keeping out of each other’s way,” he told PARADE. “Husband and wife are thrown together just two days a week; they can stand that. But the extra day might be enough to push them over the brink.”

For other families, another psychiatrist says, three days together could be a great boon “It could be the answer to the problem of father-son relationship we see so much of now,” he says. The Rev. Dr. Ralph W. Stockman, of National Radio Pulpit, adds: “The American family could well be drawn more closely together, and stronger moral fiber might be the result. But with three days of leisure, Americans might face many, many more temptations.”

Dr. Stockman does not subscribe to the idea that work is virtuous and play sinful. It’s simply that, mathematically, there’s more time to be tempted. Unfortunately, psychiatrists told PARADE, many people do regard work as “good,” and play as “bad.”

These are victims of what psychiatry calls ‘the Sunday neurosis.” At work, they feel satisfied, convinced they really are worth something; at rest, they are gnawed by feelings of guilt.

One psychiatrist who has specialized in the psychological overtones of leisure believes Americans can’t cope with three days off unless they have definite interests and hobbies with specific goals. For them to get the most from it, their spare hours will have to be planned — by themselves or others.

Dr. Eli Ginsberg, a Columbia University economist, once studied a group of movie projectionists who worked a four-day schedule. He found the same leisure-time pattern as for a two-day week end— only more of it.

“Time definitely did not hang heavy on their hands,” Dr. Ginsberg says.

“These men occupied themselves helping their wives, or with do-it-yourself projects, or watching ball games.”

But one psychiatrist predicts further scrambling of the jobs of husband and wife: “If the husband is home three days a week and spends his time washing dishes or cleaning the living room, how can a child tell who’s mother and who’s father?”

One of the biggest dislocations might be in the schools. Recently Dr. William E. Stirton, vice president of the University of Michigan, urged educators to plan now for an avalanche of students as workweeks shorten, Other educators also anticipate a boom in adult education — either by workers looking for “something to do” or by those trying to reach executive ranks (where, one hard-pressed executive told PARADE acidly, “they can then work 60 or 70 hours a week”).

Will the schools follow the pattern and cut back to four days? Many educators don’t see how the number of school days could be reduced without children being short changed. Dr. Earl J. McGrath, former U.S. commissioner of education, points out that many elementary schools already are experimenting with even longer school terms.

From parents, however, Dr. McGrath anticipates pressure to bring schools into line with the workweek. Absenteeism may increase as parents utilize three-day week ends for family trips.

“At the moment,” Dr. McGrath says, “most educators would oppose shortening the school week. It’s not the same as speeding up an assembly line.”

To many experts, this is the big stumbling block to a four-day week. As Reuther begins dickering with the Big Three of the auto industry, you’ll hear more and more of the UAW arguments: that a four-day week would spread jobs, that automation is displacing workers, that continually increasing productivity means workers are making more goods in less time, and this savings in time should go to the workers.

Today, however, nearly 50 per cent of Americans are providing services, not manufacturing products. Automatic assembly lines don’t include them. Yet if factories should cutback to a four-day week, inevitably a cry would go up for a four-day week in these fields, too.

One economist told PARADE a cut in hours would mean another rise in prices — and again the service workers would be the victims. Dr. William Haber, a University of Michigan economist, suggests that the most practical course would be to continue a five-day week. American living standards would increase and the nation could mop up some of its shortages — in highways and schools, for instance.

The Labor Department’s Stewart thinks industry might drop back to a four-and-a-half-day week, then to four days, just as the six-day week went to five and a half, then five. Other experts agree that the progress of the shorter workweek — if and when it comes —will be uneven, touching an industry here and there and leaving others on five days and some even on six.

Reuther’s demands have dramatized the issue. But no expert interviewed by PARADE believed a switch to four days of eight hours each is practical now, or even five years from now.

Both the National Association of Manufacturers and the U.S. Chamber of Commerce have assigned study committees to the subject, knowing that it will crop up frequently in the future. (Other unions already have taken their cue from the UAW and made similar demands.) They want to know, among other things, whether Americans really want to work only four days.

“Maybe what we’ll see is people trying to hold down two jobs,” says one industry spokesman. “Instead of a five-day week, they’ll choose a seven-day week.” Like many business figures, he feels that the abbreviated week will be theoretically possible someday — maybe in 20 years, maybe in 30 years, maybe more. Whether it will ever come true in fact is another question.

Will you ever work a four-day week? You can tomorrow, if you want to. But do you really want to? These, as the experts see them, are the terms.

Keynes' Friends

In his book, English Pasts, reviewing a volume of Bertrand Russell's correspondence, Stefan Collini quotes from one of the letters:

'"I saw Moore in the evening, and discussed whether there was any difference between knowing Arithmetic and knowing one's grandmother; he thinks not."'

Words fail me. At one point I wanted to go to grad school in philosophy. Professors who thought Russell was the epitome of a philosopher put me off the idea. How to answer the question of whether or not the present King of France was bald - this was a burning philosophical problem chez Russell!

(Answer: both the statement that he is and that he isn't are false, in case you're wondering.)

How Norton Antivirus Sucks

I just got back from a trip, where I got hit with the Virtuemonde virus. Norton never even picked it up. When I contacted Norton, they told me that they would escalate the problem, which I learnt meant paying Norton $99 to fix it.

Fortunately, Malwarebytes, along with Spybot, fixed it. I wonder what Norton actually does except slow down my computer.

Hours of Labour 2

by Sydney J. Chapman (translated and condensed by the Sandwichman)

The road of economic advance proceeds by specialization. Just as there has been specialization in tools and in division of labor, so has there been a specialization of labor during working hours and of leisure and social intercourse in non-working hours. Specialization on the one side implies the elimination of waste, whether of means or of time and it has therefore meant to the laborer the partial or occasionally complete elimination of the leisure that used to be interspersed within working hours. In a modern workshop, noise, the necessity of discipline, or of a continuously absorbed state of the attention, frequently reduce the possibilities of conversation to the barest limits. Humanity has no doubt been relieved of the heaviest burden of toil by inventions relating to the mechanism of production, but their application has been accompanied on the whole by the closer concentration of some kind of effort in time. The intensification of labor in a more confined sphere of activity may, as Professor Münsterberg argues, exercise more fully the higher human faculties and thereby bring with it a deeper interest, but it will almost certainly prove more exhausting, even apart from the elimination of change, leisure, and social intercourse. Decade-by-decade, with the speeding up of machinery, we can expect to find more nervous strain accompanying the process of production. That industrial functioning has become a severer tax on the energy of the workman is fully borne out by the evidence of numerous reports on industrial conditions.


Although it is not the only possible explanation, the increasing nervous strain of industrial work would account sufficiently for the curious circumstance that there is apparently no finality about any solution of the ever-recurring problem of the normal working day. The workman whose day has been reduced soon demands even shorter hours. Pessimists infer from this that the establishment of shorter hours leads the community down a slippery slope descending from competition, striving, achievement and progress toward economic stagnation. They deplore the indolence and apathy of the present generation. But an examination of the effects that work-time reduction has on output suggests the pessimists are wrong.

A mass of material for a study of this question exists in official and other reports in more than one advanced industrial country. Beginning with the writings of Robert Owen and Daniel le Grand, both of whom stressed moral and social elements, an investigator would find an almost unbroken sequence of evidence. Mr. John Rae collected a volume of facts in 1894, and these may now be supplemented by the experiences of yet another half generation. Limitations of space forbid that I should quote examples, but I may at least roughly generalize from the recorded facts. I have found no instance in which an abbreviation of hours has resulted in a proportionate curtailment of output. There is every reason to suppose that the production in the shorter hours has seldom fallen short by any very appreciable amount of the production in the longer hours. In some cases, the product, or the value of the product, has actually been augmented after a short interval. In a few cases, the reaction of the shorter hours on the output per week has been instantaneously noticeable and the new level of production has surpassed the old before mechanical methods could be improved. Further, for some industries – for instance, for the Lancashire cotton industry – we have preserved for us the results of a string of observations reaching back about three-quarters of a century. It would appear from them that the beneficial effects wrought upon output by the shortening of hours were substantially repeated, though of course in different degrees, at each successive reduction of the working day.

Next

Arm the Hypocrites in the US Senate?

Oh, I should not post here on gun issues, but... So in today's Washington Post, E.J. Dionne has a column, "Arm the Senate." He points out the hypocrisy of senators constantly wanting to make it easy for people to walk into churches and bars with concealed weapons, reduce gun control in Washington, D.C, make it possible for people to take guns to states and cities that would otherwise restrict them, and so on. At the same time, nobody is allowed to take a gun into the US Congress, which has metal detectors at the entrances to forbid it.

So, Dionne reasonably asks if it is so wonderful and crime-reducing for the rest of society to have people walking in and out with concealed weapons, why does this not apply to the US Senate? I must agree that this is an excellent sign of their hypocrisy and their kowtowing to the worst of the gun nuts at the National Rifle Association.

Janet Yellen for Fed Chair?

I am one of those who think that Ben Bernanke literally saved the world in mid-September from a 1931-style global economic collapse. He is not getting much credit for that from Congress or many other people, and is increasingly becoming a generalized scapegoat for the continuing recession, even if it probably would be a whole lot worse now if not for his actions then. However, I grant that he can be criticized for many things, including being probably too slow ahead of time to admit things were dangerous (although actions after August 2007 suggest the Fedsters knew bad stuff was up, despite their public rhetoric), along with things like how the Merrill Lynch purchase by Bank of American was handled and the details of the banks bailouts, and other stuff. So, maybe he is damaged goods, kind of like Frodo after Gollum bit his finger off when getting the Ring of Power into Mount Doom, and he should retire into the West.


If so, the two candidates people are mostly talking about to replace him are Larry Summers and Janet Yellen. I will not say anything about Summers other than to say I would far prefer Bernanke to him. But Janet Yellen is quite another matter, a worthy rival to Bernanke for the position. She is certainly more progressive, and also has lots of personal cool and common sense, as well as being exceptionally intelligent and knowledgeable. She currently serves as president of the San Francisco Fed, second most important after the New York one, and is a voting member of the FOMC. She was on the Board of Governors under Greenspan in the early-mid 90s but left to serve as CEA Chair from 97-99. Long at Berkeley, and married to Nobelist George Akerlof, with whom she has coauthored some innovative and influential papers on macroeconomics, she also was on the Board of Governors staff in the late 70s in the international finance division. In short, she knows her way around the place, including the basements where all the wonks and geeks hang out, and I have heard personally from people at the SF Fed that she is a great boss whom they all can say nothing but the most admiring things about.

Hours of Labour I

by Sydney J. Chapman, (translated and condensed by the Sandwichman)

Among the most insistent problems to be found in industrial societies are those concerning wages, conditions of work and living, and the hours of labor. The problem of the hours of labor has, perhaps, not received as much practical consideration as the others. Expressed in another way, our topic is the value of leisure, the bearing of industrial development upon it, and its effectiveness in shaping economic arrangements. The demands continually made for shorter hours and a normal day; the widely supported claim that the State should intervene; and the fact that some Governments have intervened, even to the length of regulating the hours of adult male labor, are additional grounds for trusting that this topic will be of more than academic interest.

Why doesn't the question of leisure assume prominence until modern industrialism has supplanted a simpler economy? Why is much less heard of it among agricultural than among industrial communities? In the hand industries of the past, the hours of labor were excessively long in comparison with modern industrial standards. Among the peasantry and pioneering farmers, work never wholly ceases in waking hours, except for short breaks for meals, throughout much of the year. Yet little complaint would seem to have reached us from either source. The explanation may lie partially in the fact that new grievances emerged with the spread of the wages system – the problem of the working day does not present itself in quite the same light to wage earners and to the self-employed. Furthermore, these grievances are rendered more articulate by group production and the concentration of people from one economic class lends cohesion and volume to the demand for reform. The hardships suffered by a scattered population, occasioning discontents, which, however, stop short of provoking outbreak, seldom succeed in attracting public notice. People acting in isolation are naturally timid. But this is not the sole explanation. The character of much of the world's work has changed and so have the demands made upon leisure.

Industrial work on the whole has certainly become more regular and continuous throughout the year. Analysis would seem to show that work per unit of time gets more severe, in a sense, as communities advance, though a strong case could be made for the view that economic progress fosters work that is generally more satisfying and conducive to human development. Mechanical improvements frequently bring with them a new monotony of work. However, higher wages may offset that new monotony of work by offering broader opportunities for living. Mechanical improvement proceeds by "specializing out" mechanical tasks, the performance of which by hand must be a dreary occupation. But each step in the march of invention seems to create, by its incompleteness, tasks involving a new and more intensified monotony despite the fact that it may result in less tedium per unit of output. Any work whose pace is set by a machine and kept absolutely steady must be wearisome. We may usefully compare mechanical improvements with discoveries relating to the re-use of by-products. The latter always recover from waste something of value to the community, but they generally leave a residue more concentrated than that with which they began.

Next

Organized Labor's Exhausted Paradigm

by the Sandwichman

On the Relentlessly Progressive Economics blog, Andrew Jackson, Chief Economist and National Director of Social and Economic Policy for the Canadian Labour Congress, approvingly cited a policy paper, "America's Exhausted Paradigm: Macroeconomic Causes of the Financial Crisis and Great Recession," written for the New America Foundation by Thomas Palley, former Assistant Director of Public Policy at the AFL-CIO.

At page 11, the Sandwichman threw up his hands in despair:

"The implementation of neo-liberal economic policies destroyed the stable virtuous circle growth model based on full employment and wages tied to productivity growth, replacing it with the current growth model based on rising indebtedness and asset price inflation."

Just what "stable virtuous circle" did Brother Dr. Palley have in mind?
Why the 1945-1980 Golden Age, of course. And just how does Dr. Palley envisage restoring that lost paradise?

"...restoration of worker bargaining power in labor markets through strengthened unions, a higher minimum wage, and stronger employee protections; restoration of full employment as a macroeconomic policy objective; restoration of the legitimacy of regulation and increased government provision of public goods; a new international economic accord that addresses the triple hemorrhage problem created by the flawed model of global economic engagement; and reform of financial markets and corporate governance that ensures markets and corporations work to promote national economic well-being."

There's just one catch: "While the economics are clear, the politics are difficult..."

Politics are always difficult. The Sandwichman doesn't think that's the problem with Palley's "clear economic" prescription, though. The problem with Palley's paradigm is that its politics are absent. I want to draw attention to the first two planks in the platform to illustrate what I mean: strengthened unions and a higher minimum wage. Both sound appealing to a left perspective. But do they go together?

Samuel Gompers didn't think so. Here's what he had to say about minimum wage legislation in 1914: "I am very suspicious of the activities of governmental agencies. I apprehend that once the state is allowed to fix a minimum rate, the state would also take the right to compel men or women to work at that rate." The rationale for Gompers's opposition to minimum wage legislation -- although not to minimum wages won by collective struggle -- was a philosophy based on collective self-determination and action.

Now I don't want to give the impression I think old Sam Gompers was a saint or always knew what was best for workers. He wasn't and he didn't. But there was a principle and logic larger than Gompers that played itself out in the first four decades of the 20th century that Sandwichman thinks has crucial bearing on the exhausted paradigms of macroeconomics and organized labor.

The Sandwichman drones on endlessly about the eclipse of the shorter working time ethic in the unions and the slander and taboo on the topic in economics. But let's forget about that for a moment and consider Supreme Court decisions and constitutional law. Allison Martens wrote a fascinating paper a few years ago titled, "Parrying with the Courts: Analyzing the Lochner Era through the Eyes of Organized Labor." I don't pretend to know much about US constitutional law myself, nor will I attempt to summarize Martens's argument here. I just want to call attention to a key switch in American Federation of Labor legal strategy that Martens highlighted in the paper and that was discussed earlier in a paper by James Gray Pope, "The Thirteenth Amendment Versus the Commerce Clause: Labor and the Shaping of the Post-New Deal Constitutional Order, 1921-1957."

Forgive me for quoting four paragraphs from the conclusion to Pope's article. The drama and the importance of what Pope is chronicling inhibits me from summarizing or paraphrasing:

"On the eve of the New Deal constitutional revolution, proponents of national labor legislation faced the momentous choice whether to ground their legislation on the Commerce Clause or on the Thirteenth Amendment. Since the early 1900s, the labor movement had claimed the rights to organize and strike under the Thirteenth Amendment. Labor constitutionalists argued that these rights were essential for workers to exercise actual liberty of contract in an industrial economy dominated by large corporations. By the early 1930s, this core theory had won wide acceptance, and legislators routinely echoed labor's claim that restrictions on worker self-organization and protest amounted to slavery and involuntary servitude.

"But labor's constitutionalists encountered stubborn opposition from the movement's own friends within the legal profession. During the campaign for anti-injunction legislation that culminated in the passage of the Norris-LaGuardia Act of 1932, a group of elite, progressive lawyers led by Professor Felix Frankfurter undercut labor's constitutional claims by refusing to acknowledge their existence in public while maneuvering behind the scenes to exclude them from legislative consideration. Their determined opposition to labor's freedom claims reflected not a tactical disagreement among allies, but a fundamental conflict over long-term, constitutional goals. While labor constitutionalists sought power for unions and workers, progressive lawyers sought power for social scientists and other professionals, including themselves. Over a period of six years, this cagey and well-connected opposition wore down labor's constitutional leaders. In the winter of 1931–1932, when presented with what appeared to be a choice between insisting on their constitutional theory of freedom and achieving anti-injunction legislation in the here and now, labor leaders chose the latter. Two years later, when Senator Robert Wagner proposed his labor disputes bill, unionists sought a constitutional foundation sounding in democracy and human rights, but again failed to force the issue.

"The result was to sever the popular demands for industrial freedom from the legal-professional campaign to validate the Wagner Act. Unionists embraced the Wagner Act as labor's latest 'Magna Charta' and declared that if the courts would not enforce it, the workers would. In his 1936 reelection drive, President Roosevelt campaigned against economic royalism and for industrial freedom, apparently endorsing the core of labor's theory. Roosevelt's landslide victory emboldened workers to stage full-blown factory occupations to enforce what they saw as their constitutional rights to organize and strike. The factory occupations, in turn, forced the Supreme Court to uphold the Wagner Act—a victory that workers across the country promptly celebrated as a 'new era' of industrial freedom.

"Meanwhile, however, government lawyers had been urging the courts to uphold the Wagner Act not as a human rights statute, but as an exercise of Congress's power to 'control' and 'punish' strikes under the Commerce Clause. And it was this view, not the popular vision of the statute as a human rights measure, that the Supreme Court embraced in the Wagner Act decisions. The Court did leave open the possibility that collective labor rights might be constitutionally protected, and—for a time during the 1940s—workers and unions won a number of decisions protecting the rights to organize, strike, boycott, and picket. But by the mid 1950s, labor's constitutional victories had been appropriated by others. Under the leadership of Justice Felix Frankfurter, the Supreme Court upheld a battery of restrictive labor laws. By the time the Court was finished, the new civil liberties won by unions and workers had been reshaped into a doctrine that, as Robert McCloskey famously put it, had the 'smell of the lamp about it.' The Constitution, it seemed, protected reasoned discussion about ideas, not appeals to labor solidarity. In class terms, then, the constitutional revolution of the 1930s represented the triumph within constitutional jurisprudence of what might be called the 'knowledge class' over the previously dominant business class. The role of the working class was to provide the foot soldiers for change."

I guess one could say that Palley's economic prescription, too, has something of "the smell of the lamp about it." Or, to quote Sam Gompers one last time:

"Be not deceived by any specious sympathy and guileful interest in your welfare, but like men and women work out your own problems and determine your own lives. Benefits, improvements gained by the power of collective action may be slower, but they do not menace future welfare they do not transfer to others control over future activity, policies, or methods. Self-help leads to independence, reliance, and true welfare."

Economic Illiterate: Fred Barnes v. Barack Obama

Fred Barnes tries to attack the intelligence of the President in his Know-Nothing-in-Chief. This single line should tell the reader that the rest of this Weekly Standard op-ed was a waste of time:

Demonstrating a passing acquaintance with free market ideas and how they might be used to fight the recession--that's not too much to ask.

Recessions are often seen as a gigantic market failure – letting the market decide is not a recipe for restoring full employment anytime soon. Barnes next goes onto confuse long-term issues with Keynesian remedies for the current shortfall of aggregate demand:

Obama endorsed a surtax on families earning more than $1 million a year to pay for his health care initiative. This is no way to get the country out of a recession. Like them or not, millionaires are the folks whose investments create growth and jobs--which are, after all, exactly what the president is hoping for. Another tax hike--especially on top of the increased taxes on individual income, capital gains, dividends, and inheritances that Obama intends to go into effect in 2011--is sure to impede investment.

Yes – another one of these pseudo-supply-side rants that we cannot tax high income folks lest investment will just dry up. I guess Mr. Barnes is not aware of the role of real interest rates on investment in those full employment models that free market types think rule the world. And maybe he is not aware that the current Federal Reserve is currently keeping interest rates low in the hope that investment demand will eventually regain its footing.

Steve Benen has more criticism.

Rewriting Hours of Labour +100

by the Sandwichman

Coming up is the 100th anniversary of Sydney J. Chapman's theory of the hours of labour, delivered in Winnipeg Manitoba on August 26, 1909 as Chapman's presidential address to the Economics and Statistics section of the British Association for the Advancement of Science and subsequently published in the September 1909 Economic Journal.Chapman was not a great writer. Case in point (pay particular attention to the italicized passage at the end):

The workman whose day has been reduced is soon repeating again his demand for shorter hours, and there are pessimists who infer from this that the shorter hours attained hitherto have shifted the community on to a slippery inclined plane which leads from the economic “struggle for existence” by which is meant the competitive striving for place, reputation, and achievement, whereby progress is naturally stimulated – to economic stagnation. They think they discern in the present generation a growing disinclination to make an effort and a growing disposition to take the easy path; but that the truth cannot be mainly with the pessimists an examination of the effects of curtailments of the daily hours of labour upon output would at least suggest.

Compare my translation:

The worker whose day has been reduced soon demands even shorter hours. Pessimists infer from this that the establishment of shorter hours leads the community down a slippery slope descending from competition, striving, achievement and progress toward economic stagnation. They deplore the indolence and apathy of the present generation. But an examination of the effects that work-time reduction has on output suggests the pessimists are wrong.

To celebrate the theory's centennial, Sandwichman serialize a translation of the whole article in, if not Plain English, plainer English at least. I will retain original as much as serviceable and only intervene when Chapman's convoluted phrasing and compound sentences seriously obstructs comprehension.

Kevin Drum on the Compensation of Those Not Highly Compensated

Ellen Schultz (Wall Street Journal) writes something that catches the interest of Kevin Drum:

Executives and other highly compensated employees now receive more than one-third of all pay in the U.S., according to a Wall Street Journal analysis of Social Security Administration data -- without counting billions of dollars more in pay that remains off federal radar screens that measure wages and salaries … In the five years ending in 2007, earnings for American workers rose 24%, half the 48% gain for the top-paid. The result: The top-paid represent 33% of the total, up from 28% in 2002.

Kevin follows up with:

You probably thought that the big problem with skyrocketing executive pay was the fact that it left nothing for the rest of us. And you're right: that 24% increase for "American workers" includes the 48% increase for the top earners. In other words, the executives got a 48% increase, the rest of us got approximately nothing, and it all averaged out to 24%.

There may be two problems here. Kevin is taking a simple average of 48% for the wealthy one-third and zero for the rest of us to get this 24% overall average but that’s not quite right. A weighted average where one-third received a 48% increase and two-thirds received a 12% increase is more in line with the overall increase being 24%. But if the rest of us received a 12% increase in how nominal wages over this five-year period, how does that compare to the increase in the consumer price index? If one compares the CPI as of December 2007 to the CPI as of December 2002, the increase in CPI was over 16%. In other words, those who were not highly compensated may have seen their nominal wages rise slightly but in real terms, wages declined.

Habit and Myth

by the Sandwichman

Why do you think what you think and do what you do? Habit. How do you explain why you think what you think and do what you do? Myth.

What do you want?

The Economist On Modern Economic Theory Melting Down

The most recent issue of The Economist has three articles about The Crisis of Modern Economics, with a book on the cover whose title is "Modern Economic Theory" appearing to melt down, with the most interesting one being the one on macroeconomics. All three articles are linked to in a post by Menzie Chinn on Econbrowser, where he also links to Austrian, Mario Rizzo, criticizing mathematical modeling. While recognizing some of the arguments in The Economist to be valid, Chinn definitely defends mathematical modeling, and seems to be not too critical of the dominant DSGE models. Mark Thoma at Economist's View also linked to all three articles, along with a link to Mark Gertler's mini-course that attempts to try to show how the DSGE models might be fixed to do better (an effort that I think fails).

The main arguments in the article on macroeconomics (the main other one is on financial economics) involve failures to include behavioral economics, failures to do heterogeneous agent modeling, and a general failure to model bubbles well, with Minsky being mentioned, although also dismissed as not mathematical (despite work by Steve Keen and me and others). While these arguments are correct, there is all too much defense of the DSGE models for "benchmark" purposes, although my observation is that the people working on these models, which totally dominate central bank modeling, take them all too seriously and think that models assuming rational expectations by homogeneous agents in general equilibrium can be solved with minor tweaking (and think their inclusion of sticky prices and wages is some great breakthrough to ingenuity, a point Thoma pokes at, and that many Post Keynesians have argued is neither Keynesian nor even useful, with flexprice models often less stable than fixprice ones). There is also the general ignoring of deeper problems in microeconomics in these articles, such as those pointed out in Steve Keen's _Debunking Economics_, even if I disagree with some of what he has to say in that book.

Forestry 'ethics' in Australia

Earlier this year the huge ethical problem inherent in the long-term practice of converting Australia's native forests to monoculture tree plantations was solved in one fell swoop by a director of a plantation company:

“…..Effectively most of the Central Victorian forests, it's basically a plantation. It's called 'native', but it regenerated from a 1939 fire. It all got burnt on the same day, it all regenerated on the same day - apart from having human hands touch it, that's a plantation, but unfortunately it's seen psychologically as native. But that material now is high quality. And you could plant that stuff, but you won't get quality in 10 or 15 years, or 20 or 25. …So, it's really not a native versus plantation: it's a 30 to 50 year, versus a 10 to 15 year issue.” [1]

Setting aside the fact that the 1939 fires occurred 70 years ago, rather than a mere 50, plantation management entails considerably more than a passive wait for native species to regenerate after an inferno.


In Tasmania and large areas of mainland Australia the process goes something like this: First the native forests, including ancient stands of World Heritage value, are bulldozed to the ground. A tiny minority of the logs are used for furniture making, boat building and suchlike. Ninety percent of the logs that are harvested, however, are used for the conversion to woochip to make paper pulp for the commercial benefit of large transnational corporations [2]. The rest of the considerable biomass, as can be seen in the above image [3], is piled up and burnt using napalm dropped from helicopters. In this process hundreds of years of forest mulch is also incinerated and the top soil turns into baked brick. Local residents often choke on the thick plumes of smoke that emit from these gigantic industrial fires.

Monoculture bluegum trees are planted to replace the biodiverse forest. The industrial fire prevents the regeneration of unwanted (non-commercial) rainforest species. In turn, repeated industrial applications of 1080 poison kill off wildlife that may pose a threat to these small newly-planted monoculture saplings used to replace native flora.

Over the following 20 year life span of the industrial plantation there may be repeated aerial sprayings of cypermethrin and/or other toxic insecticides; and this occurs despite the placement of these industrial plantations in major water catchments and within and around rural communities across the state. Cursory and unreliable testing is done in major arterial streams where chemicals will be the most diluted. It is no coincidence then, that that the Australian state with by far the most intensive 'forestry' regime has the highest human cancer rate in the nation. Toxicological studies in Tasmanian devils, the platypus and other native mammals, unsurprisingly, reveals the presence of POPs including organo-chlorines, PCBs, furans and dioxins. [4]

The words of Ula Majewski can only hint at the tragedy of what is happening in (what now are only the small remnants left of) Australia's native forests :

"There is nothing quite like the silence of a freshly cut clearfell or a freshly cut aggregated retention coupe, just as there is nothing quite like the terrible roar of a chainsaw or an excavator splitting open the dawn air. In these blasted landscapes, the voice falls silent; narrative is systematically rendered nonexistent. To stand within this silence, in the choked up confusion of mud and splintered stumps, to come across the jagged remains of a tree under which you sat a few weeks before, is to truly understand the terrible parameters of ignorance and disrespect that are compelled by something as fundamental and as simple as human greed. "[5]

[1] Australia's recession-proof woodchips
Peter Mares interviewing Dennis Neilson (Director of the New Zealand based forest industry consultancy, DANA Limited. A company that owns eucalyptus plantations).
ABC National Interest program. 24th July 2009
http://www.abc.net.au/rn/nationalinterest/stories/2009/2552111.htm

[2] Corporations such as Norske Skog whose major customers are the Rupert Murdoch media empire and Fairfax Media. These two companies virtually monopolise the Australian newspaper market. Also woodchipper companies such as Gunns Ltd and Forest Enterprises and the companies that invest in them (Elders, AMP, ANZ, Macquarie Group, Perpetual Investments and others).

[3] Biomass piles from a typical native forest coupe clearfell in North West Tasmania. This image was taken by the author, Brenda Rosser, in February 1996. The 100 year old regenerating forest was 'harvested' by the Tasmanian state government enterprise 'Forestry Tasmania'. Despite written assurances that the area would be regenerated back to native forest the trees were replaced by a monoculture of Eucalypt Nitens. Rainforest species in the creeks were chopped down and other breaches of the Forest Practices Code occurred with no penalties imposed by the State Forest Practices Authority.

[4] See Dr David Obendorf's comments at:
http://tasmaniantimes.com/index.php?/weblog/comments/timeline-of-the-toxicology-study-in-tasmanian-devils/

[5] The Cracking of Our Hearts. Speech by Ula Majewski., left in the Florentine. Speech: Parliament Lawns, Hobart. 13th January 2009.
http://tasmaniantimes.com/index.php?/weblog/article/the-cracking-of-our-hearts/

Fiscal Hypocrisy Goes Way Back

Steve Benen is right:

Yesterday, Senate Minority Leader Mitch McConnell addressed the costs of health care reform. "If you're going to do something as comprehensive as the president wants to do," the Kentucky Republican said, "you ought to pay for it." ... When Bush/Cheney slashed taxes by well over $1 trillion, Republicans said there was no reason to worry about paying for it. When Bush/Cheney started the war in Afghanistan, Republicans said there was no reason to worry about paying for it. When Bush/Cheney started the war in Iraq, Republicans said there was no reason to worry about paying for it. When Bush/Cheney added Medicare Part D, Republicans said there was no reason to worry about paying for it. It's not that their efforts at paying for it came up short, it's that they didn't even try. The notion of fiscal responsibility was simply deemed irrelevant -- an inconvenient detail for unnamed people in the future to worry about. And now, these exact same policymakers are, with a straight face, complaining bitterly about the fiscal habits of Democrats who are -- in case anyone's forgotten -- actually trying to pay for much-needed health care reform.

Steve adds that there are some centrist Democrats guilty of the same hypocrisy. Let me just add that Republican fiscal hypocrisy dates back to the 1981 tax cut paid for of course by increases in defense spending under President Reagan.