If you’re looking for a silver lining in the dark cloud of the Trump candidacy, you might notice that it has brought some  attention to the worsening state of white people without a college degree. It’s not that the world is rosy for non-whites without college degrees, of course, but on average they were starting from a lower base; it’s the white part of the working and lower-middle class that seems to be experiencing fairly serious downward social mobility and social dislocation, as demonstrated most dramatically by increasing mortality rates in young adulthood and midlife.
Trump’s success in getting non-college whites riled up about immigration and trade doesn’t answer the question about how much of their plight can actually be traced to those causes, but it has served to remind advocates of the free movement of goods and workers that those policies produce losers as well as winners, and that one function of the political process is to ensure that a rising tide does in fact lift all the boats, rather than lifting the yachts while swamping the dinghies.
Megan McArdle lifts a libertarian voice to join the chorus. And she’s skeptical that income-transfer policies can fix things. (Though in my view we need them just the same.)  What the downwardly-mobile need, McArdle says, is not income per se as much as employment: “good work - by which I mean work that offers opportunity, stability, respect and enough money to raise a family.” And she argues that the answer can’t be turning working-class people into middle-class people by offering higher education to people “who don’t have the ability, preparation or inclination to sit through four years of college,” and that politicians’ other answers to the problem of bringing back good blue-collar jobs are mostly beside the point.
This is way outside my policy wheelhouse, Â but from a distance this looks like a problem with a bunch of obvious solutions, though each of them is partial:
- Economic stimulus (fiscal and monetary)Â I’m not sure how much of working-class malaise would be cured by five years of really tight labor markets - tight enough to pull discouraged workers back into the labor force while substantially raising real wages - but we could try it and find out. That means having the President and the Congress stop obessing about the deficit, and getting the Fed to keep its heavy foot off the brake pedal as the economy starts to heat up.
-  Infrastructure investment The world is awash in capital and short of safe and productive places to invest it. As a result, the U.S. Government can borrow mony for 30 years at an interest rate of 2.5% (nominal). Our roads, bridges, passenger rail, electric grid, airports, and urban mass transit systems are all in desperate need of upgrades, expansion, and catching up on deferred maintenance. When you have good investment opportunities, idle resources, and access to cheap money, you should borrow the money and invest. Construction work provides  the classical source of “good” blue-collar employment.
- Public services Policing, sanitation, and parks are also good blue-collar jobs. (So is school construction and maintenance, though the actual teaching is white-collar.) The crazy way we finance municipal governments means that even rich cities like New York have disgraceful levels of public service, while poor cities look like Flint. At the Federal level, we could restore postal service to the level of the 1950s. There’s work to be done, and people willing to do it. If the private sector doesn’t provide enough good blue-collar jobs, create them in the public sector.
- Human services There are lots of jobs providing direct service to the poor, the mentally ill, people with physical and developmental disabilities, and those incapacitated by age. Some of them - the ones requiring advanced degrees - are very good jobs indeed, and even Licensed Practical Nurses are decently paid. But home health care workers, for example, and lots of nursing-home employees, scrape by on something close to minimum wage. Â That could be changed by policy.
- Wage supplements The Earned Income Tax Credit provides income maintenance without the work disincentives by supplementing wage income with tax dollars. Expanding that could do some of the same work that could be done by increasing the minimum wage without any risk of pricing low-skilled workers out of the market. A related idea would be a subsidy to employers for hiring those with little education and little labor-market experience; ideally those subsidies would be based on each employee’s future earnings, to give employers a financial interest in developing their entry-level workers’ transferable human capital.
- Unionization  One reason blue-collar jobs have been getting worse is the very successful war that has been waged on union power by corporations, the union-busting consultants and law firms they employ, and the anti-union politicians whose campaigns they finance. This was epitomized by Gov. Haley of South Carolina’s public announcement that unionized factories weren’t welcome in the state. Abolishing “right-to-work” laws and instituting “card-check” organization, along with revitalizing the National Labor Relations Board, could promptly undo much of that damage. Even in firms that do not unionize, the threat of organization will help discourage the most exploitative “human resources” practices.
-  Retirement policy It’s true that income is a poor substitute for employment for people in their prime working years. But retirees with adequate pensions seem to do just fine, thanks. If we’re short of good jobs for younger people, it’s insane to talk about raising the retirement age for Social Security.  Why not lower it instead, and open up some slots? More generally - since one key factor of a “good” job is that it provide adequate income security in retirement - we need to undo the disastrous shift toward “defined contribution” plans. Workplace-based retirement saving has proven to be a loser in the public and private sectors alike. We could improve retirement prospects for blue-collar workers while also reducing the cost of employing them by moving toward a national and largely tax-funded retirement system.
Now, as Colombo would say, there’s just one thing. None of these policies could be enacted except over the dead body of today’s Chamber-of-Commerce-and-Koch-dominated Republican party. Fortunately, Donald Trump may have a solution to that problem.
Even just getting rid of volatile scheduling would help. Being at the beck and call of your employer, who might or might not provide you with 40 hours (probably not in many industries, and that should change too) and who might or might not call you in for your shift is very demoralizing.
Columbo didn't say, "there's just one thing." He said, "just one more thing," meaning that he had one more question to ask the killer, who'd thought that Columbo had finished questioning him for the moment.
Really obscure geek reference, going way farther into the weeds than discussing Champions with Keith.
I've long thought that Columbo was clearly a Seraph of Judgment with Discord: Disheveled/5
???
Seems to be related to a role-playing game character class:
Discord:Disheveled appears to be an innovation.
Got it. Seraphim are able to detect truth and falsehood. Colombo walks into the room and, within a couple of questions, has sussed out who the murderer is. He then spends the rest of the episode aggravating the killer into confessing just to get Colombo to shut up.
There are huge barriers to entry for many occupations due to artificially high licensing requirements. A lot of licensing requirements could be reduced or done away with altogether.
And some occupations are just flat out illegal.
Nice that McArdle is seeing beyond the libertarian horizon.
But I wonder how many of your suggestions she would endorse. I'm guessing she might go for #5, at most.
1. Economic stimulus. Lousy record of job creation, and the national debt is already reaching terrifying levels, but plenty of opportunities for graft.
2. Infrastructure investment. See #1, it's just a species of economic stimulus.
3. Public services. Of course a Democrat is going to want to feed more money to the public employee unions. It comes right back to the Democratic party in donations and in kind support.
4. Human services. Put them on the dole, maybe they'll return the favor with votes, and the dole isn't even in a fungible form.
5. Wage supplements. Put them on the dole, maybe they'll return the favor with votes.
6. Unionization. Reduces employment and drives employers to automate instead of hiring expensive warm bodies, but some of the money gets diverted to the Democratic party, so it's all good.
7. Retirement policy. Might as well admit we're not going to get them jobs, so here's some money to be unemployed with. (See #4 and #5.)
Seriously, Mark, can't you see that every one of your proposals very directly benefits, not un and under employed people who just want a decent job, but instead the Democratic party and it's well off interests? At best some of these proposals might inefficiently trickle down to the poor, or give some already employed a raise at the cost of reducing the number employed.
What's Trump's answer?
Don't export jobs, don't import workers.
Now, you might think that problematic for a variety of reasons, and/or think he doesn't intend to actually do any of it, (I've got serious doubts myself.) but these are proposals that focus laser-like on providing jobs to Americans who want jobs. Not on benefiting the Democratic party while maybe having some minor effects on employment.
Your proposals are transparently politically self-interested. They're not a serious effort to help people get jobs. The horrifying thing is, you probably don't even see that, you're so reflexively focused on doing things in this way.
Economic stimulus works. Let's not hear about those CBO projections based on inaccurate historical data, please. And the debt is so terrifying the market is charging the US a usurious 2.62% nominal rate to borrow money for 30 years.
Infrastructure. The idea is simple. Low capital costs make investments in real assets attractive. Ever heard of a balance sheet?
Who needs police, teachers, etc? Do you want to fire them all, because some vote Democratic. Putting the cart before the horse there, aren't you?
Human services: I have no idea what your point is, other than a general objection to the Democratic Party getting any votes.
Wage supplements. The same. There as a time when conservatives supported this kind of thing, for largely the reasons Mark suggests.
Unionization. No point giving workers any bargaining power.
Retirement. Are there no workhouses?
Seriously, Mark, can't you see that every one of your proposals very directly benefits, not un and under employed people who just want a decent job,…
This is one for the Bellmore Hall of Fame.
these are proposals that focus laser-like on providing jobs to Americans who want jobs.
No they don't. Not close. They focus laser-like on exploiting resentment, not the same thing at all. And GOP economic policies focus laser-like on one-thing: Cutting rich people's taxes, so they will donate more, and doing it by stimulating the resentments mentioned. If you are going to claim that Democratic policies increase Democratic political power (and what's wrong with that, if the policies are effective?) then admit that GOP policies - which are wildly ineffective by the way - are aimed at increasing GOP power.
In our recent Canadian election (Oct. 2015) it was exactly this argument that turned the election campaign around and elected our new PM Trudeau.
We finally turned the corner on austerity up here. (And got rid of our very own Dick-Cheney: Stephen Harper)
" Infrastructure investment The world is awash in capital and short of safe and productive places to invest it. As a result, the U.S. Government can borrow mony for 30 years at an interest rate of 2.5% (nominal). Our roads, bridges, passenger rail, electric grid, airports, and urban mass transit systems are all in desperate need of upgrades, expansion, and catching up on deferred maintenance. When you have good investment opportunities, idle resources, and access to cheap money, you should borrow the money and invest. Construction work provides the classical source of “good” blue-collar employment."
It's bizarre to me that anyone can believe that if a private company borrows money to invest in, say, building a new factory, that increases employment and the nation's capital stock, while if the federal government does the same to repair a bridge it's an utter waste.
You nailed it above. Those who focus on the national debt by itself are engaged in lousy accounting. They assume that all spending is an expense rather than some of it creating an asset.
Do we have to, eternally, go on having these discussions as though James Buchanan had never won the Nobel prize? As though it's reasonable to discuss policy on the assumption that politicians and bureaucrats are honest fiduciaries? When we know that they, generally speaking, are only honest fiduciaries if they have no other option?
The reason that it's an investment if a private company borrows money to invest in a new factory, but not if the government does it, is that if the private company builds a new factory purely to get kickbacks from the contractors, it soon goes out of business. A private company NEEDS it's investments to actually be net productive on average.
The government doesn't go out of business if it keeps racking up losses year after year, because the investments aren't it's source of income. People who hand over money because they don't want to go to prison are it's source of income.
So the government does not, typically, base it's investments on what is economically productive. It bases it's investments on what has the best potential for graft. Rewarding cronies, giving money to people who will kick it back in some manner.
And it's incredibly foolish to discuss "public investment" as though this weren't the case, as though the government typically is as smart an investor as the average venture capitalist. As though the government didn't by preference invest in things the private sector was staying away from because they made no economic sense.
The private sector doesn't deliberately build bridges to nowhere, that's why it's different.
Yes, you're stumbling around the reasons why it's stupid to use standard GAAP concepts to describe government finances, though the fundamental reason is that the fundamental purpose of government is not to make money, and GAAP is built around the assumption that making money is the primary purpose of the entity. That's also why non-profits don't use it. That government investments don't always produce the monetary return that a private firm wants is not necessarily a problem, because the goals of government are not monetary in nature. Yes, it's important to keep the return in mind, but not in the same way that a corporation needs to. And then use GASB.
However, if you are going to start throwing around the idea that government is losing money then you cannot stop with just counting all outflows as expenses and chalking them up as losses. Either use all of standard GAAP or none of it; using only the parts that make you feel good is dishonest.
I recommend to you both the extensive literature on the agency problem in private business and, of course, Akerlof and Romer's "Looting".
As though the government didn't by preference invest in things the private sector was staying away from because they made no economic sense.
Brett,
I'm not going to address all of your rant, but there is a technical issue with this statement that you seem unaware of. There are solid, productive investments that make no sense for a private investor because it is impossible or impractical for a private investor to capture all the returns.
Also Paul Wallich points out, there is a huge amount of literature on principal-agent problems, which pretty well refutes your cartoon notions of how business maximize profits by supremely rational decision-making.
Even without that, large organizations make large blunders, have corrupt management, and so on.
That's also before you get to the multiplier effects (which I omitted in my first comment because We All Know Keynes Is Nonsense). During the depths of the recent crash, I did an interesting back of the envelope based on those published numbers for increased GDP as a function of different kinds of government spending (unemployment benefits, food stamps, tax cuts and so forth). It turned out that for some of the safety-net spending the increment was large enough that the net cost to the government — assuming the usual ratio of taxation to GDP — was very nearly negligible.
Of course I'm aware of multiplier effects.
Are you aware that they're perfectly capable of being less than unity?
Oh, yes. The multiplier for tax cuts in the piece I was looking at back then was 0.33.
I'd go with a combination of unionization and some type of explicit Job Guarantee program (i.e. active job assistance and a public job if they can't find anything for you). The latter, at least, has been popular in varying degrees over the past couple of decades, and fits with the whole "hand-up, not hand-out/work is good" mentality the US has (other countries are doing trials on basic income schemes). Everyone thinks infrastructure, but I'm thinking more along the lines of environmental clean-up and child care - both of those are labor-intensive work where you could potentially add people as necessary, and they do need to be done.
Unions depend on whenever they manage to loosen up or fight Taft-Hartley restrictions. That's been a bridle on unions for decades, preventing them from doing many of the tactics that actually worked in the Great Depression (sit-down strikes, secondary boycotts, flying pickets, general strikes).
These are precisely issues where Hillary Clinton can and should make specific proposals to bring working-class Sanders voters on board. She is a genuine policy wonk, and her ability to fight through details could easily bring stronger appointments and policies than Obama's rather distant style has generated.
Oh, and add a another effort to fix the mortgage foreclosure mess - it's disproportionately impacted minorities, but a lot of low-income whites were hit too. Obama has been very feeble on this.
BTW, it's not too early for Clinton to start work on appointments. For the moment, in secrecy, as it could look presumptuous. But she has a 64% chance (according to Forbes) of becoming President next Inauguration Day, and there is every reason to hit the ground with a full slate of nominations. Obama has often been far too slow and cautious. Does it matter if a few proposed Assistant Secretaries of this and that turn out to have illegal Mexican gardeners?
Unfortunately, all the above proposals, while they may help some people who deserve help, will cost taxpayers a lot of money and drag down the overall economy, not to mention will help a lot of people that they are not intended to help (including evil corporate types). The simple truth is that governments cannot improve economies by redistribution, they can only help the politically connected. And that leaves out me and almost everyone I know.
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