Age of Disorder

[David Horn]

(09-12-2020, 04:37 PM)Warren Dew Wrote: I expect lack of reading comprehension from Bob, but you can do better.  I'm citing 1929 to 1946 as the period of change, not the age of organized labor.  The age of the industrial barons collapsed with the 1929 crash, and there followed a period of groping for solutions, with socialist and Communist movements opposed by the remnants of the industrial baron culture.  After 1946, with the excesses of the 1935 National Labor Relations Act trimmed by the 1947 Taft Hartley Act, there was a period where organized labor was the most powerful force in the economy, and yes, that lasted through not only much LBJ's, but also much of Nixon's administration, until it came crashing down with the oil shock of 1973.

Empowerment of labor was important in 1929, and when its form was stabilized in 1947, it took a form that was useful for decades.  However, ossification of the regime in the face of a changing economy, along with the development of Arthur Okun's "invisible handshake", which provided union members with benefits at the cost of nonunionized consumers, caused it to be counterproductive by the 1970s.]/quote]

I was arising adult during the end phase of this period, and I can say without much need for reflection that New Deal economy ended with a whimper. By the late '60s, the business barons were finally working a meme that had traction: why support unions when you don't get the full benefit unless you're a member, and why pay for them if you can get a free ride? If that seems contradictory, it didn't matter at the time. The same can be said for the great idea of tax cuts paying for themselves. Both were intellectually lazy and emotionally satisfying. Offshoring rarely got a mention.

Bretton Woods got the ball rolling in '68, and the oil crises of '73 and '79 finished off the New Deal model.

[quote='Warren Dew']This is similar to what happened with the neoliberal regime.  Supply side economics was sound, but since it was established in a period of labor surplus with shortages of savings and capital, the implementation ended up focusing on increasing the supply of capital.  Ultimately this empowered the owners of that capital - in particular Silents and Boomers with fat retirement accounts - at the expense of workers.  By 2008, the neoliberal regime had clearly become counterproductive; there was plenty of savings and capital, but workers had been frozen out of the pie for decades.

Let's agree to disagree about Voodoo Economics. The Kennedy tax rate cut from 90% top nominal rate to a 70% top nominal rate made sense once growth had pulled the national debt ratio to 28% of GDP. Reagan just ran with that and destroyed the balance between capital and labor entirely. But why not? He was a GE guy for decades.

Warren Dew Wrote:Redistribution isn't the solution, since it would just consume the capital without fixing the system.  A return to labor unions in their 1950s and 1960s form is likely not the solution either, since work today isn't the one size fits all assembly line activity that characterized the labor union period.

Likely the solution will involve immigration restrictions so that employers can't just import cheap labor, along with, at a minimum, tax mechanisms to distribute more of the benefits of productivity to workers, and less to nonworkers, such as savers, investors, and those on means tested welfare.  The details of the solution will likely take another 5-10 years to figure out - or to luck into - though.

I suspect that the neo-union movement will not be focused on individual companies or even industries, but some as yet unknown measurement of equality, or the lack of it, and be extractive through the tax system or some other modality that make sense. I've always favored taxation to create a massive sovereign wealth fund that would provide dividends to the entire population. We'll see if that happens, or not for most of us.

The next round of solutions are up to the people most affected: Millennials and whatever you wish to call the generations that follow.