Frank’n'Keynes

by Don Boudreaux on November 19, 2011

in Inequality, Other People's Money, Scientism, Taxes, The Economy

Here’s a letter to Business Insider‘s Gus Lubin (HT Methinks1776):

Mr. Gus Lubin
Business Insider

Dear Mr. Lubin:

Saying that “the ’99%’ do have a point,” you favorably quote Aneta Markowska’s allegation that today’s economic woes are caused partly by income inequality (“SocGen Explains How Income Inequality Is A Growth Killer,” Nov. 18).  Says Ms. Markowska: “As of 2008, 48% of national income accrued to 10% of the population.  The remaining 90% took in only 52% of income, which is insufficient to maintain mass consumption.”

Ms. Markowska’s claim that spending is now “insufficient to maintain mass consumption” is questionable.  Inflation-adjusted personal consumption expenditures are higher today than they were just before the current recession began.*  But even if her claim were true, caution is justified before accepting it as grounds for income redistribution.

Consider that an influential group of scholars, led by Cornell’s Robert Frank, argues for income redistribution on grounds opposite those suggested by Ms. Markowska.  Mr. Frank thinks that consumer spending is chronically excessive.  As he explained last year in the New York Times, “The rich have been spending more simply because they have so much extra money.  Their spending shifts the frame of reference that shapes the demands of those just below them, who travel in overlapping social circles.”  All this spending, by rich and poor alike, to keep up with the Joneses robs us of what Mr. Frank feels we really want more of: leisure, quality time with family and friends, and tax-funded public goods.  So he seeks to soak the rich not to stimulate consumer spending but to reduce it.

My point isn’t to endorse Mr. Frank’s ideas.  It’s instead to warn that it is tempting and easy to construct superficially ‘scientific’ justifications for taking other people’s money.

Sincerely,
Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030

* See the U.S. Bureau of Economic Analysis’s National Income and Product Accounts, Table 2.1: “Personal Income and Its Disposition.”  (The figures there are in current dollars; I adjusted them for inflation by using the Minneapolis Fed‘s online inflation adjuster.)

Be Sociable, Share!

Comments

comments

67 comments    Share Share    Print    Email

{ 67 comments }

Invisible Backhand November 19, 2011 at 11:59 am

Here’s the whole quote:

Income distribution another big problem. Yet another dimension of the labour market crisis is the extremely uneven distribution of income. We believe that this massive internal imbalance is exacerbating the problem of structural demand and preventing a faster recovery. As of 2008, 48% of national income accrued to 10% of the population. The remaining 90% took in only 52% of income, which is insufficient to maintain mass consumption. During the 2000s, the growing unevenness was overcome by transferring purchasing power from the wealthy to the poor via credit creation, but this process has reached a natural limit. Another solution is needed going forward. In the aftermath of the Great Recession, which saw similarly skewed income distribution, part of the solution was redistribution via taxation. External rebalancing and financial regulation are likely to push things in the right direction over time, but we believe that taxation is an inevitable part of the solution as well.

Makes more sense when you don’t edit it. Then you trot out the tired St. Louis Fed personal consumption thing again*. Look, the rich already buy everything they want, that’s the definition of being rich. They plow the excess into financial instruments. The poor consume and don’t have any excess, that’s the definition of being poor. I know this is hard for you to understand because your paycheck depends on you not understanding it, as Upton Sinclair says.

*psst… oil.

Emil November 19, 2011 at 12:14 pm

“Makes more sense when you don’t edit it.”

Nope, it’s still bs

(The hint that there is currently no income redistribution through taxation is especially “interesting”)

“The poor consume and don’t have any excess, that’s the definition of being poor.”

The definition used to be not being able to consume

Greg G November 19, 2011 at 12:33 pm

“not being able to consume” sounds more to me like the definition of being dead.

Emil November 19, 2011 at 12:48 pm

The point is that you can consume without having excess also when earning millions a year, it doesn’t make you poor

Jon Murphy November 19, 2011 at 12:34 pm

Actually, the definition of being poor is making less than $22,000/yr.

Emil November 19, 2011 at 12:50 pm

That may be the current statistical definition but it is most certainly not the one being referred to in the quote and I wouldn’t agree with it either – you may not be well off when you make 20k a year but saying that you are poor is an affront to those really poor.

Jon Murphy November 19, 2011 at 1:04 pm

I agree with you. That is not a lot of money. I can;t imagine how one would raise a family on that

Methinks1776 November 19, 2011 at 1:28 pm

I don’t either, Jon Murphy, but the average Egyptian raises a family on $1,000 per year (on a PPP basis). Ever since Nasser introduced Socialism in the 1950′s, the country has been slowly sliding into poverty. The average Chinese, until very recently, on much less – and that’s a country of over 1 billion people.

Suddenly $22K is just filthy rich. And compared to most of the world, it is.

Jon Murphy November 19, 2011 at 12:33 pm

Actually, it makes less sense when you read the whole thing.

That, and you completely missed Don’s point.

And your completely erroneous claim that the poor do not invest in financial instruments.

And your completely erroneous claim the poor do not have excess money.

vikingvista November 19, 2011 at 12:47 pm

“Makes more sense when you don’t edit it.”

No it doesn’t. It confirms Don’s post was in perfect context. What is wrong with you, anyway? Reading comprehension problems?

Invisible Backhand November 19, 2011 at 1:01 pm

What do you think Don meant?

vikingvista November 19, 2011 at 6:57 pm

“…to warn that it is tempting and easy to construct superficially ‘scientific’ justifications for taking other people’s money.”

Like he said.

Invisible Backhand November 20, 2011 at 2:33 am

The thing I like about socialists, and Marxian socialists in particular, is that we don’t need to construct any superficial, scientistic justification for taking other people’s money. Just stick a gun to their heads and take it. It’s as simple as that.

The fact that other people claim they need it, and the fact that such claims keep socialists in power, is all the justification that is needed.

SmoledMan November 19, 2011 at 1:39 pm

#1 – the rich’s consumption makes for higher paying direct jobs. Think of the cooks, cleaners, valet drivers, limo drivers, yacht operators, etc…

#2 – The leftover assets are plowed into financial instruments like stocks, bonds, derivatives, etc… All that trickles down into the economy via cash for startups, bond issues help build or repair roads/bridges.

kyle8 November 19, 2011 at 5:46 pm

Upton Sinclair was a liar.

Ubiquitous November 20, 2011 at 1:07 am

I know this is hard for you to understand because your paycheck depends on you not understanding it, as Upton Sinclair says.

And Upton Sinclair ought to know.

The paycheck he received from various “progressive” journals for which he worked — not to mention the need to preserve his reputation as a leftist activist within the Socialist Party — depended on his misrepresenting many facts of news events and history. For example, he admitted in private correspondence (now published) that he had spoken with the attorney of Sacco and Vanzetti and had been told by him that the Italian anarchists were, indeed, guilty of murdering two payroll couriers in order to bankroll bombings of government buildings. Sinclair also admitted knowing that the only perjured testimony of their case came from alibi witnesses, yet he went ahead and wrote a fat boring novel lying about the whole thing entitled “Boston”, asserting that the murderers were themselves victims of discrimination.

Sinclair also lied about the conditions he saw in the meatpacking industry and slaughterhouses of Chicago: among other lies, there were no cadavers ground up into meat. He lied in order to incite enough of a public outcry to enact pro-labor legislation (which was not forthcoming). Following the grand tradition of lying about history (since history for the left is an important ideological tool of propaganda and has nothing to do with truth for the sake of truth) later leftists lied about the importance of Sinclair’s muckraking novel “The Jungle” claiming that it “resulted” in the passage of the Pure Food & Drug Act of 1906. It did nothing of the kind. The 1906 act was a result of various lobbying pressures, mainly by the AMA, against counter-lobbying efforts by the Proprietary Association of America, a group representing the manufacturers of “patent medicines” (which included many brand-names still in existence today: Listerine, Campho-Phenique, Ponds, Vaseline, among others). There had been efforts since the 1890s to regulate medications, but they failed until a series of articles appeared in Collier’s Magazine by the muckraker Samuel Hopkins Adams titled “The Great American Fraud.”

Sinclair’s misrepresentations of the meatpacking industry in “The Jungle” had nothing to do with it.

But thanks, just the same, for bringing up the name of Upton Sinclair, as if he were some sort of authority on, or paragon of, honesty and integrity.

Invisible Backhand November 20, 2011 at 10:20 am

I only checked one of your assertions with wikipedia, which did not agree with your slant:

In the fall of 1928, Upton Sinclair published his novel Boston, an indictment of the American judicial system that took the case, especially Vanzetti’s life and writings, as its focus, mixing fictional characters with actual participants in the trials. Though his portrait of Vanzetti was entirely sympathetic, he disappointed advocates for the defense by failing to absolve Sacco and Vanzetti of the crimes, however much he argued that their trial had been unjust.[173] Years later, he explained: “Some of the things I told displeased the fanatical believers; but having portrayed the aristocrats as they were, I had to do the same thing for the anarchists.

http://en.wikipedia.org/wiki/Sacco_and_Vanzetti

I think it’s not only the meat that’s tainted.

Ubiquitous November 20, 2011 at 4:14 pm

I think it’s not only the meat that’s tainted.

You’re right. That stench you smell comes from your rotten ideas and your corrupt motives, you Marxist trash.

Sinclair Letter Turns Out to Be Another Expose

Note found by an O.C. man says ‘The Jungle’ author got the lowdown on Sacco and Vanzetti.

December 24, 2005|Jean O. Pasco | Times Staff Writer

Ordinarily, Paul Hegness wouldn’t have looked twice at Lot 217 as he strolled through an Irvine auction warehouse, preferring first-edition books and artwork to the box stuffed with old papers and holiday cards.

But then, he wouldn’t have stumbled upon a confession from one of America’s great authors. Inside the box, an envelope postmarked Sept. 12, 1929, caught his eye. It was addressed to John Beardsley, Esq., of Los Angeles. The return address read, “Upton Sinclair, Long Beach.”

“I stood there for 15 minutes reading it over and over again,” Hegness said of the letter by the author of “The Jungle,” the groundbreaking 1906 book that exposed unsanitary conditions at slaughterhouses.

The last paragraph got the Newport Beach attorney’s attention. “This letter is for yourself alone,” it read. “Stick it away in your safe, and some time in the far distant future the world may know the real truth about the matter. I am here trying to make plain my own part in the story.”

The story was “Boston,” Sinclair’s 1920s novelized condemnation of the trial and execution of Nicola Sacco and Bartolomeo Vanzetti, Italian immigrants accused of killing two men in the robbery of a Massachusetts shoe factory.

Prosecutors characterized the anarchists as ruthless killers who had used the money to bankroll antigovernment bombings and deserved to die. Sinclair thought the pair were innocent and being railroaded because of their political views.

Soon Sinclair would learn something that filled him with doubt. During his research for “Boston,” Sinclair met with Fred Moore, the men’s attorney, in a Denver motel room. Moore “sent me into a panic,” Sinclair wrote in the typed letter that Hegness found at the auction a decade ago.

“Alone in a hotel room with Fred, I begged him to tell me the full truth,” Sinclair wrote. ” … He then told me that the men were guilty, and he told me in every detail how he had framed a set of alibis for them.”

Hegness paid $100 for the box containing Sinclair’s confessional letter and tucked it away in a closet — where it gathered dust.

Now, after stumbling upon it again, he plans to donate it to Sinclair’s archives at Indiana University, where it will join a trove of correspondence that reveals the ethical quandary that confronted Sinclair — papers that even some scholars of the author weren’t aware of.

“This is a stunning revelation,” said Anthony Arthur of Los Angeles, a retired literature professor and author of the recently released biography, “Upton Sinclair: Radical Innocent.”

“I’ve never heard of this,” added Lauren Coodley, a professor of history and psychology at Napa Valley College who edited a recent Sinclair anthology. “It’s one of those amazing things. That’s why history is so fascinating, because we keep revising it.”

Upton Beall Sinclair was a giant of the nation’s Progressive Era, a crusading writer and socialist who championed the downtrodden and persecuted. President Theodore Roosevelt, who pushed through the nation’s first food-purity laws in response to “The Jungle,” coined the name for Sinclair’s craft: muckraker.

Sinclair wasn’t alone in believing Sacco and Vanzetti were innocent when he began researching the book that fictionalized their case. On Aug. 23, 1927, the day they were executed, 25,000 protested in Boston.

The men have been viewed as martyrs by the American left ever since. Historians agree that prosecutors in the case were biased and shoddy, and that the two men failed to receive a fair trial.

On the 50th anniversary of their execution, Massachusetts Gov. Michael S. Dukakis all but pardoned the pair, urging that “any disgrace should be forever removed from their names.” But the fearless Sinclair was left a conflicted man by what Sacco and Vanzetti’s lawyer — and later others in the anarchist movement — told him.

“I faced the most difficult ethical problem of my life at that point,” he wrote to his attorney. “I had come to Boston with the announcement that I was going to write the truth about the case.”

Other letters tucked away in the Indiana archive illuminate why one of America’s most strident truth tellers kept his reservations to himself.

“My wife is absolutely certain that if I tell what I believe, I will be called a traitor to the movement and may not live to finish the book,” Sinclair wrote Robert Minor, a confidant at the Socialist Daily Worker in New York, in 1927.

“Of course,” he added, “the next big case may be a frame-up, and my telling the truth about the Sacco-Vanzetti case will make things harder for the victims.” *

He also worried that revealing what he had been told would cost him readers. “It is much better copy as a naive defense of Sacco and Vanzetti because this is what all my foreign readers expect, and they are 90% of my public,” he wrote to Minor.

http://articles.latimes.com/2005/dec/24/local/me-sinclair24

*Implication: the Sacco & Vanzetti trial was (a) a big case, and (b) not a frame-up.

In sum: Sinclair lied. He justified it by claiming that it was for “good” reasons: he didn’t want to diminish his standing amongst the left, and he didn’t want to diminish his income by disappointing his readers.

And you dropped his name as a moral authority and exemplar of integrity in your asinine and pathetic attempts to criticize Don.

Nikolai Luzhin, Eastern Promises November 19, 2011 at 1:16 pm

Headline: logic escapes Don

the poor are spending too much because the rich have been spending too much, because the rich have too much money.

Don, the logical solution for such a problem would be to transfer money from the rich (reducing their spending). This would reduce everyone’s spending (if this idiocy were true) and, with their added wealth from transfer payments they could save

Like Hayek, it seems you have no shame. That you will say or do anything to curry favor with the rich.

Emil November 19, 2011 at 1:56 pm

Reading comprehension failure again

Jon Murphy November 19, 2011 at 2:05 pm

Right? Man, our schools really have failed if they are turning out people like Nik who miss the freaking thesis.

Greg Webb November 19, 2011 at 3:34 pm

Jon, Little Nikki Luzha boycotted reading comprehension class to Occupy Crack House.

Nikolai Luzhin, Eastern Promises November 20, 2011 at 12:08 am

no Emil

your the one who cannot read

the article cited by Don says that the rich are over spending because they have too much money and that the poor are over spending to keep up with the Jones.

now the way to break that cycle is to reduce what the rich spend, giving more to the poor. This will reduce spending by the poor, while increasing their savings

Emil November 20, 2011 at 9:10 am

“This will reduce spending by the poor, while increasing their savings”

Sure, that will work – give more money to people and expect them to spend less…

Emil November 20, 2011 at 9:10 am

And of course we are supposed to be better off if everyone spends less ?!?!?!?

Methinks1776 November 20, 2011 at 11:26 am

Emil, he has not read his Lord Keynes today. Nor, apparently, his Lady Markowska.

W.E. Heasley November 19, 2011 at 1:22 pm

“Société Générale’s Aneta Markowska names inequality as a major impediment to a U.S. recovery in that it kills the consumer market.

In other words, if too much income accrues to people who will just save the money (i.e. wealthy people) then demand will be sapped, even if total population-wide income stays the same”.

Aneta Markowska’s evidence is exactly what regarding the proposition put forward? Maybe better stated is: the notional proposition being put forward by Markowska can’t come with evidence as notions are based upon notions, not evidence. A few data points are pointed to and a chart is depicted but statistics are by no means is “evidence”.

One might want to defer to Thomas Sowell regarding Aneta Markowska. Sowell has explained the game plan very well: the crisis, the solution, the result, and the response. The crisis is no crisis however income equality merely is chosen as the crisis of the day. The solution as always is notional. What result will be achieved with a notional proposition? Likely cascading unintended consequences. The response will be that the notional proposition caused poor results. This will then be met with arguments with no arguments.

Maybe, just maybe, Markowska needs to reflect upon the following:

“Who are those who assume to put hard questions to other people and to demand a solution of them? How did they acquire the right to demand that others should solve their world-problems for them? Who are they who are held to consider and solve all questions, and how did they fall under this duty?

So far as I can find out what the classes are who are respectively endowed with the rights and duties of posing and solving social problems, they are as follows: Those who are bound to solve the problems are the rich, comfortable, prosperous, virtuous, respectable, educated, and healthy; those whose right it is to set the problems are those who have been less fortunate or less successful in the struggle for existence.

The problem itself seems to be, how shall the latter be made as comfortable as the former? To solve this problem, and make us all equally well off, is assumed to be the duty of the former class; the penalty, if they fail of this, is to be bloodshed and destruction. If they cannot make everybody else as well off as themselves, they are to be brought down to the same misery as others.”

William Graham Sumner, What Social Classes Owe to Each Other, 1883

SmoledMan November 19, 2011 at 1:43 pm

Read the comments on the article – dripping with class envy. Implying that if you’re not part of the 1%, then you’re a boot-licking slave. That is the kind of toxic thinking that leads to #OWS.

Methinks1776 November 19, 2011 at 1:51 pm

A friend of mine sent me her vote for the best OWS sign: “Occupy a desk!”

SmoledMan November 19, 2011 at 2:08 pm

These OWS-types envision themselves as doing “creative” work and heaven forbid they should have to flip a burger or assemble a sandwich or make a coffee for someone. That is boot-licking behavior and they will NOT do it.

SmoledMan November 19, 2011 at 2:08 pm

Never mind that it takes a quite a bit of real education and talent to become a member of the creative class. Also in the past “starving artist” meant exactly that.

Jon Murphy November 19, 2011 at 2:11 pm

I was at the Occupy Wall Street offshoot in Concord, NH today. I felt almost bad for them. There were 6 people there.

SmoledMan November 19, 2011 at 3:19 pm

Yet the MSM pumps them up to epic proportions. The average middle-American dolt believes OWS is this huge thing.

Jon Murphy November 19, 2011 at 3:43 pm

It probably is in other places. But this is Concord, New Hampshire. There is NOTHING to protest in Concord. We have no major cororations. No headquarters, a handful of banks.

JWH November 19, 2011 at 2:29 pm

Unless a business and the government to collude in charging me too much for products and services I buy, I don’t see a problem with people getting as rich as they can because I see no instances where I am harmed
As a matter of fact, having very rich people in our society helps improve my living standards, IMO. Can one of the non libertarians tell me what mechanisms the rich typically use to take from the poor to make themselves richer and the poor, poorer. I don’t know how this works in the real world.

Don November 19, 2011 at 4:42 pm

No, they can’t, because it doesn’t. At least, not without government force used as coercion (e.g.”too big to fail”). But then, they’d never admit that government force is required, so again, they can’t.

GiT November 19, 2011 at 5:20 pm

Some would say the mechanism is the employment contract.
This starts with an uncontroversial premise: when a worker partners with an employer, they produce goods in excess of the cost of sustaining the worker and the cost of sustaining the tools that he uses. This profit, or surplus, is divided between the two parties in the contract through negotiation.

Some of those on the left would argue that negotiation over this contract inherently favors those who owns the tools, not he who sells his work.

Given this advantage, it’s argued the tendency is for workers to get a smaller and smaller ratio of the surplus they have a hand in producing. (Note that premise could also be entirely consonant with workers getting more and more amounts, or levels, of stuff, as it’s the ratio that decreases, not the absolute value).

That’s the basic idea. Of course the tendentious part is that the negotiation over a wage contract is somehow inherently advantaged towards those offering jobs, rather than a product of fair and equal exchange.

The simplest way to distill the spirit of that claim is the familiar fact that it always pays to have the big stack at the poker table, and when it comes to work those who offer jobs tend to have big stacks and those who look for jobs tend to have small stacks.

Jon Murphy November 19, 2011 at 5:30 pm

“This profit, or surplus, is divided between the two parties in the contract through negotiation.”

Well, that’s not true. A worker wants to get paid regardless of the profit or loss his employer makes. Likewise, if the employer has a profitable year, the employee is not automatically entitled to more money. A worker agrees to be hired for a wage. Plain and simple.

GiT November 19, 2011 at 5:58 pm

Point taken, but I’m considering that which is negotiated over as anything over the shutdown point, not simply economic, or even normal, profits. Shutdown point and the bare minimum cost of feeding and sheltering oneself from day to day are the maximal limits for each party. Once those are breached there is no possible way it could be in their interest to enter the contract.

An employee won’t agree to terms that means he can’t buy himself enough calories to go to work the next day and an employer won’t agree to terms where he’s losing more than if he were to let his resources lie fallow.

GiT November 19, 2011 at 6:00 pm

And I never used the language of entitlement.

The question is not what anyone is entitled to. It’s a question of what they are able to negotiate.

JWH November 19, 2011 at 7:23 pm

Thanks for your response. What keeps the worker from going to another employer if they can get a better deal somewhere else.

I also take it from your response, your opinion is that the employment relationship is the main mechanism where rich get richer at the expense of the poor. Not being smart, just a question.

GiT November 19, 2011 at 8:08 pm

I suppose the assumption for dealing with that question is that, in general, workers are thought to be in more of a competition for jobs than firms are in a competition for workers. So workers will more often be bidding their own prices down than being able to force firms to bid up, and that this asymmetry is, again, something generally characteristic of the economy insofar as all firms are in competition to deskill, and hence increase competition for, the jobs they have, because that lowers their costs (obviously this general tendency doesn’t mean that companies are never in competition over particular sorts of skilled workers).

That assumption could be a relic of industrialization, when it looked like most skilled work was disappearing. But there are also other reasons for thinking that workers might be more disadvantaged – for example, they may be less mobile than physical and financial capital and it may cost them relatively much more to repurpose their human capital for other kinds of work. It may also be more difficult for them to coordinate as a group or rely upon barriers to entry in their occupational field as a means of insulating their position.

I guess I would consider the employment contract the primary place where the rich and poor struggle over the distribution of returns/income and lose. Though, I suppose for the left the poor are predisposed to lose in other arenas as well – in the purchase of consumer goods because of asymmetries in information and in government because of asymmetrical influence over politicians.

In general the basic principle is essentially that having lots of money or relatively liquid assets which you can convert into money helps in any sort of negotiation. So the hope is to come up with some arena where negotiation precedes independent of the security and influence wealth brings – i.e. the voting box.

vidyohs November 19, 2011 at 8:41 pm

Have you ever contemplated the simple truth that the employer employee relationship is heavily distorted in favor of the employee in this country, and has been since the glorious FDR union loving days?

Consider. A courteous and thoughtful employee walks into his employer’s office and says, “Sir, I am sorry but I will be leaving your employee as of this Friday, your competitor offered me a position at better pay and benefits. Please have my paycheck ready, thank you very much.” Under that scenario, what recourse does an employer in the USA have, but to have the employee’s paycheck ready. Using the law to force the employee to stay is not going to happen, suing the employee for breach of contract isn’t going to happen (if it comes to that we know from our observations of sports that contracts are as easily broken as toothpicks). So the employer loses and employee at the employee’s discretion and there isn’t a damn thing gonna happen but the employer goes looking for a replacement.

Now consider. A courteous and thoughtful employer walks into an employees office and says, “I am terminating your employment as of this Friday. Your paycheck will be ready for you. I have found a better qualified replacement for you and he will work at 2/3 the pay and with no benefits.”

Do we not know for certain that the law will be in the employer’s office with lawsuits, fines, and harassment immediately. Ha! An employer who did that had better be ready to spend a lot of money defending himself in court. The deck is so stacked in favor of the employees in this land it is sickening.

GiT November 19, 2011 at 11:21 pm

I see what you’re saying, but let’s hold aside the question of labor law for one second.

I’m not aware of many examples of owners of companies facing great hardship because all their employees have abruptly packed up and left to work for someone who will pay better.

Stories of workers facing significant hardship because they were abruptly fired, however, are rather common.

Maybe I’m not looking hard enough, but it seems to me that individuals tend to suffer more from losing their jobs than losing their employees.

As to labor law, yes, workers have relatively more protections now. Whether that makes up for other disadvantages they face is less clear. businesses certainly make a big fuss about wrongful termination, but I’m not aware of any solid evidence about the volume of such cases and their costs.

There may also now be much less sexual harassment and discrimination in American workplaces because of the legislation. I don’t know of any studies on that either. In any case one might consider that worth at least some of the costs born by businesses. Certainly there are quite a few women and minorities which probably value the change.

vidyohs November 20, 2011 at 11:51 am

There are several factors that come into play.

You don’t hear about many cases for the simple reason no employer in this day and age who is well indoctrinated in knowledge of what will happen to him and his business if he performs the act in my little scenario, ergo, they are extremely unlikely to do it. The government via the EEO has trained American employers very very well.

In the rare instances that an employee is actually terminated, even for cause, a lawsuit is the inevitable results, and I hear about them because documenting all the lead up to trial via video is my business.

The whole point is that in our society the first scenario is common and so widely accepted as being right and proper due to the “working man”,that the “working man” is doing it for his own personal profit in the capitalist system is overlooked and never mentioned: While the second scenario is viewed as an evil man screwing a poor worker for his personal and business profit, and is reviled across the board.

It is the warped perception of the very same act that is the hypocrisy.

Nikolai Luzhin, Eastern Promises November 20, 2011 at 12:10 am

negotiation …

bs

divided between the parties based on the leverage either has under the legal system

GiT November 20, 2011 at 12:20 am

How is negotiation BS?

Negotiation doesn’t mean fair and equal. Police negotiate with hostage takers and kidnappers, that doesn’t mean they have equal leverage.

Andrew_M_Garland November 19, 2011 at 2:54 pm

Headline: Man arrested for attempts to kill the economomy

George Ima Saver was arrested today after a many-month, city-wide search.

Mr. Saver held a part-time job as a convenience store clerk in addition to his regular work. Worse, he routinely cashed his paycheck and placed that cash into a safe under his mattress.

Q:  Why did you work in a second job?
Saver:  I was bored, and wanted a bit of excitement.

Q:  Did you realize that probably you selfishly took a job from a more needy person?
Saver:  No. I applied and they hired me. They liked my work.

Q:  Why did you save your cash at home?
Saver:  I felt more secure having the extra cash right there with me.

Mr. Saver has been charged in district court.
(1) Taking a job from others that he didn’t need, for personal and frivolous reasons.
(2) Taking cash and literally puttting it under his mattress. Denying society the opportunity to use that cash for investment into other people’s projects.

District Attorney:  Mr. Saver is worse than the typical criminal. Keynesian economic theory tells us that by not spending his cash, and not even putting it into a bank, he has eliminated possibly four times as much economic activity in the larger society. His wonton act of working and mattress-saving has harmed us all. His punishment is a needed example for others.

In Other News:  The Federal Reserve reported today that banks are awash in capital to lend, provided by the Federal Reserve at almost 0% interest. “We have plenty of cash to lend, but few projects that offer a reasonably predictable return”.

– –
AMG:  Seriously, is Mr. Saver harming society?

Don November 19, 2011 at 4:44 pm

Uh, if I recall correctly, these were in fact illegal acts…

in East Germany.

It’s sad that this hardly passes for parody in modern-day America.

Gil November 19, 2011 at 11:54 pm

A one counter-story comes to mind:

“People with good jobs and high I.Q. arrested not making babies but prefer to spend it on themselves thus depriving the future generation of human capital.”

Craig November 19, 2011 at 6:48 pm

I wonder to what extent income inequality might be due to our now half-century old policy of inflating the hell out of the currency. The new money enters the system through the banks who get it while it still has its former purchasing power. And constantly-devaluing currencies tend to create a larger financial sector dedicated to preserving the value of one’s cash holdings rather than allocating capital to the goods-producers. Just wonderin’, that’s all.

Methinks1776 November 19, 2011 at 7:15 pm

Seriously?

If nobody is investing in producers, how did any of the thousands of American companies ever get funded?

nailheadtom November 19, 2011 at 7:21 pm

Frank’s NYT piece is actually funny. If deep thinkers like him are teaching economics at our universities we’re in more trouble than we know.

For instance: “Recent research on psychological well-being has taught us that beyond a certain point, across-the-board spending increases often do little more than raise the bar for what is considered enough. A C.E.O. may think he needs a 30,000-square-foot mansion, for example, just because each of his peers has one. Although they might all be just as happy in more modest dwellings, few would be willing to downsize on their own.”

Let’s not even mention that most of us wish to have the freedom to spend our own money as we wish, it’s impossible not to notice that governments are guiltier than the private sector of this malady. Take a gander at the various federal buildings in any city and see if they’re designed for optimum utility and economy.

He mentions divorce rates in communities with extensive income inequality and the length of commutes in those communities. Correlation and causation?

Methinks1776 November 19, 2011 at 8:24 pm

Hilarious. What research would that be? Surely he’s not mangling research that indicates that, in general, happiness may not increase in lockstep with increases in income beyond middle class income? It’s a rare CEO who will either want the upkeep or can afford a 30,000 sq ft mansion, but okay. If he does, Frank is absolutely sure it’s because “all the OTHER CEOs have one”. Or is it maybe because our wants are insatiable? Oh no. He knows what we really want. Thank the Lord Keynes for that! Without the wizdumb of the Robert Franks of the world, little ole me couldn’t possibly figure out what I really want.

Frank is a simpleton’s simpleton.

kyle8 November 19, 2011 at 10:19 pm

And what if we were all just motivated by keeping up with the Jonses? So the “F” what? It would still lead to a high level of economic activity, thus a high level of employment.

Who the hell has the right to try and gainsay the motives of anyone’s pursuit of happiness?

Methinks1776 November 19, 2011 at 10:08 pm

I also wonder…..if we all just want what someone else has, what prompted the first guy to want a house large enough to be a regional airport?

Jon Murphy November 19, 2011 at 10:10 pm

Small penis?

Jon Murphy November 19, 2011 at 10:10 pm

Wow…I’m sorry that was totally inappropriate.

kyle8 November 19, 2011 at 10:14 pm

naw it was pretty funny

Methinks1776 November 20, 2011 at 8:09 am

So, not someone else building a giant house, then?

I guess Frank’s going to have to re-examine his premise. Among other things…..(feelings of inadequacy on a professor’s salary are less easily soothed by excessive spending)

muirgeo November 19, 2011 at 8:52 pm

“It’s instead to warn that it is tempting and easy to construct superficially ‘scientific’ justifications for taking other people’s money.” Don

You should heed your own warning and first question how those “other people” got their money. The assumption seems to be if you have it it must have been earned. The audit of the fed books showing $17 trillion in cheap loans to a handful of megabanks over just the last three years suggest such an assumption is absurd and vastly under-estimates who is taking who’s money.

PKSully November 19, 2011 at 9:30 pm

I know who took my money, John Corzine, former governor of New Jersey and short list candidate to replace Geithner at Treasury. And I know who won’t give it back, Gary Gensler, head of the CFTC, an author of Sarbanes Oxley and former Goldman Sachs douche who worked to keep trading of credit default swaps (a very useful insurance tool when used properly, btw) in the dark and to bring energy trading into the dark pre-Enron before being appointed by the chosen one. That these guys are the darlings of the OWS buffoons is too funny.

Methinks1776 November 19, 2011 at 10:07 pm

I’m so sorry to hear that, PKSully. I was hoping that it wasn’t true, but I don’t think there’s much doubt that it is anymore.

GiT November 20, 2011 at 12:18 am

That you think Corzine, Geithner, Gensler, or Oxley are ‘the darlings of OWS’ is the only thing that’s funny here.

Jon Murphy November 20, 2011 at 10:29 am

By the way, I totally just got the pun in the title of this post. Very clever, Don.

PKSully November 20, 2011 at 10:34 am

I meant the Obama admin that appointed and/or held them up as the good guys of Wall St. Obama of Corzine “He’s our Wall Street guy”. Sorry that that wasn’t clear.

PKSully November 20, 2011 at 11:10 am

I meant the Obama admin that appointed and/or held them up as the good guys of Wall St. Obama of Corzine “He’s our Wall Street guy”. Sorry that that wasn’t clear. (this got posted further down accidentally)

Previous post:

Next post: