Saturday, April 24, 2010

Karl Marx too smart to support socialism -- once he saw it not work

A funny idea came to me the other day. Karl Marx would not have supported socialism from the moment he saw it not working. He was too intelligent. Socialism from him was sort of a "Jules Verne" attempt to guess the economic future -- or his economic "Brave New World."

He did a pretty good job figuring out what what wrong with the LABOR MARKET (I use all capitals hoping the word will be even noticed because it seems hard to get the concept even thought about for more than three seconds in intellectual circles) already (haven't read "Das" yet, but will now that this makes him seem potentially credible). He was just not very good at guessing the future.

He was not an ideologue like many later followers who take his "predictions" of common ownership of production for "revealed" religion. He had noticed (according to one comment on Economists View) that America did not need socialism because it had labor unions. I guess he lived in a world that was so totally different from today's (dominated for millenia by royal families -- only recently replacing muscle power with carbon fuel) that he just couldn't see the eventuality of labor organized democracies (today that can only be accomplished via legislated sector-wide labor agreements).

Marx would was too intelligent to have been a Marxist ideologue. He would instantly have recognized what even below average intelligences could easily diagnose was wrong with Communism in 1917.

Sunday, April 11, 2010

Re-form the labor market: the best stimulus -- and antipoverty program -- for American (and Japan!)

The best stimulus -- and best anti-poverty program -- for America with its unique dearth of checks and balances labor market would be to begin paying people what they are worth to work, again. The minimum wage (the minimum part of the job) was raised in 2007 by the Dems to all of 75 cents an hour short of what it was in the Eisenhower administration in 1956 -- 2 1/2 X the average income later! Labor unions have virtually disappeared from the private employment landscape -- and now pressure IS BUILDING on public employee unions to give up deals that the majority (working private) no longer enjoy: the ultimate race to the bottom.

The ultimate and only answer to labor union disappearance is of course the answer that serves all the better paid, less over worked OECD world (other "miserables" exception Japan): sector-wide labor agreements.

Leaving what to do aside for the moment, what will it cost. Answer: a lot of inflation. To move the 15% of income SHARE that has shifted from the bottom 90% of earners to the top 3% (overwhelmingly to the top 1/10% and the top 1/100%) over the last 37+ years (1973 being the dividing line) back where it came from must necessitate much inflation as prices rise and rerise: as much as 30% over a few years being my amateur economic guess.

A time of potential deflation like now with a definitely UNDER heated economy would seem the ideal moment. Myself reading the beginning of Nipperdey's "Germany from Napoleon to Bismark" saw there were back then potential economic upsets from freeing the formerly unpaid serfs. BUT AT SOME POINT YOU JUST HAVE TO FREE THE SERFS -- come Hell or high water.

Come to think of deflation racked Japan needs exactly the same thing: in Japan's case the institution of labor bargaining power in the market place as a completely new experience -- that is exactly what Japan needs.