Greg Mankiw's Blog: What changed?
リンク: Greg Mankiw's Blog: What changed?.
In today's Washington Post, Sen. Byron Dorgan and Rep. Sherrod Brown write about How Free Trade Hurts. Here is a telling passage:That last sentence is striking. There is no doubt that most Americans have seen dramatic improvements in living standards and workplace norms over the past century. But should we really give most of the credit to "worker activism, new laws and court decisions?" I don't think so.At the turn of the 20th century, child labor was common; working conditions were often abysmal; there were no enforced workplace health, safety or environmental requirements; no unemployment insurance; and no workers' compensation. Workers were attacked and killed for the sole reason that they wanted to form a union; there was no 40-hour week, minimum wage, job security, overtime pay or virtually any other limit on the exploitation of employees. America was split dramatically between the haves and have-nots. It was a harsh work world for many: nasty, brutish and, too often, short. Worker activism, new laws and court decisions changed all that during the past century.
I would give most credit to economic growth, which in turn is driven by technological progress, a market system, and a culture of entrepreneurship. As the economy grows, the demand for labor grows, and workers achieve better wages and working conditions.
Economic studies of unions, for example, find that unionized workers earn about 10 to 20 percent more by virtue of collective bargaining. By contrast, real wages and income per person over the past century have increased several hundred percent, thanks to advances in productivity.
Similarly, working conditions are poor in less developed countries today because productivity is low there. The key to improving lives in those nations is economic growth, not "worker activism, new laws and court decisions."
18 Comments:
Yes to economic growth - but also modernization generally: ie. growth in efficiency deriving from specialization of function.
I think continually increasing education levels are also very important. In the bad old days most people in the world were employed almost purely for their muscle, and were therefore paid and treated pretty much like animals - now most workers are skilled and most of the world is middle class.
Much of the muscle work has been abolished, and what remains benefits from the general asssumption built into the modern social system that humans are skilled workers and must be treated accordingly.
I object your honour.Worker activism alone solved exploitation in some developing countries.Economic growth comes only next.Workers of the world unite.....
Editor theorist,don't say "most of the world is middle class". How many developing countries you have visited to make this normative statement?
You are in a theoretical world!
But would we have seen as much growth and progress without worker activism, or would cheap labor and skewed distribution have kept us from seeing much?
"...worker activism, new laws and court decisions..." are not just sacred cows of old-style liberals; each should be taken seriously.
By the way, just as everybody, liberal or conservative, should read Hayek's "The Road to Serfdom," everybody, liberal or conservative, should read Perkins's "The Roosevelt I Knew." In the [liberal] labor economists' community, she is generally known as Saint Frances.
Randy Summers
'gvv' queries my statement that most of the world is middle class - it does sound surprising (as well as pleasing) so I should have provided my reference - here 'tis:
http://econlog.econlib.org/archives/2006/12/a_middleclass_w.html
"of the vast increase in the well-being of hundreds of millions of people that has occurred in the 200-year course of the industrial revolution to date, virtually none of it can be attributed to the direct redistribution of resources from rich to poor. The potential for improving the lives of poor people by finding different ways of distributing current production is nothing compared to the apparently limitless potential of increasing production."
-- Robert E. Lucas, Jr.
Was that second to last sentence of his meant to imply that without government we live in a Hobbesian state of nature, and only through emplyoing Hobbes' model of government control will we live in a state of peace? Quoting a guy like Hobbes might not be a smart thing for a newly seated senator to do. We'll see if that one gets around.
Sam Peltzman calls this effect "the natural progress of opulence." He notes that, in the 30 years before the publication of "Unsafe at any Speed", when there was basically no government safety regulation of automobiles, fatalities per highway mile driven fell 3.5%/year. In the 30 years since, with massive government safety regulation of every conceviable detail of automobile design, fatalities per highway mile driven fell... 3.5%/year.
Why can't it be an "and" rather than an "either/or"?
One can argue increasing productivity played a larger role, but must that argument include the repudiation of the role of activisim?
Can one not imagine a world where laws/activism improve the situation while productivity improvements run their course?
Is the argument that such "intervention" would slow down the normal growth rate of productivity?
Why must I choose sides? Why can't both be true statements, just with different weights?
You want to attribute everything to economic growth, not political and government action, but you ignore that economic growth came exactly from political and government action.
The unfettered free market place gave us the Stock Market Crash of 1929 and the Great Depression of the 1930s. It is thanks to liberal government policies that we were brought out of it and the economic environment enabled to grow again. The New Deal reformed and revitalized the economic and business environment. People were put to work building electrical and transportation infrastructure. The GI Bill of Rights led to boom in education levels, universities, and home ownership. Banking and investment were revised to reinstill confidence in the marketplace by putting controls on that would stop the abuses that led to the crash. Add to that direct government funding of universities and businesses to create technology (first for military use, then later employed in business) and you get economic growth.
Your textbooks say that output is a function of capital and labor. It was government action that reformed capital so that it was put back to use. It was government action that improved labor through education and increased technology. Attributing all to economic growth and ignoring the political action that provided that which was necessary for growth is extremely shortsightedness due to your idealological biases.
And lets not forget the effects of social liberalization. If it were for social activism, the Civil Rights Act, and we would still have minority labor officially oppressed and suppressed.
Give credit to the economy, but read your own textbooks and think about what actions unlocked oppressed worker productivity, improved worker efficiency through greater education, improved worker efficiency through technological growth, and reformed capital so that it wouldn't destroy itself through (some forms of) destructive greed.
I think you miss the obvious here.
Expanding the size of the pie is one thing - and the free enterprise system has certainly shown itself to be the best system to maximize that.
Ensuring a fair and just distribution of the wealth thus created, thereby forming a middle class that can further drive economic growth has been crucially dependent on labor unions and targeted governmental regulation and intervention.
We have the best system in the world, and at its heart is this tension between the factors that drive growth, and the factors that distribute wealth and regulate the market. Both are necessary to the functioning of the system.
When one strays from the ideal balance the result is either gross disparities in wealth and the shriveling of the middle class (draining the economy of a vital growth engine), or, in the other direction, a stifling of growth through a lack of free capital.
We have had a generation of heavy thumbs on one side of the scales and some righting of the balance (or lefting) is in order.
Wrong, but that is not unusual.
Don't forget, at one time it seemed appropropriate to the ruling elites for Henry Ford to use the National Guard to beat and shoot striking workers.
My grandfather worked six sixteen hour days on the railroad he was fired for being injured. That was the free market at work.
Maybe some credit should go both ways. Too bad Prof. Mankiw never had a job that caused callouses, he wouldn't be so calloused toward blue collar workers.
I have had plenty of blue collar jobs and I agree with Mankiw
Data and economic analysis can tell.
Anon #3:
It has been well proven that the Great Depression was caused by the tight money policies of the Federal Reserve, not the "unfettered free market". And to say that liberal policies brought us out of it is unclear at best. The economy did not pull out of the depression for good until 1940, a full 7 years after FDR took office; the recession of 1935-1937--after Roosevelt was in office and the New Deal in place--was nearly as bad as the initial depression of 1930-1932.
Funny who someone would blame the great depression on the free market.
Au Contrarie, the depression got as bad as it did precisely because the government, especially the fed, tried to fix things using its own power, by cutting off money supply when it was needed the most.
Only if the fed had left the market alone, the stock market of crash of 1929 would have been but one freaky episode rather than the begining of an era of drmatic contraction.
As Milton Friedman forcifully argued, we would all be better off without the fed.
Anonymous 4.19 PM,
You are exactly correct.Free market supporters are ideologically biased.