Tuesday, October 7, 2014

Rorschach's Journal. Oct 7, 2014

"The streets are extended gutters and the gutters are full of blood and when the drains scab over, the vermin will drown."

Angus is right. Labor economics is hard, but it ain't that hard. It is possible to have a G.E. with economy-wide efficiency wages, even with mobile capital. What may not be possible is for workers to insist on efficiency wages. The heyday of the workers' union is over, at least apart from SEIU. My own dalliance with a union job was with the Needleworker's Union, in my capacity making shirt buttons in Connecticut. US Button stays open because of military procurement legislation and for no other reason. When I worked there, the chief competitors were all Korean. The factories overseas were highly automated. As a press operator, I could crank out a 55-gallon drum's worth of raw buttons in a shift, but one Korean worker (who was really more like an assembly line supervisor) could be the only human in charge of producing ten times that many finished buttons in the same amount of time. Automation is insanely productive. Watch the Canadian TV show "How It's Made" sometime to see what I mean.

And if Munger is right about the fundamental purpose of the firm dissolving before our very eyes, then the future of (many kinds of) production will further erode workers' ability to unionize. One unflattering way to think about the sharing economy is to call it scab-enabling technology. P2P matching software automates middle management, directly connecting line workers with customers. Without a management structure to negotiate with, both efficiency wages and union bargaining vanish. When everyone is a scab, no one is a scab.

Is a be-your-own-boss world more euvoluntary  or less than one in which organizational costs are high? Wages will fall, sure. But so will the cost of services, since consumers won't be obliged to pay premiums to support back-office operations. Productivity should increase, and a more productive society is a more prosperous society.

And more curiously, how consistent is the support for one way over the other? Taxi drivers are a sympathetic constituency for the typical working stiff, so Uber threatens class solidarity. But auto-arbitrage in the blockchain also eliminates the need for currency arbitrageurs, so employment in the finance industry will take a hit. Is it cool to get rid of Louie DePalma if it also means we can kick Gordon Gekko out on his keister?

At any rate, will it or no, it's likely to happen. Ned Ludd has long stood athwart history, chucking clogs into the machine, but all that comes out the other end is smoke and splinters. The prudent course is to learn to love the machine.

Rorschach dies at the end.

"The accumulated filth of all their sex and murder will foam up about their waists and all the whores and politicians will look up and shout 'SAVE US!'...and I'll look down and whisper 'No.'"

1 comment:

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Do you have suggestions on where we could find more examples of this phenomenon?