Posted on 06/17/2024 10:47:53 AM PDT by nickcarraway
Vance thinks that jobs lost because of incompetent central planning don't matter—but that jobs lost to immigrants do.
In an interview published this week by The New York Times, Sen. J.D. Vance (R–Ohio) calls for a more muscular federal government to intervene even more aggressively in the economy than it already does, to create what Vance calls "incentives" for American workers. In doing so, Vance inadvertently reveals one of the major flaws in this line of analysis.
Vance's opinions about these things carry significant weight, in no small part because he's on the shortlist to be Donald Trump's running mate. With an eye towards that possibility, the Times' Ross Douthat asked Vance to explain his "populist economic agenda." Here is part of the senator's response (emphasis mine):
The populist vision, at least as it exists in my head, is an inversion of [the postwar American order of globalization]: applying as much upward pressure on wages and as much downward pressure on the services that the people use as possible. We've had far too little innovation over the last 40 years, and far too much labor substitution. This is why I think the economics profession is fundamentally wrong about both immigration and about tariffs. Yes, tariffs can apply upward pricing pressure on various things—though I think it's massively overstated—but when you are forced to do more with your domestic labor force, you have all of these positive dynamic effects.
It's a classic formulation: You raise the minimum wage to $20 an hour, and you will sometimes hear libertarians say this is a bad thing. "Well, isn't McDonald's just going to replace some of the workers with kiosks?" That's a good thing, because then the workers who are still there are going to make higher wages; the kiosks will perform a useful function; and that's the kind of rising tide that actually lifts all boats. What is not good is you replace the McDonald's worker from Middletown, Ohio, who makes $17 an hour with an immigrant who makes $15 an hour. And that is, I think, the main thrust of elite liberalism, whether people acknowledge it or not.
The basic fallacy here is one that President Joe Biden, former President Donald Trump, and plenty of other politicians make regularly: They talk as though America is made up of one group of people who are "workers" and another group who are "consumers."
If this was so, you could focus on policies that raise wages for one group—the workers—at the expense of the other. But since most people are sometimes a worker and other times a consumer, policies that artificially apply "upward pressure on wages" also apply upward pressure on the prices consumers pay (because those wages have to come from somewhere). If you want to see how this plays out in reality, just look at California's experience with a $20 minimum wage. Prices have skyrocketed and jobs are being lost.
Pitting the two fictional camps of workers and consumers against one another might be a clever electoral strategy, but it's not the basis for sound economic policy.
There is another, deeper problem with Vance's argument here. In the second section I highlighted above, he argues that there's nothing wrong if a job is automated away after the government mandates a higher minimum wage, because the workers who get to keep their jobs will earn more. But if your job is lost due to market forces—because someone else is willing to do the same work for less—that's a problem he implies the government has a role in solving.
Taken together, those two premises effectively absolve the state from being blamed for the inevitable negative side effects of its interventions in the economy. Think about the two scenarios Vance lays out. In both, a worker has lost a job. If a centrally planned wage mandate is the cause, Vance says that's actually good because it means the remaining workers will earn more and be more productive.
Kudos to him for recognizing that automation isn't something to be feared or banned—not every populist gets that. Even so, the fact that automation can help make some McDonald's workers worth $20 per hour is likely to be little comfort to the worker who would have been willing to earn $17 per hour but is now out of a job because of a government mandate. For that matter, even though automation is a natural market response to artificially higher wages, it's not clear that the trade-off is an economically beneficial one. If it were, why shouldn't Vance want a $100 per hour minimum wage?
Meanwhile, Vance is worried about that same guy being replaced by a different worker who is willing to do the same job for $15 per hour. (That scenario, you'll note, is tinged with xenophobia. Why can't the wage competition come from another native-born American worker willing to do the job for $15 an hour?)
That seems pretty incoherent, but I think Vance is trying to play a clever game here. He's arguing that job losses (or other negative economic consequences) due to well-intentioned governmental interventions should be ignored, and the focus should be on how workers benefit from those interventions.
If you're someone who favors greater governmental intervention in the economy, as Vance does, this is exactly the framework you'd like to work within. Sure, a higher minimum wage means some workers lose their jobs and consumers pay more, but other workers earn fatter checks. Sure, cutting off immigration would probably make inflation worse, but it would protect some workers from wage competition. Sure, dumping tons of tax money on politically favored businesses and industries means higher taxes or borrowing costs foisted on everyone, but look at the shiny new semiconductor factory and the jobs created.
There's nothing new about this line of thinking. Vance is simply adding a more conservative-coded twist to the same tired arguments that progressives and other advocates for big government have used for years. In either case, the argument rests on the premise that government officials know exactly what levers to pull and what "incentives" to offer. Is a $20 per hour wage enough or should it be higher? How many factories does this town or state need? Which jobs are important enough to protect? Conservatives used to have enough humility to recognize that government officials won't have the answers to all those questions.
In place of that humility, Vance and other right-wing populists are substituting a different idea: that when the government inevitably makes mistakes while picking winners and losers, we should simply ignore the costs and focus only on the benefits.
He is just another Yale Law School idiot that has no common sense.
It is obvious to me J. D. Vance is hung up on a the trope "from each according to his abilities, to each according to his needs" out of compassion for the hillbillies he remembers from his youth. No amount of reason or logic can break through what his "Mamaw" taught him. And he can't even see that his beliefs are Marxist.
Some politicians strike me as focused on positioning their brand and raising their profile rather than being motivated to serve American interests. Often on their way these politicians support positions that advance policies that MAGA but they are not dependable since they are not committed.
As you note the Yale & Harvard group are rarely solid.
I suspect that all you have to offer are insults because you lack the intelligence for a real conversation.
What a jackass, even a total idiot should be aware of the complete disaster raising the minimum wage for unskilled fast food labor to $20 in California has caused. And then there’s the ripple effect that happens across the whole economy. He must be high on Trumps !its because that’s as stupid as Trumps tactic and tips idea. Flame me if you want but you can’t change reality!
Maybe DeSantis said no. But Trump said that DeSantis handled COVID worse than Andrew Cuomo and was the worst governor. Maybe he could get Cuomo to be his VP.
I want to know where the FedGov, or any gov, is granted the authority to tell an employer how much they must pay an employee.
Thanks
Vance’s conservatism has never seemed very genuine to me. Most of the time his politics are in the right place, but I’m not really sure how principled he is or what motivates him.
Oh, yes. He’s pandering for sure.
This guy is a carpetbagger with money.
The only REAL solution to all this economic BS is to get FedGov back within the confines of the Constitution and SCRAP ALL THE REST.
He’s got quite a future in front of him. I’d give him 2 senate terms before he goes stale like Thune did. No VP. Perhaps a run for Gov. after Vivek proves his bonafides-not counting on it.
That's pretty much the antithesis of a Republican IMHO.
governments only distort markets
It is relatively easy to check the books for what workers are being paid, and, if properly enforced, a high minimum wage would help price illegal immigrants out of the market. The ill effects on marginal employment could be countered with federal income tax credits for qualified employers and subsidized training for prospective employees. Any exceptions to a high minimum wage should be limited and tightly monitored.
On the whole, we want a society in which legal, productive jobs are plentiful and financially rewarding but restricted to citizens and legal immigrants. This would help reorient individuals and families on the margins in America toward legal employment as a way to advance in life. This would do much to discourage and alleviate many pathologies at work in American life today.
I am done with the view of libertarian economists, Reason, and the Chamber of Commerce that the highest priority in America should go to cheap labor so as to assure business profitability and returns on capital. This has led to an expanding welfare state, a large mass of people who are work-shy, and a wave of destructive immigration -- supported vigorously by libertarian economists, Reason, and the Chamber of Commerce. Meanwhile, millions of Americans work hard but struggle to make ends meet and are deeply dispirited.
I think that J. D. Vance gets this. I am chagrined that it took me so many years to do so.
Whoever rises to the top of the news cycle will get hit with an attack piece in an attempt to box in President Trump.
-PJ
It may take you a few more years to gain a fuller perspective. There is a disconnect in Vance’s thinking and a naiveté that is not touching. Elucidating problems with one approach and ignoring the problems with the chosen counter approach is the ultimate in stupidity.
The best tool we have is the study of history. Whose policies brought economic prosperity to the greatest number of people in all strata of American life? Trump’s, there is no contest.
Was wage control responsible. No. Did tariffs to protect American industry, encourage the building of plants in the US, prevent predatory international trade practices suceed. In a word YES.
The simplistic siren song of mandated minimum wage has historically backfired and brought greater poverty in it’s wake. It takes a spectacularly myopic vision to ignore the recent California example.
This attempt by JD Vance to sound like a man with a compelling vision and a plan for prosperity tells us much about his intellect, his priorities (personal political chops rather than MAGA), his brashness and his willingness to gamble with American’s opportunities and economic priorities if such gambling advances his political star. In the past JD Vance has impressed me as a loose cannon and inconsistent. For a time he seemed to be becoming an asset to America. He has now clarified that he remains undependable to those who are committed to small government and individual opportunity and freedoms.
Anyway, your point applies most forcefully not to Vance but to the business establishment and political and financial elites who want cheap labor and are eager to get it through mass immigration from the Third World.
In America's emerging politics, traditional free market capitalism will likely be a political dead end because poor people from socialist countries will soon move American politics forcefully to the Left. A high minimum wage will be the least of our troubles.
And, bluntly put, if and when Third World mobs come for the rich who illegally invited them into the country, I will not be inclined to try to stand in their way. I just hope they direct their aim at Soros and son, the Obamas, the Clintons, the Bidens, the Arabella network, the Hamptons, and other wealthy Leftists in their enclaves first and are sated.
It’s foolish & naive to think you will be left alone. You will be the easier target. The rich can always afford personal security.
We can agree to disagree. I wish you freegards.
Which is why I oppose mass illegal immigration, support the Second Amendment, and live in a Red state on a long driveway off a cul-de-sac. If I become a target, I will not be an easy one.
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