Stumbling and Mumbling

Author: chris dillow   |   Latest post: Wed, 12 Sep 2018, 02:30 PM


The intelligent state

Author:   |    Publish date:   |  >> Read article in Blog website

What's the best way of protecting vulnerable workers? Two things I've seen recently poses this question.

First, Daniel Pryor notes that higher minimum wages do destroy some jobs, such as those of young unskilled ones in jobs that can be automated. And then James Bloodworth points out that banning Uber from London would cost the jobs of some drivers, many of whom are highly-indebted.

What we have in both cases are examples of how regulations have ambiguous effects. Minimum wages both raise the incomes of the low-paid and also put a few out of work. Cab regulations both protect customers from dangerous cabbies and destroy some jobs*. And in both cases, the cost is borne by the most marginal and vulnerable workers.

This is not to say such regulation is a bad idea: it's perfectly possible that the benefits outweigh the costs. But it does pose the question is: can we do better?

Yes. The best way to help workers is to create conditions which increase their bargaining power - which give them the option of using Johnny Paycheck's words: "take this job and shove it". Such conditions would involve a mixture of over-full employment**; a jobs guarantee; stronger trades unions; and a citizens' basic income which allows workers to either walk away from lousy jobs or to work only a few hours.

Such bargaining power has an advantage over regulations - flexibility. It would allow there to be low wages or poor employment conditions where workers wanted them and where the alternative was no job at all whilst empowering workers to do better for themselves in other circumstances. It harnesses the laws of supply and demand to raise wages, and also the dispersed local knowledge of particular workers so they can distinguish between situations where high wages would destroy jobs and where they wouldn't.

In fact, such policies and institutions have another virtue. In generating a tight labour market they would raise productivity by forcing employers to economize on labour by investing, innovating and generally upping their game. It might well be no accident that the biggest rises in productivity in history occurred during the years of post-war full employment.

What I'm calling for, then, is an intelligent state - one that devolves regulation to workers who know how to implement it in response to particular localized conditions***.

Which poses the question: why don't we have such a state? One reason is that managerialist ideology overstates the knowledge that central authorities can possess and under-rates the importance of dispersed knowledge. Another reason, though, is that I'm calling for workers to be fully empowered, and a state that has been captured by capitalists is inherently hostile to such a scheme.

* TfL is not revoking Uber's license because of its poor employment practices, but many lefties are welcoming it for that reason.

** Although unemployment is very low, the very fact that wage inflation is so low tells us we are not yet at this point.

*** Also, an intelligent state wouldn't regulate Uber out of existence, but rather compete it out of existence by setting up apps for cabbies to use themselves in more cooperative ways, as the NEF has suggested.

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