A few thoughts on WalMart and "Economic Triumphalism"

Dave's note: I haven't blogged in two years so please pardon any rust that may accompany this post. 

A couple of weeks ago, the League of Ordinary Gentlemen had a couple of very interesting discussions arising from posts pertaining to Wal-Mart.  In one of them, Elias Esquith drew attention to one of the controversies surrounding Wal-Mart and the company's treatment of hourly employees (as also reported by The Huffington Post), this one involving hourly compensation and meager pay increases.  Below the post are approximately 1,100 comments that cover a wide range of topics.  Both the post and the comments section are worth reading.

Of the entire body of comments, there was one response that jumped out at me.  The comment was written by Roger (#472 - dated November 22, 2012 at 10:01 am). As Roger's comment was a response to a previous comment, I will post both of them below:

Commenter Chris wrote:

This is another area where there is antagonism between capital and labor, and where they essentially serve as counterbalancing market forces. Labor and capital are both motivated to seek bigger slices of the pie, and by considering only capital in the “market rate,” we’ve essentially made a normative decision, rather than an empirical one, to exclude labor’s position that profits can be smaller so that labor’s slice is bigger.

Commenter Roger responds as follows:

There is no absolute fair share. Fair isn’t a number, it is a process. A fair football game isn’t one that ends 7 v 7, it is one where both teams and the judges played by the agreed upon rules.

In wage negotiations, the employee should ask for as much as possible subject to the risk of not getting accepted. The employer asks for as little as possible, subject to the concerns with turnover, and not getting any applicants. In a world with millions of applicants and millions of jobs and thousands of employers, there is a meeting place where any given employee can’t get any better offers, and any given employer can’t get any lower paid applicants. This is the market rate. It is procedurally fair according to the rules of free markets.

In a tight labor market, the fair wage goes up. At other times the fair wage goes down.

The only realistic way to get other than the fair market wage rate is if one of the parties uses fraud, violence or threats. This will really only work long term though if they can get everyone on their side of the exchange to collaborate. However, the incentive is for people or employers to not collaborate (per collective action problems). Thus the only real way to enforce the coalition is to police it with threats of violence as well.

Thus there is the free market wage which is procedurally fair and there is some other wage which is established by threats of violence both among and between the sides of the negotiation.

The threat of violence process really only works if an extremely powerful player dominates. In modern markets this usually means the state...

I intended on submitting a response, but other things kept me from doing so.  By the time I was able to, the conversation was long past finished. However, in a somewhat-related post dealing with organized labor, commenter Liberal With Attitude ("LWA") described his opinion about why debating libertarians on economic matters is a difficult if not frustrating affair (the pertinent portion of comment 390):

The libertarian disconnect from liberals and conservatives isn’t in the fine points of economic theory- its in what I call “economic triumphalism” where everything is subordinated to economic laws. Liberals and conservatives hold many things as sacred- human life, human dignity (including sexuality) , work, and so on.

In the conservative/ liberal view, the negotiation over sexual services, or a job, or an operation shouldn’t be allowed to be governed by economic laws; Its not that the laws of supply and demand don’t hold true; its that we don’t want them to govern, even if it produces an economic inefficient outcome.

The comment was well-received amongst certain commenters.  I think it serves as a good starting point for the discussion here; however, it is not without flaws. First, I don't think that liberals and conservatives are the only ones that hold things like human life and human dignity sacred.  I don't understand why this comment was made.  Second, there is a disconnect in the finer points of theory.  Regarding the last paragraph, the statement "Its not that the laws of supply and demand don’t hold true; its that we don’t want them to govern, even if it produces an economic inefficient outcome" is nothing more to me than an open invitation to the kind of folk economic theory that ignores basic economic principles.  For example, the notion that living wage legislation is a solution that would aid the low-income, unskilled workers and would benefit the economy is fraught with problems, problems that can be pointed out using basic concepts taught in introductory economics classes.  If I don't point this out, then I am subordinating my opinion of reality to someone's version of a pipe dream.

There are two things that I do not like to do when engaging people, especially in conversations where politics meets finance and economics.  These apply to anyone of any political persuasion.  First, I like to be the "away team" and meet people on their turf with their rules.  The second thing I like to do is stick to the pertinent facts. 

This is where LWA's point about "economic triumphalism" resonates with me.  It resonates with me because, at times, I find the use of abstract economic theory frustrating, especially (1) if it completely fails to address substantive fact-based points made by other people and (2) if the theory itself is rendered moot by the factual situation.  I've seen liberals bang their heads against the wall when libertarians have employed this approach and vice versa.

To be fair to Roger's comment, he was addressing a comment of a more general nature.  However, in the broader context, not only do I believe that some of his theory is incorrect, but I also see significant disconnects between theory and the reality faced by Wal-Mart workers.

Let's start towards the middle:

In wage negotiations, the employee should ask for as much as possible subject to the risk of not getting accepted. The employer asks for as little as possible, subject to the concerns with turnover, and not getting any applicants.

Wage negotiations don't exist for unskilled workers.  People that are facing abject poverty and are desperately trying to make ends meet are going to take whatever wage is put in front of them.  No one dares ask for too much and lose what may be the only possibility to generate income.  Employers of unskilled workers need not worry too much about turnover because 1) there is no shortage of them so replacing employees that have left can be accomplished with little disruption of business and 2) the skills required to execute the menial tasks these employees are asked to perform can be taught in a very short period of time.   

In a world with millions of applicants and millions of jobs and thousands of employers, there is a meeting place where any given employee can’t get any better offers, and any given employer can’t get any lower paid applicants.

This view of the labor markets is too macroeconomic for my liking.  Even as a high-skilled professional, my labor markets are not defined as having millions of applicants and thousands of employers.  The number of potential employers is relatively small as is the number of people in my profession seeking work.  For unskilled workers, the situation is much worse, you could have hundreds of thousands of applicants and as few as one employer given the geographic market.  Textbook definitions of equlibrium gloss over the hardships some people face in the labor market.  It is not helpful.

Now things get interesting...

There is no absolute fair share. Fair isn’t a number, it is a process. A fair football game isn’t one that ends 7 v 7, it is one where both teams and the judges played by the agreed upon rules.... This is the market rate. It is procedurally fair according to the rules of free markets...The only realistic way to get other than the fair market wage rate is if one of the parties uses fraud, violence or threats. This will really only work long term though if they can get everyone on their side of the exchange to collaborate. However, the incentive is for people or employers to not collaborate (per collective action problems).  Thus the only real way to enforce the coalition is to police it with threats of violence as well.

I agree with the first part. I believe that the appropriate market wage for a given job is something that is agreed upon by both parties to the agreement where 1) both sides are playing according to the rules of the game and 2) both sides are able to exploit their advantages with respect to bargaining power (power that does not have to be possessed in equal amounts by each side) in order to achieve the best possible solution that both sides can agree to. 

Is the process by which wages are determined for Wal-Mart hourly employees determined through the fair process in accordance with Roger's definition?  Based on my understanding of the controversies surrounding Wal-Mart's hiring practices (which should be so well-known by the public that I need not get into them here), I do not believe Wal-Mart workers face a fair process.  It is an unfair process not because the company wishes to keep unions from organizing its employees. It is an unfair process because the company can willfully disregard the rule of law while maintaining the status quo.  This situation is made worse because labor law enforcement is at best lackluster, a situation that heavily favors management. 

Therefore, I would argue that Wal-Mart's wages are not indicative of the market rate because the company has no respect for the rules of the game and will use that lack of respect to undermine every and any attempt for workers to gain bargaining power in order to better their own position.  It's also not indicative of market because the refs that are supposed to be on the playing field (i.e. the gov't) are sleeping at the wheel.  By Roger's definition, the company has distorted the market, a distortion that is aided and abetted by the gov't.

Roger mentions collective action problems.  I don't see that problem here because most if not all employers of low-wage unskilled workers have the same interest in keeping their stores, restaurants or other places of business union free and they are all undertaking their own initiatives to see to it that the status quo is maintained.

 Thus there is the free market wage which is procedurally fair and there is some other wage which is established by threats of violence both among and between the sides of the negotiation.

Personally, I think Wal-Mart employees are paid the latter.

The threat of violence process really only works if an extremely powerful player dominates. In modern markets this usually means the state...

Never underestimate the power of large multinational corporations.  In modern markets, these companies wield significant power, power that is typically augmented through our system of rent seeking and crony capitalism.  Is it any wonder the organized labor was seeking to harness this power by trying to push through the Employee Free Choice Act?  As much as laws like that concern me, I can sympathize with the supporters of the law and understand their motivations. 
I have no problem with textbook theory, and sometimes that is necessary in order to accurately respond to someone else's point.  Other times, theory needs a dose of real world perspective, especially when that reality paints a very disturbing picture.

Can Judges Be Tyrants?

So, I'm returning to these old digs to promote a unique piece on which I'm the co-author over at the League of Ordinary Gentlemen. The piece is a conversation between one of the newest members of the League and myself over the Iowa gay marriage decision and, in particular, over the ability of the courts to avoid weighing in on controversial social issues.

Will and I are particularly proud of the whole piece, which we think has a unique format that illuminates a lot of issues involved in discussions of judicial activism. I beg anyone still reading this site to go check it out (oh yeah - and if you haven't yet, please add the League to your RSS feed).

Here's a little teaser. For the whole discussion, please take a few minutes and read the whole thing - I promise you won't be sorry:

Me: “original intent” is impossible to divine (indeed, the champion of originalism, Justice Scalia, is also the foremost critic of “original intent” - he just doesn’t realize that much of what he does is little different). The legislature doesn’t act in a vaccuum, and it can’t be the responsibility of the courts to correct the legislature’s mistakes, no
matter how unforseeable those mistakes may have been. To do so would be to read words into the legislation/Constitution that aren’t there, and would in fact be a very real case of “legislating from the bench.”

Will: Here’s my big point: The courts have a certain amount of judicial capital - i.e. public trust in the courts as an institution. This gives them the credibility to enforce unpopular laws (releasing guilty criminals on technicalities, for example). Court capital, however, is extremely sensitive to public perception, and if it is completely depleted, popularly elected branches of government will take advantage of this
erosion of public trust by compromising judicial independence - through court-stripping, enacting judicial term limits, slashing the courts’ budget etc. - thereby undermining the judiciary’s ability to enforce constitutional law.

Is Liber-al-tarianism the Future of Libertarianism?

For those who have not yet updated their feed subscriptions and bookmarks as I slowly wind this site down, I wanted to point to my latest two posts at the League of Ordinary Gentlemen (subscribe here), which go into a lot of depth about what I view as the recent setbacks for the idea of a left-libertarian alliance, and also about why I nonetheless continue to view the liber-al-tarian project as nonetheless an important idea that should represent the future of politically involved libertarianism.

From the first post, pertaining to the impact of recent events on the possibilities for a left-libertarian coalition:

Rather than consider ways of achieving liberal ends (which are usually shared by
liberals and libertarians alike) that may have incorporated libertarian thinking or were at the very least highly targeted, progressive politicians have been choosing extraordinarily broad and intrusive means of achieving those ends. This is not to say that those politicians ever really cared what libertarians thought; only that this route of action has undermined any possibility of a significant percentage of libertarians (again broadly defined as fiscally conservative and socially liberal) becoming
intermediate-to-long-term members of the Dem coaltion.
All that said, Will Wilkinson is no doubt correct that all this talk of a left-libertarian
political coalition misses the entire point of “liberaltarianism,” which is not properly understood as being about coalition-building...

And from the second, on why liber-al-tarianism remains important:

The promise of this derivation of modern libertarianism is not that
it attempts to paint libertarianism in a light that is palatable to modern
liberals/Progressives, which our friend Kip rightly fears; instead, its promise is that it can help to rescue the fundamental worldview of libertarianism from the prejudices instilled in it by such a lengthy alliance with the Right. Simply put, the promise of liberaltarianism is that it can help to build a libertarianism that is more true to its classically liberal roots. In so doing, it is possible that it will become a libertarianism that modern liberals are willing to take seriously, and even learn from.

I'm particularly proud of the second post, but if you have a few minutes, please go read all of both posts, where comments are open.

The Future of Publius Endures

As you all may have noticed, posting around these parts has been light of late, and posts exclusive to this site have been virtually non-existent. The reason for this is very simple: the project Dave, Kyle, and I (amongst several others) have been working on at the League of Ordinary Gentlemen has been even more successful than I had hoped.

Dave gave a brief introduction to the League here, but it's about time that I added a few comments of my own. The point of the site is very much to take the form of a "conversation amongst friends" instead of the headline-driven writing that so typically characterizes the blogosphere. Importantly, and just as any ordinary group of friends outside the blogosphere, membership in our group is not based on any adherence to a particular set of political beliefs - Dave and I come at things from a roughly libertarian starting point, Freddie and Kyle from a roughly liberal/Progressive starting point, E.D. from a starting point that I would characterize as more or less Burkean (he may disagree, though), and Scott and Chris from a starting point that I'm not quite sure how to characterize (although our friend John Schwenkler characterizes Scott as a conservative). We also come from a diverse set of backgrounds and professions, ranging from the academy to the "working class," with various gradations in between (we even have a guy who is culturally habituated to spelling "color" as "colour"!).

But what distinguishes the League from other sites with a diversity of viewpoints like Donklephant and The Moderate Voice (both great sites in their own right that fill an important niche in the blogosphere) is our focus on dialogue between our viewpoints rather than on providing a medium for the various viewpoints to speak to a more independent audience. In many ways, the League exists more for our own benefit in our individual searches for Truth than it exists to expose our individual viewpoints to a broader audience (of course, the fact that we've thus far succeeded in reaching a pretty broad audience is a very nice bonus). In many ways, I would say that our writing at the League is to each of us what architecture was to Howard Roark - if people want to read our site, then great; but the purpose of our writing is much more to allow us all to do something we enjoy and to become as good at that as we possibly can.

For me personally, the League is the incarnation of something that I had been vaguely hoping to create ever since Kyle and I had our dialogue on education policy last winter. I had always just been unable to articulate it and, even if had been able to do so, I had no idea where to look for contributors since most bloggers with whom I've formed relationship always seemed extremely satisfied with what they were currently doing. But then Scott had the gumption to articulate precisely the vision I had been unable to articulate - and to do so publicly, seeking potential partners in the venture. And thus the League of Gentlemen was rapidly born.

In any event, the League so far has been everything we had hoped it would be, and more. That it has rapidly garnered a larger readership than we ever expected only adds to that achievement. With that in mind, I have decided to move all of my long-form writing (except my more or less weekly piece for Donklephant) to the League. I'm guessing that it's safe to say that, except for Kyle's regular pieces for Comments from Left Field, Kyle and Dave have made the same decision.

What that means for the future of PE is that this site will likely be gradually brought to an end (although I have offered another writer the option of taking over long-form writing duties), with most of my posts at this site limited to brief little snippets of the standard blogpost variety that would be inappropriate for writing at the League. In the meantime, I would encourage all of the regular PE readers to please add the League to your RSS feeds here.

All that said, if there are any of my readers who would be interested in keeping this site alive (and thereby taking advantage of the infrastructure I built over the last year and a half) and who think their writing would be a good fit for this site, please send me an e-mail; I can't make any guarantees, but if I think your style of writing more or less fits what I was trying to do with this site for the last year and a half, I'd be happy to give you the keys.

Blawging Bleg

Can anyone (cough, cough, Kip, cough, cough) recommend a book and/or readily available scholarly article that discusses the relationship between the demise of Lochner and the eventual (years later) rise of substantive due process? Specifically, I'm looking to discuss the extent to which the demise of Lochner had effects that traveled far beyond economic substantive due process.

Another Sad Day for Discourse

Culture11 is finished. I'm still trying to collect my thoughts about that fact, but it's hard to imagine a more fitting farewell than Freddie's. Although Will comes very close.

But one thing I can confidently say as one of those who had the privilege of writing the phrase "my article at Culture11" is that while Culture11 may be no more, its legacy lives on in the myriad readers and writers who were privileged to participate in the discussions there. I can only hope that fact is of some small consolation to the 14 Culture11 staffers who are now out of work.

Talking About the Same Thing

(Cross-posted at the League of Ordinary Gentlemen, where comments are open).

Professor Joseph Wagner of Colgate University, one of the three professors who most influenced the development of my early political thought, was fond of saying that the venom associated with certain issues was because the opposing parties “are not talking about the same thing.” For example, opponents of Roe v. Wade couch their arguments in terms of defending life, while proponents of Roe v. Wade couch their arguments in terms of defending choice - both important values that almost all of us hold dear.

In so doing, the two sides refuse to address the other side’s arguments. This refusal simultaneously allows the side making the argument to more or less credibly cast the opposition as “anti-______” (where ____ is a fundamental cultural value shared by almost all), while also permitting the opposition to argue, again credibly, that the arguing side is unconcerned with arguments for the other _______ (where the other _____ is also a fundamental cultural value) and is therefore opposed to ________. In a way, these attacks wind up not only being credible, but also accurate - in refusing to even address the implications of a policy for value ________, a side effectively casts that value as not only irrelevant to the specific issue at hand, but as completely devoid of consideration as a legitimate value at all.

As a means of inciting supporters of one side or another to activism, this is terribly effective; as a means of finding an actual answer to the problem or persuading fence-sitters and opponents, it is almost entirely without value. It also has another effect: by casting each side as fundamentally anti-_______, it calcifies attitudes between the two sides on other issues that involve value _______ but that are otherwise irrelevant to the specific issue already under debate.
Scott’s exceptional post this morning, about which I cannot say enough good things, along with Kyle’s excellent response, goes a long way towards advancing this more or less self-evident concept to an understanding of “good” versus “bad” forms of partisanship. Better, I think it hints at a way out of this morass. It also explains why I’ve come to hold President Obama in a higher regard than the vast majority of politicians I’ve heard in my lifetime.

In particular, Scott writes:

Right relationship of partisan tendencies is born out of a respect for the elements of an issue that a particular ideological perspective is best able to hit upon and articulate. Liberals, conservatives, progressives, and libertarians all emphasize different elements of different issues precisely because there is generally something important about the element that each grasps on to as its “first principle” on that front. …

What we seem to be fighting then, is the calcifying tendencies of partisanship. How we do that is not to strive towards some point in time where partisanship no longer exists, but rather to cultivate a greater dexterity in our partisan maneuvering. Which is to say that right relationship of partisanship requires participants who not only steel against the calcification of their own necessarily perspectival take on a particular issue, but who also consciously seek out the articulation of other perspectives and then apply a certain adeptness at “seeing” what those articulations are describing.

Yes, yes, and yes!

At their best, the various major Western political philosophies/ideologies all mostly agree on the legitimacy of certain core values or first principles; perhaps amongst others, these first principles would be things like the sanctity of human life, the sanctity of the exercise of free will, a healthy respect for cultural traditions, and the desirability of social mobility. Where they generally disagree, however, is in the prioritization of these values when they come into conflict.

There are generally two ways of dealing with such conflicts. One is to reflexively deny that the conflict exists at all, or worse to deny that such conflicts are even possible. This is the easiest way to deal with the problem. It is also terribly dangerous, poisoning legitimate debate. Specifically it ignores the fact that, as Kyle wrote, “the world we live in relies more on empirical data and real world accounting than faith. “ Although it is certainly impossible to empirically prove whether a particular first principle is more important than a rival first principle, it is absolutely possible to prove empirically whether a particular policy or event helps or hinders the advancement of a first principle, and therefore whether a conflict of first principles exists.

By reflexively denying the existence of a conflict without any attempt at a good-faith exploration of the empirical data, a party in effect denies the legitimacy (or at the very least will appear to deny that legitimacy) of the supposedly threatened value and thereby ensures a particularly nasty debate full of accusations of bad faith. It also ensures that no acceptable solution will be possible, because only one party is acknowledging that a problem even exists.

The second, healthier but far more difficult way of responding to conflicts between core values, is to view our ideology as a way of resolving doubt, or better yet, as a set of rules of construction. So conservatism becomes defined not by a dogmatic resistance to all change but instead by an effectively Burkean attitude that holds “when in doubt about a value’s primacy, err on the side of tradition”; libertarianism and classical liberalism becomes defined not by a reflexive opposition to all government actions but instead by a “soft Hayekian” (”actual” Hayekian, as I would call it) attitude that holds, “when in doubt of a value’s primacy, err on the side of free will”; and progressivism becomes defined not by a reflexive trust in the competence of government but by an attitude that holds, “when in doubt of a value’s primacy, err on the side of the least powerful.”

Looking at ideology through this lens is critical to honest and open debate, I think. It acknowledges that it is impossible to empirically prove the primacy of a particular value to the betterment of society (after all, how do you prove whether one imagined utopia is better than another imagined utopia). But at the same time, it acknowledges that one must at some point make a decision as to which value ought to take primacy in a given situation… a decision that must often be based on a certain form of faith.

Importantly, this way of viewing one’s ideology leaves one open to persuasion through reasoned argumentation or through objective review of empirical evidence. It also allows one to argue on terms that the opposing party can understand by arguing either:

1. There are legitimate flaws in the other party’s argument such that the position the other party is arguing does not, in fact, advance the principle that other party considers primary. Simultaneously, we leave ourselves open to persuasion as to whether our opposing position helps or hinders our own primary principle.

2. The other party’s arguments may well be correct; however, even if they are correct, the implications of doing as they suggest would have too much of a detrimental effect on another culturally accepted core principle because it would also do X, Y, and Z.

or 3. The other party’s arguments are correct and the implications of doing as they suggest would have sufficiently minor impact on other culturally accepted core principles that it is worth doing as they suggest even if you hold those other principles as generally primary.

Simply put: viewing ideology as a rule of construction allows us to “talk about the same thing,” and thereby to arrive at solutions that, to the extent possible, are tailored to advance one or more core principles without hurting other core principles. At root, it ensures that we continue to recognize that other core principles are legitimate and important elements of our society and cannot simply be shunted aside.

As a final note, it’s worth mentioning that my hope for Obama rests almost entirely in the fact that he has mostly (though not entirely) convinced me that he is one of the rare modern politicians who actually seeks to define his ideology in the latter way. This hope is what animated my fairly strong support of him during the primary campaign, and is why I rooted for him to win the general election even though I voted for a third-party campaign. Few things are more emblematic of why I have mostly come to this conclusion than this little nugget from Zach Wamp about Obama’s meeting with Republicans over the stimulus package:

This was not a drive-by P.R. stunt, and I actually thought it might be. It was a substantive, in-depth discussion with our conference, and he’s very effective. He knows that the debt and the deficit are huge long-term problems as well and he made a compelling case. He sounded, frankly, a lot like a Republican.”

A President who can sound like a Republican in a meeting with Republicans without giving much ground on substance is a President who understands the importance of talking about the same thing.

Finding a Better Partisanship

I don't have the time to respond to it just yet, but over at the League, Scott Payne just blew my mind. Anyone who has been reading my writing for the last year here at PE will understand why.

Money 'graph:

Right relationship of partisan tendencies is born out of a respect for the elements of an issue that a particular ideological perspective is best able to hit upon and articulate. Liberals, conservatives, progressives, and libertarians all emphasize different elements of different issues precisely because there is generally something important about the element that each grasps on to as its “first principle” on that front. In the articulation of first principles; however, we often become so identified with our own particular articulation and, perhaps even more overtly, the group identity we take on and draw strength from in locating others who agree with us, that we generate rhetorical blinders to the elements of issue that other perspective/ideologies identify and articulate. This calcification, it seems evident, can become so set in as to result in not just failing to notice the particular elements of an issue that ideologically opposed interlocutors point out, but rather denying the existence of those elements altogether.

It's a long post, but it just gets better from there. Please read the whole thing.

Quidding without the Quo

I've obviously been silent here the last few weeks, as I begin to sort out what our new project at the League of Ordinary Gentlemen means for the future of this site. But I haven't been silent everywhere. My most recent piece at the League is up right now, and it discusses the hubub over the contraception provision in the ongoing stimulus package. Money quote:

There is something else important here: there is no principle at stake for Obama in backing away from a provision like this when it is in an unrelated, but “must-pass” bill. If this is a program that Obama ultimately wants to implement (whatever I may think of its merits), he sacrifices no principle by removing it from this legislation and fighting for it later on as a stand-alone program. This willingness to compromise without sacrificing ultimate principles is the epitome of “good” compromise rather than the bipartisanship for the sake of bipartisanship that makes so many of us cringe.

And while I'm here, I may as well point to my other posts at the League:

First, the difference between principles and partisanship. Second, How to put an end to the Malkinization of our political discourse.

Please, check it out - this project of ours at the League is the most exciting thing I've been involved with in the blogosphere, bar none. Hopefully, others will agree.