Posts Tagged ‘justice’

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There’s nothing that gets mainstream economists going like a proposal to raise workers’ wages.

Except the idea of raising workers’ wages in other countries.

Then you’re screwing with both wages and international trade. And mainstream thinkers just won’t allow that.

That’s why Eduardo Porter considers the AFL-CIO’s proposal that the North American Free Trade Agreement guarantee that “all workers — regardless of sector — have the right to receive wages sufficient for them to afford, in the region of the signatory country where the worker resides, a decent standard of living for the worker and her or his family” a “fairly loopy idea.”

As I see it, the only thing loopy about the proposal is the idea that the Trump administration would actually take it seriously.

Then there’s MIT’s David Autor:

Stipulating that countries must pay above-market wages when producing export goods for the U.S. feels like outrageous economic imperialism.

And finally Harvard’s Dani Rodrik, according to whom the idea of a living wage

is very difficult to define and can be harmful to employment if enforced too strictly.

So, there you have it: according to mainstream economists, attempting to raise workers’ wages, especially wages in Mexico and elsewhere, is “loopy,” an example of “economic imperialism,” and “harmful to employment” if actually enforced.

Now, to be clear, as I showed earlier this year, workers on both sides of the border have lost out, and their losses are mostly not due to NAFTA. The wage share of national income was declining in both the United States and Mexico before the free-trade agreement was implemented—and it’s continued its slide since then.

Why then are mainstream economists so opposed to raising Mexican workers’ wages—which, after all, is merely an example of leveling-up as against a race-to-the-bottom?

It’s because mainstream economists actually believe workers are paid according to their productivity. They get what they’re worth. In other words, “just deserts.”

But that’s the problem: there’s nothing necessarily just about the prices set in markets, whether for labor power or any another commodity. Raising workers’ wages above current rates—on both sides of the border—represents a different kind of economic justice. It may not be neoclassical justice, which is the only thing Porter, Autor, Rodrik, and other mainstream economists recognize.

It’s a justice based on the idea that workers lose out when they’re paid a wage but create more value than what they receive in the form of wages. They produce a surplus, which their employers appropriate. Both their Mexican employers and their U.S. employers.

Raising workers’ wages would mean there would be somewhat less surplus available to their employers in the form of profits. And that’s a kind of economic justice mainstream economists simply won’t accept.

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The 2017 Social Progress Index is out and according to Michael Green [ht: ja], the CEO of SPI, the United States is “flatlining,”

primarily due to its falling scores on measures of tolerance and inclusion. . .

Green said that in order for under-performing countries like the US to improve their scores in 2018 and 2019, they’ll need to embrace long-term investments in protecting people’s rights.

“The US is not under-performing because of the Trump administration or the Obama administration,” he said. “It’s about the story of long-term under-investment in the justice system, in the education system, in healthcare. Those are the real challenges.”

Overall, the United States ranks 18th out of 128 nations.

The only area in which the United States outperforms other nations of similar wealth is higher education, with a large number of colleges and universities. But that doesn’t include cost and thus accessibility, which is reflected in a low score on inequality in the attainment of higher education.

And then there are all the other categories in which the United States comes up short in comparison to the rest of the world: nutrition and basic medical care (36th), water and sanitation (27th), homicides (70th), access to information and communications (27th), environmental quality (33rd), political rights (32nd), freedom over life choices (65th), and discrimination and violence against minorities (39th).

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That’s why the overall U.S. score is only 86.43, which puts it behind many other high-income nations: Denmark, Finland, Iceland, Norway, Switzerland, Canada, Netherlands, Sweden, Australia, New Zealand, Ireland, United Kingdom, Germany, Austria, Belgium, Spain, and Japan.

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The authors of the report note that, while social progress generally improves as national income rises, there’s no one-to-one correspondence between them. Thus, the United States underperforms on the Social Progress Index compared to its per capita national income.

What is clear, from the sample of countries in the chart above, is the United States has a much more unequal distribution of income compared to countries that rank higher in the SPI.

That’s one of the real reasons why, independent of Trump and Obama, the United States is flatlining when it comes to social progress.

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