Age of the Remittance-Man
KRISTOL, IRVING
THINKING ALOUD Age of the Remittance- Man By Irving Kristol Recently, in the pages of this magazine, Robert Lekachman wrote that "American critics of capitalism badly need a coherent theory...
...This particular spectral proposition holds true not only for out-of-school youth...
...but you cannot forever cajole them into believing that you have thereby done them a favor...
...It is also conceivable that this dogma may yet be the political death of the American economy...
...Yet let us keep our eye on those 76,000 unemployed, on whom some $35 a week is being spent...
...The Federal government, for example, establishes ambitious "retraining" programs that it knows beforehand will never make a significant dent in the unemployment problem...
...Irving Kristol, a former editor at Commentary and the Reporter and the first American editor of Encounter, is currently senior editor of Basic Books...
...All of our economic statistics slur over the existence of these two classes of people, and are therefore grossly misleading...
...Those mines now operating are indeed more productive: The new machinery is more efficient than the men it has replaced...
...Every year the wage statistics prosper, and every year more and more Americans lose their economic identity and are transformed into the anonymous recipients of meager remittances that are gaudily packaged as welfare benefits...
...We have two economies: a highwage one and a low-remittance one, the latter being populated by the "beneficiaries" of "welfare" distributed by a benign and enlightened government...
...Is it too harsh to use the term "profiteering" to designate the purport of this conspiracy...
...In fact, it is becoming increasingly clear that they do not—at least, not very many of them do...
...The program will offer job training, counseling, sports, dancing, outings, athletic competitions, concerts, and various other such diversions...
...THINKING ALOUD Age of the Remittance- Man By Irving Kristol Recently, in the pages of this magazine, Robert Lekachman wrote that "American critics of capitalism badly need a coherent theory of political and economic power...
...How long, I wonder, before we demand that our social and economic theory (and policy) resolve the absurdity of the two economies...
...The upshot is that the most glaring and important inequality of income in the United States today is between those who receive wages because they are permitted to work and those who receive remittances because they are denied such permission...
...They demand that the government resort to deficit financing in order to bring about full employment—and turn a blind eye to what the past decade has made apparent: that deficit financing (short of massive inflation) does not of itself guarantee full employment in a society subjected to the kind of swift technological transformation that the United States is undergoing today...
...I think it correct, and less deceiving, to regard such payments as, in effect, salaries...
...It would be unreasonable to make such accusations if one could assume that the state of unemployment were a transient experience...
...but they obtain this figure only by blandly denying that an unemployed steelworker is a steelworker, and by relegating him to the status of an un-person...
...In all justice to the unions, it must be reported that they are not indifferent to the distress of their former workmates, or of those who have never had the opportunity to be workmates...
...I take it to be one of the most serious faults of any economic system that it weds injustice to flagrant hypocrisy...
...True enough...
...Far from creating a scandal, the contradiction passes unobserved...
...But what he forgot to say is that American defenders of capitalism need such a theory just as badly...
...Their average income is, of course, considerably lower than the wages received by the working population...
...It is a gross and cruel oversimplification to say, as our textbooks do, that we have a high-wage economy in the United States...
...It affects that ever-growing number of Americans to whom society gives payments (in cash or kind) instead of jobs...
...This is most notoriously so where one of our dearly cherished dogmas—the inherent virtue and beneficence of rapid technological innovation—is involved...
...Here is a commonplace specimen of what, to commonplace vision, would seem to be economic duplicity of a kind that, in the long term, one cannot hope to get away with: New York City has proudly proclaimed a "summer vigilance and services" program, aimed at the 350,000 vacationing youngsters—but especially at the 76,000 unemployed between the ages of 16 and 24...
...In most cases it is even lower than the minimum wage prescribed by law...
...The statistics on "productivity" are no less hypocritical, since they take no account of the very real costs incurred by the workers who have been displaced by those marvelous new machines...
...The man who draws unemployment insurance, who receives welfare assistance, who is enrolled in a retraining program, who—though willing and physically able to work—is constrained to live on social security benefits or a pension, the teen-ager looking for work and living on handouts from his parents—all of these, and many others like them, are members of a new class: They are the dispossessed remittance-men of our society...
...Is it an exaggeration to describe this tidy arrangement as a conspiracy between corporate management and organized labor...
...I do not think so...
...Besides, the government, through its tax laws, actively encourages it to use retained earnings to finance the installation of new capital equipment—and this is one bit of government interference that business heartily approves of...
...a vision of the better society which existing technology and superior organization are capable of creating...
...In the meantime, the government has declared West Virginia a "distressed area" because so many other mines unsuitable for mechanized mining have been forced to close down...
...And no one thinks seriously to raise the question: Is it really better to have employed miners receiving the equivalent of $4.00 an hour while unemployed miners receive $1.50, than to have all miners working and earning $2.60 an hour...
...In addition, such voluntary organizations as the Boy Scouts, Girl Scouts, all of the Y's, the Big Brothers and Big Sisters, and sundry others will be doing their bit...
...Is it unfair to say that those who have been rendered unemployable have been "exploited" by corporation and union alike, and have been coerced into providing a subsidy to these bodies...
...Straightforward economic injustice itself the average man can cynically or stoically or even blithely tolerate...
...It is certainly an easier way to to cut costs than trying to lower wages...
...As for the corporations, they do not see that this problem is any of their business...
...The men who lose jobs as a result of technological innovation are supposed to find jobs in new industries and services...
...But the most primitive kind of calculation suggests that it could not possibly come to less than $350 per head for the 10-week period...
...This is, of course, the assumption of professional economic thinking, whether classical laissez-fairist, classical Keynesian, neo-Keynesian, or whatever...
...One such program is in West Virginia, when the United Mine Workers has ruthlessly consigned a large part of its membershp (or former membership) to paupered idleness in order that those who do work should receive the wages, sick benefits, holidays, and pensions appropriate to citizens of an affluent society...
...No estimates of the cost of this program seem to be available, and I rather suspect they do not exist...
...John L. Lewis is still applauded as a farsighted labor statesman for this bold performance in aid of productivity...
...The American economic system, at the present time, provides far too many instances where too many people are asked to play the fool—to believe they are participating in the joyous march of progress toward evergreater social and individual welfare, while in fact they are being robbed blind...
...The money that a firm saves or earns as a result of dispossessing a portion of its actual or potential work force is divided (usually after much undignified bickering) between "profits" and "wages...
...Only the salaries exist—not the jobs...
...Disraeli said that England could not endure as two nations...
...Such massive hypocrisy sooner or later provokes them into massive resentment...
...They relate proudly that a steelworker earns well over S3 an hour...
...You can victimize all of the people all of the time...
...Management is perennially eager to introduce new capital equipment that would increase productivity, for this, it has been taught, is what intelligent management ought to do...
...All very nice for the youngsters, and money surely spent in a good cause...
...I know of no one who has the faintest idea where these jobs are coming from...
...Simply in order to hold unemployment at its present level, the American economy will have to come up with 36 million new jobs by 1970...
...Even the United States Army is thinning its ranks...
...Who expects justice in this world...
...It will involve the City Youth Board, the Police and Parks Departments, the Board of Education, the Housing Authority, and a dozen other city agencies...
...It is certain that the American economy would not have attained its present level without that dogma...
...Nevertheless, we all go on pretending that the "mobility of labor" is a real thing rather than an ideal concept...
...The kinds of new industries our current technology is creating do not need a large number of wage earners, and the new services can only find their recruits among the newly-educated...
...I think well enough of the young to assume that most of them would be willing to take a job even at that low salary, rather than remain unemployed and be officially amused...
...but to avoid confusion let us call them "remittances...
...But the jobs do not exist: they have been abolished by economic and social progress...
Vol. 46 • August 1963 • No. 16