Reponses II
Jeaaer ISSUE HEATHER ECONOMY: AMERICA'S WORKING POOR Responses-II Below we present the second section of responses to our special issue, "The Other Economy: America's Working Poor'1 (NL, May 8);...
...In my own recent book, The Governmental Habit, I suggest why this should be so, and it is hardly a recommendation for more of the same in the future...
...Perfect competition is fully consistent with inequality...
...Such language brings to mind countries like Italy and Argentina, not the U.S...
...New policies leading into new directions are prerequisite, regardless of the reasons of the prevalent inequality...
...By a minute stretch of the imagination, the problem also may be generalized to apply toall the poor, working or unemployed...
...For example, Tyler does not hold big corporations in high esteem...
...They consist of a variety of enhanced controls from Washington: higher minimum wages, higher protective tariffs, more government wage subsidies, more taxes on wealth, strict wage-price-profit controls, more government control of banking, etc...
...In focusing on the duality of our economy, with the goal of ending the gross inequities burdening the poor, Tyles gets us to face one of the most urgent social problems of our day...
...All equivalency diplomas and degrees should be eliminated...
...And why grant such generous wages so easily—isn't a corporation trying to make as much money as possible...
...Few have tried to relate theory to action, however, or to tie the academic intellectual dialogue to policy and measures that would conspicuously affect the wealth and/or income distribution...
...They may only change the actors or the conditions and sources of inequality...
...Perhaps big firms face more competition than we realize...
...Economists and business leaders may try to "explain" it, but the vast majority of them are not sufficiently uncomfortable with the situation to want to change it...
...Finally, I don't believe a discussion of the Other Economy can be complete without a consideration of overall change in the form of national planning or socialism, and here of course political as well as the economic issues would have to be taken into account...
...Therefore, to promote equality or reduce inequality, major tinkering with the institutions is necessary...
...so long will our country be torn with strife...
...It should also give Europeans and others a more accurate picture of our economy...
...However, cheering for this sentiment is quickly extinguished by Tyler's "Scenarios for a Solution...
...2. It is necessary to change basic institutions or modify them drastically in order to promote the desired level of equality...
...Indeed, if there were more equality, or if the trend were significantly in that direction, it would become necessary to find a reason...
...What is more, the essay reflects a social vision founded on a life-time of work and organizational activity for the economic underdog...
...What they need is money...
...The market and competition for unlimited material rewards have nowhere advanced "equality," and they never can...
...But where does government get the money for transfer spending...
...Such new policies would be based on the following principles: 1. It is possible to identify the limits or the range of equality desired as a "good" and its absence as a "bad...
...Fourth, we should return to an educational system where high school and college diplomas mean a certain level of academic accomplishment...
...6. Dropping those over-65 from consideration in the Inadequacy Index would seem to be contra to the current trend to extend the working age...
...1 would venture the proposition that, contrary to myth, the standard of living, including all income-in-kind, is higher in some socialized countries, like Sweden, than in the United States...
...From taxes (including the inflation tax...
...A few additional possiblities come to mind...
...8. In a few instances Tyler seems to be unduly critical of family budget standards...
...If powerful firms have such complete control over their markets that they have repealed the law of demand, as Tyler seems to imply, we can wonder why the value of shares of so many corporations is so anemic today in the stock market...
...Yet, it takes little to recognize that the existing situation is fully consistent with the institutions that hold this society and economy together...
...I would say, for example, that a new television set every 10 years is not bad at all, nor is the purchase of five records a year...
...And nobody, or almost nobody, wants to tinker with basic institutions unless they are forced to...
...he surely enlivens the "dismal science...
...Particularly apt are the tax remedies...
...5. Should we not add the Earnings and Employment Inadequacy Index of those who do not want to work, for whatever reason...
...I don't see why, given Tyler's findings, he doesn't come out for a generous negative income tax...
...still others will call it socialism...
...additional sections will appear in the coming weeks...
...2. Income-in-kind should include Medicare as well as Medicaid, and rent subsidies...
...they may express a desire to see more equality, but only if it does not affect the system that allows them to be part of the "affluent economy...
...When I carefully examine the results of policy since the end of World War II, however, I come to very different conclusions as to the approach to take in seeking the attainment of these goals...
...Institute incentive piecework programs for workers (who could even work through coffee breaks and lunch hours if they wished...
...When "The Other Economy" is expanded into book form, the following suggestions for change or elaboration might be considered: 1. The partial victory of the War Against Poverty can be attributed additionally to large-scale military expenditures...
...The educational system in this country applauds and tries to justify this pattern...
...The political machinery helps to sustain it...
...It is a problem of distribution, not only of earnings, but of total income and of wealth...
...Transfer spending by government is no more necessary to maintain aggregate spending than is any other kind of government spending, say, for napalm, wiretapping, or censorship boards...
...Second, I think a return to piecework wage scales should be explored, combined with greatly limiting the tenure aspects of seniority rules...
...He writes: "Politically, the concentration of economic power in the hands of a few endangers democracy, which depends upon a widespread distribution of income and wealth to nourish broad participation in making decisions...
...Provide no unemployment assistance to people who are on strike, will not move (at government expenses) or otherwise refuse employment...
...The opposite should be the case...
...If spending on government transfers were reduced (perish the thought...
...Charles Cogen Former President, American Federation of Teachers The special issue on "The Other Economy" lives up to the standards we have come to expect of Gus Tyler...
...Jonathan R T. Hughes Professor of Economics, Northwestern University I have read "The Other Economy" thoroughly...
...Among the charges made against large enterprises is that they "control their markets," and that they "can grant all kinds of wages and fringes to employees which are simply passed on to the consumer...
...Nor is he reluctant to challenge traditional dogmas, such as the sanctity of international free trade...
...Some conservative economists argue that whatever real wage increases take place are the results of factors other than unionization...
...To all there is one answer: If you want more equality, that is the way to do it, and it can be done...
...If the greedy, powerful corporation can always raise its prices without an adverse reaction from its customer, why hadn't prices been raised earlier...
...All of which leads to the suggestion that, in any event, it would be instructive to make comparisons with what has been happening in other countries...
...OK, give it to them, and lay off the controls on them and on everyone else...
...Why leave any monopoly power unused...
...What puzzles i'it his set of policy recommendations...
...Are they coterminous...
...First, so small business could thrive, I would get the government off its back...
...Elias H. Tuma Professor of Economics University of California—Davis The concern with America's working poor reaches to the fundamentals of American society, and relates as well to all other Western-type economies...
...In short, let small business operate without hindrance (1 would expect many failures...
...Open educational opportunity to all through subsistence and tuition, but keep the standards high...
...3. To promote the "good" and remove the "bad," action must be taken on three levels: a) Set the limits to the wealth an ind-vidual may own, regardless of its origin, and proceed to tax away the excess within a specific, technically feasible period of time...
...To pick another instance of doubtful reasoning, Tyler claims that "without social insurance and transfer payments in cash and kind, national buying power would be drastically reduced, forcing others into unemployment and lower earnings...
...Paul B. J. Chu Chairman, Department of Labor Studies, Rutgers University You are to be congratulated for having obtained Gus Tyler and the support of the David Dubinsky Foundation to produce the special issue of The New Leader on "The Other Economy...
...First, I would take up the fashionable attack on the "make-work fallacy" and show its relevance to the change in the Other Economy...
...b) Set a minimum and a maximum level of the true income for all working members of the society and enforce these limits at the source of income (the employer or dispenser of the income), to avoid tax evasion and to preclude distortions through hidden incomes and fringe benefits...
...And his treatment—drawing upon the basic studies in the field and synthesizing them—has to be an eye-opener to all but the few specialists...
...On the other hand, subsistence and tuition should be paid to anyone at any age who wishes to acquire earned educational credentials and can "make the grade...
...As for the crucial concluding chapter on "Scenarios for a Solution," I accept Tyler's proposals, based on Galbraith et al, in toto...
...Some of us are justifiably inclined to doubt whether further centralization of power in the state will do much to disperse decision-making power in our economy...
...What is surprising is that Gus Tyler would be astonished at the prevalent inequality, for that reflects his unjustified expectations that more equality could prevail in this economic system...
...Much of the material is not new, but the study is a coherent interpretation of old and new data on a major problem in America...
...Even large firms cannot repeal the law of demand—people purchase smaller amounts at higher prices, larger amounts at lower prices...
...7. While education may not directly raise the wage level, can it help to create jobs and thus achieve the goal indirectly...
...c) Establish a system of social services and benefits to guarantee an acceptable level of living for those unable to work, including/«///7«//r/t, education, retirement, and death coverage...
...also, I question the adequacy of our pensions for the purpose at hand...
...for firms with sales under $5 million or less than 20 employees, I would eliminate as far as possible Occupational Safety and Health Administration regulations, environmental controls and special accounting and reporting procedures...
...1 entirely agree that our "welfare state" hasn't worked...
...others will say it is un-American...
...This is a study that can be used in many of our classes to provide students with a fresh and innovative view of how the maldistribution of income and the plight of the poor have given rise to "two nations," as well as "two economies," in this country...
...A rejoinder by (jus Tyler, the author of the study, will conclude (he final section...
...These are radical steps, and that is what is required to bring about a change in the pattern of distribution inherent in the existing institutions...
...His proposals for solution, based essentially on the work of leading liberal economists, are well calculated to strike at most of the fundamental inequities of our capitalist economy...
...What he suggests is merely a recipe for more of the same—more transfers, more evasions, and in the end a system of regimentation for those who are able to make a good living without doing much to help those on the bottom...
...The present pattern of inequality of income and wealth distribution is a true reflection of the economic, political and social institutions of the Western economy and society, especially in the United States...
...Another is to set prices in a profit-maximizing fashion (not maximum prices...
...William Marcuse Brookhaven National Laboratory I am in total agreement with the goals of The New Leader's special issue...
...Make easy capital available...
...3. The relationship between the Other Economy and poverty should be clarified...
...Tyler's analysis of the problem is keen and economically irrefutable...
...taxpayers could be allowed to retain more of their incomes for private spending and investment...
...Many attempts have been made to explain inequality or the pattern of distribution...
...So far as I can tell, Tyler's analysis of the facts is correct...
...The content is learned and the style readable...
...Amid Tyler's complaints, I did find a thought to agree with...
...The latest survey of such efforts is by G. S. Sahota, "Theories of Personal Income Distribution," Journal of Economic Literature, March 1978...
...vocational certificates also should be expanded and made more meaningful...
...The government helps to protect it...
...Third, government employees with their greater job security should pay the price in lower relative wages and should not be allowed to strike or engage in collective bargaining...
...4. What is the role of unionization on the absolute and relative levels of wages...
...Why wait until labor costs are increased...
...Morgan Reynolds Staff economist, Center for Education and Research in Free Enterprise Although Gus Tyler's intentions may be good, his economic analysis generally leaves something to be desired...
...Rather than try to formulate policies for change, we have devoted most of our energies to rationalizing the present state of affairs...
...Well, one way to do that is to keep costs low...
...Wealth and income, whether earned or otherwise, are bound to be unequally distributed as long as accumulation, private ownership, inheritance, and incomes are left uncontrolled...
...But this familiar view raises a number of troubling questions...
...Provide no welfare or subsidy to any able-bodied person over the age of 16 or under the age of 65, but support all others...
...1 must express some skepticism, though, about the statement by the author(s) of the Preface that "So long as we are a house divided...
...imperfect competition may make the problem worse...
...Second, since immobility is a major factor in low wages, proposals should be made for increasing mobility: subsidies, etc...
...Some will say it cannot be done...
...Wanting to be "objective," we have often rendered our explanations and findings irrelevant...
Vol. 61 • July 1978 • No. 15
