Paul Revere seems like an example of someone whose family went from
worker to the middle class. His father was an apprentice. Paul was
a craftsman, but it seems to me that he was middle class. So if it is
laughable, laugh away.
And then some"True enough. If you're a real theorizer and if you can back 'way off
the real lives of real people, you can even see it as a good thing
work out just fine in the end. Milton Friedman is one of those. Thomas
Friedman is, too.
But you still have to ask what has driven that trend upward. It isn't
simple, and you won't find many serious economists who ignore the long-
effects of unions. "
The fact is that we had the history we had, and there is no way to
prove or disprove what would have happened without unions. But the
Friedmans are pretty serious economists. The unions had an effect,
but I contend that the end result occurred because of other things as
improved productivity that meant that more people could consume more.
And that is what grew the middle class. I don't think that the unions
are a big force now because of all the other things, and as a
theorizer I can back way off. Anytime you throw in things about"real
lives of real people ", you are getting away from theory and going
I can accept your opinions, but do not think they are facts. And I
certainly agree that Sparky is over the top. One can know what has
happened, but it is pretty much impossible to know how someones
character would have developed in diffferent circumstances.
Paul Revere was a businessman, not a wage-earner, having acquired one
business from his marriage to his first wife; another from his father; and
foundry and copper-plating companies from his own entreprenuership. He built
a gunpowder plant. He was a petit capitalist and a pioneer of America's
Industrial Revolution. Wage-earners were working for *him*.
That's right. We were talking about globalization and the eventual
(theoretical) leveling of wages across economies, however, which is a
Labor economics is a very complicated subject because there are so many
variables and few clear-cut controls. Most of the literature that addresses
the subject of labor's effect on overall wages is based on cross-industry
studies. And the weight of evidence those studies provide supports the
conclusion that unions increased wages across the board in their early and
middle history, often at the direct expense of profits. Profits got
re-distributed by unions.
Well, Milton is. Thomas (no relation to Milton that I know of) is a
journalist who writes about economics and the Middle East. He's considered a
lightweight on economics by most observers; it's not his area of training.
He does sell more books than Milton these days.
But, again, we weren't talking there about the effects of unions. We were
talking about the eventual leveling that comes from free trade. That doesn't
address what the level will rise to.
We're getting away from macroeconomics and going toward microeconomics,
which is about the real lives of real people and real businesses. Our
disagreement is over macro issues, which is more theoretical. Micro starts
with case studies; macro starts with historical statistics.
Unions certainly are not a big force now. IIRC, only something like 9% of
workers in the US are presently organized, which is the lowest it's been
since the days of the labor riots at the beginning of the last century.
Their effect, which is getting harder to measure, will show up more in terms
of developed-country standards in competition with developing-country
standards. In other words, globalization's evolution will tell us some
things, but I don't know how measurable they'll be.
There are plenty of facts behind my opinions, Dan. There's no controversy
over these particular facts in the economic history of the US: The modern
labor movement started when the industrial revolution had progressed to the
point that companies were able to drive wages down because of the extreme
bargaining weakness that labor had, in the 1870s and particularly in the
late 1880s. Capital was competing on an amoral ground at that time. The
owners could justify anything for the sake of competition, and the first big
successes of the labor movement were in reducing the hardships of child
labor. The Fair Labor act of 1928 was a direct outgrowth of agitating from
Wage trends are harder to isolate but there were two instances in which
unions kept wages from dropping. The first occurred in the 1880s, and the
second in the period of 1910 to roughly 1925. First, large-scale
industrialization, and second, the Taylor system and the "deskilling" of
labor made it possible for companies to reduce wages. Strikes, often violent
ones, are generally credited with keeping the wage floor from collapsing.
These issues were not the subject of much argument at the time. They've been
lost in the historical revisionism of conservative think-tank publications
and in the generally vague idea of history that most Americans have today.
There's no reason that issues like those should be a subject of disagreement
today except that the grain of labor history is pretty fine and
broad-brushing it won't yield those details.
The whole thing is an accumulation of details, in fact. As I said, it's also
very complex and it's difficult to isolate what caused what. I'll stand
behind the point that unions can be shown to have increased the floor of
wages, however, because I was once exposed to it on a pretty detailed basis
and it would be possible to drag up enough evidence to make the point pretty
Not now, however. That's too much work.
Sure. That doesn't require economics. That just requires a little common
You are right on!
I wasn't going to post to this OT any more but I see that my buddy Harold
doesn't mind. He hates it when I post but he doesn't mind it when he posts
his thoughts over and over on the same topic. Like you Harold, I can live
with anyone?s opinions but YOUR ?preaching? shouldn?t go unanswered. It
sounds like you have ?yours? and you couldn?t care less of about the rest of
working Americans? Don?t worry, you not unusual. Selfishness has become
somewhat of a norm. Unlike you, I care about my neighbors, my family, my
friends. I want them to have the real opportunity to enjoy the ?middle
The middle class in the USA is shrinking faster that in any time since our
founding. Experts/economists say it's directly proportional to the
institutional dismantling of the organized labor movement.
And yet with this pending crisis we have loads of people spouting the same
rhetoric... "I don't need unions, I can take care of myself".... "unions
were useful once but not now".
They may soon wish that they hadn?t said those things because they and their
families may be the first affected by a ?union free? USA.
Reminds me a little of the history of 1930?s Germany. Unions were made
unpopular in that time and, YES, history does repeat itself. Especially for
the uninformed or misinformed!
Some examples: At one time unions made defined benefit pensions almost a
norm. People with these pensions could depend on a secure retirement and a
measure of dignity in their old age. NO MORE! These pensions are becoming
more and more rare. Management has decided as long as their risk of
unionization is low or none existent they don?t have to worry about it. If
most workers have any retirement security at all it is in a 401K that shift
ALL of the risk to them and lets employers ignore the social promise that
was common in the middle of the last century (when unions existed!).
There are a handful of good (academic) books written in the last year or so
articulating the pending crisis. Anyone want to read them, let me know and
I?ll post a list?
AND?. If no-one replies, I?ll just let it go. I?ve got lots of other
projects to work on.
Can you give me a cite on Paul Revere acquiring a business by marrying
Sarah Orne? All the things I can google up say that Paul took over
his fathers business.
Actually we were talking about wages going up because of increased
The global part came in when I said one has to consider the whole
earth now instead of just the US.
You admit is is a complicated subject, yet say that it is a FACT that
without unions .................. I at least do not know that. I do
know that there were unions and wages did go up, but unions were not
the only force changing society.
What would have happened without unions? No way to know. But if
unions were the only force, and there was no improved productivity, it
is obvious to me that wages would not have gone up.
I think we were talking about the eventual leveling that occurs from
increased productivity considering that now one has to use the whole
earth, not just the US.
Sinclair Lewis probably had nothing to do with anything.
I see the deskilling of labor made it possible for unskilled labor to
be employed and join the middle class.
I have no disagreement with the actual history. But do disagree with
which forces were necessary to create the middle class. If the
unions are not necessary to maintain the middle class now, how can you
be sure that they were necessary to create the middle class? I see
the unions as being created by the fact that "Capital was competing on
an amoral ground at that time." I do not see that capital had to
compete amorally in order to create the middle class. If capital had
not been amoral, the unions would have not been created, and we would
still have a middle class.
And a little common sense might also say that it is pretty much
impossible to determine how society would have developed in different
circumstances, say without unions.
I suppose I could if I wanted to, but a lifetime of checking facts and
poking at the conventional wisdom has led me to the much more lucrative and
satisfying work of sticking to the facts. It's my reputation as a writer and
I intend to keep it.
Her family had owned a commercial wharf, which collected fees for dockage,
loading and so on. She brought it with her to the marriage. No, I can't
remember where I read it. It came up when I was studying early American
industry for writing my contributions to American Machinist's 100th
Anniversary issue. I was more interested in the foundry and the copper mill.
I read that in 1977. d8-)
Right. And that's what I was referring to with the Friedmans: the great
leveling that Milton talked about when he said there's nothing to worry
about from low-priced foreign labor, and that Thomas talked about when he
said everyone is going to benefit from globalization. So maybe we were
thinking of different things at the time.
Of course not. We've already been over that. But a close study makes it
pretty clear that wages were in many cases going DOWN before unions, even as
productivity was climbing sharply. And unions, in incrememtal and uneven
steps, got their wage increases and their improvements in working
Given the historical evidence, Dan, you have a much higher hurdle to show
that productivity drove wages up than the other way around. In fact, that's
a major reason that unions got started in the first place. Productivity did
improve profitability and it created a bigger pool of profit from which to
draw, but that by itself did not drive wages up. It took coercive force to
squeeze it out of the owners.
I find it curious that I'm catching it from both sides, from people who
dislike unions. Harold has been claiming that unions' "greed," and their
acquisition of unfairly high wages, are the cause of America's loss of
industry to underdeveloped countries. You're saying they had no little or no
effect on increasing wages. I'm having a hard time following both of you
guys around the block. Maybe you should be arguing with Harold. d8-)
Yeah, I know, you've said that. But you haven't reacted to my statement that
unions, in the early days, got their wage increases from the pool of profit.
That's what the fight was about in the beginning: who was going to benefit
from profitability. Unions wanted some of it, and they got it.
See above. I was thinking about Milton Friedman's theories. If you've read
him (_Free to Choose_ will do), you see that the leveling comes from a
decline in the value of the dollar, to be followed later by increases in
wages of foreign workers. You could (and some people do) read the current
decline in the value of the dollar as a vindication of his theories. It's
been a long time coming, but perhaps it's true.
Without looking it up, I associate Lewis more with the Pure Food and Drug
Act than with child labor. Child labor activism was a major union effort
going back to the 1880s.
But where did those middle-class wages come from, Dan? I can show you
examples of how deskilling put downward pressure on wages, but please, check
it out for yourself first. It's in the historical record.
By reading American industrial history, for years and years.
But you can read history and see where it was going before them, where it
was going when they lost some battles, and what happened to wages when they
were in the catbird seat -- in the 1950s and '60s.
I expect you remember correctly. I just could not find anything about
it. Articles on Paul Revere on the web are likely to stretch the
truth toward making Paul look good.
The way I see it is that increased productivity increased profits.
And instead of being enlightend and increasing wages, the owners took
the short view and tried to keep all the increased profits. Did not
consider that labor would organize to get their share of the increased
profits. Owners now consider that to maximize profits, one needs to
let labor share in the profits. That motivates labor to produce more.
Could we have gotten to where we are now without unions? We probably
needed experiencing the unions in order to believe that sharing
profits ends up with everyone better off.
I am not saying that unions did not have an effect on increasing
wages. But I am saying that their role was minor compared to all the
other things that were happening.
No reaction because I agree with that. But the bigger pool of profit
had to occur first. And was a bigger factor in creating the middle
class than the unions.
I see this as somewhat similar to taxes. There is an optimum rate of
taxation that produces the maximum revenue. Too high a rate and
revenue falls. Too low a rate and revenue falls.
In the same way there is an optimum percentage of profit that needs to
go to labor. Too high and there is not enough capital investment, so
fewer jobs, etc. Too low and there are no consumers for what is
Sinclair Lewis was a writer whose books included Elmer Gantry, Main
Street, Babbit, Aerosmith and a bunch of others.
C.S. Lewis authored the Screwtape Letters and a bunch of christian
Upton Sinclair is the guy you are thinking about.. authored The Jungle.
there are too many Lewis'es in this world that are authors. :)
Yes, but they also miss his later service as a military officer and some of
his industrial projects that had an influence on industrializing the
country. His copper rolling mill may have been the first in the US, or at
least an early one. Remember Reverware, copper-bottom pots? That's the same
Paul Revere. He developed the method and later sold the company. It may
still be around.
We should end this right here, because we're in complete agreement...but
I'll keep reading.
To really settle this with facts is an onerous project and I am not familiar
with the data. As I mentioned in an earlier post to Harold or someone, if I
had another career to live it would be labor and trade economics. It
interests me a great deal but I don't have enough background to pull the
facts from my memory. I have seen curves and conclusions, but not how the
economists arrived at them.
Your productivity argument is subject to some less academic scrutiny,
however. Krugman wrote a paper recently (I don't have it on hand) in which
he points out that income gaps between labor and capital narrowed in the
period 1910 - 1970 and then started widening again. It's still widening.
Yet, profits have grown through the roof, and we just finished one of the
most rapid periods of productivity growth in history. Interestingly, the
period since 1970 also is the period during which unions have all but
That doesn't address the early history but it does point out that there is
no direct connection between productivity and the share of profits that
extend to labor, and it suggests, circumstantially, that the ratio is
connected to the power of unions. Productivity and the share of profit
extended to labor are going in opposite directions at the present time, and
that happened also in the decades around 1900.
So, we'll agree to disagree on this one.
Yes, that's one of the classic optimization problems of economics, and it's
complicated by many other factors. Note that it draws very different
conclusions from the micro- versus macroeconomics points of view: For an
individual company, there is no worry about how the wages they pay will
affect consumption. That's someone else's problem.
You can look at that as a partial explanation for why wages lag productivity
(they almost always do). It's also the basic reason why capital has no
incentive, at the micro level, to pay more than subsistence wages. The
incentive comes mostly at the macro level, where it had to be kick-started
by labor laws and union activism. Henry Ford tried to bridge that gap by
doubling his workers' wages, but his idea didn't catch on. d8-)
All of this assumes a rational market and rational agents, which is the
classical position of all economics. We know now that the purely rational
view is not adequate. Minds have changed. Managers and owners -- and
investors -- are more sensitive to the bigger picture and to workers'
welfare. We probably would call the mindset of early industrialists
sociopathological in our terms, in this more enlightened time.
But that's the period we were talking about. That's the history of early
industrialization, and the importance of labor unions...which many people
forget or never knew, and thus wind up saying things as ridiculous and
insulting as some of those said by the anti-union people here in this
Perhaps you'd understand my position better if you knew the amount of money
I grossed annually. My gripe has been, and still is, greediness----those
making unearned money----especially when they hold hostage their employer,
or the consumer of their products or services.
For the record-----my best year as a machinist, running a one man shop,
farming out NOTHING aside from secondary operations (certified heat treat
and finishing), was scarcely over $52,000. Bear in mind, I closed the
doors on my shop back in '83.
Reason for the modest income?
My bidding was realistic. I calculated my shop rate, which was below the
norm, but I was productive on the machine. I didn't routinely make much
more than shop rate, which provided a skilled, experienced
machinist/toolmaker, equipment, and liability. While It might be nice to
boast of having routinely made $200/hr., alas, I can not.
By sharp contrast, several of my acquaintances, shop owners all, were far
more greedy, and had incomes in the six digit bracket, one of which bordered
on seven digits. They did that by overbidding and skimming what they
I still like these guys, I simply don't agree with their method of doing
business, or their philosophy. You shouldn't either, for the vast
majority of the work these guys did was for you, the tax payer. Get the
picture? Where the hell does it stop?
My goal has never been to make a killing--although I have always felt I was
deserving of making a living, if for no reason, I was doing more than
nothing----including investing hard earned money. I provided a good and
valuable service for my time, and I was paid appropriately. Any greater pay
would have meant that someone, somewhere--------was getting screwed. Even
you. Taxpayer, remember?
With that in mind, you may see me as something less than some kind of
monster------or not. I have no idea of your mindset. Frankly, it matters
not, for I have a decent standard by which I live and I'm not concerned
about the opinions of those that have lost their way.
I have stated on more than one occasion I have not been an anchor on the
neck of society. I was gainfully employed from the time I started working
after high school until I took my retirement at age 54. I earned my
way----although I readily admit that I didn't earn the way of others. It
is incumbent upon them to do that for themselves. That includes feeding
their children. If their zest for pursuing an agency that is corrupt,
and guarantees them unearned wages and benefits, then watching their
children perish in the process is very much a part of what they should
expect. If the children are but pawns for this individual, why must they
become so valuable to me, where I am held hostage by their welfare?
That's precisely what would be expected from such an individual, a tool of
their trade, so to speak. Ain't gonna happen, not with me.