The Threat of an Arrogant Laboring Class

As you’ve probably heard, even though we are just beginning to see a way out of a deep recession that has long-term unemployment rising to historic levels, Republicans are blocking the extension of unemployment benefits. Joe Klein explains why:

This Is Getting Good, by Joe Klein: Jim Bunning is doing all of us a favor. As this comment from the Number 2 Senate Republican, Jon Kyl of Arizona, makes clear, the Republicans are turning toward a form of reactionary radicalism that is well to the right not only of traditional conservatism, but also of post-Victorian concepts of government and–not to put too fine a point on it–of common decency as well:

Sen. Jon Kyl of Arizona, the Republican whip, argued that unemployment benefits dissuade people from job-hunting “because people are being paid even though they’re not working.” Unemployment insurance “doesn’t create new jobs. In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work,”

The idea that those who have lost their jobs in this Wall Street/mortgage-scam recession are simply deadbeats, choosing to stay on unemployment rather than look for work, seems more appropriate to Scrooge’s London than the 21st century. But Kyl has spoken his version of the truth, and we should be grateful for that: this is what the Republican Party is now all about. …

Let’s call the roll. Let’s see how many allies Jim Bunning and Jon Kyl have. Let’s find out their names and remember them. This is so important that we should stop all other business: Let them filibuster…and spend hours telling us exactly what else they would abolish.

The quote from Kyl reminds me of a quote from Nassau William Senior (1790-1864). Senior was head of the Poor Law Commission that rewrote the existing laws dictating when relief to the poor would be paid. To give you some idea of what this was all about, note that “Oliver Twist was written in retaliation against the Poor Law.”

In his book Three Lectures on the Rate of Wages, Senior explains why he believes that relief for the poor will lead them to acquire the attitude that they have the right to exist without having to do any work:

greater exertion and severer economy are … [the laborer’s] resources in distress; and what they cannot supply, he receives with gratitude from the benevolent. The connexion between him and his master has the kindliness of a voluntary association, in which each party is conscious of benefit, and each feels that his own welfare depends … on the welfare of the other. But the instant wages cease to be a bargain-the instant the labourer is paid, not according to his value, but his wants, he ceases to be a free man. He acquires the indolence, the improvidence, the rapacity, and the malignity, but not the subordination of a slave. He is told that he has a right to wages …. But who can doubt that he will measure his rights by his wishes, or that his wishes will extend with the prospect of gratification? The present tide may not complete the inundation, but it will be a dreadful error if we mistake the ebb for a permanent receding of the waters. A breach has been made in the sea-wall, and with every succeeding irruption they will swell higher and spread more widely. What we are suffering is nothing to what we have to expect.

Let me back up and repeat from an old post (from four and a half years ago):

Nassau Senior (1790-1864) was a lawyer with an interest in social, economic, and political issues. He was a friend of many of the more prominent members of the Whig party and he was the party’s general adviser on matters involving economic and social issues. In 1825 he was appointed to the first chair of political economy at Oxford University.

In his early years, his main concern was the causes and consequences of poverty and the standard of living of the poor. Prior to 1830 Senior had considerable sympathy for the plight of the poor, and his concern appears to have been generally benevolent. He rejected Malthus’ population theory which implied long-run misery for the masses and instead believed that improvements in productivity would coincide with increases in moral character to lift the poor from their misery. He saw moral education as the only answer to poverty and actively promoted efforts to uplift intellectual and moral standards.

Conditions for the working class during this time were almost, if not surely sub-human. Exploitation and degradation were commonplace and there came a time in the 1820s and 1830s when labor began to organize and fight back. The result was widespread strikes, industrial sabotage, riots, and fires, all of which had a great influence on Senior. He changed. He particularly cited “the fires and insurrections which terrified the south of England in the frightful autumn of 1830” (Nassau Senior, Industrial Efficiency and Social Economy, 2:156). He came to believe that the poor laws and government’s dole to the poor and the unemployed were the principle causes and consequences of poverty and that this threatened to undermine the very existence of capitalism in England.

In 1830 Senior published Three lectures on the Rate of Wages. After the unrests in the autumn of 1830, he added a preface called “The Causes and Remedies of the Present Circumstances” the source of the famous wages fund doctrine. Setting aside all the finer details, the essence is that there is a fixed pool of income to divide among workers and the size of the pool is determined solely by labor productivity. Thus, to improve living conditions, labor productivity has to rise or the number of poor depending upon the fixed fund has to fall.

How to increase labor productivity? He advocated two solutions. First, the removal of all restrictions on free commerce and the accumulation of capital. Second, abolition of the poor laws which “made wages not a matter of contract between the master and the workman, but a right for one, and a tax on the other.” Senior was no longer worried about the misery caused by poverty. The events of 1830 led him to worry about the “threat of an arrogant laboring class, resorting to strikes, violence, and [unions], a threat to the foundation not merely of wealth but of existence itself.” Poor laws and dole led to a decreased incentive to work and created the arrogant attitude that workers and their families had a right to exist even if they could not or would not find work.

With his connections to the powerful Whig party, Senior was able to put some of his ideas into practice. In 1832 he was appointed to the Poor Law Inquiry Commission which was to study existing poor laws and methods of dealing with poverty and recommend reform. The report issued in 1834 was by all accounts largely Senior’s work. The new law stated:

  1. Workers should accept any job the market offered, regardless of working conditions or pay.
  2. Any person who would not or could not find work should be given just enough to prevent physical starvation.
  3. The dole given to such a person should be substantially lower than the lowest wage offered on the market, and the workers general condition should be so miserable and should so stigmatize so as to motivate the search for employment irrespective of pay or conditions.

[Since I didn’t mention the connection between the Poor Laws and the workhouses of the 1850s and 1860s, let me add this update: “The Commission’s recommendations were based on two principles. The first was less eligibility – conditions within workhouses should be made worse than the worst conditions outside of the workhouse so that workhouses served as a deterrent – only the most needy would consider entering them. The other was the “workhouse test,” that relief should only be available in the workhouse. … Despite the fact that the Act was passed in 1834 most workhouses were erected in the 1850s and 1860s and until then the ‘workhouse test’ did not operate.”]

One historian, E.J. Hobsbawn (Industry and Empire: An Economic History of Britain since 1750) said the poor law Senior was influential in creating was

…an engine of degradation and oppression more than a means of material relief. There have been few more inhuman statutes than the Poor Law of 1834, which made relief “less eligible” than the lowest wage outside, confined it to the jail-like workhouse, forcibly separated husbands, wives, and children in order to punish the poor for their destitution, and discourage them from the dangerous temptation of procreating further paupers.

Whenever I go back and read about these times, the people, the policies, there are echoes of present day policy debates everywhere. To repeat a cliche, little is truly new in this world. A close look at the principles underlying contemporary rules for Unemployment Compensation reveals strong echoes of Senior’s policies. Much of the rhetoric surrounding welfare reform, Social Security reform and so on can be found in the literature surrounding the birth of capitalism and its struggle against socialist ideas, ideas abounding during Senior’s time. As we begin another episode where these same ideas clash, are we fully aware of how this resolved itself in the past when societies struggled with the very same issues?

About Mark Thoma 243 Articles

Affiliation: University of Oregon

Mark Thoma is a member of the Economics Department at the University of Oregon. He joined the UO faculty in 1987 and served as head of the Economics Department for five years. His research examines the effects that changes in monetary policy have on inflation, output, unemployment, interest rates and other macroeconomic variables with a focus on asymmetries in the response of these variables to policy changes, and on changes in the relationship between policy and the economy over time. He has also conducted research in other areas such as the relationship between the political party in power, and macroeconomic outcomes and using macroeconomic tools to predict transportation flows. He received his doctorate from Washington State University.

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2 Comments on The Threat of an Arrogant Laboring Class

  1. I have concluded that Senator Kyl is not much different from Senator Bunning. As a Republican I want to be able to point to my party as one of compassion which will honor unemployment insurance benefits for those needing them at this time of severe economic crisis. Yet Kyl and Bunning continue to reinforce the concept that my party is the group that votes “no”. I do not support them!

    Kyl’s concept that workers on unemployment compensation are not incentivized to look for work because of a paltry weekly check is absolutely wrong. The assumption Kyl makes is basically illustrated by a former employee whose job has been terminated by this depression from a 60,000 annual salary. Kyl apparently believes that the former worker prefers to draw some 300 plus dollars a week over his former salary and benefits. Kyl further adds insult to injury by implying that most people find it easy to accept such a lowly stipend for half a year, and this pittance dissuades him from looking for work.

    As a Republican I repudiate these two Senators for their line of warped thinking and hope that many additional compassionate GOP officials will prevail. My message to Kyl and Bunning is, Senators in case you haven’t noticed it’s not just unemployed Democrats and Republicans suffering, its Americans.

    Hopefully people in 2010 will start electing to Congress those who dare to dispense compassion when the national economic situation demands it. As a Republican, like Nancy Reagan I was for just say “no” to drugs. I have never supported however those Republicans that say no to people who through no fault of their own have lost their jobs and are simply trying to survive.
    We are not the party of no, but we must speak out against these irrational senators or people we conclude we are.

    Dr. Alan Phillips
    Bloomington, IL
    77447

  2. “Hopefully people in 2010 will start electing to Congress those who dare to dispense compassion when the national economic situation demands it.”


    So, spread the wealth around?

    Some have the _ability_ to earn money, but some have a greater _need_ for that money?

    So government, knowing best how to spend money, should just take it – out of the pockets of individuals, their employers, or those businesses that will pass the cost of those “compassion” taxes onto the customer, the consumer, and result in reduced wages for the businesses’ own employees – or the inability to hire new workers?

    Put the burden of some folks’ bad fortune on the backs of all workers? It’s a benefit to no one save those in government who want to feel good about giving other people’s money away, or those who justify their moral superiority by giving other people’s money away.

    Compassion is incumbent on the individual – to take care of their own family and friends during hard times. Compassion is emphatically NOT the purview of government – to take at the point of a gun from the ant and give to the grasshopper. (Or to take from the ant’s employer, which results in him firing the grasshopper who was just hanging onto his job.)

    The US government exists as a compact between the entity of government at the consent of the governed. It is not there to “dispense compassion”. It is there to do few the duties outlined in the Constitution. Taxes are taken by force (try not to pay them and see what happens, Doc) and again, are there to maintain the functions of government outlined in the compact by which the US govt was established – The Constitution.

    Again, put the burden of some folks’ bad fortune on the backs of all workers? Because that’s the direct effect of government do-gooders taking citizens’ money – whether from individuals or businesses that employ those individuals – and handing it out.

    If that tax money isn’t taken out of the pockets of individuals and the businesses they own and work for, it leaves more money to be spent – on new employees, or to help out one’s brother-in-law whose business just went under.

    Also:
    http://shine.yahoo.com/channel/life/does-unemployment-insurance-keep-people-from-working-508256/

    Seriously? Governments “dispense compassion?”

    Beyond the curiously utopian communist point of view expressed there (at odds with reality), there are larger practical, non-ideological issues of “what’s the government wasting money on?” If there was less taxpayer money spent nationalizing banks and car companies, there’d be that much more money available for the govt. to spend on unemployment, and that much more ability for the private sector to reorganize and rebuild itself.

    Grover Cleveland said it best with regards to government “dispensing compassion”:
    “Federal aid in such cases encourages the expectation of paternal care on the part of the Government and weakens the sturdiness of our national character.”

    People need to take care of themselves and their families, not be taxed to take care of someone else.

    I’m an independent, because there are certainly no Cleveland democrats around anymore, and the Republicans are willing to say no to drugs (which don’t fall under Constitutional purview), but not to taking money at the point of a gun from my friends, my co-workers, my family, and myself and spending it while telling me what a wonderful thing it is they’re doing.

    I for one do support Kyl on the idea that federal government unemployment benefits that are taken from one and given to another do not improve the economy, and are a disincentive to job-seeking. Note that individual states are free to do what they like. If North Dakota wants state-provided unemployment, they can do it without impacting South Dakota if they don’t.

    It is precisely the paternalistic tendencies of government that Cleveland warned us about that dragged us into this mess, and will prolong it just as FDR prolonged the Great Depression with his “compassionate” policies.

    The comparisons to Dickens-era Britian are meaningless. Contrast the British system of welfare and welfare reform to that of the US at the time. The US, despite the best efforts of wannabe aristocrats, academia, unions and those who would benefit from societal stratification, is still a classless society. Hard work or good luck can take you to the top, and bad luck or bad decisions can take you right back down.

    “Setting aside all the finer details, the essence is that there is a fixed pool of income to divide among workers and the size of the pool is determined solely by labor productivity.”

    That idea in and of itself is nonsense, and is at the root of the wrong thinking that led to all the misery of Senior’s later thinking. He artificially manufactured a zero-sum game and started “distributing compassion” in what he felt was the best manner. It was less immediately lethal than liquidating the Kulaks, but just as flawed.

    And a final note on Joe Klein’s word of choice – it’s not a filibuster.

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