Reactionaries on Labor Day

Bfore there was the Democratic Leadership Council trying to steer the Democratic Party to the center after twelve years of Republican presidents, it was an era dominated by Democratic Liberals like E. J. Dionne, Jr. This sort of Democrat was at once deeply patriotic and convinced the businesses were too self interested to care much about their workers. Labor unions were a key institution protecting workers. These Liberals came from an era when it was common for a hard working middle class father with a high school education to earn enough money in a union manufacturing job to raise a family.

This era traces itself back to President Franklin Roosevelt and the ordeal of the Great Depression. For Democratic polemists, the era was a comfortable one. They knew who the good guys and bad guys were. The titans of industry and the rich in general needed to be tamed by a powerful labor movement and a federal government properly populated by popular progressives. The comfort of familiar and long-held ideas sometimes is too alluring even after they have long since lost their saliency.

This week, out of respect to Labor Day, Dionne asks, “Do not jobs matter any more?” Dionne is convinced that the ascendancy of supply-side economics has reduced concern over unemployment. After all, Dionne writes sarcastically, “Productivity is growing, which means we’re more efficient.” From a political standpoint, Dionne need not worry. The unemployment rate remains a potent political statistic. Dionne can be certain that political operatives at the White House would very much like to drive that number down as far as possible.

Unfortunately, Dionne writes with a passion and poignancy best reserved for periods of economically crushing unemployment. Of course, for everyone who cannot find a job, the lack of labor demand can mean economic hardship and be acutely disheartening. However, the current rate of 6.3% is modest by historical standards. The mean unemployment rate since the statistic was first computed in 1948 is 5.6% with a standard deviation of 1.6%. This means that about 60% of the time the unemployment rate varies somewhere between 5.0% and 7.2%. The current rate is clearly well within the norm. Moreover, the rate seems to be retreating down from a high of 6.5% during the downturn we are recovering from. Typically, economic downturns find unemployment rates reaching 8% or even higher. The recession of 2000 and its aftermath, mark the shallowest downturn since the 1950s. If 6.5% is as bad as the unemployment rate gets, the economy is doing pretty well. Looking over the pass two decades, even with occasional oscillations associated with the business cycle, there has been a steady decline in unemployment. If unemployment seems to be less of a concern, perhaps it is because it is truly becoming less of a problem.

Dionne is worried about the loss of manufacturing jobs, and implies that supply-siders do not care about such losses. After all, “worrying about manufacturing is so Old Economy.” In a global economy, low skill manufacturing jobs will migrate to low wage countries. If trade barriers are erected to dam this flow, some manufacturing jobs will be saved, though jobs in other parts of the American economy will be lost. In addition, American consumers will suffer and many third-world countries will sink further into poverty. Americans simply cannot maintain their standard of living if the economy is supported primarily by low-skill manufacturing jobs any more than Americans at the beginning of the Industrial Revolution could have rapidly increased their standard of living if the economy remained agrarian.

Dionne represents an example of the new reactionaries, wistfully longing for the economic and political era that has past, much as city workers in the industrial era might have once romanticized about bucolic rural life. If we try to return to such a lost world, future Labor Days would likely find fewer people working. We would become another Europe, suffering from double-digit unemployment, yet secure in our progressive credentials. Nonetheless, it is hard to be angry with Dionne. It is hard to begrudge Dionne’s labor illusions on Labor Day. After Labor Day, he may awake from his stupor.

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