Ross Douthat’s Insightful Yet Incomplete Thoughts

Posted by Bob Lord

Ross Douthat is one of the conservative journalists I try to follow. I find him insightful, even if I often don't agree with him. 

In Saturday's Times, Douthat explored territory where no politician, D or R (or even L or G) dares to go: The possiblity that our economy may have matured past the point of providing jobs for all. In A World Without Work, Douthat acknowledges the reality of fewer jobs to go around:

Yet the decline of work isn’t actually some wild Marxist scenario. It’s a basic reality of 21st-century American life, one that predates the financial crash and promises to continue apace even as normal economic growth returns. This decline isn’t unemployment in the usual sense, where people look for work and can’t find it. It’s a kind of post-employment, in which people drop out of the work force and find ways to live, more or less permanently, without a steady job. So instead of spreading from the top down, leisure time — wanted or unwanted — is expanding from the bottom up. Long hours are increasingly the province of the rich.

Douthat correctly notes that the loss of jobs is not jeopardizing wealth creation, but actually is the result of it:

But it’s worth linking today’s trends to the older dream of a post-work utopia, because there are ways in which the decline in work-force participation is actually being made possible by material progress.

That progress can be hard to appreciate at the moment, but America’s immense wealth is still our era’s most important economic fact. “When a nation is as rich as ours,” Scott Winship points out in an essay for Breakthrough Journal, “it can realize larger absolute gains than it did in the past … even if it has lower growth rates.” Our economy may look stagnant compared to the acceleration after World War II, but even disappointing growth rates are likely to leave the America of 2050 much richer than today.

Douthat concludes by pointing out, correctly I believe, that the loss of work is not as much an economic problem for many of the unemployed as much as it is a social problem.

One could make the case that the right to not have a boss is actually the hardest won of modern freedoms: should it really trouble us if more people in a rich society end up exercising it?

The answer is yes — but mostly because the decline of work carries social costs as well as an economic price tag. Even a grinding job tends to be an important source of social capital, providing everyday structure for people who live alone, a place to meet friends and kindle romances for people who lack other forms of community, a path away from crime and prison for young men, an example to children and a source of self-respect for parents.

Here the decline in work-force participation is of a piece with the broader turn away from community in America — from family breakdown and declining churchgoing to the retreat into the virtual forms of sport and sex and friendship. Like many of these trends, it poses a much greater threat to social mobility than to absolute prosperity. (A nonworking working class may not be immiserated; neither will its members ever find a way to rise above their station.) And its costs will be felt in people’s private lives and inner worlds even when they don’t show up in the nation’s G.D.P.

Douthat's analysis to this point is insightful, but then he stops. He doesn't explore why the jobs are drying up, or what could be done to address the societal problem the job shortage creates. This may reflect a column space problem more than it does a weakness in his analytical skills.

Here's my effort to complete the analysis:

The loss of jobs is tied inextricably to gains in productivity. Although gains in productivity historically were accompanied by increased wages, that relationship disintegrated in the early 80's, as wages have fallen further and further behind productivity. Workers grew more and more productive, but their wages stagnated. The result: massive increases in the incomes of those at the top. 

At the same time, even after the expiration of some of the Bush tax cuts, tax rates are at historical lows. And over the last few decades, America's infrastructure has been in steady decline.

So, we have gains in productivity that created enormous wealth and we cut the tax rates of those to whom the enormous wealth was flowing, while we allowed the wealth of the commons — our infrastructure — to decline. And now we find that the productivity gains have bled too many jobs from the economy.

Which gets us to the thought Douthat was headed toward: Increase taxes on those who reaped the outsized gains from the productivity increases and use the revenue to rebuild our infrastructure, with the incidental benefit being the creation of jobs. As workers are newly employed in the rebuilding of the infrastructure, the wages they receive increase demand and the improved infrastructure increases productivity. The increased productivity gives rise to another round of wealth creation, which allows for further infrastructure building. And so on.