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Tuesday, August 16, 2011

Factchecking Fed employees, salaries

My father-in-law, who is rare among his peers in his due-diligence to checking on the truth of statements sent via the interwebs, asked me to look into the claims in the video above. As with most partisan propaganda, this video has some truth to it, but that truth is bent all out of shape by its being taken out of context. It will help if you watch the video before going on as I don't summarize much of it here. 

He was sent the link via a friend and the first thing I noticed is that the link throws you right into the pop-out, full screen version of the YouTube video. To get the page with links and, more importantly, the comment thread, you have to edit the link--and know what you're doing. As with all e-mails of this kind, who knows where along the way the link got edited in this way. But it is somewhat problematic because it subverts the very narrow possibility that viewers could be exposed to response videos, comments, or other forms of social interaction around this media.

It also raises the bar on what you'll have to do go to the website to view the video and find out more about the organization. Instead of just clicking on the link, you have to search for the webpage separately. I usually wouldn't imagine that this would be something the author of the video would like, but in this case, it doesn't seem to matter one way or another: the website is pretty sparse in terms of content. There is a lot of design, but not much filling the design. Basically it is a one guy's blog (with occasional contributions from three other people) looking like a big organization.


And more power to them. This is what the internet allows people to do: start organizations that would normally take a lot more capital and attention. According to the site, the speaker in the video above is also the founder. He balks at property taxes in Florida and decided to go on a personal quest to slay the Federal Budget demon. In addition to the blog, he gives little seminars around Florida to inform his fellow citizens about the horror of taxes, spending, and all the other appurtenances of the modern nation state. No real word on the blog about who he is, but the
St. Petersburg Times did a little piece on him, saying that, in addition to being a self-declared "motivational speaker" (i.e. motivating you to hate taxes) he is also a professional poker player and Chairman of the Hernando County Republican Executive Committee. But more pertinently to his beef on property taxes, he's a real estate contractor who built a raft of houses for speculators in the run up to the housing bubble that hit Florida especially hard.  

He first teamed with a real estate company that touted Florida real estate as a can't-miss deal. Then Ingoglia did the touting himself and did it until at least March 2007, when he told potential buyers at a "Real Estate and Wealth Expo'' in Los Angeles that they could clear $25,000 by reselling before their homes were even finished. His claims were backed by appraisals that local Realtors and statewide appraisal experts said were highly inflated, if not downright phony. [ . . . . ] In his first seminars, in 2007, he roasted Hernando County government for the huge bump in property tax revenue, created mostly by the huge bump in property values, created by what? Speculation.

So this guy is not necessarily non-partisan and he's not necessarily disinterested himself. This is all good to know, but the importance of the public sphere is that it is not supposed to matter what your political leanings are or where you come from or what you've done: your argument is supposed to be based on the strength of its rationality, the merits of your sources, and the clarity of your interpretation of those sources. Here, both the video and the website itself are rather unfortunate.  

The beauty of the internet is the way you can both find information and cite it as a grounding source for your argument. You can also easily share videos and other media, making it a very good medium for productive intellectual exchange. But it can as easily become a mouthpiece for falsehood and half truth, particularly when you only employ the broadcasting functions and let the "public sphere" functions sit idle. Emails and web posts lacking any citations are bad enough, but because of the cultural role we give to television as a purveyor of truth, videos can even more easily project decontextualized facts as absolute truth. In this case, the video is not accompanied by any citations for its statistics, making it doubly hard to fact check him: not only do you have to look at the source to examine his interpretation, you have to find his source (if, that is, it exists.) This not only prevents a clear factual accounting: it also creates wiggle room for true believers, who are likely the primary target for the website anyway (more than half of the content of the site consists of comments made by other people.)  

The overall argument of the video is that "Government" is out of control. It purports to provide data demonstrating this out of control level of government employment, and especially of salaries for government employees. Some of these facts are basically accurate, but even the accurate ones are taken out of context.  

Concepts that are fuzzy: "government" and "since the recession began." The first is a standard conservative boogie-man. It is a catch all that acts like we should look upon this force with suspicion and derision. I totally agree with the idea that, as citizens, our primary role is to question the state and shape it in a way that is useful to us. That's the whole idea of democracy. More on this in a moment. In any case, this is a very loaded term in this set of discourse and it is never defined--precisely to allow the viewer to insert all their ideologically derived prejudices about what this means. This is standard fare in these kinds of videos and posts, so it's not of the author's creation.

More problematic in this video is the fuzzy date he uses in his chronology of when this explosion in government took on the current "gone wild" proportions. He says that "both parties" are responsible, but in the current climate (spoken by the chairman of the Republican Executive Committee) it is difficult to take seriously. Since most people don't use the textbook definition of recession, it is hard to parse when some of these events occurred. He uses 2009 as a benchmark number, but he says that congress used the recession to bump up government spending, creating a false causality. Many of the policies that caused the changes he mentions were in place well before this, and had little to do with the recession per se. And in response to the recession, the current administration has put a pay freeze in place to stem most of these changes, and congress passed a law last October that ends most of these pay raises. This fact is readily available - right at the bottom of the USA Today article on which the video likely based all its salary data.

First claim:

Relative number of government employees compared to private sector employees: Over the last decade, number of private employees has only increased 1%; but government employees have risen 15%.

This is a common theme among conservative politicians and pundits. This is not true for Federal Employees as a whole (which increased only 7% fro 2000-2010), but the executive branch alone has increased close to that (16%). A good chunk of that is due to the doubling of employees in Homeland Security. But even that number (which is about 2.1 million employees) is hardly unprecedented and not at all an explosion: there were at least this many federal employees in the executive branch alone for most of the post-war period--and throughout the entire Reagan and Bush I administration. The 16% or so decrease started when Clinton took office and then rose steadily throughout Bush's presidency. Still, in relative numbers, the amount of federal employees per 1,000 members of the population is historically quite low. "The Government" increase in question was for the "war on terror" protection functions libertarians think "the government" should limit itself to anyway. So it is unclear what all the fuss is about.

In any case, the real scandal here should be the pittance of jobs added by the private sector over this period. It is much larger and supposedly far more dynamic: if it is this bad at creating jobs, why are we putting so much faith in it to get us out of this recession.

Second claims: regarding the number of federal employees making over $170k. As I said above, almost all of this data is derived from a USA Today article from 2009 charting changes to Federal Employee wages from 2007 to June 2009, mostly as a result of pay hikes approved by Bush II and a new National Security Personnel System approved by congress in 2004 (and targeted at the defense department.)

Two things are important to note here. First, though the data in the USA Today article appears accurate (I can't find a place where these numbers are listed), the benchmark they choose is somewhat arbitrary - except that it provides a seemingly shocking conclusion. When you say that there is a tenfold increase in the number of people making over $170k, it sounds like a lot. But there are no relative numbers given and there is no sense of what these increases were for. In terms of relative numbers, it is important to consider two things: the number of people given the raise relative to the total number of employees and the percentage of the actual raise over their previous wage. 10,000 people in the DoD--which according to the data above, employed 737,000 people) is a drop in the proverbial bucket (it is about 1.4% of the entire workforce) And if the benchmark were "over $155k" (which was one of the previous maximum pay-bands) there might have been little increase at all. These were doctors, lawyers, scientists, engineers, and career managers in the DoD. Many of the career public servants in question had already qualified for the highest pay available and the goal of the legislation was to reward those who were doing better with a pay raise that would put them closer (though still about 20% off) with the average pay they would receive in the private sector. In other words, these people weren't suddenly given $170k/year: they were given raises from something like $150k or $155k. Choosing this benchmark is designed to have the effect of being a dramatic rise; it would be just as accurate to say something like 1.4% of DoD employees were given raises of 5-10% to place them closer to parity with the private sector.

On this note, relative to their skills and what they could get in the private sector, government employees are compensated less than their private sector counterparts with equal educational and professional qualifications:
A disproportionate number of federal employees are professionals, such as managers, lawyers, engineers and scientists. [This is backed by] a 2002 study of the nonpartisan Congressional Budget Office. It found that federal salaries for most professional and administrative jobs lagged well behind compensation offered in the private sector. The CBO study concluded that the best way to measure the difference is to compare government jobs with those in the private sector that match the actual work performed. The CBO found that salaries for 85 percent of federal workers in professional and administrative jobs lagged their private sector counterparts by more than 20 percent.

Among lawyers, for example, the average pay in the federal government was about $127,500 a year in 2009, according to the Bureau of Labor Statistics. The average lawyer in the private sector earned $137,540. And the starting salary at large law firms in Washington, D.C. -- where most government lawyers work -- is $160,000, and can grow to hundreds of thousands of dollars a year, according to the National Association for Law Placement.
In other words, though the statistics in question are accurate, it is a misleading comparison.

Second, is the reason for this new pay scale. CEOs are always defending their excessive pay with reference to the market competition--they are required to get paid in this way in order to attract the best talent. When Bush and the predominantly Republican congress approved these pay band increases, it was with an eye to giving merit pay--MERIT pay--to people who were highly qualified and high performing. According to the CRS report about this program, 

 At the end of each appraisal year, an employee is assigned pay shares based on performance that represent percentage increases in pay. Lower-performing employees may receive fewer pay shares or no pay shares. An employee must acquire at least a satisfactory performance rating to be eligible for any performance-based bonuses.  
 In other words, this was a program designed to incentivize performance in exactly the way free market promoters find the public sector lacking. It was designed by people with this in mind and there was the unexpected consequence that many more people qualified for merit pay than they thought would. In any case, it was not some random pay raise: it was designed to introduce market incentives into the public sector. Now those same free market denizens howl when public employees get paid close to their private counterparts.

As that article points out, congress voted in 2009 to end these pay scale changes, effective 2012 and the current administration gave smaller raises in 2009 (2%) than any administration since 1975 and as it doesn't--but as is easily discoverable from the OPM--Obama put a cap on pay in 2010 and 2011.  

So in terms of raises, the recession has actually spurred the government to change the policies that were increasing this level of compensation. Both congress and the administration are already changing this system so the alarm seems overblown.  

Third claim: 21 million government employees = 16% of the voting population = 32% of electorate (because each government employee has "at least one person close to them" who will vote for government) = a huge "special interest" 

This is the big punchline, but now we're playing fast and loose with numbers. 21 million "government employees" is not anywhere near the total federal employees, so it must include some amount of state and local government employees. But this is a pretty arbitrary accounting. Why not also include government contractors? People who receive government subsidies? People who drive on public highways? The premise is that, because people are paid by the government, they will never vote for a contraction of the government. If only the average person was so easily swayed by their own material interest--then arguments like this guy's would have almost no purchase on the popular imagination. As the article where he gets his data mentions, there had already been movement on the payment of government workers, and earlier eras (such as the Clinton years) have seen a contraction of government workers. So while the theory he presents might make sense, it doesn't stand up to empirical data.  

But more important, the whole idea of government is that it is supposed to operate in all our interests. To say that only government workers have an interest in the continuation of "government" overlooks the basic fact that government is supposed to operate in all our interests: that's why it is called the "public sector." The answer to the problem of government not seeming to operate "in your interest" is not to get rid of it altogether, but to force it to reform in a way that will work in your interest. This is certainly what real estate speculators like this fellow and big investment firms like Goldman Sachs do all the time. And targeting the employees - many of whom are professionals who are taking a pay cut in order to perform public service - as the cause of the problem is getting really old.

Sunday, July 31, 2011

hacker as hero

Along with preparing to move across the country, I've been listening to the audiobook of Neal Stephenson's Snow Crash.  I don't really like the format (hearing someone else read a book is sometimes quite tedious, but at this point in my life, I have almost no extra time for reading long form fiction like Stephenson's.  cf. above comment about moving across the country, add 1 year old son, new job simmering to a boil soon, and a slew of unfinished papers sitting on my hard drive waiting to be polished into publishable matter.)  It sometimes makes elements of fiction that would probably slide by as just missed attempts at stage dressing are sometimes enunciated in ways that make them stand out as weak, even annoyingly so.  The solemnity of the mafia running pizza chains is a bit hard to get into, particularly when it is such a central element of the story.  But I'd probably be much more charitable if I was reading it myself rather than half listening to it while falling asleep on the plane or driving to pick up moving supplies (or maybe I'd just stop reading altogether.)  I don't like Stephenson as much as I thought I would, but one element does stand out: the hacker as hero.

Anyway, I am sure I am coming late to the party, but after finishing the film adaptation of The Girl with the Dragon Tattoo, I am struck by this as a recurring theme.  I'm sure this is uninspired as an observation of a key cultural theme for a good part of the last 30 years or so (in my lifetime, at least since Matthew Broderick hacked into the War Games).  So here I want to make less of a case for it being such a cultural theme (thought would welcome some examples) and more of an argument for hackers needing to be heroes at the current moment.  Wikileaks is sort of on this level, though most of their power comes from whistleblowers like Bradley Manning.  And Anonymous is a very clever and exciting crew.  But in both cases they mostly just muck up the elite management of the military-corporate state system at various levels.  Excellent work to be done there, but I think it would be nice to have some hackers do something a little more practical.  Most of the big money that exists today isn't kept in immense vaults guarded by nefarious looking henchmen (though probably some of it does): it's just a set of numbers allocated in a computer terminal.  It is just waiting for some good hackers to reallocate the wealth of the world.  If the uberrich refuse to be taxed, they must be hacked.

There's recently been some angst about the fact that social security benefits and other forms of government payments will finally enter the twenty-first century--they will be distributed via direct deposit.  The animosity came from the details of the policy which state that, if people don't set up their own bank account into which this money can be deposited, then the government will maintain one for them.  However, if they opt for this government account option, they will only be allowed one ATM withdrawal per payment.  It's an inconvenience, but getting more people to have bank accounts able to have direct deposit--especially people who are in need of some "transfer payments" of one kind or another--would really facilitate the above.  I'm not saying full expropriation, but a very nice skimming off the top (something like they did accidentally in Office Space) to support the increasingly dire circumstances under which most of the world's population lives.

Wednesday, May 18, 2011

At a time when 30-year mortgages seem too long, MIT issues 100-year bonds

The Massachusetts Institute of Technology this week borrowed $750-million by issuing taxable bonds that it plans to repay not over 30 years, the usual term for capital borrowing by universities, but over 100 years.
All of the handwringing over the future of higher education in this country (or the world) aside, I hope those bondholders buy some good default insurance--or at least require MIT to take out some flood insurance.  It's pretty close to the water. And an EPA study from 2005 predicted that:

By the end of this century, global warming threatens to raise the sea level enough that a heavy storm would send flood waters into Boston's downtown waterfront, the Financial District, and much of the Back Bay, based on projections in a federally funded report to be released today
Animation and follow up here

Friday, March 04, 2011

A response to a response to my response to Koch's letter tot he WSJ

To address your gripe about the "very top" getting "ALL" the benefits of growth. They also shouldered the greatest burden. Remember who pays the lion's share of taxes...

"The top-earning 5 percent of taxpayers (AGI over $...159,619), however, still paid far more than the bottom 95 percent. The top 5 percent earned 34.7 percent of the nation's adjusted gross income, but paid approximately 58.7 percent of federal individual income taxes."

How much do you want the top 5% to pay? All of the federal individual income taxes? That, of course, would be absurd.

And remember the bugs in your data collection:
"Overall, these data on high-income tax returns appear to confirm that the recent recession had the same diminishing effect on income inequality that most recessions have, and that it occurred for the same reason, a sharp decline in income at the high end. This appears to contradict recent reports based upon Census data suggesting the opposite, that this recession had actually increased income inequality. This inconsistency between IRS data and Census data is explained by a number of factors such as: (1) Census doesn't break down data for the extremely high income tax returns (typically stops at the 5 percent threshold), (2) Census income measures do not account for capital gains realizations, and (3) Census data gathered from household surveys are less reliable for income information at the high end of the income spectrum than IRS data."

The assertion that this economic disaster was brought on by "the top 2%" is utter conspiracy-theory nonsense. Millions of middle-class homeowners took out loans, in many cases lying to get them, that far exceeded their ability to pay. They hoped to game the system, perhaps, or "not to miss out." Regardless, this was the core of the housing/leverage super-bubble. This was abetted by government policies allowing low-to-no down payments in an effort to "share the wealth" of homeownership with a broader population. And by an absolutely idiotic Federal Reserve policy of low interest rates (shame on Greenspan for calling himself an objectivist while weilding the club of market intervention). Securitization was a useful tool that became a deadly weapon--but only in the hands of people who deliberately ignored the instruction manual. Somebody very stupid bought that junk. Many of us knew it was unwise, because we are students of the system. We chose not to participate in those markets.

Leverage is your enemy, not "the top 2%". Eliminate or reduce leverage and many evils are defanged--no housing bubble, no hedge funds, no crazy private-equity buyouts. No populace enslaved to their credit cards. I imagine banks would be smaller; they would certainly be more conservative.

For the past decade I've been intimately involved in--and aware of--the workings of the financial system. A bubble is a bubble, and they've been happening for centuries. The enemy is irrational behavior by market participants. Unfortunately, that will probably never change. The best we could do would be limit people's ability to leverage their irrational behavior to the point of collapse.

Sadly, we're using a lot of leverage ourselves at the national level. Too much debt. The problem has moved, like a Whack-a-Mole, from individuals, to corporations, to states, and finally to the federal government.

I know many in the top 0.1% and they don't and didn't have some secret cabal to cause a crash. I wish they did; I'd probably get to have a hand in it. They know very well that the burden will fall on them to fix it (see tax burden, above). Nearly all of them have businesses--and incomes--that depend on good economic times and general prosperity. These people work 18 hours a day for decades to build their wealth, and employ thousands of people in the process--indeed, some of them make their employees or investors very rich. And all this is done not by stealing, but making something better, cheaper, and more appealing when they sell it to their customers. Most of the time, the role of government in that process is to be inefficient, absurd, conflicting, unweildly, and incomprehensible. I've seen it over and over. When I was a broker, I was regulated by FIVE different agencies. And you know what? Not one of them actually ensured any of us were acting ethically. None of them prevented the crash. So all five were a collosal waste. That's government, and "regulation."

Nobody wins in a crash, and the rich--more than anyone--know that very well.

With all the evidence emerging about wall street banks packaging of mortgage backed securities--the crap Goldman knew was crap--and the demand this created for ANY mortgage, however crappy, you still want to nail the blame on "millions of homeowners" who "lied" to get their houses?  This is quite a revelation.  I'd be interested to know how you have such insight into all these people's intentions and level of honesty.  Survey? Ethnography? Any actual data?  If you loan money to someone who shouldn't qualify for a loan simply because you know that you are going to be able to move that crap loan out the back door, where Goldman can polish the turd to sell to a state pension fund, the homeowner is a minor player in the drama.  One that should be held responsible, sure, but pegging it on that player is far more scandalous.

It doesn't have to be a "conspiracy" per se, either--though I think there are plenty of cases where this is exactly what it was (reporting by Matt Taibi, Nomi Prins and others over the past two years confirms this).  The big cause is the set of capital friendly policies that are the centerpiece of neoliberalism as a bipartisan policy regime.  But this was helped along by among other things, the assumption that home prices would never go down, the assumption that there would be a state mechanism to force people to pay, the assumption that the state would likely step in if it got messy, the assumption that they were going to be able to get away free and clear, etc. It was a convergence of factors, to be sure, with homeowners, the Fed and Greenspan (who, BTW, Taibbi calls the biggest asshole in the universe) having some responsibility for this, but the "irrational behavior" is not external to the profitable transaction: this is the central feature of all investments.  And the only thing that can stem its most harmful effect is some form of rules that all the parties in the market have to follow, i.e. regulation.  Since the order of the day--brought about by hefty lobbying by the financial players themselves--was deregulation, well it is no wonder there was no one interested in manning the store.

It is no accident that there are five different agencies regulating you, or that they are completely ineffectual at doing so.  THis is by design and it is one of the flaws that Elizabeth Warren wanted to correct before she was ushered offstage for being to gung ho on actually regulating finance (instead of just creating a nuisance.)  It is regulatory capture pure and simple and even if your fellow .1percenters are not at fault, much of their windfall over the past years has been due to the system being rigged in their favor.  If they actually believe that they need customers and that other people in the bottom 99.9% matter, then it is hard to understand your reluctance to have a more progressive tax system.

Here's where my problem with Mr. Koch and your own little description of how the world works seems to run aground.  The top tier are the titans and the Most Important People in Society (in so far as society exists) because you make money then use that money to employ others ("thousands" of others, by both your counts--which is no small potatoes in a country of 300 million. or...). On this count lowering the tax burden would be the best idea because then more of that money could be used productively, pumped back into the economy, more people go to work etc.  Then the 95% of people who don't pay taxes would.  The alternative, raising taxes, reduces economic activities, taxes, the power of these titans to lift all boats by trickle down economics, etc.  Not to mention it is just plainly against the Objectivist ethic (all praise Ayn Rand).

This is such a blinkered understanding of how things work.  For one thing, it takes the Laffer curve as an absolute sort of value--raising taxes ALWAYS reduces tax receipts.  But the curve, in case you or Koch has forgotten *is a fucking curve.*  There is a point where it actually makes more sense to tax the rich since they aren't really doing much with the money they've managed to squeeze out of the collective and aren't actually doing much productive with it.  In other words, there are times when taxing makes some sense, as Reagan's own tax guru has recently said in response to this line of rhetoric:


All of this is compounded by the fact that much of this money does absolutely nothing productive except gather interest in offshore bank accounts.  When the average worker's wages are stagnant--when the median wage is almost identical in inflation adjusted dollars from the late 1970s to today--yet we have seen healthy economic growth and rising worker productivity, it is not some crazy marxian observation to point out that, while productive work is being done by many people, some people are able to take more of the rewards for themselves. If the condition of your and Koch's employment solution--let the rich people and only the rich people hire you--is that your PRODUCTIVE labor is rewarded at less than those above you this is hardly fair.  And it makes the argument that people with more wealth are automatically more productive a circular argument.  People with money are able to take advantage of a structural inequality to capture more money from other productive workers who don't happen to have money.  This is not a case of productive vs. unproductive workers, but people who claim they are productive because they have money and people who do a great deal of productive work but have not received much money.

Here your account of the tax burden problem really reverses the issue--as I've said several times before in our interchanges.  The real issue is that, in the current economic distribution a relative handful receive the greatest share of the rewards for their labor--did you actually look at the graph I cited: ALL of the economic growth of the past 30 years has gone to the top 10%--and your complaint is that this means they pay proportionally more taxes!  This is like robbing someone and then expecting them to sympathize with the burden you have to bear carting off their TV: "You may have been robbed, but man this thing is heavy! My back is killing me!"

Many many people in this country work very very hard and can barely scrape by.  The problem in my mind isn't that 95% of people pay only 40% of the taxes, its that they only earn enough relative to the amount of money floating about out there to fall in the tax brackets in this way.  So I'd much rather not have taxes be the primary means of redistribution.  I'd much rather have a distribution of income and the benefits to labor that would alter the basic structure of society.  I'd rather have 95% of the population pay 95% of the taxes because they make 95% of the money off 95% of the work.  In the end it is only an illusion of the automatic superiority of the rich and a degradation and hate for working people that can allow objectivist fantasies to prevail.  I don't believe you really believe this.

Saturday, January 22, 2011

The "founders" and Socialized medicine

A meme going around that, in fact, the constitutional architects would have approved government run health care.  Adams approved funding for Government run hospitals for sailors in the late eighteenth century--funded out of a mandatory tax on the sailors and their employers.  

Original blog post here;  follow up by WaPo here; and a diss excerpt on the hospitals here.

All of this is interesting and useful information, but the focus shouldn't really be over how analogous the bills were (as the WaPo historian discusses) but how we still have this in principle today with military hospitals and the US military in general--which Chalmers Johnson calls one of the greatest bastions of socialism in the world.  The question that this historical trivia sidesteps is whether Adams or Jefferson would have approved the "standing" army of the size we have today. A good thing to remember in the week of the 50th anniversary of Eisenhower's "military industrial complex" speech.

Wednesday, January 12, 2011

Michael Denning on capitalism as primitive accumulation

Michael Denning's contribution to the latest issue of the New Left Review is very provocative.  It is effectively equating capitalism not with wage labor or private property per se, but with primitive accumulation:

However, I want to insist that we decentre wage labour in our conception of life under capitalism. The fetishism of the wage may well be the source of capitalist ideologies of freedom and equality, but the employment contract is not the founding moment. For capitalism begins not with the offer of work, but with the imperative to earn a living. Dispossession and expropriation, followed by the enforcement of money taxes and rent: such is the idyll of ‘free labour’. In those rare moments of modern emancipation, the freed people—from slavery, serfdom and other forms of coerced labour—have never chosen to be wage labourers. There may be a ‘propensity to truck, barter and exchange one thing for another’, as Adam Smith put it, but there is clearly no propensity to get a job.

Rather than seeing the bread-winning factory worker as the productive base on which a reproductive superstructure is erected, imagine the dispossessed proletarian household as a wageless base of subsistence labour—the ‘women’s work’ of cooking, cleaning and caring—which supports a superstructure of migrant wage seekers who are ambassadors, or perhaps hostages, to the wage economy. These migrations may be short in distance and in interval—the daily streetcars or buses from tenement to factory, apartment block to office, that will come to be called ‘commuting’—or they may be extended to the yearly proletarian globe-hopping of seasonal workers by steamship, railroad and automobile, as well as the radical separation of airborne migration linked by years of remittances and phone calls. Unemployment precedes employment, and the informal economy precedes the formal, both historically and conceptually. We must insist that ‘proletarian’ is not a synonym for ‘wage labourer’ but for dispossession, expropriation and radical dependence on the market. You don’t need a job to be a proletarian: wageless life, not wage labour, is the starting point in understanding the free market. 

The article goes on to catalog the ways this concept of unemployment has evolved--and how the idea of unemployment normalizes employment (and vice versa)--into the present circumstances where the informal sector is growing at a faster pace than the formal.  What this means for our conception of work and labor is unclear but he confirms that, far from being irrelevant, much of this discussion can be found in Marx's own work. 

That globalization produces redundancy would be better understood not through the deceptively concrete image of wasted lives, but through Marx’s two dialectically related concepts: the relative surplus population and the virtual pauper. The one is from Capital; the other from the Grundrisse. In the key chapter on ‘The General Law of Capitalist Accumulation’ in Capital, Marx views the problem from the vantage point of capital: ‘it is capitalist accumulation itself that constantly produces, and produces indeed in direct relation with its own energy and extent, a relatively redundant working population, i.e. a population which is superfluous to capital’s average requirements for its own valorization, and is therefore a surplus population.’ He continues: ‘this is a law of population peculiar to the capitalist mode of production; and in fact every particular historical mode of production has its own special laws of population’. Indeed, ‘the relative surplus population exists in all kinds of forms. Every worker belongs to it during the time when he is only partially employed or wholly unemployed.’ The industrial reserve army is thus merely one of these forms; in fact, as might be expected, Marx’s specific examples of the relative surplus population are the most dated part of his analysis. [24]

The fundamental metaphor in Marx’s account is that of opposing forces: it is not as if there are two kinds of workers, employed and unemployed, or two sectors of the economy, formal and informal; rather, there is a process in which ‘greater attraction of workers by capital is accompanied by their greater repulsion . . . the workers are sometimes repelled, sometimes attracted again in greater masses’. The ‘higher the productivity of labour, the greater is the pressure of the workers on the means of employment, the more precarious therefore becomes the condition for their existence, namely the sale of their own labour-power’. Intriguingly, almost the entire contemporary vocabulary—redundant, superfluous, precarious—can be found in this chapter. [25]

If the passage in Capital tells the story from the point of view of the accumulation of capital, the parallel passage in the Grundrisse begins from the point of view of living labour: ‘It is already contained in the concept of the free labourer, that he is a pauper: a virtual pauper . . . If the capitalist has no use for his surplus labour, then the worker may not perform his necessary labour’. Marx is not arguing that all workers are or will become beggars, as in the immiseration thesis often attributed to him. Rather, this is his account of bare life: since the exchange required for the means of living—the selling of labour-power—is accidental and indifferent to their organic presence, the worker is a virtual pauper. [26] Virtual paupers: this strange figure—which combines an almost lost word with one that has taken on entirely new connotations—will be my temporary resting place. In a letter written as he turned fifty, Marx wrote: ‘half a century on my shoulders and still a pauper’. A century and a half on again, the spectre of wageless life still weighs upon us.