The Value That Isn't Labor

I recently came across this humorous chain status message:

Recently, while I was working in the flower beds in the front yard, my neighbors stopped to chat as they returned home from walking their dog. During our friendly conversation, I asked their little girl what she wanted to be when she grows up. She said she wanted to be President some day. Both of her parents, liberal Democrats, were standing there, so I asked her, "If you were President what would be the first thing you would do?" She replied... "I'd give food and houses to all the homeless people." Her parents beamed with pride! "Wow...what a worthy goal!" I said. "But you don't have to wait until you're President to do that!" I told her. "What do you mean?" she replied. So I told her, "You can come over to my house and mow the lawn, pull weeds, and trim my hedge, and I'll pay you $50. Then you can go over to the grocery store where the homeless guy hangs out and give him the $50 to use toward food and a new house." She thought that over for a few seconds, then she looked me straight in the eye and asked, "Why doesn't the homeless guy come over and do the work, and you can just pay him the $50?" I said, "Welcome to the Republican Party." Her parents aren't speaking to me anymore.

The first thing it demonstrates that anybody will try to turn into a "Republican" or "Democratic" thing. In these suspect economic times, its this type of partisan stupidity that leads to issues such as what I highlighted in my previous post.

The second thing it demonstrates that nobody recognizes the value of labor.

I'm not talking about the labor theory of value that is associated with Marxian economics that states that the value of a commodity or good is related to the amount of labor that was put into it. I'm talking about the concepts explored in this excerpt from Richard Cantillon's An Essay on Economic Theory (which is the Libertarian Economic Church  Mises Institute's English translation of Essay on the Nature of Trade In General and a rant from a Wisconsin farmer. While the former looks into the classical approach of laborer versus laborer and the farmer's rant looks at it from the point of view of how labor has been weakened in modern corporate America, I'm going to approach this from a standpoint that largely combines both ideas.

First thing's first, and while this is a sales and marketing euphemism, its actually true for a whole lot of things beyond it: people only buy when value exceeds price, or in other words, when the buyer can justify spending his or her money on the sellers product. In this case, when someone that is in need of a labor service (the buyer) can justify paying wages to the prospective employee, subcontractor, etc. (the seller). Now that is settled, I'm going to emphasize three things:

Thanks to the shift from finding value in how many units are produced to how much profit is made from each unit produced, its always a race to the bottom line. While others may call this efficiency, this shift that took place starting in the 1970s and accelerating into the 1980s and 1990s is what led us more than anything to the current socioeconomic situation of today. It brought on the globalization and subsequent offshoring phenomena, that while this movement brought new jobs and revitalized economies in developing and emerging countries, it stagnated incomes in the West due to the expanded labor pool. Advances in technology, which brought on automation, allows companies to save money and keep prices low. That's good until you consider the inevitable consequence that the depressed value of labor has led to more people competing for fewer jobs available, depressing wages and payroll size. (Before you whine, I'm well aware that local economic diversity helps alleviate this).

Romanticism heavily distorts reality. Post-war American romanticism created great expectations and as this current economic end game is being played out, it's more or less fucking with people's heads. What led to the massive boom period after World War II? Pent up consumer demand, fueled by post-war euphoria, along with a population spurt with the Baby Boomers, suburbanization, and the industrial Northeast reaching its zenith, it created a perfect storm for growth that lasted relatively until the early 1970s. People romantically remember Ronald Reagan's supply-side economic recovery which provided for a boom period that lasted from the end of 1982 to 1990 -- the truth is that service sector weathered the storm and the real credit goes to the energy prices that managed to stabilize, which helped rebound the manufacturing sector. Greenspan-era loose credit during the 1990s and early 2000s was the biggest catalyst to the boom periods of the Clinton years and the mid Bush years.

Resisting the shift only exacerbates problems. Where the Industrial Revolution's inertia was rooted in forming resistance social changes resulting from urbanization, improvements and new benchmarks in living standards, the newly formed relationship between corporate business structure and the worker that led to an increased awareness in human rights (albeit loosely), as well as the advancing of the relationship between business and government, the Information Revolution's inertia is rooted in popular rejection of the quantitative approach, devoting glorifying or criticizing energies in directions that are pointless, and denial. American economic discussion should be geared towards how to make labor and the worker in general more valuable instead of Americans -- both constituents and politicians -- actively crying and bitching with mercantilism, and attempting to pass it off as capitalism.

So back to the little viral "anecdote":

She can go over there and do all of that yard work -- so as long as the homeowner finds value in her work. When the homeowner no longer finds value in her work (i.e., starts questioning why the fuck she's paying out $50 for yard work), then the prospective laborer is screwed.

The real lesson that should be that whatever you do in regards to labor will only be valuable so as long as the employer sees value in your labor. While there are a lot of things that you yourself can control, there are other factors that can't be controlled. Education is indeed key, especially in today's economy where the tertiary sector reigns king, and the primary (agricultural) and secondary (manufacturing) becomes more automated -- thanks, in part, to the tertiary sector. However, the bottom line is that the root cause of the anemic global economy is the decreased value of labor, which depresses wages and raises unemployment, which cause tax revenues to fall, governments to go broke, and countries to become schizophrenic in policy and culture.