Abstract
From 1970 to 2010, public investment in the US economy outweighed the private variety by about 1.8 to 1. A stand-alone, self-generating “private-sector economy” is an ideological construct, not an analytical one. Most of this investment went to create, alter, and maintain a modern labor force. This reflects the world-historic shift in the late nineteenth century in Europe, North America, and Japan as the “spontaneous” generation of their labor forces gave way to producing and shaping them via massive, public investment in, especially, education and training. Bizarrely, modern Economics “science” conceives of the labor force as an “unproduced input” into the economy—a free gift of nature! Supporting data tables are appended at the end of the chapter.
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Notes
- 1.
See the data tables I’ve placed at the end of the chapter.
- 2.
Again, for all figures cited here, consult the tables at the end of the chapter.
- 3.
That “special bonus” was the famous “$5-a-day” wage, received only by workers who subjected themselves to the Sociological Department and who met especially heavy output targets. See Lacey (1986: 125 ff).
- 4.
See Buder (1967) and its bibliography.
- 5.
See the groundbreaking Beckert (2015).
- 6.
I should add here that I have not done the needed historical study, but a plausible hypothesis would be that government investment began to creep up on the private variety as elementary schooling became the universal norm in Europe, Japan, and North America, and began to exceed private with the expansion of secondary education into the norm, in the 1920s in the USA, and post-1945 in Europe and Japan.
- 7.
Becker (1975) calculates in “years of schooling”, not “dollars advanced”, but the field has not stood still since then.
- 8.
Historical Statistics of the USA. Series D, Nos. 1, 3, 4. I first heard this analysis many, many years ago in a private talk given by the New Deal economist Leon Keyserling.
- 9.
Greider (1987), though dated, is still the best discussion of why and who “cooled” the US economy in the 1970s and of why this “cool war” against working people continues.
- 10.
In one of the most important theoretical works in contemporary Economics, Kenneth Arrow and Frank Hahn discuss some of the methodological difficulties in constructing a model of a productive economy. They go on to argue that there is “…at least one non-produced input that is needed directly or indirectly, for all production; labor provides an obvious example” (Arrow and Hahn 1971: 64). Curiously, the childhood of this now dominant view almost precisely overlaps the historic changeover from a spontaneously emerging to a socially fabricated labor force.
- 11.
I’ve included only federal assistance to states and localities under Unemployment Insurance expenditures: the rest of the unemployment benefit to individuals is paid for directly out of payroll taxes.
- 12.
A recent academic study argues that government, through these programs, subsidizes the wage-bill of the low-wage industries by about $150 billion per year (Cohen 2015a).
- 13.
In many parts of the USA, the electrical systems are owned and operated by local or state authorities. This is a legacy of the New Deal’s Rural Electrical Administration . Private industry wouldn’t take on the higher infrastructure costs for rural areas with, by definition, fewer paying customers. The rural cooperative movement, unsung as it is, also plays a part in many state and local economies.
- 14.
Hilbert and Ackermann 1950 (1938, 1928).
- 15.
See, for example, Kocieniewski (2013).
- 16.
Again I recommend Greider (1987).
- 17.
See Weisman (2014) from which I took the cited figures.
- 18.
See the very brief but comprehensive Rogoff (2015).
- 19.
As the Fed was simultaneously doing at the Discount Window.
- 20.
See Senator Elizabeth Warren’ s op-ed in the February, 2016 Boston Globe (Warren 2016).
- 21.
See the very interesting analysis of this in White (2011).
- 22.
See the data tables at the end of the chapter.
- 23.
Earlier, in 1950, the Corporate Income Tax provided 25.4% of federal receipts.
- 24.
In 1950, payroll taxes bore only 4.3% of the burden.
- 25.
Cohen (2015b).
- 26.
As a case in point, see the report in The NY Times about an extraordinarily tepid discussion between liberal and conservative economists about how, cooperatively, to fix the poverty problem (Porter 2016).
- 27.
The rebirth of “sweat-shops” within the USA is chronicled and analyzed in Ross (2009).
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McDermott, J.F.M. (2017). We Invest More than They. In: Employers’ Economics versus Employees’ Economy. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-50149-9_1
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