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An economist would say that almost any time a market leads to an unfair allocation of wealth or income, there is a reasonable solution that involves a transfer
by smallnamespace 10y ago
An economist would say that almost any time a market leads to an unfair allocation of wealth or income, there is a reasonable solution that involves a transfer of wealth from one party to another, rather than adopting a non-market solution.
The most galling thing about this is that there is a reasonable compromise here, which is that you let the market decide things properly then you fairly pay off the people who were negatively affected, by intensive job training, relocation, early retirements + pensions, etc. For example compared to Germany, the job training in the US is a complete joke.
But American (and especially Republican) ideology of the rugged frontier individualist would never allow the blow to the psyche that would come from officially being on the 'government dole' or admitting needing help from anyone else.
Hence we have all these disguised welfare schemes (defense contractor jobs are another example) that are economically inefficient and environmentally damaging, mostly for reasons of personal and regional pride.
- greglindahl 10y agoThe US actually has a special jobs program aimed at workers whose jobs are cut based on overseas competition. While a good idea, it isn't very successful.
- smallnamespace 10y agoYeah, because it's completely underfunded. In terms of % of GDP spent on public spending on the labor market, US ranks near the bottom. When you look at spending on job training directly, US spends 0.03% of GDP, while Germany spends seven times as much as a fraction of GDP [1]. [1] https://data.oecd.org/chart/4IID https://data.oecd.org/chart/4IID
- hueving 10y agoFraction of gdp isn't a good metric because the US has a large GDP. It's like implying that a billionaire hasn't spent much on housing because they only bought a 100 million dollar house. A better comparison would dollars per unemployed person.
- smallnamespace 10y agoIsn't it the other way around? Looking at fraction of GDP controls for size of the country, since large countries have more unemployed people because unemployment rates don't differ by orders of magnitude. The unemployment rate in the US and Germany are very similar (4-5%), so Germany spends 7 times as much training per unemployed person.
- hueving 10y agoNo, the problem with percent of gdp is that it doesn't account for gdp per capita differences.
- smallnamespace 10y agoBut all the countries we're comparing to are developed economies with similar GDP per capita.
- nerfhammer 10y agoSpeaking as someone with an economics degree, I do not believe economics defines "fair" allocations of wealth / income. Market failures or inefficiencies, the impact of taxes and subsidies, positive/negative externalities are things. Job training may have enough positive externalities such that it would be efficient to subsidize it, but not because of a concept of fairness to someone. Economic actors should be rational enough to seek it out themselves if it maximizes their net benefit.
- smallnamespace 10y ago> I do not believe economics defines "fair" allocations of wealth / income. Indeed, however economics does allow you to input your own definition of what 'fair' is, and it makes suggestions on how to fulfill that definition in the most efficient way.