The Right to Labor

Honor laborers by letting them work

On this Labor Day, it’s fitting to appreciate and defend people’s right to engage in labor. That right has been under attack since March as state and local governments have threatened force to stop waiters and waitresses, bartenders, hairdressers, manicurists, gym trainers, and Pilates instructors, to name a few, from practicing their trade.

And it’s not as if the politicians defending those rules think that they themselves should be subject to them. Nancy Pelosi’s only apology for breaking a rule in San Francisco by getting her hair done was for being set up (i.e., caught on camera), not for breaking the rule. Chicago major Lori Lightfoot thought that she should be able to her hair done even though the commoners are not.  The difference, you see, is that she was “in the public eye.” Government workers in San Francisco are allowed to go to government-run gyms while the government keeps private gyms closed.

As I said in a recent talk I gave on Zoom to an audience in Nashville on August 13:

Classical liberals and libertarians have often been charged with not caring about the working class. That charge never stood up to scrutiny. But it is especially clear now that we who advocate the right to make a living are the true defenders of the working class.



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Unemployment Rate Drops to Well Under 10 Percent

In August, the unemployment rate declined by 1.8 percentage points to 8.4 percent, and the number of unemployed persons fell by 2.8 million to 13.6 million. Both measures have declined for 4 consecutive months but are higher than in February, by 4.9 percentage points and 7.8 million, respectively.

This is from the Bureau of Labor Statistics, “Economic News Release,” September 4, 2020.

Another highlight:

The labor force participation rate increased by 0.3 percentage point to 61.7 percent in August but is 1.7 percentage points below its February level. Total employment, as measured by the household survey, rose by 3.8 million in August to 147.3 million. The employment-population ratio rose by 1.4 percentage points to 56.5 percent but is 4.6 percentage points lower than in February.

It’s not all good news:

Employment in government increased by 344,000 in August, accounting for one-fourth of the over-the-month gain in total nonfarm employment. A job gain in federal government (+251,000) reflected the hiring of 238,000 temporary 2020 Census workers. Local government employment rose by 95,000 over the month. Overall, government employment is 831,000 below its February level.

But there’s good news for hapless hospitality workers:

Employment in leisure and hospitality increased by 174,000 in August, with about three-fourths of the gain occurring in food services and drinking places (+134,000). Despite job gains totaling 3.6 million over the last 4 months, employment in food services and drinking places is down by 2.5 million since February.

More details at the link.

I earlier posted about the July numbers and the June numbers.


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Stay Out of Holly Golightly’s Way

I recently re-watched Breakfast at Tiffany’s. It was a particular favorite of mine in college, so I’d seen it many times before. But I had never really noticed how many lessons about economic opportunity there were to find in Holly Golightly’s life experiences.

Trailer screenshot -Public Domain

[Spoiler alert, in case you’ve been busy for the past 60 years.]

In the iconic opening scene of the film, Holly Golightly (played by Audrey Hepburn) is out on an early morning walk, still fully dressed from the night before. She is wearing the outfit that is not only the most memorable of the film, but perhaps of Hepburn’s entire career. Her hair is swept up to show off a multi-strand of pearls and the low-cut back of her black Givenchy dress. With coffee and pastry in hand, she stops for some quality time with the jewelry in the windows of the Tiffany & Co. flagship store.

Some think Holly Golightly was a prostitute, but writer and director Truman Capote says he saw her not as a “callgirl” but as an “American geisha.” She doesn’t have sex for money, as far as we know. She charms. She attends parties, lights up a room, works hard to make people feel good about themselves (and about her). There’s not an invoice for her time but she often gets “fifty dollars for the powder room” from her dates, money to tide her over until she can marry a husband rich enough that she’ll never have to worry about money again. This comes to a head in a tense exchange with the film’s main love interest, the down-on-his-luck writer Paul Varjak, in the New York Public Library. Paul declares his love and Holly responds by telling him about the rich bachelor she has her eye on. When he responds with anger, Holly fires off,

“Holly: What, do you think you own me?

Paul: That’s exactly what I think.

Holly: I know, that’s what they all think. That’s what everybody always thinks, but everybody happens to be wrong!

Paul: Well I am not everybody! … Or am I? Is that what you really think? Am I no different from all your other rats and super-rats? Wait a minute. That’s it. If that’s what you think, if that’s what you really think, there’s something I want to give you.

Holly: What’s that?

Paul: Fifty dollars for the powder room.”


In addition to the disturbing conflation of love with ownership, this scene is where Paul’s disgust for Holly’s willingness to prioritize financial security over romance becomes painfully clear. Economist Victoria Bateman notes the divide between those who make their money with their brains and those who make their money with their bodies, and the particular contempt reserved for women who use their bodies to procure financial gain. Until this moment, Paul is absolutely enchanted with Holly. They have been tearing up New York City, having a fabulous time, staying up late talking, taking care of each other. But once Holly makes it clear that her priorities are different from his, he becomes furious.

I won’t spoil the rest of the film by telling you why Holly makes the choices she does. And it doesn’t really matter anyway. The point is that the world Holly lives in—like it or not—is one in which her choice of how to support herself works. She’s supplying something in demand, and making the most of the opportunities available to her. Life is hard, and people sometimes choose paths that don’t quite gel with other’s sensibilities. Would it be trite of me to point out in 2020 that women who engage in sex work (or even just work with a sexy presentation) have just as much right to freely choose that path as anybody else?

And, for those who are aware of the ways in which women have historically been denied economic opportunity, there’s a sinister side to the Paul Varjaks of the world finding even more ways to shut doors. Of course, Paul is just one person, and a fictional one at that. But to the extent that his attitude gets used to push through legislation that systematically denies women opportunity under the guise of protecting them and their morality, it’s downright dangerous for women and detrimental to economic growth. The economy is constituted of billions of small opportunities pursued daily that, if not interfered with, add up to the mutual satisfaction of wants that keep people fed, healthy, and able to pursue meaningful lives. This is true even when those opportunities are pursued by people whose choices we may not always agree with or understand. We still benefit from their contributions to the market, and learn from watching to see if their actions are getting them somewhere we might like to go, or somewhere we might like to avoid.

It’s easy to see the many analogies that can be drawn between Holly’s experiences and the many other forms of entrepreneurship that are looked down upon by one group or another. And, for those who wish to maximize opportunity and well-being, the response is the same. You don’t have to like what Holly does. Just stay out of her way.



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How Well Does the Becker Discrimination Model Hold Up?

In the vast majority of my blog posts, I’m pretty sure of what I think about whatever issue I’m posting on.

This time, I’m less sure.

The basic Gary Becker model of the economics of discrimination, which he laid out in his 1957 book titled The Economics of Discrimination (which was based on his Ph.D. dissertation at the University of Chicago), is that those firms and employers that discriminate on grounds that have nothing to do with productivity will bear a cost of discriminating. That doesn’t mean that they won’t discriminate; it does mean that they pay a cost for doing so and that the cost might be large. This market incentive not to discriminate limits the amount of discrimination.

Linda Gorman did an excellent job of explaining the Becker model in “Discrimination,” in David R. Henderson, ed., The Concise Encyclopedia of Economics.

I became quite familiar with the Becker model when I used his book as one of the two texts in a half-semester Labor Market Institutions course that I taught at the University of Rochester’s Graduate School of Management (now the Simon School) in 1977.

Becker uses black and white as the major categories in his model. This is quite understandable given the issues of discrimination in the 1950s.

But the model is more general. It shows that anyone who discriminates on any grounds other than productivity will bear a cost of discriminating. Robert P. Murphy, in “The Economics of Discrimination,” Econlib, August 2, 2010, lays out the issue nicely, with examples that have nothing to do with race. (He also handles the issue of what happens when an employer, say a restaurant owner, discriminates in response to customers’ demands for discrimination.)

Here’s what I’m wondering: How well does the Becker model hold up currently in professional sports?

In many sports, especially NBA basketball, the owners are allowing and possibly encouraging players to push political views that a large percent of customers are likely not to appreciate. I’ve watched a few NBA games lately even though my Warriors are not in play, so to speak. The players have slogans on the backs of their uniforms. They get to choose from a wide variety of slogans including my favorites, “Peace” and “Freedom.” So far I haven’t seen anyone with those slogans on their backs, although I’ve watched only segments of 3 or 4 games. The most common seem to be “Black Lives Matter,” “Equality,” “I Can’t Breathe,” and “Vote.” One kind of creepy slogan, which, fortunately, I haven’t seen anyone wear is “Group Economics.”

One obviously can interpret these slogans in various ways. “Black Lives Matter,” for example, could simply mean “black lives matter.” But it could also refer to the organization Black Lives Matter that has a strong social and political agenda. “Equality” could mean equality before the law but it also could mean “let’s take wealthy people’s money and give it to the new politically empowered.” And you can bet that “Vote” doesn’t mean “vote for Donald Trump.”

My guess is that many NBA fans will be turned off by such slogans. Let’s say that 30% of fans are turned off. How will they react? If it’s by turning off the TV (going to games is irrelevant since we can’t do that anyway), the NBA will pay a cost.

How will the NBA react? Will the cost be big enough to cause it to change its behavior?

I don’t know.

Addendum: For my take on how beautifully the market worked to limit discrimination by a white racist owner against black basketball players, see “Donald Sterling and the Economics of Discrimination.”


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Do 10 Economists Constitute a Majority?


Given the massive shrinkage in the number of jobs available during the first months of the pandemic, most economists don’t think that the $600 bonus kept many people from returning to work.

So writes Christian Britschgi in “San Francisco Judge Rules Drivers With Ride-Sharing Companies Are Employees. Uber Warns It’ll Have To Raise Prices By as Much as 111 Percent,” Reason Hit and Run, August 11, 2020.

When I read Britschgi’s statement, I was shocked. Normally, when the government pays millions of people more to stay unemployed than to return to work, most economists would expect a large percentage of those workers not to return to work.

So what is Britschgi’s basis for concluding that most economists don’t think that’s true? It turns out, as the link in the quote above shows, that the reference is to a study done by 10 scholars at Yale. It’s not clear that all of them are economists, because their titles are not given. But let’s assume they are. When there are well over 10,000 economists in the United States, 10 is not a majority.

I’m not commenting on the study itself. I still haven’t read it. I’m simply criticizing Britschgi’s statement, based on the views of 9 economists, about what most economists believe.


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Sweden prediction

Tyler Cowen argues that there is too much moralizing over the Swedish policy on Covid-19. I agree. I’d add that there’s way too much focus on Sweden’s decision not to lockdown, and way too little focus on other aspects of Swedish policy.

But I don’t entirely agree with this:

In the meantime, the Swedish economy has been among the least badly hit in Europe.

That claim is defensible, but perhaps a bit misleading. Right now we simply don’t have enough data to know how Sweden is doing relative to the most comparable countries. The Q2 GDP data is likely to be heavily revised.  So here’s my prediction:  When all the GDP data is in for 2020 (say in February 2021), it will seem like Sweden’s economic performance is fairly typical. A bit better than the Eurozone and a bit worse than the other Nordic countries (Denmark, Norway and Finland.)

Here’s one small piece of evidence in support of my claim:

[Sweden’s] economy has suffered less than the European average in recent months, but at least as much and possibly more than its Nordic neighbours.

PS.  I do believe that Sweden’s decision to avoid a lockdown slightly boosted its GDP, ceteris paribus, but not by a large amount.  And also keep this in mind:

According to the University of Oxford’s government response tracker, countries from France, Austria and Croatia to Norway and Finland now all have fewer restrictions than Sweden.


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More Good News on U.S. Employment

Total nonfarm payroll employment rose by 1.8 million in July, and the unemployment rate fell to 10.2 percent, the U.S. Bureau of Labor Statistics reported today. These improvements in the labor market reflected the continued resumption of economic activity that had been curtailed due to the coronavirus (COVID-19) pandemic and efforts to contain it. In July, notable job gains occurred in leisure and hospitality, government, retail trade, professional and business services, other services, and health care.

This is the opening paragraph of the Bureau of Labor Statistics’ news release today on the jobs numbers for July.

This is not nearly as good as the June numbers, which were very good. Nevertheless, any month in which the number of people employed rises by more than half a percent is a very good month. (Household data show that 142.2 million people were employed in June and that that had risen by 1.35 million in July, an increase of 0.9%.)

Also heartening for hospitality workers, who have taken the brunt of the job losses, is that their employment increased considerably. Here’s the relevant paragraph of the press release:

Employment in leisure and hospitality increased by 592,000, accounting for about one-third of the gain in total nonfarm employment in July. Employment in food services and drinking places rose by 502,000, following gains of 2.9 million in May and June combined. Despite the gains over the last 3 months, employment in food services and drinking places is down by 2.6 million since February. Over the month, employment also rose in amusements, gambling, and recreation (+100,000).

I have pointed out how much better the numbers would be if a bipartisan majority in Congress had not, in March, legislated a $600 per week unemployment benefit on top of normal state benefits. That benefit expired last Friday. If Congress does not renew that benefit, I expect an even bigger increase in August, which would be reported on September 4. I also expect, however, that Congress will renew a modified version of this benefit.


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Firing and the Left

Firing a worker is usually a serious harm.  Sometimes it’s devastating.  But we can still wonder, “Is firing someone morally wrong – and if so, how morally wrong?”

If this puzzles you, ponder this: Ending a romantic relationship, too, is usually a serious harm.  Sometimes that, too, is devastating.  Yet few moderns attach much moral blame to someone who dumps their romantic partner.  Even if you’re married, we rarely claim anything like, “If you break up, your ex-partner will wallow in misery for years, so you have a moral obligation to stay.”  (Close family members might privately maintain otherwise if you have kids together, but even then…)

In my view, firing is morally comparable to ending a romantic relationship.  In the absence of a formal agreement to the contrary, both kinds of relationships are – and should be – “at will.”  Yes, informed observers might have some grounds to morally criticize the termination.  Ultimately, however, close relationships – whether professional or personal – are complicated, riddled with misunderstandings.  Hence, outsiders should not only affirm that people have a right to unilaterally break up; they should practice the virtue of the tolerance by remaining impartial in thought as well as in action.

To repeat, that’s my view.  The normal view, in contrast, is that romantic and professional relationships should be governed by diametrically opposed standards.  In matters of love, the heart wants what the heart wants.  On the job, in contrast, governments should protect workers from employer abuse.  And even if the law says otherwise, firing someone who’s performing their job adequately is morally suspect.

While this “normal view” is now widely-shared, it’s still closely associated with the left.  Back when “freedom of contract” had more appeal, the left strongly argued that employers’ “freedom to fire” was tantamount to “the freedom to oppress workers.”  Back in high school, my social science teachers often philosophized, “Sure, physical coercion is bad; but so is economic coercion.  If your employer can fire you whenever he likes, you’re not free.”  This outlook naturally inspired the left to advocate a wide range of employment regulations, especially anti-firing rules.  While most non-leftists also favor such regulation, the left has long been more intense about it.  Their attitude is more radical – and so are the regulations they seek.

Which makes sense.  If you earnestly believe that firing a worker is a kind of economic violence, you’re going to firmly support stringent legal scrutiny of this violence.

From this perspective, the rise of “cancel culture” is deeply surprising.  Over the last decade, many leftists have not just moderated their former stance against firing.  They have become enthusiastic advocates of firing people they dislike.  “He’s performing his job adequately, so you have no right to fire him” has strangely morphed into a right-wing view.  If you don’t believe me, just start making insensitive remarks about race, gender, and sexuality on social media and see how your career goes.  “I was perfectly civil at work; I only offended on my own time” is now a frail defense.  Even if your boss and co-workers adore you, plenty left-wing activists will still pressure them to sack you.

Again, I have no principled objection to firing workers for their political views.  Indeed, I’ve long defended the blacklist of Hollywood’s Communists; while I tolerate a wide range of opinion, totalitarians are beyond the pale.  While we have no right to jail them, they don’t belong in polite society.  But if, like most people, you embrace the view that firing a worker is “economic coercion,” the left’s newfound love of firing their enemies should disturb you.  Consider: Their revised stance amounts to something like, “Firing a worker who’s performing his job adequately is a form of violence.  And if anyone crosses us, we advocate – nay, demand! – that this violence be done.”

To be fair, many leftists have yet to revise their stance.  Perhaps because they’re afraid of experiencing economic violence at the hands of the many other leftists who have.


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The Mob Lost and the System Won


On June 12, I posted briefly about the efforts of Justin Wolfers and other economists to get Harald Uhlig fired from his position as editor of the Journal of Political Economy.

Here’s what I wrote:

I don’t know if he should be fired. I don’t know enough about how good an editor he is, which, in my view, is the only thing that should matter. Justin hasn’t made a case that he’s a bad editor. Rather, Justin doesn’t like what the editor, Harald Uhlig, said about Black Lives Matter(ing).

That same day the University of Chicago placed Uhlig on leave as editor of the journal while it investigated the case. On June 22, the University announced that it had “completed a review of claims that a faculty member engaged in discriminatory conduct on the basis of race in a University classroom.  The review concluded that at this time there is not a basis for a further investigation or disciplinary proceeding.” It presumably investigated the more serious charge made  by a former student that Uhlig had engaged in inappropriate behavior in a class the student attended. The student, Bocar A. Ba, tweeted:

I sat in your class in Winter 2014: (1) You talked about scheduling a class on MLK Day (2) You made fun of Dr. King and people honoring him (3) You sarcastically asked me in front of everyone whether I was offended Here is the receipt.

That was presumably what the University investigated.

I wrote Dr. Ba on June 13 to find out more about his allegation. He did not reply.

On June 23, Alice Yin, a reporter with the Chicago Tribune, wrote a news story about the investigation’s outcome. She writes:

Ba, who previously told the Tribune he wants to focus on his work, declined an interview, as did other academics who tweeted that they witnessed the apparent incident.

So this time the mob lost and the system won. By “system won,” I mean that the University seems to have investigated the serious charge and ignored the tweets that led to the original upset of Justin Wolfers and others, and, presumably finding not a clearcut case against Professor Uhlig, returned him to his job as editor.

I emphasize that I hold no brief for Professor Uhlig. I don’t know him and I don’t even know if I would like him if I did know him. I probably would because I like most people. But that’s not the point. People should not be axed from such jobs without good reasons for doing so. Highly inappropriate comments in class might be such a reason; sarcastic tweets are not.


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The Fantastic Unemployment Numbers!


Possibly because of the long weekend and possibly because the unemployment numbers don’t make Donald Trump look bad, there hasn’t been as much commentary as I had expected on the June unemployment numbers.

Here’s mine: They are fantastic!

Here’s the BLS release.

Now for some highlights.

Nonfarm payroll employment rose by 4.8 million in June. I’m not sure  but I’m pretty sure that this is a record increase. The previous, month, May, it was a whopping 2.5 million. So June’s number is almost double May’s increase.

The unemployment rate fell from 13.3 percent in May to 11.1 percent in June, a drop of 2.2 percentage points.

The number of people unemployed fell by a whopping 3.2 million. I think that’s a record drop also.

The labor force participation rate rose by 0.7 percentage point.

The employment to population ratio rose by 1.8 percentage points.

In thinking that the major recovery would not start until the added $600 per week federal unemployment ended (it ends at the end of July), I was too pessimistic.

I do think, though, that if Congress had not passed that benefit in March and had Donald Trump not signed the legislation, the unemployment rate today would be in high single digits, not low double digits.


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