A place for new ideas to settle.

10 September 2013

The human rights of economics

In a previous post I outlined an economic definition of human rights and used that to briefly analyze the current struggle between social conservatives and the LGBT community. Now I want to flip the script and examine the moral choices around society's bottom rungs.

I.

Internet-famous hacker-pioneer and noƶsphere-homesteader Eric S. Raymond (esr) has a lot to say about politics in meatspace as well. I recommend his blog for a bit of quirky, right-leaning-but-still-thoughtful posts. (There's a recent one about trans* people that really kicked my cognitive dissonance into high gear for a bit; I think I've since resolved the issue in a trans-friendly way, but that one's definitely a thought-starter.)

On the subject of a recent strike among fast-food workers to protest (what they see as) too-low wages, esr had this to say:
[M]inimum wages kill jobs. In the U.S., the magic threshold is abour [sic] $14.50 an hour – if an employee can’t generate that much gain, the job either won’t exist at all or will only exist illegally off the books where taxes and regulation can’t more than double its cost.

But if you’re illiterate, unskilled, or just young, you may not be able to net $14.50 per hour for an employer. In that case you get the shaft. You might be willing to work for less, but the system will “protect” you by keeping you unemployed and desperate.
In other words, the deadweight loss argument against price floors: specifically, the price floor on labor called minimum wage. Economic theory predicts that setting a minimum price for some good will result in a surplus of supply (since some buyers won't be able or willing to pay the minimum price). Slot in labor and you get a surplus of labor—also known as "the unemployed." Empirical studies show a decidedly mixed bag, though, if Wikipedia's summary is to be believed.

II.

On the other hand, the decidedly left-leaning-and-snarky-as-hell Ed, proprietor of Gin & Tacos, pointed out the ideological biases behind a particularly viral article reporting on the strike:
This. This is biased journalism. This is cherry-picking a quote out of the sea of possible interviewees and quotes to make an ideological point. As a journalist, you don't go into a laundry list of what someone spends their monthly paychecks on unless you're grinding an ideological ax. You don't accidentally choose a subject for your story that fits the prejudices and caricatures in the minds of newspapers' target demographic (white people with disposable income) so cleanly. The story may be about the fast food strike, ostensibly, but 90% of readers are going to take exactly one thing away from this story: Here we go again, more black inner city single moms looking for more handouts to support their Cadillac lifestyles.
It's not hard to read a news item and tell that the writer has gone on a fishing expedition to find the most outlandish, stereotype-reinforcing quote to portray a group of people in the most negative, unsympathetic light. This story is written to produce the sound of screeching tires in the reader's mind as soon as the words "cable TV" appear, and everyone's too busy pontificating on their own industriousness or taking the White Man's Burden view of Those People (If only we could teach them our middle class values!) to think at all about media bias let alone connect the dots to this story.
The article in question is here. It really does seem like classic anti-poor bias, though even biased reporting couldn't avoid this gem of a quote:
Her schedule varies, but she never gets close to 40 hours a week. "Forty? Never. They refuse to let you get to that (many) hours."

III.

Both Ed and Eric are right, though in different ways. Franchises aren't making buckets of cash; it's sort of like a feudal system where the king (McDonald's Corp.) gets most of the wealth while local lords just make the peasants till the fields. But it's also clear that employees like Shaniqua want to work. They want to avoid the mental tax imposed by poverty or underemployment (or outright joblessness):
Lacking money or time can lead one to make poorer decisions, possibly because poverty imposes a cognitive load that saps attention and reduces effort. Mani et al. (p. 976; see the Perspective by Vohs) gathered evidence from shoppers in a New Jersey mall and from farmers in Tamil Nadu, India. They found that considering a projected financial decision, such as how to pay for a car repair, affects people's performance on unrelated spatial and reasoning tasks. Lower-income individuals performed poorly if the repairs were expensive but did fine if the cost was low, whereas higher-income individuals performed well in both conditions, as if the projected financial burden imposed no cognitive pressure. Similarly, the sugarcane farmers from Tamil Nadu performed these tasks better after harvest than before.
(Note that Mani et al controlled for WEIRD-bias with that parallel study of Tamil Nadu farmers.)

This matches my (certainly not unique) intuition that financial security represents huge peace of mind. Moreover, financial security is an absolutely essential component of employer-employee relations. If I hate my job, but the choices are "quit and make $0 for an uncertain interval of time," and "stay on, hate it, but make some money"... with no financial backup... that's a choice between negative cash flow and break-even cash flow! No choice at all in practice, and it only increases the power differential between bosses and workers.

IV.

Ed makes a great point about the media feeding into stereotyped notions about poor people: as non-white minorities living off taxpayer-funded largesse. Statistically wrong though this might be, it's not doing actual poor people any favors. The stereotype is pretty pernicious, too. Take this suite of stories about "micro-housing" developments in Seattle:

KIRO7 - Neighborhood outrage: Where one house stands, 27 units are planned
Some complained [to the Ballard Design and Review Board] about the rooftop decks included in the design: "Are we going to be listening to music and parties five months out of the year?" Others dread the shadow the building would cast: "It's going to block my sunshine, affect the beauty in my life, my garden." And almost all complained that the influx of neighbors, and their cars, would make their houses no longer feel like home: "You're destroying our lives, and I hate it."
KING5 - Some Ballard residents not happy about new 'apodment' building
"We just want to know why the mayor and planning committee think our block needs more density, we are already like townhouse row," said Linda Melvin.

Some residents say the parking situation is bad enough already, and that adding more density will only make it worse.
They're clutching so many pearls it's like an oyster festival. And these units are only cheap by middle-class standards: $500-$600 per month for a single bedroom is still a hefty chunk of a minimum-wage take, even with Washington's high one ($9ish per hour). Of course, the specific complaints—"music and parties five months out of the year," or "sketchy people" in one newspaper article—are about the expected demographics of these "aPodments," namely, my generation, the Millennials. And we've already heard enough griping from bitter Boomers to last for another generation at least. An article at Mediaite points out the real problem—it's not about young people, it's about the economy, stupid:
Why, then, the need to believe that this generation is different from all that came before? It likely has to do with the statistics that truly reveal the difference between a twenty-three year old now and a generation ago: employment. Someone graduating college now faces much grimmer economic prospects than they would have in the 1970s and 1980s. There are fewer jobs, and those who are lucky enough to get them will earn less than they would have forty years ago, and do so while working fewer hours. While earning less, they’ll make do with fewer of the benefits, such as health care and retirement, that locked previous generations into the middle class. Many employment opportunities, even for graduates, are unpaid or low-paying internships that restrict future employment to the privileged by denying immediate renumeration, while student debt is a significantly higher burden than it was a generation ago. Worst of all, the setbacks of the initial decade of work curtail your progress forever after.
No wonder some of us have different priorities than sluicing our way down the career-suburbia-family-retirement-pension-Floria pipeline. The article goes on to say that there's a shift towards other forms of compensation that don't involve cash. Volunteer work, for example, pays out in social capital or a nice dose of feel-good self-empowerment. Millennials are also bucking the get-thee-to-suburbia trend, preferring apartments and downtown living instead, like those dirty European socialists. I wouldn't mind avoiding homeownership myself, and downtowns are cool, especially when populated with many food trucks.

But even extrapolating from the college culture and demographics here at Western Washington, I'm invariably drawing from a mostly-white, mostly-upper-middle-class population. We can at least afford housing, even if the job market is subpar. If that's not an option, well, homelessness destroys job prospects as well as charity prospects. No permanent address? No food bank. No bank bank. No job. A death spiral highly resistant to bootstrapping, unless you get really lucky.

V.

So back to these micro-housing developments. Some of these arguments are classic NIMBY, but others are a bit more subtle.

In an excerpt from his new book posted at Slate.com, Alan Durning explains the various shifting attitudes that closed off the bottom end of the housing market from the turn of the 20th century to about 1980:
The rules were not accidents. Real-estate owners eager to minimize risk and maximize property values worked to keep housing for poor people away from their investments. Sometimes they worked hand-in-glove with well-meaning reformers who were intent on ensuring decent housing for
all. Decent housing, in practice, meant housing that not only provided physical safety and hygiene but also approximated what middle-class families expected.
One of the main complaints against single-room occupancy buildings (like these "apodments," or even lower-priced arrangements like flophouses) was that they were unsafe. Fire hazards, and so on. This is still a common concern, but rather than banning such places, cities could demand fire escapes and fireproof walls. After all, we have dormitories at every college and they're basically SROs themselves, yet we don't ban dormitories because students (mostly children of upper-middle class families, even at state schools) need places to stay, of course. And having stayed in several styles of dorm during my few years in university housing, I can say that it's not bad. I like having a room of my own, but everything else can work. Durning goes on to elucidate some rather more unsavory reasons for zoning out the SROs:
Zoning gave city leaders a whole new weapon for separating the laboring class from the “better classes.” After a U.S. Supreme Court ruling in 1926 recognized states’ power to authorize local land-use planning, city planners quickly trapped residential hotels in the oldest parts of town—the parts built before zoning separated shops, restaurants, and bars from dwellings.
The more I learn about the history of land-use policy in America, the less it seems like any of it wasn't driven, implicitly, or explicitly, by a sense of elitism. And this motivation seems quite strong even today. Take these editorials and testimonials from opponents to "apodments" in Seattle and the surrounding communities. From the Seattle Times:
[The Seattle building code] counts kitchens, not beds, as housing units, and aPodment buildings usually have one kitchen for every eight units.

Buildings with fewer than nine kitchens aren’t subject to the same official review as traditional apartment buildings. That effectively allows aPodments to dodge design and environmental scrutiny.

[...]

It’s worth remembering that the SROs of yore aged into poorly maintained fire traps. Today’s developers should heed history. Build, and maintain, for the future, not just the present.
From the Everett Herald:
Don't let special interest developers and builders ruin our unique historic town by trying to rezone it and make it like every other cookie-cutter community in the area. Make your voice heard to the Snohomish City Council and stop this notion that we have to be all things to all people. Many hours were spent creating the guidelines already in place for our city's growth and development, and our Historical Society has worked tirelessly to preserve the ambience of old Snohomish. So far, both are working fine. We are not in competition to see how many people we can squeeze into a city block. There is no shame in loving what you know is a very special place to live. Let's hope our civic leaders have the intestinal fortitude to say "no" to rezoning and "no" to high-density development.
 From the Snohomish County Tribune:
“I see Snohomish as more of a village than a city,” [activist Beth Jarvis] told the Tribune earlier this month.

Jarvis is very protective of Snohomish’s historic character, and by organizing her neighborhood chat routine, she and her like-minded peers have gotten together to safeguard the city’s charm against what they call “experimental” development.

“We can’t have these big city ideas with no infrastructure in place,” she said.
To be fair to all the dissenters, it's reasonable to be wary of unchecked growth. That can certainly lead to pollution, crime, and squalor. But a lot of the talk is about "ambience" and "character" and basically whinging about a city growing up. It's remarkable that, done properly, more density should translate into more community—again, dorm culture can be a prime positive example—but "small town" to me translates into "I don't want to deal with too many neighbors, and only ones that I like." Small town life is only good to those with social capital. It's all very elitist, and ironically will in all probability lead to more "cookie-cutter" suburban housing developments in the future.

VI.

You might expect that, as with all bureaucracy, there are few hard and fast rules. And sure enough, there are exceptions. (The apodments in Seattle were made possible by a loophole in the building code, much to the chagrin of the neighbors.) However, these exceptions, in typical fashion, favor the privileged and propertied, not the poor. For example, Durning cites rules in the city of Burnaby, BC, where a residence may hold at most five unrelated people, but an unlimited number of domestic servants. That doesn't do much to provide affordable housing to anyone, but it does come in handy when a rich guy needs a butler and a maid or two and a cook and a...

(Incidentally, you see this in the land-use exceptions for churches, as well. The Federal tax code allows for a "parsonage exemption," which in the age of televangelism and megachurches it translates to huge taxpayer largesse funding McMansions for the already well-to-do McMinisters. See this op-ed by the Freedom From Religion Foundation, and also Attack of the Theocrats by Sean Faircloth.)

VII.

So at the bottom rungs of society you have twin forces squeezing out the bottom end of the market. With housing you have a strange coalition of "not-in-my-backyard" elitism and well-meaning "everyone should live better" activism. It all smells strongly of privilege—again, a good time to apply that term! I said before that activism should be about giving human stories happy endings, and it seems to me that housing rules are far away from that norm. And the NIMBY arguments in particular seem quite circular: we don't want "sketchy" people, so we shouldn't build microhousing, because "sketchy" people live in microhousing. That not only ignores the real problems (low income, abnormal psychology, or substance abuse), but it sets the lowest bar at the privileged expectation of middle-class activists, for good or ill.

Compare this to the strange coalition of well-meaning temperance movements, religious extremists, and the Ku Klux Klan, all dedicated (for one reason or another) to enacting Prohibition. Similarly the current War on Drugs. And these aren't even very foundational to the hierarchy of needs!

But it also reduces, in my mind, to a skewed perspective. Elites tend to think that they're cut from a different cloth. (Really, everyone does this, but it's easier when there aren't so many people above you.) Something is really "lesser" about the lower classes; they're not as good as we are, in some essential way. This is the old mode of thinking, as old as human society. That tribe doesn't worship our gods, while we prosper; they must not be favored. That group doesn't seem to have achieved our level of civilization; it must be the climate, or their genetics. That group is on a lower rung of our society's economic ladder; it must be their genetics.

Because we're better than they are, they can't be trusted to care for themselves; they need guidance, or they'll go mad.

This leads to an "elite panic" in times of crisis. The elites don't trust the public, the great unwashed. Like the Roman aristocrats of old, they see themselves as the only bulwark standing between Civilization and The Mob. So when disaster strikes, they fear the worst:
When [Hurricane Katrina] hit New Orleans, there were rumors that dozens of dead bodies were stacked in the convention center where refugees had taken shelter, that men were firing weapons at the helicopters coming to rescue them, that roving bands of rapists were assaulting people willy-nilly, that survivors of the storm had turned to cannibalism.
Easily disconfirmed, if one only bothered to get reports from the ground. In fact, things are often the exact opposite. Communities come together in times of great hardship. They really don't tear themselves apart... except maybe in times of chronic mismanagement. You see fears of the elite translate into ostensibly benevolent rulemongering, that often ruins a perfectly good arrangement:
[After the 1908 earthquake,] San Franciscans formed these community street kitchens...At a certain point, authorities decided that these kitchens would encourage freeloading and became obsessed with the fear that people would double dip. So they set up this kind of ration system and turned a horizontal model of mutual aid—where I’m helping you but you’re helping me—into a vertical model of charity where I have and you lack and I am giving to you.
(Emphasis mine.)

I'm beginning to see how libertarian claims regarding private charity could be justified, though in American politics these arguments have a decidedly right-leaning posture.

VIII.

Two pinched-off bottoms. Two problems for the poor. Durning suggests a quintessentially libertarian solution (cutting away at needless and destructive housing laws) that would reap social and environmental benefits. I'm quite receptive to the idea; now what about the minimum wage?

Besides the labor surplus of unemployment that may or may not result from a minimum wage, there's a problem of information asymmetry. If the wage for a job is set to (e.g.) $9.19/hr., as is the minimum in Washington state, but the value added by that job is only (e.g.) $3/hr., that's not known to the worker. How much is burger-flipping at McDonald's really worth, absent price controls? We just don't know. It would be really interesting, if we abolished the minimum wage, to see what sort of effect social pressure had in maintaining lower limits on wages. Surely not very many people are willing to work a $3/hr. job.

And certainly no one can live on a $3/hr. job, not in America. So what to do? Well, I'm for a guaranteed basic income: cut everyone a check. It's like Social Security, except not just for old people. Unlike a minimum wage or other labor-dependent welfare schemes, it provides a true unemployment safety net—more freedom to quit a crappy job, even if you have to live bare-bones for a while. It also allows employers to offer enticements besides money:
In a GBI world, an employer has to make work somehow appealing enough to get employees even though everyone's guaranteed a basic minimum whether they work or not. But that "appealing" factor could be high wages, could be valuable skills and training, could just be a pleasant work atmosphere, or could be some combination of the three.
The kind of thing, in other words, that Millennials are already starting to shift their preferences towards, in the absence of spectacular expected future income. And Martin Luther King, Jr. endorsed it, so it has some social-justice cachet. In the real world, even limited welfare schemes have certain flaming ideological hoops to jump through. The malingering specter of the welfare queen haunts every politician. Recall the Florida program to drug-test everyone on the dole. Something like 0.2% of them tested positive for anything, and the program was a dismal waste of taxpayer money. Again and again, the elites panic.

And the poor still suffer.