The internal contradictions of progressivism
The Financial Times has a very good article that exposes some of the internal contradictions of progressive economic policy:
A shortage of construction workers is putting at risk the Biden administration’s ambitious plan to fuel a historic building boom in the US, according to industry executives.
The construction sector could be short as many as half a million workers this year, according to the Associated Builders and Contractors, an industry group, increasing project costs and delaying a building campaign that executives say is comparable to that of the second world war.
For much of the past 15 years, we’ve been assured that the economy was full of unutilized resources and “unmet needs”. Classical economics (with its emphasis on production constraints and opportunity costs) was out of fashion. We had multi-trillion dollar stimuli (even under GOP presidents) and Congress recently enacted several enormous programs to create infrastructure, clean energy, and chip making.
Even without these vast new programs, the economy is currently experiencing a labor shortage due to excess monetary stimulus. This situation is quite different from the WWII arms build-up, which began (in the spring of 1940) at a time when unemployment was relatively high. We don’t have enough skilled labor:
In Columbus, Ohio, Intel has pledged $20bn to build two semiconductor factories, and Honda is building a $4.4bn battery plant with LG Energy Solution. The projects will require nearly 10,000 construction workers.
“The entire state of Ohio does not have the number of professionals to perform this alone,” said Catherine Hunt Ryan, manufacturing and technology president of Bechtel, one of the companies building Intel’s factories.
Costs are being pushed up even further by some of the regulatory provisions that require “prevailing wages” (code word for union workers) in the new projects:
“The administration is effectively tying one hand behind one’s back because of the regulatory restrictions on who can engage productively in these construction projects,” Basu said.
So why not import the needed workers? Apparently, that’s also off limits:
To meet labour demand, construction bosses are pushing for immigration reform, an issue unlikely to gain traction in a divided Washington.
. . . One problem, according to Brian Turmail, a spokesperson for the AGC, is a contradictory attitude towards building jobs in the US.
“We just don’t want our own children to work in construction and we don’t want anyone from outside of the country to work in construction.”
Progressive economics is full of internal contradictions. In its crudest form (e.g. Bidenomics), it’s little more than a wish list. Wouldn’t it be nice if we had plenty of jobs and high living standards (consumption) and high investment and high wages and a clean environment and the re-shoring of chip making.
The problem is that one cannot have all those things at once. Choices must be made. Something has to give.
On economics, President Biden has the instincts of FDR, but he’s presiding over an environment that is very different from the 1930s. After taking office, Bill Clinton figured this out—let’s hope that Biden is equally adept at learning.
Feb 21 2023 at 12:15am
Can we expect anything other than pro-union positions given the electoral college map, and how close votes have been in states such as Michigan in recent elections?
Feb 21 2023 at 8:30am
“let’s hope that Biden is equally adept at learning.” You know the person Joe Biden is definitely not adept at learning. So I will assume you mean his administration. Are they adept at learning? I do not know——but it’s hard to do anything when the leader is clueless. Can’t wait till ‘24. No really——but hypothetically. Frankly I wish it was ‘64.
Feb 21 2023 at 10:16am
What exactly did Bill Clinton figure out? His administration pushed deregulation that led to the financial crisis in the next administration. He passed a crime bill that mass incarceration.
His economic policies encouraged concentration in several key industrial and financial sector. He gutted the Justice Department’s anti-trust division and approved the Citi-Corp? Traveler meager that was an obvious mistake from the get go. His policies increased inequality while encouraging speculative capital to ever more risky investment strategies. A real paragon of responsible leadership.
Feb 21 2023 at 5:42pm
“His administration pushed deregulation that led to the financial crisis”
Which deregulatory move led to the financial crisis? I thought the problem was that FDIC encouraged small banks to make lots of reckless commercial loans. That was possible even before Clinton took office.
Feb 22 2023 at 5:04pm
“Which deregulatory move led to the financial crisis? ”
National Homeownership Strategy in 1994, and a stated policy to drive homeownership to record-high levels over the next 6 years.
Repeal of Glass Stegall. In 1999 Clinton claimed the law was “no longer appropriate.” It probably didn’t help that Clinton chose Robert Rubin and Larry Summers as Treasury Secretaries. In 2010 Clinton admitted that Rubin’s advice to deregulate derivatives was wrong. Summers had agreed with Rubin.
Feb 22 2023 at 5:13pm
That doesn’t sound like a deregulatory move but rather a regulatory move.
Glass Stegall, despite the popular claims, had nothing to do with the financial crisis.
Feb 22 2023 at 5:34pm
You’re right. The National Homeownership Strategy was not deregulation, but it tells you what Clinton wanted.
Glass Steagall had NOTHING to do with the GFC? That’s quite a claim. Many disagree, including Paul Volcker. We can link to articles on both sides. If nothing else, it contributed to too-big-to-fail and moral hazard.
Feb 22 2023 at 5:44pm
Not really. Most economists agree with it. Politicians dislike the claim. And more and more evidence is coming out that the problems were not of runaway banks (see, for example, Kevin Erdmann’s book Shut Out).
Nope. TBTF was, again, a regulatory decision, not an actual concept. And it certainly did not contribute to moral hazard (at least as that term is commonly defined).
Feb 22 2023 at 6:02pm
I agree that Glass Steagall was not a major cause of the GFC. That doesn’t mean it didn’t contribute to the GFC or that the law should have been repealed.
TBTF certainly does contribute to moral hazard. Why would you say otherwise?
Feb 22 2023 at 9:10pm
Because it’s not as one commonly understands the term. Plus, it’s impossible it contributed to the financial crisis given that designation occured after.
Feb 22 2023 at 6:59pm
“National Homeownership Strategy in 1994, and a stated policy to drive homeownership to record-high levels over the next 6 years.”
And Glass-Steagall repeal had nothing to do with the crisis.
(I see Jon already made these points. He’s right.)
Feb 22 2023 at 8:09pm
Please refer to my acknowledgment: The National Homeownership Strategy was not deregulation, but it tells you what Clinton wanted.
“And Glass-Steagall repeal had nothing to do with the crisis.”
As I said, Volcker and others disagree.
Back to what began this thread: “After taking office, Bill Clinton figured this out.”
Again: In 2010 Clinton admitted that Rubin’s advice to deregulate derivatives was wrong.
Feb 21 2023 at 10:34am
Ohio can’t spare 1/1200 of its people for the additional construction jobs?
Feb 21 2023 at 5:44pm
How many of those:
Are currently sitting at home unemployed during an all time strong job market.
Have the skills required to build chip making factories.
Feb 21 2023 at 5:53pm
Doesn’t really matter does it? Ohio will pull the workers with the correct skills from all over the US. I’d wager very few of those coming over the southern border have the required skills either.
Feb 22 2023 at 11:09am
It sure does matter. The questions do not change: how many construction workers in the US are just sitting around waiting for work?
Depending on the terms, I’d take that wager.
Feb 22 2023 at 10:44am
Not following this.
Yes, Progressivism/Joe Biden pursues multiple objectives. Yes, those objectives conflict at the margin. Can you name any person/philosophy that DOESN’T have this dynamic?
Yes, there is a “labor shortage” as evidenced by the non-zero market price for labor. As demand increases, the price of labor increases. Has this dynamic ever NOT been true?
Yes, the current administration limits immigration, and that affects the labor supply. I’m sure that there was a time when this was not true, but it was well before my lifetime.
Yup. That’s what the labor market is for—and has always been for.
I agree that FDR’s stimulus policies made more sense in the context of the Great Depression/WWII than Biden’s make today. So, sure, we might regard the administration’s policies as unwise, leading to outcomes that you or I might regard as inefficient–but again, that’s hardly a unique feature of Progressivism.
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