by Umair Haque

In lieu of a catchy opening line, a hammer-blow of a chart. The median duration of unemployment is, today, more than double what’s it been at any point in the last half-century, at 6 months and counting. It’s what you might call the dwindling of the American Dream.

Reviving the ghost of the great John Maynard Keynes, economists from Paul Krugman, to Brad DeLong, to Martin Wolf, to Bruce Bartlett, are chalking up a jobless recovery to a lack of aggregate demand. I’d like to advance a suggestion: it’s not just the quantity of demand that’s problematic — it’s also the quality of demand.

So let’s talk about jobs — how they’re created, and, conversely, how they vanish. Here’s a company that caught my eye this week. Knights Apparel, top supplier of clothing to universities, is pioneering a factory called Alta Gracia where workers earn a living wage — 3.5x the minimum wage, to be precise. In an industry premised on rock-bottom pricing, that’s an awesomely courageous move that rocks the status quo.

So will it succeed? Maybe, maybe not. Here’s the bigger point. Knights is far from the first proponent of higher wages. One of its pioneers? None other than card-carrying communist…Henry Ford. Most know him for making cars, but in fact, he innovated something much bigger than a mere product: the institution of the “job” as we know it today. Not only did this radical innovator institute perhaps one of the first minimum wages, he did it while cutting working hours. Working 40 hours a week for at least a minimum wage? It’s a fixture of American society today.

Surprised? Yet, Ford explicitly said that if he paid his workers above the norm, and gave them more leisure time, not only would he gain greater commitment and dedication, in a industry marked by quick turnover — but, more importantly, he’d also spark more, better demand for novel relatively expensive durable goods, like cars, amongst a still relatively poor middle class.

So one might raise their eyebrows, then, and reasonably wonder whether it’s American preferences that are killing the American dream. If America has changed so much that what Henry Ford thought was eminently practical is now seen as hopelessly naive — well, then perhaps it’s not just bankers, bonuses, and bailouts that are really behind the Great Crash.

Here’s what I mean by that. Every time I buy something from your local big-box retailer, it’s not that, as protectionists and “patriots” often claim, that I’m destroying an American job. In fact, it’s worse: I just might be helping stamp out the idea that there should be jobs as we know them.
Consider: the bulk of that stuff is made, when we cut through the triumphant rhetoric of globalization, by people who are “sub(sub-sub)-contractors,” enjoying few, if any, of the benefits we associate with “jobs” — security, tenure, benefits, labor standards, etc. And, of course, when those privileges are gained, production is simply moved to countries, regions, and cities where they haven’t been.

Low quality demand, then, means that we buy cheap, but the price is invisibly steep: it ignites a global race to the bottom, what a complexity economist might call a dynamic equilibrium of negative consumption externalities, consumption that results not just in joblessness but a loss in the quality of jobs. The quality of a job is sparked by higher quality demand; or, valuing more than just the dollar price of a thing, but also its human and social impact. When we have low-quality demand, we have low-quality jobs. When we value McDonalds, the result is McJobs.

A living wage is a small, halting — and perhaps even thoroughly misguided — step in a great reset of those self-destructive preferences. Yet a step it nonetheless is.

Contrast it, then, with what you might call high-quality demand. Every so often, I take my own step, in a little experiment I started about a year ago: I buy specific items in my own little budget from a (preferably local) artisan — made with love, care, and respect — but which cost 20-30% more.

Now, my friends, folks, and colleagues seeing only the cost differential, think I’m going a little nuts. Here’s what they don’t see: that I’m deliberately attempting to see if I can also factor in a different set of benefits: the benefit I enjoy from helping support something and someone I actually care about, the benefits of having a trusted, ongoing relationship with them, instead of merely mutely, anonymously consuming mass-made “product.”

Now, maybe I’m just a soft-hearted fool. But my little experiment is changing how, what, and where I buy — and what kinds of benefits I enjoy. In short, my preferences are changing radically: I do enjoy the stuff above, and often, I enjoy it more than the generic, disconnected, alienating stuff I used to “consume.” I’m learning to value not just the financial cost of stuff, but, more deeply, its often-invisible, yet still very real, human and social benefits. I suspect that if we are to create tomorrow’s jobs, it will require a sea change in preferences.

Note, here, a key nuance. Shifting jobs to lower-wage countries is a tremendous boon to the impoverished. But it would be an even bigger boon if it weren’t a double whammy: if, sneakily, we didn’t also denude jobs of quality as they were shifted overseas; if the wage differential itself was enough, instead of exploiting a lack of governance and legislation as well; if that which makes a job more than just mere work didn’t get, ever so conveniently, lost in translation.

Were that not to have happened already, people around the globe might have had more to spend, and more time to invest in spending it, with less risk — and so perhaps the global economy’s problem of aggregate quantity of demand might currently be less severe. As Ford presciently saw a century ago: “well-managed business pays high wages and sells at low prices. Its workmen have the leisure to enjoy life and the wherewithal with which to finance that enjoyment.”

Yet, even that depends on a more fundamental cause: higher quality demand. Because to generate higher wages, more leisure, better standards, work that affords space for passion, care, and respect — to offer that to, well one another — we might just have to learn to value the human, natural, and social more, first.

Perhaps this post, like my little experiment, seems idealistic — even naïve — to some of you. And that’s the real point. What Keynes and Ford understood that seems to have been lost in the race to hypercapitalism, is this: it’s an interdependent world. And in such a world, tracing — and then turning — the ever-more complex, spiralling effects of feedback is what matters. Call it, if you like, by a much older name: wisdom.

(via HBR)

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