Tuesday, July 27, 2010

Marriage: Why and Who?

The debate over same-sex marriage should turn on why the institution exists at all.  No, it’s not procreation.  So don’t start with the “Why do we let old heteros marry?”  Marriage may be good for kids, but it’s not about kids.  Marriage – traditional western marriage, anyway – is about specialization. 

People once thought, rightly or wrongly, that men and women should play different social roles.  The man’s role was provider/protector.  The woman’s role was homemaker/nurturer.  One can speculate that the female’s biologically limited ability to produce children (relative to a man’s virtually unlimited ability to do so) made women the more important sex to protect, and that everything followed from that.  But for whatever reason, gender roles have existed for a very long time.

An important aspect of specialization is socialization.  Where gender specialization is the norm, boys train to behave as men and girls to behave as women.  They arrive, then, in adulthood, with skills and attitudes appropriate to their roles.  It is this specialization, not the care of kids per se, that marriage was created to support.  Obviously, not all straight men and women have marched to the beat of the same drum, but institutions like marriage are not about outliers.  Cars exist to take us places; that they cannot take us everywhere or that not everyone needs one says nothing about why cars exist or even about why everyone who owns one owns it.

The historic allocation of gender roles put women at risk.  A man without a wife can support and protect himself, but a woman without a provider/protector is in trouble.  No wonder, then, that feminists find the arrangement unacceptable.  Because gender specialization creates unequal burdens, we should expect it to last only for as long as it’s necessary.  As societies and technologies mature, women become less dependent on a husband’s protection to preserve their child-bearing abilities.  Moreover, although a complementary marriage offers its one earner the competitive advantage of a home-based support system, if the economy can offer plentiful, safe, paid work, a second income is often a better economic choice.  And so, specialization gives way to “liberation.” 

I’m not taking sides on whether this turn of events is a good thing or a bad thing; it seems to me to have  been inevitable, so what would be the point?  Arguments can be offered for or against specialization and for or against traditional marriage in aid of specialization. My own sense is that specialization is too unfair to women to persist in a world where many jobs are safe and the brigands are under control.  If the “Leave it to Beaver” family is “better” for kids, it’s not perceived to be enough better to retain the old model.   (Of course, should it turn out that the economy cannot offer plentiful, safe, paid work to enough people, we may need to rethink the family business model yet again.)

The question for now, though, is this: if the sexes no longer specialize, what’s left for marriage to do?  Absent complementarity, marriage gets you a date every Saturday night, someone to visit you in the hospital, and someone to help with the kids.  None of these things requires the state’s intervention or merits its support.  Why should the state provide tax benefits or enforce support or inheritance rights just so that two lovers can hang out?  Let them sign a contract, ask the blessings of their God if they have one, and get on with their lives. 

Marriage is still very special to the participants, who love each other and commit to each other.  But the message, at least in liberal circles, has changed.  The vows have been neutered, fathers no longer “give away” daughters, and I’ve seen Jewish weddings where the bride and groom both break the glass at the end lest the groom’s doing it alone say something – God only knows what – about the relationship.  Instead of being about specialization, marriage is now about love.  That’s a good thing for something to be about, but is it something for the state to pay any attention to?

This post-specialization relationship, still called “marriage,” with its no-longer-warranted legal consequences, is what same-sex couples now seek to enter.  I understand why adherents to traditional marriage oppose the idea.  Marriage, to them, is still a commitment between specialists who love each other to specialize for their exclusive mutual benefit.  They want the ritual into which they have entered to mean what they understand it to mean, for if it does not have that meaning for society, not only is the message they want to send to their community by entering into it is lost, so is the certainty that each partner understands what he or she is doing.  For at least some religious people, marriage is a sacrament, and to change its nature is to make it no longer one.  I’m not religious enough to know what that feels like, but I’m sure it matters a lot to the people to whom it matters at all.

For heteros who have accepted the modern notion of marriage as a partnership of unspecialized lovers, same-sex marriage is just like their own, so it’s fine with them.  But, these couples have no dog in the fight.  The battle is between homosexual couples, who want the same opportunity as straights to ritualize their commitment to love, and traditionalists who want to be able to ritualize their loving commitment to specialization.  They both can’t have their way, because both are concerned about what marriage “says” about them, and it can only “speak” in one language – the language of the “audience.”  If the polity recognizes homosexual marriage, then marriage signals a commitment to love.  If the polity does not recognize homosexual marriage, then marriage can still signal a commitment to specialize. 

The problem for the traditionalists is that they are defending what may be only a logical possibility.  If same-sex marriage is recognized, marriage cannot be about specialization; if it is not recognized, then marriage can be about specialization, but that does not mean that it is perceived to be so by the community at large.  Once the dominant mode of hetero marriage is the commitment to love, marriage no longer sends the message of a commitment to specialize, even if only heteros are allowed to do it.  So, to the extent that shift has occurred, the traditionalists have lost the war, and same-sex marriage should be allowed.  Politics is about such things as when an inflection point in perceptions of this sort has incurred, and the political process should be the place that the battle is fought. 

I do not see a Federal Constitutional right to same-sex marriage, at least not yet.  Supporting sex-based specialization within its borders seems to me something a state ought to be able to do.  I recognize how much such legal support looks like anti-miscegenation law, but looks can be deceiving.  Race-based “specialization” (aka slavery and discrimination) and sex-based specialization have very different histories and political consequences.  We have a national consensus on the former.  Should one emerge on the latter, the political system will address it. 

That consensus may even be expressed through public acceptance of a Supreme Court decision that there is a Constitutional right to same-sex marriage, although the legal niceties of such a decision seem to me mind-boggling.  The jurisprudentially correct way of applying such a right would, I think, be a holding that hetero-only marriage laws discriminate against gays and so hetero-only marriage laws are unconstitutional.  In such a case, the Court would not tell a state whom it must permit to marry, because the Court would then have to say what “marriage” entails.  Rather, the Court would tell the states that it may not marry anyone if it will not marry same-sex couples.  What the states do about that order would be up to them, but, in the meantime, the validity of all hetero marriages in hetero-only states would be suspect.  I just don’t see the Court opening that can of worms.

Friday, July 2, 2010

Why Free Trade has not Created Jobs for American Workers

In 1994, Thomas I. Palley, then a Professor of Economics at the New School for Social Research, wrote:

From the standpoint of orthodox theory, increased international trade is an unambiguous good, so that lower international transactions costs and increased multinational production are both seen as major sources of gain. Orthodox economists have therefore persistently pushed for free trade and the elimination of tariffs, and these policies have reinforced the secular reduction in transactions costs.

However, the conventional approach to trade draws no distinctions between types of trade. Instead, all trade is good, and the greater the diversity of the trading partners, the greater the benefits to trade. Thus, Americans supposedly have the most to gain from trading with countries like China, Mexico, and the Phillipines. Nothing could be further from the truth; instead, the benefits to trade depend importantly on who one is trading with. Without doubt trade can be enormously beneficial, and these benefits include: (a) greater product diversity, (b) lower prices attributable to economies of scale associated with larger markets, (c) lower prices attributable to the fact that some countries have climatic and natural resource advantages in the production of certain commodities, and (d) lower prices due to increased market competition.

However, trade ceases to be a good when it rests exclusively on wage differentials: in this case, it becomes an implicit instrument for battering down wages and raising profits. This forces a reconsideration of trade policy: where countries have similar wage structures, employee protection laws, and environmental protection laws, then free trade is desirable; where countries differ in these regards, we need to be much more cautious. Free trade predicated exclusively on wage competition is entirely unacceptable, and represents a major threat to popular prosperity in America and Western Europe.

Professor Palley was too early with his prediction of disaster, as the Clinton years featured economic expansion here even as the trade deficit grew. But being too early is not being wrong: every President since Richard Nixon has been “too early” in calling for an end to our dependence on foreign oil, and they were all absolutely right. Nevertheless, it is an unfortunate trait of human beings that we tend to regard as intrinsically bad, and therefore as “discredited,” any advice whose time simply has not come.

In 1994, American capital was "all dressed up with no place to go." Enough jobs were moving off shore to alarm labor-oriented economists like Prof. Palley, but aggregate demand had not dropped enough to offset the benefits of lower prices, especially as other sectors of the economy (tech mostly) were growing. More productive capacity had to be created abroad before American capitalists could take full advantage of the low cost of accessing it. Prof. Palley may have underestimated how long it would take for that capacity to emerge, but disaster delayed is not disaster denied.

Cheap labor has always been an important part of our trade with less wealthy countries, but those countries have not historically been able to compete with us on so many different classes of goods. Quantity, they say, has a quality all its own. Whether cheap Chinese jeans are good for America or bad for America turns on whether there are also cheap Chinese cell phones and cheap Chinese TVs and cheap Chinese snow shovels and, and…. There’s a limit on the list of “other things” we can make, and even if we invent them here, we cannot make them here if our neighbors across the shrinking ocean can deliver them to us for less.

Certainly, cheap Chinese goods put extra money in consumers' pockets, which creates demand for more goods, which creates more jobs. But that demand may be offset by a reduction in demand from the loss of American jobs, and much of the alleged additional demand is for additional cheap Chinese goods, so many of those new jobs are also in China. And yet, every argument I read in support of free trade with China assumes both that (i) the loss of US jobs results in no net reduction in US demand, and (ii) the demand for more goods will create significantly more American jobs. Neither of these assumptions is ever necessarily true, and, more important, neither appears to be true now.

This is not to say that the US has done all it can to be as competitive as possible in the export market. But our competition in the export market is not China; it's Europe. The Eurozone is doing better at selling to China, India, and Brazil than we are. Despite their high labor rates, Germany, Holland, and Ireland are all running significant trade surpluses, and, in general, The Eurozone's trade balance seems to oscillate around zero, thanks not only to their exports but, of course, to their running a much lower oil bill than we do. The important point for Americans, however, is not that we must compete with the Europeans, but that we must compete with them for the global market in capital-intensive goods, a market that by definition creates few jobs and so wouldn't be satisfactory even if we had it all to ourselves. So, the fact that we are not competing well in that market is salt in our wounds, but it does not point to an opportunity for national prosperity.

Competitiveness with Europe - while certainly to be strived for - is not the answer to China's broad wage-based advantage. The obvious antidote to that ill is the imposition of tariffs. Prof. Palley put it this way:

Where there are conditions of domestic monopoly or where countries have a natural advantage in the production of goods, free trade is desirable…. However, where the only reasons for trade are poverty level wages, and lack of obligations regarding pollution abatement, worker safety standards, and health and social insurance costs, … free trade will end up promoting a decline in the wages of American workers as companies either transfer production overseas, or use the threat of doing so to extract wage concessions.

Moreover, to the extent that the system of social and environmental protections becomes viewed as a source of cost disadvantage and job loss, this will unleash political pressures for its repeal. In the realm of free trade, market forces promote the lowest common denominator.

Given this, free trade is appropriate where the requisite criteria are satisfied…. However, if the criteria are not met, countries should be subject to a "social" tariff designed to compensate for their exploitative economic conditions. As conditions in countries improve, this tariff can be lowered thereby providing an incentive mechanism for governments in under-developed countries to advance the welfare interests of workers. Moreover, the tariff proceeds could be used to provide aid for purchases of U.S. exports, thus helping both the U.S. economy and under-developed countries.

Leaving aside the welfare of foreign workers as a basis for U.S. trade policy (a slippery slope not to be tested in tough times), Prof. Palley’s proposal makes sense. Mobile capital will not come here or stay here if it can take advantage of “exploitative” wages and conditions elsewhere. So we must either immobilize the capital – not likely – or, for our own sake, end the exploitative conditions “enjoyed” by our trading partners. Prof. Palley’s tariff, which allows for competition on other bases – German and Japanese cars would be welcome – seems well-designed for that purpose.

Free-traders will doubtless object to the tariff proposal, citing the usual undifferentiated litany of horribles associated with tariffs and, of course, invoking the worship words “Smoot” and “Hawley.” We’ll be told that tariffs raise the cost of trade, thereby reducing its benefits, resulting in slower growth of wealth everywhere, and a delay in the development and transformation of the low-wage states. Some of these claims would be accurate, but they would not be persuasive.

A tariff would raise the cost of trade and so reduce its benefits. But only in the short term. If the cheap foreign labor is putting Americans out of work, aggregate demand will fall, and trade will not have created any benefits to reduce. The tariff sacrifices short-term gain for long-term prosperity. To treat the short-term sacrifice as the whole picture is simply wrong.

I don't know what effect a tariff regime that reflected wage differentials would have on Chinese development. Wages are rising in China, and the country is already trying to develop domestic demand. Either way, the world does not owe China a living, so Chinese development per se ought not to be an object of American trade policy. The Chinese need to consume as many consumer goods as they produce (whether the former are domestic or imported) and not expect the West be their dumping ground. A tariff will encourage them to do that, at whatever speed they choose.

As for Smoot-Hawley, which is remembered by many as the tariff that ate the 1930’s recovery, experts like Ben Bernanke will have to step up and explain the difference between a mercantilist tariff imposed by a trade surplus country (us, then) and one imposed by a trade deficit country under economic attack by underpaid workers (us, now). I can’t do everything…