The Agenda

On Draft Horses, Hierarchies, and the Invention of Needs

Earlier this month, Philip Greenspun wrote a provocative post on the deterioration of the labor market position of less-skilled U.S. workers. Drawing on Gregory Clark’s A Farewell to Alms, he suggests that less-skilled workers might be “the draft horses of the 21st century.”  Greenspun observes that cost of employing a less-skilled worker has increased due to a combination of labor market regulation, rising medical expenditures, the threat of employment lawsuits, and, most interestingly, the interconnectedness of modern firms:

Most subtly, and perhaps most significantly, the potential cost of a mistake by an individual worker has skyrocketed. In industrial plants, the link between individual employee action and billions in losses is fairly obvious, e.g., with the Bhopal explosion. A tiny misstep in a chip factory and a wafer containing hundreds of valuable integrated circuits becomes worthless scrap. Computer networks, however, have made the potential costs of a clueless or careless office worker dramatically higher. Suppose that a company hires a low-skill not-very-alert office worker for $10/hour. This person accepts an email invitation to follow a hyperlink. One click later and the company’s network is infected with a virus. Best case: IT department spends $50,000 cleaning up; worst case: customer lists, customer credit cards, and other private data are compromised, costing millions of dollars.

Though I think there is something to Greenspun’s analysis, my guess — and my hope — is that his pessimism will prove unwarranted. David A. Bell, author of China’s New Confucianism, has written extensively on the relationship between economic and social inequality in Confucian thought. The following is an excerpt from a Bell essay published in Dissent:

Confucians are realists in the sense that they take for granted that power relationships and social hierarchies will exist in all large-scale societies. They worry less than Western liberals do about these relationships and hierarchies, particularly when they are based on age and achievement. If a choice must be made between social and economic equality, then Confucians would choose economic equality and make social inequality work to support it.

How might that happen? The ancient Confucian thinker Xunzi proposed the idea of social rituals that include people of different status. By participating in common rituals, those with more status develop feelings of care for the others and thus become more willing to do things in their economic interest. For example, a boss in Confucian-influenced Japan or South Korea might enjoy singing karaoke with a worker. The ritual is hierarchical; the boss sings first and perhaps for a longer time, but after singing and drinking together, affective bonds are strengthened, and the boss is less likely to dismiss the worker in difficult times. Such rituals help to explain the practice of lifelong employment in large Japanese and Korean corporations. More generally, they help explain why Japan and Korea—perhaps the most socially hierarchical societies in East Asia—also have relatively equal distributions of wealth and do not suffer from 10 percent unemployment rates in bad times.

Perhaps small, homogenous societies endowed with substantial natural resources, such as Norway, can afford equality all the way through, but Confucians recognize that the choice for most societies is between a socially egalitarian society like the United States, where power is typically expressed through material wealth, and societies governed by informal rituals, where the powerful do not need to rely on wealth to show their “superiority.” For Confucians, the latter society is far preferable.

One wonders if the deterioration of the labor market position of less-skilled workers might lead to a more “Confucian” arrangement in the United States, in which shared cultural practices are used to mitigate sharper economic inequality. The increasing cultural heterogeneity of U.S. society suggests otherwise.

Another possibility is that skilled workers will continue to consume more in-person services, thus creating an incentive to invest in the noncognitive skills of the future labor force. In a postmodern economy, most “needs” are invented. An abundance of relatively low-cost labor will presumably lead to the consumption of more labor-intensive services, just as the influx of less-skilled Mexican workers has kept the agricultural sector in the arid Southwest afloat. The problem, of course, is that the market wage for this kind of work might prove unacceptably low, as Greenspun suggests, thus creating pressure for expensive forms of redistribution. If the top half of the distribution continues to grow more productive and thus wealthier, generous redistribution of this kind will prove unsustainable. If not, Greenspun is right to worry.

Reihan Salam — Reihan Salam is executive editor of National Review and a National Review Institute policy fellow.

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