Saturday, October 15, 2011

Great Minds are Working on the Pressing Economic Issues of Our Time

Yes, right wing opinion writers like Megan McArdle are busy writing about "the servant problem" for The Atlantic:
No More Servants

By Megan McArdle Oct 12 2011, 12:58 PM ET

The other day, Arnold Kling asked a sort of interesting question: why hasn't rising inequality resulted in in the much-predicted oligarchy? Or to put it as he does: with so many unemployed, and income increasing faster among the affluent, why aren't people hiring more servants?
In an economy where some folks are very rich and many folks are unemployed, why are there not more personal servants? Why don't Sergey Brin and Bill Gates have hundreds of people on personal retainer?
Some possible answers (some of them culled from, or inspired by, his comments section. I encourage you to read it through.)

1. Various forms of public assistance, and wealthier families, have increased the reservation wage. A servant in 1900 worked at least 10 hours a day, at least 5.5 days a week, and according to our archives, cost at least $25 a month for a "passable" one. Many middle class people could probably afford to pay about $500 a month, plus a room and some food, for someone who would take care of all the housework, all the time. But how many Americans would work for such a sum? Our house was built in that era, and either they didn't have live-in servants, or the help was sleeping in a pretty gnarly unfinished basement. You'd have to be fairly desperate to take the equivalent job today, and almost no one is that desperate.

2. There's a tax wedge. If servants were more common, the IRS would be more assiduous about auditing for payroll taxes, etc. (Already a problem for working women with nannies who end up in public service). My mother actually paid taxes for her cleaning lady, and it was not only expensive, but an administrative nightmare--somehow, the numbers never added up right, the paperwork got lost, etc. Taxes reduce the differential between the value of your labor and someone else's, because you don't have to tax you.

3. Regulatory overhead See above. The modern labor regulatory system is set up to deal with corporations, not individuals contracting for informal labor. Either the work ends up in the gray economy (illegals), or it's contracted out to companies that can amortize the regulatory overhead over a lot of workers (Merry Maids)

4. Management Workers have to be managed. They leave. (Hance Saki's memorable epigram: "She was a good cook, as cooks go. And as cooks go, she went.") They need to be replaced. Sometimes the replacement doesn't work out. All of this takes time. For the mistress of a house in the era before labor-saving appliances, managing servants was undoubtedly more pleasant than scrubbing the coal scuttles. But it was a job. And many high-paid women in the sub-Gates class have full-time jobs; they don't have the time to take on full time employees. A large servant class may have presupposed the existence of a large class of women at home.

5. Labor saving devices Servants were often standing in for things that machines now do more cheaply, and without stealing the silver.

6. Cultural mores We have a much greater affection for personal space than people did in the era of large families and small heating appliances. Most people don't want anyone else in their personal space.

7. Liability These days, you're liable for the actions of your employees in a surprisingly wide variety of circumstances. Safer not to have employees.

8. Communications, tools, and transportation increased the efficiency of outsourcing I don't need a gardener; I need to pay a landscaping company to come by once every few weeks and run their high-octane power mower around the lawn. In effect, we rent servants by the hour, and some of them are mechanical.
Darn... And I was so hoping that those millions of university grads could find "meaningful" work by entering "the service" for the upscale 1%. It would do them good to slave in close proximity to their "betters" so that they might appreciate how the productive "job creators" have risen to such economic heights. Too many people today think that a living wage is some kind of birth right. Oh for the "good old days" of the work houses where the penniless were shown how to earn their bread by putting in 12 hour days 6 days a week to pay for their own upkeep instead of burdening the taxpayer!

Failing this approach to thinning out the lolling mobs who are out on the street with their Occupy XYZ protests, maybe we should go for the Jonathan Swift approach and simply roast the unemployed and feed them to the hard working middle class to raise their protein input. If the penurious can't support themselves, at least they can be put to a useful service as fodder for the hard working middle class.

Oh... and I have a good fix for the problem with all those "underwater" homes. Give these financially reckless owners $1 and take over their homes and then give the homes to the rich to serve as "retirement homes for superannuated pets". I'm sure there are lots of the 1% who are tiring of old Rover sleeping all day. No zip. Farm Rover out to a "retirement home" and let the 1% buy a new, lively puppy. This makes the productive part of society happy, it gives a nice place for Rover to die, and the ousted former home owners can feel good knowing that their financial mistakes have been forgiven and their homes have now been put to socially productive work. Everybody is a winner!

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