My brother suggests that I missed the point in my recent post, where I claimed that being depressed about work is nothing new, and that finding work worth doing was the solution.
I beg to differ.
I was not claiming that things are not way worse. Obviously, the way people are hired, managed, and required to do their tasks are way worse than they used to be. Nor am I claiming that finding “work worth doing” will solve the financial or economic problems—it won’t make it easier to pay the rent or put food on the table.
My claim is that it will help the mental health issues of dealing with late-stage capitalism.
Finding, and doing, work that’s worth doing will make everything else about your life better.
It’s why I was such a strong advocate for frugality and simplicity during those years writing at Wise Bread. Maybe you can find a way to earn more, and maybe you can’t, but anybody can find a way to spend less. And if you spend less, you can focus more on the work that’s worth doing, even if it doesn’t pay as much as the the wretched, soul-destroying work that’s ruining the lives of another generation of workers.
What if—and hear me out here—instead of trying to bribe women with weird tax credits to try to get them to have more children, we just made it much cheaper and easier to raise a child? Free health care, free education, free day care, mandatory time off to deal with medical or family issues… Stuff like that.
We have benefited enormously from the vast economies of scale in the vaccine industry. Because childhood vaccines were mandated, the companies that made them could be confident that they’d be able to sell large numbers. That made it worth both doing the research and investing in capacity.
Even flu vaccines have benefited, because government agencies got a bunch of scientists to come together and produce their best guess as to what strains to vaccinate against each year, so that there only had to be one vaccine that everyone got, and mandating that insurance companies had to pay for it.
But with the current administration in the U.S. suggesting that vaccines are generally bad, I fear we’re going to see less of that: fewer mandates are going to mean fewer vaccines being administered. Obviously that’s going to mean more sick people, which is really bad. But almost as bad, it’s going to reduce the economies of scale, meaning that the per-shot cost of vaccines are likely to rise significantly.
This all got me to thinking, what would a post-mandated-vaccines world look like?
Well, only smart people would buy vaccines, and only rich people would be able to afford them.
How many people are both smart and rich? And how rich would you have to be? Depending on how much prices went up, maybe only the top 50% would be able to afford them, maybe the top 10%, maybe the top 1%.
One small upside might be that boutique vaccine shops could find it worthwhile to make better vaccines—modestly better effectiveness, modestly reduced side-effects—because there’d be vaccine competition.
Really, though, there was always a strong push for that stuff for mandated vaccines, because if you’re going to give out 300 million doses, even a tiny improvement is going to really matter.
Still, I read a year or so ago about a version of the Covid-19 vaccine that produced much longer-lasting immunity being discontinued because they couldn’t sell enough of it, because it wasn’t mandated. That’s the sort of thing that might get better in a post-mandate world.
Won’t be a net win for society. Probably not even a net win for the 1% who can afford whatever bespoke vaccines they want, because it costs billions to research and test a vaccine, and even the 1% can’t afford that, unless they all get together and fund joint projects.
These thoughts brought to you by me getting my Covid shot now rather than waiting until just a few weeks before I go visit my 92-year-old mother—because who knows if it’ll be available then?
I’ve been hearing for years about how much trouble Social Security is in, and how pretty soon there won’t be enough money left in the trust fund to pay everyone’s pensions in full, and how we’ll have to raise taxes or cut benefits. That’s almost entirely false.
The Greenspan commission that restructured Social Security back in 1983 got almost everything right (which is why we haven’t needed to change Social Security tax rates, diddle around with the cost of living adjustments, nor change the age at which people retire for forty years). The one thing they got wrong?
Back then, about 90 percent of all wages were subject to Social Security payroll taxes. Today, that’s dropped to around 82.6 percent as more income has shifted above the taxable maximum.
The most common suggestion for “fixing” Social Security is to get rid of the ceiling on the amount of income subject to the tax, but that’s the wrong way to think about it. Getting rid of the ceiling would decouple the size of the eventual pension from the size of the income that earned it, which would give conservatives yet another hook for criticizing the program.
The right fix is to boost incomes of those at the bottom, so that once again 90% of all wages are under the Social Security tax ceiling.
Making sure that lower-income people earn enough money to live on will fix Social Security as a side-effect.
In the run-up to the campaign I saw reports of young people, frustrated that Biden hadn’t managed to do the huge student loan forgiveness that he’d tried to do, say that they weren’t going to vote for him or for Kamala. “If he can’t get this thing done, why should I support him?” Here’s why:
“Beginning May 5, the department will begin involuntary collection through the Treasury Department’s offset program, which withholds payments from the government — including tax refunds, federal salaries, and other benefits — from people with past-due debts to the government. After a 30-day notice, the department will also begin garnishing wages for borrowers in default.”
Many politicians and financial analyst types are suggesting that the Fed should “look through” tariff-induced price hikes. Superficially this makes sense, because a one-time cost increase is not the same thing as inflation. Unfortunately, we know that the results are bad.
The example I’m thinking of is the price shock from much higher oil prices due to the 1973 OPEC oil embargo. As that price shock moved through the economy, first oil prices went up, then gasoline prices went up, but very shortly all prices moved up, because every business faced higher energy costs, and needed to pass at least a fraction of them forward. And then, of course, all the businesses that bought things from those businesses needed to raise their prices further, and workers started demanding higher wages because their costs were going up.
The Federal Reserve tried to “look through” that price shock, not raising interest rates, even though prices were rising. As I say, this makes sense. The one-time price shock will move through the economy, raising many prices by various amounts (depending on how much the inputs for each particular item increase in cost, and the market constraints on price increases for each particular item). Once that all works through the economy, the prices increases should stop.
In fact, raising interest rates could easily make things worse, because the cost of credit is another cost to nearly all businesses, so it’s just another expense that they have to pass on, and it’s a cost to employees, that they’ll want to recover in wage negotiations.
But we know what happened: Inflation rose enough that the Fed eventually decided that it needed to raise interest rates. Higher interest rates hurt the economy, threatening to produce a recession. The Fed cut interest rates to head off the threatened recession, which led to inflation, which led to the Fed raising rates again, etc.
The result was the stagflation of the 1970s, which only ended when new Fed chairman Paul Volker raised rates high enough to produce a severe recession, and then kept them high for long enough to wring the inflation out of the economy.
To me it’s clear that “looking through” the “one-time” price shock of higher tariffs will produce the same result. The Fed can probably mitigate it by holding rates at their current levels until the price shock works its way through the economy (which will probably take a least a year, because many prices (wages, rents, etc.) are only renegotiated annually), and only cut rates after price increases settle back down to close to the Fed’s 2% target.
I assume the Fed governors know this. Do they have the courage to take the right action? Only time will tell.
Some financial commentators are suggesting that the hit to the economy from the new tariffs will push the Fed to lower interest rates, but I don’t see it. The tariffs will push up prices, so the Fed will feel it needs to stick with higher rates for longer.
