March 25, 2023

Today’s Economist: Nancy Folbre: The Unregulated Work of Mechanical Turk

Nancy Folbre, economist at the University of Massachusetts, Amherst.

Nancy Folbre is an economics professor at the University of Massachusetts, Amherst. She recently edited and contributed to “For Love and Money: Care Provision in the United States.

Ever wonder what our labor market would look like without minimum wages or labor law protections? Take a look at the brave new world of online piecework platforms, like Amazon’s Mechanical Turk, which allows employers, politely termed “requesters,” to post jobs for a “global, on-demand, 24 x 7 work force.”

Today’s Economist

Perspectives from expert contributors.

Workers are offered pay for completion of a series of Human Intelligence Tasks (HITs), easily fragmented activities (like transcription, categorization or tagging) in which computers actually need assistance from carbon-based life forms like ourselves.

Spamming and fake reviewing can be easily commissioned. For instance, I could probably pay less than 10 cents apiece for unique posted comments of at least 50 words including at least two positive superlatives on this blog. (Should I discuss this with my editors?)

Estimates of what workers can earn on these crowdsourced tasks range from about $1.20 to $5 an hour without any benefits. Employers treat them as independent contractors not covered by federal minimum-wage legislation. A standard terms-of-use agreement gives employers the freedom to reject an employee’s work on any grounds; workers (oops, I mean contractors) have no easy recourse.

Mechanical Turk takes its name from an 18th-century hoax featuring a man-size Turkish puppet that could vanquish most opponents at chess with serene equanimity. Years later it was revealed that his chess table concealed a human prodigy who could manipulate the pieces from underneath with magnets. Other successful companies have adopted equally poetic names, like CrowdFlower and CrowdCloud.

What started as a niche experiment has become a major global industry. Like some other activities, like work at call centers, digital piecework represents a form of virtual labor migration that denationalizes employment. Research by Panos Ipeirotis, a computer expert at the Stern School of Business at New York University, estimates that Mechanical Turk alone engages 500,000 active workers in more than 100 countries, with workers heavily concentrated in two countries: the United States (with 50 percent of the total) and India (with 40 percent).

About 70 percent of its employees are women, many of whom probably can’t find other opportunities to work from home with flexible hours and are therefore willing to accept low wages.

The Mechanical Turk Web site promotes itself with a quotation from a proud chief executive: “Over all, we estimate saving 50 percent over other outsourcing methods.” Yet as both Zakia Uddin on Alternet and Julian Dobson on The Huffington Post point out, these labor practices haven’t gotten as much attention as sweatshop practices in other countries.

A recent Utne Reader article by the California journalist Ellen Cushing briefly profiles some of the industry’s fans as well as its critics. In general, computer scientists, including Professor Ipeirotis, seem quite cheerful about its prospects for improving both efficiency and opportunities for people in developing countries who can gain access to computers.

Low-quality wages may elicit low-quality work. But as Professor Ipeirotis points out, companies can compensate in two different ways, through redundancy (hiring several workers to do the same job and comparing their results) or through use of “gold data” — questions to which employers already know the answer, randomly inserted as a test of worker competence.

One recent academic paper on the future of crowd work, acknowledging sweatshop anxieties, asks, “Can we foresee a future crowd workplace in which we would want our children to participate?” It does not provide a clear answer.

Such a future can clearly be imagined. But can it be achieved?

Workers relying on such low wages and unstable employment are not likely to be able to educate their children enough to escape increasingly high rates of unemployment. A sustainable form of crowdsourcing will require forms of collective governance that mitigate the effects of market competition on those treated as mere links in a chain of algorithmic logic.

In other words, it will require some assurance of human rights, including access to decent employment, living wages and high-quality public education.

Computers don’t care whether they have meaningful opportunities for the development of their potential capabilities. Most humans do. If they had such opportunities, they would not be willing to crawl under a table and create the illusion of an eternally smiling, amazingly intelligent global machine. They would not be willing to get turked.

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Today’s Economist: Nancy Folbre: Work in the Walmartocene

Nancy Folbre, economist at the University of Massachusetts, Amherst.

Nancy Folbre is an economics professor at the University of Massachusetts, Amherst. She recently edited and contributed to “For Love and Money: Care Provision in the United States.

Some scientists contend that we should label the era we live in the Anthropocene, because we humans (anthropoi) have fundamentally altered our global ecosystem. Economists might, for similar reasons, consider labeling the current economic era the Walmartocene.

Today’s Economist

Perspectives from expert contributors.

The world’s largest retail company (and second-largest business), having easily survived recent skirmishes with workers, shareholders and the law, just announced that it would virtually guarantee jobs to most recent American veterans, who currently suffer from higher-than-average unemployment rates.

In some ways, Walmart represents the archetype of modern capitalism. It is Tyrannosaurus rex. It pioneers cost-saving methods of global outsourcing and resistance to unionization. It leaps national borders in a single bound. It generates huge profits for its shareholders by delivering a gazillion goods to consumers around the world at prices that few other big-box stores – much less small retail businesses – match.

Many of its regular shoppers adore it. Many of its workers, on the other hand, feel underpaid and underappreciated, and have filed numerous suits, accusing it of violations of labor law, including failure to pay overtime, locking workers in stores overnight, union-busting and sex discrimination. The details of the company’s bribery of Mexican officials, in a successful effort to bypass community opposition to store construction in proximity to a historic site, proved particularly embarrassing to its shareholders.

Walmart has long had a love-hate relationship with the American public. But the hate has become more visible in recent years, and the company has made active efforts to abate it.

Before announcing its most recent veteran-hiring initiative, it had thrown its considerable weight behind locally grown organic food and green energy initiatives, pursuing themes that seem intended to win approval from the Obama White House.

These efforts may represent nothing more than cost-effective investments in public relations. But they may also reflect the values of a new generation of Walton family members.

In terms of ownership and management, Walmart is not a classic capitalist company owned by shareholders buying and selling purely on the basis of price per share. It is a family operation, largely controlled by the Walton family, which keeps a tight hand on management.

Although the founder Sam Walton was an entrepreneur, succeeding generations represent a kind of feudal dynasty, largely based on inherited wealth.

Analysis of data from the Survey of Consumer Finances indicates that, in 2010, the Walton family controlled assets equivalent to those of the bottom 42 percent of American families.

This Arkansas aristocracy may feel a certain noblesse oblige. Offering to give jobs to all veterans honorably discharged on or after the plan’s announcement on Jan.15 is a patriotic gesture, even if it is sweetened by substantial tax credits.

The company values loyalty and its hierarchical management structure may look familiar to men and women who have participated in the armed forces.

However, most veterans taking up Walmart’s offer will have to tighten their belts. An Army private first class, with four years’ experience, earns a base pay of $24,178. The average active-duty service member receives a total benefits and pay compensation package worth $99,000 a year, because of substantial in-kind benefits in the form of housing, health care and food.

The average wage for a full-time hourly Walmart associate in the United States is $12.57, which adds up to $26,108 a year at 40 hours a week. But the primary benefits Walmart offers are slim: a health-insurance plan with high deductibles that workers can choose to sign on and contribute to, and a 10 percent discount on store purchases. As a result, Walmart workers make more use of public health and welfare programs, such as food stamps and Medicaid, than other retail workers.

Opportunities for promotion and annual raises are rather limited.

The new hiring policy may increase the proportion of men working the Walmart aisles, because veterans are predominantly men. On the other hand, female veterans may be more likely to apply for jobs in retailing.

Some of these women, bruised by a “brass ceiling” based on their exclusion from combat roles, may prove rather feisty when they learn of continuing class-action suits against Walmart, accusing it of restricting women’s access to management positions. Some may be heartened, however, by Walmart’s recent efforts to increase women’s representation on its board and to promote women’s businesses.

One could argue that efforts to shame Walmart have paid off. But it seems unlikely that the United States economy would look much different if Walmart had been slightly better behaved all along. The company itself is the product of increasingly global competition that has increased the scale of business enterprise, concentrated the ownership of wealth and weakened democratic governance.

In the Walmartocene Era of declining opportunities for American workers, some veterans may feel that even the promised entry-level jobs are worth fighting for.

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Economix Blog: Nancy Folbre: The Science of Prophets and Profits

Nancy Folbre, economist at the University of Massachusetts, Amherst.

Nancy Folbre is an economics professor at the University of Massachusetts, Amherst. She recently edited and contributed to “For Love and Money: Care Provision in the United States.

Some say economics is not a science at all, because it doesn’t successfully predict the future. Others point accusingly at a lack of unanimity. Many construe fierce political convictions as a sign of bias.

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Perspectives from expert contributors.

Wrong on all three counts. Both science in general and economics in particular are much more interesting than these formulas imply. The meetings of the American Economic Association and the larger umbrella of organizations in the Allied Social Science Association in San Diego in early January offered plenty of examples.

Seldom can any science accurately predict the future. In a region particularly susceptible to earthquakes, it’s impossible to say when and how cities like San Diego will be shaken. Sea levels are rising as a result of global climate change; no one knows exactly when they will flood the first floor of the luxury hotels.

Many economists, themselves, long for unanimity. One paper, “Views Among Economists: Professional Consensus or Point-Counterpoint?” by Roger Gordon and Gordon B. Dahl of the University of California, San Diego, presented at a session on “What Do Economists Think About Public Policy Issues?” used data from a regular survey of economic experts to assert that opinions differed little as long as extensive research was available.

In another paper at the same session, “Comparing Beliefs of Economists and the Public,” Luigi Zingales of the University of Chicago, asserted that public opinion is least swayed by economists when economists are largely in agreement.

Two discussants – both with strong claims to economic expertise – begged to differ with the first of these presentations.

Paul Krugman of Princeton forcefully asserted that disagreements regarding macroeconomic policy are momentous. Justin Wolfers, currently at the University of Michigan, offered a sharp and funny analysis of policy differences between “Team Blue” and Team Red” among surveyed experts, acknowledging that, in some cases, he used Facebook pictures to infer political affiliation. His analysis got even more laughs from the audience than the official humor session on Friday night.

A voice from the audience complained that the expert panel survey, assembled by the University of Chicago’s Booth School of Business, was limited to about six faculty members from each of the seven “most elite research universities in the U.S.” The session organizer seemed taken aback by the very possibility that any respectable economist might feel unrepresented by such eminences.

Differences among economists teaching at elite research universities and others are probably quite significant and deserve attention in survey research.

These differences of opinion don’t signal immaturity or inadequacy in scientific endeavors; they are a driving force of scientific progress. As the well-known philosopher of science Thomas Kuhn explained, dominant paradigms typically become encrusted and resistant to change, making it difficult for their adherents to even perceive anomalies that are inconsistent with existing theory.

Burgeoning research in behavioral economics speaks to this issue, pointing to many examples of putatively rational consumers behaving in distinctly irrational ways. So-called framing effects influence the way everyone, including scientists, interpret information. Sometimes the only way to see how one is implicitly framing a problem is to face a direct challenge from someone who frames it completely differently.

The late Professor Kuhn contended, even more assertively, that older scientists almost never relinquish a theoretical frame, but are, thankfully, eventually replaced by a younger generation that has smaller intellectual investments in the status quo.

Some economists are probably convinced that their own views, however imperfect, are more accurate than those of the public at large and that more unanimity (even if slightly forced) would increase the profession’s policy impact. They should, instead, consider how fully discredited the profession would be if all its members (rather than just a few leading lights) agreed on a policy measure that turned out, in retrospect, to be completely incorrect.

In other words, there are benefits to a diverse portfolio.

As Professor Zingales pointed out, the carbon tax, which most surveyed economists favor (as do I), is so disliked by voters that politicians of both parties are loath to raise it.

Political allegiances are clearly linked to theoretical frames. Knowing whether someone leans left or right is often makes it possible to predict where they stand in economic debates. But it does not follow that those who clearly or even vehemently state their allegiances are somehow more biased than those who don’t.

Trying to evenly split the difference between left and right defines a path that is about as predictable as either of the extremes – and heavily influenced by both.

Better to have differing views debated openly and to identify all sources of financial support for research. To its credit, the American Economics Association just officially adopted conflict-of-interest rules, as Ben Casselman wrote in The Wall Street Journal, “in response to criticism that the profession not only failed to predict the 2007-8 financial crisis but may actually have helped create it.”

Economists can’t vow impartiality. But they should always reach, with humility, for the truth.

The Marxist historian E.P. Thompson put it this way: “The evidence is there, not to disclose its own meaning, but to be interrogated by minds trained in a discipline of attentive disbelief.”

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Economix Blog: Nancy Folbre: Conservatives and the Zombie Apocalypse

Nancy Folbre, economist at the University of Massachusetts, Amherst.

Nancy Folbre is an economics professor at the University of Massachusetts, Amherst. She recently edited and contributed to “For Love and Money: Care Provision in the United States.

At first glance, Mitt Romney’s now-famous assertion that all those who don’t pay federal income taxes are dependent moochers seems like a dumb mistake. Why would he lump recipients of Social Security, veterans, students and low-wage earners — many of whom have voted Republican in the past — in with welfare recipients?

Today’s Economist

Perspectives from expert contributors.

Perhaps Mr. Romney was confident that his remarks were private, or perhaps he was pandering to his audience of potential donors. But he did follow a well-established conservative script, one of two competing horror-show narratives that increasingly dominate political discourse in this country.

The basic right-wing story line evokes zombie apocalypse: The shambling, diseased living dead — Obama Zombies — are threatening human civilization. A self-described neoconservative Web site features a parody of Shepard Fairey’s Obama campaign poster featuring the zombie in chief.

A forthcoming book by Nicholas Eberstadt is titled “A Nation of Takers: America’s Entitlement Epidemic.” Charles Sykes contends that we have become “A Nation of Moochers.”

The effort to elicit revulsion and moral outrage may be intended to counter the left-wing narrative of vampire threat, which warns of a small group of powerful, almost immortal beings who invest in blood funds, suck out the profits and stash them in Transylvanian tax shelters.

Both narratives reflect the enormous economic anxiety Americans feel in the aftermath of a financial crisis and ensuing recession. Zombies and vampires represent archetypal middle-class fears: the fear of being pulled down by the needy or stomped on by the powerful.

But the two fears are not perfectly parallel. Because zombies are generally considered incompetent, they don’t constitute a serious threat unless they mobilize in very large numbers; hence the pressure to exaggerate the size of the zombie class.

Also, in most cinematic accounts, zombies don’t suffer from moral failings; rather, they have contracted a virus or been exposed to some environmental toxin (for an extended literary treatment, see “Zombies Are Us: Essays on the Humanity of the Walking Dead”).

So who exactly are these zombies (or “takers” or “moochers”)?

We know who they are not.

They are not those who paid no federal income taxes last year, because many of these can point to a record of hard work.

They are not those stuck at the very bottom of the income distribution: When all taxes (rather than merely federal income taxes) are taken into consideration, the share of all taxes paid by different income groups corresponds pretty closely to their share of total income.

They are not those who get more in government benefits than they pay in taxes in a given year, because many of these families include children, elderly people, or adults who are eager to resume wage-earning as soon as they can find jobs but for now are unemployed.

Maybe the zombies are those likely to receive more in government benefits over their lifetime than they have paid in taxes. At the top of this list would be seriously injured military veterans in need of continuing care, along with those receiving costly Medicare-financed interventions in the last two months of their lives.

Alternatively, one might point to all those who have received means-tested public assistance. If so, Mr. Romney’s father George, who received public relief at one point, falls under suspicion.

If only we could use a simple blood test to determine who the real humans are. Would Mitt Romney be willing to release his own test results for past years?

But never mind. Blood tests could be dangerous when vampires are around.

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Economix Blog: Nancy Folbre: Just Try Harder

Nancy Folbre, economist at the University of Massachusetts, Amherst.

Nancy Folbre is an economics professor at the University of Massachusetts, Amherst.

“We try harder” proved a famously effective advertising slogan. Effort is important. Good incentives can elicit greater effort.

Today’s Economist

Perspectives from expert contributors.

But incentives sometimes backfire. And too much emphasis on them can lead to the presumption that all our failures result primarily from lack of willpower.

One commenter on my last blog post asserted that the economy would recover if middle-class people “would work harder, spend less, kill their televisions, stop drinking alcohol, stop eating sugary fat foods, exercise an hour a day and stop letting their rotten little brats run wild.” Good suggestions, in my opinion, but not substitutes for better economic policies.

In “The World Is Flat,” Thomas Friedman often sounds like a football coach, exhorting Americans to be more competitive. He tells his daughters, “Girls, finish your homework – people in China and India are starving for your jobs.” Again, good advice, but I doubt it will end the offshoring of American manufacturing employment.

Do people work harder if their pay is linked to specific measures of performance? Sometimes. But the psychologist Paul Marciano summarizes a number of reasons that  carrots and sticks often fail, including the resentment workers feel when their performance has been mismeasured.

The debate over performance pay for teachers raises fears that it will overemphasize standardized test scores or undermine collaboration among teachers, hurting students more than helping them.

As the compelling “Freakonomics” documentary shows, experimental efforts to improve student performance by paying them for high grades have shown only small positive effects so far. Some of the most poignant moments in the film capture a student who says he will try harder but fails.

Many experimental studies have offered people financial incentives to stay on a diet and lose weight. Incentives tend to work in the short run, but most people regain the weight they have lost. In a recent New York Times article, Tara Parker-Pope persuasively asserts that willpower is not their primary problem: physiological changes make significant permanent weight loss extremely difficult to achieve.

Why not stigmatize fat people anyway, if that might help them lose weight? Likewise, why not blame poor people for their own poverty and the unemployed for their own joblessness? Even if they don’t deserve the blame, it could help them try harder.

The economists Roland Bénebou and Jean Tirole come close to making this argument when they assert that a delusional belief that people always get what they deserve can be economically advantageous because it will motivate greater effort.

But as Richard Sennett and Jonathan Cobb pointed out long ago in “The Hidden Injuries of Class,” blaming people for every aspect of their own failure can demoralize and demotivate them. That kind of blame also discourages efforts to collaborate with others to make changes that no individual can achieve alone.

If we simply assume that the world is just, then there’s no need to change it.

Good incentives should encourage people not just to try harder but also to try smarter; to improve their social environment rather than their just their own psyche.

Some fascinating research shows how “commitment contracts” enable people to specify rewards or punishments for meeting (or not meeting) their goals, and to recruit friends or others as enforcers.

Ian Ayres, a law professor who developed this concept in his recent book “Carrots and Sticks,” takes it well beyond mere self-improvement. A commentary he recently wrote with the economist Aaron Edlin, on the Op-Ed page of The New York Times, makes a strong case for a public commitment to tax – and thereby discourage – further increases in income inequality, on the grounds that it undermines democracy.

I believe that inequality also undermines effort, by making it more difficult for those at the bottom to move up. Americans now enjoy less economic mobility than their counterparts in other affluent countries.

Improving economic fairness — now there’s a problem economists should try harder to solve.

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Economix Blog: Nancy Folbre: What Percentage Lives in Poverty?


Nancy Folbre is an economics professor at the University of Massachusetts, Amherst.

Do poor people represent the bottom 16 percent of the population or the bottom 15 percent? The answer matters more than you might think.

Today’s Economist

Perspectives from expert contributors.

The difficulty of measuring economic well-being helps explain why it’s hard for people to figure out what economic percentile they belong to or which public policies would best serve their interests.

A difference of one percentage point in the overall poverty rate is no big deal. But the new Supplemental Poverty Measure, or S.P.M., developed by the Census Bureau, which yields the slightly higher overall estimate, shows lower rates of poverty among children and higher rates among the elderly than the traditional measure. An estimate based on a measure similar to the S.P.M. suggests that poverty has increased less over time.

The S.P.M. goes beyond consideration of money income to estimate the value of such in-kind transfers as food stamps, net taxes paid to government (taxes paid less the value of tax credits received), and medical and work-related expenses (such as child care and commuting costs). It also employs a new standard of need, linked to what low-income families actually spend.

Children are the beneficiaries of more of the in-kind transfers measured by the S.P.M. than people over age 65 and have fewer out-of-pocket medical expenses. As a result, they look less susceptible to poverty under the new measure than the traditional one, especially compared with older adults. Safety net programs such as food stamps expanded during the Great Recession.

Any income-based measure that takes such transfers into account is likely to show a smaller increase in poverty resulting from the recession than one that does not. Indeed, a good measure of poverty should register the impact of major public policies.

Unfortunately, the S.P.M. suffers some painful limitations. Like the traditional poverty measure, it understates the relative economic well-being of older adults because it ignores the value of their wealth – which doesn’t count as income although it can reduce or help cover their living expenses.

Also, some low-income families simply can’t afford expenditures on health and go untreated. They are not necessarily better off than similar families who spend money on health, though the S.P.M. might make them appear so.

Shawn Fremstad of the Center for Economic and Policy Priorities effectively details these shortcomings. But like others who acknowledge the S.P.M.’s limitations, including Arloc Sherman of the Center for Budget and Policy Priorities and Heidi Hartmann of the Institute for Women’s Policy Research, he agrees that it provides important new information.

Much depends on how researchers, journalists and public policy makers interpret the measure and how they explain the difficulties of measuring economic well-being.

The in-kind benefits that people receive from government go far beyond those measured in the S.P.M. and include big-ticket items such as spending on public education and Medicare expenditures. Tax benefits range from implicit tax subsidies for employer-provided health insurance to the mortgage-interest tax deduction.

The value of these benefits to individual families is not measured in any comprehensive survey. Both in-kind and tax benefits to the poor are more politically visible, and they phase out rapidly as family income increases above the poverty line, where both federal income and Social Security taxes begin to bite harder.

This differential visibility probably intensifies political resentments that some middle-income working families feel toward the poor.

Yet taking net taxes and work-related expenditures into account shows many families closer to the poverty line than they would otherwise seem. Using the traditional income-based measure, about 36 percent of Americans lived in families with income more than four times the poverty level in 2010. Using the S.P.M. measure of economic well-being, the size of that top group declines to 17 percent.

Major government transfers and benefits are directed at different age groups. As a result, age-based politics now greatly complicates political alignments based on class. Most individuals enjoy large transfers from the government as children (through public education) and as retirees (Social Security and Medicare) paying net taxes only as working-age adults. As a result, voters are often confronted by choices that might help them now but hurt them later, benefit their children or harm their parents.

We are now a demographically diverse population with enormous variation across households in the extent of time devoted to the care of dependents, whether children, individuals with health or disability problems, or the frail elderly. Yet we don’t factor either the costs or the benefits of this work time into estimates of family living standards.

When differences across income groups are extreme and increasing over time — as between the bottom 99 percent and the top 1 percent – they can trump these complexities.

But any political movement that aims to unify American voters must devise strategies to improve their standard of living. Such strategies should be informed by serious efforts to go beyond conventional measures of family income to develop more comprehensive measures of economic well-being.

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Economix Blog: Nancy Folbre: The Green Jobs Numbers


Nancy Folbre is an economics professor at the University of Massachusetts Amherst.

Now, more than ever, prospects for “green jobs” are being treated as a red flag in partisan debate.

Today’s Economist

Perspectives from expert contributors.

Media Matters, a nonprofit watchdog group, has documented a Fox News report proclaiming that the costs of green jobs exceed the benefits. A recent New York Times article, pointing to lackluster programs in California, concluded that “public efforts to stimulate creation of green jobs have largely failed.” A column by David Brooks in The New York Times was pointedly titled “Where the Jobs Aren’t.”

In reaching for bipartisan support in his jobs speech on Thursday, President Obama avoided the word “green” altogether, though his proposed increase in infrastructure spending could involve investments in improved energy efficiency.

But green jobs still hold considerable promise. While it’s not hard to find examples of programs that haven’t lived up to expectations, considerable evidence demonstrates the actual and potential employment impact of efforts to improve environmental sustainability.

Not that green jobs are easy to define. The Bureau of Labor Statistics is currently in the process of developing an official measure, but employment that either saves energy or increases use of energy generated from renewable sources clearly falls into the category.

In February, the Economic Policy Institute and the Blue-Green Alliance released a comprehensive analysis of the employment impact of American Recovery and Reinvestment Act expenditures aimed in this direction, dominated by efforts to improve energy efficiency in buildings and to promote low-carbon transportation.

The study estimates an increase in direct employment of about 367,000 jobs, while indirect employment effects came to about one million – not a cure-all for an economy with more than 14 million unemployed, but a significant contribution.

The cost per job created varied considerably, and not all programs have moved forward as quickly as they should have. But as a report from Think Progress carefully documents, sensationalized assertions of a million dollars or more spent per job are misleading. Overall, the costs of green jobs creation, whether funded with public or private dollars, are lower than those in most other sectors of the economy, at an average of about $60,000 each. These jobs are likely to last for years, generating private cost-savings and important public benefits.

Retrofits to improve the energy efficiency of our existing building stock offer a particularly high rate of return.

A recent Brookings Institution report calls for broader attention to “clean jobs,” defined as those in establishments that produce or add value to goods and services with an environmental benefit, such as reducing pollution or natural resource depletion.

By this definition, the clean economy is a pretty small slice of the United States economy, accounting for only about 2 percent of all jobs. But it’s now bigger than the dirtiest slice, related to production of fossil-fuel based energy.

The analysis by Brookings of employment trends on the county level between 2003 and 2010 shows that jobs in wind energy and solar photovoltaics represent a small but rapidly expanding part of the larger clean economy.

The report also points to a growing share of private venture capital moving in this direction: 16 percent in 2010, from 2 percent in 1995.

So why not rely entirely on the private sector? The biggest gains from investments in new renewable-energy technologies are not easily captured in private transactions, because they produce environmental services that are largely unpriced. Companies can sell consumers with a conscience a “share” in global greenhouse gas reduction – that’s what the growing business of carbon offsets is all about. But consumers who don’t pay also get the benefits, creating a strong temptation to free ride.

Companies can’t market to the consumers likely to benefit most, because they haven’t yet been born. Conventional fossil fuels are cost-effective now only because the environmental costs are dumped into a global commons that imposes costs on other people and future generations.

Public policies could remedy this problem, by imposing a tax on carbon emissions so that their market price better approximates their social cost. Adopting clean-energy standards would also increase demand for clean and green production, giving private companies greater incentive to invest.

The Brookings report explains that Germany, carrying out such policies, attracted investments from major American corporations including Google, First Solar and Good Energies. Between 2004 and 2009, German employment in renewable energy increased to more than 300,000 from 160,000.

Globally, the green jobs numbers look pretty strong. Unfortunately, in the United States, the possibilities for bipartisan collaboration still look very weak. Flag-waving is so much easier.

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Economix: Defining Economic Interest


Nancy Folbre is an economics professor at the University of Massachusetts Amherst.

Republican resistance to raising taxes represents a distinctly minority view. The latest New York Times/CBS poll shows that only 34 percent of adults believe that taxes should not be increased on households earning $250,000 or more to lower the budget deficit. Even this modest percentage surprises me, because only about 2 percent of American households report income above this amount.

Today’s Economist

Perspectives from expert contributors.

Most conservative economists argue that higher tax rates at the top would hurt everyone because they would lower economic growth. I don’t buy this argument for a variety of reasons that I’ve explained elsewhere. However, the argument seems pretty easy to sell.

People don’t always recognize and effectively act on their economic interests. As one of my favorite behavioral economists, Dan Ariely, put it, we are all more like Homer Simpson than Superman.

I’ve always identified more with Marge Simpson than with Homer, but in any case, if the Simpsons don’t act on what we believe are their economic interests, economists should be able to explain why.

Reaching for a better understanding of the Tea Party seems like a good place to start, since it gets much of the credit or blame for current Republican priorities.

According to last week’s poll, Tea Party members are slightly better educated and more prosperous than the typical American. Still, only 17 percent earned more than $100,000 a year and 2 percent earned more than $250,000. I wish the survey had asked how many were unemployed or working in the public sector.

Some evidence suggests that the Tea Party’s interests are shaped by its racial composition. Surveys show that it includes few African-Americans (3 percent of the total) and has greater membership in the South than in other regions (41 percent of voters compared with 15 percent in the Northeast).

At that time, a majority reported that they believed that “too much has been made of the problems facing black people” (52 percent compared with 28 percent of all Americans).

Asked to volunteer what they don’t like about President Obama, the top answer, offered by 19 percent of Tea Party supporters, was that they just didn’t like him.

The most recent poll confirms this animus: Only 12 percent of Tea Party supporters approve of President Obama’s job performance, compared with 20 percent of Republicans and 48 percent of Americans.

Dislike and disapproval obviously inclined them to support Republicans who gave the president a hard time. But as Kate Zernike pointed out in a recent article in The New York Times, Tea Party members did not line up squarely behind those who wear their mantle in Congress. A CBS News poll taken in mid-July showed that 53 percent of Tea Party members, along with 66 percent of all respondents, favored a combination of tax increases and spending cuts.

One self-identified Tea Party Web site goes so far as to decry wealth inequality and calls for a progressive tax on wealth.

So why did Tea Party Republicans in Congress take such a hard line? Their views — like those of most other elected representatives — are not primarily shaped by the views of their constituents.

While the Tea Party movement got a big initial boost from small donors, its elected representatives quickly began relying on political action committees and major contributions from Wall Street firms. These almost certainly grew after the Supreme Court, in its Citizens United decision in January 2010, loosened campaign finance restrictions.

Many Tea Party members may be unaware of the extent to which wealthy political conservatives like the Koch brothers have bankrolled their efforts and shaped legislative priorities.

Partly because it does enjoy significant grass-roots support, the Tea Party has helped Republicans deflect attention from growing concerns about economic inequality and class conflict.

But these concerns are likely to intensify as unemployment rates remain high and the economy moves back toward official recession.

An ABC News/Washington Post poll conducted last month found that most Americans said the biggest difference between President Obama and Republicans lay in whose economic interests they aimed to serve.

Perceived differences based on household income categories, like the “$250,000” benchmark, seem less salient than those based on big business versus everybody else.

A striking 67 percent of Americans said Republicans were protecting the interests of large business corporations, compared with 24 percent who believe the same of President Obama (see chart below).

Data From ABC News/Washington Post Poll, conducted July 14-17

Meanwhile, the Tea Party is taking the fall. Its popularity has declined significantly in recent months. The latest New York Times/CBS News poll found the Tea Party was viewed unfavorably by 40 percent of the public, up from 29 percent in April.

As the economy nosedives, Tea Party populists are likely to become even less popular. And perhaps Tea Party members will change their perception of where their own economic interests lie.

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Economix: How the Budget War Was Framed


Nancy Folbre is an economics professor at the University of Massachusetts Amherst.

Political strategists often refer to “framing” as the way in which the edges of an argument define perceptions of its core. The term also has an older, sharper meaning that implies miscarriage of justice – as in “he was framed.”

Today’s Economist

Perspectives from expert contributors.

In the debate over the budget deficit and debt ceiling, the American people have been framed in both senses of the term. They have been given a misleading picture of the possibilities, and they have taken the blame for unrealistic attitudes.

Nominally, the budget debate focuses on spending cuts versus tax increases, with Republicans in one corner and Democrats in the other. What I see is a three-way tussle among the rich, the not very rich and the not rich at all over who should pay the costs of balancing the budget.

On this issue, differences among Democrats run deeper than those between the major players getting most of the press: President Obama and Speaker of the House John Boehner.

Consider a largely invisible proposal for balancing the budget, the People’s Budget, released in April by the Congressional Progressive Caucus, which includes 83 members of Congress.

Its proposed budget savings include major cuts to military spending based on immediate withdrawal from Iraq and Afghanistan. Its proposed revenue sources include new tax brackets for the rich (from 45 percent on income over a million dollars a year to 49 percent on income over a billion a year), restoring the estate tax and eliminating the Bush tax cuts.

The Economic Policy Institute provides a more detailed supportive analysis. Proponents have also developed a three-way comparison with budget proposals advocated by President Obama and Congressional Republicans that allows you to register your own preference.

Deficit hawks (at least those who are not tax chickens) should welcome the People’s Budget, because it offers a plausible path to debt reduction.

Matt Miller of The Washington Post noted that the People’s Budget would, unlike the Roadmap for America’s Future advanced by Representative Paul Ryan, Republican of Wisconsin and chairman of the House Budget Committee, generate a budget surplus at a predictable point in the future, winning the “fiscal responsibility derby.”

Paul Krugman, who praised the People’s Budget in The New York Times, observed that it stood little chance of being passed, but that the same was true of Mr. Ryan’s proposed budget.

Serious consideration of the People’s Budget in April could have reframed the budget debate by counterbalancing the rightward thrust of the Republican proposals. Serious consideration of it today would make President Obama’s focus on closing tax loopholes for wealthy individuals and corporations seem faint-hearted, at best.

The progressive tax policies endorsed by the People’s Budget have drawn remarkably strong support in public opinion polls, suggesting that the views of our most powerful elected officials don’t accurately reflect the views of the electorate.

An NBC News/Wall Street Journal poll in late February found that 81 percent of people would support a surtax on millionaires to help reduce the budget deficit. A Pew Research Center poll in late May found that 66 percent favored raising income tax rates on those making more than $250,000 and 67 percent raising the wage cap for Social Security taxes.

So why hasn’t a budget proposal that features more progressive taxes had a stronger, more visible impact on the national debate?

Poor press coverage is one explanation. Dave Moberg of In These Times asserted, “The corporate media give progressive alternatives short shrift, even though opinion polls show the public often supports such measures.” Peter Hart of the media watchdog group Fairness and Accuracy in Reporting made the more specific assertion that media coverage of the People’s Budget has been confined to opinion pieces, with no “hard news stories about it in the big papers.”

What about The New York Times, often characterized by some of its critics as having a liberal bias?

On July 14, I searched for the phrase “People’s Budget” on The Times’s Web site for occurrences over the last 12 months. I found the mention by Mr. Krugman, two readers’ comments on a previous post of his and a link on the Green blog to a brief derogatory comment in The Atlantic blog.

In short, “no hard news stories” about it (unless they omitted the proposal’s title). On the other hand, Representative Ryan’s Roadmap for America’s Future was mentioned more than a dozen times, though, of course, it has been in play longer. The most prominent articles focused on Mr. Ryan and his general philosophy rather than on the budget itself.

Maybe that’s the problem: the budget debate seems to elicit less hard news analysis than political framing and reframing.

And there’s no way that people can frame the People’s Budget if they haven’t even heard of it.

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