Slapped by the Invisible Hand of the Free Market

UPDATE: Justin has responded that it was not his construction job from which he was laid off but his editing job, which makes moot the point about construction jobs being fewer because of the housing slump. But the larger issues of the housing slump being an indicator of a widespread economic slowdown are important for considering whether moving to another area will alleviate economic problems.

ORIGINAL POST: Sometimes, one finds a jewel of social and economic analysis in the comments on blogs. The comment below, written by “klaus,” a frequent commenter on this blog, is in response to Justin Katz, administrator and main blogger at Anchorrising.com, who recently announced that he was laid off from his construction editing job, a job he has held for 10 years with a Massachusetts company.

As prelude to klaus’s comment, it’s important to know that Justin’s post goes to great lengths to blame the “indigent drags” on society who use social programs. Klaus provides a reframe that puts to shame the rest of the responses, mostly comments from people who use Justin’s experience to grind their axe against Rhode Island:

Justin,

First of all, I would like to extend my sincere condolences to you. Losing your job through no fault of your own is a wrenching experience.

You have just been slapped by the Invisible Hand of the Free Market. Construction is a notoriously boom-and-bust industry. We have been enjoying the boom for the last 3-5 years; now we have entered the bust. This is a national phenomenon; Boston is one of the most overpriced markets in the country, and RI tends to approximate the ups and downs of our larger neighbor to the north (and east).

This is all part of the “creative destruction” of capitalism. The market — in its infallible wisdom — has decided to stop allocating capital to construction and to put it elsewhere. Now, based on free-market principles, you are simply supposed to slide effortlessly into an industry that’s on an upswing. How you are supposed to do this, unfortunately, is not the concern of the Market. Nor is the Market concerned if there are no industries on the upswing. That doesn’t matter. What matters is that people like you are available as a surplus labor pool for the next boom cycle.

Also, you can congratulate yourself on being part of the fight against inflation. Ben Bernanke is concerned that a tight labor market will stimulate inflation. And, since you have been with the same company for ten years, no doubt your wage was high enough to create more upward pressure. So everyone should join me in thanking you for taking one for the team.

Then too, you can take comfort that you are in good company. As corporations move their labor pool to locations with lower unit labor costs, many people are finding themselves in the same situation as you. After all, they were making too much money, so their jobs had to be eliminated.

And you can thank Republican policies of the last thirty years for making it easier for companies to react nimbly to changes in the Market. And it’s good that we’ve been cutting back on things like unemployment insurance, because that also helps keep taxes low. Of course, if individuals have to face economic shortfalls, that’s the sacrifice that the Market requires. No doubt, the people at the top of the economic pyramid who are finding their incomes soaring because of these policies also extend their gratitude for your sacrifice on their behalf.

But you may want to reconsider moving to Massachusetts. It has a higher tax burden than RI, so no doubt industries are fleeing Massachusetts in droves to places like Alabama or Mississippi, where those money-sucking leeches don’t drain public coffers. The poor in these states live in squalor because they’re lazy or wicked and deserve to be poor. Either that or they haven’t organized as well as Rhode Island yet. So you may want to consider moving there.

I’d like to add a few comments of my own. I like Justin’s writing. I read it often. I read parts of his novel back when he was doing that. I wish Justin well in whatever he pursues; I believe he has striking talents.

Now, as an observer from out here in liberal-land, I’d like to add my thoughts.

I agree with klaus that there is a national housing slump, and as a result, construction is experiencing a pullback, not just in Rhode Island, but in many parts of the country. There are clear statistics to back this up. New housing starts dropped significantly in 2006, and the data has been mixed in 2007.

In addition, I know I’m just a liberal, but in response to all the comments that reply to Justin by complaining of Rhode Island’s taxes and social spending, how is it Rhode Island’s fault that Justin’s Massachusetts employer laid him off? This thinking seems to be ridiculously flawed.

Justin makes note that his wife and much of her extended family live here in Rhode Island, which would suggest there is significant social support here. This may be an important asset for Justin and not something that he should toss aside because of complaints about macro-economic issues in Rhode Island that don’t really apply directly to this situation.

In my experience as a therapist, people often raise the possibility of the “geographical cure” to deal with their lives. We are taught in social work school to help people question this impulse carefully, and for good reason. It is important to make sure that the geographical cure is not going to make things worse rather than better. Familiarity with an area is an asset, generally speaking, as is a family network. Also, given that Justin makes no claim to great wealth, I don’t think that tax rates should be the main reason for any geographical move. And even if lower taxes were the main reason that Justin should decide to leave Rhode Island, he may find that the flip-side of lower taxes will significantly decrease quality of life for his family. For example, other states may have less taxes, but their school systems may be worse than ours. They may have a less educated population and less infrastructure in place for economic development.

Finally, a totally wild idea for Justin to consider: try spending a year working in the social services. You would probably need to work two jobs in order to make the money you were making in construction, but many people do this. This would give you the opportunity to learn about the struggles of people who end up using social services, and see how many of them, like you, want our economy to work so that they can be successful. It might be a life-altering experience that will help you appreciate a fuller range of the human experience. Or, if it turns out that all you find are a bunch of indolent leeches on the system, it will make great fodder for a book.