At 10:35 19/03/04 -0500, you wrote:
"Capital is dead labor, which, vampire-like, lives only by sucking living labor, and lives the more, the more labor it sucks."
--Karl Marx, Capital, vol. 1, ch. 10
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NY Times Op-Ed, March 19, 2004 Only Machines Need Apply By TODD BUCHHOLZ
SAN DIEGO
The gross domestic product is going up, but hiring looks sluggish. Credit cards bills go unpaid, but big-screen TV's are flying off the shelves. With statistics so contradictory, maybe economists should ditch their spreadsheets for dart boards.
Let's leave aside all the estimates and extrapolations for a moment and ask a simple question that may help cut through all the confusion: if you were a manager, why would you hire a human being instead of a machine? Humans get sick. They daydream. And they take coffee breaks.
The cost of capital equipment, meanwhile, from laptop computers to lathes, has plummeted since 1995. Moreover, the cost of leasing and financing new tools has fallen to the lowest levels since, well, before there were laptops and lathes. At the same time, federal tax policy has been tilted toward capital spending, with taxes on most dividends and capital gains falling to 15 percent. Changes in the tax law two years ago allow small businesses to write off $100,000 in new equipment immediately, while big firms get a temporary 50 percent write-off.
People, however, remain relatively expensive. Let's say an applicant can deliver $35,000 of value for the firm — and she is willing to work for $35,000 a year. Great match, right?
Not exactly. In addition to her salary, the employer also has to pay a 7.65 percent Social Security and Medicare tax, and contribute to workers' compensation and unemployment insurance. And then there's health insurance costs: employers paid an average of $6,600 per family last year. President Bush's tax cuts chipped away at these barriers, but they are still rising — just when the hurdle for capital has shrunk to the height of a sidewalk curb.
Can anything be done? Well, we certainly shouldn't dissuade businesses from investing in machines. Huge productivity gains help raise our standard of living. Congress could make it less costly to hire workers by reducing the amount an employer is required to contribute to Social Security taxes for new employees. Then managers might be less likely to view a job applicant like a walking bill from a collection agency.
Barring action by Congress, however, there is still hope for job seekers. Stein's law, named after the economist Herb Stein, declares, "If something cannot go on forever, it will stop." Over the next year, as American businesses take delivery on all the technology and machines they have ordered, the "Help Wanted" signs will finally go up. Human workers are not yet an endangered species. After all, somebody needs to operate the equipment — or at least turn on the coffee machine.
(Todd Buchholz, a former White House economic adviser in the administration of George H. W. Bush, is the author of "Market Shock.")
Louis Proyect Marxism list: www.marxmail.org
Robert Scott Gassler Professor of Economics Vesalius College of the Vrije Universiteit Brussel Pleinlaan 2 B-1050 Brussels Belgium
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