[Marxism] Vampire capitalism
lnp3 at panix.com
Fri Mar 19 08:35:44 MST 2004
"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
NY Times Op-Ed, March 19, 2004
Only Machines Need Apply
By TODD BUCHHOLZ
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.")
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