A Question of Being Productive; C. Carson

Clarence B. Carson A Question of Being Productive IF we must have statistics (a doubt ful proposition), and if there must be a Bureau of Labor Statistics to col lect, collate, and expound them (equally doubtful), it strikes me that there are potential statistics of con siderably greater economic import than those being bandied about by the Bureau. The best known of the Bureau's calculations, of course, are those dealing with unemployment. Although they are less likely to get muchnoticefrom the media,the Bu reau also releases figures from time to time on the number of people who are employed. The Bureau must compile other interesting tidbits, Dr. Carson has written and taught extensively, spe cializing in American intellectual history. He is the author of several books and Is working at present on A Basic History of the United States to be published by Western Goals, Inc. otherwise it probably would not qualify for such exalted status among government unqertakings, but those items rarely attract attention.

Although the hest I can do amounts to no more tha~ lukewarm support for any of them. this is not intended as an attack on $tatistics, per se. Still, it might be well to point out some of their shortcomings at the begin ning. The most! general objection to statistics is th~t they are reduction ist in character. That is, statistics are compiled b~ lopping off all the individual ways in which things dif fer from one andther to arrive at their common traits. I What emerges is al most inevitabllY a lowest common denominator for all of them. All too often, too, the cpmmon feature is the least revealingl and least important aspect of what is being categorized. fi79 580 THE FREEMAN October Take the matter of statistics on unemployment. When they are re ported in the media, they are made to sound as' if they were absolute numbers. We may be told, for ex ample, that during the past month there were 8,250,000 unemployed in the United States. The figures are further broken down into percent ages for cities and regions. For ex ample, the Bureau may announce that 12.7 per cent of the work force in an area was unemployed. That sounds precise, exact, certain, and beyond doubt. This apparent preci sion is achieved, however, by the ex tension of figures collected in sur veys, by the acceptance ofself-serving claims, and by the adoption of a coni venient fiction.

Lumpinginto Groups The convenient fiction concealed in unemployment statistics, let me hasten to explain, is that there is such a thing as a completely, or to tally, unemployed person or that if there is, they are very numerous. It is conceivable, of course, that there are some persons who spend their waking hours seeking jobs: going over want ads, writing letters of ap plication, making telephone calls, going to places of employment to get on their lists, and so on. It is even conceivable that some people might do this for as much as several weeks or even longer. But that such people exist by the millions in the United States is a fiction which is able to parade as fact only by lopping off large portions of reality. Among those listed as unem ployed are those for whom the status is essential for them to continue to draw unemployment compensation. Their claims to being unemployed are self-serving. That is, they expect to benefit from the acceptance of the claims. In fact, many of them are working, part time or full time, for themselves or someone else. The 1n temal Revenue Service has an nounced, even, that the number of those who are working at some thing, or something extra, and not reporting their incomes is legion, and that their earnings may amount to several hundred billions annually.

Many of these are undoubtedly listed as unemployed. It is not my point, however, that the category, unemployed, is mean ingless. There are undoubtedly many people who do not have regular em ployment for which they receive a regular and predictable paycheck. There are those who have difficulty finding employment in their profes sion or trade. There are some who would consider themselves partially or temporarily employed, when em ployed at all. The figures of the Bu reau of Labor Statistics may even reflect, roughly, the fluctuations in all of this. My point is that the real ity is much less precise than the sta tistics suggest, or declare, and that 1982 A QUESTION OF BEING PRODUCTIVE 581 the condition is rarely the one that is sentimentalized for the popular imagination. But the labor statistics duality of employment-unemployment has at least two other major difficulties pe culiar to it. One is that it leaves out of account a considerable portion of those with whom it might be ex pected to deal. It not only· fails to account for the whole population, but also leaves out of account a portion of the potential work force, what ever that may be taken to mean. To put it more directly, the employ ment-unemployment figures do not balance with the population figures.

Suppose, for example, that we are told in a report that there are 1121/2 million people employed and 81/2 million unemployed. That adds up to 121 million. But if there are 230 million people, say, in the United States, 109 million of them are missing from the statistics. Un doubtedly, they can be placed in this or that or the other category, but they are still in an employment-unem ployment limbo. Misleading Categories The other difficulty, too, tends to disqualify the dual employment-un employment category. The trouble is that it is not a very apt economic category, if it is an economic cate gory at all. It does not tell us any thing much that is applicable to eco nomics. Economics has to do with the effective use ofs~arce resources-i.e., land, labor, aqd capital-so as to provide those goods that are most wanted. Emplqyment and unem ployment figures may appear to get at that, but th~ appearance is de ceiving. Wheth¢r those who are em ployed are aid~ng in the economic endeavor is noil revealed. As to the unemployed, the statistics them selves are sile~t on the impact on the economy.

What is wanted, it seems to me, are some diffe$nt categories, cate gories which ¢mbrace the whole population, wh~ch are economic in focus,and whicq are more nearly self explanatory. (If the new categories present problems of quantification, they will not d~ffer in that from the present ones. Tpe distortions in sta tistics are inhetent, hence, unavoid able.) Since th~ production and dis tribution of goodsis the main concern of economics, it would be quite ap.. propriate to have the categories con centrate on thlat rather than em ployment and unemployment. Therefore, the following three cat egories are hereby nominated as re placements: (1~ the Productive, (2) the Unproductive, and (3) the Coun terproductive. ~veryone falls in one or the other of! these categories, or some variant ofiit. The categories are unquestionabl~ economic in charac ter. Classifying people according to them poses no greater difficulty than those in use. Above all, the third 582 THE FREEMAN October category, a highly important one, gets entirely ignored in the present classification.

The Productive The Productive consist ofthose who produce the.goods on which they live. They may produce the goods for themselves or for sale in the market, or, what is most common, some com bination of these. No distinction need be made between goods and ser vices, and the provision of a service is here considered as the production of a good. Thus, the housewife is as much the producer of a good when she prepares a meal or vacuums a room as when a factory worker con tributes to the production of a wid get. The crucial distinctions pertain to whether or not what is produced or provided is an economic good and whether or not what is produced constitutes what they live on. The productive, then, provide their own livelihood, either individually or as a family, and they do so with the goods they produce, whether they consume or sell what they make. It might be well to emphasize, too, since such distinctions have some times been made, that those in cluded in the productive category may do work that is predominantly physical or mental, may be em ployed by others or work for them selves, may work on assembly lines or be presidents of corporations, may be doctors, nurses, homemakers, farmers, miners, millers, butchers, bakers or candlestick makers. None of these distinctions matters in the determination of whether or not anyone is productive. Nor does it matter whether the productivity was in the past or is going on in the present. That is, those who are liv ing off savings, a surplus from past productivity, have a residual claim to be classified as productive.

The Unproductive The Unproductive consist of those who do not (or did not) produce the goods on which they live. This is a hodgepodge category. One of the categories had to be if everyone was to be fitted in somewhere. It in cludes the partially productive as well as those who produce nothing. It overlaps with the third category. That is, some people would fall in both categories logically, though since the counterproductive is the stronger category, those who fall there basically need not be listed among the unproductive. Since the Unproductive category is so diverse in its makeup, those who fall into it should probably be di vided into sub-classes. The partially productive might well be distin guished from the wholly nonpro ductive. This latter class would in clude infants and small children, students (not otherwise employed), the aged infirm, the temporarily un employed, and so on. A more contro1982 A QUESTION OF BEING PRODUCTIVE 583 versial sub-class would consist of those who are fully employed but economically unproductive. Among these could be listed such pursuits as those of the police, full time poli ticians, judges, soldiers, bureau crats, and the like.

These categories are not devised to reflect on the importance of some occupations vis avis others or for the purpose of making moral judg ments. I take it that the police per form vital functions, even functions that make possible more effective economic activity. So it may be with soldiers, politicians, and some of the others. Students may be preparing themselves to be more effective at their work in the future. It is no re proach to infants that they are not economically productive. My intent here is·to describe, not prescribe or proscribe. The point is that police men, as policemen, students, as stu dents, and so on, are not economi cally productive. Nor, though these categories do emphasize production, do I mean to suggest that production is the only or most important of hu man functions. ShiftingCategories But place it where you will in your scheme of valuation, there can be no reasonable doubt that production is essential to our lives and well-being.

Nor are there any plausible grounds for doubting that all who continue to live are dependent for their livelihood on what, is produced. More over, they eith~r produce it them selves or get it! from that which is produced. Mor~ succinctly, the un productive mus~ be provided for from the labors of t:pe productive, or, if you will, from the land, labor, and capital of the pvoductive. Thus, the changing proportions between the pr~ductive and the un productive are ~fmore than passing interest. Such ~vidence as we have indicates that ~he proportion of the unproductive t~ the productive has been increasing over the years. No statistics are available for this, but there are statisUcs and there is evi dence which provide clues. Proba bly, at the time of the founding of the United Sta~es as much as 80 per cent of the population was produc tively employe~ much of the year. Most people liv~d on farms, and only infants, very sD;iallchildren and the bed-ridden were excused from work ordinarily. In tOwns and cities, too, the young usually went to work as soon as they w~re able to do much, and worked until they were no longer able. Most of ~his work, of course, was performed py families.

By contrast,~he National Taxpay ers Union saiq a while back that there are "only ~bout 50 million real taxpayers left. the rest of our people are living off ofrecycled government money - federa~ payroll, pensions, grants, contraqts, loans, subsidies, revenue sharing ... ," and the like.

584 THE FREEMAN October While that does not absolutely dis tinguish the productive from the un productive, it gets close to it, and it may suggest that something less than one-fourth of the people do the bulk of the work. (The major distor tion in these figures is that house wives do not pay taxes in connection with that endeavor but, in my view, are productive.) The Counterproductive Even so, the Counterproductive may be a much more important cat egory in many respects than the un productive. The counterproductive are those who place obstacles in the way of those who would be produc tive. Although it would be interest ing to know the number of them and whether they are actually increas ing in proportion to the population or decreasing, it must be admitted that their impact on society is much greater than their numbers. Indeed, many of those who would have to be classified as unproductive are in that category because of counterproduc tive forces. I say "forces,"because the counterproductive are not just peo ple, but people acting with force.

Who would be classified as coun terproductive? Let me begin with two important sub-classes in the cate gory. One is made up of those who criminally' obstruct production and interfere with commerce. Among them are thieves, embezzlers, sabo teurs, terrorists, extortionists, intimidators, and all who make free dom of movement and commercial activity difficult. Crime deters all peaceful undertakings, and crimes of violence have been on the upsurge generally for years now. The second sub-class of the coun terproductive is labor unions. The most dramatic activity of labor unions in obstructing production is the strike. Strikes often stop all pro duction in a factory, sometimes an industry, and often interfere with (when they do not shut down) re lated businesses. Boycotts can have similar results. More broadly, though, virtually the whole power of unions derives from their ability to hamper production. They do this not only by strikes, boycotts, and violent activities but also by slowdowns, by work rules restricting production, by featherbedding, by specifying the limited types of work which may be assigned to a given job, by minimum wages, and by time-consuming meetings and negotiaton sessions.

But the greatest and most exten sive obstacles to production in the United States today are placed there by governments. It has already been noted that most, if not all, govern ment activity is unproductive. That is, the basic business of government is not the production and distribu tion of goods. Beyond that, though, much of government activity today is counterproductive. This has not always been the case. In 1840, say, 1982 A QUESTION OF BEING PRODUCTIVE 585 very little ofgovernment activity was counterproductive. The United States government did levy a tariff on im ports, and, though it was not high, it may have limited some kinds of commercial activities. Beyond that, state and local governments would have had some restrictions, but they were usually minor. In the twen tieth century, however, there have been mounting regulations, restric tions, inhibitions, limitations, and prohibitions on productive activity by all levels of government.

Away from the Productive In one way, at least, all govern ment undertakings tend to be coun terproductive. So far as they are supported by taxation, wealth is taken from its potentially produc tive use to an unproductive use. That is counterproductive. It follows, too, that all expansion of government activity tends to increase the unpro ductive sector at the expense of the productive. Thus, the growth of gov ernment tends to be counterproduc tive in its impact. This is not meant to suggest that there may not be le gitimate reasons for an increase in the size of government. Rather, it is to point out that in respect to taxa tion, at least, the economic impact is away from the productive. But much of government activity today is counterproductive, the fi nancing of it aside. The most ob vious of the counterproductive impact occurs when people are prohibited to be productive. The most striking exampl¢ of this is child la bor laws, which prohibit children from engaging in most productive efforts. Compulsqry schooling, which is a counterpartrto this, pushes chil dren into the unproductive category, willy-nilly. Gov¢rnment encourage ment of schooling, or retirement, and such like, is alsQ counterproductive.

It is also obviously counterproduc tive when govelfIlment deliberately restricts production, as in crop re strictions, mark~ting quotas, or any other device fori holding down pro duction. Minimum w$.ge and maximum hour laws are also counterproduc tive. Minimum 'Wage laws are coun terproductive b~cause they tend to price the unsklilled, the partially disabled, and the less productive out of the labor maItket. Maximum hour laws are count~rproductive in two ways. Where they actually reduce the number of hours that can be worked at a job, as fot commercial pilots, flight attendants, truck drivers, and others, they may reduce production directly. In many instances, how ever, maximum. hour laws are not absolutely proh~bitive; they only re quire higher p~y for hours above a certain maximlllm. This has a simi lar counterprodiuctive impact to that of the minimum wage. Anything th~t hampers or makes production more difficult is counter586 THE FREEMAN productive. Licenses, franchises, schooling requirements for occupa tions, government granted monopo lies, and restrictions on entering any field of endeavor are counterproduc tive. Government regulatory activi ties, such as are carried on by the Interstate Commerce Commission, Federal Trade Commission, Food and Drug Administration, Occupational Safety and· Health Administration, Environmental Protection Agency, and many others, are counterpro ductive. All business and personal record keeping for government, such as employment records for the Equal Employment Opportunity Commis sion, are counterproductive. So, too, are all business tax collection for or payment to government, such as So cial Security, unemployment com pensation, sales taxes, withholding taxes, and so on. They require the use of time and energy for govern ment, which is unproductive, rather than the use of them for production.

Among the sorts of people who would be counterproductive, either part or full time, would be inspec tors, enforcement personnel, admin istrative law personnel, judges (while enforcing regulations of production), Justice Department officials, politi cians and their aides (while consid ering and enacting such laws), and the numerous bureaucrats that have something to do with them in one way or another. Whether all busi ness personnel directly involved with looking after the regulatory and other hampering activities should be classified as unproductive or coun terproductive is an interesting ques tion. No effort has been made here to evaluate from every angle all gov ernment programs which hamper production. Whether this one or that one or the other might be justified on adequate grounds was not my concern. Rather, I proposed to look at the matter only from the perspec tive of the question of being produc tive. That does not mean, of course, that production is all that matters.

In that regard, my point is that pro duction matters, that it is impor tant, that it should be taken into consideration. Nor was it my purpose, ul timately, to spur the issuance of statistics on whether people are pro ductive, unproductive, or counter productive, though I think they would be interesting and revealing, if it could be done. Rather, by delin eating the categories in some detail, it was my hope to focus attention on whether people are productive, un productive, or counterproductive in their undertakings. Our livelihood and well-being depend upon the weight of the answers to this ques tioa , PITY the poor Federal deficit. What was once hailed as a western eco nomic savior has been relegated to a public whipping boy. Politicians and liberal economic writers who a decade ago declared that deficits were "actually desirable because this meant the federal government was pouring funds into the economic stream" now declare with equal sin cerity that these same fiscal short falls are a menace to economic growth.!