Ep. 199: Guest Elizabeth Anderson on Private Government (Part Two)

0:00 Elizabeth: That will make a difference.

0:01 Mark: Seth had said earlier, well, maybe the amount of respect that I get is a highly sought after tech worker. That seems like a counterexample to your theory. But your theory is not that this is universal, this is quoting from your book. The amount of respect, standing, and autonomy that workers get is roughly proportional to their market value. That's the problem. And one might say, why is that a problem? All that is voicing a form of meritocracy. And isn't meritocracy the way that we get the best possible society? The people that for whatever reason, even if unjustly, are not performing as well or their interests don't count as much.

It's the most efficient, the people, whatever way that gets the economy rolling. But hopefully the people with sought after skills, they're the ones that should be most rewarded and that should have the most power and decision making. That's just the way the economy works. That's efficiency. So there's a tension there between egalitarianism versus meritocracy. Do you want to, you know, use that as a bridge to talking about what you mean by egalitarianism and how that fits in here?

1:07 Elizabeth: So what I'm interested in, in thinking about egalitarianism is not equality of pay. It's a certain mode of relating to one another in which everyone recognizes certain baseline entitlements to respect and dignity, even if the relationship contains some elements of authority. And that's what we expect from public government. Right. The democratic state has authority, but it's expected to pay attention to all the citizens, not just the rich ones, because everyone's entitled to standing, to have their interests be considered in the formulation and enforcement of the laws.

And merit really has nothing to do with it. I would add that the idea of meritocracy itself has been grossly abused and that even if it existed in one generation, it would instantly be dissolved in the next. Because the most important thing that the people at the top do with the extra privileges they get is try to secure advantages for their kids, regardless of whether their kids are talented or not. And so even if you could achieve meritocracy, it would end in the next generation. So it's not even really a stable ideal. It self destructs pretty rapidly.

2:45 Dylan: Part of what you're saying makes me think, especially since I read your paper on equality, is that it's not even really a meritocracy. The problem is that there's just too much luck involved. It's not accounting for all of the factors of luck, all kinds of inequalities that are incidental to us. It's in a kind of arbitrary way maximizing that factor. Not even just, you know, abilities, but where you're born, what time you're born, you know, where you are in your life and so forth.

3:17 Elizabeth: Yeah. So I want to push against that way of formulating the objection to meritocracy. I agree with you that there's all kinds of arbitrariness and that only a subset of people with talent ever get the chance to develop that talent or to make themselves known to decision makers. All that's true, but I think it's kind of a secondary thing. My view is if you are a participant in some kind of authority relation, you could be the lowest rank on the workplace hierarchy. You're still entitled to a baseline level of respect and to have your interest taken into serious consideration. You're not just a drone who can be stomped upon and abused just because you're Easily replaceable.

4:04 Dylan: That sense of respect and entitlement is what I understood you to be the reason why other kinds of distributive justice or other kinds of understanding of egalitarianism don't work because they fall prey to basically problems of luck.

4:24 Elizabeth: Yeah. See, what I would say is that even if you could eliminate luck and make sure that pure merit was the only factor determining where people ended up, it's still the case that you could object to the way the workplace is structured because even the people at the very bottom, maybe they have no more talent than just what the lowest paid, lowest level unskilled work could be. But those workers too are contributing to the social product and they're entitled to a baseline level of respect, shouldn't be abused, shouldn't be harassed, and so forth.

5:00 Dylan: I guess I was trying to formulate that the thing that ought to be made equal is what was at issue when I read your paper. And I think that's what is sort of going on now is that the thing that ought to be equal as human beings comes under this notion of respect. And then there would be a discussion about that. And it doesn't have anything to do with circumstance or ability or any other kinds of things that we're going to talk about making equal. It has to do with their ability to participate as citizens and have equal respect.

5:33 Mark: In that context, if libertarians make a meritocracy argument, basically social Darwinism, then the ready response to that is, as you said, Dylan, to point out luck. To say you being rich is not a matter of you being the most talented. It's a matter of who your parents were, what sort of education you got. And you could even point further like it's not your fault that you were born not so smart or not have the interpersonal skills to get ahead in the business world. And so that kind of response still is admitting the fundamental premise of meritocracy. It's just saying that merit is something that we need to correct for bad luck. And then we need to award respect, award standing based on merit. And so you consider in your paper, Liz, other folks theories that come down to, well, it should just be your own choices that you're punished for.

6:26 Wes: Right?

6:26 Mark: It's your choice not to work hard, but we should have some sort of maybe social recompense for your lack of natural talent, your lack of being born to the proper parents. All these things that are amount of luck we should somehow correct for, maybe with cash payments, maybe with some other things like that. But you know, we have to even out the playing field. And of course, the picture of the Kurt Vonnegut short story of the smart people that have to have the blaring noise in their headphones at all times. You know, these sort of. This is too easy for the libertarian to respond to because of course we don't want some dystopian equalizing kind of thing like that.

So your response is really to just reconceive of the meritocracy altogether and to, as you say, everybody deserves some level of respect. We're not going to make a judgment whether you need a helping hand because you made a foolish decision or because you're naturally untalented or for any other reason. We're just going to say that there are certain fundamental, which this requires against Rawlsian liberalism, the state to have a positive notion of what human nature, what the good of human nature is, at least to a minimal level. And this is something that could be a matter of ongoing negotiation.

But we're going to say that everybody is entitled to food or entitled to meaningful work or whatever it is we work out based on a non value neutral conception of what human beings sort of should be entitled to. And then beyond that, you could allow for a great deal of economic inequality or whatever based on any number of factors. So it's a matter of setting this minimum baseline. And that includes not just material goods, but more importantly respect, which is what ultimately we're talking about in this current book of that employers, even if as a practical matter for the operation of a firm, an employer needs to have the discretion to order you from this task to that task and that task to this task, and really have kind of an open ended by default authority over you in that way.

There needs to be some limits to that in line with your basic dignity as a human being. And those are things that we would negotiate.

8:40 Elizabeth: So part of it is a dignitary interest. I agree with you, but it's not just that. I mean, workers have interests in autonomy as well. And I think that requires some division between their life when they're on duty at work and their off duty life. So about half of workers, for instance, are subject to random drug testing. And that means that if they smoke a little pot over the weekends, pot being of a nature to stick around circulating in your system for a long time, you could get in trouble in the middle of the following work week if you test positive, even if you're completely sober.

I just think the employer just shouldn't even be going there. Look, they can observe whether you're a good worker or not, they don't have to dig into your bloodstream to figure that out. It's not that I approve of smoking pot. I think it's not a good choice. Not a choice for people. But if they do that, I don't really think it's any of the employer's business. What are they doing drug testing every day?

9:41 Dylan: I mean, I guess the corollary is what's important to the employer might have an interest in them not being drunk or high. They're on the job.

9:50 Elizabeth: No, on the job is a different matter. Look, I do think it's fair. If you are flying a passenger jet, I think it's proper for you to pass a sobriety test before getting in the cockpit. I'm okay with that. But then you're on duty.

10:05 Dylan: But if you're coding software, that doesn't matter, so.

10:09 Seth: Or doing software marketing, as the case may be.

10:12 Dylan: Yeah, they actually have joints in the vending machines work.

10:16 Wes: So.

10:18 Elizabeth: Yeah, I was thinking for sometimes maybe getting a bit little high could be good for your performance.

10:23 Seth: No, it's. It's worse.

10:25 Elizabeth: I once talked to a guy who worked in the kitchen of a restaurant and one of his co workers got really angry. He was just sort of an angry kind of person. And he was always relieved when this angry co worker had smoked a joint because then he was just kind of nicer and got along with people. Yeah, yeah. Please, please go ahead.

10:47 Seth: There was an extreme example of this and let's take schedule C or whatever drugs off the table. What was it? One of the companies recently said they're not going to serve meat in their cafeterias anymore. And if you're an employee, wellness programs

11:02 Dylan: fall under this too.

11:04 Seth: Where I work, they have these voluntary health programs. So if you meet certain standards, your health premium is reduced. So like, if your blood pressure, you know, and your whatever your weight versus your height, your bmi, whatever the. It's an incentive for you to try to like, engage in healthy behaviors. Of course that means you have to document all this stuff through the company and go through this whole process. But there's a number of different programs where they have incentives where like, oh, if you do so many steps a day for a certain period of time, you get so many points and these points will add up and blah, blah, blah.

But, but there's a part of me like, I genuinely, I don't eat wheat, I don't eat corn, I don't eat processed foods. Like, I have this whole thing and I do believe that sugar is Worse than like heroin. But for me, I'm doing like a keto kind of like diet. And it's like meat is important because I don't have other alternatives. And I'm trying to imagine what kind of circumstance it would put me in. And I'm not trying to be spurious. If one of the things that we haven't mentioned yet that you mentioned, Liz, in your book is the. And you don't even put as much emphasis on it as I would, which is health care, employer provided health care.

It's a critical part of decision making. When you're talking about if you are an employee at will who is able to leverage your skills and your experience to make choices between different employers. Healthcare benefits are a critical part of that decision making process. And the difference between being employed and not being employed is the difference between having benefits and not. And the only bridge between having been laid off, I've laid people off, I've been laid off, I've taken voluntary separation is this COBRA program by the government, which is another interesting intervention of public and private and all this.

But the reality of you being able to afford the premiums, paying the full price of the premiums that your employer pays, it's a very tangled. And from a benefit perspective, from an employee perspective, and from an employer perspective, having to provide those benefits and simultaneously the cost of those things as part of the overall compensation to the employee. And again, maybe this is a white collar knowledge worker, first world kind of problem and it's not applicable to West Virginia public school teachers. But this is a real and live issue in the world that I live in.

The friction in that freedom of exchange where you talk about, well, we're in a free contract with each other. Well, if it's just about money, that's true. But when it's about health care for your family, that creates friction to change. Friction to freedom of movement such as described.

13:51 Elizabeth: Oh, absolutely, yes, that's quite right. And I just want to discuss a little bit the whole state commandeering of large employers as de facto public health agencies for their employees through these wellness programs. This is another area where, yes, I can see the public health rationale for it, but I think you're just mixing up levels of coercion here. And I really don't think the boss should have any business with your personal health care choices. It's too much supervisory control. And workers, I think need more autonomy. This should be considered an off duty thing.

And Obamacare, I think, made a serious error in recruiting employers into this public health agency. Mode which just hands them a lot more authority to structure workers lives. Granted it's a prudent thing to quit smoking and exercising and improve your diet and so forth. That's all fine but I really don't, I don't think it's proper to recruit people's bosses to get them in line on these issues.

15:03 Seth: I completely agree. As soon as the company has a financial interest in the cost of your health they have an excuse and a lever to make normative judgments and enforce policies in your personal life about the decisions you make.

15:21 Elizabeth: That's quite right. And it's also, I think a major driver. Employer provided health insurance is a major driver of discrimination against older workers. That's a factor in tech as well because you know, you get older inevitably you're going to be spending more health care dollars and that raises everybody's premiums. There's a reason just to get out of the employer provided health care business. It was a bad model. You don't see any other rich country do things that way. You know, it's a reason to move towards something like Medicare for all and just relieve employers of this gigantic hassle of trying to figure out what health insurance options to offer employees.

16:03 Mark: So is the issue just of employers having that particular power and an interest in health and getting in the business that way or is it that we don't think that any level of government should get in your business that way? So you would think if the federal government itself provides universal healthcare then they have an incentive to do the same kind of wellness programs to inflict the same. But you're thinking that that is not as bad because that authority is not mixed up in your day to day workings in the way that employees are.

16:33 Elizabeth: Well no, I actually would object if the state started taxing me more just because I'm not following a state prescribed diet or something. I would have a big problem with that. No, none of their business. There are some things that the state can do properly. Public health announcements, making sure that people know what the dangers are of, of taking various drugs or smoking and so forth. Information's fine, but no, I don't want them digging into my personal details and prescribing for me an optimal healthcare behavioral program.

17:08 Dylan: But it sounded like it was more than that. Is that the question of incentives that actually end up being discriminatory is a problem in this respect. An incentive like that will reward you in some way for going to the gym every week. You would say is not benign.

17:27 Elizabeth: That is correct.

17:29 Mark: But that sounds like then and I Think one of the appeals of libertarianism is because it seems simpler that if you just say it's not the government's business what preferences you express or how these things, let's just let the market fulfill it, then that seems like a consistently hands off approach. But you're saying, well no, there are certain things about human nature, such as our need for autonomy, that we can legislate and say we must protect this within the workplace. But even though your need for health is pretty damn objective, it's still none of the government's business. The government should be Rawlsian liberal neutral with regard to what exercise programs you follow or what diet you follow, because that is a step too far.

18:16 Elizabeth: I just want to point out that as far as the libertarian goes, it's true that in this respect, they're right about the state's interference with our civil liberties even to do imprudent things from a medical perspective. But libertarians are totally okay with the employer deciding to penalize or reward workers based on their conformity to the employer's ideas of what the optimal behavioral health program is. And that's where I say I have a problem with it. It's not just the government of the state, it's the government of the workplace too. That should stay out of workers autonomy. Give them space.

18:58 Dylan: I have a question about this because it has me thinking about other kinds of things that this would be mainly in public government, but I think it applies also to private government. This question of incentives to me makes me think of the whole question of should government, broadly speaking, have any interest in cultivating the good of its citizens? And one way in which that I think is typically less objectionable than even health care, is requiring education. So mandatory education minimums, and that seems to be arguably fits both categories of being for the good of the citizenry.

The good of the government is the government itself has a vested interest in having citizens who are able to participate in the running of the government, especially a government like a democracy, as well as good for the citizens themselves in the sense that I'll just say it's just an unarguable good that individuals are better off having education.

19:59 Elizabeth: Yeah, but let's point out that there's no real violation of a child's autonomy here because children don't have autonomy yet. In fact, you need some level of education to be able to fully exercise freedom of choice. Education's liberty enhancing.

20:16 Dylan: I agree, I agree. But it's an interesting exception then because in that case it's relying on the fact that the participant actually has a different authority relation and the people who have that authority have a different set of obligations or something like that. Again, I'm thinking about in the equality paper, one of the ways in which you turn it is you may end up focusing on obligation rather than equality of distribution. So in that case, you would argue not only is it not contrary to the interest of the children because they really don't have autonomy, so you're not violating their autonomy. And in fact, it's an obligation of the government and the adults to provide that in order for them to maximize their liberty. That would be the kind of argument. Why doesn't that apply to healthcare here?

21:04 Elizabeth: We're talking about, of course, healthcare, since, in fact, the state does properly intervene if parents refuse to provide health care for their children.

21:16 Dylan: Well, but in a very, very limited way. And in fact, it's only if you're poor that the government interferes in things like something like the food and diet of children by having requirements regarding what kinds of things, People who are on food stamps, restrictions on what they can purchase. But there is nothing to prevent a parent from feeding their child horribly.

21:39 Elizabeth: Oh, well, I mean, like you feed them junk food. But if it gets to the point where the kid's starving. Right. The state certainly can intervene.

21:47 Dylan: Starving is one thing, but they could have heart disease or any other. You know, there's a whole litany of things that could be wrong with them that's different than starving. That.

21:54 Elizabeth: No, that's quite right. And, you know, one of the issues here is that food is. There's a very wide variety of conceptions of the good regarding food and all the kinds of considerations that people put into that. And, you know, people need space to decide these things. But at some point. Right. We do know that there are some really destructive practices. And one of the things we hope is that pediatricians, for instance, will intervene if parents are giving their baby soda to drink out of the bottle. Okay. This actually happens. And it rots the kids. Yeah, it's like really bad. And you know, pediatricians ought to be saying, look, really just shouldn't be doing that to your kid.

22:38 Dylan: This is really, really interesting question about where, you know, we're talking about authority here and when that authority really involves affecting the liberty of other individuals and what their standing is with respect to that. That's what the whole thing is all about.

22:53 Elizabeth: Right.

22:53 Dylan: That's what the private government argument is

22:56 Elizabeth: at the most general level. Yeah. So here we're. Now, our discussion has wandered outside of the workplace and we're looking at other authority relations. And look, I do think that why do people go to the doctor? Because the doctor has certain level of expertise on arcane matters having to do with our health. And they know better than us often what's going to be good for us or bad for us. And that's also why we take our kids to the doctor. Now, we hope, of course, we expect that the doctor is going to give advice, medical advice that's helpful to people, and they are going to exercise some normative, pressure the parents to teach their kids better habits and inculcate better diets and so forth. It's not terribly effective, but you know, it's something and sometimes it has an impact.

23:44 Dylan: But even then it has me thinking about there's different versions of the good in regarding risk and health. Right. So, you know, a somewhat benign example is the roaming child question.

23:54 Elizabeth: Oh, right, the free range kid. Yeah, I'm totally in favor of free range kids. I see.

24:00 Dylan: Yeah, I'm a big fan of free range kids myself, but they're delicious.

24:07 Seth: Sorry.

24:09 Wes: That was perfect, Wes.

24:13 Mark: So just to relate this back to libertarianism again. And so it sounds like, Liz, that you are more libertarian than a libertarian. In other words, you're just as much of a libertarian, perhaps about government action, but you're more libertarian because you want to extend this to the power relationships within firms. However, that is complemented by this complexity with regard to different types of freedom that you recognize in a way that you say libertarians don't, that for instance, the right to private property, which is of course every libertarian buys into leave me alone with my stuff, but that actually is a government restriction on everybody else from touching your stuff.

So it's actually, you know, it gives you a small amount of positive freedom in dealing with this stuff, but involves a great negative restriction, a restriction on the freedom of. So actually that fundamental thing, libertarians, the most hardcore libertarian, already admits that state action, a state definition of relations is necessary in order to, you know, that there's going to be some trade off between positive freedom and negative freedom. And so that is what enables you to be able to say, consistent with that, hey, libertarians, you should allow the positive action of government to restrict employers from certain, you know, whether it's just certain abuses, but really it seems like to make the default relationship between employer, employee, not the employer gets to do everything except what is specifically prohibited, but that there is some sort of more actual negotiation about what powers the employer has.

And this is all again, so a restriction by the government is necessary to maximize positive freedom.

26:00 Elizabeth: Well, yeah, the basic idea here is that when we consider the state and its legal infrastructure, libertarians tend to make the mistake in thinking that all law is only coercive and only constraining when lots of law is actually enabling and empowering. These are two sides of the same coin. You restrict some people's liberty in order to open up liberties for other people. And private property, of course, as you mentioned, is a classic example of that the owner gets more liberty over their property precisely because the state is stepping in and preventing however many billion people from touching your stuff.

So in that case, the libertarians are highly sensitive to the enabling aspects of the law, but then they seem to be blind to it in other instances. And what I argue for is a consistent way of viewing the law in both its enabling and constraining aspects. Because enabling, providing options, opening up options for people, requires constraints on the other end. And let's view this consistently so we could see whether the constraints are worth the liberties obtained from them. And what I see libertarians do is they, depending on their pre existing biases, they only see constraints in certain domains and they only see liberty in other domains.

And they, they don't see that there's an infrastructure of law that both constrains and enables in both cases.

27:42 Mark: We've discussed similar things in like our free speech discussion where somebody like Stanley Fish says you need to have some sort of restraints because those end up in a net gain of freedom. In this case keeping people from being so abusive to each other as to kind of to stifle speech in the first place. But that, that is just a general, inescapably political feature of any talk about freedom is that you have to negotiate. You can't just beforehand set up some simple principles and this will determine all possible contingencies. It might actually be a bad idea to set up, you know, in detail, these are exactly what the employers get to do.

Because as you point out again in your book, you know, the theory of the firm says that for a business to be efficient, and this is what pro business folks like Tyler Cowen are going to say, look, the fact that you're even considering workers rights is going to just doom the competitive nature of American business. The more union activity you allow, the less competitive, the less economic growth we have. Tyler Cowen's position in particular is that whatever inconveniences people suffer under the current system, if we maximize growth, then over generations we produce more and more wealth.

And so by strictly utilitarian argument, allow the Abuses now because. Because two generations now from now, nobody's going to remember the abuses. There's just going to be way more wealth to go around. So that's an extreme version.

29:13 Elizabeth: Well, except it doesn't go around. It gets concentrated in the 1%. Right. You were taking what, 22% of national income. So I don't believe in maximizing GDP, doesn't necessarily maximize welfare for people. But let's leave that aside. I think the competition argument is misguided if the regulations are universal so that no business can skirt around them. Classic case in American history is Title VII anti discrimination law. It is true that in the Deep south if you had a white employer who employed a black person, that they could lose their competitive edge because there were so many racists around who would punish the corporation for doing that.

Some of them would be the workers, some of them the customers. And of course a lot of employers themselves were racist and so didn't even want to consider hiring a black person or a woman for various positions. And the point is to say, you go in there and say, no, you got to treat everybody equally. You can't discriminate on these grounds. And then no employer can say, well, but I'm put in a competitive disadvantage relative to somebody else because everybody has to play by the same rules. You don't lose anything competitively. And in fact, the economic historian Gavin Wright actually took a look at the economic impact of the 1964 Civil Rights act on the economy of the south.

And what he found was that it was the best thing economically that had happened to the south since the abolition of slavery. Why? Because it unleashed a huge amount of talent among African Americans that enabled them to find positions that better fit the talents that they had, which enormously increased the total productivity of society. So even though you had a lot of hand wringing about government intervention and regulation and so forth, was going to stifle efficiency, quite the opposite was the case. You needed to break through these oppressive social norms of segregation in order to open up opportunities for talent to express itself.

31:36 Mark: So I threw out those, the red meat positions that Tyler Cowen. It kind of threw off the initial point that I was trying to make, which is just the trade off argument against libertarianism.

31:48 Elizabeth: There's always trade offs. And one of the things I do in my book is I'm not saying that the only acceptable mode of workplace authority is full scale workplace democracy where the workers call all the shots. I don't actually say that. Now we do have some interesting models where that has been successful and the Mondragon corporations of Spain are a really interesting example that lefties have looked at for a long time. And it's really great. It's great for the workers if they can pull that off. But I don't actually think that that's a highly generalizable model.

I think it's wonderful if you could get it. But there's a lot of reasons actually to be cautious about full scale workers democracy. One of the reasons is that you pull off democracy in this case because the workers are actually the owners of the firm. But then the difficulty is that if a firm requires a lot of capital investment, you put all your eggs in one basket. So if the company goes south, you also lose all your savings, which is not a good thing for workers. It's a high risk strategy for ordinary workers. So there's some downsides. What I was looking for was a model for organizing the constitution of workplace government that I think is more generalizable, that could work in a wider variety of workplaces, even where workers can't put up the capital to actually own the business.

And the model that I found pretty attractive was what they do in Germany and it's known as co determination. Every firm with 50 or more workers has to establish a works council which basically creates at the shop floor level, joint worker owner management of workplace conditions and operations. Now this kind of system is actually not legal in the United States because under our union laws that's considered an employer union. And there's a bad history of an employer union in the United States. But Germany seems to have figured out a way to do it where workers have a genuine independent voice in how the workplace operates.

And it's not just at the shop floor level, but at higher levels of firm governance, all the way up to the board of directors. Workers get seats. And you know, nobody can say that German workplaces are inefficient or unproductive. I mean, Germany is a manufacturing powerhouse, got incredibly highly skilled workers, flourishing economy. Workers seem pretty happy there. It's definitely not an example of a failed economy by any means. So if it could work in Germany, it seems to me that that would be a model worth looking at. Not that we replicate it and rubber stamp it here in the United States.

United States. But it's something to build on. One of the advantages of the German system is you don't have to run a union election which can be manipulated and oppressed by the employer in order to get a voice in the workplace. It's just automatic. You hit 50 employees and you Get a voice. So it's built into the default constitution of the workplace rather than something that has to be fought through for through arduous and expensive and lengthy attempts to organize the workers as in the American labor union model, which exposes them to all kinds of vulnerabilities, including firing.

35:25 Mark: Maybe this is getting at. I was trying to, in making a comparison to the free speech example, I was trying to get at the fact that at least according to Fish or someone like that, that there is always a matter of negotiation involved. And this seemed to be in your book. What you were pushing for is that what's wrong with the workplace constitution is that there is no negotiating power that the worker has, that the state sanctioned structure of this employment at will gives all the power, gives all the cards, as you say, to the employer, and that there should instead be room for negotiation.

That sort of goes against one of your solutions, which is to impose something like the rule of law in a workplace. And what you just said there, when you hit 50 employees, you automatically. So that's not a matter of individually or as a group negotiating with individual employers. That's a matter of having a default workplace constitution that has rules in it that do not require negotiation.

36:28 Elizabeth: Well, right, but let's keep in mind that we already have that in current employment law only the default workplace constitution is a dictatorship instead of anything where workers have a voice.

36:39 Dylan: Yeah, I mean, that's the point with the German co determination things is that's also part of German law, that that's how it's structured. So that that's where the authority comes in for the companies to have to behave that way.

36:51 Elizabeth: Here's just another point that I think is really important. And libertarians somehow sometimes fantasize that you can create a really advanced economy with a complicated division of labor and international trade relationships. I mean, the kinds of advanced high tech economies we have today on the basis of purely libertarian contracts without state defaults. And it really doesn't make sense. Once you scale up your economy, there's really no avoiding the law. Libertarians like to look at these small communities where people, through the sheer force of social norms have managed to create wonderful cooperative systems.

So you can take the example, for instance, of Bob Ellickson, who has a lovely book called Order Without Law. He's a libertarian and what he showed was in Shasta County, California. The people there as a ranching county had figured out their own ways of handling situations where cattle wandered off the ranch and onto other people's property. And they just read it beautifully using their own norms and totally ignored what the law said and it worked great. But even by his own account, there was a stranger who bought property and was sort of an out of state rancher, didn't really care about community relationships and he was violating all the rules and letting his cattle wander and really just totally ignored the norms because what did he care?

He wasn't living there. These were in his neighborhoods. He was just sort of a part time long distance rancher. And so the whole system down. And in cases like that, you really need the law to step in. Well, now let's think about complex advanced economies. What's critical about them is they're not face to face. We have cooperative relationships with total strangers with whom we're not able to exercise the same kind of normative pressure as we can with people who we see every single day. And in cases like that, you can't depend on local spontaneously generated norms to solve these coordination problems.

And at the same time, to scale up also, you need some level of uniformity of rules. So this is a point that Hernando De Soto makes about what happens when you let people just create local property conventions on the fly, just organically emerging from local norms. What happens is your property law just becomes incredibly idiosyncratic, which is fine for the locals, but if you want to create a national market or an international market for stuff, it's impenetrable to outsiders to figure out how the system works. And hence the property isn't marketable to a wider market.

And so all the property sells at a really low value because outsiders don't really know what they're getting when they buy this stuff. And so De Soto argues, he's a good capitalist, but he argues, look, you just need some level of uniformity in the background rules in order to create large scale markets. I think he's entirely right about that. But how do you achieve uniformity? It's not going to arise spontaneously. What spontaneous voluntary interactions face to face produces is a million little local conventions that are impenetrable and unknown to outsiders.

You want to create a national market or an international market. It takes vast amounts of state power and state rulemaking to create that. So my argument is, if you like the high tech, super advanced economies that are ultra wealthy and productive, you actually need some pretty powerful state regulation to create the background infrastructure to make all that prosperity and the vastly expanded scope of cooperation possible. So it's just another reason why instead of railing against the state, we should see why we need it. And then it opens up much Wider opportunities when you can market your talents on a national or even an international scale that enhances people's opportunities.

But you need states and trade agreements to create that.

41:16 Dylan: What you're talking about reminds me of the very beginning of the book and how the early days of market arguments were exactly this kind of thing, of enhancing the freedom of the individuals against the tyranny of the small town restrictions. That really being an individual within a market was a way to become free.

41:38 Elizabeth: Yeah, look, I mean there's a lot to be said for that. So I don't want to be seen as somebody who, who doesn't like markets. I want to say, look, if you want to increase the scale of cooperation through markets, the only way to do that is to accept the power of states to create a legal infrastructure that's going to make that possible. And same for large scale corporations and employers, they need a legal infrastructure too. But then now that raises the question of what that infrastructure should look like. Should it disempower the workers within that structure or should it give them a voice?

Well, that's a state decision. I think the arguments in favor of giving workers a voice are very, very powerful. And the arguments that suppose that workplace dictatorship is a good idea really don't pan out. And I point to Germany. Like what's wrong with the German system? Exactly. They create incredibly high levels of prosperity while securing to a much higher degree the dignity of workers than what your typical ordinary run of the mill American worker enjoys.

42:50 Dylan: But, you know, doesn't get quite the same amount of prosperity. Is that the people who run the companies in Germany probably, I bet, don't make nearly as much money as the people who run the companies in the

43:01 Elizabeth: U.S. oh, you're absolutely right about that. But can we talk about that a little bit? Because really now you can't even figure out how to spend a billion dollars. How is this supposed to work? You get a billion dollars, I mean high tech people, what Zuckerberg, he has many billions, right? Or Elon Musk, all these people, they got billions. But how are you supposed to spend it on yourself? You buy a mansion, it's got 30,000 square feet. Then you buy 365 of these mansions and you spend one night each per year in each one of them. It's more of a hassle to travel from one to the next than it is just to have one regular house and maybe a summer house somewhere. Then you only have to split your time between two residences. Really. Do you really need 365 houses or 93 cars.

43:54 Dylan: Everybody has different interpretations of the good.

43:58 Elizabeth: I understand that. But why should the ordinary worker sacrifice so that the 1% can get 22% of the income to indulge the most frivolous desires? If they had less money, their tastes would rapidly adjust to smaller demands. They'd still be massively well off. So let me just tell you the story. Back in the 1950s, was it. I think it was. Fortune magazine profiled a top executive of Connecticut Company, one of the leading CEOs of his day, around 1955 or something. And they covered what his life was like. So he had enormous authority and thousands of employees.

Very prestigious guy. They just said, well, how does the top 1% live? Well, so they visit his home and they found out, wow, he had a two car garage. Okay. And he made a certain salary and I calculated it against inflation so you could have today's dollars. It turned out he was making $400,000 a year in today's dollars, which is quite nice. He was totally happy. They're wowing over the fact that this guy has a two car garage and that every summer he could go to a lake and go fishing. It was a nice lake and he had a nice boat, but it wasn't like a huge yacht or anything.

It was just a fishing boat. And is one of the top executives in 1955. This is how he lived. And I'm thinking basic sort of upper middle class American lifestyle, but not at all remotely like what top executives make today. But was he in any respect less happy than top executives today? It's hard to doubt he was totally content.

45:49 Seth: I feel like discussing that in earnest would take us on another trajectory that I'm afraid I don't have the energy for tonight.

45:57 Elizabeth: But

45:59 Mark: yes. Are there any particular conceptual issues or anything that we want to prompt Liz on before we wrap this up?

46:07 Seth: There's something I want to say, but I don't want to pose it either to open a broader another whole chain of discussion or to be critical. But I open this by talking about your interview on Russ Roberts Econ Talk podcast, which Russ has been on the show. I'm a fan. But. But I sometimes also get the sense that he's insulated from some realities. There's a lot. Academic economists are kind of, in a lot of sense the worst offenders from my perspective of being completely disconnected from the world that they pretend to describe with their theories.

And just as I think that there's a class of worker like me that might be somehow between the top executives that you describe and the Blue collar workers. I think also that the concept of firms being hierarchical in the sense that you describe, again, has not been my experience in the organizations that I've worked with. And in many respects I've had many roles where I'm interacting with lots of other companies and talking to people in lots of other organizations about what their roles are and what they're doing. And I think there's more nuance in corporate organizational structure than can be captured by just describing it as hierarchical.

And again, this is just me speaking from my own experience. And I think there's a sense in which that nuance could enrich the analysis that you give. And I'm not posing it as a criticism, but just to say that there's complex organizational structures that require a lot of the lines of hierarchical authority are not as clear as they may seem.

47:52 Elizabeth: Yeah, so what I'm describing is a kind of formal authority structure, the default constitution of the workplace. But of course there's lots of room for employers to set a corporate culture that could be quite different from the formal structure. There are huge founder effects in firms. So the founder kind of sets the terms of the culture. And even after the founder leaves, that culture kind of has a self perpetuating quality to it. It's really hard to change. But that culture can often be much more collaborative, based on teamwork than the formal sort of legal constitution of the firm involves.

A lot of the more successful firms have this more collegial teamwork aspect to it, where people really are enthusiastic about working with others to create some exciting project. And that's all great. I'm not saying the default structure is always descriptively accurate. There's a lot of room for variation, which is all to the good, but especially for the workers at the bottom. They are often the ones who aren't scarce, don't have scarce talents and so forth. They often feel the brunt of the default authority structure of the workplace.

49:12 Seth: I certainly don't deny that. And ultimately, as collegial as my environment may be, my company can decide. I live in a quote unquote right to work state. I guess most of them are now

49:24 Elizabeth: anyway, but even Michigan, the heart of the labor union movement. So right to work state now. Yeah, well, although Missouri just voted a referendum to bar right to work.

49:37 Seth: Well, I'm sure their governor will somehow find a way to resist that. Yeah. But anyway, it doesn't change the fact that yes, as a manager, I understand that human resources job is to protect the company from liability, not to actually protect the interests of the human resources in the company and so forth. I get all that. Maybe I just feel like in my experience that the workers have perhaps more power and more mobility. Let me say it this way. If you have education and mobility and the part in your book where you talk about Paine and his sort of strident positions and how they would. Well, the idea that if you are educated and have mobility or are willing to relocate, your experience of being a part of the labor force will be radically different than somebody who has no education and does not have mobility. I'm educated and have mobility. So there you go.

50:34 Mark: Yes, of course. Even though we tried to put the warning on this episode that you're raising, these are concerns that we need to take into account and that our ideology has blinded us to. I'm not providing specific. Maybe Germany is a suggestive example, but I'm not saying that's the answer. You're very cautious in the book, in your various lectures about this to clarify that. But of course, when you hear something that sounds like a practical proposal, then you start thinking like, well, so what is the alternative to at will employment? And think about if, you know people that work in government and how hard it is to fire somebody who's just clearly incompetent and you have to document their clear incompetence for weeks and months and they'll probably still get a year of.

Part of that maybe comes out of you say that the voice of employees somehow has to be non adversarial. So this is why the German model is different than the unions here. Because if the unions here are adversarial against management, then they do tend to set up rules that just assume that management is going to act in bad faith. And so you have many hoops to jump through that makes it difficult to fire people. And you could see if you generalize the way that some government organizations work in that respect. You tried to generalize that to all private industry.

I think it's at least pretty plausible that we would be at a serious competitive disadvantage, you know, growth disadvantage, you know, even if. But it's a matter of, you know, it's just like when you say, oh yeah, any taxation, it lessens the capitalist incentive to produce. So we need to have no taxation because then they'll produce the maximum amount. Whereas of course, it's an empirical matter how much taxation you can levy on the rich and still have them be plenty. They still want to make money, you know, as you say, even if they're only making the millions, the best empirical

52:20 Elizabeth: estimates of the Revenue maximum maximizing marginal tax rate on top incomes is around 70%.

52:26 Mark: Yeah. So you won't have any depression of productivity.

52:29 Elizabeth: They're not slacking off on their production even at a 69% rate.

52:34 Mark: So you have to come up with something comparable to assure folks that. Look, what I'm proposing is not necessarily full on like what you see in government agencies where there's unionization and it's that hard to fire people and all that kind of stuff. It doesn't have to be that draconian. It doesn't have to be that restrictive on the wills of employers. But there's got to be some wiggle room where you allow bathroom breaks or whatever. The standard that you set up as autonomy that still allows does not have a significant depressive function for the business's output quite right.

53:08 Elizabeth: Now I would add that one of the advantages of full on workplace democracy is that your fellow workers are really going to be pissed off if you're totally slacking off or even sabotaging the workplace. Actually, you have less workplace employment protection in workplace democracy than you do under many union contracts where the union goes to the mat even for the worst performers, people who get drunk in the middle of the day and can't even perform the minimal requirements of the job by noon.

53:46 Dylan: You have a whole other question about workplace constitution having to do with the rights of the minority and stuff like that.

53:53 Elizabeth: I mean, yeah, yeah, yeah, all of these things are issues of really challenging institutional design. I'm not saying there's easy answers here, but I do think the answer that America has come up with gives way too much power to employers. And there are other models out there in very advanced, sophisticated economies that are super prosperous. So we ought to be looking.

54:15 Mark: Sure. And I guess if I'm picturing the Russ Roberts libertarian response, it would be okay as soon as you say it's going to be very complex. But it's something the state has to do. In other words, the state has to be involved in a good faith negotiation to figure out the proper level of interference in businesses relationships with their employees that just due to the fundamentally dysfunctional nature of our government at any time in the recent past, at least that's a tall order. The best you could do as a philosopher is to point out it would be really nice if people could rationally debate and come up with a standard here.

Just like philosophers might debate on what is virtue, but actually coming up with legislation to enact that and have that be argued about in a rational way without simply being socialist, you know, without having, like this is what your whole function is of trying to recalibrate the way that people conceptualize that in the popular domain, the way that people talk about these things to address conceptual problems.

55:19 Elizabeth: So what? Yes, exactly. So let's talk about this way of talking about a proposal like installing German co determination in the American workplace. Yes. The way we talk about it, which we get from libertarians, is that's government intervention into the workplace. But I think that's a completely mistaken understanding of what's going on. The state inevitably provides the critical background infrastructure for market and firm relationships to proceed. So you can no longer coherently speak about government intervention in this domain. Then you can criticize Major League Baseball for deciding whether three strikes and you're out is a rule of baseball.

It's a constitutive rule. It's not intervention. It's like creating the game in the first place. And a lot of what the government does is just create the constitutive rules for how the economy is going to operate, without which you just wouldn't have the economy running at all. Or it would run on a zillion little inefficient, completely idiosyncratic rules of totally local significance that are opaque to outsiders and incapable of sustaining the hugely productive economic relations that we currently enjoy.

56:45 Seth: I just want to thank you, Liz, for being a part of this and for being open to the conversation. I really found your writing compelling and I think there's a genealogy of egalitarianism and this notion that you're talking about the idea of free market as a liberating force as opposed to a constraining force for labor, not just for capital. That's really interesting and compelling. And anything I said about my own experiences is intended only to kind of push on the boundaries and try to enrich and elucidate the ideas that you had to put out there. So I appreciate it and thank you for coming on.

57:25 Dylan: Thanks so much for being on, Liz.

57:27 Mark: Wes, did you have any wrap up words?

57:30 Wes: Yeah.

57:30 Elizabeth: Thank you.

57:31 Wes: No, that's it.

57:32 Mark: Liz, did you have anything else that you want to leave folks with? Anything you want to plug or any last point you want to make?

57:36 Elizabeth: First of all, I just say thank you for inviting me. It was really fun. And you should look out for the book I'm writing now called the Great How Neoliberalism Turned Liberalism Against Workers. So it's actually going to be exploring the Protestant work ethic which lays at the foundation of thinkers like Locke and how Locke originally deployed it in favor of workers. And today the work ethic is really just used to favor the interests of capital over workers because people forget that when Locke was deploying it, he was criticizing the idle rich, not the idle poor, so much.

58:27 Seth: Liz, what's your relationship with Frithjof Bergmann?

58:30 Elizabeth: Oh, Frithjof was a colleague of mine when I first came to the University of Michigan for a couple decades, and I did talk to him about his new work initiative. I think it's terrific. And yeah, he's an ally.

58:45 Seth: Okay, good. He's another friend of the podcast.

58:48 Mark: So, yeah, these are not incompatible things. I was struck with some what about ism in terms of even if your employer's treating you nice, if you're doing unpleasant work, then that doesn't help the Frithjof response. But I understand understand these are parallel struggles. It's fine.