Apropos to the Most Recent Post
Posted on March 2, 2008 Posted by John Scalzi 31 Comments
This story is an object lesson on how people can work their asses off and still find themselves sliding down the economic ladder, and sometimes land in poverty. And it’s of more than minor interest to me since four of my five closest neighbors drive trucks for a living.
No, no–it must be the truckers’ fault that fuel prices have risen, otherwise the whole notion that the invisible hand of capitalism will guide those who work hard and who invest wisely to their proper place at the top of society’s antpile while those who are lazy sink and are crushed at the bottom (as they deserve to be) might be proven to be some kind of… some kind of… myth or something. And then what becomes of this great country founded upon the basic principles of hard work and sound investment? (And no other principles–don’t let those life-leeching closet socialists give you any nonsense about “justice,” “general welfare,” and the “blessings of liberty”–the Founding Fathers very clearly intended this nearly-superfluous language to merely refer to the right of every good, non-lazy American to prosper by hard work and sound investment. A Nation exists to promote the interests of those who earn and invest capital, not to dole out money that the government had no right to collect in the first place to the shiftless masses who never learned to labor and scrimp.)
These lazy truckers, who expect their government to “step in and help” instead of requiring them to help themselves should take a page from the books of hard-working Americans like Ms. Paris Hilton, of California, who has never asked the government for anything and yet is in the position of a veritable queen, if America had royalty, thanks to nothing more than the sweat of her brow and her obvious wisdom in selecting capital investments that yield sensible returns. I suggest they take a lesson, instead of asking for a handout.
As for poverty – ‘there but for the grace of god’ … and for that matter ‘been there done that’.
Yet ..
Trucking’s owner-operators, the self-employed drivers who haul everything from Hummers to hay, are suffering. Many say they’re running on the edge of bankruptcy, about to disappear unless they get help.
Time to find something else to do to make money. Go to work for a carrier, say. Get out of trucking and do something else, perhaps.
“If you eat it, drink it, wear it … sit on it, if it is anything other than the air you breathe, an American truck driver made it possible!” wrote trucker Joe Misilewich of Norwich, New York in an e-mail. “Don’t forget it! Without truckers, America is nothing!”
And without IT guys, you truckers won’t know where to go or what to pick up when you get there. Without accountants you won’t get paid. Without lawyers … well yes we need lawyers. They keep the business humping along. Heck without people buying stuff there isn’t a whole lotta need for truckers. Haw – they need us as much as we need them.
Fact is, we’re none of us indispensable, yet we’re all important in the grand scheme of things, economically speaking.
Brian:
“Time to find something else to do to make money. Go to work for a carrier, say. Get out of trucking and do something else, perhaps.”
Which is an awfully simplistic solution when, say, you owe as much on your rig as you do on your house, and when one has been doing the same job for years, which doesn’t exactly leave a whole lot of time to re-train doing something else for anything close to the same amount of money that these folks had been making.
The point is not that they should just get another job; the point is the job that they had been earning a comfortable middle-class existence with is now worth substantially less. What’s happening to them could indeed happen to anyone, and the slide happens more quickly than a lot of people can prepare for.
What suprises me is that the increase in prices is not being passed onto the consumer. We’ve had record gas and diesel prices for the last few years and things are still cheap. How can this be? Maybe there are too many truckers out there. The reason for a recession is over capacity. Too many people with goods and services are chasing too little demand of service. If some truckers go out of business, albeit independents or maybe a big company or ten, then it relieves the burden for all in that profession and would right the ship of capitalism again. Or is supposed to. Of course our wonderful government is doing the opposite with the finance industry right now. Offering cheap money and ignoring the shame of the ratings/insurance industry to keep those companies afloat is creating a moral hazard. Why not expand that to other industries like trucking?
I am bothered by the talk of price controls, the last time we did that Nixon was in the White House and the result was huge inflation. That same issue is happening now in China. But fear not, the trend is back towards more control and regulation of our economy. Which is not necessarily a bad thing, it might give these independents a chance against the big companies.
Tell me about it. I used to work (last year) for a small independent freight company – until I got laid off due to declining business. The price of diesel was eating us alive, and it’s gone up another US$0.50/gal since then.
It’s times like this I start thinking I should get around to writing that novel. I wouldn’t be any poorer than I am now, and hell, I’m reasonably competent at putting together the components of my native language and I don’t have any serious major psychological issues, so that puts me ahead of half the slushpile right there. (And I can follow directions. That’s got to get me up to at least the 75th percentile of would-be writers…)
I was complaining that the price of gas in Connecticut was hovering around 3.25, until I saw the price of diesel.
$3.99
Considering gas prices are supposed to hit $4.00 by summer (even though GWB, “…hadn’t heard that…”), that means diesel will probably go up to $4.75+ a gallon.
So that trucker mentioned in the article will make even less to transport the goods to their destination and the consumer will pay more. I won’t be surprised if he is scanning the skimpy help wanted section of the newspaper when he can’t pay the bills on his truck anymore.
Ultimately, I do think this boils down to a severe gap between working class and rich. It seems that the fat cats (not just the oil/gas industries) are getting richer while the poor are barely able to survive. Globalization, which seems to be the hot word in the Corporate boardroom, means less jobs for Americans while stockholders get to vacation in that second home in Aspen. Congress can spend more of our tax dollars investigating ‘golden parachutes’ but ultimately, nothing will be done to protect the people barely able to pay for heating and food this winter.
It just shows you that making above a certain threshold makes you immune to bad economical news as evident by the $400,000 President who can’t seem to have a finger on the pulse of his own nation.
His statement this week should have read: But, we
the richdefinitely, most positively, are not in a recession.Nope.
If you ask me, I’ll save my scorn for the wealthy who don’t charitably give and who leave hundreds of millions in a cash account while laying off people during the holidays.
I know I don’t get paid a lot for what I do, but guess what? I made sure another family got a turkey for both the Thanksgiving and Christmas holidays. I made sure some less fortunate children were taken care of with clothing this winter, and I made sure that sick kids stuck in the hospital had something to make them smile. I will continue to pay it forward only because it’s not only the right thing to do, it’s the human thing to do, and a lot of people have lost sight of that.
I wonder when the consumer price index will ever factor in food and energy? (It doesn’t because they’re “too volatile.” ) When you look at the CPI summary for last month, Transportation and Food are the largest changes in the last year.
The trouble with these discussions is that everyone talks about “the poor” as if they are all the same and everyone is poor for the same reasons. Unfortunately, most solutions are much the same. What would help these truckers won’t help the homeless guys I walk past on the way to work, and vice versa.
I’ve come to the view that the real solution is to cut to the chase and decide what every citizen has a right to and simply provide it and dump all means testing entirely. Free health care, free child care, free education and a monthly check given to every citizen. That way, everyone can get educated, everyone gets enough to live, no one faces financially crippling health care decisions and all kids get cared for. Beyond that, entirely free market and let people get what they can.
The reason that public school is not stigmatized whole free school lunches are is because everyone gets free public school.
John,
Which is an awfully simplistic solution . . .
Sometimes simple is best. Which is not to say it’s easy – I don’t think that.
The folks portrayed in the article are not making it. There are things they can do to change that situation; waiting for the government to step in and save them is a sub-optimal survival strategy.
The point is not that they should just get another job; the point is the job that they had been earning a comfortable middle-class existence with is now worth substantially less.
Sorry – I should have posted my thread-hijack on my own blog.
But .. I’m a guy. I’m in IT. You present me with a problem and I can’t help but toss around solutions. It’s what I do.
What’s happening to them could indeed happen to anyone, and the slide happens more quickly than a lot of people can prepare for.
Luck favors the prepared … but yes you’re right. Stuff happens and it always happens faster than you can imagine.
Good arguments for having money in a savings account, minimal debt, a fall-back, and a feasible defense against dinosaur-killing junk from space.
Brian:
“Good arguments for having money in a savings account, minimal debt, a fall-back, and a feasible defense against dinosaur-killing junk from space.”
Yes to all. Personally, I’m behind on the last of these.
Another twist to the problems for truckers:
http://www.cato.org/pub_display.php?pub_id=3927
My academic and professional background is in analytical economics and financial economics, and the utter economic ignorance of those who push laissez faire as some kind of Holy Grail that will Cure All Ills still astounds me at times. Theory always falls apart in the face of human realities–and most of them don’t even understand the theory.
Doctrinal socialists should not take that to heart as a vindication of their own sins–they’re just as bad. Both sets of ideologues worship their preferred “pure” principles as unquestionable dogma while actively trying to disclaim all of the obvious adverse results of what they advocate. The rest of us just muddle along knowing there ain’t no Big Rock Candy Mountain.
But John, the important question is “Do you have a zombie survival plan?”
Okay, I don’t mean to make light of a very serious subject that will very soon impact all of us. If truckers suffer then we all suffer. We can try to go back to eating and buying locally produced goods but thanks to our trade agreements, there isn’t a lot of that around anymore.
Partly in answer #4 (Jim), mostly general:
I don’t see things being cheap at all. I run a roofing company and oversee a crew who make pretty good money when the housing business is roaring. Yet their pay, although good, doesn’t catch up with the rise of real estate costs. No, it’s not just the frenzied buying from the speculators that drove up the price of housing, but also the rising costs of fuel: roofing materials are made from derivatives of oil and prices had tripled and quadrupled as well as delivery costs due to gas prices.
Yet, the labor earnings of most of the people I work with (we’re blue-collar middle to lower middle class) haven’t gone up and in most cases, many of us are living beyond our means, using credit cards to buy those “cheap” high-end products. The cost of a small house has grown beyond the financial means of many first-time buyers due to fuel as well as material costs. Hence, the banks’ greedy use of creative financing (another topic for another day). The entire economy is credit-based and that’s not a good thing in a recession because obviously, there isn’t enough money to cover expenses beyond the first two months of being laid-off. The line between adequate living to poverty is just a few mortgage payments away. Suddenly, one day, you’re poor.
Yes, certainly it’s simple to say, find another job. I have to lay off a number of guys the last few months because the housing business is dead. Only one has found another job in this area (Central Florida). There are, simply, no job openings in their capacity. There is a certain resentment from them that I’m not looking for jobs hard enough or if I do have one, I’m “not sharing,” even though I’ve prepared them with warnings of hard times ahead months and months ago. But of course, no one listens to the lady boss ;-/.
OTOH, I get to joke to my business partner that us self-employed will be getting money back next year, for a change. I’ve been down to zero dollars in the bank before and it’s not a nice feeling, especially when you’re a young woman alone in a foreign country. There was no shame that I was poor, but there was a sense of helplessness and shame that I couldn’t take care of myself. It’s the desperation of wondering if I would actually do something demeaning (to me) because I was that close to living on the streets. It’s the fear of experiencing that kind of desperation again that keeps me a little ahead of some folks. That, and knowing this time–twenty years later–I probably won’t get too many dollar bills…ha…
Regarding truckers, it is apparently only going to get worse. The Bush administration is still pushing the NAFTA “pilot program” which will allow Mexican trucks on our roads (previously they were only allowed to drive a short distance past the border). All in the name of competition, now truckers will have to compete with folks making even lower pay with lower safety standards. All this despite protests from Congress. Americans in all blue collar fields are going to be in a race to the bottom in Darwinian competition with the cheapest labor in the world. Of course we’ll constantly be told it’s beneficial to the nation as a whole. The problem with this thinking is that this is a planet that adds about 80 million people per year, mostly in the third world. There can’t possibly ever be a “leveling out”, only an endless supply of cheap(er) labor.
I haven’t read the story yet. But I do know that trucking has gone through a long period of undercapacity and people training like crazy to get jobs in there…as it is a good opportunity for some. But commodities cycle. And being and independant trucker (or even an employee) is not a government job. That’s just reality. The world has not become completely programmed yet. Imagine what it was like 100 or 200 years ago. Life is full of ups and downs.
John:
Brian:
“Time to find something else to do to make money. Go to work for a carrier, say. Get out of trucking and do something else, perhaps.”
Which is an awfully simplistic solution…
But it’s a necessary one. You can’t fight economics, and the economics for independent truckers well and truly sucks right now.
Fuel prices have risen, which means one of two things can happen: truckers can earn less, or shippers (and ultimately consumers) can pay more. The reason the former is happening much more than the latter is that independents lack pricing power. Thanks to government regulation, trucking is pretty much as close to a textbook perfectly competitive market as you can get, which means the expected profit margin is zero. In this case, profit means after subtracting out the cost of living: if your cost of living is higher than your competitors’, say, if you have a family, then you’re going to be forced out of the market before they are. If the national carriers can exploit economies of scale to reduce their costs, then it is the independents who will be forced out of the market. This is what’s supposed to happen. It reduces the total cost of shipping, and thus the price of consumer goods, for everyone. People can complain all they want about big corporations like Wal-Mart coming in and driving out the little guy, but Wal-Mart couldn’t do it if everybody didn’t shop there. Because it’s cheaper.
The only way you can raise the take-home pay of truckers is to reduce the supply at a given price point. Even if you can reduce this supply at very low price points by unionizing or striking or forming a national carrier or instituting government price controls, at the new equilibrium price demand will be less. Higher shipping prices will get passed on to consumers who will buy less. Substitutes to trucking (e.g., railways) will be used more. That means either each trucker works less (which doesn’t help them increase take-home pay) or some truckers have to leave the market. Since they’re also consumers, it means their cost of living also increases, though presumably not very much, since there are far fewer independent truckers than there are total consumers.
Other forms of government intervention (e.g., tax breaks), pass on the increased fuel costs to taxpayers. Since our tax system is fairly regressive (poor people pay a much larger percentage of their income in tax), this will have a similar effect on consumers. But what you won’t get is the re-allocation of resources: light rail usage will not increase, even though it should (they use less energy, and so should be preferred more often when energy costs increase), and truckers will not decrease. This means the total cost transferred to tax-payers will be larger than the cost increases that would be due to the fuel prices, since you are using fuel inefficiently. This might be a good solution if you expect the current economic conditions to be temporary (e.g., farm subsidies to bail out farmers because of bad weather could be reasonable if you don’t expect that weather to be a recurring phenomenon), but I think it’s become pretty clear at this point that fuel prices aren’t heading south (more than temporarily) any time soon.
What would be interesting would be government subsidies to help transition truckers out of the market. Clearly people are staying in the trucking business longer than makes sense (forgoing luxuries, health insurance, etc.) because the switching costs are high. But this becomes difficult (but maybe not impossible) to balance against the cost to enter the market. If it is hard to become a trucker, but easy to stop being a trucker, you will tend to have too few truckers. I’m not sure how far you could move in this direction without causing more problems than you create.
Ultimately I agree with John’s assessment: your livelihood can disappear due to forces beyond your control, and faster than you can react. This is a risk we all face. The problem is that most people think in the short-term, and so do not price in that risk. They assume that current conditions will continue indefinitely. This is the same problem that caused the sub-prime mortgage crisis, now leading to hundreds of billions of dollars of losses in the financial industry (not to mention millions of foreclosed homes, decimated retirement funds, etc.).
I disagree with the belief that if you get caught up in one of these situations, you are entirely blameless. If you had looked at the Iraq invasion 6 years ago and said, “Gas prices might never come down, meaning I might be out of a job before too long,” you might’ve made some different decisions. Like putting that $150 in the bank instead of going out to Shogun sushi. Or, because you are in a perfectly competitive industry and you can’t rely on your peers to also price in the risk, maybe picking a different career.
Similarly for the housing market: people who got into ARM’s at prices they could barely afford during a period of the lowest interest rates in 40 years, and then were surprised when their rates reset and their payments doubled, are maybe just a little culpable compared someone who got a fixed rate for a property they could afford easily. You can argue that many people didn’t understand the situations they were getting themselves into, and trusted the professionals (who, in the face of the above-mentioned interest rate environment, almost universally recommended ARM’s and sometimes advised clients that rates would “probably go down”). But if you understood the profession (loans are repackaged and re-sold to offload the risk, and the incentives for the people actually selling the loans are all towards volume over quality), it was easy to see they were not trustworthy. If you entered into a debt that would, at its best, take you 30 years to repay and that could, at its worst, easily bankrupt you in no time without understanding the economics of the situation or the motives of the people you were dealing with, then you deserve what you get. If you don’t have the time or ability to learn all of that, that’s fine. Buy a smaller house. Or rent, which carries much less risk with it. It’s clear that during the ridiculous run-up in housing prices that a lot more people should’ve been renting than actually were.
I suppose that depends on exactly what situation we are talking about, and exactly what we mean by blame. There are certainly people in some situations whom I would consider to be blameless.
Quoth Steve Burnap:
Questions:
Er, where’s this money supposed to come from?
If everyone gets a check every month that covers pretty much everything and then some, who’s going to clean toilets?
Without lawyers … well yes we need lawyers. They keep the business humping along.
As a lawyer, let me explain a little something about why we’re paid as much as we are. In addition to all that expensive higher-education thing that keeps many people out? We have a cartel. If you aren’t in the cartel, it is in fact illegal to work as a lawyer. We don’t get paid the big bucks because of a free market for legal services.
As for “tossing around solutions,” where I come from, we call that “armchair quarterbacking”. It’s very easy to tell people what they should have done and why their situation could have been prevented when your operating criterion is, how can we avoid helping them particularly through government intervention?
Just because one might not approve of government subsidies for truckers (I don’t) doesn’t mean that one shouldn’t feel bad for their current situation. And just because one believes that the market can eventually adjust for this situation (I do) doesn’t mean that individual human beings aren’t struggling in the meantime.
The invisible hand does knock people over on occasion, and ignoring that entirely is largely what has so many people disgusted by the term “invisible hand”.
I read an article somewhere about the interwebs today regarding the rising number of billionaires and the amount of wealth.
There is enough wealth out there to fix problems. Not all of them…but enough to put a huge dent in the big issues surrounding poverty.
Someone (with money) just needs to give a damn.
This is one of those Deja Vu moments.
I got called to the bar during the last recession (in Ontario it lasted from about mid 1991 to about late 1992 or early 1993; it was bad here.) One of my first jobs as a lawyer was working for a union that represented lots of truckers; guess which.
The complaints of truck drivers were identical then as they are now. They complained about the high price of gas and wanted “something to be done”. They actually organized rolling blockades of one of the major highways in Ontario (the 401 which connects central Canada to the Mid-western United states).
What happened; nothing. The recession eventually ended and stuff started moving on the highways. There was more work for truck drivers and they started making more money.
Same thing will happen now.
What these truck drivers have that most unskilled workers don’t have is a skill. Watch a truck driver someday maneuver a truck on a city street better than most folks drive their cars. When the recession ends, stuff will start moving on the highways and these truck drivers will start making money again. People will pay for their skills, and when times are good they will pay well.
#19 “Er, where’s this money supposed to come from?
If everyone gets a check every month that covers pretty much everything and then some, who’s going to clean toilets?”
Apparently this is exactly the situation in the United Arab Emirates; there is a lot of money in the Emirates from shipping. So much so that they can afford to pay every native born emirati the equivalent of $1000.00 U.S. per month regardless of means. What you get their is folks who can make lots of money in really really good jobs work, but those who can’t make really good money don’t bother; the labour participation rate amongst the native born emirati is very low. The labouring type jobs are done by immigrants who don’t get the cheques. Apparently this has lead to a situation where 80% of the people in the United Arab Emirates are not, in fact, native born. To me this sounds like an extremely explosive situation.
Whether this is true or not is open to question. I got this anecdotally from a family member who worked their for six months. Not the most unimpeachable source.
Cheers
Andrew
Cheers
Andrew
Andrew(#23),
It is also a good way to ensure the citizenry will always keep the current PTB in power.
Not too long ago, driving truck was pretty lucrative work. My husband and I sighed over people we knew who were doing that, and earning a lot more than we did with our college educations. Owning a small business is always risky. A majority of small businesses fail. I’m sorry so many truckers have fallen on hard times, but I don’t necessarily think the government owes them a living. It would be nice to see some loan programs to help out those that are facing bankruptcy, but I don’t think the farm subsidies have worked out well at all (especially since the changeover from a stockpile system to direct payments), and would not like to see another industry heavily subsidized.
We’re all going to be seeing changes in our lifestyle as we get used to paying something that resembles the true cost of our food and other purchases, rather than a cost artificially reduced by government farm subsidies, cheap third world labor, and cheap oil. We could have a different future without these things, even a better future, but it may necessarily involve less long-haul trucking, which is very bad for the environment anyway.
Regarding a mandatory wage for everyone:
There is some interesting work out there in that regard:
http://www.usbig.net/
@19 – I’d be a lot more interested in cleaning toilets if it paid $20 or $25 an hour.
I mean, bachelor’s degree notwithstanding, I’ve spent the last ten years in the kind of jobs that draw more-than-minimum-but-not-really-living wages – which wages have been stagnant. (I’m actually drawing $0.25 less an hour now than I did in 2000 for slightly-less-skilled work in the same general field, but I’m in a different state which apparently negates any relevance I might have had.)
It’s not about “who’s going to do the scut work” so much as “how much is the scut work really worth,” that is, how essential is it to have the toilets cleaned, the garbage hauled away, the merchandise delivered to the shops, etc, and is it essential enough that these tasks be done (by someone other than whoever is doing the deciding) that wage offered covers the actual cost of having someone (available to) do that job: the worker’s food, housing, transportation costs, health care, family support, etc.
Why is this so hard for people to understand? Pay enough, and there are plenty of people who are willing, even eager to work – but if for example I were a single mother, I’d be paying around $200 a week for child care in this market – out of just over $300 a week in after-tax wages, which would be a pretty strong disincentive to take the job I have at the wage I get.
I considered long haul trucking back when I was in college, but figured I’d get disowned if I dropped out to drive a rig. It’s not something I’d start now, but fifteen years ago it didn’t look like a bad deal.
Thena makes an excellent point. We all know people now who make really nice wages and basically do…nothing. I’ve had completely inneffectual bosses that make twice as much as me.
But my garbage guys come every week, rain or shine, and work hard till the job is done. I reallly, really, really like having that service. But my boss? Mr. Highly Educated Middle Management Guy Whose Main Job Is to Slow the Pace of Production? I’m sure that society will not faulter a bit if that job (and/or high wage) is eliminated. I have a feeling that all of our toilets will somehow get cleaned, still if people had basics like shelter, health care, food and clothing guaranteed in some way. The rules behind supply and demand would still work.
We all know people now who make really nice wages and basically do…nothing. I’m sure that society will not faulter a bit if that job (and/or high wage) is eliminated.
The fellow whose job is eliminated might not think so.
It’s not society so much as his employer – he’s got to be worth at least his compensation to them or he’d be gone.
There are broken companies where this is not the case: if you find yourself in one of those (smile) it’s time to flee before it collapses.
Scalzi is a bleeding heart liberal…he aches with it. He oozes. He…(insert troll).
Back in the day we were taught that every job choice had an equal “opportunity cost” to factor in with your career decision. The point really came home one day at school when our Tax prof. demonstrated that over a working lifetime a plumber made just as much money as a neuro-surgeon. After one subtracted education costs, including not really building any nesteggs while receiving training (possibly 10-12 years for a medical specialist), and of course taxes, both financial scenarios turned out equal.
The point? Technology and Demographics hold more sway over a successful career than that Tax Econ. prof. will ever understand. The unfortunate evil truth is that nobody can take you aside and whisper “plastics is the future son”. When trying to scrounge up a dollar for a living we all have to act as paranoid and schizophrenic as the stock market seems to be. Not much time left for just living and raising a family.
Being gracious for your position seems more important than being well-trained or well-skilled.