The nirvana fallacy was given its name by economist Harold Demsetz in 1969 who said:
The view that now pervades much public policy economics implicitly presents the relevant choice as between an ideal norm and an existing "imperfect" institutional arrangement. This nirvana approach differs considerably from a comparative institution approach in which the relevant choice is between alternative real institutional arrangements.
“The dystopian perspective promoted by the vast majority of labor historians reflects not the facts, but dogmatic anti-market ideology.” The money quote.
I thought the really insidious thing about company towns was that they issued their own currency and made sure that rent and food were always higher than pay so the workers were always in perpetual debt to the company?
There is some back and forth on this issue of "debt peonage" and a long literature. I would start with Price Fishback's 1989 article in Explorations of Econ History, pertaining the postbellum south. This is a very well done article. His abstract indicates "Descriptions of the postbellum South vary. Farmers either were postharvest debt peons, were subject to “seasonal credit peonage” to a monopolistic store, or relied on seasonal credit from stores that faced spatial competition. Analysis of Georgia Agricultural Department data shows that postharvest debt peonage was not a major problem in the 1880s. "
What's the literature that's arguing that debt peonage in industrial towns was a serious problem, and does it have any historical backing? I can see what might be happening with the agricultural debt, but that's not usually the classic image of the company town that is the spectre of Robber Barons.
Not aware of any serious empirical studies (as opposed to some just making that assertion) that support that claim in industrial towns. Again, refer to Fishback's work on this issue, he is THE GUY when it comes to this topic. On coal mining in his famous back "Soft coal, Hard Choices..." Here is brief summary of his key findings, as written in the JEH review "First, although by modern standards coal miners suffered considerable hardships, these were in fact no worse than those experienced by comparably skilled workers in other sectors of the economy.
Hourly wages in coal mining were actually substantially higher than in manufacturing, though shorter hours of work and about 60 fewer days of employment per year meant that annual earnings were roughly equal. Second, the higher accident risk faced by miners was compensated with higher earnings. Third, employers did not exploit their monopoly position to charge unreasonable prices in company stores, or raise rents on
company housing unfairly." These studies are not easy because need to control for many other factors explaining wage differences which is why I doubt you will find anything more reliable than Fishback's work.
Excellent - thanks for this summary! There's so much of history that has been summarized by ideology that it's often hard to determine whether to take that piece out of my head or not.
Hidden concern for political power is not concern for economic power. And see _Rooseveltcare_ (online) by Don Watkins, a study of widespread, effective, private unemployment insurance and pensions in the US before the hysteria that created Social Security. Big city phonebooks listed hundreds of such organizations. And, the first attacks on capitalism were from religious conservatives hysterical over mans independent mind. Marx drew on them for his early writings, denouncing "cash nexus" replacing sacrifice and praising the holistic joys of medievalism.
There is only one basic economic issue: the focused mind vs. the unfocused mind, as Ayn Rand identified in 1957.
My overall impression reminds me of the old phrase from someone at EconLog: "Markets fail; use markets."
i.e., markets aren't perfect, but they're the best of all feasible alternatives.
The nirvana fallacy was given its name by economist Harold Demsetz in 1969 who said:
The view that now pervades much public policy economics implicitly presents the relevant choice as between an ideal norm and an existing "imperfect" institutional arrangement. This nirvana approach differs considerably from a comparative institution approach in which the relevant choice is between alternative real institutional arrangements.
“The dystopian perspective promoted by the vast majority of labor historians reflects not the facts, but dogmatic anti-market ideology.” The money quote.
I thought the really insidious thing about company towns was that they issued their own currency and made sure that rent and food were always higher than pay so the workers were always in perpetual debt to the company?
"In Defense of the Company Town" by Alex Tabarrok January 27, 2015 on Tyler Cowen's Marginal Revolution site.
Found it - so is there any historical basis for a company using rent and food prices to create eternal debt?
There is some back and forth on this issue of "debt peonage" and a long literature. I would start with Price Fishback's 1989 article in Explorations of Econ History, pertaining the postbellum south. This is a very well done article. His abstract indicates "Descriptions of the postbellum South vary. Farmers either were postharvest debt peons, were subject to “seasonal credit peonage” to a monopolistic store, or relied on seasonal credit from stores that faced spatial competition. Analysis of Georgia Agricultural Department data shows that postharvest debt peonage was not a major problem in the 1880s. "
What's the literature that's arguing that debt peonage in industrial towns was a serious problem, and does it have any historical backing? I can see what might be happening with the agricultural debt, but that's not usually the classic image of the company town that is the spectre of Robber Barons.
Not aware of any serious empirical studies (as opposed to some just making that assertion) that support that claim in industrial towns. Again, refer to Fishback's work on this issue, he is THE GUY when it comes to this topic. On coal mining in his famous back "Soft coal, Hard Choices..." Here is brief summary of his key findings, as written in the JEH review "First, although by modern standards coal miners suffered considerable hardships, these were in fact no worse than those experienced by comparably skilled workers in other sectors of the economy.
Hourly wages in coal mining were actually substantially higher than in manufacturing, though shorter hours of work and about 60 fewer days of employment per year meant that annual earnings were roughly equal. Second, the higher accident risk faced by miners was compensated with higher earnings. Third, employers did not exploit their monopoly position to charge unreasonable prices in company stores, or raise rents on
company housing unfairly." These studies are not easy because need to control for many other factors explaining wage differences which is why I doubt you will find anything more reliable than Fishback's work.
Excellent - thanks for this summary! There's so much of history that has been summarized by ideology that it's often hard to determine whether to take that piece out of my head or not.
Hidden concern for political power is not concern for economic power. And see _Rooseveltcare_ (online) by Don Watkins, a study of widespread, effective, private unemployment insurance and pensions in the US before the hysteria that created Social Security. Big city phonebooks listed hundreds of such organizations. And, the first attacks on capitalism were from religious conservatives hysterical over mans independent mind. Marx drew on them for his early writings, denouncing "cash nexus" replacing sacrifice and praising the holistic joys of medievalism.
There is only one basic economic issue: the focused mind vs. the unfocused mind, as Ayn Rand identified in 1957.