Modern Economic Problems Part 29

France, for seamen 1850, 1881; for miners, 1894, 1905, 1907 (noncontributory, all indigent citizens); 1910 (contributory, all workmen and employees; was voluntary by laws 1850, 1886).

Great Britain, 1908 (noncontributory, old age pensions, granted by the government).

Sweden, 1913 (universal, contributory).

-- 12. #Unemployment insurance#. The most difficult of all the problems of insurance is that of unemployment. There the amount of the risk in any case is so largely dependent on the personal qualities of the worker. There are obvious objections to making the competent, steady, sober members of any trade bear the burden of the infirmities of their fellows. But, on the other hand, as we have seen,[4] a large part of the problem of unemployment is chargeable to social maladjustments rather than to individual faults.

At present development in this field is along two lines, that of subsidized trade-union relief (the Ghent system), and that of compulsory state insurance in certain industries. The former has been adopted by many cities and by some countries in western Europe, the public paying a certain proportion (from one sixth to one third) of the amounts of the benefits paid by the unions. Great Britain is the only country as yet to adopt a compulsory state system. It began operation in 1912, and applied to 2,500,000 persons, or one sixth of all the wage-earners. The contributions are made 3/8 by employers, 3/8 by wage-earners, and 2/8 by the state. There are several original and interesting features of the act, such as rewarding, by the refunding of dues, those employers that provide regular employment and older workmen that have received benefits amounting to less than their contributions. Its administration in close connection with the labor exchanges will give valuable experience in this field. The working out of the many minor problems of cla.s.sification, a.s.sessment, and administration, of unemployment insurance, will require many more years of experimentation.

-- 13. #Need of ideals in social insurance#. The world has had nearly forty years of experimentation of a remarkably varied kind, in the field of social insurance, since the German system was inaugurated in the eighties of the nineteenth century. America stands almost at the beginning of a development along those lines that is certain to be of enormous extent and importance. It would be folly for us to repeat the costly errors of other countries by failing to recognize certain principles which have been clearly established by experience. If these could be grasped and firmly kept in mind our progress in this field in America would be faster, more certain, less costly, and farther reaching than it promises otherwise to be. We can here attempt no more than merely to outline these principles that must be embodied in an ideal system of social insurance in America.

-- 14. #Insurance rather than penalty#. The principle of social insurance rather than that of legal penalty should be universally recognized. At present, in all countries where the several kinds of insurance are found side by side, accidents are indemnified on plans that are still rooted in the notion of employers' liability for negligence; whereas, necessarily, the indemnity in case of sickness and of old age has no such explanation. The unfortunate result of this difference of view is that whereas all cases of sickness and invalidity ent.i.tle to benefits, only those accidents suffered "in the course of employment" are indemnified, and the worker is left unprotected in a large share of the accidents to which he is liable.

The worker's need and the social need are thus not adequately met. We have started along the same line of development in America, and it is to be feared that only through a long series of legal fictions and contradictory judicial decisions shall we be able to work out toward consistency in this matter. Another unfortunate result of this difference is that accident compensation, being made peculiarly the task of the employers, does not develop the spirit of responsibility on the part of the workers and of cooperation between them and employers that other forms of insurance call forth, where representatives of both parties sit together in the administration of the system.

-- 15. #The compulsory principle#. Insurance must be general in its application to all the persons within broad wage-earning cla.s.ses, and in order to be general it must necessarily be compulsory, not voluntary, in its application. To leave any form of insurance optional, or elective, with either employers or wage-workers, is to fail of the main purpose in a large proportion of the individual cases where it is most needed, and to increase the expense to those that are included. Within a compulsory system, however, there should be given wide opportunity for the voluntary principle by admitting to the system others that are not compelled to insure, and to enable any insured person to increase his paid-up, nonforfeitable insurance at any time by extra payments made at times of unusually high wages, from legacies, or from any other exceptional income.

-- 16. #State insurance and a unified system#. The state, through the public insurance office, must ultimately be the sole agency for insurance. Only in this way can the maximum of simplicity and economy be attained. Of course, this calls for a better appreciation of expert training, and a broader sentiment in favor of the merit system in the public service than we yet have in America.

There should be a unification of various kinds of insurance in one general plan and under one general administration for the whole state.

This should be done with full regard to the actuarial differences in costs as among various kinds of insurance, various trades, various establishments, and, to some extent, even the various individuals, so as to ascertain the costs and to distribute them equitably.

Only in this way can provision be made for entire mobility of labor, so that men may not be bound, as a condition for obtaining benefits, to continue in the service of any one employer. To this end there should be interstate comity and cooperation, so that the insured could at any time transfer his actuarial equity from one state to another.

-- 17. #The contributory principle#. The contributory principle should be adopted, and both employers and wage-earners contribute to the cost in equal amounts. But further, the general public interests may be recognized through the payments in aid of the funds (subsidies, subventions). Both employers and employees usually seek to escape the burden, by getting the state to bear the whole expense[5] or by getting the other party to pay all or the larger part. But it is much to be desired that in large part the finances of a system of social insurance should be disa.s.sociated from the ordinary budgetary system of taxation and public expenditures. The fundamental reason why the premiums should be divided between employers and employees is that this is most favorable to the equal partic.i.p.ation and cooperative efforts toward reducing the risk, and developing right industrial and political relations. Everywhere it is the practice to provide for representation nearly in proportion to contributions.

It is usually a.s.sumed by employers, by wage-workers, and by others in the discussion of the subject, that the burden remains and is borne by those who directly pay the premiums, and just in proportion to their payments. This is an almost utterly mistaken view. There is, on the contrary, every reason to believe that the general principles of shifting and incidence of taxation apply fully here.[6] It cannot be doubted that, if wages are not arbitrarily fixed, if they result, as we must believe, from an adjustment and equilibrium of the various cla.s.ses of labor in a general economic situation, then after a time the premiums become a part of that general situation. Payments compulsorily made by employers (by all, without exception) will ultimately be offset by a lower wage, and if transferred to the workmen will ultimately be offset by a higher wage. Of course, there is some delay and friction in making the adjustment, but, under any settled policy, the adjustment once made will be maintained. The benefit of social insurance to the workingmen is not mainly that their wages are increased by the direct contributions of employers to the premiums, tho there are doubtless some cases of "parasitic" industries and parasitic employers that escape their due share of payments for risk, now that there is no insurance system. The great benefits are that total wages and losses are apportioned economically to the points of maximum utility; that acc.u.mulation of capital by and for the wage workers is made regular, automatic, safe, and in great amounts; and that financial aid, physical care, and mental relief from, some of the most tragic anxieties of life, are given effectively and economically to the ma.s.ses of the people.

But, as has been indicated in another connection above, it is far from being a matter of indifference, psychologically, where the first, immediate burden of premium payment falls. The persons paying the premiums, in whole or in part, are far more keenly aware of the cost, and alive to reducing and removing the evil conditions. Moreover, their interest is stimulated by the fact that they are the first to gain by any temporary economies, and the more so because of the illusory belief sure to persist, that they are the ultimate as well as the immediate bearers of the costs.

The development of a complete system of social insurance along these lines promises to do more than any other single measure of practical social reform now under consideration to change the conditions and the outlook of the wage-earning cla.s.s.

[Footnote 1: See above ch. 2, sec. 14; ch. 10, sec. 7; ch. 20, sec. 1; ch. 22, secs. 11-18.]

[Footnote 2: The American a.s.sociation for Labor Legislation has issued a pamphlet describing these features more in detail.]

[Footnote 3: Thirteen states had, in 1916, state insurance funds, and, in five states (Oregon, Nevada, Washington, West Virginia, and Wyoming), they are the only insurance agencies allowed.]

[Footnote 4: Ch. 22, secs. 14-18.]

[Footnote 5: See examples in the lists of laws above cited, sec. 11.]

[Footnote 6: See above, ch. 16, sec. 14.]

CHAPTER 24

POPULATION AND IMMIGRATION

-- 1. Nature of the population problem. -- 2. Complexity of race problems.

-- 3. Economic aspects of the negro problem. -- 4. Favorable economic aspects of early immigration. -- 5. Employers' gains from immigration.

-- 6. Pressure of immigration upon native wage-workers. -- 7.

Abnormal labor conditions resulting from immigration. -- 8. Popular theory of immigrant compet.i.tion. -- 9. Divergent views of effects on population. -- 10. The displacement theory; its fundamental a.s.sumption.

-- 11. Magnitude of the inflow of immigrants. -- 12. Earlier and recent effects of immigration upon wages. -- 13. _Laissez-faire_ policy of immigration. -- 14. Social-protective policy of immigration. -- 15.

Population and militarism. -- 16. Problem of maximum military power.

-- 1. #Nature of the population problem.# No one of the problems of labor thus far discussed is of so great importance in relation to popular welfare as is "the problem of population." By this is meant the problem of determining and maintaining the best relation between the population and the area and resources of the land. What is to be deemed "best" in this case depends, of course, on the various human sympathies and points of view of those p.r.o.nouncing judgment. Very generally, until the nineteenth century, the only view that found expression was that of a small ruling cla.s.s which favored all increase in population as magnifying the political power of the rulers and as increasing the wealth of the landed aristocracy. This view still is unconsciously taken by the members of a small but influential cla.s.s, and is echoed without independent thought by many other persons.

But more and more, in this and other labor problems, another more democratic standard of judgment has come to be taken, that of the abiding welfare of the ma.s.ses of the people. This is the point of view that must be taken by the political economist in a free republic.

The problem of population presents two main aspects: one as to composition, and the other as to numbers of the people. Changes in either of these respects concern the welfare of the ma.s.ses. Changes in the kinds of people, or in their relative numbers, may greatly affect the welfare of the people, in some cases touching special large cla.s.ses, and in others affecting the whole ma.s.s of the people.

-- 2. #Complexity of race problems.# The questions of race composition that we shall here consider are those of the negro and of the immigrant.[1] Both of these questions are complex and go beyond the limits of mere economic considerations, touching the most vital political and social interests of the nation. Indeed they involve the very soul and existence of peoples, for who can doubt that ultimately racial survival and success are mainly to be determined by physical and spiritual capacity?

The negro in America is the gravest of our population problems. In large portions of our land it overshadows every other public question.

Yet the negro is here because men of the seventeenth century ignored the complexity of the labor problem and thought only of its economic aspect. The landowners wished cheaper labor and, reckless of other consequences, they imported slaves from Africa to get it. They gained for themselves and a few generations of their descendants a measure of comparative ease, but at a frightful cost to our national life--a cost of which the Civil War now seems to have been merely a first installment on account rather than a final payment.

-- 3. #Economic aspects of the negro problem.# The negro as a wage earner is found very little outside of the least skilled branches of a limited range of occupations. Of these the princ.i.p.al ones, as is a matter of common knowledge, are farm work, domestic service (including janitor service in stores and factories and work in hotels), and crude manual outdoor labor. Repeated attempts to operate factories with a labor force of negroes have proved unsuccessful. In some of the better-paying occupations in which large numbers of negroes were found in the North soon after the Civil War, such as barbering, waiting on table in the best hotels, and skilled manual work, they have been largely displaced by European immigrants. Negroes are a disturbing and unwelcome influence in labor organizations, and even when nominally eligible to membership are in fact rarely accepted. They very frequently are employed as strike-breakers and this fosters race antagonism both immediately and permanently.

The negro problem is, from our present outlook, insoluble. The most laudable of present efforts, that for industrial training, represented by Hampton and Tuskegee Inst.i.tutes, and the work of Booker T.

Washington, leaves the dire fact of two races side by side and yet una.s.similated socially, politically, and, in large measure, economically. Two other possibilities, race admixture and caste, are both so repellent to white American thought, that they cannot be looked upon as solutions. Segregation in a separate state, or separate states, is a thorogoing proposal, but is practically impossible.

Finally there is the conceivable, but improbable, event of the decrease and extinction of the negroes in America, Their relative number has declined since 1800,[2] but their absolute number still continues to increase. It seems probable that if European immigration were to be stopped that a very large migration of negroes from the South to the North and the West would occur to take places. .h.i.therto filled by unskilled immigrant workers. In the year 1915, following the check to immigration as a result of the European war, a very marked movement of this kind set in. If this occurred on a much larger scale it might result in greatly reducing the negro population in some portions of the South, and as the "natural rate of increase" of the negroes in the North is a negative quant.i.ty, it might cause the total negro population of the country to begin absolutely decreasing.

-- 4. #Favorable economic aspects of earlier immigration.# Regarding the immigration problem we are not confined to futile expressions of regret as in the last case. For by the "immigration problem" is meant primarily and mainly the coming of immigrants, and we can by legislation limit or stop their coming, if we will. The question at issue is whether their coming really is an evil or, on the whole, a blessing to the country.

The historic American att.i.tude toward immigration has been highly favorable to it. The early settlers on these coasts were led by various motives, some political, some religious, but far the largest part economic, the motive of bettering their worldly condition.

Land was plentiful and all men of any capacity could easily become landowners. An inflow of laborers was favorable to the interests of all the influential elements of the population, especially to landowners and active business men. Increase of numbers, favoring division of labor and the economies of production in manufacturing, and reducing the dangers from Indians and from foreign enemies, seemed an unmixed blessing. Many of the newcomers soon became landowners and employers, and in turn favored a continuance of the movement. Thus was hastened the peopling of the wilderness. The interest of these cla.s.ses harmonized to a certain point with the public interest; but likewise it was in some respects in conflict with the abiding welfare of the whole nation. It led to the fateful introduction of slavery from Africa, and it encouraged much defective immigration from Europe, the heritage of which survives in many defective and vicious strains of humanity, some of them notorious, such as the Jukes, the Kallikak family, and the Tribe of Ishmael.

-- 5. #Employers' gains from immigration.#. The immigration from Europe has furnished an ever-changing group of workers, moderating the rate of wages which employers otherwise would have had to pay. The continual influx of cheap labor aided in imparting values to all industrial opportunities. A large part of these gains have been in trade, in manufacturers, and in real estate as the cities have taken and retained an ever-growing share of the immigrants. Successive waves of immigration, composed of different races, have ever been ready to fill the ranks of the unskilled workers at wages somewhat lower than the current American rate.

The lower enterprisers' costs that resulted from immigration surely did not accrue to the advantage of the employers alone. Bearing in mind the fact that the employing-enterpriser is a middleman,[3] we may see that the lower costs must, in most cases, be pa.s.sed on to the consumers in the form of lower prices of products. And often the consumer, as the employer of domestic service at lower rates than otherwise would be possible, gets this advantage directly. This increases the number of those whose self-interest, at least when narrowly judged, leads them to favor the policy of unrestricted immigration, Tho perhaps less general than it once was, this sentiment in favor of immigration is still potent. The continuous inflow of immigrants has in many industries come to be looked upon as an indispensable part of the labor supply. Conditions of trade, methods of manufacturing, prices, profits, and the capital value of the enterprises have become adjusted to the fact. Hence results one of those illusions cherished by men whenever they identify their own profits with the public welfare. Without immigration, it is said, "the supply of labor would not be equal to the demand." It would not at the wages prevailing. But supply and demand have reference to a certain price. At a higher wage the amount of labor offered and the amount demanded would come to an equality. This would temporarily curtail profits, and other prices would, after readjustment, be in a different ratio to wages.

-- 6. #Pressure of immigration upon native wage-workers.# There must always have been cases where the labor incomes of workers were somewhat depressed by the incoming of immigrants. Indeed, that must to some extent always be so when the natives continue to work alongside of the immigrant at just the same job. But before the Civil War living conditions were simple, wages comparatively high and (more important) pretty steadily rising, and the wage-earning cla.s.s not yet a large share of the population. Moreover, this conflict of interest was minimized and often quite avoided by the native changing to another occupation. In the old days there was always the outlet of free land on the frontier, now closed. Always there has been a better opportunity for natives to move into higher positions of foremanship or as employers of immigrant labor.

As the wage-earners have become relatively more numerous, many of them have felt more keenly the pressure of compet.i.tion from immigrant labor. Moreover, the immigration since 1890 has been increasingly from southern and southeastern Europe, from countries with much lower standards of living, and has been of enormous proportions. Here are some significant figures as to immigration since 1820.

-------------------------------------------------------------- | | | Immigration, | Immigration | Increase of | per cent of Decade | in the period | population | population- | | | increase -----------------|---------------|-------------|-------------- 1820-30 | 124,000 | 3,300,000 | 3.8 1830-40 | 528,000 | 4,200,000 | 12.3 1840-50 | 1,604,000 | 6,100,000 | 26.3 1850-60 | 2,648,000 | 8,200,000 | 32.3 1860-70 | 2,369,000 | 8,400,000 | 28.2 1870-80 | 2,812,000 | 10,400,000 | 27.0 1880-90 | 5,246,000 | 12,700,000 | 41.3 1890-1900 | 3,687,000 | 13,100,000 | 28.1 1900-1910 | 8,795,000 | 16,000,000 | 55.0 Total, 90 yrs. | 27,800,000 | 82,400,000 | 33.7

-- 7. #Abnormal labor conditions resulting from immigration.# The labor supply coming from countries of denser population and with low standards of living creates, in some occupations, an abnormally low level of wages and prices. Children cannot be born in American homes and raised on the American standard of living cheaply enough to maintain at such low wages a continuous supply of laborers. Many industries and branches of industry in America are thus parasitical A condition essentially pathological has come to be looked upon as normal. The commercial ideal imposes itself upon the minds of men in other circles.

Statistics show that the prevailing wages for unskilled manual workers in America have risen much less since the Civil War than have other wages.[4] Wages in the great lower stratum of the unskilled and slightly skilled workers are much lower in America relative to those of more skilled and professional workers than they are in Europe. It can hardly be doubted that the most important, tho not the sole, cause of this situation has been the unceasing inflow of immigrants going into these low-paid occupations. The "general economic situation" in America, but for immigration, would compel higher wages to be paid to the ma.s.ses of the workers. If immigration were suddenly stopped in a period of normal or of increasing business, wages in these occupations would at once rise, and that, without the aid of organization, of strikes, or of arbitration. This would affect most those occupations which now present the most serious social problems, in mines, factories, and city sweatshops. In some small measure the war in the Balkan States, by recalling many men for service, had this influence in 1912; and the great war beginning in 1914, by stopping a large part of the usual immigration, gave a striking demonstration of this principle. In employing circles the rise of wages was sometimes referred to with an air of grievance as due to the "monopoly of labor," as if the economic situation here, enabling the wage-earners (millions of them immigrants), to get a higher compet.i.tive wage when immigration temporarily was diminished, const.i.tuted a monopoly.

-- 8. #Popular theory of immigrant compet.i.tion.# The depressing effect of the ever-present and ever-renewing supply of immigrant labor upon wages appears most clearly at the time of wage contests, and often seems to be the most important aspect of the question. Laws against contract labor, pa.s.sed to prevent this particular evil, have put no check to the great stream of those guided by friends to a "job."

Organized labor thinks most of these immediate effects. Commonly labor's protest is expressed in terms of the untenable "lump of labor"

theory of wages. "Every foreign workman who comes to America" is believed to take "the place of some American workman." The error in this too rigid conception of the influence exerted upon wages by new supplies of labor is evident in the light of the principles of wages.

Yet it may be true that, both immediately and ultimately, the foreign workman depresses the incomes of those already here with whom he directly competes. On the other hand, those in occupations into which few immigrants enter may, as consumers of cheaper products, be immediately the gainers in real wages, by the very change that depresses the wages in the lower strata.[5] The manufacturing-employers advocate "protection" which enhances the price of their products, while usually favoring "free trade" in immigration to cheapen their costs. What more natural than that laborers should favor a policy of protection to labor, to keep foreigners from coming here to be their compet.i.tors.