Matt Yglesias’s China Syndrome

Commenting on the recent labor unrest in China, Matt Yglesias makes a comparison with the past and present of the United States.

Conditions in contemporary China have much more in common, structurally speaking, with conditions during the heyday of western labor activism than does anything about the Chicago teachers strike or the apparent American Airlines sickout. The rapid pace of Chinese industrialization means the average wage in a Chinese factories has managed to lag behind the average productivity of a Chinese factory worker (roughly speaking because it’s dragged down by the absymal wages and productivity of Chinese agriculture) which creates a dynamic ripe for windfall profits but also for labor activism. The repressive nature of the Chinese state is an unpromising ground for union organizing, but by the same token Chinese labor organizations have much less to lose (in terms of union-managed pension funds, union-owned buildings, etc.) if they break the law with “wildcat” strikes and the like.

Why are workers rioting in China? Because, says Matt, of the large gap between labor productivity and labor compensation there, which is similar to how things once were in the US and Western Europe but is unlike anything in the contemporary US.

Oh really? Since 1973, labor productivity in the US has risen 80.4 percent. Yet median wages have increased only 4 percent, and median compensation as a whole—which includes benefits—has only increased 10.7 percent.

This is hardly a state secret; mainstream economists talk about it all the time. Which is why I was so puzzled by Matt’s claim.

So I asked him about the discrepancy. He  responded: “I should explain the difference more clearly. US is a median issue, China is a mean issue.” I’m not clear what point he’s trying to make here, but it seems to work against him: if the mean worker wage in China is being depressed by very low wages in agriculture, that means factory work pays better than agriculture, so workers should be flocking to the factories. An increase in the labor supply is not usually conducive to labor activism.

Back to the US.  So where did all that productivity growth between 1973 and 2011 go? Writes Paul Krugman:

One third of the difference is due to a technical issue involving price indexes. The rest, however, reflects a shift of income from labor to capital and, within that, a shift of labor income to the top and away from the middle.

2/3 of the productivity, in other words, went to the “windfall profits” that Matt speaks of above. Not so unlike China after all.

And what about labor activism? Matt is right, of course, about the repressive Chinese state. But as I’ve long argued, a good deal of worker activism in the United States also gets repressed. One in 17 of every eligible voter in a union election gets illegally fired or suspended for his or her support for a union. While it’s true that the American state is not the equivalent of the Chinese state, it’s also true that a great deal of repression in the US has always been outsourced to the private sector—even in “the heyday of western labor activism.”

Over the summer, when Chris Bertram, Alex Gourevitch, and I were advancing our thesis about workplace tyranny, Matt repeatedly professed bafflement as to why we were even talking about this issue. Well, this is one reason: repression and coercion in the workplace actually prevent the union organizing that helps ensure that that growth in worker productivity translates into higher pay and benefits for workers.

Matt gets it. In China.

This post is cross-posted at Crooked Timber.


  1. Doug Henwood September 24, 2012 at 10:55 am | #

    Certainly we have workplace repression here, but the repression was far more intense 120 years ago when Pinkertons were shooting strikers. And there was a lot of labor militance in those days.

    That said, it would be nice to re-evaluate conventional perceptions about which system is more repressive, the US or China’s. The Chinese leadership is scared of instability and worries about legitimacy. Not ours.

    • Corey Robin September 24, 2012 at 10:58 am | #

      Though as I’ve told you many times, a lot of repression against workers in the US has always been non-violent.

      • Corey Robin September 24, 2012 at 11:00 am | #

        The better comparison to today is not suppression of labor 120 years ago but McCarthyism. No one would deny its repressiveness. But very very little violence. Instead, tons of surveillance of workers as well as targeted firing. I think the Pinkerton comparison is not really all that helpful.

      • PhilPerspective September 24, 2012 at 11:10 am | #

        Re: your second comment, there is a lot of violence. After all, what about Tiananmen Square? We still don’t know fully what happened there.

      • david mizner September 24, 2012 at 12:24 pm | #

        Yeah, why resort to violence when you don’t have to?

        Interesting CPR paper here “that provides significant support for the final explanation for union decline –that aggressive, even illegal, employer behavior has undermined the ability of U.S. workers to create unions at their work places.”

        Part of the problem is piddly penalties and lax enforcement.

        EFCA (remember that?) would stiffen penalties for intimidating or firing workers trying to unionize.

    • robert wood September 24, 2012 at 5:24 pm | #

      A couple thoughts on that. The disciplinary structures of workplace repression of multiplied and proliferated. There are videos, speeches, and other media created and distributed to fight organizing. Along with that, industries have created an entire intellectual group to fight organizing in the form of consultants, union-busters, etc. They’ve been able to take care of the holes in the increasingly weak NLRB to create a web of discourse and social relations keeping organizers out. In addition, state violence is less needed, but that violence is intensified. If you look at early struggles, the level of force is uneven, but not to the degree it is today. Pinkertons shot a lot of workers, but those workers frequently shot back. The ability to engage in such a struggle has shrunk as the militarization of the police has occurred.

  2. PhilPerspective September 24, 2012 at 11:12 am | #

    Is it any surprise that MY gets all mixed up? One, he writes for Slate. Two, it’s obvious he’s in over his head writing about economics, if he wants to be taken seriously by people who aren’t brain dead.

  3. Stephanie Luce September 24, 2012 at 11:32 am | #

    One interesting difference is that the laws in China do not specifically address strikes, so striking is not clearly legal, but not illegal. Meanwhile, many workers in the U.S. do not have the right to strike under their public sector state laws (such as the Taylor law in New York), nor can they strike during the duration of their contract if unionized. Also, US employers are quick to bring in replacement workers and anti-union consultants to try to bust unions during many strikes, and for some reason this doesn’t happen in China.

    Matt’s comparison between Chinese unions not losing pension funds doesn’t make much sense, since the only union in China, the ACFTU, is not behind the strikes, and does, in fact, have much to lose with the on-going strike wave. Interestingly, it seems some of the ACFTU leaders realize this.

  4. Ben Hosen September 25, 2012 at 12:26 am | #

    Off topic a little, but have you noticed the NFL Referee’s strike? Crunch the numbers, it is one for the books. The owners are fighting not for money so much (roughly 0.02% of league revenue), but for Principle.

    Principle being “Most people don’t get pensions either, so Fuck You. So what if the product suffers, demand is inelastic anyway.” There are some workplace safety issues about the NFL in the headlines too.

    Notably awful national TV games Sunday and tonight. Close games, last minute… and yet still awful. Even the sporting press has begun to notice. A window, here? A lot of angry white guys watch sports (raises hand guiltily), maybe we can make some connections here- those damn union Refs at least know what the fuck they are trying to do, etc.

    (Disclosure: I really enjoy NFL football, but no way in hell will they see one thin dime from me. Ever.)

    • Kenneth Thomas September 26, 2012 at 1:30 am | #

      Um, the referees are locked out, not on strike. Otherwise, I agree with what you say.

      • Ben Hosen September 26, 2012 at 11:56 pm | #

        D’oh! I know the difference, but that’s a bad misstatement on my part, esp. in first sentence. Thanks.

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