|
Polls in the US continue to show that health care is the #1 issue
driving jobs and the economy. Unless the US embraces a solution very soon, it
will likely be too late to save what is left of its non-Military Industrial
Security Complex (MICS) production economy. Before we can adequately address a realistic industrial policy that
with global economics, we have to undergo a quick 12-step purging of the myth
of The Free Market zeitgeist. This cannot be done by politicians alone, it must
be led by economists. There is a noisy immigration debate here – the Dubai Ports World deal
was the introduction – but it is being driven by 24/7 media looking for verbal
bouts that boost ratings. Some call this immigration issue the new civil rights
battle of the 21st global century. Without the inclusion of sound economics, it will be nothing
more than nationalistic outpouring by some and reflexive outbursts by others. Industrial Strength By Robert Kuttner,
American Prospect, Web Exclusive: 03.28.06 General Motors and the
United Auto Workers stunned Wall Street and the labor movement this week by
proposing the
ultimate buyout package.
GM proposes to pension off every
one of its 131,000 GM and Delphi workers in the United States, with cash bonuses of up to $140,000 for
taking early retirement. Who would make the
cars? A new generation of lower-paid workers. It is a mark of GM's fragility
that the UAW considers this about the best deal the union can get. GM lost $10.6 billion
last year. Its bonds are now classified junk. The stock market values the
entire company at just $12.4 billion, a fraction of Toyota's $177 billion. Wall
Street reacted to the prospect of this daring desperation plan by bidding up GM
stock - by exactly one cent. GM once made nearly
half the autos sold in America; it now sells about one in four, many of them
imports. What went so wrong? And what does this say about the future of US
manufacturing and trade unionism? For starters, as a
frequent renter, I conclude that GM makes cars consumers don't want. Compared
with Japanese, Korean, and European competitors, the steering is slushy, the
instrument panel needlessly confusing, and the feel cheesy. The reliability
ratings are less than impressive. With a few nice exceptions, the designs are
weird. Even the latest Caddy looks like it wants to be a Hummer. Ever since the
abortive Corvair, GM executives have been promising to learn from the
competition, but they never do. Meanwhile, GM is stuck with a once-proud social
contract that was defensible in the era of scant imports and a Big Three
monopoly: GM would pay good health and pension benefits, as well as decent
wages. But GM's foreign competitors live in nations with universal health insurance, giving domestic automakers a cost
disadvantage from the get-go. Even so, total labor
costs for automakers are actually about $10 an hour higher in Germany, which
manages to compete by making terrific cars. If GM management were not such a
mess, its workers would not be paying the price. There is a larger
story here. The United States is also needlessly losing manufacturing jobs
because it hasn't figured out how to compete globally. This is partly a story
of lazy management, but partly of misguided public policy. Mostly, it is not a
story of overpaid production workers. Since 1973, total
productivity of the US economy is up about 70% while the median wage of
nonsupervisory workers is up about 10%, according to the nonprofit Economic Policy
Institute (on whose board I serve). Economist Robert Gordon recently calculated
that nearly all the fruits of that productivity went to the very top income
brackets. In autos, however,
workers in Mexico and China with comparable production equipment and skills are
paid less than one-10th the US wage. To stay in the game, the United States
will have to compete smarter. Yet the United States
lacks sensible trade, industrial, technology, and labor-market policies to
revive domestic manufacturing. Its policies are crafted mainly for the benefit
of corporations that want the lowest-paid workers, regardless of where they are
located and whether their home governments play fair. Consequently, America
welcomes imports, whether or not the government of the exporting company
subsidizes industry to capture market share, steals intellectual property, and
honors basic labor rights. Some have proposed
smart strategies to reclaim competitive industry and good jobs in the United
States. A plan by Senator Barack Obama of Illinois would relieve automakers of
the ''legacy costs" of retiree expenses in exchange for Detroit's
commitment to put serious money into state-of-the art hybrid cars. This idea is disparaged in some circles as ''industrial policy," as if Japan, Korea, and China did not have
industrial policies. The next generation of
workers, which will include much lower paid GM employees (assuming there is a
GM) faces the most unequal distribution of wages and opportunities since the
Gilded Age a century ago. Unionization of the expanding service sector, most of
which can't pick up and move to China, would help defend wages. But the United
States shouldn't abandon manufacturing altogether. Automation means
manufacturing will never have the share of jobs that it once did. Still, it's
not too late to save US manufacturing and at least some good industrial jobs.
But that will take radical revision of both management thinking and of the
official free-market ideology. Robert
Kuttner is co-editor of The
American Prospect. This column originally
appeared in The Boston Globe. http://www.prospect.org/web/page.ww?section=root&name=ViewWeb&articleId=11363 Related Business News Analysis
and Opinion Profits Rise, Wages
Fall, Income Gap Grows: The Wall
Street Journal reports, "Since the end of 2000, gross domestic product per
person in the U.S. has expanded 8.4%, adjusted for inflation, but the average
weekly wage has edged down 0.3%." The reason? Since 2001, "a lot of the growth in GDP per
person -- that is, productivity -- has gone to profits, not wages." Moreover, the Bush tax cuts "appear to
have widened the income gap, according to many analyses. They increased
take-home pay of almost all working Americans, but boosted it most for those at
the top." Jared Bernstein of the Economic Policy Institute estimates "the weekly wage of the worker at the 10th
percentile -- the one earning less than 90% of all workers -- fell 2.7% from
2000 to 2005, adjusted for inflation. The wage of the worker at the 90th
percentile rose 5.3%." (Think Progress 032706) Toyota, Kia will
expand in US http://www.washingtonpost.com/wp-dyn/content/article/2006/03/13/AR2006031300248.html US 2005 Q4
Productivity revised to –0.5 percent http://go.reuters.com/newsArticle.jhtml?type=businessNews&storyID=11449323&src=""> Dale Dauten
The Fed has the leash, but is the dog on it? How Fed policies keep wages low http://bostonworks.boston.com/news/articles/2006/03/12/the_fed_has_the_leash_but_is_the_dog_on_it/ Bloomberg’s Brendan Murray Stock
Performance Undercuts Bush’s Vision of Ownership Society: "President George W. Bush has
tried to sell Americans on an 'ownership society' that would create more wealth
-- and more Republicans in the process. The stock market hasn't accommodated. "The
Standard & Poor's 500 Index - the benchmark for American equities - is down
2.8%since Bush took office 5 years and 2 months ago. That's the worst
performance during the same stage of any two-term administration in the past half
century except that of Richard M. Nixon. "The market's performance is undermining a central goal of White
House Deputy Chief of Staff Karl Rove, Bush's chief political adviser.
Borrowing from Margaret Thatcher's privatization push in the U.K. in the 1980s,
Rove's theory is that if more Americans make their own financial decisions and
the last vestiges of a welfare state are dismantled, a culture of ownership
will spring up. The ranks of Republican voters, the idea goes, will swell along
with it. " 'The ownership society looked
very attractive on paper,' said Jacob Hacker, a political science
professor at Yale University in New Haven, Connecticut. 'But once you flesh out the changes, people become
very concerned because they are already fearful that their economic security is
slipping away.' " http://www.bloomberg.com/apps/news?pid=10000103&sid=amzVdnivhgdY&refer=us Time’s Tim Padgett Bush in Mexico: Whatever happened
to NAFTA? http://www.time.com/time/nation/article/0,8599,1178497,00.html IPS’ Sanjay Suri Trade: Time for a collective strip tease http://www.ipsnews.net/news.asp?idnews=32439 |
_______________________________________________ Futurework mailing list [email protected] http://fes.uwaterloo.ca/mailman/listinfo/futurework
