Watching Greed Murder the Economy - A Workforce Betrayed

[seemslikeadream]

http://www.counterpunch.org/roberts07102008.html


By PAUL CRAIG ROBERTS

The collapse of world socialism, the rise of the high speed Internet, a bought-and-paid-for US government, and a million dollar cap on executive pay that is not performance related are permitting greedy and disloyal corporate executives, Wall Street, and large retailers to dismantle the ladders of upward mobility that made America an “opportunity society.” In the 21st century the US economy has been able to create net new jobs only in nontradable domestic services, such as waitresses, bartenders, government workers, hospital orderlies, and retail clerks. (Nontradable services are “hands on” services that cannot be sold as exports, such as haircuts, waiting a table, fixing a drink.)

Corporations can boost their bottom lines, shareholder returns, and executive performance bonuses by arbitraging labor across national boundaries. High value- added jobs in manufacturing and in tradable services can be relocated from developed countries to developing countries where wages and salaries are much lower. In the United States, the high value-added jobs that remain are increasingly filled by lower paid foreigners brought in on work visas.

When manufacturing jobs began leaving the US, no-think economists gave their assurances that this was a good thing. Grimy jobs that required little education would be replaced with new high tech service jobs requiring university degrees. The American work force would be elevated. The US would do the innovating, design, engineering, financing and marketing, and poor countries such as China would manufacture the goods that Americans invented. High-tech services were touted as the new source of value-added that would keep the American economy preeminent in the world.

The assurances that economists gave made no sense. If it pays corporations to ship out high value-added manufacturing jobs, it pays them to ship out high value-added service jobs. And that is exactly what US corporations have done.

Automobile magazine (August 2008) reports that last March Chrysler closed its Pacifica Advance Product Design Center in Southern California. Pacifica’s demise followed closings and downsizings of Southern California design studios by Italdesign, ASC, Porsche, Nissan, and Volvo. Only three of GM’s eleven design studios remain in the US.

[leftchick]

1. duh!

<snip>

The idea is nonsensical that the US can remain the font of research, innovation, design, and engineering while the country ceases to make things. Research and product development invariably follow manufacturing. Now even business schools that were cheerleaders for offshoring of US jobs are beginning to wise up. In a recent report, “Next Generation Offshoring: The Globalization of Innovation,” Duke University’s Fuqua School of Business finds that product development is moving to China to support the manufacturing operations that have located there.

The study, reported in Manufacturing & Technology News, acknowledges that “labor arbitrage strategies continue to be key drivers of offshoring,” a conclusion that I reached a number of years ago. Moreover, the study concludes, jobs offshoring is no longer mainly associated with locating IT services and call centers in low wage countries. Jobs offshoring has reached maturity, “and now the growth is centered around product and process innovation.”

k&r!

:hi:

[NMDemDist2]

2. how arrogant! as if the US had only very intelligent people and blue collar workers

were only brown or yellow people.

I don't know about you, but I meet lots of folks who are good people but certainly not brainiacs. they needed those manufacturing jobs to support their families. and now those jobs are gone.

and the incidence of alcoholism, drug abuse and family violence goes up as hope is gone.

we're so f#@ked.

[midnight]

3. Someone has had a plan in the works, and it isn't intended to

help the worker.

[crikkett]

4. arbitraging, arbitrage, arbitrageur.

In economics and finance, arbitrage is the practice of taking advantage of a price differential between two or more markets: a combination of matching deals are struck that capitalize upon the imbalance, the profit being the difference between the market prices. When used by academics, an arbitrage is a transaction that involves no negative cash flow at any probabilistic or temporal state and a positive cash flow in at least one state; in simple terms, a risk-free profit. A person who engages in arbitrage is called an arbitrageur. The term is mainly applied to trading in financial instruments, such as bonds, stocks, derivatives, commodities and currencies.

From wikipedia.

[flashl]

5. Nontradables such as nurses, teachers, or doctors should be safe but they are not. nt

[TahitiNut]

6. Our 'leaders' are Trafficking in Human Labor

Our "immigration system" is virtually nothing BUT a system of trafficking in human labor, even in the non-enforcement that exploits a colonial plantation economy to our south which we helped create. For the last 30 years, the costs of higher education have increased at nearly the same rate as health care, increasing the chasm between the 'haves' and the 'have-nots' ... as we lurch and stagger toward becoming a plantation economy ourselves.

[asteroid2003QQ47]

7. The workers did it to themselves.

There was a time when unionss were stronger and workers
didn't buy the lies.

-------------------------------------------------------
One Big Union, One Big Strike!
--Industrial Workers of the World

[JHB]

9. Yes, in the same way battered wives "do it to themselves" n/t

[TahitiNut]

10. Yes, and similarly, it's not 'solved' by being nicer to the abusers.

:shrug:

[JHB]

8. The "Has a Clue" Club welcomes PCR for his much-delayed joining...

Somewhat more observant memebrs of the club have been "Watching Greed Murder the Economy - A Workforce Betrayed" since the Reagan days, when he was the #2 man at Treasury.

Back then financial hotshots unleashed by the Holy Sacrement of Deregulation (of the Unquestionable Church of the Free Market) would target companies that were profitable and gainfully employing people (did I mention profitable?), judge them to be "underperforming", take them deep into debt to "force efficiency", lay off most of the employees, put it into bankruptcy, and sell the husk to a competitor (who, if they replaced any of the husk's manufacturing capacity did so overseas), all while somehow managing to shuffle large amounts of the company's money into their pockets.

Then hop to another company and repeat the process. A lot of manufacturing jobs didn't "leave the US", they were actively scuttled then replaced with foreign production.

Maybe Roberts can dredge up his vehement objections from that time to this sort of practice (because i certainly can't recall any). Or he can admit to either being one of those "no-think economists" or a lying propagandist who fed us the "assurances that this was a good thing".

Either way, don't just make suggestions of "what should be done". We already have plenty of that. Give us something on breaking the hold Free Market Ideology has on the political structure right now. Any suggestions on how to Smash the Chicago School?

[Cassandra]

12. I was watching "Dragon's Den" last night on BBC America...

It's a reality show that has people with ideas or products pitch to potential investors for relatively small amounts of money (too large for family and friends, too small for banks) in exchange for equity shares and possibly business advice. Although the negotiations were interesting to watch, one thought I had, which was shared by some of the inventors, was that the money people had only money. They were still dependent on other people having the good ideas but were able to force the creative people to take their terms (or not) just because they had the money. There was no sense of wanting to be part of a successful venture, or wanting to build something, for the joy and profit of the creation. There was just the money, to be put wherever there was the greatest return, all other considerations being considered irrelevant. Seems a very soulless existence.

[JHB]

13. Welcome to "venture capitalism"

Actually, at the level you're describing, "(too large for family and friends, too small for banks)", it serves a needed role in the economy. The problem is when it's scaled up and that same game is played where it directly affects dozens, hundreds, even thousands of people, and more as effects ripple outward.

[raccoon]

11. K&R. nt