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June 19, 2013
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 Will We Choose a Chinese Future?Posted on Feb 17, 2012By David Sirota For the last two decades, we’ve heard many myths purporting to explain the loss of American manufacturing jobs. CEOs, for instance, typically say they’ve sent jobs overseas because they can’t find skilled American workers. Conservative economists say the giant sucking sound is that of technology replacing obsolete workers. And conservative politicians say job loss is the result of high corporate tax rates, even though ours are among the lowest effective corporate tax rates in the industrialized world. All of these explanations are fables with a purpose: They are designed to deny the obvious by pretending that exploitation and policies that encourage exploitation aren’t the root cause of offshoring. More specifically, they ask us to ignore the fact that tariff-free trade agreements and tax loopholes incentivize companies to shift production to countries where slave wages, environmental degradation and human rights abuses are tolerated. But now at least a few manufacturing jobs are suddenly coming back to America, and the same CEOs, economists and politicians who have tried to squelch any honest discussion of exploitation are inadvertently admitting that exploitation has always been the manufacturing economy’s invisible hand. They are admitting it when they concede that jobs are returning primarily because American wages are precipitously dropping at the same time Chinese minimum wages have slightly risen—from awful (in some places, $100 month) to a mere terrible (still just $240 a month). This is not some fringe theory. It’s a widely acknowledged fact. President Barack Obama admitted it when in his State of the Union address he said jobs are returning because “it’s getting more expensive to do business in places like China.” Economists at the Boston Consulting Group underscored it when in August they said employment growth is happening because rising Chinese wages are “eroding China’s cost advantages” while the United States “is becoming a lower-cost country” as American wages decline. And GE Consumer & Industrial CEO James Campbell reiterated it when he recently told The New York Times that “making things in America is as viable as making things any place” because domestic labor costs are now “significantly less with the competitive wages”—read: far lower wages—now accepted by American workers. Advertisement If our answer is yes, then we should support current state legislative proposals to reduce child labor protections; back federal legislation to eliminate all environmental, wage and workplace safety laws; and applaud corporations that crush unions and further reduce wages in America. We should also probably encourage our fellow countrymen to follow Apple Inc.‘s Chinese workforce by simply accepting $17-a-day paychecks, 12-hour workdays and six-day workweeks. Indeed, if we accept this race-to-the-bottom style of competition, then we’re basically saying Chicago should look more like Chengdu; our heartland should look more like the poverty-stricken interior of China; and 21st-century America should look more like late 19th-century America. If, alternately, we reject this dystopian future, then it requires us to more seriously consider things like tariffs, industrial policy, tax incentives for domestic investment and Buy America laws for government procurement. In other words, it requires us to declare that access to the American marketplace is no longer free—that corporations that want to sell things to Americans must play by our wage, environmental and human rights rules no matter where they make their products. Between these two paths, there is no “third way,” and doing nothing will likely mean that the uptick in American manufacturing jobs will prove fleeting. A choice, therefore, must be made—and it should be a no-brainer.
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By - bill, February 18, 2012 at 12:33 pm Link to this comment
Sorry, David: your choice is a ‘no brainer’ only to people with no brains.
While it’s entirely reasonable to suggest that we should not do business with companies that truly exploit their workers and despoil the environment, it’s simply ignorant (or disingenuous) to suggest that in many places in the world working for FAR lower than what used to be typical American wages innately constitutes exploitation or that we, as one of the most vigorous environmental despoilers on the planet (especially over time) have any real moral right to turn around and castigate others for doing just a small percentage of the despoiling that we did and to a large degree continue to do. The cost of living in many places is far lower than it is here, in part (but only in part) because the STANDARD of living is much lower - resulting in situations where workers may be clamoring for work at far lower than American wages in order to RAISE their standard of living.
Raising tariffs to discourage that kind of non-exploitative off-shoring does no favors to those foreign workers and is thus no ‘moral’ issue but a purely pragmatic one: do we want to take that route toward protecting American jobs in preference to a route which leverages whatever unique strengths the American workforce has (or can develop) to compete better for the kinds of jobs that produce the kinds of wages it takes to maintain our own standard of living? In an increasingly frictionless world economy the former approach cannot succeed for very long, and even over the short term is far from free of drawbacks - e.g., wages that are higher than world competition requires result in prices that are similarly higher, benefiting workers at the expense of consumers (though to a large degree those two groups overlap).
So there are indeed 3rd, 4th, and many more ways to address the plight we face in a world that increasingly does not de facto leave us at the top of the economic heap. We can keep our unions and their strengths, but only if those unions recognize that they’ve got to compete against world labor in ways (and with innovations) that they are not used to (otherwise, the jobs WILL go elsewhere and they’ll be left with a very hollow victory). We can (and should) retain our child-labor laws (there’s some cost even to that, but it’s a cost that a country as rich as ours is should be happy to bear). We can (and should) retain and strengthen our environmental laws (again, we can easily afford to and given our long-standing environmental abuses have strong moral obligations to). And we can (and should) use things like tariffs, tax advantages, and perhaps even ‘Buy American’ legislation for government purchases TEMPORARILY to help ease our transition.
But make no mistake: change is already here and will continue to accelerate, and we need to adjust or be left behind. The post-WWII era has finally come to an end, and a new ball game has begun where we don’t get to set the rules any more. The dinosaurs once ruled the world and died out when they failed to adapt to its changes. We should thank them for the warning they have given us, rather than use them as role models.
Report thisBy Inherit The Wind, February 18, 2012 at 9:04 am Link to this comment
Thanks. For profit fire-fighting is a proven failure. As cities like NYC become more complicated machines, public services require higher skill levels and dedication.
We live in a crazy world where we compensate CEOs, athletes and hedge fund managers far more than people we REALLY need, like fire-fighters, police, teachers, farmers and inventors.
One fund manager’s compensation is over $4 BILLION a year! Yeah, FOUR BILLION DOLLARS EVERY YEAR!. I’d work 3 months, maybe 6, then retire! That’s almost $11 MILLION DOLLARS A DAY, 365 DAYS A YEAR! $7600 a MINUTE, round the clock! $126 a second. Hell, I’d LOVE to make $126/hour for only 40 hours a week!
How can fund management POSSIBLY be worth so much?????
Report thisBy oddsox, February 18, 2012 at 8:30 am Link to this comment
Here’s a worthwhile article from former Labor Secretary Robert Reich.
Report thishttp://www.salon.com/2012/02/17/the_factory_jobs_arent_coming_back/
By oddsox, February 18, 2012 at 8:16 am Link to this comment
ITW, good to hear from you again.
Please read Aaron Ortiz’ comment down-thread.
American workers are learning a hard lesson right now—that in the global context we’re all part of the “1%.”
(in quotes here to distinguish branding from literal percentile interpretation, though I’d like to see the actual #.)
Nowhere is this more true than in manufacturing, where outsourcing is still abundant and practical in order to keep production costs down.
But even the service industry and sales positions are feeling it. Public sector, too, where outsourcing isn’t an issue.
Take one example: a firemen.
You can’t outsource a fire-fighter, right?
The average US fireman makes more than her/his counterpart in almost every other country.
Only UK pay is higher.
(in fairness, the US fireman also puts in more hours and the gap isn’t very wide among 1st world countries).
But compare salaries to those in countries like China, Mexico, Portugal, Poland and Brazil, and it’s 5x-10x higher.
This isn’t a slight on our firemen.
I’ll bet they’re better trained here than in most other countries. I’d be proud if my young son or daughter became one.
But don’t look for wage increases any time soon.
As the world shrinks due to advances in technology and communication, pressure is put upon wage disparity. It’s unfortunate that the US is running high point on that front.
These aren’t partisan Tea Party or GOP goals, they’re just facts in a changing world.
Report thisSirota doesn’t like it and blames “conservative economists.” But when guys like Thomas Friedman or Fareed Zakaria make the point, one has to realize this isn’t a politically motivated phenomenon.
By Inherit The Wind, February 17, 2012 at 9:32 pm Link to this comment
If our answer is yes, then we should support current state legislative proposals to reduce child labor protections; back federal legislation to eliminate all environmental, wage and workplace safety laws; and applaud corporations that crush unions and further reduce wages in America. We should also probably encourage our fellow countrymen to follow Apple Inc.‘s Chinese workforce by simply accepting $17-a-day paychecks, 12-hour workdays and six-day workweeks.
***********************
But that is exactly what the reactionaries in the GOP and the Tea Party want. It’s what they argue is “right and proper” everyday all over the Internet.
Report thisBy prosefights, February 17, 2012 at 7:05 pm Link to this comment
Problem here?
From: “Jake Rudisill” <j.rudisill@meridianenergyusa.com>
To: .(JavaScript must be enabled to view this email address)
Sent: Friday, February 17, 2012 3:35:12 PM
Subject: RE: What are the values of s, t, u, v, w, y and z?
I have you on deep, dark, ignore.
Jake Rudisill
From: .(JavaScript must be enabled to view this email address) [mailto:bpayne37@comcast.net]
Sent: Wednesday, February 15, 2012 7:39 PM
To: Jake Rudisill
Subject: Fwd: What are the values of s, t, u, v, w, y and z?
Hello Jake,
bill
————————————————————————————————————————
From: .(JavaScript must be enabled to view this email address)
To: “Valerie Espinoza” <voteval@q.com>
Sent: Wednesday, February 15, 2012 8:12:25 PM
Subject: What are the values of s, t, u, v, w, y and z?
http://www.prosefights.org/coal/turbinecoal/turbinecoal.htm#ronquestion1
Regards,
bill
http://www.prosefights.org/whitmancrocker/whitmancrocker.htm#grabbe
Report thisBy super390, February 17, 2012 at 5:48 pm Link to this comment
(Unregistered commenter)
Mr. Sirota at least acknowledges what the Chinaphobes won’t - China has reached takeoff point with higher wages feeding more-educated workers to more-advanced factories producing pricier goods. America had that for a while, and threw it away. Germany still has it.
If Chinese urban wages double every 7 years, $240 a month will be $1000 a month by 2026, creating conditions comparable to the advanced parts of Europe and America 100 years ago when basic social service legislation was passed even where there wasn’t much democracy. The problem now is calibrating the consequences of all this material wealth and pollution. I sometimes see articles about the rising discussion in China about using their new fortune to restore the goal of socialism. Workers are protesting most violently when their jobs at state factories are lost. The next generation of Party insiders are said to be very anti-Western and critical of what they see of capitalism.
What if, as hard as it is for us to believe, China is about to develop a real workers’ movement, and one of the Party political factions decides to ally with it against the pro-business factions?
Keep an eye on internal passport policy and social benefits. If the government finally recognizes the right of “illegal” internal immigrants to theoretically existing social services, then a big change is underway. Ironically, capitalist Japan, S. Korea and Taiwan all have national health insurance. Communist China next?
Report thisBy Ivan Hentschel, February 17, 2012 at 2:48 pm Link to this comment
(Unregistered commenter)
Too bad Mr. Sirota has joined the “flavor of the month”, knee-jerk reaction crowd. Suddenly it is very fashionable to worry about China and our similarities,challenges and potentialy dangerous interminglings. We have bigger fish to fry.China was there before, and it will be there later, and so will we,but probably no more instantaneously like Chinese peasants than we are now. We should be looking inward for solutions instead of outward for distractions and dubious ramblings. This was not helpful.
Report thisBy oddsox, February 17, 2012 at 9:21 am Link to this comment
“Do we accept an economic competition that asks us to emulate China?”
Yes or no.
No “third way.”
Because Sirota, master of the false dichotomy, says so.
Fortunately, we do not have to emulate China to compete with her.
Report thisBy Aaron Ortiz, February 17, 2012 at 8:51 am Link to this comment
(Unregistered commenter)
My response to this article could be summarized in one word: “Globalization”. What I mean is that the law of supply and demand applies to wages, and is now globalized.
Report thisBy balkas, February 17, 2012 at 8:04 am Link to this comment
like many other MSM columnist generalizations, so is “poverty-stricken interior of china” by
Report thissirota a vast deception.
the fact is that peasantry/serfs in europe and asia were very poor for centuries or millennia
[for china] because of their ONE PERCENT.
sirota is or appears to be blaming present china rulers for poverty which ‘strikes’ chinese
villagers.
poverty, deceiving, miseducating, exploiting, say, in russia or china, was waged for a long
time before communists took over the rules in these two empires.
that same ONE PERCENT is doing that right now to “poverty-stricken interior of US”.