Workers blame themselves, while CEOs snicker...
Book Review: The Disposable American: Layoffs and Their Consequences, by Louis Uchitelle
Most of the economic analysis by free market fundamentalists on the problem of displaced workers and outsourcing of factory jobs are more statements of ideological faith then economic analysis. What economic analysis that is presented is based on misstatements of fact about labor growth in the US. So Uchitelle’s book is welcome addition to the massive misinformation campaign by the big Ivory Tower think tanks like the CATO Institute that dominate the Internet and the mass media.
This book documents the problem of layoffs. And clearly it's a problem---as Uchitelle thoroughly documents---since layoffs are widespread, and the great majority of laid off workers either drop out of the labor market, or take jobs with less skills and lower pay. Another fact of the layoffs that is often dismissed by free marketeers is that most of the layoffs in last 10 years were a result of management incompetence and short-term vision, not worker productivity.
As a result, American is left with an economy that is weaker and less productive. Worse, our economic growth has become completely dependent on monetary policy slight-of-hand tricks that Alan Greenspan pursued for over 10 years. Greenspan’s economic plan is hardly a "free market" solution, as it consists of creating unsustainable economic bubbles with financial deregulation and artificially low interest rates. Worse, the low interest rates that the free market fundamentalists are so fond of are an illusion, made possible by massive deficit spending financed by foreign governments, first the Japanese and the Arabs, and recently to the Communist Chinese government.
As Uchitelle puts it, "Rather than try to outstrip foreign competitors in innovation, a costly and risky process, management gave up in product after product." On the other hand, companies with management that took responsibility for innovation and refused to layoff at all, like Southwest Airlines, are the stars of what's left of America's productivity based economic strength.
Uchitelle's most important message---which is directly opposite of the ideological bias of the free market fundamentalists---is to dismantle the myth that the workers are too blame for their declining economic insecurity. Obviously, the problem isn't job training, or work ethic, but lack of demand for jobs. Uchitelle documents the fact that laid off workers who re-enter the job market end up being forced to take lower skilled jobs at lower pay, and no benefits. Highly skilled airline mechanics end up running a water taxi for tourists, or going into building maintenance, or a job "throwing boxes" at Federal Express.
Of course, what's ironic of course is that the outsourcing that the CEO classes believe benefit them in the short run, end up hurting many of the corporate staggers who a few years earlier where praising the "innovation" of mergers and outsourcing. Uchitelle survey of the Harvard class of 1968 shows that a good number of the Harvard MBAs have found themselves in the same position that they put their workers in a few years ago. Many are working part time jobs as "consultants", involved in a series of insignificant business ventures. Many just retire to the country estates and palatial mansions that their stock compensation plans bought, and fiddling around with their dwindling stock portfolios, or borrowing equity out of their homes to make ends meet like everyone else.
But the real victim of the fantasy economics embraced by the federal government in last 20 years is the political bedrock of American democracy---our middle classes. The claim was that the United States was expanding high-wage, high-skilled jobs, and that the laid off could simply jump into jobs as good or better is proven by Uchitelle to be totally wrong. After all, he writes, as of 2004, more than 45 percent of American workers were earning $13.25 an hour or less. The jobs that the country has been "growing" the fastest include those like janitor, hospital orderly and cashier. It is simply not true that the downsizing, outsourcing and mergers of the last 20 years have yielded an improved labor market for the majority of workers.
Clearly, Uchitelle is no socialist---he supports private property and enterprise. But on the other hand, he points out the obvious---that it's self destructive to allow the dismantling of our economic base, and ultimately our political democracy.
A lot of the solutions obvious, such as reforming CEO compensation packages and increasing stockholder rights. Corporate Management shouldn't be rewarded for dismantling their companies by walking out with millions of dollars--enough money earned in a few years of reckless, destructive policies---to live for the rest of their lives in luxury and idleness. Another obvious reform would be ending the role of the Export Import bank in financing the exporting of American factory jobs and technology. Withdrawing from "free trade" treaties like NAFTA and CAFTA in favor of "fair trade" treaties is another. Getting tough on the Communist Chinese in currency manipulation is another. Mostly importantly, reevaluating the role of government in guiding the economy to productive ends instead financial insolvency and deficit spending so popular among the politicians.
But the most important solution is to establish a new management compensated for results, not short term profits at the expense of long term viability. America needs a new management class that values it's citizenship, and commitment to the ideals that in past years made America the economic power, and guiding light of democracy and freedom throughout the world.
