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The Future of Manufacturing, GM, and American Workers (Part I)
What's the Administration's specific aim in bailing out GM? I'll give you my theory later.
For now, though, some background. First and most broadly, it doesn't make sense for America to try to maintain or enlarge manufacturing as a portion of the economy. Even if the U.S. were to seal its borders and bar any manufactured goods from coming in from abroad--something I don't recommend--we'd still be losing manufacturing jobs. That's mainly because of technology.
When we think of manufacturing jobs, we tend to imagine old-time assembly lines populated by millions of blue-collar workers who had well-paying jobs with good benefits. But that picture no longer describes most manufacturing. I recently toured a U.S. factory containing two employees and 400 computerized robots. The two live people sat in front of computer screens and instructed the robots. In a few years this factory won't have a single employee on site, except for an occasional visiting technician who repairs and upgrades the robots.
Factory jobs are vanishing all over the world. Even China is losing them. The Chinese are doing more manufacturing than ever, but they're also becoming far more efficient at it. They've shuttered most of the old state-run factories. Their new factories are chock full of automated and computerized machines. As a result, they don't need as many manufacturing workers as before.
Economists at Alliance Capital Management took a look at employment trends in twenty large economies and found that between 1995 and 2002--before the asset bubble and subsequent bust--twenty-two million manufacturing jobs disappeared. The United States wasn't even the biggest loser. We lost about 11% of our manufacturing jobs in that period, but the Japanese lost 16% of theirs. Even developing nations lost factory jobs: Brazil suffered a 20% decline, and China had a 15% drop.
What happened to manufacturing? In two words, higher productivity. As productivity rises, employment falls because fewer people are needed. In this, manufacturing is following the same trend as agriculture. A century ago, almost 30% of adult Americans worked on a farm. Nowadays, fewer than 5% do. That doesn't mean the U.S. failed at agriculture. Quite the opposite. American agriculture is a huge success story. America can generate far larger crops than a century ago with far fewer people. New technologies, more efficient machines, new methods of fertilizing, better systems of crop rotation, and efficiencies of large scale have all made farming much more productive.
Manufacturing is analogous. In America and elsewhere around the world, it's a success. Since 1995, even as manufacturing employment has dropped around the world, global industrial output has risen more than 30%.
We should stop pining after the days when millions of Americans stood along assembly lines and continuously bolted, fit, soldered or clamped what went by. Those days are over. And stop blaming poor nations whose workers get very low wages. Of course their wages are low; these nations are poor. They can become more prosperous only by exporting to rich nations. When America blocks their exports by erecting tariffs and subsidizing our domestic industries, we prevent them from doing better. Helping poorer nations become more prosperous is not only in the interest of humanity but also wise because it lessens global instability.
Want to blame something? Blame new knowledge. Knowledge created the electronic gadgets and software that can now do almost any routine task. This goes well beyond the factory floor. America also used to have lots of elevator operators, telephone operators, bank tellers and service-station attendants. Remember? Most have been replaced by technology. Supermarket check-out clerks are being replaced by automatic scanners. The Internet has taken over the routine tasks of travel agents, real estate brokers, stock brokers and even accountants. With digitization and high-speed data networks a lot of back office work can now be done more cheaply abroad.
Any job that's even slightly routine is disappearing from the U.S. But this doesn't mean we are left with fewer jobs. It means only that we have fewer routine jobs, including traditional manufacturing. When the U.S. economy gets back on track, many routine jobs won't be returning--but new jobs will take their place. A quarter of all Americans now work in jobs that weren't listed in the Census Bureau's occupation codes in 1967. Technophobes, neo-Luddites and anti-globalists be warned: You're on the wrong side of history. You see only the loss of old jobs. You're overlooking all the new ones.
The reason they're so easy to overlook is that so much of the new value added is invisible. A growing percent of every consumer dollar goes to people who analyze, manipulate, innovate and create. These people are responsible for research and development, design and engineering. Or for high-level sales, marketing and advertising. They're composers, writers and producers. They're lawyers, journalists, doctors and management consultants. I call this "symbolic analytic" work because most of it has to do with analyzing, manipulating and communicating through numbers, shapes, words, ideas.
Symbolic-analytic work can't be directly touched or held in your hands, as goods that come out of factories can be. In fact, many of these tasks are officially classified as services rather than manufacturing. Yet almost whatever consumers buy these days, they're paying more for these sorts of tasks than for the physical material or its assemblage. On the back of every iPod is the notice "Designed by Apple in California, Assembled in China." You can bet iPod's design garners a bigger share of the iPod's purchase price than its assembly.
The biggest challenge we face over the long term -- beyond the current depression -- isn't how to bring manufacturing back. It's how to improve the earnings of America's expanding army of low-wage workers who are doing personal service jobs in hotels, hospitals, big-box retail stores, restaurant chains, and all the other businesses that need bodies but not high skills. More on that to come.
For now, though, some background. First and most broadly, it doesn't make sense for America to try to maintain or enlarge manufacturing as a portion of the economy. Even if the U.S. were to seal its borders and bar any manufactured goods from coming in from abroad--something I don't recommend--we'd still be losing manufacturing jobs. That's mainly because of technology.
When we think of manufacturing jobs, we tend to imagine old-time assembly lines populated by millions of blue-collar workers who had well-paying jobs with good benefits. But that picture no longer describes most manufacturing. I recently toured a U.S. factory containing two employees and 400 computerized robots. The two live people sat in front of computer screens and instructed the robots. In a few years this factory won't have a single employee on site, except for an occasional visiting technician who repairs and upgrades the robots.
Factory jobs are vanishing all over the world. Even China is losing them. The Chinese are doing more manufacturing than ever, but they're also becoming far more efficient at it. They've shuttered most of the old state-run factories. Their new factories are chock full of automated and computerized machines. As a result, they don't need as many manufacturing workers as before.
Economists at Alliance Capital Management took a look at employment trends in twenty large economies and found that between 1995 and 2002--before the asset bubble and subsequent bust--twenty-two million manufacturing jobs disappeared. The United States wasn't even the biggest loser. We lost about 11% of our manufacturing jobs in that period, but the Japanese lost 16% of theirs. Even developing nations lost factory jobs: Brazil suffered a 20% decline, and China had a 15% drop.
What happened to manufacturing? In two words, higher productivity. As productivity rises, employment falls because fewer people are needed. In this, manufacturing is following the same trend as agriculture. A century ago, almost 30% of adult Americans worked on a farm. Nowadays, fewer than 5% do. That doesn't mean the U.S. failed at agriculture. Quite the opposite. American agriculture is a huge success story. America can generate far larger crops than a century ago with far fewer people. New technologies, more efficient machines, new methods of fertilizing, better systems of crop rotation, and efficiencies of large scale have all made farming much more productive.
Manufacturing is analogous. In America and elsewhere around the world, it's a success. Since 1995, even as manufacturing employment has dropped around the world, global industrial output has risen more than 30%.
We should stop pining after the days when millions of Americans stood along assembly lines and continuously bolted, fit, soldered or clamped what went by. Those days are over. And stop blaming poor nations whose workers get very low wages. Of course their wages are low; these nations are poor. They can become more prosperous only by exporting to rich nations. When America blocks their exports by erecting tariffs and subsidizing our domestic industries, we prevent them from doing better. Helping poorer nations become more prosperous is not only in the interest of humanity but also wise because it lessens global instability.
Want to blame something? Blame new knowledge. Knowledge created the electronic gadgets and software that can now do almost any routine task. This goes well beyond the factory floor. America also used to have lots of elevator operators, telephone operators, bank tellers and service-station attendants. Remember? Most have been replaced by technology. Supermarket check-out clerks are being replaced by automatic scanners. The Internet has taken over the routine tasks of travel agents, real estate brokers, stock brokers and even accountants. With digitization and high-speed data networks a lot of back office work can now be done more cheaply abroad.
Any job that's even slightly routine is disappearing from the U.S. But this doesn't mean we are left with fewer jobs. It means only that we have fewer routine jobs, including traditional manufacturing. When the U.S. economy gets back on track, many routine jobs won't be returning--but new jobs will take their place. A quarter of all Americans now work in jobs that weren't listed in the Census Bureau's occupation codes in 1967. Technophobes, neo-Luddites and anti-globalists be warned: You're on the wrong side of history. You see only the loss of old jobs. You're overlooking all the new ones.
The reason they're so easy to overlook is that so much of the new value added is invisible. A growing percent of every consumer dollar goes to people who analyze, manipulate, innovate and create. These people are responsible for research and development, design and engineering. Or for high-level sales, marketing and advertising. They're composers, writers and producers. They're lawyers, journalists, doctors and management consultants. I call this "symbolic analytic" work because most of it has to do with analyzing, manipulating and communicating through numbers, shapes, words, ideas.
Symbolic-analytic work can't be directly touched or held in your hands, as goods that come out of factories can be. In fact, many of these tasks are officially classified as services rather than manufacturing. Yet almost whatever consumers buy these days, they're paying more for these sorts of tasks than for the physical material or its assemblage. On the back of every iPod is the notice "Designed by Apple in California, Assembled in China." You can bet iPod's design garners a bigger share of the iPod's purchase price than its assembly.
The biggest challenge we face over the long term -- beyond the current depression -- isn't how to bring manufacturing back. It's how to improve the earnings of America's expanding army of low-wage workers who are doing personal service jobs in hotels, hospitals, big-box retail stores, restaurant chains, and all the other businesses that need bodies but not high skills. More on that to come.
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I agree wholeheartedly with your conclusion. It is difficult to imagine how we can or will achieve improving the earnings of Americans stuck in low wage employment when our educational system is not preparing the average student to earn more or be more competitive in the economy of today let alone the economy of tomorrow. The disinvestment in education over the past 30-40 years is already taking its toll but it is only going to get worse because we continue to fail to do what is necessary to improve our educational system and/or prepare our young people to be academic achievers followed by becoming economic achievers.
May 29, 2009 11:22 AM | Reply | Permalink
Has anyone ever read Vonnegut's "Player Piano"?
May 30, 2009 7:19 PM | Reply | Permalink
Indeed, indeed.
June 1, 2009 4:35 PM | Reply | Permalink
This looks like a future where:
- some have jobs which increase the rate of change of the economy and society (information systems technologists, biotechnologists),
- some have jobs which add bureaucratic complexity to economic processes and social interactions (e.g. human resources benefits consultants, tax accounting experts) and
- others have jobs in personal services (e.g. retail distribution and sales).
All of the benefits which might possibly result from increased productivity in the routine agricultural, manufacturing, and services jobs get consumed by creating more complexity and personal services. People still spend 60 hours per week away from home commuting or at the job location. There is no increase in leisure, in time for family life, or in opportunities for personal improvement and creativity.
Is this the best solution that economics can come up with?
That everyone still has to spend most of their life working in order to make a living?
That the only way to distribute goods and services is by having everyone punching a clock?
May 29, 2009 1:09 PM | Reply | Permalink
Yes. Reich's vision has us suffocating under growing bureaucratic and symbolic fluff. Instead of tilling the earth productively we end up 'tilling' the 'earth' of symbolic analysis. This strikes me as parallel to the problem of risk and leverage in the recent market problems.
Reich wants to invent high-paying jobs for people and to keep standards of living high. This leverage strikes me as bubble fodder. It definitely pushes the envelope on the imaginary components of an economy. New jobs mean higher outlays means consumers need higher incomes to maintain standard of living. But consumers are being divorced from real production by productivity increases. Now if we can increase incoming tourism, then the "domestic" economy could improve. But Reich points out that this is not just a domestic issue. And he's looking at "symbolic-analytic" jobs -- that sounds like bean counting and psychotherapy. Maybe he think we should all become high paid Silicon Valley Ipod designers. The problem there is obvious - the designers are fed by the manufacturing process and are highly leveraged (one designer for 100-1M units produced). Maybe Reich thinks we can pay ourselves high salaries to design our own gizmos and have them built with no labor and no capital costs, not to mention no volume in the market for the gizmos and thus no mfg. income to pay the salary of the designer (which is traditionally a small fraction of mfg. sales price).
In addition to looking at labor productivity, how about capital productivity too?
I look forward to his part 2.
May 29, 2009 2:28 PM | Reply | Permalink
For the most accurate available description of "symbolic analytic work", see http://www.dilbert.com
May 29, 2009 5:41 PM | Reply | Permalink
also see Blade Runner, where jobs are mostly imaginary or street sales
May 29, 2009 8:06 PM | Reply | Permalink
I wish you could have had the experience with a self-service cashier machine, that I did last evening at the very Republican Home Depot.
Well, actually two of them. The first had me swipe my item; put it in the bag; then it told me there was an "unidentified item" in the bag, and to remove it; then it told me to put my item in the bag...
Pretty soon it went blank and ordered me to seek assistance from a customer representative. Who was standing six feet away, rolling her Far Eastern teenage eyes, and yelling at me to "Poot thee item in thee bag!"
As soon as I protested that I was not as dumb as I must have looked to her, she cleared the machine (wait... are you saying, BC, that Home Depot was paying a clerk on duty, to supervise the automatic cashier machine? Um, yes, yes I am), and I went to the next one.
Similar issues. She started screaming at me again to "Poot thee item in thee bag!", and after I started walking toward her with what must have been a look of all-out menace in my eyes, she punched a few keys on her computer (again, located right next to the "automated" saviors of the global economy), and I miraculously was given the ability to get out of this poor, overworked dear's hair for good.
All I kept thinking about was that famous recording, just before the elections, of that conference call with the CEO of Home Depot, cussing-out his fellow corporatists who were too goddamned dumb to contribute to Norm Coleman, and defeat this goddamned EFCA for once and for all, you goddamned..!!! Remember that one?
p.s.. as it turns out, I was in a different Home Depot on Saturday, as well. Where my wait was even longer, due to the fact that not one, not two, but three of these machines literally had their guts hanging out. But, despite the technology not being an exact science yet, at least we got rid of all those goldbricking goddamned Union workers, right?
(Because really, who the hell cares, if the kid in the orange apron doesn't know Thing One about your stupid fucking paint? And don't worry, stockholders, we're working on doing something about the Pakistani chick at the computer...)
June 1, 2009 1:59 AM | Reply | Permalink
Do you think that is how Reich means it here?
BTW, my "bean counting" includes lawyering, much of civil services, and other "productive" occupations.
May 29, 2009 8:10 PM | Reply | Permalink
Maybe not. Reich's impression of "symbolic analysis work" is probably that it is much more like that of a college professor or upper-layer bureaucrat, with a lot of freedom, self-direction, and satisfying achievement.
But Scott Adams' career involved the type of occupations that Reich says is the future. Scott worked at Crocker Bank and then at Pacific Telesis in the huge building that they built in San Ramon. That building was actually a little more humane that the vast cubelands that some other corprations subequently built. Or the strip malls converted to call centers.
Despite his being away from the current IT scene, plenty of loyal readers send material in to the Dilbert strip, so it feels current.
I'd also include lawyers, much of civil service, etc. in the category. Unless management is really good, you can get a lot of disfunctional relationships between employees in these jobs. Technical organizations also get larded up with a lot of non-tech people in project management and similar jobs. These folks defend themselves by subtituting process for technical expertise and strangle any opportunity for creativity.
May 29, 2009 10:53 PM | Reply | Permalink
No, it isnt' the best possible solution, but it is the best capitalism at this stage in its development will provide. In other words: it sucks.
May 29, 2009 4:01 PM | Reply | Permalink
Even with capitalism at this stage, access to money and power is a complex function of what you do (job), what you know (skills), what you have (capital), who you are (position), who you know (juice), and a fair amout of luck.
It's not clear why there can't be a balance away from time spent on the job towards the other factors. Consider position, for example. Maybe more jobs should be tenured.
May 29, 2009 11:03 PM | Reply | Permalink
First was deflation of wages and they themselves did not help us.
Next there was pawning of assets and they themselves did not help us.
Now there is worry of deflation of the price of products and assets and they will use everything all of us have to help them, themselves.
May 29, 2009 1:42 PM | Reply | Permalink
All I have to say Mr. Reich is that globalization is undermine local democracy. If you think globalization is more important than democracy then you are part of the problem. So far the capitalists have ha free rein to skew the situation in their favor only. You can dance around all you want but the fact is globalization is tool to control labor cost and thus destroy worker bargaining power. You either curtail globalization with stiffer regulations or sit back and watch the labor force become slaves.
May 29, 2009 2:00 PM | Reply | Permalink
I sympathize with your point but I disagree that 1) restrict globalization or 2) be reduced to wage-slavery are the extent of our options. In the past, industrialization reduced wages at first, but then workers organized and this organization enabled them to bargain on fair terms. Globalization is reversing the gains won by organized labor by playing workers in one country against workers in another. The global capitalists have convinced American unions and American workers to see foreign workers at the competitor; this is the wrong way to look at the situation. American unions need to start looking at foreign workers as brothers. Instead of decrying Chinese, Mexican, Indian (etc) workers, our unions need to be organizing there and coordinating a system of international collective bargaining.
May 29, 2009 5:03 PM | Reply | Permalink
And just how do you purpose to out maneuver the capitalists with out regulatory structures. Human rights before corporate rights, remember? The elites will do their darnedest to thwart union organizing from going global thru the use of CIA and standing armies which are at their disposal. Global organizing cost money, a luxury the worker doesn't have. The workers best hope is to influence local law to protect himself from the financial arbitrage of the moneyed elite. The main beneficiaries of capitalism are anti-democratic and will undermine any effort to curtail their power. This is a situation that's been going on since the beginnings of civilization. It ebbs and flows but the song remains the same. The end result of doing nothing will be almost all the wealth in the hands of a few. Unfettered capitalism doesn't lift everyone, it concentrates power. Either the wealth gets redistributed or the misery of the majority rises. It's inevitable.
May 29, 2009 8:47 PM | Reply | Permalink
If I be the first to say it: Capitalism has got to go. In its place will have to be something closer to Socialism. I have long believed that the basics of life should not be at the whim of wealthy capitalists. Housing, food, clothing, medical care and education should be non-capitalistic. That leaves plenty of room for the wealthy to exploit us by persuading us to buy iPods and SUVs.
May 31, 2009 8:48 PM | Reply | Permalink
Yes, sir. We'll re-train former clerks and fender bolters to be Einsteins and Picassos. That's the new liberal vision.
About as realistic as the old ones.
May 29, 2009 2:42 PM | Reply | Permalink
I'd say it beats retraining them as Robespierres. or Mdm. Defarges, no?
Not that they'd need any training for that - though some will have gotten it courtesy of the DOD.
Capitalism, at least in the US, needs be wary of the 2nd Amendment. Resistance to neo-feudalism is its own reward.
May 29, 2009 3:22 PM | Reply | Permalink
They won't be retrained as either...because it's impossible.
Some time in the very near future it will become obvious that the natural rate of unemployment is 25%...or 50%.
As soon as the employed realize that morality and legality will be adjusted accordingly. Why not? Since there is no God morality is as flexible as everything else.
May 29, 2009 3:53 PM | Reply | Permalink
Even with a god, it's pretty flexible -- as the Amalekites learned to their chagrin.
May 30, 2009 11:52 AM | Reply | Permalink
You're way behind the curve. Currently, in many parts of the U.S., it is impossible to buy ammunition because demand for it is so great.
May 29, 2009 3:56 PM | Reply | Permalink
[grin] That's not how I meant it, but you are entirely correct on that!
Of course, us bowhunters are all "what's this problem with getting ammunition?"
June 3, 2009 11:39 AM | Reply | Permalink
Ordinary, you may not want to think of artists as real workers or genuine manufacturers, but they certainly are. They're the reason that the music and film industries now employ more people than the steel and auto industries. The arts are real, they produce products that people can hold in their hand, that are popular all over the world, and which provide a long-term stream of royalties. Picasso made a ton of money, billions actually, and his work continues to pay off. Art is becoming the highest paid profession of all, but a lot of people can't see it, can't break free of obsolete stereotypes. An auto or computer produced thirty years ago isn't worth anything at all. But a piece of writing, a film or a painting is. They hold their value really well.
Which is why it's so important to get arts back into the school and give them the financing they need. It should be our number one financial priority, not mathematics and technology. Those things are useful, but they don't provide real lasting jobs, that's just an illusion. I've been a painter/writer and a software designer, and take my word for it, the arts pay better. Obama and his uneducated cohorts have $50 billion for the auto industries, but only $50 million for the arts. Stupid. It should be the other way around. But if Americans won't do it, and won't treat artists with the respect they deserve for keeping the economy going, there are plenty of other countries that will. Note that one of America's premier filmmakers/artists, Steven Speilberg, whose work is very commercial and has brought billions to America, is now getting his financing from the Indians. Think about the implications of that.
May 29, 2009 4:19 PM | Reply | Permalink
The problem is not that artists are not workers. It's that workers are not artists, or scientists, or mathematicians, or doctors, or anything else requiring high skills, intelligence, talent...and they can't be trained for those professions.
May 29, 2009 5:21 PM | Reply | Permalink
in your 'liberals are bad' myopia, you are always correct and everyone else is wrong.
yeah, like that's likely to be true, ha!
what you describe is certainly not liberal. it's not even conservative. it's feudal.
I would have thought you'd fit right into that system, with your other political shortcomings.
May 29, 2009 8:09 PM | Reply | Permalink
That pretty much puts the entire world in a jam. Eventually 10% of the population of the world will make everything for everyone and 90% of the world population won't have anything in partiicualr to do. Then we'll absolutely have to have a socialist state.
May 29, 2009 3:59 PM | Reply | Permalink
May 29, 2009 7:35 PM | Reply | Permalink
From a practical, computational point of view, most of the world's population is economically superfluous. With today's technological and manufacturing capability, the goods and services we need to eat, take shelter, maintain health, and travel can be provided/created by a small faction of our total population. (Worth noting: the local food movement and 'small batch' agriculture as antidote the pest problems of mass agriculture run counter to this trend) At the same time our population continues to increase towards a peak sometime after the middle of this century. These two trends are on a collision course.
Faced with an analogous but much smaller problem and unencumbered by the Protestant Ethic, the Roman Empire fell back on 'Bread and Circuses.' The Western European ideological underpinnings of the Industrial Revolution don't allow for any such crassly practical solution. Instead, our theoreticians and authority figures play a pretend game and insist the with new and ever more ingenious tchatchkes and 'services,' we can somehow employ the billions of economically superfluous people and have some semblance of just distribution of essential goods and services. The endgame for this process does not look promising or happy, especially with weapons of mass destruction and Global Climate Disruption in the mix.
May 29, 2009 7:57 PM | Reply | Permalink
Irresepective of my previous comment, one aspect of world trade puzzles me. Germany has a highly paid workforce with comprehensive medical coverage, and it supports what appears to an American to be some semblance of a welfare state. Yet it is the world's largest exporter. How can this be? In the case of Italy, the smaller scale and fragmentation of enterprise has caused a lack of competitiveness. But the US has no such problem. Why then, do the Germans so outperform us in international trade?
May 29, 2009 8:08 PM | Reply | Permalink
Look at what they export and to whom.
Look at GDP and where tax revenues go.
May 29, 2009 8:14 PM | Reply | Permalink
The main reason is that there's no contradiction between good conditions for labor and competitiveness. In Germany, like in the rest of the industrial world (other than the US), universal health care programs enable everybody to gain a good and affordable insurance, while in the US, where the issue has been left for health corporations, insurance has become a huge economic burden. But the debate whether there could be long-term growth and stability without public investment in human capital (in the form of health, education, and other welfare services) is rarely based on economic data, but on political world views. In fact, in light of the current collapse of US economy, the question may have to be reversed - how come the US market, in which the workforce is getting less and less access to education and health insurance, remained competitive for so long, and to what extent is this collapse related to the shift in labor-capital relations since the 1980s?
May 30, 2009 5:50 AM | Reply | Permalink
This has a lot to do with how Germany and the EU in general distribute the proceeds of their economic output. In the U.S. there has been a continuing trend to unevely distribute the benefits of our economic output toward a small segment of the population at the top of the income scale.
In the longer term this harms our economy because it diminishes the purchasing power of the vast majority of the population while simultaneously limiting access to things such as education and health care that would enhance our general condition of competitiveness.
You can see this very thing in the bank bailout where tens of millions of working class savers who have 401K investments have lost big time and will never recover those losses. The loss of wealth is huge. Along with the decline in home values and further erosion of wages the majority working class are again subject to a decline in wealth that worsens our overall ability to pull ourselves out of this mess. As long as we have an absolutely bullshit system of campaign finance, which is founded upon a complete lie, Wall Street and corporate America will hold an undue and altogether inappropriate influence over wealth distribution. Under the present scheme you simply cannot get away from the reality that we will continue down a path that leads to our national decline.
May 30, 2009 8:37 AM | Reply | Permalink
It's far worse than that.
May 29, 2009 8:48 PM | Reply | Permalink
Reich is right. Read Ha-Joon Chang's "Bad Samaritans" http://www.amazon.com/Bad-Samaritans-Secret-History-Capitalism/dp/1596913991 and you'll understand how the success of developing nations will help us, but how we and Europe have rigged the "free trade" game in our favor. Our trade policies keep countries like Nigeria in the toilet while making our own prosperity (credit bubble, anyone?) in risk of failure.
May 29, 2009 9:21 PM | Reply | Permalink
what a crock of SHIT! I have the highest disdain for politicians who suddenly see the light after they could have done something about it. I put you squarely in this category - right there with Scott McClellan.
Pretending that you are some sort of progressive oracle now makes me laugh. It is sick, your self importance shines through, and you contradict almost all of your administrations official actions and policies which are still all in place. When you could have made a difference, you didn't. Now you pretend to have insights, and to be some sort of progressive leader or role model. Your ship has sailed, you sucked up to power and money when it mattered. Now you are just a Monday morning QB like the rest of us, except your career sucked. It is like listening to Joey Harrington expound on the intricacies of QBing to Peyton Manning. A joke, just cuz you were there doesn't mean you are an expert. On manufacturing, I don't think you understand, I think you sort of understand, and you are trying to CYA. I get that.
Blaming knowledge and robots is partially right. But it is so self-serving I am disgusted.
I know about eliminating headcount for efficiencies. That has been my job for GM, Ford, Lear Corp, and a Toyota supplier. You pretend to have a simple explanation, but it is laughable for anybody who actually knows what they are talking about. You never got your shoes dirty, so your conclusions are lofty, made from 10,000 feet above the action.
You sound like that idiot Tommy Friedman - who uses the internet on a train in China - and this proves some stupid point he tries to make. Look! It's one factory with two employees and a bunch of robots!! That proves that it is all KNOWLEDGE's fault. Give me a fucking break.
It must be convenient to take none of the blame for your policies. It might help you sleep at night, but the former steel, textile, and autoworkers are not sleeping soundly. And it is more YOUR fault than KNOWLEDGE's.
Tax policies, and trade policies have had much more of an effect than evil robots, or mad scientists. YOU ARE THE REAL VILLAIN HERE.
NAFTA, similar treaties, and the tax loopholes have caused the migration of whole factories. The reality is that the two-person factory you saw is a complete and total outlier. It makes you look like an idiot to argue based on an example that is surely one-of-a-kind. It is like me arguing that smoking makes you live longer, becuase I met one grandma who was 104 yrs old and smokes everyday. It is called an outlier - how stupid are most of our public officials? Christ, any college sophomore wouldn't use logic like that.
If your argument was true, we would see EVERY factory still in America, just with less employees, and more robots. But that is not the case. Sometimes reality is a bitch, moreso if you live in Michigan than if you are some smug politician with millions in the bank.
Your theory doesn't explain companies closing US plants, and then openning up plants to make the exact same thing in China, Mexico, etc.
This has happened very often, and it is because of your politics of raping the middle class at command of your corporate masters.
The corporations move their operations because it is less expensive, due to our trade policies, treaties, and labor laws.
Enviromental protections, union wages, and tax costs are all reasons that factories MOVE. No factories move HERE, you'll notice. But if we had a poor, ununionized labor force, provided tax breaks, etc. then we would. This is pretty obvious to anybody who actually works as a professional in any capacity related to manufacturing.
Only pretentious jackasses blame robots and knowledge, when they and their cronies put the laws in place that ENSURED the wholesale destruction of manufacturing jobs in this country, and by extension the eradication of the middle class.
YOU worked hand in hand with Allan Greenspan to make sure there was an appropriate level of "worker insecurity." It is in the history books.
Instead of having the honor to second guess the trade/tax/treaty/tarrifs of YOU and YOUR cronies, you blame a robot that can't defend itself.
DISHONEST, and DISHONORABLE
I hope you never spout this garbage at a UAW meeting, you'd be eaten alive with the facts.
If we wanted to save American jobs, it would be simple: re-instate the tariffs that we always had in this country to protect our workers. We had steel tariffs, clothing tariffs, etc.
Until YOU and Bill Clinton destroyed all of that.
Act like a man, and live up to your war against the middle class.
The ultimate goal of politicians is exposed by this kind of two-face bullshit:
bad event:
"None of this is any fault of my policies or the laws I pass!" (and blame robots if remotely feasible)
good event:
"I take all of the credit for this great thing! It was the result of my policies and laws!"
May 29, 2009 9:59 PM | Reply | Permalink
Re: No factories move HERE, you'll notice.
This is not true. Several foreign car manufacturers (for an example), both German and Japanese, have opened factories in the US. And while Reich's example of a two-person robotic factory may be extreme, your rant about trade does nothing to refute the other piece of evidence he's offering; the fact that manufacturing employment is declining everywhere. If it was just a matter of US outsourcing we would expect China, Mexico etc to be gaining jobs. But they aren't. They are losing manufacturing jobs too. Oh, and the US still produces 23% of the world's manufacturing output, more than any other nation (albeit down from the high of 27% a generation ago)
May 30, 2009 4:23 PM | Reply | Permalink
OK, you are right, and I was wrong. There are maybe a few examples. However, I would say that a good deal of them "open" here, rather than "move". The Toyota truck plants in Texas are an example, and there are some others in the South that have moved here recently.
They always go to "right to work" states, as to stay as far away from UAW HQ in Detroit. I have sat in on these type of discussions. I have been involved in many decisions/projects about reallocating work, moving volume between locations because of financial benefits.
I don't think people are complaining that companies are trying to make money. It is that the current policies of this country encourage companies to move their operations out of this country. We used to have tariffs to prevent this exact thing. That is what "free trade" got rid of, the worker protections.
Toyota doesn't pay the pension and health benefits that GM/Ford do/(did?). That is their competitive advantage, not providing the same standard of living to their employees, and especially former employees. Hooray for that. If we had single payer healthcare, it would take 2K per car cost off of GM cars. But that is off the table.
So when the few opennings happen, whether they are "moves" or not, the local governments have to entice the corporations with ridiculous bribes. In order to keep/create some jobs in Michigan, the government has been bending over backwards to give money away to companies to "create" jobs. The bidding wars between locales have driven the subsidy prices upwards of $90K per job created.
This type of job creation is very inefficient, and there are serious questions about the long term benefits of paying such large bribes to companies.
A typical story: Toyota wanted to open an R&D center near Ann Arbor, MI. They were in intense negotiations with the government at the state level, promising to create 400 jobs. The land had been up for bid, and developers bid over 25 million dollars for the land and wanted to build housing. The government passed a law to deal only with Toyota, and then tried to sell it to them for less than half of the 25 million bid.
On top of that, Toyota got almost a $40million tax break. People who have studied these subsidy programs have said they do not have an impact that is measurable.
Michigan is not the only state giving away millions in tax breaks to get companies to open/move there. Alabama, far from UAW HQ, still had to give DaimlerChrysler AG's
Mercedes-Benz plant in Vance, around $372 million in incentives for a promise of up to 4,000 jobs, roughly $93K a job.
Instead of it being prohibitive to manufacture overseas and then sell goods here, though time-tested tarrifs and taxes, we have a perverse system. We are forced to pay extravagant ransomes to have companies open up.
The system before made it the smart choice to "add value" to raw materials here. Free Traders have encouraged this race to the bottom where no jobs are protected by policies, and corporations are incentivized to manufacture overseas.
The burden has been shifted from the companies who want to be cheap with their labor to pay tariffs if they want sweat shop conditions. This burden is now on American workers to pay for the huge ransomes through taxes that it costs to keep jobs here, or to create/move them.
This is exactly wrong, in my opinion. Beyond that it is ridiculous, corporations have lost understanding of their place. They only exist because of the government laws allowing them, now they have become more powerful than their makers.
I would submit that policies really do matter, and labor leaders in countries all around the world know Free Trade is not a good deal for workers.
May 31, 2009 7:29 PM | Reply | Permalink
Rich has been taken over by some panty-waist corporate butt licker.
I wonder how cheaply they bought him for.
May 29, 2009 10:39 PM | Reply | Permalink
Improvements in agriculture? Yeah - I you like eating a sack full of water and all the nutrients and mineral leached out of our soil. I suppose he thinks corn based ethanol is good for our soil and water tables too.
Get a clue guy - it's NOT blue collar jobs we are losing - it's the white collar jobs AND the transfer of wealth that is killing us.
The CEO
http://www.corporate-america-sucks.com
May 30, 2009 12:39 AM | Reply | Permalink
BTW - What happens when the only country that knows how to AND has the capability of MASS PRODUCING the guns, bullets, bombs, rockets, and airplanes - is China - What happens then Mr. Reich? Last time I checked they were still a communist country with a keen eye toward censorship and Totalitarianism.
Corporate America in their greed for profits OVER our free enterprise system have systematically transferred all of this “mass production” technology to China – all in the name of profit, without regard for society nor employees.
The CEO
http://www.corporate-america-sucks.com
May 30, 2009 12:50 AM | Reply | Permalink
Technophobes, neo-Luddites and anti-globalists be warned: You're on the wrong side of history.
As a supporter of the so-called "anti-globalization" movement, I can't let this crack pass without comment. It is an unfortunate turn of language that makes (to the convenience of those pushing the policies that fall under the umbrella of 'globalization') it easy to throw anti-globalization together with technophobia and Luddism. As if there were no difference between Kaszinski (sp?) and Chomsky.
Authentic progressives strongly support
"globalization" of various kinds: globalization of environmental standards and efforts, globalization of unions, globalization of human rights standards, and the formulation of global labor standards. These standards, especially environmental, should be NO LESS enforceable than so-called "free trade". What CORPORATE globalization or what I term "McGlobalization" means is a race to the bottom, where factories like Smithfield relocate to Mexico so they can pollute (and if there's a swine flu that comes out if it -- they won't be held liable). Now it's easy to say 'well, I think that there should be protections for peasants and for the environment blah blah blah TOO ...' while supporting globalization policies that EVEN AT THEIR BEST fail to really protect the most important values (like the environment) EFFECTIVELY AND ENFORCEABLY, rather than SECONDARY values like free trade. "Globalization"
or corporate globalization might indeed be the way that the planet goes, all while the environment goes down the tubes and we are left with the survival of capitalism but not the worthwhile values of culture and civilization. The elite of the world are perfectly happy to see the ecology of the world left in ruins (and very well may do that, as increasing numbers of climatologists suggest) so that they might preside over the ruins.
So I believe in PROGRESSIVE technology (pouring many public billions into hydrogen energy -- See "Somebody Doesn't Like Hy-Fuel" from the Oct 4 NATION on that issue), solar voltaics AND solar thermal, and wind, while not expanding and indeed phasing out coal and nuclear as fast as is feasible. Pushing conservation through technological innovation is good too -- all these are technologically progressive, but they must take precedence over McGlobalization for the positive values that masses in Peru, Bolivia, India and elsewhere are seeking to defend. And that's no "Luddism"!
May 30, 2009 1:04 AM | Reply | Permalink
Right to the point - I was too disappointed by Reich's cheap rhetoric on this point, and it's important that you called him on that.
May 30, 2009 5:59 AM | Reply | Permalink
I don't want to get ahead of your assessment of the administration's reasons for intervening in what what is clearly a declining sector of the economy. In my view, however, stabilizing the automakers and the millions of downstream jobs that depend on them may be the only viable option in the short term.
The long-term solution is to provide infrastructure that supports the efforts of displaced workers to remain productive. I disagree with those who maintain that manufacturing workers lack the skills, motivation or opportunity to do so.
The problem, it seems to me, lies in the narrow and rather blithe assumption that "symbolic-analytic" jobs are only path to value creation in a post-industrial economy.
This assumption, enthusiastically promoted by our university system, has driven a generation of students to invest hundreds of thousands of dollars to burnish their symbolic-analytic credentials. For far too many, their investment is rewarded by cubicle jobs that provide little satisfaction and, as eds points out above, create minimal value.
Our obsession with producing the most new stuff at the lowest possible cost undervalues the contributions of those who lay brick, sweat pipe, weld beams and repair the stuff we break and now, suddenly, can't afford to replace. Matthew Crawford argues persuasively for a return to these values in a remarkable essay in the Times magazine. It should be required reading for anyone contemplating the nature of work in and emerging new economy, and I think it is key to understanding the president's economic policy.
May 30, 2009 3:08 AM | Reply | Permalink
. . . the contributions of those who lay brick, sweat pipe, weld beams and repair the stuff we break . . . .
But aren't these the workers least affected by globalization -- the very workers who are laughing all the way to the bank? What care they that arrogant symbolic analysts may "undervalue" their work? They sure aren't "underpaid" for that work.
May 30, 2009 12:09 PM | Reply | Permalink
Precisely my point. These are jobs that are not exportable. Real investment in infrastructure -- public and private sector -- will create demand for skilled labor that significantly outstrips supply. And machines that aren't bought new every two years will have to be repaired.
But our middle class ethos says the path to progress lies in skill sets that create far more cubicle drones than satisfied knowledge workers. Trade schools and apprenticeships used to be the bedrock of middle class education, something to aspire to. Today, not so much.
Jobs for welding engineers -- requiring a four-year degree and training in the trade -- pay six figures right out of school. That's demand-based compensation. Why shouldn't these folks laugh all the way to the bank?
May 30, 2009 5:38 PM | Reply | Permalink
Dear Mr. Reich:
There's something you're leaving out of the equation. You talk at length about the reduced need for manufacturing workers being due to the greatly increased productivity of each worker -- value added per person-hour.
But there's a flip side to that: the increased productivity of labor comes about primarily because of increased use of energy. In effect, we replace person-hours with kilowatt-hours. And there are problems with using increased amounts of energy...
Over and above that raw fact, it was pointed out by the environmentalist Barry Commoner some 30 years ago (full disclosure: I was working for him as a gopher in those years) that as the productivity of labor was increasing, the productivity of energy was actually going down. We were getting less value added per kilowatt-hour (or btu or whatever unit of energy you wanted to use). Dr. Commoner did his analyses on various segments of the manufacturing economy, and came up with the same results virtually across the board.
In other words, not only were we replacing human labor with energy use, but we were getting less and less economic good for each unit of energy we used.
This needs to be factored powerfully into the equation (if you'll pardon the expression) to decide whether the trend of replacing human labor with mechanization can continue. The answer may be more complicated than it seems.
Peace,
Paul
May 30, 2009 3:23 AM | Reply | Permalink
"What do you mean you want to study accounting? Go get a liberal arts degree, THAT'S where the money is!"
May 30, 2009 8:05 AM | Reply | Permalink
Okay, I've slept on it. I even blogged about this piece.
Now I'm almost totally convinced this is Reich's idea of a wicked joke. I come to this because:
a. He was the Labor Secretary a few years back. He understands the necessity for good paying jobs.
b. He is a professor so I know he comprehends what he reads. He reads, as I do, that every MONTH over a half-million workers lose their jobs.
c. He's better at understanding economics than most. He knows without even giving it much thought that when people are out of work they're not buying things. We live in a consumer economy. Things need to move of the shelves and out of the lots or we're in big trouble.
d. He is known for his impish sense of humor.
So, unless I'm badly mistaken, Part 2 is going to be the punchline to his joke. He's going to come out laughing at US for taking him seriously.
If I were a praying person, I would be praying it is so. If it isn't, I'm ripping him off of my bloglist as fast as he can talk.
May 30, 2009 9:50 AM | Reply | Permalink
If new technology was the cause of lost manufacturing jobs we would have had this problem a hundred years ago. The problem is free trade. Shut down the American factory, move production over seas, import, and sell to those Americans who still have jobs. To use Mr. Reich example of the iPod, if tariffs prevented “assembled in China” how many more Americans would have middle class jobs? A lot more than the jobs designing it. How many of Apple’s designers were H-1Bs and not Americans?
May 30, 2009 1:41 PM | Reply | Permalink
"It's how to improve the earnings of America's expanding army of low-wage workers who are doing personal service jobs in hotels, hospitals, big-box retail stores, restaurant chains, and all the other businesses that need bodies but not high skills."
Perhaps the first thing to do is to abandon the belief that all these jobs that need "bodies but not high skills" actually don't need high skills. Anyone who has done some of those "low-skill" jobs knows that doing them well often takes more skill and more knowledge than the typical "symbolic/analytic" job, with a side order of fast thinking and theatrical performance. The reason people don't get paid squat to do those jobs is that they have no power, and the people with power have no clue. (I say no clue because hiring the less-competent people low wages attract typically leaves huge profits on the table for other companies to take.)
Imagine for a moment box stores staffed with people who not only knew where every item in the store was, but knew enough about its function to be able to offer useful advice rather than just upselling whatever crap management wants moved this week. Health care workers even at the bottom rungs who understand why they're giving the care they are. (I'm assuming Reich is well-informed enough not to be ignorantly insulting nurses and physician's assistants.) Heck, imagine restaurants (not just the high-end ones) where someone gets all the orders right and can tell people what's in their food...
For a not-entirely-tangent thought, consider that many of the frontline jobs Reich dismisses require skills (multitasking, people skills, equanimity, broad knowledge instantly recalled) that have traditionally been denigrated as characteristic of "women's work" and paid accordingly.
May 30, 2009 8:26 PM | Reply | Permalink
Sympathy for third-world workers and $6 will buy you a large, burnt-coffee milk shake.
If the cost to assemble iPods is such a small portion of the total price, then Apple could just as well assemble them in the United States. Whatever money the Chinese factory saves is going to Apple, not consumers.
Lots of people just aren't smart enough to go to college and become symbolic analysts. They deserve living-wage jobs, too. Manufacturing should be a part of that.
May 31, 2009 6:03 AM | Reply | Permalink
Reading this post and these comments has made me feel pretty stupid, because I have long been an admirer of Robert Reich. I supported him in his bid to become governor of Massachusetts and saw him speak at the Unitarian church in Northampton. I've heard him say on a radio show that if you really wanted full employment you could cut people's working hours to 35/week, which no one seems ever to have the courage to suggest. I've enjoyed his commentary as brief respite from the idiotic gloss that is NPR's Marketplace. But this post is bad enough to turn that all on its head, and really, the harsher the comments that followed, the better.
Anybody who was sentient during the 90's has heard all of this tough love about giving up the dream of American manufacturing, going out and improving ourselves for the "knowledge-based" or "creative economy" of the future. The comments have already said this better than I could. This is all a very fixed, ideological understanding of progress, concretized by labeling non-believers "luddites", and so forth. It's pure ideology. As if technology, automation, and globalization couldn't be understood differently to produce outcomes that actually improved people's lives in different contexts. In this vision, the robot future is the robot's, and we must reprogram ourselves to be useful to them.
Ne'er a mention of sustainability. No question about how this inexorable progress is complicated by a human-based democracy (although some of the wealth produced by automation and "new knowledge" obviously goes to argue against people trying to save their own jobs), or by global warming, plastic particulates in the oceans, over fishing, disposal of toxic wastes, soil erosion, peak oil, etc., etc. (I know I've left out dozens of apocalyptic implications).
I think the lesson of the 90's, which may take decades to learn, is that you can't tell everybody to do something, whatever it is. You can't tell everybody to be a software engineer, or to eat salmon for its omega-3s, or to excel at math and science, or to save money or run up debt, or to buy stock, or to travel to Machu Picchu, or to drink water from the Alps, or to follow whatever financial or career advice national personalities give us (maybe we should all become celebrity economists).
We don't need higher productivity. It's killing us. So to say that we should orient our lives around it is inhumane. GM and Chrysler, their robots and their erstwhile human employees, made too many cars. They don't need to be more efficient, or produce more cars. They need to dim their hopes of making a wild profit. They need to lessen their negative impact on the environment. We don't need more corn or the ability to fish more off the Somali coast. We need to leave that to inefficient farmers and Somali fishermen so they can make a living, farming and fishing sustainably, for a reasonable diet. These industries were all mismanaged from on high, and now we get the benefit of losing our pay, pensions, benefits and getting tough love advice handed down to us from Mt. Olympus. Well, I'm a monotheist.
Glenn Greenwald has it right, referring to Jeff Rosen specifically, that pundits and celebrity experts never admit error. If someone I knew personally said what Reich has said here, I know it would wash out over time, they might admit their error or I might steer them toward a less ideological conclusion (a truly beaten-to-death one, btw), but I know I can look forward to more strenuously argued idiocy in this vain from Reich. It reminds me of when Baudrillard died, how I really felt a light go out in an ever darkening world.
June 1, 2009 9:02 AM | Reply | Permalink