The media coverage of the auto bailouts has focused on the need for union autoworkers to take big pay cuts, causing them to once again miss the real story. The Fiat-Chrysler deal shows that the pay problem is at the top, not the bottom. At the end of the day, the new Chrysler is still likely to be producing most of its cars in the United States. What the new company will be getting from abroad is technology and top management.
This big story was so easily missed because it runs against one of the main myths that our elites have cultivated about the US economy: that the country has a "comparative advantage" in highly skilled labor. In this story, the United States will continue to lose manufacturing and other "less-skilled" jobs as its economy becomes more concentrated in highly skilled sectors.
This story was convenient for our elites because it meant that the decline of manufacturing was a necessary, if sometimes painful, part of a natural economic progression. It also justified the growing inequality in US society that benefited not just Wall Street bankers and CEOs, but also millions of doctors, lawyers, economists, and other highly educated workers. These people took their six-figure salaries as a birthright, even as the pay of less educated workers stagnated or declined.
While this story of the US becoming a high skills center in the world economy may have been comforting to the elites, and was widely promoted by economists and the news media, there was never much truth to it. Highly skilled professionals did well in recent decades not because they succeeded in international competition, but rather because they were largely sheltered from it.
Trade agreements like NAFTA were explicitly designed to remove any barrier that made it difficult to export manufacturing goods to the United States, thereby placing US manufacturing workers directly in competition with their much lower paid counterparts in the developing world. Most of these restrictions had nothing to do with tariffs. Instead the key issues were rules protecting investment in the developing world along with limits on the ability of the US to exclude imports through safety or environmental regulations.
There has never been any similar effort to eliminate the barriers that prevent professionals from the developing world from coming to the United States and competing directly with their US counterparts as doctors or lawyers or in other highly paid professions.
The economists and the media somehow failed to notice that professionals were intentionally sheltered from international competition and instead just trumpeted them as the winners in the global economy. We were just treated to a beautiful example of this double standard when the media and the economists got all huffy about the "buy America" provision in the stimulus bill that might have protected a few manufacturing jobs in steel and other industries.
While this provision was roundly condemned and eventually watered down, the buy America provision in the Treasury's latest bank bailout bill went completely unnoticed. This provision requires that any investment manager taking part in the program be headquartered in the United States. Even though the argument against protectionism in financial services is identical to the argument against protectionism in steel, no one bothered to make the argument when Wall Street was the beneficiary of protectionism.
The end result of this protectionism for those at the top is a bloated overpaid sector of top managers, which is what we saw at Chrysler. If we compare wages for assembly-line workers in Europe and the United States, there would not be much difference between the pay of UAW members and their counterparts in Europe. However, there would be a very large difference between the multi-million dollar pay packages of the top executives at the US companies and their European counterparts. The pay gaps persist among the more highly paid engineers and management personnel.
Therefore, it was only logical that a bailout of Chrysler would seek to take advantage of the lower cost management and design skills available at a European car company like Fiat. In Chrysler, as in other companies, the high pay packages for these people are like an anchor dragging them down in international competition. If the US is to be competitive in the 21st century, we must either bring the pay of those at the top back down to earth or we should look to follow the lead of Chrysler and contract out for these services.
Wasn't this kinda obvious around the second time Ray gen got elected?
until then long live the union.
in reality, there is - or there are - rulers and there are workers and there are some who get in the way, here lately it seem that the middle class is getting in the way, the poor are expendable.
There is a reason for the bible passage about a camel passing through the eye of a needle. Being rich means you are selfish and self serving. These CEOs who got bailed out and then got bonuses could have put a little of that back into the community and then people would have money to put into their banks, thus giving themselves job security for as long as their community is prosperous. The problem is that these CEOs are multi-national and don't have a community.
This is why Argentina collapsed, the multi-national money holders just up and took off, leaving the communities and workers that made billions for the richies to suffer and rebuild (and once they're done you can bet the money holders will come back for more).
Through that last year, from the downsizing to the closure we lost 75 jobs...
It was done quietly...
But I'm NOT going to be quiet about this.
Somebody is going to pay for this baloney and will.
Here in Pennsylvania, that's going to be "Republican turned Democrat" Arlen Specter.
The use of H 1-B Visas, and Outsourcing is only good for one entity...the CEO's and the other executives of the corporations. The reality is that they just don't want to pay a fair livable wage so they go and hire foreigners and half the wage or move the entire operation overseas still offering half or less than half the wage paid to American workers.
Using H 1-B Visas and Outsourcing is against our very way of life because our ancestors came to America to build a better life....
The use of H 1-B Visas and the practice of Outsourcing is Treason against the people of the United States and nothing less.
http://eye-on-washington.blogspot.com
Anyone who compares any autoworker in the Euro Zone to American autoworkers, knows that American autoworkers are working at least 15% more hours and getting either the same OR lower pay than the autoworkers in Europe... (They still remember revolutions where kings were shot or killed.) and they always have healthcare and their pension/social security system kicks in earlier and with more money...
The only way they afford this is because they are not afraid to make the rich pay their fare share....here we are loosing 50 billion dollars at least each and every year in taxes on the millionaires...see IRS infor on TPM and run the numbers...and the 400 richest are paying 17% in taxes...It is time to take the cap off of Social Security and call the surtax Public Health Financing.and to make all income subject to income tax....I really would not mind seeing capital gains taxes cut for people with incomes less than 50 grand and increased for the incomes over 250 grand...
It's not the rich who pay for the perks of the poor around here, but the middle class. Of course, there is a significant amount of middle class in Europe, whereas the US has decided that it does not need that many well educated, grown up people to run things. They still think they can get away with fools at the bottom and jerks at the top.
I believe the term for most corporate management is..... R.E.C.T.U.M. management...
Random Emergencies Created Through Unqualified Management.... don't be a rectum manager.
overturn nafta,
Term Limits Now...
"The average American has very little voice in Washington."
The average American voted for Bush... twice. I think that says it all.
Don't you know it is cheaper to educate them in the low cost countries and it keeps the wages down when we have can keep bringing them in...This is nothing new...