Why Our Jobs Crisis From Hell Could Last Decades
"Now main streets whitewashed windows and vacant storesSeems like there ain't nobody wants to come down here no more
They're closing down the textile mill across the railroad tracks
Foreman says these jobs are going boys and they ain't coming back to
Your hometown, your hometown, your hometown, your hometown,"
Bruce Springsteen, "My Hometown"
I am at the small port of Olympia, Washington with a dear friend who recently retired from state government. "That about says it all," he says pointing to the cargo on the docks.
We see only two items: raw logs by the thousands, and stacks of giant wind turbine blades. The logs are on their way to Japan for milling and the seventy foot-long turbine blades have arrived from Brazil for assembly on our wind farms. Remarkably, the America of 2010 is exporting raw materials and importing high tech renewable energy products. And this is happening less than 100 miles from Redmond, the home of Microsoft.
Is this pattern just a fluke? Surely we have not yet become a third world nation that must survive by exporting its raw materials in exchange for finished goods. Then again, the most recent unemployment statistics suggest we are in serious trouble.
While the rest of the world competes to develop and, yes, to protect its manufacturing base, we let ours go. Instead, we bet the entire economy on fantasy finance -- on a financial sector that was to become the great profit and job creator of the future. We were told we could build a prosperous society by moving money around instead of making things and providing tangible services. We were scammed.
Instead of an economy that worked for all of us, we ended up with a very prosperous society for the very, very few at the top. We lead the world in billionaires. We lead the world by having the largest gap between CEO and average worker pay. We lead all developed nations by having the most extreme distribution of income and wealth. And we lead the world in having created the worst financial crisis since the Great Depression.
We also lead the world in bailouts: We have dumped more that $14 trillion of taxpayer support into Wall Street to prop up the failing financial sector. And now we are on our way to leading the developed world in unemployment: There are more than 29 million of us who are unemployed or underemployed. The BLS U6 jobless rate for September hit 17 percent.
If we're going to import items like wind turbines rather than to build them here, it's highly unlikely that our tepid recovery is going to create anything close to full employment. That's because our policies are still geared to the grand laissez faire experiment that sunk our ship. That failed folly had three parts: 1. Deregulating finance to promote "financial innovation"; 2. tax relief for the wealthy to promote "entrepreneurial activity/investment" and 3; unfettered free trade to boost profits by moving production to where labor is cheap and environmental regulations lax. .
This witches brew has turned into the wildest casino ever as excess capital sought the higher returns provided by innovative (toxic) securities that secured bogus AAA ratings.
Meanwhile, the biggest export nations -- Germany, Japan and China are doing all they can to protect their key industries in a variety of subtle and not so subtle ways (currency manipulation, direct subsidies, dumping, rigged bids, targeted R&D investments, etc.) They are not about to give away key manufacturing jobs. That's because there is an intimate connection between manufacturing and the higher tech jobs that always grow around it. That's a major engine of middle-class job growth and we let ours rust out a long time ago.
It's time for our policy makers to wake-up to the real world rather that the flat one imagined by cheerleaders like Thomas Friedman. In the real world, you have to find ways to protect the new industries needed to produce jobs for your people. In the real world you build renewable energy technologies by investing large sums of public money in it, and by making sure that its core products are produced on your soil.
If other countries like Brazil want to send its wind turbine blades halfway around the world to Puget Sound, then we need to be sure their production and shipping leaves as small a carbon footprint as would be the case if those steel blades were produced here. A protective border adjustment tax based on carbon content would be in order. It might even courage other nations to produce the blades here, using our steel and our unemployed. Your not a Neanderthal to suggest that taxpayer stimulus money go to purchase goods made at home.
Without a national industrial plan to build a new green economy and to promote long-term industrial employment, short term tax subsidies to create jobs won't work for long. Even Robert Reich's call for a robust WPA will be insufficient in the long run. He assumes that once the economy is on its feet again we won't need a continued WPA because the private sector will provide enough jobs. I don't share his optimism. It's not clear why most of those private sector jobs will be within our borders unless we insist on it. (For an excellent account of how carefully designed protectionist policies can increase employment in all nations see Paul Davidson's The Keynes Solution.)
It won't be easy to undo the disastrous neo-liberal free-for-all that got us here. Not only will it require some degree of protectionism, but also we'll have to dramatically curtail our wealthy elites who funded the casino. We will need to return to Eisenhower progressive taxes (91 percent on income over $3 million in 2009 dollars) or something near them to reduce our obscene income and wealth gaps. And we will need to return to Teddy Roosevelt's trust-busting to break apart financial firms so they no longer are too big too fail, or big enough to domineer over our elected officials.
It's a very tall order, especially since we seem much more timid than the New Deal/Greatest Generation. God forbid we should bust up Goldman Sach, JP Morgan, CitiGroup or Bank of America. But we may soon find our way there as we discover that nothing else works. Either that or we'll face decades of bailouts and unemployment as the logs leave and the windmills arrive.
Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It, Chelsea Green Publishing, June 2009.
Follow Les Leopold on Twitter: www.twitter.com/les_leopold
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We all have to take some responsiblity. Where we shop ,the products we buy and what we eat plays a very important role.We have a kids clothing store in town. The owner has carried American made items for a long time and she tried not to buy imports. To stay competitive was forced to carry items from China. Her customers demanded cheaper products..I don't see how free markets and Capitalism is going to survive in America. Paying CEO's 100-400% of your workers wages isn't working. Producing cheap goods in China is starting to catch up to us as we face a job crisis.The less government, cut taxes and free markets are working for the wealthy not very well for middle America. We have become a nation of bargain hunters. We look for the best deal on everything. Employers are looking for a bargain and they are finding it overseas.
There is nothing wrong with bargain shopping. Its a good thing. The problem is when we let some manufacturers make products using slave labor, child labor, or use toxic materials in the products.
There has to be rules in capitalism otherwise we head back to slavery and child exploitive labor. China is communist dictatorship which sees humans as expendable. We can't trade with communist. We can't trade with nations that are dictatorships. Its really that simple.
Have you tried to find anything made in America? My niece's 7th grade class is studying consumerism
The teacher had the class look at the labels on thier clothing and other items. Three of the students hade something that was made here. When you go to your grocery store checkout how much of the produce is imported. Called customer service lately? How many of those jobs are outsourced?
I received an email a few yrs ago that said I could get rid of my whiny loan officers keep the commissions by outsourcing the processing to India.I do not own a mortgage brokerage this was sent out to anyone that held a broker's license. Major corporations have legal departments that work on getting visas for engineers and other high paid positions from India and Asia.How many middle or upper middle class jobs will be left?
There is not a shred of evidence that any species, but especially man, regulates itself for sustainability. It's about the availability of energy, which for most species is food. When the food runs out, things change, quickly and drastically. Until the food runs out, it's copulate till you drop. The enthusiasm being expressed by your well-meaning president for new, renewable, eternal, cheap, green, sustainable sources of energy, is in fact a recipe for an even greater cataclysm than is happening now. We are too close to ourselves to see that every problem we solve with technology uncovers greater, more intractable ones. Robert Malthus was right- it's time to hear him.
I would invite Les Leopold to open any business as simple as he wishes, even an ice cream store, and run it for one year. He must pay all required taxes and comply with all regulations.
He must actually make the ice cream
Then we'll talk about why nothing is made here.
Les Leopold has no idea.
We need to start thinking differently about economy. We need to be asking "what is an economy for" and rethink how we answer that question. For the last 30 years, our answer seems to have been "making and maximizing profit." That answer elevates the financial sector to the top position of importance in our economic system. Everything for a profit: mergers and acquisitions, downsizing, importing cheap goods, outsourcing, etc. Electing politicians who promote middleclass-centric policies will help, but until we have a different social agreement about what economy is for nothing much will change. The business elites have to buy in. Right now Milo Minderbinder is bombing his own airbase. Everybody has a share.
We've had a rash of wind farms starting up here in farm country USA and have been so excited to be part of the "green revolution." I'm devastated to learn that the blades are not being manufactured in the USA!! Where are our "green jobs?" This was the one indicator we've seen in this area that there is some hope for our future economy. Now I see that too was a false hope.
Yes, the revolution is coming. The only solutions I see to avoid it are strict term limits for Washington politicians and absolutely only publicly-funded political campaigns. This will put the people in charge of the government again. But I cannot see these being allowed to happen in our current corporate-owned political system. So it must be revolution.
"Why Our Jobs Crises From Hell Could Last Decades."
PEAK OIL
PEAK OIL
PEAK OIL
Exactly!
Hopefully last summer's $4 petrol drove home the FACT that any economic system still based upon unlimited access to cheap, plentiful oil is doomed to extinction.
Thirty years of feckless American leadership means we've got a lot of catching up to do.
Only if we don't adapt. Rooftop 3 cent solar and waste BioFuels can supply all the energy and fuels the worlds needs forever, cheaper, safe and clean. see my profile.
And by the way:
I find it to be a fascinating irony that conservatives who look back to the good ol’ 1950s of Eisenhower that supported this country’s middle class prosperity fail to look at the income tax structure of that era. Then, the wealthiest Americans were taxed at a 91% rate--back then, in the good ol’ 50s.
Today, our middle class is dwindling as the wealthiest in our country have received favored tax status. Health insurance companies outsource jobs for their telephone banks, and proposed health legislation will mandate that we all support these companies that send jobs abroad.
Our national carelessness toward our country’s economy that has favored big business over nurturing its middle class has brought us to the present situation. We have voted for public officials who promise “no new taxes” as we have continued to slide into an inferior global position.
Return to the 50s! I am all for it!
good observations. some of which I started pointing out back in 1980 after the election of Reagan but everyone I said these things to crapped on my head and told me I was crazy, being negative, too young to know anything, shut the hell up you knit whit. But, here we are. all our chickens have come home to roost and there are still enough people crapping on this kind of analysis, still willing to give the financial sector another try that we may never get out of this.
One thing left out of this analysis is education. There's been s systematic, destruction of our school systems since the early eighties and it needs to be reversed. We have to get the evangelical christians off our school boards and get back to treating science, math and history with facts and stop muddying the waters with mythology and challenges to long known factual information. Theology and mythology can be taught as their own class and be identified as such. We need to show our kids we care by giving them good schools to go to with good teachers and adequate funding. We can rearrange our economic plan all we want but if everyone is mixed up or ignorant nothing will get better.
This is the first column I've seen that adequately describes the dimensions of the hole we find ourselves in and proposes a solution scaled to fit the problem. These incremental steps we've taken amount to digging slower to get us out of the hole. Not going to work by a long shot. We need to realize that what we are doing is harmful to our own future. We cannot begin to heal by doing simply doing the same things slower. We need to radically rethink our version of "how the world works" because for at least a generation WE'VE BEEN WRONG about this fundamental assumption.
I know of at least one health insurance company that outsources telephone banks. Thee are probably more. With proposed health legislation, we middle class will continue to support outsourcing --and fined if we do not!
Without the public option, we are only encouraging these companies to continue to send American jobs overseas.
Nice summary of our malaise - and (how dare you) some reasonable remedies.
Sadly, even the best of our leadership remains studiously clueless.
We are the victims of mercantelism. This article lends ammunition to my conclusion that I have been shouting for the time I have written on this site.. That is why modern international trde is such a disaster. It has fulfilled the wildest dreams of a dictatorship in China and destroyed our once supreme manufacturing, technological system. In mercantelism, the victim country ships its precious raw materials to the predatory economic system and receives back manufactured goods and servitude and eternal debt. We are the Southern share cropper, eternally indebted to the absentee landlord.
What is outrageous is the fact that the ignoble, incompetent Obama Administration is encouraging the continuation of our precipitious bankruptcy and collapse as a viable organizational unit. I can't believe what I see and hear. Where in the hell is there an honest, courageous, patriotic leader?
What is good for Wall Street and the big bankers is organization-destroying for America.
Too bad even our mainstram media will not tolerate this truth be known.
I voted for Obama's promise of change we can believe in. What did I get? Obama's car czar demanded the transfer of Chrysler to Fiat for free. Fiat is now in the process of splitting Chrysler in half in order to keep the part generating short term profits and let the larger half wither away. This is going to destroy a large chunk of our remaining manufacturing infrastructure.
Also Obama's car czar perfromed a corporate coup on GM by forcing out the CEO Waggoner who was keeping GM largely intact. Car czar Rattner installed his loyalist as CEO and stacked the board of directors wirth more of his loyalists. Then Rattner forced GM to eliminate Saturn, Opel, Pontiac, and 2000 dealerships. Thus Obama is responsible for GM abandoning millions of faithfull followers of Pontiac Saturn and dealerships. GM is effectively being forced to sacrifice market share, sarifice economy of scale, sacrifice technology from Germany, and sacrifice its reputation. Obama has done the most to destroy our infrastrucrture & economy that took 100 years to invent and build.
Bollocks.
If GM's Wagoner had pursued the EV-1 development program a decade ago instead of tossing it aside for the bloated machismo of the Hummer line, GM could very well have mounted a challenge to Honda and Toyota's supremacy in the all-electric and/or hybrid market.
But by all means, go right on blaming Rattner or Obama or whoever for Wagoner's failure.
Refusal to accept responsibility for boneheaded decisions is a Republican hallmark.
"Instead of an economy that worked for all of us, we ended up with a very prosperous society for the very, very few at the top. We lead the world in billionaires."
Remember in It's A Wonderful Life, everytime you heard a bell ring, you knew an angel somewhere had got his wings? Well, everytime a new billionaire is created, somewhere, an angel explodes. You can hear them if you stop and listen -- poom! poom! poom!
Why am I laughing? This is a tragedy
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