Whenever you hear a business executive or politician use the term "American competitiveness," watch your wallet. Few terms in public discourse have gone so directly from obscurity to meaninglessness without any intervening period of coherence.
President Obama just appointed Jeffry Immelt, GE's CEO, to head his outside panel of economic advisors, replacing Paul Volcker. According to White House spokesman Robert Gibbs, Immelt has "agreed to work through what makes our country more competitive."
In an opinion piece for the Washington Post announcing his acceptance, Immelt wrote "there is nothing inevitable about America's declining manufacturing competitiveness if we work together to reverse it."
But what's American "competitiveness" and how do you measure it? Here are some different definitions:
- It's American exports. Okay, but the easiest way for American companies to increase their exports from the US is for their American-made products to become cheaper internationally. And for them to reduce the price of their American-made stuff they have to cut their costs of production in here. Their biggest cost is their payrolls. So it follows that the simplest way for them to become more "competitive" is to cut their payrolls -- either by substituting software and automated machinery for their US workers, or getting (or forcing) their US workers to accept wage and benefit cuts.
- It's net exports. Another way to think about American "competitiveness" is the balance of trade -- how much we import from abroad versus how much they import from us. The easiest and most direct way to improve the trade balance is to coax the value of the dollar down relative to foreign currencies (the Fed's current strategy for flooding the economy with money could have this effect). The result is everything we make becomes cheaper to the rest of the world. But even if other nations were willing to let this happen (doubtful; we'd probably have a currency war instead as they tried to coax down the value of their currencies in response), we'd pay a high price. Everything the rest of the world makes would become more expensive for us.
- It's the profits of American-based companies. In case you haven't noticed, the profits of American corporations are soaring. That's largely because sales from their foreign-based operations are booming (especially in China, Brazil, and India). It's also because they've cut their costs of production in the US (see the first item above). American-based companies have become global -- making and selling all over the world -- so their profitability has little or nothing to do with the number and quality of jobs here in the US. In fact, it may be inversely related.
- It's the number and quality of American jobs. This is my preferred definition, but on this measure we're doing terribly badly. Most Americans are imprisoned in a terrible trade-off -- they can get a job, but only one that pays considerably less than the one they used to have, or they can face unemployment or insecure contract work. The only sure way to improve the quality of jobs over the long term is to build the productivity of American workers and the US overall, which means major investments in education, infrastructure, and basic R&D. But it's far from clear American corporations and their executives will pay the taxes needed to make these investments. And the only sure way to improve the number of jobs is to give the vast middle and working classes of America sufficient purchasing power to get the economy going again. But here again, it's far from clear American corporations and their executives will be willing to push for a more progressive tax code, along with wage subsidies, that would put more money into average workers' pockets.
It's politically important for President Obama, as for any president, to be available to American business, and to avoid the moniker of being "anti-business." But the president must not be seduced into believing -- and must not allow the public to be similarly seduced into thinking -- that the well-being of American business is synonymous with the well-being of Americans.
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
All I can really think is that something the business sector and the US and most state governments are really good at, which is planning, is too rarely a skill used in an effort to plan for the fate of the American worker. Here the old axiom of "it's always best to have a plan," was inverted in the interest of business and no plan serves them well by increasing worker insecurity.
The Fed, whatever it is or what it really stands for, has fallen flat in both areas of its dual mandate by a.) letting inflation zero out which causes corporations to sit on profits since they aren't loosing anything by doing so and b.) doing nothing but playing "who's got the button" with business as far as creating jobs is concerned. And I am left wondering why banks get to profit so mightily by being the ones to introduce currency into the economy when this could also be achieved by giving employers money to pay their workers. Which of course would have no quick and easily solution, giving Republicans the opportunity to repeat almost every one of their talking points.
There really is no minimum standard as far the conditions for those that are the whatever the real percentage of unemployed is The worse it gets for those who are among that percentage and the larger that percentage is, the better it is for business.
Right now top-executives and shareholders of US corporations like GE and GM are profiting enormously from America's messed up relationship with China. You can see this in the way the US stock market has surged back to pre-Lehman crash levels, despite the US unemployment rate still hovering in the double digits.
But it's only a matter of time before the Chinese start subsidizing their own corporations in order to out-compete US corporations. This has happened to Gamesa, a Spanish company that specialized in building wind turbines and it will soon happen to many US corporations.
What I think is also likely to happen is that once the Chinese get done beefing up their military, they'll simply use their military might to force US corporations out of their country. So when the Chinese do get around to either out-competing US corporations like GE and GM or forcing them out of their country, the US will be too broke to bail them out again.
Unfortunately, I think that ship has sailed, at least as to the president. If the situation were not so dire, it would be hilarious that Obama could be labeled "anti-business" after he's bent over for Wall Street again and again and again. But of course the big corporations think themselves very ill-used indeed if they get only 98% or 99% of what they want.
http://www.pbs.org/newshour/bb/business/jan-june11/obamabusiness_01-21.html
The guy couldn't even counter ONE of Dr. Reich's very specific points - note how Makin just tried to change the subject and be as evasive and vague as possible. Why does the news media allow these guys to get away with this, time and time again?.”
By the way, some have praised Mr. Immelt’s appointment on the grounds that at least he represents a company that actually makes things, rather than being yet another financial wheeler-dealer. Sorry to burst this bubble, but these days G.E. derives more revenue from its financial operations than it does from manufacturing — indeed, GE Capital, which received a government guarantee for its debt, was a major beneficiary of the Wall Street bailout.
Want to compete, now let's apply those wages and conditions from the top down and include politicians in the scheme.
So if we wish to understand why our leaders decide as they do all we have to do is connect their actions to the beliefs they hold in mind. Likely material self-interest is the belief that could explain the decisions made. It is quite likely that the decisions are not so much about creating jobs for all, but rather about creating the opportunity for the one job that comes available in 2012. So there is agreement, “it’s politically important for President Obama.” What we need is statesmen/stateswomen making decisions, not politicians.
http://www.forprogressnotgrowth.com/2011/01/20/turn-off-auto-pilot/
http://www.forprogressnotgrowth.com/2010/07/11/crisis-of-will/
— Boeing: China agreed to approve airline contracts for 200 aircrafts to be delivered over a three-year period, starting this year.
— General Electric: The White House says GE reached a deal with China Shenhua Energy Company Limited. The joint venture will use GE's cleaner power generation technologies to advance cleaner coal solutions for industrial chemicals, fuels and power generation.
— Honeywell International, Inc: Honeywell will work with China's Haier Group to develop and promote low-emission, high energy-efficiency products and solutions. Honeywell estimates the total value of the U.S. export content in the five-year deal is $210 million.
2007 article-This is a regional jet that’s eighty to one hundred seats, nominally. This is the first time they’ve designed an airplane and they’ve brought in foreign suppliers. GE is building the engines, Honeywell is providing the avionics, and they have other companies providing other systems on the airplane—about 40 percent of that airplane is actually sourced from U.S. suppliers.
Me-With GE building the engines and Honeywell providing the avionics and the new GE CEO as head of economic advisors sound a little like insider trading? How in the world can he be unbiased in his decision making on contracts and outsourcing policies?
xanas FYI: Businesses fire Americans so they can hire cheap foreign labor. They do this because it increases profits.
The logic that you used in your first 2 points would just as easily fit the pages of mises.org
Your 3rd point needs some references, but the first part would always be too generic. Some businesses are doing well and some are not. It's at the end of this point that you make this totally irrational statement that the "number and quality of jobs in the US... may be inversely related [to their profitability]"
I say this point is irrational because businesses can only expand operations and increase profits with more people, all other things being equal. People are the most limited resource that is available. Without people there would be no cars, homes, medicine, etc. The "natural resources" that exist on earth are nothing but rock without someone to make them into useable things. Machines do not operate themselves and they do not make themselves.
Cutting labor is not something that business does to become more profitable unless the jobs that those individuals were working were determined to be unproductive. And this is the crux of the matter. Jobs were cut because many industries that came into being due to the rate of interest being held artificially low by the Federal Reserve were unprofitable after the contraction of credit that resulted from the housing bubble ending.
Your 4th point could do to learn from the logic of your first 2.
All this has been TOTALLY disproved, starting in the 20th century (with the invention of assembly lines). Engineers and inventors disprove the notion that one person cannot totally change how things get done and how many people it takes to do them, every day. Farmers can produce 100x what they used to using technology instead of hundreds of slaves (funny, though, how history is slowing repeating itself in terms of wages). New car plants need 75-85% fewer workers. Robots (that only need to be programed once) have replaced thousands of workers (and that's a big reason manufacturing has declined - not just outsourcing). In the future robots will be able to do even more and programming them will become even easier and require even fewer programmers. By the way, remember in the 1980's the prediction made that by 2000 we would need thousands and thousands of people to repair and program the "robots of the future"? THAT never happened. Many of those "roboticists" never got jobs and now many training in alternative energy will also not find jobs. Technology really can be disruptive and many people can be put out of business by technology, particularly if it is introduced too rapidly (quicker than people can adjust).
Your arguments don't hold any water - Dr. Reich's arguments, on the other hand, have been very well thought out and even proven.
I was about to make a similar point.
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So if two businesses possess the same technology and one has more employees than another, provided that both businesses' employees are well selected and are productive the business with a greater number of employees will produce more than that which has less (barring horrible management in some other area).
B) On the matter of "thousands and thousands" of programmers prediction, I think you are referring to my argument that machines require people. And yet, they do indeed require people, even if less than some prediction. If things were as bad as you imply here, our unemployment rate would be far higher than a mere 10%.
C) I don't question that technology makes some jobs unnecessary. I do question that this "really can be disruptive" over any reasonable length of time absent government intervention. What's funny is that in many cases technology is used to replace workers because of government interventions (such as the recent case of workers in American Somoa being replaced by machinery due to the drastic minimum wage increase there, which was much higher than the increase in the continental US).
Oh? What universe have you been living in since the Clinton Presidency? Since NAFTA, "globalization", the rise of the international corporation?
Cutting jobs is the *first* thing corporations do when they find someplace they can do it cheaper - and I don't mean that "all other things being equal". They don't care about "all other things" like labor health and safety, or environmentally sustainable practices.
For far too many business in modern-day America, labor is just another resource to be exploited, used up, and discarded when necessary, and as cheaply as possible.
Labor is indeed another resource to be exploited (not referring to the negative connotation you probably place on this word), and the better it is used the more production is possible leading to a larger supply of goods and services.
Welch grew GM but planted the seeds of its problems in the last couple of years just a reagan and Bush did.... He increased profits by outsorucing and union busting... then the straw that broke the camels back occured... American workers were no longer making enough to buy GEs products. And small bussiness growth stopped because there were no more major businesses/plants left to support and thus no major customers for small business. of course small business booms where are MFG moved to....
Regards
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