July 24, 2011
What Exporting Your Manufacturing Base And Switching To A Service Economy Does To The Middle Class

Catherine Ramsdell reviews Someplace Like America: Tales from the New Great Depression:

Consider—in 1979 “Wal-Mart employed 21,000 workers”, “General Motors employed 618,000”, and “the average CEO…was paid 35.2 times what an average worker was paid”. Flash forward to 2008 (and draw your own conclusions): “Wal-Mart employed 1.4 million”, “General Motors employed 92,053”, and “the average CEO…was paid 275.4 times what an average worker was paid…”

You can certainly make the argument that many of these manufacturing jobs were replaced by jobs in the tech sector.  The “IT field,” for example, wasn’t much of a field back in 1979, and now it’s ubiquitous.  

But there’s also an important difference between these two fields: the manufacturing jobs offered by General Motors in 1979 provided people without a college degree a “family” wage (thanks in part to the efforts of the UAW).  A 1979 high school graduate with a willingness to work hard could walk into a GM factory and ask for a job, and be reasonably certain they’d be provided with a good wage.  

A 2011 high school graduate, on the other hand, cannot simply walk into an IT shop with a strong work ethic and receive a job.  You need to have at least a couple years of post-secondary education to work in IT.  And given the fact that not everyone can be said to possess the talent or innate ability necessary to understand the intricacies of a tech sector vocation, those same high school graduates now must accept a job working at Wal-mart, where they will earn just-above minimum wage, and can expect to be encouraged by their wildly profitable employer to apply for public assistance instead of being provided with health insurance and other common benefits, even though Wal-mart could easily afford to pay their workers $12/hour with a resultant price increase to consumers of $0.46 per shopping trip.

So in essence, we’ve traded family-wage jobs with very few education and/or skill-based barriers to entry, for a) tech sector jobs that have at least some education and/or skill-based barriers to entry for a significant portion of the population, and b) jobs at Wal-mart that pay signficantly lower wages to employees who could’ve worked for General Motors in 1979 for a much better wage.  If you want to know why the middle class in America is shrinking, you have your answer.

April 5, 2011
puddinheadwilson:

“If  you want to understand better why so many states—from New York to   Wisconsin to California—are teetering on the brink of bankruptcy,  consider this  depressing statistic: Today in America there are nearly twice as many people  working for the government (22.5 million) than in all of manufacturing (11.5  million).  This is an almost exact reversal of the situation in 1960, when there   were 15 million workers in manufacturing and 8.7 million collecting a  paycheck  from the government.
~Steve Moore in the WSJ
The Public Sector’s share of GDP is currently at historic lows.  The export/loss of manufacturing jobs abroad is due in large part to Free trade agreements, like NAFTA and GATT, policies which Libertarian economists seem to be fond of.  
Of course, we could probably blame our high corporate tax rates too; if it weren’t for the inconvenient fact that most large American corporations pay either zero taxes or actually get paid by our government.  So blaming corporate tax rates for manufacturing flight is no answer.
We are literally the only Westernized country in the world that does not protect domestic industries with trade barriers.  As a result, we have massive trade deficits with almost every one of our trade partners.  This means that its worth it for corporations to move their operations overseas; they can dodge tariffs and importation quotas in places like South Korea by operating locally, while being able to sell to America trade-barrier free.  Free trade agreements have done a lot more to destroy our manufacturing sector than growth in the public sector ever has.  In fact, I honestly can’t see how the two are even related in a cause-effect manner.

puddinheadwilson:

“If you want to understand better why so many states—from New York to Wisconsin to California—are teetering on the brink of bankruptcy, consider this depressing statistic: Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government.

~Steve Moore in the WSJ

The Public Sector’s share of GDP is currently at historic lows.  The export/loss of manufacturing jobs abroad is due in large part to Free trade agreements, like NAFTA and GATT, policies which Libertarian economists seem to be fond of.  

Of course, we could probably blame our high corporate tax rates too; if it weren’t for the inconvenient fact that most large American corporations pay either zero taxes or actually get paid by our government.  So blaming corporate tax rates for manufacturing flight is no answer.

We are literally the only Westernized country in the world that does not protect domestic industries with trade barriers.  As a result, we have massive trade deficits with almost every one of our trade partners.  This means that its worth it for corporations to move their operations overseas; they can dodge tariffs and importation quotas in places like South Korea by operating locally, while being able to sell to America trade-barrier free.  Free trade agreements have done a lot more to destroy our manufacturing sector than growth in the public sector ever has.  In fact, I honestly can’t see how the two are even related in a cause-effect manner.

(via antigovernmentextremist)

Liked posts on Tumblr: More liked posts »