Robert Reich posted this on his blog yesterday:
According to the New York Times, Apple Computer employs 43,000 people in the United States but contracts with over 700,000 workers abroad. It makes iPhones in China not only because of low wages there but also the ease and speed with which its Chinese contractor can mobilize their workers – from company dormitories at almost any hour of the day or night.
An Apple executive says “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.” He might have added “and showing a big enough profits to continually increase our share price.”
Most executives of American companies agree. If they can make it best and cheapest in China, or anywhere else, that’s where it will be made. Don’t blame them. That’s what they’re getting paid to do.
What they want in America is lower corporate taxes, less regulation, and fewer unionized workers. But none of these will bring good jobs to America. These steps may lower the costs of production here, but global companies can always find even lower costs abroad.
Global corporations — wherever they’re based — will create good jobs for Americans only if Americans are productive enough to summon them. Problem is, a large and growing portion of our workforce isn’t equipped to be productive.
Put simply, American workers are hobbled by deteriorating schools, unaffordable college tuitions, decaying infrastructure, and declining basic R&D. All of this is putting us on a glide path toward even lousier jobs and lower wages.
Get it? The strategic responsibility for making Americans more globally competitive can’t be centered in the private sector because the private sector is rapidly going global, and it’s designed to make profits rather than good jobs. The core responsibility has to be in government because government is supposed to be looking out for the public, and investing in public schools, colleges, infrastructure, and basic R&D.
But here’s the political problem. American firms have huge clout in Washington. They maintain legions of lobbyists and are pouring boatloads of money into political campaigns. After the Supreme Court’s Citizen’s United decision, there’s no limit.
Who represents the American workforce? Organized labor represents fewer than 7 percent of private-sector workers and has all it can do to protect a dwindling number of unionized jobs.
Mr. Reich is correct that we do not invest in the United States, that is to say that we do not fund education or infrastructure, and this means that our labor force (you and I friends) is not as attractive or equipped to do certain jobs. I also agree that this is the role of the government not private industry. Finally I agree that corporate influence in politics promotes policies that prevent these sort of investments from happening.
There is however a giant hole in Mr. Reich’s argument, and that’s if we made these sorts of investments in education and infrastructure that jobs would return to the United States. Let’s assume we return to post World War II levels of infrastructure spending and we instituted free education for every citizen up to the PHD level. Would jobs come back to the United States? Would laborers who live in barracks next to Chinese factories still get up in the middle of the night to work a twelve hour shift to make a slightly different iPhone screen? I think the answer is yes. How does educating Americans counteract this? How does this keep our workforce from competing with a globalized workforce that is willing to work for much lower wages than we could possibly afford to?
As Yves Smith pointed out on her blog yesterday, we also have to contend with the fact that nations like China will subsidize industry to win work:
So basically, the Chinese funded a completely non-economical glass R&D facility IN ANTICIPATION of getting the Apple order. There is no way anyone would build a factory like that unless the money was close to free. It already had glass samples in stock! The “some subsidies trickled down” sounds way too innocent. It sounds more like someone recognized the importance of Apple as a marquee customer, and whether the push came from the officialdom or businessmen with the right connections in high places, it doesn’t really matter. This project smells of having serious government backing. How can private businesses anywhere compete with that?
The issue at hand is very much about our domestic spending priorities, but we can’t solve this problem without addressing trade policy as well. Throwing down all barriers to international trade has allowed multinational corporations to pit american labor against substance laborers overseas, and there’s no way that we can compete on those terms regardless of education or infrastructure. We especially cannot compete against nations that subsidize and protect their industries while we refuse to.
Mr. Reich avoids the basic question of whether or not globalization is beneficial for the nation or our workers. There is no doubt that companies can produce more goods for less cost, but how does this benefit people who can no longer afford these products much less afford to get by? The efficiency gains are being reaped as profits by the multinationals more than they are distributed as wages to foreign workers or as lower prices to American consumers.
The bottom line is that we should not compete against foreign labor and we should not engage in unrestricted trade for goods that we can produce perfectly well at home. We should invest in education and infrastructure but we need to do this in the context of fostering and protecting local industry as well.
Is this “free market” capitalism or “free” trade? No, but that’s not historically what we’ve done in this country.
So, I agree with Mr. Reich on some of his points, but he has the same basic world view as the New York Times- that free trade and globalism are akin to the laws of physics and not up for debate. Until we challenge this, I don’t think we’ll get anywhere.
