In case anyone wonders why I keep dancing around a decision and just don’t come out for Bush (or so a few correspondents suggest), given my discomfort with Kerry’s security non-policies, here’s a brief explanation from Forbes:
U.S. companies that outsourced the most jobs in 2003 also offered well-above average pay increases to their chief executives, according to a new study released this morning. Companies that made outsized political contributions to either the Democratic or the Republican parties also paid their CEOs unusually well, the study finds.
The average CEO compensation at the 50 firms outsourcing the most service jobs increased by 46% in 2003. That increase compares to an average hike of 9% for CEOs at 365 of the largest U.S. companies, according to a report by the Institute for Policy Studies, a non-profit that focuses on progressive research, and United for a Fair Economy, best known for its opposition to the repeal of the federal estate tax.
I’ll comment that the source isn’t exactly unbiased, and I’ll go and read the study and see how solid I believe it to be before I give this total credence.
And I’m not an opponent of the internationalization of business (I’m not an opponent of gravity, either). But when you see that the issue isn’t one of lowering costs to customers, or one of increasing shareholder value – but of nakedly lining the pockets of the managers who make the decisions – it’s hard not to frame this as one in which the managers see the decision to internationalize as one where they can pocket a substantial amount of the salary dollars they save.
But ultra-luxury housing is doing better in Los Angeles than upper-middle priced housing, like mine. See the LA Times article “$10 Million is the new $1 Million“:
Even in the mid-1990s, even among rich folks, $10 million was freakishly big money; only a handful of homes each year sold in that range. Not Madonna, not Cher, not Arnold Schwarzenegger lived in $10-million houses, at least in those days.
Now, however, even with the market momentarily cooling, real estate agents say $10 million is your basic starter mansion. “In the high bracket,” said Beverly Hills real estate broker Cecelia Waeschle, “$10 million is now almost the norm.”
John Edwards’ ‘Two Americas’ may be the tagline to a good joke by Giuliani for the next few months.
But it’s an issue that won’t go away soon.
Kerry is supported by the heir of a major outsourcer, Heinz 57.
And Kerry vored for all the free trade legislation.
The outsourcing of IT jobs is directly due to the overbuilding of communications infrastructure in the 90’s, during the reign of William J. Clinton.
So how does CEO pay indict Bush? All the companies that have outsourced computer programming and call centers around here are more profitable, which benefits a lot of people.
CEO’s are paid for results and profit creation. Indian programmers make 20% of what an American programmer expects. To not hire the Indian over the American would be malfeasence of the part of the CEO.
The world is a tough place, and there are no guarantees.
And that is Bush’s fault and Kerry is going to make it all better? I don’t think so….
AL: The poet says–
“Phoebus the Phoenician, a fortnight dead,
Forgot the profit and the loss….”
It is not a hard decision for me. I’d rather gamble on GW fixing the economics, than on JF keeping me alive.
First off, its hard to argue about globalization’s ills when unemployed is less than 6%. Dan Drezner has spoken much more eloquently and informedly on the subject than i ever could, but to summerize it is entirely likely that we get at least as much as we give.
Secondly, this is a one issue election for most of us. And globalization, without a shadow of a doubt, is a long term security homerun. Nations with close economic ties rarely war. Perhaps sending jobs to places like India, China, Jordan, and Indonesia is a far more cost effective, and just plain effective way to make friends and influence people than any amount of hand outs we give to their rulers. The more friends like South Korea, Taiwan, Poland, and India we have, the better. Prosperity cures all ills, and we have quite a bit to spare.
Without objecting to your general thrust, the correlation between CEO salary increases and outsourcing may be simply that companies that increased outsourcing were simply more efficient (ie, better run) and rewarded their management accordingly.
I’m chary of off-shore outsourcing of functions that produce intellectual property. I think it’s a short-sighted and ill-considered policy. And the explanation that only the low-level jobs are being off-shored is stupid. Most senior engineers started as junior engineers. Fewer junior engineers here now means fewer senior engineers here in the future.
But I understand the conventional Ricardian trade arguments and the value of specialization. So I’m resigned to it. And I don’t have any problem with executive compensation legitimately arrived at. I think it’s also a short-sighted and ill-considered policy but it’s a problem that belongs to the stockholders to solve.
But I will have a problem when companies that get burned by short-sighted and ill-considered off-shore outsourcing (as is inevitable) go rent-seeking for relief.
*CEO WORTH*
bq. _”The study does not make the case that there is a causal relationship between outsourcing or political activism and CEO pay. However, it does claim a connection between contributions and at least one issue, the current effort in Congress to block rules that would require corporations to report all stock option grants as expenses in their financial statements.”_
bq. _”The study makes no claim that there is cause and effect between outsourcing jobs and big CEO pay packages. Some of the companies on the list of outsourcers are unusually large or profitable, so their executives may have simply profited the most from stock options, which is how one CEO typically earns more than the next. It may also be the case that companies on the cutting edge of technological change tend to outsource more to India where there is an abundance of highly skilled technology workers, as well as less skilled but eager call center workers. It is also the case that the extent of outsourcing tends to be overstated, something that the study seems to concede.”_
bq. _”Whether contributing money to political parties (whether by the companies themselves to conventions or by company executives to candidates) actually increases company profits or CEO pay is an open question, too. On one hand, executives may be pursuing their self-interest. On the other hand, they may have political beliefs distinct from personal gain.”_
If one is to believe the article without doing any further research the study is strictly centered around CEO pay in relation to the common worker. The study makes no claims based on research as to the reasons for disparity but it does offer up questions that further research may hope to answer. The article also goes above and beyond in assigning any implications that political favors from either party (regardless of favored candidate and disparity of donations to Republicans versus Democrats) as being a direct result of CEO wealth. Beyond that what this article really tells me is if I want to be extremely wealthy I should strive to be a CEO.
Dave
bq. _”But I will have a problem when companies that get burned by short-sighted and ill-considered off-shore outsourcing (as is inevitable) go rent-seeking for relief.”_
Well put there are no valid reasons or arguments for the tax payer to bail out a companies short comings.
AL,
I don’t get it. Three points:
1. The president has fairly little power over the economy, and even less influence over corporate governance issues, so why are you letting the CEO pay issue influence your vote in the presidential election?
2. Aren’t corporate governance issues primarily for the state legislatures to decide, and secondarily for congress?
3. Leaving the “Benedict Arnold” slanders aside, is there any evidence that Kerry would do more than Bush about this issue?
4. Looking at their records, what have Bush and Kerry done about CEO pay during their respective tenures?
5. If congress or the president was to address the CEO pay issue, isn’t the most likely outcome that it would just create new problems? See Campaign Finance Reform Act.
Companies that report good earnings and maximize shareholder value tend to have higher CEO pay as a result. The companies which outsource a lot have higher CEO pay.
It’s difficult to immediately conclude which correlation has a casual relationship, but you certainly can’t dismiss that observation that companies which do take advantage of offshoring where it is efficent make larger profits and thus pay their CEOs more.
Or, perhaps, that companies that have recently produced a large number of offshore jobs are also companies which are growing rapidly, and thus extremely likely to have higher CEO pay.
Companies which are NOT expanding overseas may very likely be NOT expanding at all, and hence won’t have CEO pay.
Most likely, high growth and succesful companies are much more likely to both have offshoring and raise their CEO pay.
Of course, the principle agent problem is real– CEOs certainly have a temptation to work in their own interest instead of that of their stockholders. Everyone concedes that. (The difference is that conservative economics believes that the similar problems with government and governmental regulation tend to be worse.)
I have a difficult time believing that it’s merely a case of many, many virtuous CEOs that refuse to have their salary raised, and many others who want more money. I believe that all CEOs try to get as much money as possible, and the ones that got higher raises are those that were better able to justify their raises through higher profit and shareholder value.
You have an odd, idealistic view of CEOs.
So naturally you blame this on Bush. That makes as much sense as this satirical New York Times headline I found on NRO’s Corner:
“Nuclear Device Detonated in NYC; Thousands of Gay Marriages Delayed”
Fredrik
You exceeded your three point by two but that’s OK.
bq. _”Aren’t corporate governance issues primarily for the state legislatures to decide, and secondarily for congress?”_
It is because of governance that we have issues regardless of whether it comes from the state or congress. It could be argued that states have less control since the constitution strictly forbids them from carrying out certain acts such as tariffs on commerce between states. International policy is different altogether in that congress is afforded the power to regulate and enter into treaties with foreign governments concerning trade and commerce. It is the legislation on this level that places restrictions on free trade that affect the corporate levels both abroad and locally. Attempts to manage exports versus imports in a favorable manner concerning US interests have been met with other than the desired outcome.
Now, however, even with the market momentarily cooling, real estate agents say $10 million is your basic starter mansion. “In the high bracket,” said Beverly Hills real estate broker Cecelia Waeschle, “$10 million is now almost the norm.”
Given the ‘progressive’ (what an Orwellian term…) taxation system, the CEOs in question are contributing more than any other individual to the state. Even a flat rate means, the more you make, the more money for government programs. The more money people make, the more money there is to spend on whatever.
If there are two America’s, the richer one is paying for the poorer one.
No idea what’s up with the mansions – but look into it more deeply before passing judgment. Luxury homes in the $2M+ (and far more) range are all the rage in the Miami area… but the people buying them are usually foreigners (wealthy Latin Americans hiding assets, mostly) and so correlation to “2 Americas” is almost nil.
Or maybe it’s more like “2 entertainment industries” – in L.A., a growing bipolar divide within that industry alone could drive the mansion phenomenon, without saying anything about America in general at all. Again, I’d like to know more about who is doing the purchasing etc. before I could say anything meaningful.
As for CEO pay & political contribution correlating… that’s sort of like heat and summer. Outsized political contributions are made by large organizations with a lot at stake, which often means rent seekers, who tend to have spare cash. Add to that the fact that a number of highly regulated (hence high contributing) industries are doing well these days, and it’s no surprise that their CEOs are raking it in. If they _weren’t_ correlating, that would be interesting news to me.
Finally, the missing pieces of data re: CEOs who outsource – how did their companies perform last quarter, and what has their trend been relative to their markets as a whole?
The answer could simply make this a study that shows outsourcing pays. Or it could show that turnaround managers who negotiate big contracts tend to pull the trigger on outsourcing quickly, and the jury’s still out. Or it could show a correlation between greedy CEOs and outsourcing as a short-term bottom line boost.
Again, not nearly enough data to even have an interesting conversation.
What I heard on NPR this morning was that the issue involved “outsourcing service jobs.” Now, if I were an entrepreneur, I would say that’s expanding the market. Service jobs could be many things, but the whining this year has been over the decrease in manufacturing jobs–Union jobs.
Some components of the economy are doomed by
progress. It makes as much sense to fish for
salmon as hunting for buffalo for instance.
Same for many manufacturing jobs. Robots do
it better faster and cheaper and much of the
whining comes from the unions which will lose
even more power AND the workers that are too
old or too uneducated to relearn the new ways.
Printing, broadcast news, wood stick-frame
construction, diaper services to name a few.
To fight the trend is a losing battle. The
individuals that resist go on unemployment
or retire.
But the corporations that resist go on the
dole. We prop them up using the Chrysler/CSX
arguments. I say bullshit. If the corporation
resists the inevitable, it is malfeasance and
the taxpayer should not be burdened UNLESS
the taxpayer gets a piece of the pie ala
shares. This would not be nationalisation
because the stock would be SO diluted. But
it would offset some of the demands of say,
Social Security?
To stay competitive companies can fire workers, automate, outsource, or close the doors.
Which would you prefer?
I don’t understand how with the death of socialism people can still believe the socialist manifesto.
All I can say A.L., is that I’m glad you are not gay. Other wise Andrew Sullivan might have some serious competition on the economics front.
============
Some one once asked why a project in China used shovels and human labor to dig ditches instead of machines. The Chinese official replied: “jobs”. The questioner then asked: “Why shovels? Why not spoons?”
===========
So A.L. what is the difference between jobs lost to automation and those lost to China?
===========
I live in Illinois. If I lose my job to some one in Nebraska is it good? How ’bout if the job goes too China? Is that bad?
===========
BTW here is some help for you re: Kerry.
–==–
Steal this sig:
George Bush never called me “baby killer”.
There is a big difference between William Calley and John Kerry. William Calley is a proven war criminal. For John Kerry we only have his word as an officer and a gentleman.
New Soldier
Guys, I certainly understand the power of ‘creative destruction.’
I also understand that – amusingly enough – most of our economy is shaped by regulatory decisions. We’ve managed to often balance the regulation between business and labor, but – first, I think that in general we have too much regulation – and second, I think that recently capital has trumped labor and captured much of the regulatory mechanisms in the country.
No one can stop the internationalism of business, and in fact one of the better scenarios for the future depends on it – that economic activity in India and China and the ‘little dragons’ will hit a threshold point where internal demand will be sufficient to light off a world economy not dependent on selling to the US and Europe.
But I also think that this has significant political consequences, and that we need to be thinking hard about those consequences and some ways to meliorate them, and limit the damage to our polity and society.
A.L.
Envy is a deadly sin.
Why practice it?
If you want a $10 mil mansion earn it. If you would rather give the money away earn it and do that.
Why do liberals want to be thieves? I take that back. Why do liberals want others to do their thieving for them?
You are into guns, A.L. Why not go to the $10 million house and steal it? Or your fair cut. Why let a government agent do your dirty work?
Fortunately the progressive communist socialist form of liberalism is dying out. Once the boomers are gone it will be a novelty. As of now it is merely an annoyance.
–==–
Steal this sig:
George Bush never called me “baby killer”.
There is a big difference between William Calley and John Kerry. William Calley is a proven war criminal. For John Kerry we only have his word as an officer and a gentleman.
New Soldier
So Simon, should I earn that house by bribing an official into giving me a contract? By looting a company, like the Rigases seem to have done? By gaming a regulatory system like Enron did?
Simon, I can’t believe you’re so blinded by your logic – as opposed to reason – that you don’t understand that the value of our economy is in large part supported by the coherence of our society and polity.
I have brief with people earning what they can and will. I don’t even mind when they game the system; our job is to redo the system to make it harder forthem to do it.
But please spare me the moralism.
A.L.
A.L.,
Typical of a liberal to call greater economic efficiency “damage”.
Without all this “damage ” to the economy poor people would be paying a lot more for their basics.
I say let the damage continue. To call creative destruction “damage” is to misunderstand economics top to bottom beginning to end.
Either that or it is socialist prejudice.
Are we better off because S. Korea can make DRAMs creaper than American companies or worse off?
A.L.,
What percentage of the houses are gotten by bribery?
I guess if you are a communist enemy of the capitalist class all of them. Eh, comrade?
Enron’s assets have been redeployed. BTW how can you tell a market shift from malfeasance? In addition wasn’t one of the reasons Enron went down was that it couldn’t get the government to enact mandatory carbon trading for emissions. So was it good or bad that Enron didn’t get the business?
Over time the market sorts out quality from trash. Without government intervention. The Dutch tulip craze is a prime example.
The value of our economy is based on the control of violence. Read the “Sovereign Individual”. The market can sort out the rest. Unless you are into painless economic advance. It has been tried. It turned out to be way more painful than the officially painful kind.
Without government interference in the economy Milton Freidman estimates that our economy would have grown 50X what it actually has since 1950.
That is an awful lot of performance to give up to satisfy even some of your “fairness” criteria.
Suppose at the end of that time the poor would only be 2X better off than today and every one else was 51X better off. Would that be good or bad?
The more politics controls economics the less efficient the system. So are you saying a system that wastes more resources is better if there is more equality?
An interesting philosophy. I wouldn’t call it liberal though.
A friend of mine runs a small startup here in Silicon Valley. His company had a few customers, and had some income from ongoing deals, but was not far from collapsing due to high overhead. After much soul-searching, he fired most of his US staff and opened an engineering office in China. Now, his company is self-sustaining and growing, and he has hired a couple of American engineers to directly support customers.
For him, it was either go offshore or die. Being a US-only company was simply not an option permitted by the marketplace. And a bunch of Americans have jobs that would not have them if the company had failed.
Good story, Foobarista. Thanks!
A.L. has discussed economic issues a number of times, and what I get out of it is that the “2 Americas” rhetoric has resonance these days precisely _because_ many Americans are losing confidence that the big payouts were in fact earned rather than gamed.
That matters.
I’ve pointed out the major gaps in the Forbes study, but let’s step off that issue and go for some history: how did the right overturn the lib-left economic consensus? Many ways, but think back a bit and you’ll recall that a big sea-change was the emergence of entrepreneurs who started companies, created something that everyone could agree was valuable, and visibly earned their wealth.
The reminder was potent: America is still the land of opportunity(TM). That entrepreneur could be you someday, or your daughter, or you could invest in those companies and build a financial future.
That was a political message that became a cultural one as it went mainstream. Put aside A.L.’s position for a second, and see the underlying point – fractures in that new cultural consensus presage fractures in the political consensus about economics.
Right now, that cultural consensus is cracking. Badly.
How to address this without adopting economically destructive political policies is a worthy challenge for the Right. One I haven’t really seen them step up to yet – or even acknowledge. But it matters to their future to do so over the next few years, and do so effectively.
Well, if you like internationalization of business, why are you then displeased with the higher pay of the managers who do it well?
I, otoh, am displeased with the way this internationalization is done, not how much managers make. Outsourcing is a nobrainer in financial terms, but there’s a social aspect to the process that is entirely ignored and moreover, bullshitted about — there’s a real propaganda war (one-sided in practical terms so far) over it. You can’t, imo, simply throw hundreds of thousands of people out on the street w/o much ado — even if this makes sense number-wise. What to do about it (and how to do it) is another issue; I have no specific recommendations, but I am very sure that there’s a need to do something; what this something should be needs to be determined via public debate and a competent discussion of all specifics of the process. Such a debate does not take place, and, as I’ve already mentioned, is purposefully being prevented from taking place — the gaining party is waging an information class war by mouthing self-serving baseless “free-market” shibboleths or outright lies of the “talent shortage” kind.
That’s what I see as a problem, not what the outsourcing CEOs are making. It bothers me that a 50-year-old guy’s (with a family and morgage) livelihood can be destroyed overnight (in industries that are far from dead, so don’t give me the horse-and-buggy line) with vague justifications that people like that will move to some mythical “better, smarter” kinds of work. First I don’t see any “better, smarter” work on the horizon, and second, how does a 50 year-old move in there? Does he go to college once more? And when this “smarter” area gets outsourced in its turn, what does he do? And who pays for retraining? It’s one thing for a 20 year-old having some 30 years of gainful employment ahead of him to repay it to take out a college loan, but how do you handle this kind of thing in the case of someone nearing retirement? Moreover, the existing system of higher education is not geared towards 50 year-olds even organizationally, forget the financing.
There’s a social aspect to everything, and while it’s good when companies make more money, it’s not good when the country’s “social fabric” is destroyed. Both are important, imo. Cheap stuff’s good, but a stable society is just as necessary. Business actions that have large-scale social ramifications cannot be left to the business side to decide based purely on their short-term interest and to a total exclusion of every other consideration; business and policy should work hand in hand here.
Btw, the why-not-Bush question has a much simpler answer then this or that detail of W’s policies: because he’s an imbecile. You don’t want a cretin run the country in general — even if he’s got a good (though not even-handed by any means) cabinet and is little more than a figurehead.
AL,
OK, just go ahead and change your tag-line to “Armed Socialist.”
One question. Who do you think is BUILDING all those $10,000,000 mansions? To over-simplify, each $10,000,000 mansion provides an annual wage of $40,000 per year for 250 lumberjacks, millworkers, surveyors, roofers, carpenters, brick-layers, etc. The vast majority of miserable peasants in India and China can only fantasize about the lifestyle that capitalism provides for the workers that BUILD these mansions let alone their inhabitants.
I think that recently capital has trumped labor and captured much of the regulatory mechanisms in the country.
That is a ludicrous. Unions have been given a legal monopoly over the supply of labor that has played a large part in driving American jobs overseas. Meanwhile, America’s 93 million small investors are getting screwed by regulators and lawyers. In this supposedly capitalist country, why do we celebrate Labor Day, but have no equivalent Shareholder Day?
If it weren’t for those $10,000,000 mansions, many of those assembly line workers whose labor was made uncompetitive by unions, lawyers and government regulators would be unemployed.
So, AL (AS?) discard the socialist envy that clouds your thoughts, and accept the Hayekian fact that the market is wiser than you and all the elitist government regulators.
HA –
I’ll assume that you’re a small businessman or an independent consultant; I’ve spent a lot of my career time working in and for large corporationa, ands let me offer you a hint – America is already a Socialst country. There is no industry I can think of – including several illegal ones – where regulatory policy is not a significant factor in shaping the competitive landscape, or where substantial corporate energy is not spent shaping that regulatory policy.
So while you may have fun sitting at home reading Hayek; I’d rather invite you out in to the real world to help solve the problems we’re facing right now.
A.L.
Joe,
The death of an ideology cannot lead to a soft landing. What can people like A.L. do when they find out that not only does their ideology not work (bad) but also is no longer socially popular (how can I get a date?)and further it has kept people impoverished because some might gain the advantages of wealth creation before others? There is a moral/spiritual dimensiion.
Generally what you get is depression and retreat. This year with the approaching Bush landslide Democrats and the farther left are going to be in a post 9/11 type shock. World view destroyed.
Really. I was once a lefty like A.L. I have no sympathy for their hurt. Millions have died or been hurt to support their beliefs. I have come to terms with my moral culpability. He and the rest will have to come to terms with theirs.
It is going to hurt. Bad.
Warum,
You are correct. Bush is an imbicile.
Yet he keeps defeating his opposition what does that say about the intelligence of his opposition (you).
–==–
The socialism of the right will not do much harm economically. Here is its agenda:
Republican Socialism
Nationalize the flag
Nationalize permissible eating, drinking, and smoking habts etc.
Nationalize people’s sex lives
Nationalize women’s bodies.
Simon
Simon –
See my comments to HA above. I certainly understand what you’re talking about, and it isn’t what I’m talking about.
A.L.
A.L,
If you are going to government to solve the problem all they have that the market doesn’t is guns.
Is forcing people to do what you want the only answer?
If so then we can never be a free people. Pick your poison.
Bush in a landslide.
Simon:
You’re making a lot of assumptions about who I am (Re: “you”.) You also say, “he keeps defeating his opposition” — now, what’s this “keeps” doing there? He defeated (with a bit of legal help) his opposition once — in 2000. That’s it. No “keeps” so far. That aside, let us get to the gist of what you’ve said:
By way of extreme example, and without making any direct personal comparisons: Hitler defeated his opposition too, remember? Fully democratically — he was elected: outright, with no court interventions. What did it say about “the intelligence of his opposition”? A very complicated question! I’m sure it did say something, but what exactly is by no means an easy matter. More importantly: what did the efficacy of his opposition have to do with the desirability of Hitler’s gaining power? Suppose the opposition was in some ways ineffective (unintelligent or whatever) — was everything OK then? Is the fact that Hitler did succeed in ’33 a proof of his having been right and his, perhaps very few, opponents’ having been wrong? A rhetorical question, isn’t it? yet with great sureliness you offer precisely this line of easy but spurious logic as a final determinant.
Athenians, in the midst of losing a war, put several of their victorious generals to death for not having gathered their dead after the naval battle of Arginusae. (Gathering the bodies of the fallen was a tradition and a law in Athens — but surely dead are dead and don’t suffer any more if left ungathered: surely gathering bodies is less important than winning a war, especially the one that doesn’t go well overall. As we know, the Athenians eventually did lose the war, which might have had something to do with a lack of capable commanders.) Could the Athenians afford killing their best generals? A rhetorical question again… Their opposition at this trial? One man — Socrates. What does it say about his intelligence?
Who said that majority’s always right? (not that W had it in 2000, btw.)
Otoh, yes, it’s definitely worth to analyze and find out why W defeated his opposition — although the answer is by no means as simple and obvious as you imply, it certainly is a worthy question in its own right. Yet while making our inquiry we must keep in mind that it has nothing to do with whether having a guy like W as president is good or not. The two are important but separate issues.
A. L.:
So Simon, should I earn that house by bribing an official into giving me a contract? By looting a company, like the Rigases seem to have done? By gaming a regulatory system like Enron did?
I agree with your point here completely. And I agree that ensuring more honest corporate governance is both a vital interest of stockholders and of government. IMO the unease many of us are feeling these these days is due to many factors. The economic factors include
The collapse of large corporate pension systems which I believe is inevitable and will dwarf the saving and loan crisis of the 80’s will only add to the unease.
So what are the solutions? Protectionist measures are likely to be a cure worse than the disease. At this point the only suggestions I can offer are prudent provisions for an uncertain future and hope. A little prayer probably wouldn’t hurt, either.
HA: “Unions have been given a legal monopoly over the supply of labor that has played a large part in driving American jobs overseas”
HA, only nine (9) percent of private-sector employees are unionized (2000 numbers, http://lmi.ides.state.il.us/lmr/union.htm)
And if we relate that to what is being decimated, it will, of course, be manufacturing: the high-tech’s unionization rate is probably zero.
“A legal monopoly”?
What drives American jobs overseas is difference in cost of living, plus lack of labor standards and the like there. No unionization (even if it’s higher than nine percent) can jack up wages tenfold.
Posting at the very bottom of a long thread has serious disadvantages, so I’ll probably end up saying this in a post on my own blog, soon. But not to put to fine a point on it here, I don’t think it makes sense to keep dragging out the old conventional ideological/class warfare any longer. Even though I’m a Democrat and think the Democratic Party has simply missed the boat, and the fact that it clearly misses the boat on the War on Totalitarianism doesn’t mean it’s any more keyed in on the old socio-economic debate.
The resolutions of issues of inequities proposed by the Democrats, and influenced by the “left of the left” within that party, are all compensatory and backward looking. Hence, they aren’t really solutions but temporary repairs. And note that the repairs were all promoted by the same class of elites that had acquired and controlled 98% of the productive capital in the US (excluding agriculture, which remained the single greatest source of capital for individuals and families until the rise of agri-business toward the end of the last century).
I’ve become resigned to the fact that we need a massive political realignment in this country, and it simply has to begin with the meltdown of the Democratic Party. There is simply too much investment by that party in the “socio-economic bribery” solutions of the Roosevelt/Johnson welfare state. They were concerned with ameliorating the effects of poverty and unemployment, not with eliminating the causes.
But once the Democratic Party has gone the way of the Whigs, over the issue of totalitarianism, it will become apparent that the unreformed laissez faire religion of the Republicans just won’t cut it. So, within a relatively short time a new party will emerge that’s problem oriented, rather than ideology centered. And it will be paying more than lip service to the “ownership society.”
Capital will always trump labor, because it’s an order of magnitude more productive than labor. As long as we have an economy based on distribution of the proceeds of production primarily through labor and wages we’ll be tied to Liberalism 2.0 and the battle with Totalitarianism 3.0 will be inconclusive. Once we cross the threshold where most people get most of their income from the direct ownership and control of capital and not through compensation for their labor we’ll have a system that’s immune to periodic inflation and periods of unemployment, in which rewards are directly linked to productivity and no one is rewarded for non-productivity, or need.
And this system, which requires a massive overhaul of the capital finance system, is simply not yet on anyone’s radar. Nor will voting for John Kerry ever put it there. He’s into socio-economic bribery. The same mechanism that blinds the majority of folks in that party to the real threat of Totalitarianism 3.0 also blinds them to the economic/cultural/and social transformation that must transpire in order to create a genuinely capitalistic economy, as opposed to a laboristic economy. And I think that can only change if and when they suffer a massive defeat, or two. The point is that there’s a third perspective that must emerge somehow, that’s not simply a compromise between Ds and Rs. It isn’t covered by “moderate” Republicans or Democrats. It will emerge as a direct consequence of alignment with the “American Ideology” in a way that grasps both horns of that dilemma.
So, I’m voting Republican… strategically.
A.L.,
Too much regulation? I agree.
Now ask yourself who asks for it? Usually the “little guy” in hopes of being protected from the “big guys”. Naturally those with the resources will do their best to influence the regulations and the regulators.
I mean once guns are on the table wouldn’t it be wise to grab as many as you can?
The ICC is a perfect example. Originally designed to keep the big guys from gouging the little guys it turned out to be a way for the railroads to get an extra 10% or more because it had government guns behind it.
Objectively the Democrats are the party of big business. They are devoted to regulation as policy.
The cure is to reduce regulation and let copetition take care of things. In its own time. Problem is people get in a hurry. So they decide that force (just a little) would be expedient.
Now the people who want more regulation are the very people (usually) who rail against $10 mil houses.
In that way you are undercutting your own argument.
If the $10 mil houses were earned under the current rules then the problem is not the houses it is the rules. Your mention of the houses confuses the argument. Which rules need changing? Specifically. Or even generally. But you have to point to something other than expensive houses to make your point. It indicates a touch of envy.
Speaking of rules I really like how the campaign finance rules have taken money out of politics and the drug laws have taken drugs off the streets.
The Republicans aren’t into socioeconomic bribery?
Interesting. I’ll have to reread the farm bill and the corporate tax bill and the medicare “reform bill” and the energy bill and the “healthy forests bill” and “Clear Skies.”
I must have missed something.
I’ve read the report itself, and I gotta now give Simon some credit: this thing is typical “progressive” drivel. They just keep counting other people’s money, spouting their tired “fair share” blah-blah… who’s to tell what’s fair? I just don’t get that. Suppose executive pay was made one tenth of what it is, how would this help with outsourcing and the unemployment caused by it? I don’t see the connection.
Suppose at the end of that time the poor would only be 2X better off than today and every one else was 51X better off. Would that be good or bad?
An interesting question, and not one with an obvious answer. The point is that once our basic needs are met, we measure our wealth (and in may ways our happiness) relatively. Most citizens are many times better off than they were 50 years ago. Are they many times happier? Obviously not.
If we’re designing society for its people (rather than designing a society to fit a system and to hell with the people in it), then perhaps we’re trying to maximize happiness. In which case, measures to reduce inequality may well bring a lot more happiness even if the total wealth in society declines. Of course,
but it’s not at all obvious that if the wealthiest 10% are 51 times better off and the poorer 90% are twice as wealthy, you haven’t just made 90% of the population a lot less happy.
Not necessarily the atribute of a successful policy.
Tom,
A successful policy takes into account how people actually behave. In every population (mamal at least) you have the 80/20 rule. 20% of the population will control 80% of the resources. This is nature.
To work against nature costs. Working with nature profits.
The neat thing about America is that the people in the bottom 20% this year are mostly not the same people who were in this category 20 years ago.
In a society with social and economic mobility wide disparities in income (as long as no one is starving) need not be debilitating.
One of the moves towards Republicanism these past few years is that people see that it is very possible that some day they may be rich. Thus they see no need for equality imposed by government. They look forward to the day when they or their children will want to see the fruits of their labor.
Socialism on the left is dead. Dead. Dead.
Now if we can just keep the Republicans from Nationalizing my wife we will be even better off.
AL,
America is already a Socialst country
You obviously missed my point – and affirmed it. I disputed your assertion that “capital has trumped labor” in this country. You can’t have it both ways. If “capital has trumped labor”, we are NOT a socialist country. On which point do you wish to concede your error? I happen to agree with your second point, and that is not a good thing.
There are multiple variants of socialism. In the one must typically acknowledged, socialism exists as a way of leveraghing the power of the state in favor of labor and in opposition to capital. In others – think ‘national socialism’ or what we’re seeing in China today, the power of the state may be used to restrain labor in favor of capital.
It’s not quite such a simple buzzword…
A.L.
Sigh. I can’t type any more today…at least not without dumb typos.
A.L.
Capital raises the value of labor. A man who can operate a ditch digger is worth more than the man with a shovel.
Restraining capital may be a short term benefit for labor. It is a long term loss. Adults will sacrifice the short term for the long. Children generally will do the opposite.
Even Marx knew that no economy can advance with out pain. Which is why Marx was no Marxist.
>Even Marx knew that no economy can advance with out pain.
>Which is why Marx was no Marxist.
You sure? On both counts? Chapter and verse (perhaps?) 🙂
If you want a reason to vote Kerry, then here’s a good one that seems totally obvious to people who’ve watched foreign news chanels.
Bush’s tough stance on terrorism and national security has angered many moderates, not just in the middle east but in Europe and the Philipines etc and has made them more likely to be recruited by extremists or to fund/assist extremists (Like the shoe bomber, a Britain). By cracking down Bush has created more problems and more terrorism, and it has spread to attacks in Spain, Bali etc that probably would not have happened without Bush.
Cracking down has created more potential terrorists and has widened the base from which terrorists recruit. More terrorists over a wider area mean the need for wider crackdowns, and wider crackdowns lead to more anyer and increased anti US feeling. This is a cycle that will not end, reprisals feed reprisals, and the more enemies you have the greater the liklyhood of one of them getting a shot in against you.
A lot of people feel that the world has become more dangerous not less dangerous, and many feel that US foreign policy is working to change moderates into extremists faster than Al Quida ever could.
America is now doing what Al Quida accused them of doing before.
Kerry might calm people down, if your soft on a moderate he will respond in kind, if your hard on him, he will be hard on you. Its only the extremists that you can’t reason with and their outnumbered by everybody else.
Contrary to what is published in the US media, most people just want to get on with their lives, only a few jump up and down and scream death to the US, you can appease the many without compromising national security or your morals, putting embargos and making wild acusations, then attacking is not the way to go about business.
AL,
There are multiple variants of socialism… socialism exists as a way of leveraghing the power of the state in favor of labor and in opposition to capital
I agree completely. And if you amended your earlier comment to the “market has trumped labor”, I would agree with that too. Like gravity, the market always wins in the end. Those who would use the coerceive power of the state to leverage EITHER labor OR capital can only do so temporarily.
All the use of government power can do is to introduce temporary distortions in the market. And when the market inevitably removes these distortions, the carnage will be worse than if government had never intervened. Take a walk through the former industrial corriders in the rust belt to see the carnage first hand.
To tie together a couple of points made by others, capital raises the value of labor in order to earn a profit. When the government introduces regulations that increase the cost of doing business, and write laws that favor labor over capital, government raises the level at which business can profit from labor. Less profit, less labor. More profit, more labor. It really is that simple and leftist Democrats NEVER seem to grasp this fundamental reality. I am continually amazed at the profound ignorance of the left, even as they wear their imagined intellectual superiority of their collective sleeve.
If businesses can no longer profit from labor in America, businesses will find somewhere else to profit from labor. If businesses cannot find somewhere to make a profit, businesses will close. Either way, labor suffers. And this is reflected in the declining proportion of union membership as a percentage of the labor force in spite of the anti-liberal legal favoritism that government gave to unions in the 20th century.
Actually, if anything Bush’ intervention in Iraq is by far his worst crime when viewed in terms of US security. He has squandered the political capital of the USA for the next 10 years on an essentially meaningless war in Iraq that will at best do nothing and at worst make it far easier for the terrorists to recruit.
The *real* crime, however, is that no US government will be able to intervene when US security really *is* on the line. The reality is that NK or Iran can develop nuclear weapons with impunity at this point and there is no way the USA could possibly intervene. It’s military capability is spoken for for the next decade, and it has squandered its political will to do so in Iraq.
If the USA is to face a real crisis of existence in the next 20 years, it will be because Bush succeeded in squandering the political capital that would be necessary to make a dangerous and perhaps couragous move to stop nations who may well use nuclear weapons from obtaining them.
This is not to say that Bush, or his successor would actually have risked such a gambit. After all, military intervention in such a situtation would be risky at best.
However, it is now a certaintly that they *cannot*. And in the end, that may cost the United States its existence.
look at the reasons for outsourcing…
Rural Oregonians were once able to assemble laser pointer/flashlight thingies at home on a pay per piece basis. The state came in and required the company build a facility and force thier people to work at it and pay gobs of taxes for this that and the other thing. The company simply decided to have the lights assembled in in China.
The employees did not want/ were not able to work in a central facility on a regular schedule though the state said these things needed to be provided for their benefit. Actually the state was interested in getting a whole bunch of revenues in property taxes and all the taxes avoided by having independent contracted labor.
Now 50 to 100 people who did not want to travel to a jobsight (stay at home parents, rural Oregonians, and retirees) to assemble these things are out a job.