Why millions of jobs aren't coming back
The era of big labor is over.
By Kevin Mellyn
Though recent jobs numbers seem to suggest improvement, the underlying data tells a different story. The official statistics vastly underestimate real lack of work that Americans are feeling.
One of the key issues in November is which candidate can credibly promise the voters he can create jobs. The problem is that anyone making such promise is not telling the truth.
One of the odd notions that both political parties pay homage to is that government at any level can “create jobs” other than by hiring people itself or subsidizing others to do so. The historical fact is that our modern concept of employment only dates back to around 1880 and has been dying since about 1980, along with the industrial economy that brought it into being in the first place.
The model of full-time secure employment in the private sector (it had always been common in the public sector) grew up in the late 1800s along with heavy manufacturing industries and utilities that needed skilled labor (like machinists or railroad engineers) rather than “hands” to do low-skill tasks (mill girls, longshoremen). Political institutions adapted to the big public companies that employed more and more of the population through both regulation of labor conditions and support of unionization. Companies tried to keep workers cheap and docile but in the end had to bargain with labor and appease politicians.
The result was an Iron Triangle: big business, big government, and big labor. The Iron Triangle focused on the political process in Washington to divide the loaves and fishes brought forth by unquestioned American dominance of the world economy. Conflict and compromise in Washington assumed that most people would work in large, regulated enterprises that could be compelled or induced to provide them with things like pensions, health insurance (a relic of World War II wage-and-price controls), and other protections. The list could always be expanded because American enterprises (and, indirectly, labor) were really only competing against other high-cost developed countries, most with higher taxes and more elaborate social provision and protections for workers.
In fact, only about a third of mankind was involved in the global market economy until the late 1980s when countries as diverse as China, India, and the former Soviet Union became to one degree or another market economies. Technology had in the meantime greatly enhanced worker productivity and, crucially, the ability of firms to contract for inputs on a global basis. The good news was that over a billion people worldwide escaped grinding poverty. The bad news was that for the first time since World War II, American workers faced a vast “reserve army of labor” capable of driving down their living standards to a global norm. This of course is why so many people in the developed world hate and fear what in loosely called "globalization."
Logically, these profound changes in economic reality should have led us to think beyond a political and institutional framework formed in the New Deal. In a dynamic world of global competition, high-cost producers are doomed. U.S. industry painfully restructured to confront this reality a long time ago. High wage union jobs in the private sector have been declining for a generation. However, the massive growth of consumer credit since the 1980s served as a huge bandage to cover the loss of earning power by American workers.
Basically, consumer debt and a huge run-up in house prices fed by cheap and easy mortgage finance became a substitute for real income, sustained a consumption driven economy and created an illusion of prosperity. Blame the banks for our troubles if you must, but the credit-driven economy that blew up in 2008 suited everyone in the old Iron Triangle just fine. The financial market meltdown of 2008 however ripped the bandage off a very old and deep wound of a hollowed-out economy and a profoundly unequal and divided society.
In this election year, both contenders talk as if Washington can restore the world we have lost, the brief century when secure, well-paid employment was both possible and expected. What is really needed is a complete rethink of our Iron Triangle era institutions, from public education to retirement and everything in between, especially government itself. For what’s coming is a world in which most workers will be in effect contractors or temps, and self-employment will become the norm.
Kevin Mellyn is an international banker and consultant at MasterCard Advisors. He is the author of Broken Markets: A User's Guide to the Post-Finance Economy (published by Apress, July 2012).
Our government did not sit on it's hands, since Reagan our government has been busy deregulating, entering treaties that allow jobs to go over seas, dropping tariffs, lowering taxes on the most wealthy, razing taxes and writing laws unfavorable to the middle class and favorable to multinational corporations. IF we want a strong America WE THE PEOPLE need to wake up, quit buying into the propaganda (like this article) that the best days are behind us and start believing in ourselves again.
We ARE the UNTIED STATES, the greatest economic engine in the world (still). WE THE PEOPLE have the power to reverse the inanity that has been going on the past 30+ years. But we have to wake up and UNITE ... now. Defeatism is our enemy, we are at a crossroads and we need, with this election, make our representitives put us back on a course for prosperity! Don't drink the cool aid this is NOT a well written article, it's tripe calculated to make us give up.
A well-written article which encapsulates much of what I have known to be true for years.
One thing I do wonder about, as the article pointed out only 1/3 of the world was manufacturing, is how the world can find more practical energy, particularly transportation energy, considering the pending decline in petroleum due to peak oil production.
Another thing I wonder about is how US workers can be expected to periodically retrain for a new field as soon as what they are in becomes obsolete (obsolete meaning some globalist corporation finds another Third World country to export jobs to), given the costs of education in the US.
I also doubt that pollyanna cornucopian economists truly understand resource depletion or the Second Law of Thermodynamics. I wonder how much the "developing world" can develop until they hit the resource ceiling due to overpopulation, and I wonder how far the US will fall in the mean tiime. Averaging the income of the US (which has about a 300 million population) with India's and China's income (which have about 2.5 billion combined) looks to see a much larger average decline in the US in income and standard of living than the average rise in China or India.
Europe and the US are seeing the result of their so-called "leaders" selling out their workers in a global zero-sum game and attempting to cover their tracks with excess consumer credit and excess government debt.
Our Government sat on it's hands while millions of jobs went to China, India and Mexico. Not one of our elected officials had the courage to protect them. The U.S. has the highest cost of living in the world. We cannot live and survive on 2 dollars an hour. Those politicians are in the pockets of the Corporations that now dictate policy.
We should have had a Fair, balaced trade agreement to even the playing field. Now we have those same politicians saying they are going to create jobs.
What a laugh. There are no jobs to create that will replace the thousands of factories and millions of jobs lost. And even lost to Communist countries !!
One day the American people will have the courage to say enough is enough and throw these bums out on the street.
I don't think jobs will ever come back, I was a saleman for 25 years,
I sold softdrinks for 25 years back in 1960, I had 150 mom&pop stores i took care of, We had 30 drivers and each of us had that many stores to take care of, One by one they all went out of business,I can remember a time there was so many jobs you could pass jobs by untill you found one you liked, We had millions of jobs,Most everything made in the USA,
Them days are gone,And they will never return untill we do something about letting our companys
go overseas, And then send the garbage back here that china makes,
Im glad i got to live in the USA when it was our country, Im an old man now and it's sad to see what our country has come to,Our young people will never know how great our country was, When people helped each other,Im glad im old, I don't want to be around to see our country go down the drain, And don't think were that great that it can't happen,
I don't think it matters who you vote for,Neither can help us. Were to far gone, After 4 years of obama,We at least need to give someone else a chance, He sure can't make things worse,
With the right laws and policies in place the multinationals could be forced to stay and create jobs in the USA. As things stand now it's a matter of time untill all the high paying jobs are gone overseas and Americans are left serving hamburgers and washing cars anyway. A reverse of Reganomics is what is needed but we'd have to reverse the Supreem Court "Citizens United' ruling for that to happen. Trickel Down ended up being Trickle up, evil or not the 1% have enough, if this country is to survive our Government needs to start shoring up and promoting the middle class. A strong middle class built this country, only a strong middle class can make it endure.
Self employment ended long ago. When the Industrialization started people in large masses went to work instead of working their land to provide produce, livestock and grain. We live in a Fast Pace world today and the hard work of physical labor went out the Door as soon as we developed CEO's, Presidents, and Management who take large sums of money from the aspects of FRAUD, WASTE and ABUSE.
Politics has always been bad for business. The forming of Government only about 260 years ago had a purpose which has been shreaded to pieces as they kept changing the laws and rules which were meant for everyone for their (Political) Greed.
From there Liquor, Tabaco and Drugs prevailed as those Thiefs catered to their own kind in Celebration.
The Government today don't work for the people and surely the gov't doesn't create jobs but just Tax you to death.
Well, I guess I don't have to worry about dying as I'm Immortal.
I'll work and pay taxes forever .... lol.
Best job is to steal from the Wealthy .. like Robin Hood.
Americans gripe about jobs. If they don't have a job, they gripe about being unemployed. If they do have a job, they gripe about the Boss or something else.
My late father was a head chopper at a big industrial firm. His take on it was that in any modern American company 20% of the people do 80% of the work, and for the outfit to survive, the other 80% had better get their *** in gear and show how they benefit the company.
Usually the 80% is in middle management jobs that go deep undercover so as not to attract the attention of senior management. The people that are actually doing the work aren't the problem.
At his company, he found an entire divison that had made itself invisible and had been contained off the main campus of the company.
Consisting of 600 people with nothing to do and nothing to show for it.
They were gone in a month, and their wasn't one bolt turner among them.
Moving forward, small businesses and workers who are satisfied living a modest life will become the norm.
The days of the beer-swilling, indulgent, overpaid union man making $28/hr to screw in a bolt on a car every 15 minutes are gone, as are the companies who employed him. The government bailout of GM (which is currently failing, BTW) merely kept the bandage on a little longer.
I am self employeed. I make good money in the warm months, but things slow down in the cold months. I am aware of that and plan ahead for it. Kinda like the ant and the grasshopper. I grind when the work is there. I rest and play when it isn't. But every year I have employees that only want to work enough to pay the bills then play in the summer. And every winter they are crying when I lay them off. Like I TOLD THEM I would when I hired them.
Many people (the sheeple?) don't want to be self employed once they realize that they actually have to be responsible for themselves and their family. They would much rather rely on 'daddy government' or 'daddy big company' to take care of them.
If unions weren't so greedy...Also who was it that started to sign bills on outsourcing jobs? Bush Jr..probably even before him...
What's also not being said is that this effort to keep the laborers docile so those who have the money can enjoy pushing laborers around--that has been around since the dark ages. The Redneck Manifesto rants about this, but does little to provide the actual historical data to which it refers. The end result of which is that the arguments presented compel, but do not convince.
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Breaking up big banks is an untested solution to the too big to fail problem that attempts to isolate and dismantle large, troubled institutions while protecting the rest of the economy.
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