On Tuesday, the President will deliver his State of the Union (SOTU) address on Capitol Hill. Last night,
he told us that he will talk about our country's
"Competitiveness." He also noted that he will mention this within the context of an agenda for
"winning the future."
I would very respectfully suggest that he reconsider this strategy, and in so doing, reassess the present and spend a little more time learning from our recent past mistakes, as well.
Here's Krugman, from Saturday morning, discussing the "competitiveness" meme...
"Competitiveness"
Paul Krugman
New York Times Blog
January 22, 2011 9:34 AM
Sigh. So it appears that President Obama is going to make "competitiveness" his main economic theme. To be fair, he could (and may well) do worse. But this is hackneyed stuff, and involves a fundamental misconception about the nature of our economic problems.
It's OK to talk about competitiveness when you're specifically asking whether a country's exports and import-competing industries have low enough costs to sell stuff in competition with rivals in other countries; measures of relative costs and prices are, in fact, commonly -- and unobjectionably -- referred to as competitiveness indicators.
But the idea that broader economic performance is about being better than other countries at something or other--that a -[company]- country is like a corporation--is just wrong. I wrote about this at length a long time ago, and everything I said then still holds true.*
The hopeful interpretation of Obama's embrace of the idea that he's the CEO of America Inc. is that it might help fend off right-wing attacks on government action as a whole, helping him sell the need for public investment of various kinds. On the other hand, as Robert Reich says, this could all too easily turn into a validation of the claim that what's good for corporations is good for America, which is even less true now than it used to be...
To some extent, the inconvenient truth here is summed up in the headline of the lead story in Sunday's NY Times: "Obama to Press Centrist Agenda in His Address."
IMHO, to get a better sense of where the administration's heading in the next couple of years, at least as far as the economy and jobs are concerned, one need look no further than three of his most recent appointments:
-- former Clinton NEC Chair Gene Sperling as the new head of the National Economic Council, replacing Larry Summers (once again, as he did in 1997);
-- JP Morgan Chase CEO Jamie Dimon's righthand man, Bill Daley, as Rahm Emanuel's replacement in the Chief of Staff office; and, last but not least,
-- GE CEO Jeff Immelt, as chair of the President's Council on Jobs and Competitiveness
I've spent little time referring to Gene Sperling in previous diaries, primarily due to the fact that he's about as close to a Larry Summers' clone--and perhaps his all-time greatest protege--as one can get.
Over the last few weeks, I've written extensively (THIS is a link to a diary where I discuss Daley) about the selection of Bill Daley as Chief of Staff, but I think M.I.T. economics professor and former International Monetary Fund chief economist Simon Johnson pretty much echoes my sentiments in THIS post.
As far as the Immelt appointment's concerned, I could spend some time reviewing HuffPo's coverage of it, however, focusing upon economist and Netroots Nation discussion leader Mike Konczal's commentary on this matter is far more pertinent to this reality-based community, IMHO. That's because, as Konczal's quick to point out, the entire centrist meme (Konczal makes quite the fool of Time's Joe Klein on this matter; click on the link) concerning the hiring of a business executive leading a company with a focus upon manufacturing is very misleading to the public, at-large.
Immelt, GE Capital, and the Financialization of Manufacturing
Mike Konczal
Rortybomb
January 21, 2011
...the idea that we have 15 million unemployed because of our "competitiveness" is just wrong, lacking any real substantial evidence. But the idea that GE can, as Joe Klein puts it, point a way forward from a financialized economy is also wrong.
The truth is--as of 2011 and with their recently-announced acquisition of a large portion of Citigroup's U.S. retail consumer credit business--GE Capital now happens to be the largest retail point-of-sale consumer finance firm in the U.S., by far. And, as Konczal points out, 40%+ of GE's entire business (this is the fourth largest company, in any business sector, in the U.S.) is financial services. (Hint: Check your Wal-Mart/Sam's Club credit card bill to see who's receiving your payment.)
Short and sweet, Immelt's one of the biggest financial services exec's in the U.S.
More from Konczal...
...GE Capital, the major subsidiary of GE, is a major shadow bank. It used GE's high-quality credit rating to become a major player in the capital markets, much in the same way AIG FP used the boring insurance high credit rating. GE Capital was the single largest issuer of commercial paper going into the financial crisis.
GE Capital received major bailouts during the crisis, including having the FDIC guarantee more than $50 billion dollars of unsecured debt that was issued. To put that in perspective, only about $24 billion of GE Capital's funding comes through deposits, allowing a shadow bank with massive unsecured debt obligations and only a small depository base to be carried through the financial panic...
...
...GE has been at the forefront of blurring a "financial services"-centric model of business onto the remains of a hollowed out manufacturing base, one kept in a minimal state just strong enough to qualify for high credit scoring. Marcy Wheeler has written about how that manufacturing part of the company is driven by outsourcing. In his recent, excellent book, "Cornered," Barry Lynn talks about how GE's manufacturing business model becomes focus on business lines with government buyers (defense) and with government regulators and industry standard setters that can be worked (health care). They use the ratings agencies to only look at those business lines when determining the ratings they get, and lever up in the shadow banking network off that. Success!
This is not a big win for the notion of Jobs and Competitiveness.
(
Bold type is diarist's emphasis.)
So...let's revisit this jobs meme, shall we?
The facts are thus: it's true that any jobs are better than no jobs at all. But, the reality is that at this point in our nation's history, we're witnessing the destruction of the U.S. middle class (those aren't my words, they're Elizabeth Warren's) and the greatest level of income inequality between our nation's have and have-nots since any substantial/legitimate methodology was invoked to actually measure these metrics, going back to at least 1917.
And, in yesterday's NY Times, there's this wake-up call: "Union Membership in U.S. Fell to a 70-Year Low Last Year."
Union Membership in U.S. Fell to a 70-Year Low Last Year
By STEVEN GREENHOUSE
NY Times
January 22, 2011
The number of American workers in unions declined sharply last year, the Bureau of Labor Statistics reported on Friday, with the percentage slipping to 11.9 percent, the lowest rate in more than 70 years.
The report found that the number of workers in unions fell by 612,000 last year to 14.7 million, an even larger decrease than the overall 417,000 decline in the total number of Americans working.
"It was a very tough year for unionized workers," said John Schmitt, a senior economist with the Center for Economic and Policy Research in Washington. "We're seeing declines in the private sector, and we're seeing declines in the public sector..."
...
..."Unionized companies obviously raise wages and benefits for their workers, and while they often raise productivity, typically they're at a cost disadvantage, and unionized companies haven't fared as well," he said. "In addition, in an increasingly globalized, very fast-moving world, unionized companies may not be able to adjust as quickly."
Another factor that has pushed down unionization, he said, is that companies have grown more ideologically opposed to unions and more aggressive about resisting organizing drives. In 2009, union membership fell by 771,000 largely because employment declined over all, but that decline followed a surprising spurt in union membership. Union ranks grew by a total of 739,000 the previous two years because of increased employment and some large, successful unionization drives...
You see, IMHO, the "competitiveness" meme--coming at a time of record profitability for U.S. companies--is actually just an outgrowth of the too-big-to-fail greed that got us into this mess in the first place.
Here's an excerpt from one of my many posts on this subject; from my November 20th, 2010 diary: "Democrats In Denial: On Forsaking Our Feud w/Neofeudalism:"
Unions Yield on Two-Tier Wage Scales to Preserve Jobs
By LOUIS UCHITELLE
New York Times
November 20, 2010
MILWAUKEE -- Organized labor appears to be losing an important battle in the Great Recession.
Even at manufacturing companies that are profitable, union workers are reluctantly agreeing to tiered contracts that create two levels of pay.
In years past, two-tiered systems were used to drive down costs in hard times, but mainly at companies already in trouble. And those arrangements, at the insistence of the unions, were designed, in most cases, to expire in a few years.
Now, the managers of some marquee companies are aiming to make this concession permanent. If they are successful, their contracts could become blueprints for other companies in other cities, extending a wage system that would be a startling retreat for labor.
Though union officials said they could not readily supply data on the practice, managers have been trying to achieve this for 30 years, with limited results. The recent auto crisis brought a two-tier system to General Motors and Chrysler. Delphi, the big parts maker, also has one now. Caterpillar, back in 2006, signed such a contract with the United Automobile Workers...
The story references the reality that this was a "...fairly common means of shrinking labor costs in the recession of the early 1980s. At the end of the contracts, however, wages generally snapped back up to a single tier. At G.M., Chrysler, Delphi and Caterpillar, the wages will not be snapping back."
Bold type is diarist's emphasis.
Uchitelle takes us to three large, successful manufacturers in southeastern Wisconsin: Harley-Davidson, Mercury Marine and Kohler, where management has successfully implemented semi-permanent, "two-tier systems that could last well into a recovery."
"This is absolutely a surrender for labor," said Mike Masik Sr., the union leader at Harley-Davidson, the motorcycle maker, not even trying to paper over the defeat.
I'm leaving some of the most alarming quotes and facts for you to read (by clicking on the links, above).
It's a stunning piece; a stark, extremely tangible example of the ongoing destruction of our country's middle class, as it's occurring in real time, throughout America.
# # #
And...[here's]...a little more about unions; this time as it concerns G.M.
Yesterday, along with many hundreds of others here at DKos, I applauded the story of a resurging General Motors, as articles regarding the "new G.M.'s" initial public offering flooded the MSM and the blogosphere, throughout the day. I even posted a positive diary about it! In it, I talked about the United Auto Workers, and their rapidly-diminishing membership...
To provide some context for organized labor's share of the statistics that are mentioned, above, here's a snapshot from the Wiki UAW page...
The UAW has seen a dramatic decline in membership since the 1970s. Membership topped 1.5 million in 1979, falling to 540,000 in 2006. Then the Great Recession hit, with GM and Chrysler going bankrupt. Membership fell to 390,000 active members in 2010, with more than 600,000 retired members covered by pension and medical care plans.
But, the reality is, while Thursday's MSM (along with many folks' posts in this community) was bursting at the seams with stories of jobs "saved," the truth is all new UAW hires are earning only a small fraction ($14 per hour) of what all new union members earned up until just 17 months ago. (Very much like all those Wisconsin union members in Uchitelle's story in today's NY Times.)
From a very poignant op-ed by author Paul Clemens in Thursday's NYT...
The Ghosts of `Old G.M.'
By PAUL CLEMENS
New York Times
November 18, 2010
...ACROSS the nation, as in Detroit, there is an economic disconnect, a split between what the economic numbers say and how things feel on the ground. The economy is growing, but the unemployment rate hasn't budged. The recession officially ended in June 2009, but more jobs have been lost than have been added since that "ending."
Handling this disconnect requires political acuity. It brings to mind something Philip Roth once said about those who have little feel for literature and the texture of lived experience it provides and so "theorize" it. Mr. Roth imagined a scene of a father giving his son this advice while attending a baseball game: "Now, what I want you to do is watch the scoreboard. Stop watching the field. Just watch what happens when the numbers change on the scoreboard. Isn't that great?" Then Mr. Roth asks: "Is that politicizing the baseball game? Is that theorizing the baseball game? No, it's having not the foggiest idea in the world what baseball is."
It'll be fun, for a day or two, to look at the scoreboard, and to see what G.M.'s shares are going for: $26? $29? $33? $35? The numbers on the exchange will change; it'll be great, and a welcome, temporary relief from the numbers, still difficult to comprehend, of jobs lost and plants closed. Soon enough, though, we'll have to go back to watching what's actually happening on the field, where there's still a blowout in progress, with the home team way behind, and no one, seemingly, with the foggiest idea what to do about it.
# # #
On Friday, I posted this diary, entitled: "The United Bankrupt States of Twisted Economic Priorities." At the end of it I asked the following question...
The real question, IMHO, is this: Since when did Bank of America and Citigroup become more important to our nation than California, Illinois and New York?
Having been a registered Democrat my entire adult life, nowadays I can't help but wonder how my Party could so rapidly turn its back on its past, especially when so many are struggling just to survive, day-to-day in the present.
I'm sure I'll be thinking about this on Tuesday, when President Obama's talking about our "competitiveness" and "winning the future" in his SOTU address on Capitol Hill.
That's because the only people I see "winning the future" are the ones with virtually all of our cash in their pockets today.