Instead, it's the fault of those who should have seen the omens: post-World War II dominance was certain to be fleeting as the war-torn economies of Europe and Japan recovered.
In that moment, American companies, communities and employees should have started taking the competition seriously. That did not happen. Companies like General Motors continued to shower blue-collar workers with handsome pay and benefits.Ah. The unions did their job. But the owners and managers failed to properly slap them down. No surprise that globalization would get a pass from the editor of The Globalist, I suppose.
Who was to blame for this? Not the unions. They did what they were supposed to do: ask for higher pay and more benefits. No, the fault lay with the top corporate managers: it was their job, as capitalists, to deny such increases if they were not justified by productivity trends.
Please read below the fold for how Richter missed the mark.
At the Economic Policy Institute, Josh Bivens heaves Richter's point of view over the side:
Start with claims that excessive blue-collar pay destroyed manufacturing. For a paper examining those claims, check this out (pdf). Spoiler alert: it’s not. Inflation-adjusted hourly wages for production workers in U.S. manufacturing peaked in 1978 and were about 8 percent lower in 2007, while manufacturing productivity rose by well over 100 percent in that period.Bivens goes on to point out the other holes in Richter's argument. For instance, most of the automobiles and auto parts imported into the United States come from nations with comparably high or higher wages for manufacturing workers. And then there's been the damage caused with exchange rate.
More generally, one really shouldn’t be allowed to just hand-wave about “global competition” as an inevitable destroyer of American living standards without mobilizing some evidence that you understand either what determines these living standards or the economic mechanisms through which globalization affects them. [...]
It is true that increased global trade can (and does) increase inequality in the U.S. economy, so even as average living standards growth continues apace that a large share of American workers are left behind. This has happened, and it’s a bigger deal than many think [...] But this is not a story of American workers getting stupider, as Richter sets it up. Instead, it’s a story about how globalization’s rules of the game increasingly place blue-collar workers in direct competition with workers around the world, while corporate interests are protected.
Neither Richter nor Bivens mentioned the impact that a decade of making crappy cars had on giving away America's dominance in the auto industry, so I'll save that for another time.
Over the next couple of years or so, we're going to hear a great deal about how to "fix" Detroit and, by extrapolation, other American cities and towns that have suffered decline. Many of those prescriptions, you can be sure, will focus on managerial tough-love for American workers and greater rewards and regulatory freedom for their bosses. With GM already paying entry-level workers around half what they got just half a decade ago, you can see where that's going.
Cities are complex entities that have their ups and downs. Reviving one that's been on the downslide for decades has no single, one-factor-above-all-others solution. And economics aren't the only matter at issue. Detroit's cultural history, including white flight, is a matter that needs attention, too. But a progressive vision—a 21st century left vision—of a "fix" for Detroit and its beleaguered sister cities would encourage innovation, mandate environmental sustainability, reverse the economic damage caused by inequality. It would remind everyone that what once made life vibrant in Detroit were good schools and parks and transportation and jobs. It would promote policies—national, state and local—that restored those factors instead of the worker-hating approaches that just make things worse for the many while adding more polish on the perks of the few.
Detroit could be a model for that vision. It won't be if it remains in the clutches of those who now run it.