The last time I was in an economics class America was only
a dozen or so years removed from a period of trade surpluses and virtual
isolation. German and Japanese small cars had made inroads, but were still
considered a bit of a novelty – until the real hammer fell in the form of the
so-called Arab Oil Embargo. It was the first time the post world war generation
felt serious effects of any kind from foreign trade and it was an eye-opener
indeed.
While auto sales to the two aforementioned Axis powers
boomed, my instructor informed me with a knowing and portentous air that within
the decade, 80 percent of the wealth of the world would be in the hands of OPEC
nations, courtesy of the runaway price of crude oil (about $30 a barrel as I
recall) and he had some pretty impressive figures, charts, and even publications
behind him. Almost unnoticed, jobs in the manufacturing sector which had been
the backbone of American Labor and the very engine of democracy, began the mass
exodus from US soil in earnest, mostly in the direction of Taiwan, Malaysia and
Mexico while the Capital was supposed to be finding a new home in the Middle
East.
More than a decade later, about the time Sony bought
Columbia Pictures and an investment group including the Mitsubishi family became
the owner of Rockefeller Center in New York, Newsweek and the Wall Street
Journal were encouraging all of us to learn Japanese – or else. The Japanese
had already crushed the American electronics manufacturers and as they gathered
up all the monies associated with that victory, they were working on the remains
of the automakers. Everything they didn’t own, they would certainly control, we
were told.
But even as we quaked over the growing power of one Far
East giant, the financial markets would soon become skittish over the impending
return of Hong Kong to the remaining communist superpower. Many voices were
raised and hands wrung, wondering aloud about what havoc these inscrutable
commies might wreak on what seemed to be the most robust and possibly the purest
capitalist enclave in the world.
Now almost a decade after the handoff, China has proven to
be an extremely quick study – to the point where it has become the new bully on
the block. It is defining the ground rules and near-invisible profit margins
for manufacturers and retailers alike with the help of its new best buddy from
Arkansas, Wal-Mart.
The manufacturing that largely built America and its middle
class, the manufacturing that made us a genuine power in the First World War and
saved the freedom of the western democracies in the Second World War is all but
dead and the USA doesn’t seem very upset about it. Labor may be reeling a bit
from the defeat but they have become accustomed to diminished and constantly
eroding expectations while Capital seems to be doing just fine, thanks.
It would be hard to argue with the obvious conclusion that
this is simply the natural result of laissez-faire Capitalism. The Labor
movement of the last century just postponed it for six or eight decades.
Class mobility as a result of the acquisition of wealth is
one of the basic attractions of life in the US and it is proven to exist every
day, but the advances are usually incremental. Sixty years ago a lower class
kid in Flint Michigan knew that he could go to work in the GM plant and if he
showed diligence and aptitude and was patient for ten or fifteen years, he would
most certainly be making the kind of money that would push him into the middle
class — given the UAW contract at the time. well into the middle class
— and his retirement would be provided for as well.
With stock options and so forth, some of those kids born to
plant foremen already ensconced in the middle class would find that a stint at a
public university and a return to the management suites would allow them to
assert themselves even higher. There aren’t many of those jobs left in the US –
far fewer, anyway – and the benefits and guarantees that accrue to those
positions are fast becoming a thing of the past. When they are gone, how many
will be upwardly mobile then? How many kids can sell millions of dollars worth
of life insurance or get continuous scholarships to college and medical school?
Just about everyone with a library card is aware that
around 1937 we were deep in a Great Depression that was finally broken only by a
war and the most amazing manufacturing boom in history. But it is barely a
footnote in most US history books that we were only two or three fireside chats
away from truly embracing Communism – at least as a viable political party.
Labor reform was right at the front of that confrontation and in those days the
workers had significant clout. Items consumed in the USA — whether electrical,
textile or comestible — came from the USA with extremely few exceptions, and
they were grown, built or assembled using materials from the USA.
When Franklin Roosevelt or Joe McCarthy got a manufactured
item in their hands, it had been designed, created, transported and sold by
Americans exclusively. They might have been recent immigrants but they were
legal, and 100% American. Nowadays it’s a pretty good bet that with the
possible exception of foodstuffs, you cannot put your hands on a single thing in
your house that meets these criteria.
As if the current prospects for American labor weren’t bad
enough, we’re made to feel politically incorrect, greedy and insensitive if we
don’t think the Mexican border should just be opened up with a big Welcome (¿perdón?
– Bienvenido) mat facing south. We’re not talking about manufacturing jobs
here of course but I’m more than a little suspicious when individuals of the
moneyed class (let’s just take the President of the United States, as an
example) appear to be the ones weeping the biggest tears for the plight of the
poor illegal immigrants who sneaked across our borders fair and square and now
seem to be harassed as they set about laying claim to the lower end of the wage
scale.
There may be some truth in the assertion that this labor
competes little or not at all with mainstream American labor – although I have
to swallow hard to accept that logic. But it does show graphically what the
effect of competing in a true global economy is like. Is there a shortage of
American workers who do what the Mexican workers do, or is there just a shortage
of those who will do it for the same wage? And if so, should we just
acknowledge it and quit whining? That is after all what supply and demand is
all about.
Likewise if you work in manufacturing and don’t know
something that your counterpart in Shenzhen doesn’t know, you better be willing
to work for what he is getting, or hope that the supply chain between where you
are and China is so poor that it makes you look good by comparison. In America,
if you don’t have some extremely up-to-date technical skills, or maybe your own
truck, you better have a lot of money. The good news is that if you do, you are
on the threshold of a new golden age that only the Robber Barons of the early
industrial revolution knew – before OSHA – before child labor laws – in fact
before any kind of labor reform.
Working conditions in China and the third world would make
Jacob Riis lose his lunch, but the vast horde who toil in this human rights
vacuum are going to continue to be in such oversupply that they will literally
compete to the death to get a tiny portion of your dollar (or euro or yuan,
since we are now in a global environment). So you won’t be able to spend very
much of it even to pay for your certified American servants because they must
compete with the new semi-legal immigrants who are far more eager and less
selective.
Meanwhile your increasingly sophisticated manufactured
goods will continue to be built by the international low bidder in an auction of
unregulated labor so desperate that they will barter the lives of their children
to build gaudy vessels for your conspicuous consumption. And even as they
express gratitude to the local overseer, they will hate you a little more every
year for your distant complicity.
This is the definition of capitalism carried out to its
logical conclusion. The free market is taking care of itself as it always has –
with the subtle violence of Darwinian determinism. The strong continue to
prosper as usual, and the weak must look to the hereafter to inherit what’s left
of the earth. Is that necessarily a bad thing? Maybe not, but I think it’s
time we started looking farther down this road we’re taking to see where it
ends. In the society to our south from which most of our illegal aliens
originate there are also wealthy, sophisticated, intelligent people. Not as
many, granted, but they live every bit as well as the wealthy in the US, and
when the middle class is gone we are going to look a great deal like our Mexican
brethren.
When the social burdens of the nouveau poor have driven the
more capable of the population to seek a bit of satisfaction elsewhere, where
will our refugees go? Frankly, I don’t think Canada can handle it. And most
sobering of all: When the middle class is gone and the poor have even less
disposable income, who will shop at WalMart?
(Dan Johnson is director of computing services for the
information technology department of Exel Transportation Services, Inc.)
