THE CANARD

Playing off of the main theme of the State of the Union address, Very Serious Reasonable Centrist David Gergen asks a very basic question in his latest CNN piece: Can the U.S. still compete?

The question: Will the United States renew its capacity to compete in global markets so that we create quality jobs for our people here at home? If we do, America's best days are still ahead; if we fail, they will soon be far behind. It's about that simple.

For more than a century, we didn't have to worry much about our greatness as a people. But times have changed. We may be the nation that astonished the world by building a transcontinental railroad. But today, as the president pointed out last month in a visit to North Carolina, we find that Shanghai in China has built more high-speed rail in a year than we have built in the past 30 years.

For most of the 20th century, we were No. 1 in the world in education; today, we are ninth in the proportion of young people with college degrees, 18th in high school graduation rates among industrialized nations and 27th in the proportion of science and engineering degrees. China now graduates more English-trained engineers than the U.S. and has become the world's No. 1 exporter in high technology.

As others have become more competitive and we have slowed, American jobs have been disappearing…Can we turn things around? No one is certain, but the competitiveness commission — representing some of the best minds in the country — believes we still have a chance. In the 2010 report, its top four recommendations, in descending order of importance, were:

1. Upgrade U.S. K-12 education in science and math to a leading position by global standards.

2. Double real federal investment in basic research in math, the physical sciences and engineering over the next seven years, while maintaining the recent doubling in bioscience research.

3. Encourage more U.S. citizens to pursue careers in math, science and engineering.

The seductiveness of this argument and people like Gergen in general is that it is impossible to disagree with his point. We do suck at math and science. We are shedding jobs. We are a shell of what we used to be in terms of competitiveness. Although he doesn't say so explicitly, he is tapdancing around the fact that we're not really good at anything anymore except engaging in high-tech warfare for low-tech purposes, i.e. bombing the living shit out of some country that is already difficult to distinguish from rubble.

The problem is that this line of reasoning misses the point entirely. None of these problems that he identifies, as real as they are, will be solved by having more young people doing better in math and science. We could start churning out Stephen Hawking-caliber minds by the hundreds and it would not change the fundamental fact that we cannot compete with China and the "developing world." Everything "engineers" and scientists can do can and will be done more cheaply there. And we did this to ourselves when we decided that having cheaper consumer goods for the top 10% of income earners was more important than having a middle class making decent money and driving the economy with (non debt-supported) purchasing.

When the upper- and middle classes decided 30 years ago that it would be a good idea to phase out the working class in favor of cheap foreign labor it appears obvious in hindsight that they were opening floodgates that would eventually result in white collar and highly skilled jobs going overseas as well. But something – subconscious racism, American exceptionalism, or perhaps good ol' fashioned cockiness – convinced everyone in the suburbs and penthouses that this could never happen. Chinamen using computers? An Indian getting an MBA? Be serious! The unwashed masses of the Third World will never be able to do our jobs, said the comfortable elite. They will be useful for helping us break unions, but their skills are and ever shall be limited to menial physical labor.

First they came for the autoworkers, and I did not speak up. Then they came for the steel mills, and I did not speak up. Then they came for the white collars, and there was no one left to speak up for them.

It doesn't matter how many math PhDs and computer scientists and engineers we produce. What's the point? Within the next 15 to 20 years, every single one of those jobs will be done in Southeast Asia.** The jobs are not coming back because there is not a single incentive, economic, legal, or political, for companies to hire American workers, be it for menial or highly skilled work. As Christina Freeland pointed out in a recent (and excellent) Atlantic Monthly piece, globalization has put you and I in the position of competing with someone who will do our job for 1/10th the compensation:

The good news—and the bad news—for America is that the nation’s own super-elite is rapidly adjusting to this more global perspective. The U.S.-based CEO of one of the world’s largest hedge funds told me that his firm’s investment committee often discusses the question of who wins and who loses in today’s economy. In a recent internal debate, he said, one of his senior colleagues had argued that the hollowing-out of the American middle class didn’t really matter. "His point was that if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade," the CEO recalled.

I heard a similar sentiment from the Taiwanese-born, 30-something CFO of a U.S. Internet company. A gentle, unpretentious man who went from public school to Harvard, he’s nonetheless not terribly sympathetic to the complaints of the American middle class. "We demand a higher paycheck than the rest of the world," he told me. "So if you’re going to demand 10 times the paycheck, you need to deliver 10 times the value. It sounds harsh, but maybe people in the middle class need to decide to take a pay cut."

Leave aside for a moment the ridiculous notion that we can start educating innovators and engineers while we're slashing funding for education, laying siege to those Greedy Teachers and their Unions, and making a push in some of our biggest states to start teaching kids that people rode dinosaurs (Think of how many great bioengineers and geneticists a nice, creationist education will produce!). America cannot compete, not because we are dumb, though we are, but because we have set ourselves against people willing to work for much, much less that us.

We cannot compete with a China that keeps manufacturing workers in quasi-prisons, working 12 hour shifts making iPods for pennies per hour.

We cannot compete with a China, India, or Mexico in which industry pollutes without the slightest hesitation on a scale that would embarrass an 1890s American steel mill.

We cannot compete when imported goods compete with domestic goods on even terms in the U.S. retail market.

We cannot compete when your college friend from India gets the same degree as you do, returns home, and does the same job for 1/4 the salary.

We can't compete until you're willing to take that paycut our socioeconomic betters now demand, because our most glaringly obvious problem is that you currently make too much money.

We can't compete because we have spent the last 30 years seeing to it that we cannot, and will not, compete.

How unfair it is that so many of the people responsible for our current state of competitiveness will have the luxury of dying before its consequences fully unfold.

** Including yours. Yes, yours. I know everyone in these fields has rationalized a reason that they will never be Outsourced, but recent history has given the lie to any theories of exceptionalism.

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73 Responses to “THE CANARD”

  1. drive-by Says:

    (Sorry, should be "fears xenophobia and mistreatment": that's not a rational expectation nor a calculated idea of how Terrible Foreigners Treat Poor, Innocent Privileged U.S. Expats. I just fear cruelty, because people can be fucking horrible to immigrants in this country, and I don't *know* that it's different in other countries, although it may well be. There's enough uncertainty to drive fear.)

  2. vegymper Says:

    From down here in South America, my very shallow knowledge of History and humanities (with a little speck of Biology) leads me to imagine if people would have or not this same kind of conversation at Rome, when the empire borders got so porous that a lot of the riches they received from the conquered countries had to be spent back in keeping an increasing number of legionaries. The issue would not be about Roman education going through the sewer, as the mantra-word "education" as a cure for all ills has been a quite recent invention; probably it has more to do with power and income balances; when the size -and the spending habits- of an organization get a little bit past the equilibrium point, another competing organization will do it more efficiently. Sorry the dinosaurs didn't get the point.

  3. jack Says:

    @Nunya

    If all the American jobs move to China because work is cheaper there, why won't the lower costs for products and services cause higher real wages for Americans, cancelling out the effects? Why won't the wages of chinese and indian workers rise because of the extra work and money they are getting, putting them back into equillibrium with American workers? Why won't the capital America exports eastward be used to create businesses in the east that drive up wages of chinese and indians even further, or even create business opportunities for western expats?

  4. Kulkuri Says:

    @John,
    "Let's also ignore taxes — you'd almost assuredly be in the no-tax bracket at this rate anyway. You get to keep all of your money."

    While low wage earners may not have to pay income tax, everyone under $106K pays FICA tax, also called payroll tax or Social Security tax. That's another $1153, leaving your worker $2047 for all the other necessities.

  5. sluggo Says:

    So the political right has a master plan that has a small group of uber-wealth people supported by a mass of subsistence farmers, with engineering degrees, who are armed to the teeth.
    Like something could go wrong with that plan.

  6. Steve Ruis Says:

    When you say "We really suck at math and science" you miss the point. Our best are still better than "their" best. If you look at the "countries" that are waxing us on international math and science tests, some are hardly countries (Singapore is a city-state for Pete's sake) and most are small countries with relatively homogeneous populations. (Homogeneity is a key factor which can be seen in the scores of the various states of the US.) Because the US is so diverse, we do have significant education problems, but the demand for spots in our universities by foreign students still shows that we have the best higher education system in the world. And our best students are taking advantage of that system still.

    Where we are really flagging is with effort. Significant studies show that it is not culture, not heredity, not ethnicity that determines educational accomplishment, it is effort expended by students. Our "best" in science and math are still putting in the effort but too many of our best are getting attracted away from those fields by the allure of the money available in business fields.

  7. bb in GA Says:

    @sluggo

    Your description is just about dead on for me. I am an old un(under) employed engineer, who is a farmer, and I am armed.

    So what's gonna happen when "we" get angry/frustrated/racist/mysogynistic/homophobic/anti-government enough?

    Be afraid …bruuhahahaha, very afraid…….yeah right

    Get me angry enough and I'll nuke you with my cukes!

    //bb

  8. anotherbozo Says:

    @sluggo

    If the suits think revolution is imminent they'll simply arrange for a clothing malfunction on one of the reality shows and the folks will drop their pitchforks and rush inside to the teevee.

    all part of God's plan.

  9. Hobbes Says:

    I majored in math and I'm working on my PhD in computer sciences and bioinformatics (quals are Monday OH GOD) at Big Midwestern University. A good 2/3 of our graduate students are from China or India – we're GREAT at educating people, it's just that the Americans don't want to learn. And hell, *I'm* planning to look into jobs in not-America when I graduate. This shit is terrifying.

  10. Screamin' Demon Says:

    The name of the author of the Atlantic Monthly article you cite is Chrystia Freeland, not Christina.

  11. My Says:

    I be working for the government, non-state, non-local style. Mein arbeit will presumably be non-exportable until this is no longer the United States to be governed….

  12. Poo Says:

    "How unfair it is that so many of the people responsible for our current state of competitiveness will have the luxury of dying before its consequences fully unfold."

    Ed cant help but take another shot at the hated "boomers". Thats me, just squirming with delight at my upcoming luxurious death without a care in the world what happens to my children and grandchildren.

    Me and tens of millions of my cohort spent our entire lives in meetings scheming to fuck you and yours over.

    Idiot.

  13. Hobbes Says:

    Me and tens of millions of my cohort spent our entire lives in meetings scheming to fuck you and yours over.

    So… what were you doing in those meetings, then?

  14. grendelkhan Says:

    DB Main: My daughter turns nine today. When I ponder the skills she'll need to thrive, I think of basic life skills, not a deep education in arts or science. I'm talking about the ability to grow and process her own food, to be handy with tools, and to be more resourceful with less. […] Would I prefer her to live the life of today's America, with a mindless focus on career, consumerism and greed? Or in a better future where life is more basic, and the focus is on more important things like family and basic needs (food, clothing, and home)? […] And yes, when I talk this way in front of my neighbors in this affluent Chicago suburb, they think I'm crazy.

    If I never have to hear another comfortably wealthy person waffle on about the salutary effects of poverty, it'll be too fucking soon.

  15. Wes Says:

    I really hope you're just being cheeky. There are economic problems that are difficult where reasonable people can disagree and then there are statements like "How unfair it is that so many of the people responsible for our current state of competitiveness will have the luxury of dying before its consequences fully unfold."

    How can someone who recognizes that income growth is very quick in both India and China think that the current wage discrepancy will last another half-lifetime? It doesn't take more than a couple decades of 8% catch-up growth to see an India with no "wage advantage" over the western world. I'm also interested in hearing your explanation for growth in the EU economy after it took in all of the "low wage" eastern European countries.

  16. blake Says:

    Nah, I disagree. Trade should make countries richer, if it's making you poor you are doing it wrong. Take the extreme case of us just closing our borders, we are America, we would be fine making the stuff we need to maintain a high quality of life from domestic resources. We would want to do it slowly to avoid shocks, but once the prices settled down we would be fine. We made most of our own stuff from 1850 to 1960 and did great, and our technology and worker productivity have gone through the roof since then. Our problems have not much to do with people selling us stuff too cheaply, and a lot to do with our system being totally FUBAR. Bigger problems than cheap labor include,
    1. Our health care system is a joke
    2. Our financial sector is a joke
    3. Our criminal justice system is a joke
    4. Our educational system is a joke
    5. Our military is a joke
    6. Our agricultural system is a joke
    7. Our civil justice system is a joke
    8. Our Federal government is a joke
    9. Our State and Muni governments are a joke
    You get the idea, all of those things I see as bigger problems than consumer goods being too cheap. Equalizing trade imbalances are what currency exchange rates are for, China has been manipulating their currency by taking the money that their workers should earn and spend on Iphones and such, and using it to buy Treasury bonds. This results in our government having too much money, the Chinese government having too many T-bills, and both American and Chinese workers getting screwed. This blows up income inequality, and with the marginal decrease in value and demand of money as income goes up, it takes more and more printing and credit to keep the system running. This is horrible, but it does NOT have to be this way.

  17. Price Says:

    Read "Culture of Contentment" by John Galbraith. Speaks, at least in degrees, to your point Ed.