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. TacosOne Says:

    Back to subsistence farming for everyone! We'll all be better off. lol, kinda.

  2. Mike Says:

    Heh-hey. My work-through-college job is absolutely not exportable. I'm paid for my accent.

  3. Mike Says:

    …working in an economically based environmental program, one major consensus is that the only way forward (on environmental damage issues) is to raise the standard of living. Poverty and low-tech societies pollute brutally (per GDP). Education and affluence is seen as the solution to overpopulation as well.

    I'm not entirely sure it works out though. It might be a solution to some of the problems, but in the process? While affluent societies don't pollute as much per GDP (like, orders of magnitude less), there's certainly a hell of a lot more GDP, isn't there?

    Likewise, while it isn't a zero sum economic game, economic convergence is going to occur when wages approach the same value across all countries for similar activities right? And coming from one of the richer countries on earth, we have a long way to fall before we hit world average. Is this good, or bad? Who knows.

    Here's the kicker: you likely won't give a shit. Heard of the hedonic treadmill? Yeah. It's that weird. You care about it now, but later, meh.

  4. HoosierPoli Says:

    It's not that the Chinese or the Indians or whoever is WILLING to work for less, it's that they're CAPABLE of working for less. First-world concerns about standard of living aside, there is simple a floor to the wage that an American can earn and still be alive, and that floor is STILL too high to compete with third-world labor.

    The ONLY people in America who can possibly benefit from unrestricted wage competition are the capital owners with enough breadth to swing the cost differential. God damn, for a guy who was an evil Nazi and wrong about everything, Marx just keeps coming back to bite us in the ass.

    There is of course compelling evidence that trade relations reduce bellicosity, so I guess we can take some comfort in the fact that while the Chinese may take all of our jobs, at least we won't be put in fatigues and sent over to be murdered by them as well.

  5. Xynzee Says:

    At your comment about White collar job export: a friend of mine just went to India to set up an auditing farm for E&Y, yes *that* E&Y. So say good bye to accounting jobs.

    Now it all becomes clear. Why did Reagan can the US's going to metric? We were always told that retooling would be too expensive. Even as a 5th grader this sounded stupid because if the world is going metric we needed to make globally competitive products. Yes! The reason it was too expensive, was that the plan was to kill US manufacturing all along.

    We do have to admit that globalisation is helping like India become better places to live, but why it has to mean our lifestyle has to go backwards is what we take issue with.

    I wonder if that's what is the voiceless rage behind the tea partiers, when they're saying they hate Govt intervention. The govt has intervened alright, and sent their jobs off shore.

  6. grumpygradstudent Says:

    Just want to point out that there are still a lot of jobs that can't be outsourced, because they require physical proximity. Construction, plumbing, roofing, heating and air conditioning, park rangering, cops, firefighting, knee surgery, house painting, exterminating, restaurant eating, catering, and to a lesser extent, even teaching, just to name a few.

    It's true that manufacturing employment has declined rapidly (and that's actually much more attributable to technology than outsourcing), but there are still a good number of viable "working class" occupations. They'll be making a middle-class wage long after the white collar class has been outsourced out of existence.

  7. RT Butte Says:

    All of this is absolutely true and there is no reason to think any of it will change any time soon. Any mention of disincentivising (what a loathsome word) outsourcing is met with furor and angst and calls of "anti-business behavior". Even if we do somehow eliminate all the incentives to outsource on our end, these companies will just pull up stakes and go where they can be more profitable.

    I hope I've managed to make sense, it's really late and I'm not normally very coherent anyway.

  8. RT Butte Says:

    @grumpygradstudent

    A lot of the jobs you mention (ie, construction, roofing, painting, etc) are already being done by migrant workers and guess why: it is so much cheaper. Illegal immigrants don't tend to demand benefits, unionize, or even demand the federal minimum wage. Why hire a legitimate contractor to repair your roof when you can just hop down to the local Home Depot and pick up a couple dudes who'll do it for $2/hr.

  9. ladiesbane Says:

    What DO we have going for us? So many of our jobs are in management, sales, and other non-productive lines. Since we can't offer goods or services competitively, what's left? Hollywood, some luxury brands, some R&D (Rx/biomedicine/ag engineering/programming), some tourism…what am I missing? I know my Marxist friends want cottage industries to fill the gap, but people are not lining up to get their hands on summer camp grade crafts.

    So what do we do? And if we do find a money maker, how can we keep the business owners/investors from funnelling the money out of the country?

  10. Andrew Says:

    A lot of the jobs you mention (ie, construction, roofing, painting, etc) are already being done by migrant workers and guess why: it is so much cheaper. Illegal immigrants don't tend to demand benefits, unionize, or even demand the federal minimum wage. Why hire a legitimate contractor to repair your roof when you can just hop down to the local Home Depot and pick up a couple dudes who'll do it for $2/hr.

    My concern would be guarantees, quality, and regulation. There's no telling what sort of roof you'll end up with using the above method of going to Home Depot with a pickup.

  11. Andrew Says:

    And if we do find a money maker, how can we keep the business owners/investors from funnelling the money out of the country?

    Taxes and tariffs, I would expect. It's actually not hard to prevent this kind of "funneling", it just requires political will to do so. Unfortunately, decades of beating on the free trade drum seems to have created the impression that the government is completely helpless to regulate the moneyed class.

    Now, that might be true, but it's not because there are no tools to do so; it's mostly because the moneyed class holds the keys to the shed and the government isn't willing to gut-punch them in order to get the keys back. In a manner of speaking.

  12. Tim H. Says:

    The end of this progression looks nasty, brutish and short. If the United States slides into third world status, it will only support a fraction of the number of wealthy people we have now, are they looking forwards to an exciting struggle? What happens when Wal-Mart becomes a luxury store for most people?

  13. Tim H. Says:

    http://www.counterpunch.org/macaray11292010.html
    You're not the only one thinking along these lines.

  14. Arslan Amirkhanov Says:

    Enjoy your capitalism. Keep thinking you can somehow regulate the system back on track with Keynesian economics.

  15. Misterben Says:

    This is one of the best articles you've written in a long time. This makes the average feature article in Time or Newsweek look like a second-grade "How I Spent My Summer" essay in comparison. If you can churn out this kind of quality even once a week, you don't need academia; people would pay just to read this stuff. I know I would.

  16. anotherbozo Says:

    Misterben said it for me. Dismal subject, but exhilaratingly clear, pungent, smart, perceptive, incontrovertible essay, Ed. And not outsourceable.

  17. displaced Capitalist Says:

    oh, but we still have our lawyers!

  18. Da Moose Says:

    I love this topic because I think it's the nexus for many issues facing our country today: educational drift, financial immorality, militaristic fascism, cultural shallowness, etc. Here are my worthless knee-jerk thoughts:

    1. US never had an educated population. We dominated in the past simply because no one was competing against us on the scale that Asia is today.

    2. Today's fear of Asian domination (except in perverted sexual routines ) reminds me a lot of the hysteria over Japan in the late 80s. So, don't be surprised if China soon suffers from an overheated economy simply because everyone expects them to continue to dominate.

    3. Though I don't have much hope because I think it is clearly evident at this point that most Americans are simply chimps who happen to know how to clothe themselves in the morning, I don't agree that we can't compete against the average cheap labor servant in Asia. We can compete on quality. Ignoring the crap that came out of Detroit in the 80s and 90s, the average American worker can compete with the average Asian worker by producing a superior product. People will pay for quality over quantity. We just have to be intentional about.

    4. The average American middle class worker has been fucking overpaid. Sorry. But, it's true. Shit, I'm way overpaid. The problem in our country is wage disparity between someone like me who is way overpaid and someone who cleans my building's bathrooms who is way underpaid.

    5. Ultimately, my only real concern at this point is for the integrity of biodiversity on this planet. The more I read and observe, the more I think humans are a parasitical life form in need of a serious population reduction. So, basically, I really don't give a fuck what happens to this country and its greedy self-absorbed people. We've been taking way too much for what we don't give back to the rest of the species we "share" this planet with.

  19. Monkey Business Says:

    @anotherbozo: Not true. I've hired a team of writers in India and China to start producing knockoff Gin and Tacos posts.

  20. Kulkuri Says:

    Back in the Mid-80s Sen. Paul Simon said we can't build a strong economy delivering pizzas to each other. That still applies today.

  21. John Says:

    As said earlier in this comments thread, the issue is not even that America is dumb and unwilling to compete. We physically cannot compete. This is why I laugh every time someone suggests abolishing the minimum wage — it is, of course, invariably someone who has never worked a minimum wage job, and has no idea what it's like to try to live on minimum wage in this nation, let alone below it.

    Federal minimum right now is $7.25 an hour. Now before we begin, we must accept one fact: in the vast majority of minimum wage jobs, you can't get a 40-hour work week. You could be the best worker on the planet, but they won't give you 40 hours because that makes you a full-time employee which entails more obligation on their part. But, for the sake of argument, let's say you find a magical full-time minimum-wage job. Also, let's disregard the concept of vacation or sick days — let's just say you somehow work every day (minus weekends) of the year for 40 hours a day for that wage.

    $7.25 x 40 x 52 = $15,080

    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.

    So now you've got some bills to pay. Let's put housing at $500 a month, which is modest to say the least. This is probably a small apartment (I know my 'two-rooms-and-a-bathrom' studio is more than that, but I do live in a fairly decent area). That's 6 grand a year. You also need gas to get to work, and at approximately $40 a tank and a tank a week, that's another 2,080.

    $15,080 – $8,080 = $7,000

    Now you need to keep the water running and the electricity on. This can vary wildly from dwelling to dwelling, but let's set it at a $20 a month water bill and a $80 a month electric bill (that's low, of course, for heating/cooling in most areas). That's another 1,200.

    $7,000 – $1,200 = $5,800

    Now let's get semi-frugal with groceries at $50 a week.

    $5,800 – $2,600 = $3,200

    So you've got roughly $3K per year for clothing, vehicle maintenance, supplies to keep your home some semblance of clean… and at the very end of all of that, savings and discretionary.

    And god help you if you actually have children to worry about.

    Now, given this knowledge, keep this in mind: There exist people — almost all of them affluent people — that believe you're being paid too much, and that the EVIL FEDERAL GUB'MINT needs to stop forcing business to overcompensate you so much.

  22. bb in GA Says:

    @Da Moose

    'I really don't give a fuck what happens to this country and its greedy self-absorbed people. We've been taking way too much for what we don't give back to the rest of the species we "share" this planet with.'

    From AntonNews.com on A Global Look at Charitable Giving, 04June 2009, Bob McMillan

    “A simple fact. The United States leads the world in charitable contributions [ON A PERCENT OF GDP BASIS - bb] and with regard to the number of people who volunteer for good causes, we are second.

    While the statistics are not fully current, it is safe to say that some $260 billion was donated in 2008 to charities across the nation. The leading recipients were religious organizations, receiving around $90 billion.

    Taking a look at charitable giving, by country, as a percent of GDP, the results are interesting. The United States gives almost 1.8 percent of our GDP each year. Canada and England are second with around 0.7 percent of GDP. France is close to the bottom with charitable contributions around 0.15 percent of its GDP.”

    An important factor might be that many (more socialist higher taxed) countries provide more humanitarian and other aid from the government to their own citizens and to foreign countries than the USA does. This may relieve individuals from a sense of responsibility to provide personal charity to others.

    If you take that tack we are back in Da Moose's direction.

    //bb

  23. Da Moose Says:

    @BB

    Good points. But what I am referring to more is the rate of consumption. If anything, charitable giving simply increases the number of humans on the planet and, in turn, increases environmental destruction. There's only one thing that will help the planet acheive homostasis: population reduction. I think we need not worry though. The planet is trying its darndest to get rid of us and eventually will.

  24. Southern Beale Says:

    I really vigorously object to the way we fetishize math and science education in this country, anyway. I read a wonderful article in Harper's by Mark Slouka (subscription only but I excerpted pieces of it here a while back… if you subscribe my link will take you to the whole piece, which is truly excellent). As Slouka points out, putting every American crisis (including the "education crisis) in merely economic terms dehumanizes us all. And I think this dehumanization is what really ails America. It's not foul-mouthed bloggers or Fox News or Teanuts … they are symptoms of the larger crisis of dehumanization.

    Look, creating math and science and computer engineering geeks who can help Microsoft and GE and Google and Lockheed Martin is great on the surface, it creates great worker bees, drones for capitalism. But to create good citizens you need the humanities. You need English and Literature and Arts and History. You need people to question their society and their government, with critical thinking skills and organizing skills to counter the capitalisms inevitable creep to totalitarianism.

    Or, as Slouka put it:

    "The humanities, done right, are the crucible within which our evolving notions of what it means to be fully human are put to the test; they teach us, incrementally, endlessly, not what to do but how to be. Their method is confrontational, their domain unlimited, their “product” not truth but the reasoned search for truth, their “success” something very much like Frost’s momentary stay against confusion."

    So I was really pissed off to hear Obama fetishize the science and math stuff AGAIN. I mean, I realize it's so ingrained in our culture that music education is superfluous to advanced calculous but I can't let these ideas go by unchallenged.

  25. Southern Beale Says:

    Oh and remember Al Franken's classic book, "Lies & The Lying Liars"? There's a chapter where he has his job as a writer outsources to India. It's hilariously funny because it's a big FAIL in the book but as a freelance writer let me tell you: our media IS oursourcing writing to India. They don't care if the writer is not a native English speaker, if syntax and grammar and other even facts are wrong. They don't care. They just care that it's cheap.

    So yeah. Cockiness? I'd say that was a big part of it.

  26. bb in GA Says:

    It is not either or…

    Jefferson, Franklin, and Washington (to name a few) were men of Science and Engineering as well as the Humanities.

    //bb

  27. Southern Beale Says:

    @bb in GA:

    Yes but Jefferson, Franklin and Washington lived in an age where things like arts and humanities were valued. Shit, Jefferson spoke French! 200+ years later John Kerry was excoriated for speaking French!

    Not only do we no longer value these things, they've been turned into NEGATIVES by craven political operatives who seek power.

    And don't get me started on history. If we truly valued our history Michelle Bachmann wouldn't get away with fabricated claims that the Founding Fathers abolished slavery. She'd be drummed off the national stage for being ignorant. Sure Anderson Cooper had a hissy fit (as did Tweety) but that didn't stop CNN from airing her rebuttal nonsense last night.

    What the fuck anyway? Enlighten Up, America.

  28. Web Dunce Says:

    Southern Beale you are so right about the humanities! I too am really tired of the whole STEM (Science, Technology, Engineering and Math) push in public schools. So many children are completely left out of the equation (pun intended) with so much emphasis on science and math. I think back to my days in high school. I failed math and science miserably, and not for lack of trying. I just don't have a head for math and science. I even went to a trade school because coming from a blue collar working class family, college was out of the question! Ever since I was in Kindergarten my likes and interests have always drifted to language, writing and the arts. Always. Luckily, at 32 years of age, I was able to finally graduate from a private liberal arts college with a degree in English. People have laughed at my choice of major, always noting that there are plenty of jobs to be had flipping burgers at the local fast food restaurant. I shrug it all off. I love my non-profit communications job and I get by just fine on my salary!

  29. David Says:

    For centuries nations have used trade restrictions to foster and protect their manufacturing sector. Once the US began championing so-called "free trade" a large number of corporate executives made the decision to uproot America's manufacturing sector and move it en masse to Asia. The end result is a surprise to neither the corporate executives which made the decision or the government officials who enabled it. This was not a "natural" process as if anything in economics is really natural apart from natural resources. This was a highly artificial and purposed decision made by a small number of Americans.

    Perhaps it is too late for Washington – if it had the desire and the will – to bring industry back to America. It would only be possible by rescinding "free-trade" with any other nation which did not have a comparable PPP (purchasing power parity), labor and environmental laws. I place "free-trade" in quotes because we all know it is a farce. How can trade be tree when you're trading in slave labor and the destruction of the environment?

  30. DB Main Says:

    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. Math and science is an important skill in this context, insofar as it helps her grow food and fix things.

    And here's the thing: As a parent I'm conflicted. I worry that she's going to live in such "interesting times". But when I consider the alternative, I'm not that bothered. 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.

  31. The Moar You Know Says:

    @Web Dunce:

    Enjoy it while it lasts. Eventually there will be no money available to pay the meager salary that you make. Not because the money won't be there, it's that your job will have been outsourced and the money that was formerly used to pay you will have either gone to an engineering firm, some venture capitalist's pocket, or most likely, a lawyer fighting for the rights of a corporation to pay less in taxes.

  32. Brandon Says:

    Ed, you raise a lot of good points, and I don’t have any genuine objections to what you’ve written. But I think that the economic globalization debate is often presented in overly simplistic, binary terms, by both critics and advocates. I think that a lot of the criticism from the left is frequently couched in nativist terms, whether intentionally or unintentionally. Even your superb analysis seems to imply that Americans have sort of innate birthright to a comfortable middle-class existence. You portray the loss of jobs overseas as unfair because we simply can’t compete with people willing to do the same job for much less compensation. And you might be right. But as far as that earlier era that you hearkened back to, the era when Americans could expect a comfortable middle-class lifestyle, do you think that that state of affairs emerged free of any political or economic context? That it had nothing to do with America’s unrivaled military and political power in the immediate post-war era? Or that the high standard of living in Western Europe had nothing to do with their colonial history? So, while I certainly agree that economic globalization presents daunting challenges to the American middle class, challenges that our leaders are obligated to address, I think that critics who point out the unfairness of Americans losing jobs to lower paid competitors are often less willing to analyze the context in which that “Golden Age” emerged.

    As harsh as that quote from the Freeland article is, (the one about the tradeoff between four people in the developing world emerging from poverty while one American slips into poverty,) if we take off our nationalist lenses and try to analyze the costs and benefits of globalization objectively, it’s a fair calculus to engage in. Now, I think the common response from opponents of globalization would be to cast skepticism on the claims that globalization is really lifting people in the third world out of poverty. It’s a tough question. I gather from your reference to the “prison style” conditions in Chinese factories that you are in the skeptical camp. But I think that’s an overly simplistic portrayal. I don’t think that comparing the condition of Chinese workers to American workers is fair. If you compare China today to before they opened up their economy, they have seen one of the biggest reductions of poverty in world history. Many of the female workers who have taken those low-paying jobs in the urban garment factories had no options in their home villages. They can even send remittances back to their families in the villages. There is a lot of good anthropological work about how this phenomenon has altered gender relations in these countries. They aren’t automatons, they made conscious choices. Certainly those choices were circumscribed by global economic forces, but I don’t think that their set of choices was wider BEFORE China opened its economy. And again, I don’t want to paint too rosy a picture of the situation. And I also recognize that China (and India, Vietnam, etc.) has advantages that allow it to compete in the global economy that other countries don’t have. The fact that some Chinese might have benefited from globalization doesn’t mean that globalization hasn’t been harmful to other countries in Africa, Latin America, etc. But I do think it’s a complicated picture.

    So I guess I don’t have any policy recommendations for U.S. leaders, who obviously are supposed to be answerable to American workers. I don’t know that all is hopeless for the advanced industrialized countries. Germany of late seems to competing pretty well. I just wanted to toy with your assumptions a bit and offer a different perspective.

  33. karen marie Says:

    John Says:
    January 26th, 2011 at 11:09 am

    Let's also ignore taxes

  34. jeneria Says:

    My big issue with last night's SOTU was that Obama is still pushing for all Americans to be college-educated while simultaneously calling for higher education's standards to be higher. You can't have it both ways. You just can't.

    You can't guy K-12, force everyone into college regardless of ability, suspend their fin aid after two semesters when they can't maintain a 2.0, and expect higher education to churn out brilliant students all the while universities are having budgets slashed left and right.

    It's preposterous.

  35. karen marie Says:

    Well, crap. Somehow my summation got cut off by the blog monster.

    Although a person making minimum wage doesn't pay income tax, they still pay SS/Medicare, so the theoretical amount left after living expenses is closer to $500/year.

  36. jeneria Says:

    Crap, I meant "gut" K-12 not "guy"

  37. jack Says:

    No.

    Globalisation in economics is like lupus in House. It's not globalisation. It's never globalisation.

    According to a large number of usually sane people, when Indians get MBAs westerners will lose jobs. As far as I can tell, the argument is that:

    1) Indian MBA's work for less
    2) So American companies will employ them instead
    3) Cheaper products and services due to lower wages for foreign workers will not push up real wages for Americans because ???
    4) Even with this influx of American wealth, new companies won't start up in India and China employing their MBA's and driving the wages of MBA's up towards equillibrium with American workers because ???

    It's like the Underpants Gnome theory for pessimists.

  38. Paul W. Luscher Says:

    On a side note: why is the emphasis in education always on MATH and SCIENCE in this country? What about humanities, arts, etc?

    Is the idea that instead of creating a well-rounded individual capable of thinking for him- or herself, we want a highly-skilled worker drone who'll simply accept the corporate line, and won't be subject to any Dangerous Thoughts?

  39. John Says:

    @karen marie:

    Very true. The point of the exercise was to take an absolute best-case scenario (hence the preposterously low electric bill, this example person would be sleeping in a frozen/roasting home) and show how quickly minimum wage disappears under even the most austere of measures for a US resident.

    Again, note that the example budget I provided could not in any way whatsoever be considered "welfare queen" material, as some folks like to conjure up. That budget included only the absolute bare necessities to live in this country with absolutely no frills of any kind. Heck, I even assumed that they have a completely paid-off car and absolutely zero debt of any kind.

    The reality is that an actual person making minimum wage is in far, far worse straits than even that. Simply put, it is not possible to live in this country on the money that the working class earns in other nations. It's barely possible — and even then, I really wouldn't call that "living" — with the federally-mandated minimum in *this* country, a mandate which many citizens believe is gross tyranny on the part of the federal government.

    That there are people in this nation, people who make six or seven figures a year, who complain that minimum wage is too high and that government should "stop suffocating businesses" or that "welfare queens" should stop "suckling on the government teat". That it has never occured to these people to actually spend five minutes calculating what life is like at minimum wage upsets me; that they are given national platforms to speak as respected individuals makes me violently ill.

  40. Da Moose Says:

    I basically agree with the idea that the humanities should not be ignored. That's basically how I was taught so I understand and appreciate the value. However, the opportunity to become a well rounded individual from an educational standpoint is an aspect of a well-off society. You can't have a well-off society without engineers. Well rounded individuals with mud roads, broken plumbing works, crumbling buildings, fractured transportation systems, and failing utilities will cease to be well-rounded individuals for very long as the daily needs to stay alive will take over from the leisure activities of reading Kant. It’s an extreme example but one worth making.

  41. A Says:

    All of this education talk reminds me of yesterday's discussion on Rhoades Scholars. With the caveat that I believe that almost all education is valuable. (Sorry can't get behind creationism.)

    The argument should not be either/or. The emphasis should not be put on STEP while ignoring or degrading humanities. Even with the information overload theory being presented, humanitarians need to know why Math is important. (At minimum wage or even the Average American wage, you need to know how to budget.) If Scientists don't want their jobs outsourced, then they need to be able to write.

    For what it is worth, Indians/Chinese/etc. low wage earners can learn U.S. Laws & are "working" for US law firms for a lower wage as we type. (You can research US case law in India just fine.) So the lawyer crack isn't cutting it here.

  42. Southern Beale Says:

    Even with the information overload theory being presented, humanitarians need to know why Math is important.

    Well, as I mentioned in a thread from last week, I DO have an anti-math bias. So …

  43. Web Dunce Says:

    @ the Moar You Know

    I'm not too worried about it. I work in my community for a non-profit. Before that in advertising/pr. I can always find a job. I will never regret the career and educational choices I've made in my life. The whole point of my original post was that there are many of us who just aren't cut out for math/science careers. To those who are, more power to them. I just feel sorry for kids today who will get the shaft educationally because maybe they don't want to be a civil engineer or a biologist.

  44. HoosierPoli Says:

    "As harsh as that quote from the Freeland article is, (the one about the tradeoff between four people in the developing world emerging from poverty while one American slips into poverty,) if we take off our nationalist lenses and try to analyze the costs and benefits of globalization objectively, it’s a fair calculus to engage in. "

    You can call it nationalism if you want, but frankly, let's let Thailand's government worry about Thailand. Our government is supposed to be serving OUR interests, not world interests. Not that they're particularly good at either.

  45. Crocodile Chuck Says:

    US competitiveness: another dismal datapoint:
    http://gregor.us/economics/scrap-metal-cowboys-2/#disqus_thread

  46. Nunya Says:

    Whenever I hear anyone encouraging people to go into the STEM fields, I usually ask them how many scientists, programmers or engineers they know who are over 40 and still working in their field. The truth is that yes, America is comparatively stupid in math and scientists but we still make a fine showing of technologically astute people. They usually discover that nearly all of their jobs are highly exportable and thus, determine that a future in the hard sciences is probably a limited move career-wise.

    Continuing down the path of outsourcing nearly every productive job to the developing world will inevitably lead us to parity with them. We'll soon discover that the giant market that is the United States will wither when disposable income disappears and more and more people end up living in poverty.

    I'm ashamed that my government refuses to ignore the biggest threat to our nation that we have faced in many years. Without a strong middle class and the virtues that arrise from it, we will not only not be able to compete, our very existence as a nation comes into question.

    This situation can only be reigned in by some serious government intervention. I don't call for an isolationist policy but it is ridiculous to assume that free trade can exist between high and low wage countries without all of the labor moving to the low wage country.

    Globalization will occur, eventually, and we will be able to comete on a level playing field when wages, costs of living, and lifestyles are equal. Until that point, there is no end to the destruction of the working class in America.

    If you haven't been affected yet, it is simply a matter of time. America, with its lack of a proper safety net, is ill equipped to deal with massive long term unemployment.

  47. queenrandom Says:

    @John – I agree with your overall point but have some amendments: Car insurance, car payment, health insurance (not health care, mind you). Now, best case scenario, worker already somehow has a car before they get their first job (HS graduation gift?). It's unlikely, but let's be generous. OK, so no car payment. But car insurance is required by law. It's hard to estimate, but national average for car insurance is about $1500/year.

    That leaves the minimum wage earner $1500/year for clothes etc.

    This also leaves out the cost of health insurance; most people would consider that a necessity. Assuming the employer helps and is generous, it'll be, let's say $50/mo for a single person (I've been paying family insurance for years so correct me if my estimate is way off). That's $600/year.

    Assuming our minimum wage worker has zero doctor's office visits, doesn't get vaccines, no prescriptions, no accidents, etc. which would require copays, this leaves a grand total of $900 per year for clothes, vehicle maintenance, emergencies, savings, etc.

  48. jwm Says:

    i.e. bombing the living shit out of some country that is already difficult to distinguish from rubble.

    I've often heard the same sentiment expressed as "I'd just as soon region x to glass rather than lose a single American soldier."

  49. Richard Weare Says:

    Hello my name is Richard Weare and I am a compulsive liar who lives in Calgary, Alberta in Canada. I have the unique habit of lying about others just so that I may get the attention of others to make myself look like I am honest and caring wwhen in reality I am nothing but a lying little puke who lies to make himself look good.

  50. drive-by Says:

    The question I ask myself is whether the would-be U.S. middle class will begin to emigrate in large numbers to lower-cost developing nations. And more specifically: whether I, personally, will be forced to leave the U.S. sometime in the future to earn a decent living, or whether that too will basically be impossible. How I feel about leaving my native country; how I feel about this place in general . . . I don't have answers. Part of me expects xenophobia and mistreatment anywhere else in the world. Part of me wonders if I could do anything (now or in the future) to overcome it. That's where my thoughts tend to go.

  51. 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.)

  52. 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.

  53. 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?

  54. 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.

  55. 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.

  56. 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.

  57. 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

  58. 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.

  59. 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.

  60. Screamin' Demon Says:

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

  61. 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….

  62. 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.

  63. 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?

  64. 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.

  65. 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.

  66. 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.

  67. Price Says:

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