Will American Anti-Labor Policies Infect Europe?

-- by Dave Johnson

I want to send a warning to working people in Europe: when you let your businesses save money by mistreating workers in other countries, it might teach them to think they can save money by mistreating you, too. Over here in the US we have learned this the hard way. We entered into "free trade" agreements that enabled our businesses to take advantage of exploited labor in countries like China, and the plutocrats used that as a wedge against us here to drive down our wages, get rid of our benefits and break our unions. Now your own business leaders are taking advantage of eroded labor rights here, and if you let them get away with this they will want to bring these working conditions back to you.

Recently in the post Democracy V. Plutocracy, Unions V. Servitude I described how American companies use China as a wedge to drive down wages and labor rights here,

The threat is in the air: "Shut up and take the wage cuts or we will move your job to China."

... Workers in countries like China where people have no say have low wages, terrible working conditions, long hours, and are told to shut up and take it or they won't have any job at all. They are given no choice.

Increasingly workers here have their wages, hours, benefits, dignity cut and are told to shut up and take it or their jobs will be moved to China. Because we are pitted against exploited workers in countries where people have no say, we have no choice.

The unions are weakened, the government doesn't enforce or weakly enforces labor laws and regulations, age, gender or race discrimination laws, worker safety laws, so workers are placed in a terrible squeeze. Workers who try to organize unions are isolated, moved, smeared, fired, humiliated, whatever it takes.

In countries like Germany workers are still paid fairly well and have benefits and rights. Here our pay, benefits and labor rights have eroded terribly. This is the result of American companies using exploited labor in countries like China as a wedge to force concessions at home. Can the same chain of events attack wages, benefits and unions in Europe? Last May, Harold Meyerson’s LA Times op-ed, The U.S.: Where Europe comes to slum, described how European companies come here and behave like American companies,

… slumming in America is fast becoming a business model for some of Europe's leading companies, and they often do things here they would never think of doing at home. These companies — not banks, primarily, but such gold-plated European manufacturers as BMW, Daimler, Volkswagen and Siemens, and retailers such as IKEA — increasingly come to America (the South particularly) because labor is cheap and workers have no rights. In their eyes, we're becoming the new China. Our labor costs may be a little higher, but we offer stronger intellectual property protections and far fewer strikes than our unruly Chinese comrades.

… The auto companies of Europe and Japan have opened factories in the nonunion South over the last couple of decades. Not one of them has agreed to refrain from waging a union-busting campaign should their workers wish to organize. Their stance could not be more different from their attitude toward workers and unions in their home countries.

Meyerson describes the kinds of anti-union, anti-worker things these companies are learning how to do,

As a report released by Human Rights Watch late last year documents, companies that routinely welcome unions, pay middle-class wages and have workers' representatives on their corporate boards in Germany and Scandinavia have threatened their U.S.-based employees with permanent replacement by other workers as the penalty for protesting wage cuts (that was the German manufacturer Robert Bosch), ordered workers to report on fellow workers' pro-union activities (that was T-Mobile, a subsidiary of Deutsche Telekom) and disciplined workers who couldn't show up for unscheduled weekend shifts announced on Friday night (that was IKEA, according to an L.A. Times story).

T-Mobile’s Anti-Union Efforts

Here is an example. Germany’s Deutsche Telkom is trying to turn their wholly-owned subsidiary US company T-Mobile into a low-wage, low-benefit, union-free dumping ground. Is this an effort to ultimately bring these tactics back home to break Germany’s unions?

This is how T-Mobile is operating now: In May T-Mobile workers in upstate New York filed a petition for a union election. Over the next three months management used anti-union “isolate and pressure” tactics to erode support. Instead of letting the workers decide for themselves if they wanted a union, they contested the effort and brought in a “union avoidance” specialist firm.

The company used excuses to delay the election, and launched a propaganda campaign, making the workers hear a constant barrage of reasons to suspect union motives, suspect the benefits the union promised, and other reasons not to vote for a union. They were repeatedly required to leave their job to attend meetings and conference calls, on company time, where they were lectured, given misinformation, told they would lose benefits they current had, that unions would make them pay $5,000 in dues every year, told again and again that the union was lying, that union organizers were only telling them things to get bonuses, told they must not ever talk to each other about the union on company time and that if they voted for a union the company would have to eliminate their jobs and contract out the work instead. After enough of this the workers withdrew the election petition.

The Sheer Weight Of This Wears You Down

When regular people who are just doing their jobs, who work hard and get up in the morning and go home tired and don’t make a lot have to face constant tactics of daily pressure by management, constantly being told that unions are evil and “unions bosses’ and “union thugs” are trying to trick them, and they are put under tactics that isolate them from being able to discuss what is true or not, finally the sheer weight of all of it together can be too much.

Again and again when workers try to form a union they are up against these tactics. Management repeatedly calls meetings where they give professionally-crafted propaganda speeches about all the terrible things that will happen if workers vote for a union. If a worker has the courage to stand up and talk about the good reasons for a union, they are excluded from future meetings and isolated from the other workers. (This is when a company stays legal and doesn’t just fire people who favor a union – not an uncommon tactic and it takes years for the company to be penalized for illegal firings, if it ever is.) In these situations management completely controls the message and keeps workers from hearing the other side.

Typical Here, Outrageous There

This all sounds normal to American workers, because this is what American companies do. This is what workers regularly face when they try to organize to make their workplace better and safer and get things like sick pay, decent wages and some benefits. We have sort of become used to this kind of treatment here. In America we have gone from 30% to 7% union membership because companies are allowed to fight unions, and routinely do things like this.

But T-Mobile is wholly owned by a German company. Germany respects workers rights and German workers would be absolutely shocked if they understood that a German company was doing this to workers. They would be shocked to even see a company try to stop a union – why would a good company want to?

Will American Anti-Labor Policies Infect Europe?

So here is the question for European working people to ask. Will Europe let the US be their China? American companies learned to use China as a weapon against workers here. Will European companies bring American anti-labor practices home as a weapon to break down European worker rights and living standards?

Will European companies learn to use American anti-labor practices against European workers? Or will European workers stop this in time? If you think this sort of thing can’t happen in Europe, just look at what is happening to Greek workers right now.

US workers are threatened with having to do things like China does them in order to compete. Will German workers be threatened and told things have to be like the US? Will they tell that German public that their policies need to be more “Business friendly?”

So this is a warning to European working people. Pay attention to what your companies are doing in the US. You really don’t want them learning to operate the way a lot of US companies operate, or your own wages, benefits and even your jobs could be on the line – like ours are here.

This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.

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-- Posted by Dave Johnson at 9:43 AM PST on February 16, 2012.

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China Is Very "Business-Friendly"

-- by Dave Johnson

China is very, very "business-friendly." Corporate conservatives lecture us that we should be more "business-friendly," in order to "compete" with China. They say we need to cut wages and benefits, work longer hours, get rid of overtime and sick pay -- even lunch breaks. They say we should shed unions, get rid of environmental and safety regulations, gut government services, and especially, especially, especially we should cut taxes. But America can never be "business-friendly" enough to compete with China, and here is why.

Workers In Dormatories, 12 To A Room, Rousted At Midnight

China is very, very "business friendly." Recent stories about Apple's manufacturing contractors have started to reveal just how "business-friendly" China is. Recently the NY Times' Charles Duhigg and Keith Bradsher exposed the conditions of workers at Apple's Chinese suppliers, in How the U.S. Lost Out on iPhone Work. They describe how China's massive government subsidies and exploitation of workers mean, as Steve Jobs told President Obama, “Those jobs aren’t coming back.”

One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. ... New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

Right. No American plant can roust workers out of nearby dorms at midnight to force them onto a 12-hour shift. And the corporate conservatives criticize America for this, not China, saying we are not "business-friendly" enough to compete. This is because we are a place where We, the People still have at least some say in how things are done. (Don't we?) Later in the story,

The first truckloads of cut glass arrived at Foxconn City in the dead of night, according to the former Apple executive. That’s when managers woke thousands of workers, who crawled into their uniforms — white and black shirts for men, red for women — and quickly lined up to assemble, by hand, the phones.

“Business-friendly” = living 12 to a room in dorms, rousted out of bed at midnight for 12-hour shifts, working in a plant paid for by the government, using a neurotoxin cleaner that harms people but enables more production for companies like Apple.

Forced Labor Is The Real "Business-Friendly"

Arun Gupta at AlterNet, in iEmpire: Apple's Sordid Business Practices Are Even Worse Than You Think, writes,

Researchers with the Hong Kong-based Students and Scholars Against Corporate Misbehavior (SACOM) say that legions of vocational and university students, some as young as 16, are forced to take months'-long “internships” in Foxconn’s mainland China factories assembling Apple products. The details of the internship program paint a far more disturbing picture than the Times does of how Foxconn, “the Chinese hell factory,” treats its workers, relying on public humiliation, military discipline, forced labor and physical abuse as management tools to hold down costs and extract maximum profits for Apple.

... Foxconn and Apple depend on tax breaks, repression of labor, subsidies and Chinese government aid, including housing, infrastructure, transportation and recruitment, to fatten their corporate treasuries. As the students function as seasonal employees to meet increased demand for new product rollouts, Apple is directly dependent on forced labor.

... The use of hundreds of thousands of students is one way in which China’s state regulates labor in the interests of Foxconn and Apple. Other measures include banning independent unions and enforcing a household registration system that denies migrants social services and many political rights once they leave their home region, ensuring they can be easily exploited. In Shenzhen about 85 percent of the 14 million residents are migrants. Migrants work on average 286 hours a month and earn less than 60 percent of what urban workers make. Half of migrants are owed back wages and only one in 10 has health insurance. They are socially marginalized, live in extremely crowded and unsanitary conditions, perform the most dangerous and deadly jobs, and are more vulnerable to crime.

Please read the entire AlterNet piece, iEmpire: Apple's Sordid Business Practices Are Even Worse Than You Think. These things are not “costs” that we can compete with by lowering our wages, these things are something else.

Not JUST Low Taxes -- Massive Government Subsidies

These stories also describe how the Chinese government massively subsidizes these operations, assists their low-wage labor-recruitment schemes, and looks the other way at violations of labor and trade policies. The Chinese government is very "business-friendly." They hand money to businesses so they are much more able to "compete." They are so friendly to business that they even own many businesses.

Trade Secret Theft

Another area where China has very "business-friendly" policies is when their own businesses steal from non-Chinese businesses. This NY Times story, U.S. to Share Cautionary Tale of Trade Secret Theft With Chinese Official details just one case of the "unbelievably endemic" problem of Chinese theft of "intellectual property" -- the trade secrets that keep businesses competitive. In this case China's Sinovel sole the software that ran an American company's products, and immediately cancelled their orders for those products because they could now make them in China:

Last March, China’s Sinovel, the world’s second largest wind turbine manufacturer, abruptly refused shipments of American Superconductor’s wind turbine electrical systems and control software. The blow was devastating; Sinovel provided more than 70 percent of the firm’s revenues.

... Last summer, evidence emerged that Sinovel had promised $1.5 million to Dejan Karabasevic, a Serbian employee of American Superconductor in Austria.

If you steal the ideas, processes, techniques, expertise, plans, designs, software and the other things that give companies a competitive edge, then you don't have to pay them and you can just make the things yourself. When you get in bed with a very "business-friendly" country, you might find that they are more friendly to their own businesses. Because they consider themselves to be a country with a national strategy, not a self-balancing, self-regulating "market."

Trade Deficit Drains Our Economy

As a result of our ideological blindness, refusing to understand China's game, we have a massive trade deficit with them. This means hundreds of billions of dollars are drained from our economy, year after year. And to make up for this we borrow from them in order to keep buying from them. But this does not cause their currency to strengthen in the "markets" because China loves this game the way it is going, and intervenes against the markets to keep their currency low. And so it continues, year after year. We believe in "markets" they believe in rigging markets so they come out ahead...

Markets Can't "Compete" With This

Corporate conservatives tell us we need to be more "business-friendly" to "compete" with China. But at the same time Steve Jobs was being a realist when he said "the jobs are never coming back" because he understood that the current political climate, controlled by a wealthy few who benefit from China's "business-friendly" policies will not let us fight this. Why should these companies bring jobs back here, when over there they can roust thousands from dorms at midnight and make them use toxic chemicals for 12 hours a day for very low pay to make iPhone screens that he can sell at fantastically high prices? Why should they, unless We, the People tell them they can't do that to people, and that we won't let them profit from it?

As long as we continue to think that this is about "markets" competing, we will lose. China sees itself as a nation, and they have a national strategy to continue to be so "business-friendly" that our businesses can't compete. Our leaders and corporations may have "moved on" past this quaint nation thing but China has not.

We, The People Need To Act To Fix This

As long as we continue to send our companies out there alone against national economic strategies that engage entire national systems utilizing the resources of nations, our companies will lose. But the executives at those companies are currently getting very rich now from these schemes, so what happens in the future is not their problem. Maybe the companies they manage won't be around later, but that is not their problem. Others are concerned, but are forced to play the game because no one can compete with national systems like China's.

When everyone is in a position where something isn't their problem, or where they can't do anything about it on their own, it means this is a larger problem, and this is where government -- We, the People -- needs to get involved. It is our problem but we have been convinced that we -- government -- shouldn't interfere, or "protect" our industries, because "the markets" don't like "government" -- We, the People -- butting in. This is a very convenient viewpoint for few who are geting very, very wealthy at the expense of the rest of us.

We Need A Plan

In U.S. must end China's rulers' free pass at Politico, AAM's Scott Paul writes, Read it, read it, read it!)

We shouldn’t fear China’s citizens. But we should be worried about the actions of its authoritarian — and, yes, still communist — regime that tightly controls the People’s Republic. And we should be downright terrified by some of our own leaders’ attitudes toward China.

... China is not merely the key U.S. supplier of cheap toys, clothing and electronics: Its government is also one of our foreign financiers. China achieved this status by defying the free market and its international obligations toward more open trade and investment.

[. . .] History didn’t do in the Soviet Union. A sustained and aggressive strategy did. China engaged our business and political elites — and seduced them into believing these policies were no longer necessary.

... There has been no strategy, no effort to prevail economically.

... No one is suggesting that China is an enemy and we should just update our Cold War strategies. No one can accurately define what China’s intentions are in terms of foreign policy or defense. But on the economic front, the lessons of the past are instructive: We need a plan.

We need a plan. We need to understand that China is not competing with us in "markets' they are competing with us as a nation. We need a national economic/industrial strategy that understands the urgent need to fight as a country to win the industries of the future.

It’s not just price, it is things a democracy cannot allow. We can’t ever be “business-friendly” ENOUGH. We have to do something else. We have to understand that We, the People -- the 99% -- are in a real fight here to keep our democracy, or we will lose what is left of it.

Democracy Is The Best Economics

When people have a say they demand good wages, benefits, reasonable working conditions, a clean environment, workplace safety and dignity on the job. We need more of that, not less of that. We must demand that goods made in places where people who do not have a say do not have a competitive advantage over goods made in places where people do have a say. And we must demand that those places give their people a say.

As long as we let democracy be a competitive disadvantage, We, the People will lose.

This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.

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-- Posted by Dave Johnson at 12:49 PM PST on February 15, 2012.

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Single-Payer Supporters Urge Supreme Court To Strike Down Mandate

-- by Dave Johnson

Fifty Medical Doctors for Single Payer Urge Supreme Court to Strike Down Individual Mandate,

Fifty medical doctors who favor a single payer health insurance system today urged the US Supreme Court to strike down the individual mandate.

In a brief filed with the Court, the fifty doctors and two non-profit groups – Single Payer Action and It’s Our Economy – said that the Patient Protection and Affordable Care Act’s (ACA) individual mandate is unconstitutional.

The individual mandate is the provision of the ACA that requires Americans to purchase health insurance from private insurance companies if they do not otherwise have coverage.

... “It is not necessary to force Americans to buy private health insurance to achieve universal coverage,” said Russell Mokhiber of Single Payer Action. “There is a proven alternative that Congress didn’t seriously consider, and that alternative is a single payer national health insurance system.”

We went into this trying to find a way to do something about the terrible, corrupt monopoly insurance companies, lying, cheating, scamming, denying coverage after you got sick, overcharging, bankrupting people, etc. etc. etc... and we came out of it ordered to buy insurance from those companies.

Except I can't understand why they insist on calling this "single payer" which sounds to most people like it means you are going to have to pay for all your health care yourself. "Medicare For All" is a much better way to explain it.

-- Posted by Dave Johnson at 9:15 AM PST on February 14, 2012.

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How To Understand The Greece Situation

-- by Dave Johnson

Why are the Greek people forced to take big wage cuts, lose pensions, etc., as well as forced to privatize -- sell off their public holdings into the hands of wealthy 1%ers who will then rent the services back to them for a profit?

They are forced to do this to bail out banks. These banks made loans and charged fees and high interest rates according to their own evaluations of the risk of making those loans. They understood when they made the loans that people in Greece had pensions, etc. But now that the banks crashed the economy of the world, it is the fault of the lazy people of Greece for having pensions and living high on the hog, and they have to suffer so that the banks can get all their money.

Once again, banks made loans based on valuations of risk and charged fees meant to cover losses of potential defaults. They made loans to lots of people, expecting a certain default rate, and charged money according to that risk. But now that the risk is realized, they are not happy just making what they charged (which as based on the risks they understood), and want the people of Greece to cut jobs, wages, pensions, to make sure the banks are paid.

Now, watch this carefully, especially starting at 3:50. This is about Ireland, but it may as well be Greece, or here. From What Wolf and You Can Learn from the Irish Press for the GOP Debate,

"Now, why are the Irish people required to pay billions to unguaranteed bondholders under threat to the ECB." "You people are intervening in this society causing huge damage, by requiring us to make payments, not for the benefit of anybody in Ireland, but for the benefit of European financial institutions. Now could you explain why the Irish people are inflicted with this burden."

No response.

Also - and this is very important, note the difference between this journalist, and what we have here in the US. This journalist is willing to press the real question and is not kowtowing to the big corporate 1%er spokesman. You won't see that on the American corporate media, not ever, if the reporter wants to keep his or her job.

-- Posted by Dave Johnson at 8:57 AM PST on February 14, 2012.

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The National Teach-In to Take Back the American Dream

-- by Dave Johnson

From CAF, National Teach-In To Take Back The American Dream:

On February 21, the nation will have an opportunity to hear the true story of who broke the economy for the 99%, and what we need to do to fix it. And you can help us make sure that story is heard.

The Campaign for America's Future, along with Free Speech TV, Rebuild the Dream and Thom Hartmann's "The Big Picture," invite you to participate in the National Teach-In to Take Back the American Dream.

The National Teach-In to Take Back the American Dream

Who Caused the Mess? How Can We Rebuild the American Dream?
Tuesday, Feb. 21, 9 p.m. ET/6 p.m. PT

Tune in to "The Big Picture with Thom Hartmann" on Free Speech TV (DirecTV channel 348 and DishTV channel 9415), RT TV and online at FreeSpeech.org. Click here for details.

Featuring

Thom Hartmann, host
Robert Reich, former U.S. Secretary of Labor
Heather McGhee, Demos
Leo Hindrey, businessman and “Patriotic Millionaire”
Natalie Foster, Co-Founder, Rebuild the Dream
Robert Borosage, Campaign for America’s Future

Click here to find out how to organize and publicize your own teach-in event on OurFuture.org.

If enough people do this, we can turn the "teach-in" into a massive movement-building event!

-- Posted by Dave Johnson at 12:00 PM PST on February 13, 2012.

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What Happened To Our Economy?

-- by Dave Johnson

These six charts clearly show what happened to the middle class and to our economy as the result of Reagan's policies: Reagan Revolution Home To Roost -- In Charts | OurFuture.org.

-- Posted by Dave Johnson at 3:56 PM PST on February 12, 2012.

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If Opposing Catholic Bishops Is Anti-Religion...

-- by Dave Johnson

What about their appeal to Congress to extend unemployment benefits?

-- Posted by Dave Johnson at 7:48 AM PST on February 11, 2012.

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Gotta Watch This, A Republican Talks About Gay Marriage

-- by Dave Johnson

Here is a hero. Watch WA State Rep. Maureen Walsh:

-- Posted by Dave Johnson at 7:32 PM PST on February 10, 2012.

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Producers Vs. Moochers, Freeloaders And Losers -- The Cruel Pro-Rich Propaganda Of The Right

-- by Dave Johnson

"Producers" and "parasites." Cruel language justifying extreme greed seems to be mainstream now. Even Presidential candidates feel free to disparage 99% of us! In today's right-wing folklore government by We, the People is an evil thing that takes from "producers" and gives to "moochers," "freeloaders," and "losers." Government and taxes "take money out of the economy." Decision-making by We, the People is "collectivism" and "mob rule." And those of us who think the insanely wealthy should pay fair taxes suffer from "envy."

In today's discourse wealthy elites receiving $20 million a year in “capital gains” while paying almost no taxes are “producers,” while janitors or nursing home workers, working two jobs and not making enough to pay rent and feed themselves, are “moochers” and “freeloaders.” Right.

This email came in to CAF yesterday, (see also Richard Eskow's take on it, John Galt Is A Crybaby And So Are You)

I am really curios to know what motivates the mind of a socialist. Why do you think its fair to penalize those of us who produce while rewarding those who do not? If healthcare should be a right then where does it stop? Could one not use the same argument that everyone has a right to free housing? A free car? Perhaps free air travel? Who will pay for all this? What happens when the government has exhausted the money acquired from the producers? I have a feeling producers will stop producing if the government is just going to take it. Again, I ask why should the people who produced be punished to reward free loaders?

Actually, a right to housing, health care and decent transportation sound like the kind of things that proud citizens in a democracy ought to demand, if you ask me.

The Ayn Rand Poison

This email and others like it echo the language of the novels of Ayn Rand, which so many Republican politicians today embrace. The people writing them are disciples of Ayn Rand. They used to be teenagers who resented being told to clean their rooms; now they are grownups who don’t want to be told to pay their taxes. Republicans have enthusiastically embraced the poison of Ayn Rand, its justification of psychopathic greed and selfishness, along with her belief that altruism and democracy are "evil."

This Ayn-Randian idea that there are two kinds of people, "producers" and "parasites," is reflected across the language of the right today. The wealthy "producers" are "job creators" Republican Speaker of the House John Boehner, for example, regularly echoes this core philosophy of "producers" and "parasites," saying,

I believe raising taxes on the very people that we expect to reinvest in our economy and to hire people is the wrong idea,” he said. “For those people to give that money to the government…means it wont get reinvested in our economy at a time when we’re trying to create jobs.”

"The very people" who "hire people" shouldn't have to pay taxes because that money is then taken out of the productive economy and just given to the parasites -- "the help" -- meaning you and me...

Who Is The Real Freeloader?

With the release of his (but for some reason only the most recent) tax returns we learned that Mitt Romney collects over $20 million a year, while doing nothing, from the many millions he was able to get control of by stripping companies and laying people off or making them take huge pay cuts and loss of benefits. According to the Christian Science Monitor, this is the story of what happened to the workers in one company when the Romney/Bain machine "came to town":

The new owner, American Pad & Paper, owned in turn by [Mitt Romney's] Bain Capital, told all 258 union workers they were fired, in a cost-cutting move. Security guards hustled them out of the building. They would be able to reapply for their jobs, at lesser wages and benefits, but not all would be rehired.

According to the cruel language of the right, those workers are "losers." If they need to get unemployment or food stamps they are "parasites" and "freeloaders" who are "asking for handouts." When old, they will need the Social Security and Medicare they paid into all their lives, more "handouts." People like Romney says these "entitlements" -- the things we are entitled to as citizens in a democracy -- are "draining the economy."

Mitt Romney says government is the culprit, not people like him who show up and strip our jobs, factories, companies, industries and economy. Romney, who pays very little in taxes on the $20-plus million he receives in "capital gains" every year, wrote in a December USA Today op-ed titled, What kind of society does America want? that the very existence of government itself costs the economy jobs, writing, "With the growth of government has come an inevitable contraction of the private sphere." Romney writes that programs like Social Security and Medicare are examples of "government dependency." And, finally, he writes, "Government dependency can only foster passivity and sloth."

Right. Mitt Romney, producer -- who receives $20-plus million a year for not working -- as contrasted with the "losers" who work two jobs at minimum wage, making so little they need food stamps just to get by. (They used to make more, but Mitt Romney came to town, buying the company they worked for, chopping it up and sending the parts they don't sell to China, laying them off or cutting their wages in half, and taking their health care and pension.)

The Dependency Index

The conservative Heritage Foundation has published an "Index of Dependence on Government," saying we have "unsustainable increases in dependent populations." Heritage writes that, "Americans are haunted by the specter of enormously growing mountains of debt that suck the economic and social vitality out of this country."

Heritage fails to mention that we were paying off the nation's debt before Bush's tax cuts for the wealthy. In fact, at the rate we were paying off the debt when Clinton was President the entire US debt would have been paid off by now. Except for those tax cuts for the wealthy. But according to Heritage, the problem is not wealthy people paying very low taxes, it is humans who have human needs who are a "a potentially ruinous drain on federal finances."

Please take a look at Heritage's "dependency index." Social Security is "government dependence." Medicare is "government dependence." And on and on. Heritage says nothing about the huge, bloated, corrupt, enormous, massive, ginormous military budget -- that doubled under Bush. Heritage says nothing about the incredible subsidies government provides to oil and coal companies. Heritage says nothing about the cost of all of the tax cuts handed out to the wealthiest since the Reagan era. Nothing at all.

Heritage says that We, the People doing things for each other "encourages dependence." They talk about people as if they are squirrels. Like building the interstate highway system encourages dependence or having good public schools encourages dependence or a pension after a life of hard work encourages dependence or public health programs that keep epidemics from spreading encourages dependence or giving vaccines to children encourages dependence or, I guess, in the old days helping a neighbor put up a barn encouraged dependence.

It is the Romneys, getting their $20-million-plus checks for doing nothing -- the "gains" from stripping our economy and sending our jobs to China -- who are dependent. Not the people that the Romneys threw out of work or cut their pay in half. Not the people working two jobs yet not making enough to pay rent and get enough to eat. The real "producers" in our economy are the 99%, the people who work, not the1%er "parasites" who use their wealth and power and connections to game the system and reap vast "gains."

This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.

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-- Posted by Dave Johnson at 1:31 PM PST on February 09, 2012.

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Manufacturing On Planet Economus

-- by Dave Johnson

Economist Christina Romer had an op-ed in the NY Times this weekend, Do Manufacturers Need Special Treatment? The question that keep coming back to me is why did she feel the need to write an op-ed to diss manufacturing? Is it just an economist thing? Or is she, like so many economists, from another planet?

In her op-ed Romer claims those of us who argue for a national manufacturing policy do so out of “the feeling that it’s better to produce “real things” than services.” But, she says,

American consumers value health care and haircuts as much as washing machines and hair dryers. And our earnings from exporting architectural plans for a building in Shanghai are as real as those from exporting cars to Canada.

Here is the difference: We can't just keep servicing each other. This "service economy" thing hasn't worked out so well here on Earth, and now we have a huge trade deficit. It is "better to produce real things" because that is what you sell to others to get the money to pay each other for haircuts (and scissors).

Once You've Got It It's Hard To Lose It, Once You Lose It It's Hard To Get It Back

Manufacturing brings so much along with it that entire economies have been, are and will be supported. China isn't making its living by cutting each others' hair. Neither is Germany, or other countries that have realized the importance of manufacturing and manufacturing policy to an economy.

Manufacturing brings with it all the businesses in a supply chain, it brings the research and innovation that manufacturing requires, and it brings a lasting real infrastructure that requires enormous investment to duplicate elsewhere before competition is enabled. Today we have a tremendous current account imbalance that resulted from the terrible trade deficits suffered since we were invaded by this crowd from planet Economus, who told us we don't need manufacturing - that we should transform ourselves into a "service economy." And it will require enormous investment to restore the ecosystem that we allowed to escape to other countries in that period.

Once you've got it, it's hard to lose it, and once you lose it, it's hard to get it back. Not so much with services.

Romer's Three Straw Arguments

Romer sets up three arguments made of straw for helping manufacturing, only to knock them down:

One: Market Failure. Romer says "government intervention" is only justified when you can demonstrate "market failure." In essence she says markets must make our decisions, not We, the People. “For example, when competition in a market is limited, antitrust laws that prevent monopoly can be helpful.”

Romer writes that another “market failure” comes when it can be shown that there is a benefit to having clusters of businesses. When benefits leak beyond where a company is putting their money then tax breaks and other government help may be due.

Romer knocks down this justification for government “intervention” with two arguments. She says, “large clustering effects have been hard to find.”

Perhaps cluster effects don’t have benefits on planet Economus, where Romer apparently resides, but on earth all you have to do is look from the development of the auto industry in Detroit to the development of the semiconductor industry in Silicon Valley to understand that yes, clustering effects matter.

Romer also says if clustering does brings benefits why single out manufacturing for government benefits when other sectors also benefit from clustering? Well, of course we shouldn't just help our manufacturing if it can be shown that government involvement boosts the businesses of We, the People in other sectors.

Romer also says there is market failure if a learning period means that future companies benefit form work done by early companies. Romer says, “ a study of the semiconductor industry found that although learning by doing was substantial, most of the rewards went to companies doing the early investing.”

The Silicon Valley Romer talks about is located on that planet Economus. The Terran Silicon Valley I live in has seen many, many startups fail, only to see later companies take up their ideas and succeed.

Romer concedes that we might need manufacturing to make things with which to defend the country, justifying government intervention in markets. The argument that we need a strong manufacturing base here in case of war must be taken seriously. But she says it still doesn’t follow that all manufacturing deserves special treatment. Which industries are truly essential in a war effort, she asks? I guess she asks this is because on planet Economus service industries are essential to a war effort. On Economus you apparently win wars by cutting each others’ hair.

Two: Romer’s second case-of-straw for “government intervention” is to create jobs and reduce unemployment. Romer says, “Unfortunately, those effects are probably small.”

In the 2000-2009 "service economy" decade we lost 5 million manufacturing jobs, more than 50,000 factories, and the hope to capture several industries of the future. Those are not small effects. And the effects on the surrounding communities are severe.

Romer rightly says that the current problem with the economy is lack of demand. She prescribes tax cuts for households, help for state and local governments and investment in infrastructure. (The old "taxes take money out of the economy" argument?)

But then she says that a tax break to encourage insourcing of jobs in manufacturing won’t create demand so we shouldn't do it. It might make our goods cheaper to export, but challenging China’s currency manipulation would do more, so we shouldn’t do this. This is the old "don't do anything if it doesn't fix everything." We need to do all of these things, and more.

Three: Romer’s third straw argument is income redistribution. Because manufacturing jobs “are seen as” better-paying “for less educated workers” then manufacturing is a way to distribute more income to people with less education. But no, she says, “Increased international competition has forced American manufacturers to reduce costs. As a result, the pay premium for low-skilled workers in manufacturing is smaller than it once was.”

Romer says government should help people get a better education instead of helping create jobs for people who do not go to college. Perhaps on planet Economus all the IQs are above average, but on Earth the average IQ is 100, and not everyone can or should get a college degree. If we send more people to college without bringing back manufacturing, we'll just have more unemployed people with college degrees than we do now.

Romer also says, "If increasing income equality is the goal, it might be wiser to put money into infrastructure than to subsidize manufacturing. Construction also pays good wages, but with lower educational requirements. And America’s infrastructure needs are enormous." Well, yes. But again this is the old "don't do anything if it doesn't fix everything." Do those things. And revive American manufacturing.

Why is "the pay premium for low-skilled workers in manufacturing ... smaller than it once was"? Here is why: Before we became a plutocracy we were a democracy. When We, the People had a say we demanded good wages, benefits, good working conditions, a clean environment and dignity on the job. But workers in China have no say. They are stuffed 6 to a room in dormitories, rousted in the middle of the night to work extra shifts …

"Free trade" agreements made democracy a competitive disadvantage. To people from planet Economus, these conditions in places like China are just “lower costs” that the rest of us need to learn to compete with.

Are All The Other Countries Wrong?

The countries that are successful in today's economy have national industrial/economic policies. We do not. They work to capture parts or all of key strategic industries, and line up the infrastructure, finance, education, supply chains, power grid, tax policies and everything else needed to compete in the world economy. We do not.

We send our companies out against these national systems, and even our largest companies cannot compete with national systems. So we lose.

Are China, Germany and so many other countries just wrong, putting so much into these efforts to capture parts or all of strategic industries? Or are they being smart? Look at who has a trade surplus and who has a trade deficit, and see if you can guess the answer.

The Fix

1) Romer says we should not have special treatment to help manufacturing. Well, let’s start by removing the special treatments that are hurting manufacturing. After that we can begin to talk about "special treatment" to help manufacturing. Out tax policies encourage outsourcing and make it economically beneficial to close a factory rather than maintain it.

2) Countries like China offer subsidies to strategic companies and industries. They manipulate their currency to keep their prices lower in world markets. Let’s enforce trade rules against that, and if we can’t then let’s get out of these "free trade" agreements that are killing us and put tariffs on their goods so they are not unfairly competing with goods made here. And start matching subsidies on exports so they compete in world markets.

3) Other countries have national industrial policies, lining up everything needed to capture part of all of strategic industries. We don't so we send our companies out alone against countries. We have to change this, or ultimately our companies have to lose.

4) Planet Economus is a place far from Earth. On planet Economus they apparently have free markets, and free trade. But on Earth free markets and free trade never existed anywhere at any time, and never worked when they were tried. So on Earth we have to have policies that reflect what happens on Earth, not on planet Economus.

This Time Isn't Different

Romer concludes,

AS an economic historian, I appreciate what manufacturing has contributed to the United States. It was the engine of growth that allowed us to win two world wars and provided millions of families with a ticket to the middle class.

Right, and it still is. This time it isn't different.

This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.

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-- Posted by Dave Johnson at 12:20 PM PST on February 08, 2012.

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