The Great American Labor Squeeze (updated)

George Rebane

[This piece is a continuation of a series that explores the large currents shaking our country and the world.  Here we look at the labor shock from which America today has no plan to recover.  No one wants to talk about it.]

 

Let’s start by recalling the fate of John Henry, America’s legendary ‘steel drivin’ man’ when he attempted to save his job by competing with the new steam-driven steel driver.

Before the Berlin Wall came down in 1989, the American worker was competing against about 1,500,000,000 workers in the world economy.  The other 1,500,000,000 workers of the world were locked behind heavy gates in the socialist/communist workers’ paradises.  Their efforts and output didn’t compete with the workers of America and the free world.  Then the wall came down, and over the next three to five years there were ‘suddenly’ three billion workers across the world, all making things and providing services that could be sold across national boundaries.

The economists and sociologists called this The Great Doubling (and here), and it has poured into labor markets hundreds of millions of workers who discovered that they too can find their place in the sun along with the rest of us in the west.  Foreign governments immediately saw how they could compete.  Just start making things that the comfortable, under-educated, and highly paid western workers made, but make them cheaper and with higher quality.  They all learned to skip the learning curve of the post-war Japanese.  Every worker in the third world who went from field to factory was a hero to their own family and village.  And these eager people went through cutthroat competition to get and keep those jobs while our workers were grousing about not enough benefits and pay for the same output.

We’ve all heard this story, but perhaps, keeping the Great Doubling in mind will give us someplace to hang our hat and reflect as we send our kids off to school to learn skills that are valued primarily in the public sector.  Millions from the other billion and a half are spending more time studying math or science books, and then working their tails off to get into the local technical college.  In those far off lands all it takes is brains, and a clear recollection that you’ll spend your life staring at the ass-end of a water buffalo in a rice paddy if you ever decide that you ‘don’t do numbers’.  All the while the American youngster was taught that s/he had rights – the first of which was to cultivate a totally worthless sense of self-esteem (see update below) – and that the gummint would always come to the rescue.

But the Great Doubling is just one jaw of the pincer that’s putting the squeeze on the 140 million American workers.  The other side is made up of accelerating technology in its myriad of forms.  Smarter and smarter computers are teeming with nano-technology and genomics to continually stretch the income inequality gap between those who can and will, and those who can’t or won’t.  The latter quickly see that their future lies in backing governments that will use the force of arms to provide them with what is not theirs.

In spite of this, last November’s election was an American watershed where the people in their wisdom voted in a zero-sum administration that immediately launched itself on reapportioning its vision of a fixed economic pie.  But that pie is no longer baked only in the United States, and the parts cooked overseas keep growing and growing.  See the above references that give the background and details of how far behind we are falling.

So at this point it is important to just keep one simple and devastating thing in mind as we start suggesting all kinds of social remedies like those coming out of Washington today.  What are about 70 million American workers going to do in the coming decade in order to maintain the quality of life they have come to expect?  Don’t even think of a solution to our problems until you answer that question.  Where will these workers be able to competitively sell their labor?  Because if we ignore their expectations, they will dismantle our country, either politically or by more direct means.  And they have already launched their ‘political solution’.

Some who don’t keep up with the important stuff will argue that humans, and particularly Americans, have always led the way in doing higher skilled jobs, whether with their brains of with their hands.  Take a look at this video of the kinds of jobs machines with hands can already start doing today.  This is just one recent step in the rush to the Singularity.

Politicians and journalists don’t talk about the rock and the hard place where today’s American worker lives, simply because they are ignorant about the great forces that are converging on our country.  They blather about the return of jobs when the economy is stimulated back to normalcy, as if government has the power to take us back to the days of Ozzie and Harriet.  Few point to the warnings given by futurists and technologists who now gather regularly to debate the practicalities in dealing with machines of par intelligence, luddite reactions, and the effects of setting up trade barriers in the last ditch effort to protect the newly unskilled workers and dinosaur industries within our borders.

With our current policies we will not continue to generate wealth to maintain, let alone grow America with legions of humanities majors busy counseling each other about life’s hard moments, or as caregivers changing old folks’ diapers, or imposing additional regulations on each other, or asking whether we want fries with that hamburger.  Here’s a  current report on how we stack up from CNN (HT to Russ Steele for this timely reference.)

But I believe there are some unlikely ways up and out of our dilemma.  Next time we’ll take a look at one of these.

[update] Today’s WSJ reviews the just out NurtureShock by Bronson and Merryman.  The book’s authors survey the latest research on the effectiveness of all the child-rearing nostrums that were sold to eager, caring, yet gullible parents over the last decades.  And guess what? all the studies that cost hundreds of thousands of dollars confirm what we knuckledraggers knew from the start.  On self-esteem we read –

A striking example is the latest research on ¬self-esteem. As Mr. Bronson and Ms. Merryman remind us, the psychologist Nathaniel Brandon published a path-breaking paper in 1969 called "The Psychology of Self-Esteem" in which he argued that feelings of self-worth were a key to success in life. The theory became a big hit in the nation's schools; in the mid-1980s, the California Legislature even ¬established a self-esteem task force. By now, there are 15,000 scholarly articles on the subject.
 
And what do they show? That high self-esteem doesn't improve grades, reduce ¬anti-social behavior, deter alcohol drinking or do much of anything good for kids. In fact, telling kids how smart they are can be ¬counterproductive. Many children who are convinced that they are little geniuses tend not to put much effort into their work. Others are troubled by the latent anxiety of adults who feel it necessary to praise them constantly.

The stuff on ‘tolerance’ and ‘diversity’ is even more eye-opening for those who have spent the last forty years quoting slogans.

Comments

[DaveC]

One can see the technological advances China has made.

I first went to Beijing, China on business for my former employer in 1986. It was nothing but a back woods, third world country. Few, if any spoke English. The most common mode of transportation was bicycle. People lived in squalor. Their idea of a 4 Star hotel was private room, with padded mattress and privey down the hall. Police guards watching your every move.

I returned about 3 months ago as a consultant, this time to Guangzhou, about an hour ride north of Hong Kong. What an amazing place. People want to speak English. Owning a motorcycle or scooter is a necessity and they want cars now. Hotels match those in Europe and hotel food is more western-like. It is more up beat with people smiling and greeting westerners more, instead of the poverty they once had. Ordinary citizens asking me if I know Alex Rodriguez, Derek Jeeter, George Bush, Brad Pitt or the Jonas Brothers. Cell phones, iPods, ladies wearing cosmetics, leather and spike clad bikers on scooters. And, they want more.

Sadly, I went to Guangzhou at the request of my former employer to iron out some issues. You see, my former employer, like many other US business elected to dump their local employment force and outsource it overseas. It is quite apparent these businesses are fueling the Chinese economy at the expense of US technology.

[Dixon Cruickshank]

Good piece George