Train Your Foreign Replacement = "Dig Your Own Grave?"

[Spectre_of_Pithecanthropus]

@Kimstu

That sounds as though we’re putting decent jobs in the same category as high-end luxuries that only a minority can realistically expect to enjoy. That’s kind of troubling.

Nobody needs to drive a Mercedes in order to have a decent material standard of living and reasonable quality of life. But the way we’ve set up our society, the vast majority of people need to have a decent job in order to afford food, shelter, clothing, healthcare, a secure retirement, a safe neighborhood, family stability, education for their kids, etc. etc.—all the basics of life in a developed society.

If we’re now telling hard-working, well-qualified people that they don’t necessarily “deserve” these things and should not rely on being able to get a job that provides them, we’re contradicting the fundamental message of our capitalist society that says industry and ability are the key to prosperity. It’s good to be honest about this, but we had better be prepared to deal with a lot of shock and outrage from workers.

Or another way of expressing it is that it’s a form of more unbridled capitalism, in which only those who take the financial risk, that is the entrepreneurs, stockholders, and assorted favored others such as corporate lawyers “deserve” a decent living, and everyone else can be a serf. The fundamental message of capitalism is not that industry and ability are the key to prosperity, but that value to the shareholders is paramount. But what delivers the most value to shareholders in the short term can definitely have long term effects that lead to economic instability, and even poverty, for many. There must come a point when these conditions and the social problems they generate undermines the value of capital, whether through actual insecurity and class warfare, or through the government being forced to fund a vastly expanded welfare system by inflating the currency.

Now if only more people thought beyond the next quarter’s numbers…

[John_Mace]

@Kimstu

That sounds as though we’re putting decent jobs in the same category as high-end luxuries that only a minority can realistically expect to enjoy. That’s kind of troubling.

Nobody needs to drive a Mercedes in order to have a decent material standard of living and reasonable quality of life. But the way we’ve set up our society, the vast majority of people need to have a decent job in order to afford food, shelter, clothing, healthcare, a secure retirement, a safe neighborhood, family stability, education for their kids, etc. etc.—all the basics of life in a developed society.

OK, change “Mercedes” to “Toyota Corolla”. Do you think that everyone deserves a “decent” job? I’d certainly agree that everyone deserves an equal shot at the “decent” jobs that are out there, but I can’t see that anyone “deserves” a good or service from another individual.

If we’re now telling hard-working, well-qualified people that they don’t necessarily “deserve” these things and should not rely on being able to get a job that provides them, we’re contradicting the fundamental message of our capitalist society that says industry and ability are the key to prosperity. It’s good to be honest about this, but we had better be prepared to deal with a lot of shock and outrage from workers.

Capitalism doesn’t promise prosperity. To the extent that it “promises” anything, it just promises more prosperity than can be obtained by other economic systems.

[Evil_Captor]

@John Mace

I can’t speak for Bricker, but I certainly understand that people feel bad about the situation. I think most of the free traders here do, too. Yes, we “feel their pain,” if that helps.

John, I just don’t believe you. I think you THINK you feel their pain, but if you feel it at all, you feel it through many layers of ideology.

In any event, I’ve never heard a free trader EVER come up with a solution other than “do whatever you’re told to do for money, and if you can’t get someone to employ you, you’re just shit out of luck, too fucking bad.” Certainly, none of you would THINK of trying to make the marketplace work for people, instead of vice versa.

BTW, that analogy about the 100 plates of food is a good one. The corporate honchos and the stockholders are getting rich while everyone else loses jobs and goes without. I don’t think the people at the top are feeling ANY pain at all.

And I think that’s OK with you.

[Spectre_of_Pithecanthropus]

@John Mace

OK, change “Mercedes” to “Toyota Corolla”. Do you think that everyone deserves a “decent” job?

Capitalism doesn’t promise prosperity. To the extent that it “promises” anything, it just promises more prosperity than can be obtained by other economic systems.

Changing the type of car is highly significant. Because for most of the 20th century, the accepted model of employment in this country was “a good day’s pay for a good day’s work”, beginning with Henry Ford himself, who believed that the workers who built the Model T should be able to afford one. While such a principle would not have been applicable to the workers who built Lincoln Town Cars, or yachts, or the like, still the underlying premise was that the average worker should be more or less able to afford at least a lower middle class lifestyle. Not all workers, necessarily. There are bound to be some crappy jobs in virtually any economic system.

I think we agree that capitalism promises more prosperity than other systems, but the question is how that prosperity is distributed. IMO there must be adequate reward for the entrepreneur to make it worthwhile, but if there’s not a wide enough distribution of the rewards, then capitalism becomes no better than communism was. If our capitalist economy devolves to the point where wealth and comforts are concentrated in the hands of a few, like Soviet Russia, then what’s the advantage of capitalism over communism?

[Kimstu]

JM: I’d certainly agree that everyone deserves an equal shot at the “decent” jobs that are out there

But if there aren’t enough decent jobs out there for all (or at least the vast majority) of the hard-working well-qualified people who want them, then we’ve got a problem.

Just saying that capitalism provides opportunities for prosperity isn’t enough to recommend it. We need to know what sort of opportunities it provides, how many, for whom. We need to know whether it will in fact be successful in meeting society’s expectations about what people deserve.

Though you may not approve of it, many many people do in fact feel that hard-working, well-qualified workers deserve a decent job. Not that they deserve to be supported without working, nor that they deserve to be paid like CEOs, nor that they deserve to have total job security in any one job. Just that if they’re capable of and willing to do good work, they ought to have ample opportunity to earn a decent living.

What I think you’re driving at is that we can’t always count on markets to provide that ample opportunity. There are economic downturns, industry restructurings, etc., which contract workers’ opportunities temporarily (and there may be trends like rising productivity which contract such opportunities permanently, but that’s more speculative). However, you can’t expect people’s fundamental ideas about what they deserve to change just because the economy slumps. If they’re still hard-working and well-qualified, they’re still going to feel they deserve to earn a decent living.

[hijack]

Do you think that everyone deserves a “decent” job?

I don’t quite see how my personal beliefs on the subject constitute a useful contribution to the debate, but I have no objection to answering the question. I think every honest, industrious, capable worker deserves a decent job. I don’t mean that they should just get a decent job handed to them or expect never to lose it once they get it, but they should always have ample opportunity to get a decent job.

So what do I think that means in terms of the real-life working world? What do I think the job market should be expected to provide for such workers? Let’s see if I can flesh that out with at least some vague statements about specific expectations…

• Wages that enable at least an upper-working-class or lower-middle-class lifestyle, including decent healthcare, education, retirement, etc. (some of these will no doubt be provided by universal social benefits instead of directly out of the paycheck).
• Decent working conditions and worker protections, right to organize, all that NLB stuff.
• On average, no more than two or three involuntary career changes and/or major geographic relocations in the course of a working lifetime.
• On average, no more than six to ten months total of involuntary unemployment in the course of a working lifetime.

That, I think, would be a reasonable compromise between prosperity and security for workers on the one hand, and flexibility and opportunity for employers on the other. And I have no problems at all with asserting that every honest, industrious, capable worker deserves at least this good a chance at prosperity and security.

[/hijack]

[iamme99]

Businessweek has an excellent story comparing the way Costco does business and how it treats it’s employees compared to Wal-Mart’s Sam’s Club in the April 12, 2004 issue. It is rather eye opening, showing that if you treat your people well, you will reap major benefits. In this case, the numbers don’t lie. The link is (here) but it appears to be a subscriber only article. If you want to read the whole thing, then head over to the library if you’re not a Businessweek subscriber.

Here’s an excerpt:

Surprisingly, however, Costco’s high-wage approach actually beats Wal-Mart at its own game on many measures. BusinessWeek ran through the numbers from each company to compare Costco and Sam’s Club, the Wal-Mart warehouse unit that competes directly with Costco. We found that by compensating employees generously to motivate and retain good workers, one-fifth of whom are unionized, Costco gets lower turnover and higher productivity. Combined with a smart business strategy that sells a mix of higher-margin products to more affluent customers, Costco actually keeps its labor costs lower than Wal-Mart’s as a percentage of sales, and its 68,000 hourly workers in the U.S. sell more per square foot. Put another way, the 102,000 Sam’s employees in the U.S. generated some $35 billion in sales last year, while Costco did $34 billion with one-third fewer employees.

Bottom line: Costco pulled in $13,647 in U.S. operating profit per hourly employee last year, vs. $11,039 at Sam’s. Over the past five years, Costco’s operating income grew at an average of 10.1% annually, slightly besting Sam’s 9.8%. Most of Wall Street doesn’t see the broader picture, though, and only focuses on the up-front savings Costco would gain if it paid workers less. But a few analysts concede that Costco suffers from the Street’s bias toward the low-wage model. “Costco deserves a little more credit than it has been getting lately, [since] it’s one of the most productive companies in the industry,” says Citigroup/Smith Barney retail analyst Deborah Weinswig. Wal-Mart spokeswoman Mona Williams says that Sam’s pays competitively with Costco when all factors are considered, such as promotion opportunities.

PASSING THE BUCK. The larger question here is which model of competition will predominate in the U.S. Costco isn’t alone; some companies, even ones like New Balance Athletic Shoe Inc. that face cheap imports from China, have been able to compete by finding ways to lift productivity instead of cutting pay. But most executives find it easier to go the Wal-Mart route, even if shareholders fare just as well either way over the long run.

Yet the cheap-labor model turns out to be costly in many ways. It can fuel poverty and related social ills and dump costs on other companies and taxpayers, who indirectly pick up the health-care tab for all the workers not insured by their parsimonious employers. What’s more, the low-wage approach cuts into consumer spending and, potentially, economic growth. “You can’t have every company adopt a Wal-Mart strategy. It isn’t sustainable,” says Rutgers University management professor Eileen Appelbaum, who in 2003 edited a vast study by 38 academics that found employers taking the high road in dozens of industries.

Given Costco’s performance, the question for Wall Street shouldn’t be why Costco isn’t more like Wal-Mart. Rather, why can’t Wal-Mart deliver high shareholder returns and high living standards for its workforce? Says Costco CEO James D. Sinegal: "Paying your employees well is not only the right thing to do but it makes for good business."

Look at how Costco pulls it off. Although Sam’s $11.52 hourly average wage for full-timers tops the $9.64 earned by a typical Wal-Mart worker, it’s still nearly 40% less than Costco’s $15.97. Costco also shells out thousands more a year for workers’ health and retirement and includes more of them in its health care, 401(k), and profit-sharing plans. “They take a very pro-employee attitude,” says Rome Aloise, chief Costco negotiator for the Teamsters, which represents 14,000 Costco workers.

In return for all this generosity, Costco gets one of the most productive and loyal workforces in all of retailing. Only 6% of employees leave after the first year, compared with 21% at Sam’s. That saves tons, since Wal-Mart says it costs $2,500 per worker just to test, interview, and train a new hire. Costco’s motivated employees also sell more: $795 of sales per square foot, vs. only $516 at Sam’s and $411 at BJ’s Wholesale Club Inc. (BJ ), its other primary club rival. “Employees are willing to do whatever it takes to get the job done,” says Julie Molina, a 17-year Costco worker in South San Francisco, Calif., who makes $17.82 an hour, plus bonuses.

[clairobscur]

@John Mace

Capitalism doesn’t promise prosperity. To the extent that it “promises” anything, it just promises more prosperity than can be obtained by other economic systems.

Which, assuming it’s true doesn’t mean much. For instance, if there’s wealth created, but all this wealth (plus some more, taken from other people) goes to a very limited number of individuals, it won’t be considered as a good thing by the overwhelming now impoverished majority, who would prefer less overall prosperity but a larger share of it going their way, or at least keeping the level of prosperity they enjoyed previously.
Even assuming that economists could agree and tell us what policy should be followed for a given outcome to be achieved (which of course isn’t the case), it wouldn’t be enough. We would still have to agree about what result we would want to reach collectively (since we’re part of a society). For instance, I would be most certainly very unhappy living in ** Libertarian ** ideal society and the reverse would most certainly be true. So, we would still disagree about what should be done even if we knew for sure what a given policy would result in.
So, “promising prosperity” isn’t enough by a long shot. Even ignoring the “promise” part (communist systems also promised a lot of things). I wouldn’t trade, individually, more prosperity (wealth) for, for instance, less vacations (actually I traded more vacations for less wealth), nor more prosperity for crappy working conditions. Let alone if the trade-off is more crappy work conditions for me in exchange for more prosperity for the “happy few”.

[Metacom]

@John Mace

I’d certainly agree that everyone deserves an equal shot at the “decent” jobs that are out there, but I can’t see that anyone “deserves” a good or service from another individual.

If they move my position, and others like it, to India then I’ll no longer have any shot at all, much less an equal shot, because I’m not an Indian and I can’t become one.

Hell, if I could I’d seriously considering taking an IT job there. With the savings that I have, I could probably afford my own Colonel Kurtz-style jungle compound, complete with sacrificial water buffalo… Mmmmmmm, insanity and absolute power…

[lee]

Once upon a time, weren’t corporations granted charters, charters that could be revoked, because they promised to do something that the government agreed served the public purpose? Wasn’t that why they were granted special things like limited laibility?

[Mtgman]

I often find threads like this amusing, in a very sad and dark humor kind of way, because of the juxtaposition of the stereotypes. The stereotypical conservative, hard-nosed realist, is harping on about the ideals of free trade and how it will raise all boats in theory at least. The stereotypical liberal, ivory tower idealist, is pointing to the cold, hard facts of rising unemployment and falling standard of living.

I believe free trade can have enormous benefits as a economic model, when it is universally the rule. Therein lies the rub. Unbalanced market forces never did anyone any good. My company has been outsourcing jobs, some of which are going overseas, and on each of our meetings with CEOs/CIOs/CFOs, etc I have asked the same question. “Are we seeing new market opportunities as capital flows to the developing nations? Are we acting to take advantage of emerging markets? Are markets emerging at all?” So far no one has tackled my question, and I don’t blame them. The reality is that reality is dangerously out of sync with the ideal free trade model and implementing one aspect of it without the others can be disastrous. It is the law of unintended consequences.

Enjoy,
Steven

[Kimstu]

Mtgman: *My company has been outsourcing jobs, some of which are going overseas, and on each of our meetings with CEOs/CIOs/CFOs, etc I have asked the same question. “Are we seeing new market opportunities as capital flows to the developing nations? Are we acting to take advantage of emerging markets? Are markets emerging at all?” So far no one has tackled my question, and I don’t blame them. The reality is that reality is dangerously out of sync with the ideal free trade model and implementing one aspect of it without the others can be disastrous. *

Good point. This the crux of my problem with supporters of laissez-faire policies: they too often seem to assume that

Most efficient operation of markets = Whatever businesses want to do right now.

This is a dangerous assumption, IMO. The incentives of the market system we’ve got are heavily skewed towards short-term profit rather than long-term stability and prosperity. Plenty of business trends turn out to be shortsighted and foolish (dot-com bubble investment, anyone?), and we shouldn’t be afraid to speak out against strategies that have serious problems just because they’re providing some immediate benefits for some people.