haleygk74: Making Money Jobs

Robert Kuttner reiterated many of the same points he made in his article at the Huffington Post last week on this weekend's edition of Your Money on CNN. Businesses are not going to start hiring American workers until our politicians start to care more about protecting American jobs than their corporate campaign donors.

Business Doesn't Need American Workers:

Once again, the job numbers are dismal. In January, the U.S. economy created just 36,000 domestic jobs, far below the roughly 145,000 that economists had forecast. The unemployment rate fell, to 9 percent, but only because more and more discouraged workers are giving up and leaving the workforce.

The U.S. still has a jobs gap of about 14 million jobs, and that number is increasing as the labor force grows. Counting people who've given up, or who are working part time when they want full time jobs, the real unemployment number is around 17 percent. America now has about 25 million people either out of work or underemployed.

Meanwhile, corporate profits continue to set records. Profits in the third quarter of 2010 were 1.659 trillion, about 28 percent higher than a year before, and the highest year-to-year increase on record.

What's going on? Very simply, America's corporations no longer need America's workers.

Much more there so go read the rest. Transcript via CNN below the fold.

ROMANS: You know Robert Kuttner, is the coeditor of the "American Prospect." Robert there's this feeling, this sneaking suspicion that American workers have been delinked with success of corporate America and American business. Is that true and is it permanent?

ROBERT KUTTNER, CO-EDITOR, "THE AMERICAN PROSPECT:" Well, it's certainly true. And it's certainly the result of the business model that American business currently pursues and unfortunately that is abetted by the trade policy practice by both political parties, which is to say make whatever deals you can make with whatever countries are offering you subsidies, low-wage workers, a little bit of arm twisting as the Chinese do, and if you can prosper from that, god bless you.

I mean in the '50s engine Charlie Wilson, then the head of GM, was ridiculed for saying what's good for GM is good for America. There was some truth to that in those years. I'm not sure you can say what's good for GE is good for America because GE has been moving most of its high level as well as low level jobs overseas and making a separate peace with the Chinese.

ROMANS: But the CEO of GE is a man who the president is relying on quite heavily for advice about how to work with business to make sure that the American middle class isn't left out. Right?

KUTTNER: Yes, and isn't that unfortunate. I mean if anything, Jeff Immelt is the poster child for the wrong kind of business model.

[...]

ROMANS: But super elites don't vote for the president in 2012, and they don't vote for congress. Congress is where there is the real concern about what to do. Robert, what does Obama need to do to help the middle class whether this recovery and enjoy this recovery?

KUTTNER: Well super elites may not vote, but super elites fund campaigns and that is why they have so much disproportion influence. I have to take exception to the idea it's always the middle class that gets whacked. The middle class was getting whacked long before this recession. This is a 30-year process of income distribution becoming more unequal. We need to turn that around and we need to persuade congress to invest in America, to invest in the skills of workers and have a different trade policy. That is not protectionism.

Germany has the highest wage cost in the world. And it also has the highest export surplus in the world because German elites care whether they still make things in Germany. American elites don't seem to care whether we do. Now Obama needs to reach out to public opinion as well as to the Chamber of Commerce to change those perceptions and those policies and those national goals.

ROMANS: Last word to Richard Quest who is going to throw his pen into the camera at any moment.

QUEST: Well, he makes a very good point. Just look at the way Germany handled the great recession. It didn't lay off employees. It put them on short time. It did paid holidays or unpaid holidays. It did all sorts of things. It drove down the cost base so that when the recovery came German industry more than any other in Europe was ready to take advantage of the growth that was coming.

So Robert is quite right. But this question of infrastructure is fascinating. Look at the Victorians, look at the last century, they built bridges. They built tunnels. They built roads. They actually built something that we're still using today. In New York they can't even get the tunnels under the Hudson. You can't even -- you can't even get agreement on a fast rail network, and in Britain we're having exactly the same problem.

ROMANS: Two seconds to Chrystia, the one that is dying to get points.

FREELAND: Super quickly. I agree with Richard and Robert about infrastructure and investment. But someone has to pay taxes for that to happen. Americans across the political spectrum seem to not want to do that.

ROMANS: All right. Chrystia Freeland --

KUTTNER: How about the top 1 percent?

ROMANS: Global editor at large at Reuters. Robert Kuttner, co- editor of "The American Prospect." And Richard Quest is going to stick around where he can throw things and say Victorian as many times as possible because I love it when he does that. Thank you everyone.

Whenever you hear a business executive or politician use the term "American competitiveness," watch your wallet. Few terms in public discourse have gone so directly from obscurity to meaninglessness without any intervening period of coherence.

President Obama just appointed Jeffry Immelt, GE's CEO, to head his outside panel of economic advisors, replacing Paul Volcker. According to White House spokesman Robert Gibbs, Immelt has "agreed to work through what makes our country more competitive."

In an opinion piece for the Washington Post announcing his acceptance, Immelt wrote "there is nothing inevitable about America's declining manufacturing competitiveness if we work together to reverse it."

But what's American "competitiveness" and how do you measure it? Here are some different definitions:

It's American exports. Okay, but the easiest way for American companies to increase their exports from the US is for their American-made products to become cheaper internationally. And for them to reduce the price of their American-made stuff they have to cut their costs of production in here. Their biggest cost is their payrolls. So it follows that the simplest way for them to become more "competitive" is to cut their payrolls -- either by substituting software and automated machinery for their US workers, or getting (or forcing) their US workers to accept wage and benefit cuts.

It's net exports. Another way to think about American "competitiveness" is the balance of trade -- how much we import from abroad versus how much they import from us. The easiest and most direct way to improve the trade balance is to coax the value of the dollar down relative to foreign currencies (the Fed's current strategy for flooding the economy with money could have this effect). The result is everything we make becomes cheaper to the rest of the world. But even if other nations were willing to let this happen (doubtful; we'd probably have a currency war instead as they tried to coax down the value of their currencies in response), we'd pay a high price. Everything the rest of the world makes would become more expensive for us.

It's the profits of American-based companies. In case you haven't noticed, the profits of American corporations are soaring. That's largely because sales from their foreign-based operations are booming (especially in China, Brazil, and India). It's also because they've cut their costs of production in the US (see the first item above). American-based companies have become global -- making and selling all over the world -- so their profitability has little or nothing to do with the number and quality of jobs here in the US. In fact, it may be inversely related.

It's the number and quality of American jobs. This is my preferred definition, but on this measure we're doing terribly badly. Most Americans are imprisoned in a terrible trade-off -- they can get a job, but only one that pays considerably less than the one they used to have, or they can face unemployment or insecure contract work. The only sure way to improve the quality of jobs over the long term is to build the productivity of American workers and the US overall, which means major investments in education, infrastructure, and basic R&D. But it's far from clear American corporations and their executives will pay the taxes needed to make these investments. And the only sure way to improve the number of jobs is to give the vast middle and working classes of America sufficient purchasing power to get the economy going again. But here again, it's far from clear American corporations and their executives will be willing to push for a more progressive tax code, along with wage subsidies, that would put more money into average workers' pockets.

It's politically important for President Obama, as for any president, to be available to American business, and to avoid the moniker of being "anti-business." But the president must not be seduced into believing -- and must not allow the public to be similarly seduced into thinking -- that the well-being of American business is synonymous with the well-being of Americans.

Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.

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haleygk74

Tuesday, February 15, 2011

Making Money Jobs

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