In The Price of Civilization, Jeffery Sachs explains how it comes to be that the employee is left holding the bag in the new globalized economy:
In the ensuing competition among governments, capital benefits from a “race to the bottom,” in which governments engage in a downward spiral of taxation and regulation in order to try to keep one step ahead of other countries. All countries lose in the end, since all end up losing the tax revenues and regulations needed to manage the economy. The biggest loser ends up being internationally immobile labor, which is likely to face higher taxation to compensate for the loss of taxation on capital.
Post pandemic, maybe that could change for the better for many types of labor including those ones that were once immobile. Telehealth and telemedicine are becoming more mainstream now than ever before. So the immobile labor associated with providing healthcare will perhaps fare better now. But these are not the hardest hit employees to begin with. As Sachs points out:
Among American workers, the biggest losers by far are those with a low level of education. This is because most of the new entrants to the global labor market in China and India also have a high school diploma or less.
Sachs does not get into the fire in the belly factor of these folks with low level of education that work out of India and China. My friend T works with manufacturers in China to produce the parts he needs to run his local small business. The level of attention and engagement he gets from vendors in China is completely different from those in America. The job costs orders of magnitude lower for one thing and arguably not much can be done about that. But the overseas vendors are willing to take a chance on T and his business, deliver the product in small batches because T's business is not big enough. He does not have the cash reserves of a bigger operation. So they give him a break in pricing terms, work holidays and weekends to make his deadlines. Their average response time to anything is under thirty minutes. Even if price were to be equal the choice of business partner for T would be obvious. He gets none of that from suppliers here.
It would be great if the likes of Sachs would point out this rather obvious detail - to compete successfully, you need to be willing to go the distance, above and beyond. The electrical contractor I had to work with recently is the kind of low level education American worker Sachs is describing. He is in mid twenties running a very successful business, employs three other people and they work 24/7 every day of the year. He was deeply apologetic for not being available to help me on New Year's day. That is fire in the belly. People who have that will survive and thrive anywhere.
Sachs speaks of all that ails America from the vantage point of his ivory tower. Lot of blame is doled around - he is fairly equal opportunity that way. But his perspectives are not novel. Could impress a freshman class in college but for older folks there is not that much. Most of us knew such facts as Sachs impresses upon the readers in the context of tax havens for example:
The last step of this wonderful chain is that Google Ireland Holdings, despite its name, is based in Bermuda, where it avoids taxation on the billions of dollars of royalties paid to it.
Then he states the most commonsense, self-evident facts like this one as if he had stumbled upon some miraculous insight. I would assume that the more astute freshmen would not be impressed
..I have created a Commercialization Index (CI) that aims to measure the degree to which each national economy is oriented toward private consumption and impatience rather than collective (public) consumption and regard for the future. My assumption is that the United States and other heavy-TV-watching societies will score high on the CI and that a high CI score will be associated with several of the adverse conditions plaguing American society.
Comments