Picking
up on the last posting, this one continues commentary on an apparent Biden
Administration policy choice that does have implications on how well Americans
are federated. What the government is
aiming to do does reverse a historical development.
To
summarize that development, it takes the following form over the centuries: humans went from nomadic economies to
agricultural economies, to industrial economies, and then to a post-industrial,
service economies especially in those economies that were most successful. At each turn, productivity increased – more
output per units of inputs in the production process.
But
now, of late, there seems to be a new advocacy for some retracking in this
grand progression. At least in the US, there
are calls for rebooting the industrial sector of the economy. Why?
Apparently, the reason is more political than economic. When manufacturing was exported to other
countries, this left behind millions of dispossessed workers. They found themselves instead of holding good
paying jobs in manufacturing facilities to being unemployed or employed in
significantly lower paying jobs.
The
good pay was now going to those who were trained/educated in technical skills such
as in computer-based work. Instead of
manufacturing centers enjoying vibrant economies, tech centers, such as Silicon
Valley in California, became the new enriched centers in the American economy. And a slew of workers who were caught up in
these relatively quick changes, were not in the positions of life – due to age,
family status, or other factors – to quickly shift onto new employment paths,
at least, not reasonably so.
What
were available to them were low skill retail work or personal service options such
as yard maintenance businesses. Many of
these workmen/workwomen found themselves working as waiters or waitresses in
local or chain restaurants and mostly for tips.
While the economy grew mostly as a result of services in IT or financial
businesses, the bulk of these former industrial workers became the fodder for
radical politics.
While
not all radicals are underemployed Americans and all un or under employed
Americans are radicals, this Venn diagram has a good deal of overlap. Hence, there exists a political reason for
finding relief. And the obvious turn
should be toward revamping the nation’s manufacturing capacity. Linda Yueh[1] uses the
term “rebalance” to describe this recent reversal toward manufacturing.
If
one needs an “economic” reason for this reverse, one can cite the 2008
financial crisis. There, the service-oriented
financial industry almost led the nation and the world to a world-wide
depression. It pointed to the possibility
that the nation was too service oriented and being too dependent on that sector
to maintain a healthy economy.
Also,
the nation’s current reaction to the pandemic has indicated that the US fell
short of some essential products such as masks, gowns, and other protective apparel. That has led some to consider whether as with
this shortage, perhaps Americans would we wise to produce enough of emergency
goods for this or possibly other unplanned eventualities. Should the nation not produce those goods it
can possibly need now or at some future date?
These
are legitimate economic reasons to look at whether the nation has relied too
heavily on services to meet the needs of the American people. Now add to that some context:
· c.
70% of the US and other western economies are service based;
· yet
the US economy is the second largest industrial country (second to China);
· even
China’s service sector is growing; and
· automation
threatens roughly 25% of existing manufacturing jobs in the US.[2]
Despite
these conditions, in the West, along with the US, manufacturing amounts to less
than 20% of total production (in Britain it is closer to 10%, in Germany closer
to 20% or a bit above that).
The
point being made is: this problem of
dispossessed workers is not limited to the US, it is a problem that is not
going away, but the US and these other countries are not totally out of the manufacturing
game. Therefore, this call for increased
manufacturing seems highly doable and should be seriously considered.
While
federation theory does not justify the resulting identity politics that this dispossession
of workers has led to, it does see their plights as problematic beyond just the
fact that one has a significant number of people being upset. With these shifts of fortunes, difficult
questions arise. As stated elsewhere in
this blog, that theory promotes what it calls regulated equality[3] and the
current state of affairs disabuses its implied value.
This
whole process has taken place with the social structure of accumulation (SSA)
perspective known as the neoliberal SSA.[4] That view, reflecting the Reagan economic
agenda with its strong laisse faire bias and policies, has led to
extreme inequalities of income and wealth.
This leads one to judge that the resulting increases in productivity
associated with services has benefited relatively few people in the West.
For
example, early in the 1960s, the top 1% of households’ net worth was 125 times
the median wealth in the US. Currently,
that has grown to 190 times.[5] This is just one indicator that unbalanced
growth has favored of the rich. And
given the above-described fate of former industrial workers, one can see why
many Americans are turning to a radicalism of the right. Therefore, if for no other reason, federation
theory finds such concerns over production and globalization as legitimate
areas to address from a moral point of view.
This
blog will revisit this concern in the future, but it leaves the reader with two
question: should a capitalist nation,
such as the US, issue public policy that promotes reindustrialization or should
governmental policy play a neutral role and allow the markets to determine
what, where, and how production should occur?
If the answer is somewhere in between these two more extreme positions,
in which direction and how far should it favor one or the other? The common good is dependent on hitting the
right balance.
[1]
Linda Yueh, What Would the Great Economists
Do?: How Twelve Brilliant Minds Would
Solve Today’s Biggest Problems (London, UK:
Penguin, 2019).
[2] For this last bulleted point, see Annie Nove and John
W. Schoen, “Automation Threatening 25% of Jobs in the US, Especially the ‘Boring
and Repetitive’ Ones: Brookings Study,”
CNBC (January 25, 2019), accessed February 2, 2021, https://www.cnbc.com/2019/01/25/these-workers-face-the-highest-risk-of-losing-their-jobs-to-automation.html
.
[3] The term regulated equality refers to the value in
which one prizes for the most part equality before the law but make allowances
for the hardships bound to occur within mostly capitalist economies. Usually, the regulated elements take the form
of minimum wage, unemployment insurance, and retirement benefits. It can also include welfare programs, public
housing, public education, and other services to meet minimum subsistence
standards.
[4]
William K. Tabb, The Restructuring of
Capitalism in Our Time (New York, NY:
Columbia University Press, 2012).
[5] Jeanne Sahadi, “Wealth Gap Widens,” CNN Money
(August 29, 2006), accessed January 28, 2021, https://money.cnn.com/2006/08/29/news/economy/wealth_gap/#:~:text=In%20the%20early%201960s%2C%20the,wealth%20in%20the%20early%201960s.
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