The Commons is a weblog for concerned citizens of southeast Iowa and their friends around the world. It was created to encourage grassroots networking and to share information and ideas which have either been suppressed or drowned out in the mainstream media.

"But if the cause be not good, the king himself hath a heavy reckoning to make, when all those legs and arms and heads, chopped off in battle, shall join together at the latter day and cry all 'We died at such a place;' some swearing, some crying for a surgeon, some upon their wives left poor behind them, some upon the debts they owe, some upon their children rawly left. I am afeard there are few die well that die in a battle; for how can they charitably dispose of any thing, when blood is their argument? Now, if these men do not die well, it will be a black matter for the king that led them to it; whom to disobey were against all proportion of subjection." (Henry V, Act V, Scene 4)

Tuesday, August 23, 2005

Stirling Newberry - Wal*merica

Wal*merica
by Stirling Newberry

Sunday on Truthout I wrote about how there is a dollar glut And the American consumer is the one footing the bill. It's entirely reasonable, after all, the reason people want dollars is because American consumers buy things with dollars, and produce a revenue stream. That revenue stream has been packaged as stocks and other instruments and sold. We've been selling our children to buy oil, because they are the source of the future value that is being sold.

I got a wave of questions, the most common one can be summarized as "what can I do?" That's the beauty of it, there really isn't very much you can do. You can't take advantage of this, because you are being taken advantage of. The turkey gets invited for dinner.

If you are wealthy what you are doing is "seeking Yuan exposure". People have heard a lot about China, and have been told their jobs are going to China. This isn't the case. Your jobs are being shovelled into tax cuts. The work you were doing is going to China, but your job is a different matter.

Look at it this way, when you were first working, you had a entry level position. You basically saved time for someone more experienced, or did things that required no more than knowing which end of a broom to use. Even if you were a lawyer, you were still a janitor. When you were promoted, you stopped doing many of the simplest tasks, and did others. Some other entry level employee took over the small tasks. Did he or she "get your job?" No, you were happy to let them do the dull work, as you got to do more, and get paid more. You still had your job even if you were doing different work.

Now let's change this, imagine you are doing work for a company, have a job, and then one day they cut your hours down to the minimum, hoping you will leave, and bring on someone else at the bottom of the pay scale to do the same work. There's a case of someone having your job. Did the entry level person "take your job"? Should you blame them? No, you know who to blame, the boss is the one who took your job.

What this means is don't follow the work, which changes, but follow the money.

The way new jobs get created is through government demand. The Republicans run around saying that "government can't create wealthy". It's true, wealth is dead currency, and government's like their currency alive and kicking. And I have news for you, the odds against a poor person becoming wealthy are 50 times as big as the child of a rich person becoming wealthy. Yes, a few people do make it to the top - but the numbers are no larger now than they were in 1950 or 1970. In short, the Republicans haven't made it easier for ordinary people to get rich.

::

What do you call a company that takes in unskilled labor, and spits them out as fast as possible. This is the Wal*model of employment: do everything cheap, have a few positions that require skill, and drive everyone else hard. Even if it means breaking the law, because, hey, they don't have other employment choices.

This is the model that the south has run on for generations - no jobs, no choices, no labor problems! But it was Wal*Mart that could ship it all over the country. They broke a few laws doing so, discriminated against women, and looked for the unprosperous margins that needed the work. And then soaked up the remainders of downtowns and local merchants.

The key to their success, other than paying below minumum wage with below minimum wage standards and getting sweet heart land deals - was China. You see, if Wal*Mart could make something in China at 30% less, it could undercut everyone else by 10% - still enough to be a "deal" for the consumer looking for the rock bottom price - and then use that money to shave other prices on national brands to the bone. Every cheap iron you buy discounts 25 bottles of vitamins by 4 cents. They built a supply chain management system that shaved another precent or so off of costs. Between 1992 and 1999 almost half of the retail trade productivity increase in the US was Wal*Mart.

All of this did nothing for communities, because the drop in prices was exactly balanced by the drop in real estate values downtown and wages. It redistributed income a bit, but it reduced the total basic industry of the area, since the profit from the store went out of the local area. Everyone was more equal, and poorer. Think of Wal*Mart as bolshevism, only privatized.

No where did the profit go? Well, it went into make the Walton family very, very, very, very rich. It made a few other people merely very, very rich.

::

So your job is going into the Walton family's bank account. And until they decide they want something other than parking dollars, it isn't coming back out again. I know that James Fallows is writing on this same correlation - that bigger deficits have a correlation to work moving to China and not coming back.

So what do the Walton's want. Well first off to stay rich of course. Second they want a mean, nastier America filled with mean, nastier people - because if everyone is fighting among themselves, they won't look upwards. They want cheap oil, because if people start thinking about whether they want to drive to Wal*Mart, then Wal*Mart loses business. It also increases shipping costs, and they don't like that either. If you know the inside story of the Walton family - fighting over the money, bulldozing small companies into the ground - you'll realize that what they want is Wal*merica.

Now I'm going to say something that isn't going to sit well with a whole bunch of people who think of themselves as self-made, rugged individualists. Your job is created by the government. It is government demand that drives people to do things that aren't profitable right this very minute, and which banks on the idea of being able to recapture the profit from it with taxes. That's the advantage that Uncle Sam has - he can afford to be generous, he can afford to wait, and he can afford to let everything come out in the wash.

By having an obsession with low taxes and a poor government, you've taken away your own advantages. You are like a kid stealing dollars out of your mom's wallet to buy candy bars, only to find out that she couldn't sock away enough money to buy you the bicycle that you wanted. Only in this case, what we are talking about is your job.

You may really like getting money from the DoD rather than some other government agency, it may make you feel like a kick ass kinda guy, but I have news for you - defense is pure cost. It is, as Adam Smith pointed out "non-productive". While other things that you have been taught to call pork might seem like "wastes" of time - studying agriculture, surveying land, measuring population movements, advising small businesses - they all, in the end produce real economic growth. The whole "big military small government" mantra of Reagan was completely cock eyed - we need to have as small a military that will do the job, and have as much of an economy as possible. Musclebound America is losing the competition with China, because every dollar that goes to defense is two dollars not going to competition.

The life in Wal*merica - where you don't have a job unless Betonville says so, is a lot worse than the old liberal state where these issues were thrashed out in Washington DC. You see, you have a constitutional right to send an SOB to Congress, who will claw for money to go back to your state and your district. You don't have a constitutional right to a seat on the Wal*Mart board of directors.

So, you want your job back? It isn't in China. If America were to pass laws against jobs moving to China, then some company from some other country would make the same thing in China, and sell it to the US. In order to "stop jobs moving to China", you'd either have to build a wall around China - which is what stalinism did - or you would have to build a wall around the US.

Problem with that is, how would the energy - the oil - get in? The US isn't self-sufficient, and even it it were we'd have to go through alot more trouble to make here what others can make there.

::

So this is why I said at the top that the beauty of the whole dollar glut is that individual Americans can't really take advantage of it. Because before individual Americans realized that while 90% of ordinary Americans might be worse off, if they pushed and scraped hard, they might be in the 10% who were better off. And over and over again Americans voted for this, thinking that they would "win". Americans have been voting for a meaner America for 25 years, and they stand on the other side of that very unhappy. They live primarily the way they did 25 years ago, except more of them can visit aunt Edna by flying Southwest, Wal*Mart with wings, and they can see the sweat on the linebacker in HDTV.

Because there isn't an easy way for ordinary Americans to play this economic change, it is going to be one of a series of changes that will alter the political landscape. In 1984, it was the last election that wasn't "regional" - America made choices that were the same all over the country. Since then every eleciton has been increasingly regionalized, as people in various regions votes what was best for their region, regardless of the consequences. That was true of both parties, but the leaderhip of the Republican Party were much better at making sure their interests were served, rather than served up.

Now however, the change in world economy alters everything for everyone. China isn't just competing with manufacturing a few categories of goods. They can compete with making almost everything, including agricultural goods. That means that every American everywhere has a reason to vote not to live in Wal*merica.

http://www.dailykos.com/storyonly/2005/8/23/85724/5111

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