June 26, 2007


Caption: Backward priorities aren't going to get us where we want to go.

More than a year ago, writer Holly Sklar wrote a strong op-ed with the title "Wanted: A High Road Economy." The immediate context of the piece was the now successful campaign to raise the long stagnant minimum wage.

But she also raises some serious issues about the choices that continue to confront us as we try to meet the economic challenges of the 21st century, both in the U.S. as a whole and in El Cabrero's beloved state of West Virginia.

Again, it comes down to the low road or the high road:

Waving the banner of "global competitiveness," corporate and government policymakers are running the U.S. economy into the ground. We are becoming a nation of Scrooge-Marts and outsourcers—with an increasingly low-wage workforce instead of a growing middle class.

She cites an all too familiar list of current trends: record numbers of Americans without health care; stunning trade deficits and debt to other countries; declining public investments in infrastructure and R&D; growing inequality and personal debt; etc.

She notes:

We will not prosper in the 21st century global economy by relying on 1920s corporate greed, 1950s tax revenues, downwardly mobile wages and global-warming energy policies. We will not prosper relying on disinvestment in place of reinvestment. We can't succeed that way any more than farmers can "compete" by eating their seed corn.

The low road doesn't even make good business sense. One of the sources cited by Sklar is the book How We Compete: What Companies Around the World Are Doing To Make It In Today's Global Economy by Suzanne Berger. In discussing the results of a study by the MIT Industrial Performance Center of more than 500 international companies, Berger says:

Contrary to the widely held belief of many managers, we conclude that solutions that depend on driving down costs by reducing wages and social benefits—in advanced countries or in emerging economies—are always dead ends. . .

Strategies based on exploiting low-wage labor end up in competitive jungles, where victories are vanishingly thin and each day brings a new competitor. . . As low-end firms that compete on price move from one overcrowded segment of the market to the next, there is virtually no chance of gaining any durable advantage. The activities that succeed over time are, in contrast, those that build on continuous learning and innovation.

In an interview from MIT's openDOOR in 2006, Berger makes it plain:

Globalization can continue to produce great benefits for our society--on the condition that we strengthen the infrastructure of education and research. We also need to recognize that openness has costs, and that the costs and benefits are not evenly distributed. Many who lose jobs because of the relocation of production or trade will not get new ones that pay as well. So if we are going to maintain broad public support for an economy open to international flows of goods and services and capital, we need to be sure that losing a job does not mean losing a family's access to basic necessities, like health care, provision in old age, and education.

That is talking sense.

EFCA HELD HOSTAGE IN SENATE. The U.S. Senate voted 51-48 for cloture on the Employee Free Choice Act (EFCA) yesterday. Sixty votes were needed to move the measure to a floor vote. Supporters are planning on keeping up the campaign as long as it takes. Even yesterday's vote represents a victory of sorts--it's the first time in ages that a majority of senators voted to reform labor laws.

YOUNG AMERICANS in a new New York Times/CBS/MTV poll seem to be moving to the left of their elders on some issues. Details here.


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