January 25, 2012 · 4 Comments
By Marie Burns:
With one exception, every word Tom Friedman writes in his New York Times column today is a lie, including ‘and’ and ‘the.’ I hope some real economists will go after him with all the derision he deserves, but let me start the ball rolling.
First, Friedman chooses as his “expert economist” one Adam Davidson, whose vast expertise in macroeconomics comes to him via a B.A. from the University of Chicago, where as part of his general graduation requirement he might have taken an introductory econ course taught by some Milton Friedman (no relation to Tom) acolyte. Friedman describes Davidson as an “author.” This is correct. Adam Davidson writes stuff, which makes him an author. It does not make Davidson an author who knows anything about macroeconomics, and – as actual, credentialed economists like Dean Baker have repeatedly pointed out – Davidson does not understand macroeconomics. Ignorance has not yet stopped Adam Davidson from “authoring” things about economics or talking about economics on the radio. Not long ago the New York Times Magazine published one of Davidson’s unfortunate forays into economic theory. Yves Smith, a financial expert, said of the piece, it “manages the impressive feat of making you stupider than before you read it.”
Friedman likes Davidson as a brilliant “author” of economic truisms because Davidson holds to the same stupid, disproved theories Friedman spouts in such gems as his best-selling book The World Is Flat, in many, many of his columns, and on any teevee show that will have him. Quite a number of qualified economists – like Nobel Prize winner Joe Stiglitz – have said Friedman has no understanding of what he writes about. But I thought Matt Taibbi – who is not an economist – captured the essence of Friedman’s World:
On an ideological level, Friedman’s new book is the worst, most boring kind of middlebrow horseshit. If its literary peculiarities could somehow be removed from the equation, The World Is Flat would appear as no more than an unusually long pamphlet replete with the kind of plug-filled, free-trader leg-humping that passes for thought in this country.
For the gazillionth time (see Friedman’s last column for the proper use of “gazillion” in discussing macroeconomic theory) Friedman doubles down on his World Is Flat theory that globalization and technology have totally changed the shape of the world. Citing a cover article Davidson wrote for The Atlantic, Friedman writes,
Davidson’s article is one of a number of pieces that have recently appeared making the point that the reason we have such stubbornly high unemployment and sagging middle-class incomes today is largely because of the big drop in demand because of the Great Recession, but it is also because of the quantum advances in both globalization and the information technology revolution, which are more rapidly than ever replacing labor with machines or foreign workers.
More free-trader, leg-humping middlebrow horseshit. Which brings us to Friedman’s theme:
In the past, workers with average skills, doing an average job, could earn an average lifestyle. But, today, average is officially over. Being average just won’t earn you what it used to. It can’t when so many more employers have so much more access to so much more above average cheap foreign labor, cheap robotics, cheap software, cheap automation and cheap genius. Therefore, everyone needs to find their extra — their unique value contribution that makes them stand out in whatever is their field of employment. Average is over.[Emphasis original.]
As his example of cheap foreign labor, Friedman cites a horrifying New York Times story by Charles Duhigg and Keith Bradsher who describe working conditions in a Chinese factory that makes the glass screen for iPhones. I recommend the article to you. It is an object lesson in what is wrong with American business and what is wrong with a government that supports and allows American corporations to ravage human capital. (See, also, Yves Smith’s response to the Duhigg-Bradsher story.) The Chinese factory makes Dickensian labor conditions look downright enlightened. You will want to hurl your iPhone into the gutter and curse the Ghost of Jobs. Friedman finds the Duhigg-Bradsher story “terrific.” Instead of treating their story as a morality play on what American companies do terribly, terribly wrong, Friedman cites their findings as an example of “automation.”
No, it is an example of horrendous exploitation of workers to accommodate the whims of narcissistic, over-compensated corporate executives and their bad planners and designers. As Duhigg and Bradsher tell it, the Chinese factory geared up 8,000 slave laborers in record time because, a few weeks before the iPhone was to be shipped to stores, Steve Jobs demanded an immediate change to the product: Duhigg & Bradsher write “Mr. Jobs angrily held up his iPhone…. ‘I want a glass screen, and I want it perfect in six weeks.’” You think Jobs was a genius? I think he was one callous, self-absorbed son-of-a-bitch. That’s my cleaned-up version. And Apple sucks. How good was Apple’s alpha-testing procedure if their geniuses didn’t notice that the screen they put on the iPhone would scratch easily? Okay, let’s accept the fact that even highly-paid designers and product-testers make mistakes. The way to cover screw-ups is not to hire foreign slaves and take advantage of a worker-exploitation system heavily subsidized by the Chinese government.
Apple used to pride itself on making its products in the U.S. Now its executives view the move to cheap, “flexible” Chinese labor as an inevitable result of the global economy. Instead of being ashamed at their Chinese slave-labor factory, Apple executives marveled at how terrific it was to be able to find a labor market that could gear up overnight. They have no shame.
What’s to be done about that? If this country’s political leaders actually cared about the American economy and the American worker, they would not have allowed those iPhones – produced with slave labor – to be sold in the U.S. Moreover, they would not have set up a tax structure that allows Apple to keep its assets overseas to avoid paying taxes here. President Obama said as much in his State of the Union speech last night:
… no American company should be able to avoid paying its fair share of taxes by moving jobs and profits overseas. From now on, every multinational company should have to pay a basic minimum tax. And every penny should go towards lowering taxes for companies that choose to stay here and hire here in America…. It is time to stop rewarding businesses that ship jobs overseas, and start rewarding companies that create jobs right here in America.
As for the Chinese government’s subsidizing plants that can start up and employ thousands at a moment’s notice, President Obama said, “It’s not fair when foreign manufacturers have a leg up on ours only because they’re heavily subsidized.”
That’s not the way Apple’s corporate management feels about it, of course. Duhigg and Bradsher cite a current Apple executive: “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.” Solve America’s problems? Ha! American corporations gone wild – like Apple – have caused America’s problems.
Duhigg and Bradsher write about a college-educated American worker named Eric Saragoza who had a full-time job at Apple that paid him $50,000 a year. Apple laid him off, and after many job-hunting travails, Saragoza found himself back at Apple, working 12-hour days as a $10-an-hour temp with no benefits. In 2010, Timothy Cook, Apple’s new CEO received “a compensation package … valued at $59 million.” What could possibly be wrong with that?
Last July, at the height of the debt-ceiling debate, the BBC reported that Apple had more cash on hand than did the U.S. federal government. Apple is holding most of that cash overseas in hopes of getting a huge tax break. Let’s understand: if Apple gets a huge tax break, your taxes will go up to compensate for it. Republicans favor the corporate tax break or tax “holiday,” which would allow money U.S. corporations brought back into the U.S. to be taxed at a rate of only 5.5 percent. Even Mitt Romney pays taxes at a higher rate than that.
A few days ago, Dean Baker, in refuting New York Times columnist David Brooks’ latest foolishness, succinctly explained the real reason globalization hurts some American workers:
… deliberate policy shaped globalization. The reason that wages are much lower and the skills expected are much higher for manufacturing workers than in the past is because it has been government policy to place U.S. manufacturing workers in direct competition with their much lower paid counterparts in Mexico, China and elsewhere. The predicted and actual result of this policy is to reduce the pay of manufacturing workers….
In other words, it was not globalization and technology that led to the upward redistribution of income, it was conscious policy. The vast majority of people in the United States who hold high-paying jobs are able to maintain their income because they enjoy far more protection than manufacturing workers.
Eric Saragoza is not in a bind because of technology. Rather, technology created a job for him. But later, U.S. labor and trade policy allowed Apple to exploit him. As for how important it is for Apple to save production costs by exploiting Chinese labor at the expense of American workers like Saragoza, Duhigg and Bradsher have a tentative answer to that, too:
It is hard to estimate how much more it would cost to build iPhones in the United States. However, various academics and manufacturing analysts estimate that because labor is such a small part of technology manufacturing, paying American wages would add up to $65 to each iPhone’s expense. Since Apple’s profits are often hundreds of dollars per phone, building domestically, in theory, would still give the company a healthy reward.
This points to the central fallacy in Friedman and Davidson’s argument. With proper government oversight, technology and other advances do not put people out of work. Instead, these advances allow them a higher standard of living and shorter working hours. Most Americans have it better than did the ancient kings of Europe, much less the laborers in the feudal fields. The agricultural revolution led to the industrial revolution led to the technological revolution. Each of these earlier “revolutions” was a good thing – but not until policy caught up with innovation. The agricultural revolution engendered urban sweatshops, but unions, labor laws, safety laws and progressive tax policy put an end to most sweatshops in industrialized nations and created higher pay and, with that, a higher standard of living for what Friedman would call the “average” worker. If your iPhone cost $65 more because it was manufactured in the U.S. instead of in China, it would still be relatively cheap for you to purchase – if you were earning more. As long as U.S. corporations can get away with underpaying American workers, every purchase is dear. It is federal and state policy that is keeping you down, not technology.
No, Mr. Friedman. Average is not over. We need to change our policies so that we have jobs that pay decent wages to average American workers. This is not Lake Wobegon. Not everybody is above average. I know “average” is a difficult mathematical concept, but only half of us can be above average. And all of us who want to work should be able to do so, and we should be fairly paid for it.
The one thing Friedman gets right is this: the U.S. needs a better-prepared workforce. This is evident even in the Duhigg-Bradsher story: “Apple executives believe there simply aren’t enough American workers with the skills the company needs…. In particular, companies say they need engineers with more than high school, but not necessarily a bachelor’s degree. Americans at that skill level are hard to find, executives contend.” But here Apple itself is as much at fault as our educational system. In Eric Saragoza, they had a good worker. When the skill set required for his job became obsolete, Apple should have retrained him to do other work that would benefit the company. Instead, Apple hired him back – much later – at starvation wages and at a job well beneath his abilities. When corporate executives claim there are too few Americans with the skills they need, it is because the companies themselves fail to develop those skills in workers who have the talent to master them. CEOs who take home millions of dollars a year while farming jobs out to China and underpaying domestic workers have an incredible amount of gall complaining about the quality of the American workforce.
Tom Friedman concludes that “In a world where average is officially over, there are many things we need to do to buttress employment, but nothing would be more important than passing some kind of G.I. Bill for the 21st century that ensures that every American has access to post-high school education.” That is, Friedman expects the taxpayer to fund jobs training. I’m for that, too. But only if corporations, who profit from that jobs training, are forced to contribute a healthy share of the costs of Friedman’s “G.I. Bill.” Under current policy, corporations do not pay their fair share. The American taxpayer should not put billions more into the pockets of the One Percent.
Friedman’s “solution” to solving what he deems the problems of globalization and technology is to further burden the middle class for the benefit of the wealthy. But then, everything Tom Friedman says is wrong.
Marie Burns blogs at RealityChex.com