Hey anti socialist! You really don’t want to sit on UHC, Cigna, Microsoft, Walmart, Koch brother’s, GE, Boeing or Buffet’s corporate boards?
By Daniel Becker
Just thought, being the new year, we might want to start it off with some actual new thinking about how to make our economic system better. I have been meaning to purchase the book: Were you born on the wrong Continent. I’m just a very slow reader though and have to finish what I have. So, I found this Book TV interview to satisfy my “should I buy it” meter. Yes I should, and will.
Here in this country, it’s unthinkable that you would have a high school graduate on the corporate board of a major corporation. And there it happens, I don’t want to say routine, it happens a lot. You know, at least in terms of the supervisory board.
My favorite example, which I give in the book is, is this ah, nascent global bank which was just starting up and I asked a young banker there about co-determination, how it worked and he said well ah, “I’ll tell you how it works. The guy who brought us the plants, around the bank building, he’s on the corporate board.” Well what do you think about? “Well I think it’s very funny.” He said “the other thing I think about, is that they can’t hold the meetings in English” which is the global language … because this guy only speaks German. Everybody has to go at the pace of the gardener on the… corporate board.
Imagine that! Mr. Smith actually does go to Washington. As a lobbyist. Daily even, if he were a German citizen.
The author, Mr Geoghegan goes on to say that Germany was punished for the conception and implementation of co-determination by the boycott of international capital. The Financial Times, the Economist all editorialized against it. Thus, their people have to be on guard for those who want to bring it down. However, he notes that the post 1945 constitutions that were adopted came out of the New Deal, consequently they have in stone rights to healthcare, employment and education. Things our New Deal could not get constitutionally in-scripted. Under their constitution the courts have to look at whether the law will help or hurt the family. Is education free or not free?
Ultimately, Mr. Geoghegan sees Germany having an advantage in their system because the people are pulled into the system and thus are responsible for the results of their decisions. He notes that in the US we have no real power (at least as it relates to economic outcomes via labor) which allows one to talk irresponsibly about power. Remember that gardener? He is at the table of economic policy decisions. Kind of makes you realize just what we’re about to experience now that the Tea Party is calling some major shots. All of a sudden a group of people who have been able to sit on the outside in their own circle of reality is at the table of the worlds circle of reality. Think there is not going to be some major crashes? Even Carl Rove understood the danger in O’Donnell’s limited understanding of power because of lack of exposure and all it experiences. The issue we should all have with Rove et al though, is that he does not want to helper her learn about real power and thus truly be able to make decisions that enhances her life and reduces the risk of living.
In Germany, because of their system that makes it hard for even the least educated to sit on the outside, and the most powerful to ignore or leverage the least knowledgeable for their own gain, they have a better chance of surviving those who would create the world in their own vision.
One caution when asked what the down side is of the German system? The least knowledgeable being employed. Here, we have a service economy as the solution. That is personal service to those who have the where for all to buy personal service. This leads to a crack in the foundation of an egalitarian mind set and thus the policy that follows.
Truth is, not everyone is born to go and get a traditional BS type college education. Germany obviously is going to struggle as we have with making sure the lowest common denominator and not the highest is the the standard for acceptable earning capacity. Sure, promote being the best you can be. Great as an individual motto, but not as a minimum standard for policy setting. We need to understand that the best for some is simple manual labor. If we don’t, then we are only left with welfare policy, which I have no problem with if that is what we choose. One way or the other, people who for what ever luck in life they have or have not been blessed with have to be able to receive enough money to live in the society we have set up. Either we allow this to happen by assuring “living wages” for the lowest work society needs accomplished or we do it by welfare. Preferably not the penal kind of welfare we seem to be choosing. It cost the most to society and not just in money.
Besides, is it not what made us the model for and the envy of the world that we had created an economy which allowed such capacity to be considered valuable enough to earn the basic American Dream of a house, car, education and retirement without being broke or broken?
Do watch the interview.
“Sure, promote being the best you can be.”
Erm, yes, Ricardian comparative advantage writ large. It’s what this whole idea of “trade” is built upon.
The problem with Ricardian Equivalence is that operationally it meant “Beggering your neighbor’s workers”, the benefits ultimately flowing entirely to the capitalist/rentier class. Given the political system that governed even in Britain in the 18th century, where the franchise maybe was extended to around 5% of the population and the welfare of the other 90-95% was essentially at the discretion of that top tier this made sense, the working classes being literally of no account in politics, but ultimately the theory comes into fatal conflict with a universal democratic franchise. And 20th century attempts to argue against all evidence that Free Trade and Wage Suppression (via such things as opposition to Minimum Wage and labor laws generally) ultimately rebound to the benefit of all (Trickle Down) simply not having any basis in economic history. Which might explain why few economists not named Brad DeLong pay much attention to economic history to start with.
I am not an economist but back in my days in Berkeley’s history PhD program I did some work in medieval and early modern peasant economy, particularly in Britain, and the results did not match either of the competing theories of Whigs and proto-Liberals that governed during the delvelopment of what became known as Manchester style Econ. Life before the Enclosure Acts was never Merrie Olde England nor was it the cariacture of peasants living in filth characteristic of the poorer rural regions of Britain c.1750, the apparent reality justifying neither the Liberal arguments about the Standard of Living controversies that roiled economic thought in the mid to late 19th century nor the Marxist arguments that held that feudalism meant extreme levels of labor exploitation, both sides paradoxically sharing the same Enlightenment belief in capital P Progress.
The notion that Free Trade is an unalloyed Good flies in the face of evidence that British cloth manufacturers deliberately designed machinery whose openings were too small for adult men to operate while simultaneously suppressing the Indian cloth trade. There being a reason that the symbol for the Congress Party being a spinning wheel to this day.
All of those inconsistencies could be ignored even after the British Representation of the People Act of 1884 but no longer could after the Act of 1918, the days of Capital being able to exploit competitive advantage at the direct cost of labor running into the needs to collect democratic majorities. Which explains such works as Caplan’s Myth of the Rational Voter, how dare the majority ignore eternal verities that were accorded to Ricardo and Smith (and yes I have heard Ricardo wasn’t entirely a Ricardian even as Marx was never quite a Marxist or Freud a Freudian as commonly conceived).
Free Trade is ultimately inconsistent with Democracy. Not a problem for the 18th and first half of the 19th century where ‘Democracy’ was literally a dirty word among the ruling class. (As a modern you have to look at even the so-called Great Reform Act of 1832 and shake your head, Americans generally haveing quaint ideas that Britain was actually a democracy starting with the Witangemeot and the Magna Carta and not realizing that even extending the franchise to Manchester manufacturers in the 1820s at the expense of Cornish Rotten Boroughs being considered as crazy as deploying the guillotine at Traitor’s Gate by people like Wellington).
In my view the apparent failure of most modern economists to come to grasp with the fact that their discipline grew up in a totally different political environment is the cause of many of their blind spots. (Then again I make the same argument about the basic structure of the historiography of the classical west, largely explaining why in those […]
Note that real democracy in the US was first approached by manhood sufferage as a part of the post War of 1812 period, this showed up by the Jacksonian Revolution. Before then the the US was also a land of property qualifications to vote all be it not as high as in the UK. As noted by Bruce the 1918 act in the UK which also extened the vote to 30 year old women and the 19th amendment in the US finally ushered in democracy were all adults could vote (in theory at least the south was different).
The real issue with free trade is that the benefits are general and small, while the costs are high and only affect a few. Capital of course wants to be free to move around, I think we need to change cap gains a bit, to make long term 5 years not one, and to put in a higher than regular rate for less than 6 months. (Or a stamp tax on stocks bonds and derivaties) (We used to have it but it has been abolished, or at least NY state had one, of course the british tried this and got a revolution out of it).
Nothing of course is “free..” What passes for “free” trade today is really subsidized, centralized benefits for low wage countries and a sellout of most of America in its wake. The costs of this tax subsidized give away are laid on the many..not the few. Whether “democracy” is predominant or not is irrelevant. It’s only a Constitutional Republic that offers any chance at generational rights and opportunities…spare me the socialism and social welfare garbage..that’s only rationalized thievery!
DOLB – “Ultimately, Mr. Geoghegan sees Germany having an advantage in their system because the people are pulled into the system and thus are responsible for the results of their decisions. He notes that in the US we have no real power (at least as it relates to economic outcomes via labor) which allows one to talk irresponsibly about power.”
DOLB, do you mind providing more detail on what is highlighted above? Example, what is the difference between a worker’s supposed “power” if employed by an OEM automotile manufacturer in Germany and the United States? Same story for a number of other major employer examples.
I read two weeks ago that Germany’s workers are suffering from larger declines in real wages than those in the USA. If that is accurate, it doesn’t appear that the German workers have such high levels of supposed “power”.
MG:
DOLB has already cited something. In all faiirness, you should cite something to refute his claim.
MG, you would have to contact Mr. Geoghegan for an answer. I’m just summarizing what he said in the interview. He has a web site as noted at the end of the interview.
Not to sound sarcastic, but Tim, how did you get Ricardian out of: Sure, promote being the best you can be. Great as an individual motto, but not as a minimum standard for policy setting. We need to understand that the best for some is simple manual labor.
I’m talking wages not international trade.
Also, MG, I believe your answer is in the fact that even the gardener is a sitting member of the German OEM corporate board. That’a ain’t happening here.
In Germany, labor is legislated a specific number of seats on any corp board. The point of the post.
run,
I wasn’t attempting to refute DOLB’s claim in the first part of my comment. As stated in clear language, I was asking for more details if available from DOLB.
What I stated at the end of my comment was taken from an article or interview from Germany, as I recall. I believe that this point was also raised on blog. I cited something (if accurate) that goes to the issue of the end result of supposed “power”. Real wage growth.
run,
I wasn’t attempting to refute DOLB’s claim in the first part of my comment. As stated in clear language, I was asking for more details if available from DOLB.
What I stated at the end of my comment was taken from an article or interview from Germany, as I recall. I believe that this point was also raised on another blog. I cited something (if accurate) that goes to the issue of the end result of supposed “power”, real wage growth.
DOLB,
Yeah, and the results of that difference? More employment, higher real wage growth, more benefits, et al?
Let’s say that a group of new U.S. Federal laws were passed which, in effect, adopted Germany’s labor laws and corporate decisionmaking participation. What would be the likely net outcomes?
The U.S. would be facing more offshoring in all likelihood, for starters. The U.S. lost 44,000 plants between 2000 and 2005. How many more thousands of plants do we want to lose to offshoring?
Real wage growth? No, not if Germany’s real wage growth during the last two decades is an example. See my comment post at 12:42:11 AM (below).
More employment? How would that work out for existing employees?
Shared jobs, thereby reducing monthly wages to existing employees? Perhaps.
Shorter work weeks? Ok, but weekly wages would decline.
National healthcare? The results of the mid-term elections indicate that that is a no go at this point.
It’s easy to throw up the German or European model and think that it will work fine in the USA. Maybe it would help, and maybe not.
Frankly, I would be more concerned about the effects of U.S. trade policy. The national leadership has failed to tackle that overriding policy which has significant impact on labor employment in the USA. I wouldn’t expect any major improvements for labor if the offshoring cycle isn’t stopped dead in its tracks.
Perhaps I’ve missed something here, but, we all know we can’t go backwards, say prior to R.R. in the 80’s. when labor had clout, which seems to be more of a pipe dream today, depending on what they put into their pipe. The problem as I see it, nobody has come up with any rational form of progress in the system, but continues back sliding, due imho, to the sycophantic behavior of a corrupt government. Why is it so hard to see, as Moores Law is to the chip, that going backwards only spell’s what we are endureing today which is growing worse all the time.
You make many of the arguments that have occurred to me concerning the vast differences between the age of Smith and Ricardo compared to our modern world and how economists seem to acknowledge what it means to their discipline. How can comparative advantage mean the same thing in the early days of the Industrial Revolution as it does in an age of rapid global commerce and Knowledge Economies? Knowledge and finance know no barriers. National borders are largely meaningless to them. Where is an honest debate about how that affects the core concepts of comparative advantage? I’ve never heard of one.
You guys — and the original poster — are working every angle of co-determination which is the creme-de-la-creme of labor democracy. How about working from the opposite extreme: everyday American labor hell where we (labor) just don’t count.
My personal experience in labor hell as a Chicago cab driver: one 30 cent increase in the mile rate in 16 years (1981, 1990, 1997) at which midpoint the city began adding 40% more cabs while cutting our business maybe in half with subways to both airports, unlimited livery and free trolleys between all the hot spots.
Between 1968 and early 1997 the federal minimum wage underperformed Malthus: dropping from $10/hr (adjusted) to $5.50/hr instead of only 33.3% as population grew 50%.
We are a long way from worrying about the creme-de-la-creme (nice as it would be). Why don’t we talk about a practical beginning of labor democracy in America with the Canadian-lite version of sector-wide labor agreements — wherein companies who are not unionized simply have to follow the collectively bargained contracts of those that do? Airline and supermarket employees would kill for sector-wide agreements — a good place to start — an easy political sell. Perfection can wait until later.
As long as American labor remains uniquely “neutered” of economic and political power American civilization will continue to be fought over by two elites, the liberal elite which seekes to tear up the social fabric (TSA naked scanning and groping — not tolerable in sexually looser Europe where people EXPECT to be taken care of right) and the conservative elite who want to wreck the economy.
If I wait another year will anyone on Angry Bear (or Economist’s View or Brad DeLong) ever begin the dialogue on the really practical — and really salable — return trip from American labor hell (balancing the labor market the only way it really works anywhere: sector-wide bargaining)? Ever?
“the liberal elite which seekes to tear up the social fabric (TSA naked scanning and groping . . . “
WTF?
I haven’t heard any significant liberal support for TSA naked scanning and groping.
And in what sense is TSA scanning and enhanced pat-downs ‘tearing up the social fabric?’ Annoying? Yes. Unnecessary? Yes. But to call it ‘tearing up the social fabric’ is hyperventilating.
Unemployment is tearing up the social fabric in this country. Airport security–not so much.
To get back on topic — before I get kicked off of comments — what about sector-wide labor agreements, Joel?
I would sell European style social democracy — also known as socialist by lying Repubs — by explaining that its economic components (mandated sector-wide labor bargaining and the welfare state — 2 out of 3 components of welfare having no moral hazard: free education and health) as invented by very anti-communist, very conservative, very Roman Catholic German politicians after WWII to tamp down labor demands so Germany’s just post-fascist industrialists could put more money into rebuilding the economy. Conrad Adenauer comes to mind.
England’s unions would not go along at first leading to a race to the top for wages because in England everybody was afraid everybody else would not go along with whatever concessions they made. Ergo, England’s recovery was slower.
The same sector-wide bargaining process which prevents the race to the top also prevents the race to the bottom which as of early 2007 had left 25% of the American labor force earning lower wages than the minimum wage under Lyndon Johnson (1968 Americans would have thought that impossible).
To get back on topic — before I get kicked off of comments — what about sector-wide labor agreements, Joel?
I would sell European style social democracy — also known as socialist by lying Repubs — by explaining that its economic components (mandated sector-wide labor bargaining and the welfare state — 2 out of 3 components of welfare having no moral hazard: free education and health) as invented by very anti-communist, very conservative, very Roman Catholic German politicians after WWII to tamp down labor demands so Germany’s just post-fascist industrialists could put more money into rebuilding the economy. Conrad Adenauer comes to mind.
England’s unions would not go along at first leading to a race to the top for wages because in England everybody was afraid everybody else would not go along with whatever concessions they made. Ergo, England’s recovery was slower.
The same sector-wide bargaining process which prevents the race to the top also prevents the race to the bottom which as of early 2007 had left 25% of the American labor force earning lower wages than the minimum wage under Lyndon Johnson (1968 Americans would have thought that impossible).
To get back on topic — before I get kicked off of comments — what about sector-wide labor agreements, Joel?
I would sell European style social democracy — also known as socialist by lying Repubs — by explaining that its economic components (mandated sector-wide labor bargaining and the welfare state — 2 out of 3 components of welfare having no moral hazard: free education and health) as invented by very anti-communist, very conservative, very Roman Catholic German politicians after WWII to tamp down labor demands so Germany’s just post-fascist industrialists could put more money into rebuilding the economy. Conrad Adenauer comes to mind.
England’s unions would not go along at first leading to a race to the top for wages because in England everybody was afraid everybody else would not go along with whatever concessions they made. Ergo, England’s recovery was slower.
The same sector-wide bargaining process which prevents the race to the top also prevents the race to the bottom which as of early 2007 had left 25% of the American labor force earning lower wages than the minimum wage under Lyndon Johnson (1968 Americans would have thought that impossible).
To get back on topic — before I get kicked off of comments — what about sector-wide labor agreements, Joel?
I would sell European style social democracy — also known as socialism by lying Repubs — by explaining that its economic components (mandated sector-wide labor bargaining and the welfare state — 2 out of 3 components of welfare having no moral hazard: free education and health) as invented by very anti-communist, very conservative, very Roman Catholic German politicians after WWII to tamp down labor demands so Germany’s just post-fascist industrialists could put more money into rebuilding the economy. Conrad Adenauer comes to mind.
England’s unions would not go along at first leading to a race to the top for wages because in England everybody was afraid everybody else would not go along with whatever concessions they made. Ergo, England’s recovery was slower.
The same sector-wide bargaining process which prevents the race to the top also prevents the race to the bottom which as of early 2007 had left 25% of the American labor force earning lower wages than the minimum wage under Lyndon Johnson (1968 Americans would have thought that impossible).
What about them, ddrew? Personally, I have no objections.
WRT your stupid remark about airport screenings, which I commented on: base on your replies, you seem to have confused the Obama Administration with liberalism, demonstrating that you know nothing about either one.
It is elites on both wings I am worried about. 40 years ago the terrible racist George Wallace said one true thing about the Dems and Repubs: “There isn’t a dimes worth of difference.” Which there wasn’t; which was a good thing: both cared about protecting the country from outside and both cared about the little guy.
Nixon signed a $9/hr (adjusted) minimum wage to go into effect all at once (not staggered) at 60% of today’s average income and wanted to extend paid medical care to all not just the old and the poor (the latter get a joke called Medicaid today — paying $24 for a cardiac specialist visit in New York for instance — no more dental). Nixon was a flaming liberal compared to Hillary and Obama who never ever mention our crazy labor market. But that was the last time labor was organized enough to have some clout.
Jim,
right, to my recollection, ricardo’s comp advantage assummed capital immobility but more importantly we might want to know whether comparative advantage – even though coherent theory – had/has much to do with other than the ideological reality of a powerful nation taking advantage of weaker ones. historically it’s been seen as an ideology of unequal exchange.
both england and the u.s. were protectionist until having achieved industrial superiority; see, e.g., this article in foreign policy in focus:
Kicking Away the Ladder: The “Real” History of Free Trade
http://web.archive.org/web/20071010012842/www.fpif.org/papers/03trade/history.html
your bigger question – the contradiction between national political and global economic – has to do with unit of analysis and best way to synthesize what is an intertpenetrated nation state system on one hand and concentrating intranational corps on the other. but, as soon as the latter are brought in, questions of trade vs internal transfer, data quality, subsidies, finance vs production, and so on arise, pushing us towards questions of modern imperialism’s ultimate limits.
DOLB
So lets go back a few years,,,,,1995-7 i think:
The major findings of the Survey may be briefly summarized in the following single paragraph: American workers want more involvement and greater say in their jobs, they would like this involvement to take the form of joint committees with management and would prefer to elect members of those committees rather than have managers select them. They prefer cooperative committees to potentially conflictual organized relationships. A sizable minority are in workplaces where they and their fellow workers want to be represented by unions or union-like organizations.
,,,
The new forms of work and work relations about which the Commission heard considerable testimony are part of the working lives of many American employees. The distinction between supervisors and non-supervisors is eroding…
,,,
Most employees want more influence or decision-making power in their job, and believe this would improve company productivity as well as their working lives. Sixty-three percent of employees said they wanted more influence, compared to 35 percent who were content with things as they were. …
,,,
Workers generally have favorable attitudes toward employee involvement plans, but believe the plans would be better if rank and file employees had more power in them.Thirty-one percent of workers who participate in programs viewed them as very effective, 55 percent as somewhat effective, and 11 percent as not too effective. In the majority of programs, management recruits participants by asking for volunteers (47 percent) or simply picking people (27 percent), rather than by having employees elect or otherwise select their peers. The vast majority of employees (82 percent) believe that -if employees, as agroup, had more say in how these programs are run_ they would be more effective than at present.
Asked about the sort of workplace organization they would like to have, employees voice fairly clear preferences for joint committees that would work cooperatively with management, but which have some independence from management……
http://www.dol.gov/_sec/media/reports/dunlop/appendixa.htm
if the u.s. wants to avoid banana republic decadence there will have to be
real economic democracy via workers councilaq–the basis for a new democracy.
upgrading nearly 40 years infrastructural decay.
single payer health care and education.
if ‘niether’ party can move towars this,,,,time for ‘them’ to go
And for good riddance –
In this crisis the true character of capitalism and the impossibility to maintain it, was shown to mankind as in a searchlight. There were the millions of people lacking the means to provide for their life necessities. There were the millions of workers with strong arms, eager to work; there were the machines in thousands of shops, ready to whirl and to produce an abundance of goods. But it was not allowed. The capitalist ownership of the means of production stood between the workers and the machines. This ownership, affirmed if necessary by the power of police and State, forbade the workers to touch the machines and to produce all that they themselves and society needed for their existence. The machines had to stand and rust, the workers had to hang around and suffer want. Why ? Because capitalism is unable to manage the mighty technical and productive powers of mankind to conform to their original aim, to provide for the needs of society.