In the Trenches: Economic Crossfire

I would like to thank Glenn Russo for his reply to my viewpoint “Downsized American Productivity” (THE HOYA, Oct. 20, 2009, A3); I was very impressed with his eloquence if not the substance of his reasoning, which seemed like little more than a rehashing of a number of popular globalist clichés. A few points:

If Russo is right, then why is the world, and especially countries like the United States and the United Kingdom — which he rightly singles out as exemplars of free-trade service economies — in such an economic morass? Likewise, why is it that some of the more advanced and up-and-coming economies — Brazil, China, Germany, India, Taiwan, Sweden — are making such robust recoveries, even though none are of the “post-industrial” category and most of these protect their domestic manufacturing sectors (and yet people still buy their products; I have owned both German and Japanese cars)?

Russo picks the United Kingdom as the model and historical paradigm in defense of unrestricted free trade and a service economy: A nation that began as a great (but fairly protectionist) industrial giant that adopted a policy of free trade and the transplantation and outsourcing of manufacturing to its far-flung colonies, ends up as a nation almost totally dependent on its “service sector” — mainly banking, investment banking and insurance — and heavily dependent on foreign imports. The result is that in recent years, the United Kingdom’s international standing is almost entirely a function of its subordinate status as the United States’ staunchest ally. Thus, over two centuries, Britain evolved from being one of the leading global economic powers to a nation struggling to remain a second-rate power. Does Russo believe the United States should follow this example?

I have no illusions about the abuses of the unregulated industrial capitalism, especially during the 19th century. Most of these were eventually corrected by progressive legislation and, in some cases, by industrialists like Henry Ford. Ford’s idea was that a living wage and a shorter workweek actually increased efficiency and production levels. He also believed that it was a matter of basic fairness for workers to be able to buy the products they made, which many did. Consequently, from the 1940s to the 1970s, many industrial workers in this country lived fairly comfortable middle-class lives. I would pit the Ford Motor Company of the 1940s against a Southeast Asian sweatshop any day.

If you look at nations with integrated, high-tech manufacturing economies (Germany, Korea, Japan and Sweden would serve as examples), most embrace these high-minded management practices and ethos. Management today embraces employee empowerment, communication and efficiency. At least the half-dozen or so management classes I have taken have all emphasized these things (my teaching position is a part-time night job, since the number of tenure-track jobs in American history listed in a typical edition of The Chronicle of Higher Education range from zero to about a half-dozen nationwide, and each one of these generally attracts 100 to 300 applicants).

A final point: In terms of total export, the United States is actually the third-largest exporter (behind China and Germany). But economies support populations, and if you adjust this to a per-capita basis (significant given our relatively large population), we fall behind France, Germany, Japan, South Korea, Sweden and Taiwan. That’s pretty pathetic, given what we once were.

Michael Duggan is a professor in the School of Continuing Studies.

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