Bill Richardson, GM, Citibank: Where is the Bail-Out Debate on Offshoring Middle Class Jobs Overseas?

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offshoring twn.jpg
A bit more than a decade ago, I received a briefing at Sandia National Weapons Laboratories on a few of their private-public partnerships, or CRADAs (Cooperative Research and Development Agreements). Intel had a CRADA with Sandia and Los Alamos Labs on developing extreme ultra-violet lithography. Many other top tier firms did too.
But the CRADA that interested me most was General Motors.
GM’s tech team was with us — and we learned about a great number of tax-payer supported national security research technological achievements that could prove useful to the auto industry. I asked whether these acquired technologies would be applied differentially to GM’s production base in the U.S. — and whether they would be careful of extending such technology in their China operations.
The answer was pretty shocking.
GM said that it was taking all of the technology it could get its hands on — whether from the labs or elsewhere — and fully deploying it in China.
GM felt that this was a way to embed itself deeply in the Chinese economy over the next three decades and would keep the car manufacturer ahead of the more technologically-stingy Japanese firms as well as Daimler and Chrysler which had already had hiccups at that time in their China activities.
In a different realm, Citibank has been a leader in off-shoring, pushing more and more of its financial services support base overseas.
Now taxpayers are being asked to bail out these large firms which showed little interest in the economic health of the nation and which engaged in “winner-takes-all capitalism” where those at the top, like Robert Rubin, became mega-wealthy with little regard to the eroding conditions of America’s middle class.
American interests and the economic interests of firms were said by many economists — including Lawrence Summers, Robert Rubin and others — not to be tied to each other.
Telecom and media CEO Leo Hindery, who served as senior economic policy advisor to the John Edwards for President campaign and then served on the economic advisory team to President-elect Obama, has been talking for a long time about getting the economic interests of major firms back in line with the interests of the American middle class and of America itself.
Hindery and others, particularly former IBM chief technologist and emeritus Sloan Foundation President Ralph Gomory, have said that re-aligning the interest of firms and the nation must be a priority policy goal.
Senators Sherrod Brown, Byron Dorgan, Jeff Bingaman, Patty Murray, and others have been equally vocal on this subject.
Then, why isn’t anyone asking the question of the CEOs of these firms about what their new social contract with America and working Americans should be after having their companies literally “saved” during this economic crisis? What if we see the funds from the bailouts go to increasing the rapidity of off-shoring to India, China, and elsewhere in Southeast Asia?
Will that be the payoff taxpayers are expecting? I don’t think so — but few are talking about it.
Any big loans or bail-out equity acquisitions should come with a fundamental new condition: U.S. job creation and penalties for off-shored positions.
That should be the price of dipping into the public coffers — for all firms, whether financial or manufacturing.
Had Leo Hindery been made Secretary of Commerce instead of Bill Richardson (whose new perch in government will be announced today), I would have had more confidence that the Obama administration would take seriously this requirement to rewrite the “social contract” with firms in this country.
We’ll have to see how Governor Richardson handles this responsibility and whether he’ll figure out a way to get behind the interests of America’s middle class.
But it is essential to have the thinking of people like Hindery and Ralph Gomory considered when designing these bail-out packages.
Otherwise, on the Off-shoring front, we are just going to see more of the same, and the taxpayers will pay to help their own job base get shipped abroad.
— Steve Clemons

Comments

29 comments on “Bill Richardson, GM, Citibank: Where is the Bail-Out Debate on Offshoring Middle Class Jobs Overseas?

  1. Keith M Ellis says:

    National economic development is not a competition. Trade and specialization create wealth for all nations involved, it’s not a zero sum game. It doesn’t make sense, generally, for a lot of manufacturing to occur in the developed world when it can be done in the developing world. The Chinese can manufacture things more cheaply than we can, and there’s things we can do that the Chinese cannot. Those are the things we should be doing.
    It’s true that multi-national corporations are amoral and certainly don’t participate in the social contract. And their shareholders, as a group, don’t either. This is certainly a problem. I’m not sure how that could be fixed and I don’t think it’s realistic to expect all these business people worldwide to suddenly acquire highly developed senses of social responsibility. Regardless of whether the actual economics of trade and specialization benefit everyone, these corporations are going to act in very short-sighted and selfish ways.
    The solution to all the problems associated with trade and corporate amorality is regulation and oversight. In particular, the complaints that most people have about trade, about “offshoring”, is reduced job security and displacement. The solution isn’t to protect inefficient jobs, but rather to address the underlying concerns that make people worry about their jobs. And that’s their general economic security. The correct solution is a much wider-reaching and stronger safety-net, along with vastly increased adult education programs and whatever else it takes to ease worker’s transitions from one kind of job to another. After all, regardless of offshoring, Americans no longer have just one career during their lives, anyway. We all need retraining at some point.
    If people knew that they’d be able to continue to pay their bills and have an economic future in some other position, they’d be a lot less fearful of “those people” “taking” jobs away from them overseas.
    The answer to the problems associated with global trade isn’t protectionism and economic nationalism. It’s a whole host of progressive domestic programs that make sure that job displacement is more of an inconvenience than it is a threat to family and home. In this sense all Americans need to renew their sense of having a social contract and understanding that “sharing the wealth” is a good thing, that at the level of individual workers, there shouldn’t be “winners” and “losers” in market economics.

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  2. ... says:

    just a modern form of slavery, that’s all.. no big deal… mortgages, taxes and all the rest of it.. replace one type of slavery with another type.. some want to control others, almost always thru money, and most others don’t and are just looking to get by and enjoy the moment..
    these friggin goons that are only interested in adding zeros onto their bank accounts are zeros to begin with…

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  3. JohnH says:

    I think we’re talking a bit in circles about the “social contract” issue here. It should be the responsibility of government–and the Obama administration–to articulate the values underlying our society. Obama did this quite successfully during the campaign. Now the question becomes whether he will follow through as President.
    Dan’s right that asking businesses CEOs to articulate a social contract is counter-productive. This was proven by the Bush administration. It is called “self regulation” and “voluntary compliance.” Businesses pursue only their narrow self interest and have no sense of the public interest.
    It has become so bad that capitalism now represents nothing more than the care and feeding of capital and its owners, regardless of the cost to the public. Wall Street and Main Street represent capital. They get bailed out. People don’t represent capital. They don’t get bailed out. Unlike people who kills others, if corporate negligence ends up killing people, there is little the government can do. This is about as pure a capitalism as you can get.
    http://www.pbs.org/wgbh/pages/frontline/shows/workplace/etc/script.html
    Given the outrageous behavior of business during the past 8 years, this is exactly the right time to demand a new social contract, one that demands a balance between the needs of capital and the needs of people. As such, it behooves the Obama administration to “take seriously this requirement to rewrite the “social contract” with firms in this country.” It should involve making the economy work for people, instead of just having people work for the economy. It should also channel business activity to focus on adding real value to the economy, and reducing the tendency to create shady financial schemes, trash and trinkets, and pollution.

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  4. Dan Kervick says:

    I think talk about a “social contract” here is a bit out of place. Businesspeople are going to pursue their own interests. If we want their behavior to end up being good for our country, then we need to structure our laws in such a way that business people’s pursuit of their own interests within the framework of those laws ends up benefiting the country in the ways we want.
    To decry the behavior of corporations as immoral or unpatriotic might sound like a progressive point of view. But it actually plays into the hands of the defenders of laissez faire capitalism. Those defenders want the public and the government that represents it to keep their hands of business. So they would like us to see the bad effects of business decisions as the mere moral failures of individuals, to be addressed from the pulpit or the op-ed pages, rather than a systematic governmental failure to put into place the proper system of incentives.

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  5. ... says:

    making money isn’t the same as nation building.. it is a mistake to think any of these capitalist companies are interested in the welfare of their country… they have been trained to be interested in whether the money is coming in or not.. everything else is an after thought.. it wasn’t that long ago that it was okay to export jobs to india or china in order to increase corporate and shareholder profit.. now steve is advocating something different.. good luck… the whole system is not based on sharing anything, but on taking what it can from where it can, which always ends up being the little persons pocket…
    tie strings to ‘bail out money’ you say?? lol… watch how big thieves take money from little people with the help of politicians.. it is happening as we chat and has always worked this way… quit being naive would be a better suggestion…

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  6. pattyhartwell says:

    Steve,
    Woke up this very morning and after hearing about the Citi bailout, I had this sinking feeling in my stomach, which has been there all day. Fixing another bank yet – what about the middle class and jobs?
    Now that I read this post about offshoring jobs and Citibank – nausea has completely set in. Hopefully your post will open up some eyes – so glad to see you were focused on this today.
    Attention. Must. Be. Paid.

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  7. Tosk says:

    Folks,
    Presumably GM is concentrating on the Chinese market because that is where the growth is going to be… Growth has stalled in the US, EU, Japan and the #s of vehicles per year has stalled since 2000 (US= – 2.11%; EU=+0.04%; and Japan = -2.09% compounded annual growth rate), while 95% of the growth is in developing markets. Of this coming growth BRIC (Brazil, Russia, India, China) account for an estimated 58%. **This** is why they are doing what they are doing, and not from some desire to stick it to the home country (due to not caring about the social compact)…. Here at home it’s a zero-sum game at present.
    http://www.ph2dot1.com/2008/11/studies-of-interest-i.html

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  8. Bartolo says:

    Recently I needed to call Linksys (Cisco) tech support concerning a new router. I was disappointed to find my call being routed to somewhere in Asia. Sadly, the two of us failed to come to an understanding about my query.

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  9. haypops says:

    Interesting comments Steve.
    I would like to come to the defense of CRADA, however. Those agencies of the government that are less fully funded than the department of Defense benefit from these agreements. Research funds from corporate sources are funneled into government labs for the benefit of all.

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  10. Paul Norheim says:

    Pauline,
    this seems like a good idea, but my suspicion is that you`ll not
    be able to charge those car batteries unless you contact an Apple
    Store via iTunes on your iPhone!

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  11. pauline says:

    Leo,
    An Apple car sounds great! At least I won’t have to worry about getting MP3 player in it, right?
    Maybe Apple could make it electric and design it to run on laptop batteries, install a keyboard, 1000 fre iTunes and . . .voila!

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  12. leo says:

    People keep talking about “technology” as a general cure for the US auto industry but my problem has always been that US cars aren’t attractive (externally and internally) and don’t perform as well as many imports.
    Why can’t US automakers excel at design, at least occasionally making the automobile equivalent of iPods?

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  13. pauline says:

    Ralph warned us about Citigroup back in 2002.
    Weekend Edition
    July 27, 2002
    Citigroup, Heal Thyself
    by Ralph Nader
    Last week Citigroup, the nation’s largest financial services holding company, trotted out one of its top executives, Robert Rubin, to spread some soothing words about how to clean up the corporate scandals and repair the sagging stock market.
    Rubin’s (and Citigroup’s) message appeared as a lengthy op-ed in the Washington Post under the headline “To Regain Confidence.” As former Secretary of Treasury in the Clinton Administration, Rubin commands a following, particularly in the financial press so important to Citigroup’s vast empire.
    The need for Citigroup to use Rubin to pose as an ally of reform became obvious two days later when the Senate Permanent Subcommittee on Investigations released hundreds of pages of documents that the Subcommittee Chairman Carl Levin said proves that Citigroup and J. P. Morgan Chase “knowingly assisted Enron Corporation in disguising debt by structuring sham financing vehicles.”
    The scheme not only facilitated Enron’s deception which cost investors and employees hundreds of millions of dollars, but earned more than $200 million in fees for Citigroup and J. P. Morgan Chase.
    Citigroup’s Rubin didn’t provide an inkling of his bank’s complicity in the Enron scandal when he penned his piece for the Washington Post. But he may well have had Citigroup’s secret involvement in mind when he argued that “regulatory and legislative changes and enforcement should be balanced and appropriate.”
    With the revelations pouring out of the Senate hearing, it is understandable that Citigroup and its executives would be entering a plea for “balanced and appropriate” enforcement-a light tap on the wrist, perhaps.
    At least one Senator at the hearing-Peter Fitzgerald of Illinois–raised questions about how many of the current scandals could be blamed on Congress’ decision in 1999 to allow banks, insurance companies and securities firms to merge and form giant financial conglomerates such as Citigroup.
    That question must have troubled both Citigroup and Rubin who played such major roles in the enactment of the legislation-Rubin as Secretary of the Treasury and Citigroup as the biggest beneficiary of the action. Rubin left the Treasury in July of 1999 and Citigroup announced he had been hired by the corporation on October 26-four days after the final compromise was reached on the legislation.
    In answering Senator Fitzgerald’s question about the wisdom of the 1999 legislation which merged banks and securities firms, Lynn Turner, the former chief accountant of the Securities and Exchange Commission, said “securities firms and banking firms can’t be working together, entering into transactions together and using the security arm to try to get banking business.”
    That echoed what many of us warned the Congress about repeatedly when the legislation was being hammered through by Rubin and Citigroup and the biggest players in the financial industry. The lobbying, greased with record campaign contributions from financial services corporations, drowned out all warnings about the dangers now so apparent in Enron and other corporate debacles.
    For consumer and community organizations around the nation, the new revelations about Citigroup should come as no surprise. Community groups have been trying for years to get legislative and regulatory action that would halt predatory lending and other deceptive practices by Citigroup’s affiliates.
    Citigroup became the nation’s largest predatory lender when it acquired Associates First Capital in September 2000 and merged it with another its subsidiaries, CitiFinancial Credit. Last year, the Federal Trade Commission (FTC) filed lawsuit against Associates First Capital, Citigroup and CitiFinancial Credit Company seeking an injunction against unfair and deceptive lending practices.
    Here is what Jodie Bernstein, director of FTC’s Bureau of Consumer Protection, had to say about the practices of the Citigroup affiliates:
    “They hid essential information from consumers, misrepresented loan terms, flipped loans and packed optional fees to raise the costs of the loans. What had made the alleged practices more egregious is that they primarily victimized consumers who were the most vulnerable-hard working homeowners who had to borrow to meet emergency needs and often had no other access to capital.”
    Last year, Citigroup paid $20 million to North Carolina customers of Associates and $300,000 to the state to settle allegations that consumers had been tricked into buying expensive and unneeded credit life insurance as part of their mortgage loans. The New York Times reported last fall that Citigroup had settled 200 lawsuits pertaining to practices of Associates with at least twice that number still pending in the courts.
    But, these facts, like the funny money games now revealed in the Senate hearings, were strangely missing in Robert Rubin’s lengthy rendition in the Washington Post about actions that were needed for the nation to regain confidence.
    To paraphrase an old adage: Citigroup, heal thyself.

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  14. TonyForesta says:

    The fascists in the bushgov through Paulson are thugging the American people. We are not being mugged, or roughed up a little before our wallets are stolen, – we are being THUGGED, ruthlessly pounded and beaten into submission and robbed not only of our wallets, but our jewelry, shirts, shoes, our cars, and even our homes are threatened.
    Paulson is robbing from poor and middleclass Americans to feed the superrich – the predator class – the fiends, shades, and shaitans (and Paulson cronies) who conjured and perpetuated this crisis without review, or remedy for abuse.
    There are no restriction, there is no accountability, and there is no questioning Paulson allmighty dictates on how best to rob and missuse the American taxpayer.
    These lying fiends and theives will never keep job in America when they can and do exploit much cheaper labor in India, China, and other South Asian nations.
    The American middle class is being thugged, we are being raped, and we are being robbed of what is left of our wealth and our childrens future, for the wanton profits of the liars and thieves on wallstreet who are responsible for conjuring and perpetuating this crisis.
    “Deliver us from evil”

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  15. Pacos_gal says:

    I didn’t know about GM using the technology from potential military development in China. That rather pisses me off. Technology should not be “shipped” off shore, nor should jobs, especially of companies who are taking government money to bail them out of the stupid decisions they have made for the past number of years.
    Over the weekend I was at a dinner party and speaking with one of the economist with a banking group here in Canada and his opinion is that no matter what Paulson meant to do when this economic downturn started to really hit, at this point, he seems to be completely over his head and incompetent to make any rational decisions. There is no faith that anything constructive is happening with regards to the economy and won’t until after Obama’s new team is in place. Cautious optimism seems to be the general consensus on the team being put together.
    One of the things that Obama mentioned on the campaign trail was rewarding companies who keep jobs in the U.S. I think that has to be in play with any companies accepting a bailout from the government. I have my doubts that anything that is put through while Bush is in the White House will come with those constraints. Congress has to attach restriction, regulation and oversight to any bailout bills.

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  16. questions says:

    Dan Kervick,
    You’re absolutly correct. I think ten minutes with a text on behavioral economics seems to indicate that we make lousy long term decisions routinely; we don’t understand probability or markets well; our emotions get in the way; and since markets require full information and we’ll never have that, we really can’t have unregulated markets. I am temporarily high on Thaler and Sunstein’s _Nudge_, and a variety of insights from game theory. I was, though, under the impression that iterated games produce better results, but this consequence seems to be negated by other pressures.

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  17. WigWag says:

    I couldn’t agree with you more, JohnH, the government did try to push Wachovia into the hands of Citi. Thank goodness it didn’t happen. To his credit, Bob Steele (the Wachovia CEO who took over after the bank was already in crisis) continued to push for a merger with Wells Fargo even after the government tried to arrange a shot gun marraige with Citi. Wachovia’s shareholders and the taxpayer owe a debt of gratitude to Bob Steele. He really turned out to be one of the good guys.
    Wells Fargo is a strong bank and a Wachovia-Wells Fargo merger makes perfect sense.
    Of course, the government official who tried to deep six the Wachovia-Wells Fargo deal was none other than media darling Shiela Bair. She’s the one who wanted Wachovia given away for basically nothing to Citi.
    Bair may give a good interview, but she’s a disaster.

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  18. Dan Kervick says:

    “The job of ameliorating the excesses of capitalism should not rely on the good will of the capitalist but instead belongs firmly in the hands of the government.”
    Precisely, WigWag. For the same reason, it is futile to complain as that the derivatives monstrosity and financial meltdown is caused by “greed”, as though the solution to the problem consists in exhorting businesspeople to be more virtuous.
    My hypothesis is that, human knowledge, rationality and veracity being what they are, an weakly regulated financial system naturally tends in the direction of more and more speculative and Ponzi borrowing. Even lenders that are initially disposed to invest prudently and conservatively find themselves in a competitive marketplace in which they can’t compete effectively in the finite market for investment opportunities without imitating the behavior of less prudent upstarts.

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  19. JohnH says:

    I stand corrected, Wigwag. Instead, the Fed was trying to push Wachovia into the clutches of Citigroup under the false pretense that Citigroup represented a “safe haven!” Imagine how much Citigroup/Wachovia would be begging for if the Fed had had its way! You have to marvel at the judgement of these esteemed leaders (not!)
    Regarding my other point, House Republican Leader John Boehner said Sunday, ““If we’re really serious about creating jobs, what we ought to do is, we ought to eliminate the capital gains tax for the next two years on any equities that are purchased.” He lso argued that cutting the corporate income tax would help boost employment.
    http://www.marketwatch.com/news/story/congressional-leaders-clash-over-economic/story.aspx?guid=%7BD360F1A1-EBCA-41F7-BBEF-648BCFDD1842%7D&dist=msr_29
    Ditto-head Republicans’ two-track broken record: 1) There is a military solution to every foreign policy problem.
    2) Every domestic problem can be solved by cutting taxes on corporations and wealthy individuals, so that they can create more jobs…in China.
    Krugman recalls, “Sept. 13, 2001, I got frantic calls from staffers on Capitol Hill. They informed me that Republican leaders in the House were trying to use the terrorist attack to ram through, you guessed it, a cut in the capital gains tax.”
    http://krugman.blogs.nytimes.com/2008/11/24/caricature-economics/
    Terrorist attack? financial meltdown? One solution!

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  20. WigWag says:

    Thanks for your kind words, erricwwk. Robert Reich is a guy who actually gets it. He understands what Steve Clemons is referring to vis a vis a social contract. In light of the terrible deal that Paulson just signed off on with Citigroup last night, I am copying for your information a blog post from Reich’s blog on the Citi bail out. I hope that you find it interesting.
    Citigroup Scores
    Sunday, November 23, 2008
    If you had any doubt at all about the primacy of Wall Street over Main Street; the utter lack of transparency behind the biggest government giveaway in history to financial executives, and their shareholders, directors, and creditors; and the intimate connections the lie between Administrations — both Republican and Democratic — and the heavyweights on Wall Street, your doubts should be laid to rest. Today it was decided the government will guarantee more than $300 billion of troubled mortgages and other assets of Citigroup under a federal plan to stabilize the lender after its stock fell 60 percent last week. The company will also will get a $20 billion cash infusion from the Treasury Department, adding to the $25 billion the bank received last month under the Troubled Asset Relief Program.
    This is not a particularly good deal for American taxpayers, but it is a marvelous deal for Citi. In return for all the cash and guarantees they are giving away, taxpayers will get only $27 billion of preferred shares paying an 8 percent dividend. No other strings are attached. The senior executives of Citi, including those who have served at the highest levels in the US government, have done their jobs exceedingly well. The American public, including the media, have not the slightest clue what just happened.
    Meanwhile, more than a million workers in the automobile industry, along with six million mortgagees, and a millions of Americans who depend on small businesses and retailers for paychecks, are getting nothing at all.

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  21. PissedOffAmerican says:

    Its my understanding that GM intends, if bailed out, to use a portion of the funds to develop its plant and operations in Brazil.
    Why does this suprise anyone? All the sudden these huge megacorps are going global? Hardly.
    I wonder, are any of those that Steve named as opposing these offshore migrations getting jobs in the Obama Administration? Doubtful.
    The McCain camp and Obama share vetting and potential co-conspirators? I wonder, did McCain gift Obama with some of the players that were instrumental in making sure Airbus got the tanker project?
    Nothing to see here, just business as usual.
    Got vaseline?
    Maybe Bush will loan you a jar, I understand the Saudis keep him well supplied.

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  22. WigWag says:

    JohnH, Merrill-Lynch was rescued by Bank of America not Citigroup. Bank of America actually purchased Merrill on September 18th for $44 billion.

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  23. JohnH says:

    Reminds me of the time I played the role of a rich guy on talk radio. When asked about raising taxes to pay for health care, I said, “You have to realize that there are dire consequences to raising taxes on wealthy Americans–we won’t be able to create more jobs in China.”
    BTW–what’s with the Citigroup bail-out? Only two months ago they gobbled up Merrill-Lynch because Citigroup was a “safe haven.” It sounds like Hanky Panky Paulson has one solution to every problem–make sure the Fat Cat Banks get fatter.
    The real solution to being “too big to fail” is to keep them from too big at all. Time to break Citigroup to smithereens.

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  24. erichwwk says:

    Nice comment, Wigwag.
    I only take exception to:
    “The philosophy that the winner takes all is deeply imbedded in the wiring of capitalism.”
    The way I read Adam Smith, capitalism was the OPPOSITE of winner take all. Ideally, markets were seen as a alternative way, a way to allocate proportionally. I would more attribute the “winner take all” concept to our political process, a warning Adam Smith gave in discussing that “men rarely meet except to fix prices”.
    I find your Bill Richardson, Ronald Reagan, and Robert Reich observations spot on.

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  25. erichwwk says:

    Steve writes:
    “…it is essential to have the thinking of people like Hindery and Ralph Gomory be considered when designing these bail-out packages.
    Otherwise, on the Off-shoring front, we are just going to see more of the same, and the taxpayers will pay to help their own job base get shipped abroad.”
    EXCELLENT !!!!!
    I just hope this post is widely read, by the right people, and we all help Steve move this discussion forward.
    This is the critical moral and egalitarian of our generation. To whom is the value of intellectual property to be distributed? To “skimming” CEO’s?
    To ALL people’s equally? (The picture “competing shovel to shovel” captures that essence nicely). Or are the working citizens of the United States entitled to retain that value for themselves?
    How this gets decided will have HUGE implications for our children and grandchildren.

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  26. WigWag says:

    “Now taxpayers are being asked to bail out these large firms which showed little interest in the economic health of the nation and which engaged in “winner-takes-all capitalism…”
    The philosophy that the winner takes all is deeply imbedded in the wiring of capitalism. It is useless to expect the capitalist to listen to the better angels of their nature. Frankly it may not even be smart to want them to.
    The job of ameliorating the excesses of capitalism should not rely on the good will of the capitalist but instead belongs firmly in the hands of the government. All of the Presidents from Roosevelt to Carter did a reasonably good job at tamping down those excesses. But from the time of Ronald Reagan we’ve had governments more motivated by the philosophy of Gordon Gekko than Franklin Roosevelt. You know, “greed is good.”
    Steve asks a great question, “Then, why isn’t anyone asking the question of the CEOs of these firms about what their new social contract with America and working Americans should be after having their companies literally “saved” during this economic crisis?”
    The Asian countries, especially China, Japan and Korea, have imbedded this kind of social contract in their economic system for years. In Europe, a strong trade union movement has taken to the picket lines to make sure a strong social contract is part of the system.
    In the United States, organized labor has been on the decline for many years but that decline accelerated when Reagan fired the air traffic controllers. No labor movement, hence no social contract. (One reason I am hoping the Democrats win 60 seats in the Senate is that if they do, repealing the most onerous provisions of Taft Hartley might be possible).
    Steve thinks very highly of Leo Hindrey but it’s a little hard for me to get my mind around someone whose main claim to fame is starting the YES network (that broadcasts NY Yankees baseball games and NJ Nets basketball games) and serving as CEO for Global Crossing.
    One Obama advisor (and former Clinton Secretary of Labor) who has spoken forcefully about these issues has been Robert Reich. But Bill Richardson? He’s obviously a popular Governor (he was reelected with 70 percent of the vote) and he knows foreign affairs from his stint as UN Ambassador and energy policy from his stint as Secretary of Energy. But is he really the right person to run Commerce? Do we have any evidence at all that he cares about advocating for the type of social contract Steve suggests?
    It seems that Obama offered Richardson the Commerce position largely as a consolation prize. I guess Obama decided that after watching the way Richardson stabbed Hillary Clinton in the back, that he didn’t want Richardson in too high profile a position. Ironic, don’t you think, that he trusts and respects Hillary Clinton more than Bill Richardson?
    Agree with them or disagree with them, most of Obama’s appointments to date seem very thoughtful. The Richardson appointment is an exception. The idea seems to have been just to find a relatively low profile place to hide a person owed a big political favor but who cannot be trusted.
    And while Richardson can’t be counted on to care very much about establishing a social contract, perhaps he can immerse himself in all of the other things the Department of Commerce does. Things like running the National Weather Service, the National Oceanic and Atmospheric Administration and the Patent and Trademark Office.
    Does anyone know if Bill Richardson knows anything about meteorology?

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  27. John Robert BEHRMAN says:

    The place to re-align corporate and national interests as well as to implement the planning and standards necessary to turn “stimulus” and “bail-outs” into anything but public indemnification of private improvidence is …
    The Department of Defense.
    They can limit technology exports but also build the industrial mobilization base. They have been doing this since before WWII. The main problem is that their paradigm is still a Great, World, and Cold War paradigm of war production.
    A contemporary military doctrine would actually be compatible with civilian economic imperatives.

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  28. ivan says:

    Right on Steve. Good to see some sensible thinking on this.
    Do you think part of the reason we’re not hearing more about
    this problem has to do w/the stigma of aligning big companies
    with national interests in a globalized world?
    I’m thinking of the influence of European nationalized
    companies and public-private parterships (PPPs): it seems we
    free-trade capitalist Americans been taught to dismiss them as
    inefficient/bad, and as a result it’s become taboo to talk about
    big private companies and national interest (at least out side the
    defense industry). After all, that’s part of the reason why PPPs
    exist (how successful they are is a complex debate, and
    depends on industry) in Europe: to synthesize, to the greatest
    degree possible, private/corporate interests with those of the
    public they are meant to serve.
    In a related note, it’s truly incredible how many people think the
    mere idea of a “social contract w/America” smacks of
    European…socialism.
    From “social” to “socialism” and the infallibility of Greenspanian
    terms like “market fundamentalism,” we really need to redefine
    our terminology to reflect our own needs as a country and not
    those of Wall Street, Reaganites, and Cold War soldiers
    determined to relive the 80s. As Obama demonstrated in his
    campaign, we need to reclaim “patriotism” not as a wedge
    political issue in the Rovian style, but as a serious factor when
    examining our economic crack-up. A bailout of Detrout without
    the kind of conditions you mention will be catastrophic. We’ve
    already thrown away enough money that will not be recycled
    into the middle class.
    What role does the issue of language/metanarrative play in your
    work w/the New Social Contract Initiative? Do you agree it’s a
    fundamental factor in turning the corner?

    Reply

  29. Lurker says:

    Excellent article Steve! I have not seen this angle on any of the major papers or blogs, but once you read your views, they make total sense.
    I bet Lou Dobbs calls you.

    Reply

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