What a Jobs, Jobs, Jobs Strategy Should Look Like

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uncle-sam-broke.jpgThis is a guest note by Ralph Gomory, one of the nation’s leading thinkers about technology, innovation, and the productivity health of national economies. Gomory previously served as IBM’s Senior Vice President for Science and Technology and subsequently as the immediate past president of the Alfred P. Sloan Foundation.
This essay first ran on The Huffington Post.

A Time for Action: Jobs, Prosperity and National Goals
Here in the United States, we talk endlessly about the importance of free trade and of government not interfering with the market.
But while we are talking, other nations are busy subsidizing and building up key sectors of their economies, and in this process destroying key sectors in our own economy.
These nations have grasped the obvious: that a country which leads the world in the most productive sectors of the economy will be rich, while countries that are confined to what is left will be poor. And while this is going on we continue to pursue more “sophisticated” but misleading ideas like comparative advantage.
We have too many people today who see in the destruction of our key industries by well-organized and highly subsidized actions from abroad nothing more than the effect of free trade and the operations of a perfectly free market. This is a delusion and a dangerous one. We also have an elite industrial leadership that too often sees itself with no other duty than maximizing the price of their company’s stock, even if that means offshoring the capabilities and know-how for advanced production to other nations that have no free markets themselves.
Our Nation’s Failure
Although I have just named foreign subsidies and American corporate leadership as part of the problem, the heart of the problem is the lack of leadership from our own government. Despite the importance of economic progress, our government, unlike many others, has no clear economic goals for our nation. But economic progress is essential, and to make that progress in today’s world we need economic goals that we steadily pursue and support.
I believe that our government should visibly and clearly adopt two national economic goals:

(1) To be a productive nation steadily growing a large per capita Gross Domestic Product (GDP).
(2) To share widely the prosperity made possible by that productivity.

Both are essential and measurable goals. By adopting and pursuing these goals our government can visibly align itself with the interests of the American people.
The Role of the Corporation
The principal actors in attaining these economic goals must be our corporations. But today our government does not ask U.S. corporations, or their leaders, to build productivity here in America; much less does it provide incentives for them to move in that direction. Rather, our government, captured by the delusion that they are watching free trade and free markets at work, has too often simply stood by and allowed one-sided destruction to go on.
They do not realize that the corporate goal of profit maximization at all costs does not serve the interests of the nation. They do not realize that the fundamental goals of the country and of our companies have diverged.
The sole focus on profit maximization, which leads to offshoring and holds down wages, does not serve the nation. This must change. And it must change before the damage to our economic ability is irreversible. And, in light of the recent Supreme Court decision on campaign financing, we must also act before the increasing influence of global corporations on our government becomes irresistible.
We must act to realign the goals of company and country.
Reward Productivity and High-Wage Jobs
I am not suggesting that our government step in and run our industries. What I am suggesting is that we need economic goals. Then, given those goals, we should reward those corporations that, acting freely and competitively, contribute strongly to those goals, productivity in America being high among them.
Our government should not pick companies to favor; I do not think we have the history or inclination to do what some countries can do successfully, which is to pick and sustain national champions. Rather we should use traditional means to directly serve national goals.
For a long time we have used the corporate income tax rate to spur R&D in any company. Building on that familiar approach we could, for example, use the corporate income tax rate to reward any corporation, large or small, that maintains high-value-add-per-U.S.-employee.
These companies are the strong contributors to GDP per capita. Many variations on this approach are possible, including many that are revenue neutral, but the essential point is to use corporate tax rates to reward the corporations whose actions support national goals. We do not select national champions; rather, we reward any entity that contributes strongly to the national goals. If we can agree on goals, enunciate them, keep them in mind and measure them, we will find many ways to provide rewards to corporations that contribute to those goals.
Some nations target the growth of specific industries that are productive. But let us go one better and make our country a place where any productive entity is rewarded. Much of manufacturing has the high productivity that will earn it incentives under this approach. We should clearly reward productive manufacturing and end this endless discussion about whether we do or do not need manufacturing. But we should also reward intelligent users who use tools and ingenuity to become more productive in whatever they do.
We should make sure that in our country productivity and high-wage jobs in the United States become the path to profitability.
Balance Trade
One unpleasant aspect of reality is that we cannot have success with any real economic policy, if we do not balance trade. Foreign governments can be extreme in their quest for dominance in specific industries. And we see every day the destructive effect of their actions.
By balancing trade we guarantee that any inflow of goods is matched by an equivalent export of goods made here in the United States. Balancing trade, coupled with rewarding productivity, will move us a long way toward ending both the one-sided destruction of industry by subsidized competition with its consequent loss of jobs, and the growth of our indebtedness to other nations. And this indebtedness leads to a diminution of our actual independence and of our ability to control our own future.
There are many ways to approach the balance of trade.
Many measures have been discussed. Prominent in these discussions is the need to obtain a realistic exchange rate. Clearly, major movement in that direction would serve our national goals. However, other nations – China is the best example – see it in their interest to have their currencies undervalued and hence their products underpriced.
Years of talks with China with no results should make clear to us that the exchange rate is something we do not control. We should realize that the approach of trying to “level the playing field” may simply not apply when we are dealing with countries that work hard to keep the playing field slanted in their direction, and when they have many ways beyond the exchange rate to do just that.
We may very well need to tackle the trade issue in the direct and head on way that Warren Buffet suggested in his insightful Fortune article in 2003. In this article he described his Import Certificates plan. The Buffet plan is something that we can carry out without the agreement of other nations, and it is something that would actually balance trade. The time has come to take this plan seriously in place of the endless talk that only postpones the day of reckoning.
The Moral Dimension
And let us not neglect the moral dimension. Let us make it right and admirable for corporations to consider high wages for Americans as part of their job, and for outstanding products to be something in which they take pride. Those who cannot remember may think I am dreaming, but I am not. Until the 1980’s the dominant view of the role of corporations was the stakeholder view, which included, along with profits, all the considerations I have just named and more.
Conclusion
The time has come for us to shake ourselves free from the delusions that shackle us; let us act before it is too late.
Let us urge government to visibly announce and then support and measure goals of productivity and widespread prosperity. Let us reward those who provide high-wage employment in the United States. Let us urge on our government the necessity of balanced trade, and let us do that in spite of the cries from those who currently find it more profitable to participate in and develop unbalanced trade.
Let us all in our various ways start to clarify the role of the American corporation and find ways for our companies to serve not only shareholders, but also their employees, and the nation.
Let us act before it is too late.
— Ralph Gomory

Comments

42 comments on “What a Jobs, Jobs, Jobs Strategy Should Look Like

  1. nadine says:

    Well, they proved your point in short order, didn’t they, kotz?

    Reply

  2. Neo Controll says:

    I second the emotion.

    Reply

  3. PissedOffAmerican says:

    Kotz, I’d like to take this opportunity to thank you for your continuing support and endorsement of Nadine’s blatant propagandizing, lying, and expressed indifference to human suffering. There is nothing that can be said by this blog community that can match the message you send by attaching yourself to her bigoted and dishonest narratives.
    Your endorsement says it all. Thank you.

    Reply

  4. kotzabasis says:

    Psychological projection is the art of the intellectual effete. Norheim, like Kervick, illustrates this at his best. All his moral and intellectual shortcomings, distortion, paranoia, extremism, fear, moral weakness, are projected gratuitously on Nadine. And thus exculpation and redemption comes for his deadly intellectual sins.

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  5. nadine says:

    JohnH, you are one saying that control flows one way: corporations control the government. I pointed out an example where government (does it really matter so much whether state or federal? and the drilling restrictions are both state and federal, I believe) is obviously placing onerous regulation on oil companies that hurts their profits badly.
    I asked, how could that be, if oil companies control the government?
    Pointing out oil company tax breaks does not answer the point. I never said the oil companies (or any other big company you care to name) were NOT recipients of favors from Washington. I just pointed out that power flows both ways in the relationship. You are the one asserting otherwise so I’m asking you to explain evidence that goes against your assertion.

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  6. Carroll says:

    Posted by nadine, Jan 31 2010, 2:28AM – Link
    JohnH,
    Here’s a question for you. America has an unknown amount of offshore oil reserves, because drilling is off-limits anywhere along the coasts except for part of the Gulf of Mexico and Alaska’ North Shore. Nobody has even looked at Atlantic and Pacific offshore reserves for 30 years.
    Now, certainly the big oil companies could make oodles of money if these fields were opened to exploration. Ditto for ANWR, where the reserves are known.
    If the oil companies run the government like you say, how come they can’t drill wherever they want?
    >>>>>>>>>>>>>>>>
    It’s not up to the federal government to say whether or not oil companies can drill off shore…it’s up to the states whose shore they want to drill off of.
    A company tried to drill off the NC coast and the state wouldn’t let them on the basis of possibily ruining coastal tourism which generates a lot more money and jobs than an oil drilling project would.

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  7. JohnH says:

    I guess Nadine never heard of the term “too big to fail,” which gives banks carte blanche to take whatever risks they want, and the public will clean up the mess. But, Nadine bleats, banks suffer under too much regulation!
    And Nadine whines that the government does not permit oil companies cannot drill wherever they want, regardless of the environment cost. By that logic, I should be allowed to do whatever I want–tear up the expressway out front to drill for oil or to plant a garden. How dare the government interfere with my personal freedoms?
    Nadine chooses to ignore the fact that oil companies benefit enormously from enormous government tax breaks, the oil depletion allowance scam being the most notorious. And oil companies are charged some of the lowest royalties in the world for exploiting public lands, royalties they often don’t even bother to pay. But, Nadine bleats, oil companies suffer under too much regulation!

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  8. David says:

    Don,
    I dissed Mass voters because they seemed to think that the answer to the shortcomings of Obama’s first year was to send and empty suit who opposes health care reform and rejects the idea that we need to change the nature of energy consumption generated by the burning of fossil fuels, and while they are at it empowering the likes of Mitch McConnell, James Inhofe, et. al. Democrats apparently chose to stay home, which reflects poorly on Democratic insight into how American politics actually works, and independents, especially swing voters, demonstrated the two-dimensionality of their relationship to voting and the federal government. Add in the effect of the Teabagger reactionaries driven by god-knows-what (I grew up in the apartheid South and remember well reactionary extremism and its impact on elections), and I found myself appalled that Massachusetts could fall prey to such a dynamic.

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  9. silver slipper says:

    Does anyone have an opinion about my point that one individual company adjusting wages to qualify for a “reward” from the government will cause chaos in the work environment(per the author’s suggestion). My point is when minimum wage is increased I eventually see my pay increase (at least within a year). But what happens when one individual business increases wages? Like take Mom and Pop store #1 that increases wages to the government’s requirements to receive a reward. What to the other Mom and Pop stores do? At first they would lose their employees to the store that raised their wages (therefore work environment chaos). Also, once the Mom and Pop store #1 has hired everyone they can, the employees that have to stay at Mom and Pop #2 will have decrease job satisfaction (and therefore work environment chaos).

    Reply

  10. nadine says:

    JohnH,
    Here’s a question for you. America has an unknown amount of offshore oil reserves, because drilling is off-limits anywhere along the coasts except for part of the Gulf of Mexico and Alaska’ North Shore. Nobody has even looked at Atlantic and Pacific offshore reserves for 30 years.
    Now, certainly the big oil companies could make oodles of money if these fields were opened to exploration. Ditto for ANWR, where the reserves are known.
    If the oil companies run the government like you say, how come they can’t drill wherever they want?

    Reply

  11. JohnH says:

    Nadine, what do you know about the kind of world that Wal-Mart, Exxon, GE, Goldman Sachs and Microsoft work in?
    You think these companies, which have revenues greater than the GDP of most countries, behave like the corner grocer. And there’s a reason the major oil companies are not allowed to own energy assets in most major producing states–they’re so big that they feel entitled to run the countries. Same thing is true here, but you have your AEI/NAM/AIPAC blinders on, so you see them as struggling small businesses.
    Get a grip on reality!

    Reply

  12. nadine says:

    Paul, nothing in my answer to you deserved this response. If you truly believe that American business today operates in a laissez faire environment, then you have your facts so wrong that all your conclusions will be off in cloud cuckoo land.
    A lot of liberals live in their own paranoid reality where there is nothing to fear in this world but large corporations and global warming. They consider their views to be so self-evident that they accuse me of lying just because I don’t believe in the same set of “facts,” based on the best evidence I can find. This is your ideological straightjacket, not mine. I don’t think you’re lying. I just think you believe a lot of nonsense.
    Liberals are much more at risk of ideological cocooning than conservatives simply because it is easier for them to avoid conservative opinions than vice-versa. Conservatives always have to deal with liberal opinions in the media, so they can’t avoid knowing it.
    If you don’t want to reply to me, don’t. I’ll post when I feel like it. I was posting here to see if there are any good arguments on the Left. I’m not finding many. But I have found a lot of self-indulgent outrage that any conservative should dare to argue with the self-evident superior morality of leftism. You all mean so well!

    Reply

  13. Paul Norheim says:

    Nadine,
    as you probably know, I really appreciate a good dialogue. I also don’t mind discussing
    with people who strongly disagree with me. Generally speaking, I may even have a
    stronger belief in dialogue and discussions in political matters than you have. But
    just like you, I also realize that at a certain point, it makes no sense to continue a
    discussion.
    I have reached that point with your comments here a long time ago, Nadine, and last
    week I decided not to respond to your posts from now off. Your approach to every
    subject we discuss here is too militant to my taste – and when I say “militant”, I mean
    this in a double sense: There is no room for doubt in your biased, black and white
    world. You are a classical partisan, who talk as if you always know the right answer,
    as if there was some religious source, or some bolchevik or zionist committee
    instructing you. I’ve had enough of that kind of “dialogue” in my life, long before you
    started commenting at this blog.
    Beside that, you routinely distort events and facts, and interpret stuff in an often
    highly paranoid way; and when people catch you lying or distorting facts, you never
    seem to care, as if flat lies are just a part of the game, an acceptable trick in
    political discourse on a blog. You also have an ugly tendency to characterize even the
    most moderate of your opponents here – from the host, Steve Clemons, to several regular
    posters, me included, as extremists, or supporters of those rabid extremists who
    according to you want to exterminate the ethnic group you belong to. I regard these
    repeated, and completely unfounded accusations as intolerable.
    In my view, all of the factors mentioned above undermine the basic framework that make
    dialogues possible and meaningful. I notice the fact that most of the other commenters
    here respond on a daily basis to your posts, on a scale from agreement to disgust. At
    the moment, most of the threads are actually dominated by your comments, and the
    replies from people who disagree with you. Some posters even seem to comment solely
    when they want to say something nasty about you. I am sure all of them realize the
    pointlessness of this. Personally, I have decided not to discuss political issues with
    you anymore. I would of course hope that other commenters followed my example, but
    that’s their business.
    If you want to discuss literary or philosophical issues with me, and if Steve allows
    this, you’re welcome. I would imagine that issues like the topography and history of
    planet Mars would be neutral ground as well. But any political back and forth with you
    is over.

    Reply

  14. nadine says:

    “Why is even some sort of European model a taboo, regarded as “socialism”, “communism”
    and even worse?” (Paul Norheim)
    Why shouldn’t it be called “socialism” when so many of the Euro parties call themselves some form of socialist, e.g. the French Socialists, the German Social Democrats, etc.? What else would you call it?
    The Euro model is often discussed, particularly at leftist hangouts like TWN. But most Americans see little they want to emulate in the European system. Europe has permanent low growth and high unemployment, compared to America; on a per-capita basis, most European are quite a bit poorer than Americans (whether you look at household income or per-capita GDP), and Europeans are not having children at replacement levels, so the system is unsustainable.
    We have similar problems, but to a lesser degree, and we have a much better track record in assimilating new immigrants.
    The track record of European governments in planning industry is not inspiring either. They seem to do a lot more of protecting uncompetitive sectors than incubating competitive ones.

    Reply

  15. nadine says:

    Paul, if you think America as it is today is remotely close to laissez faire capitalism, you are just not paying attention. The burden of taxation, regulation, zoning, environmental studies, lawsuits and slapsuits from this group or that is large and ever growing.
    Often the regulation has the perverse effect of being so burdensome that only the largest companies can survive it, as with the Consumer Safety Protection Act, that is closing down thousands of manufacturers whose products are perfectly safe. But they cannot afford the tests the law requires to prove it.
    One suspects the big corporations are not so unhappy at having their small fry competition closed down, but I thought it was the left that objected to big corporations and crony capitalism – yet they are fostering it, perhaps unwittingly.
    In places like California, the regulatory burden has effectively halted new construction of any large project and is driving business out of the state. (That new train system in the Stimulus bill will never get built. Wait and see. But many environmental lawyers will have full employment for years to come, so I suppose it’s not a total waste.)
    Other states have a name for this mode of being: Californication.

    Reply

  16. Paul Norheim says:

    So the best system in the best of all possible worlds is to allow small business
    enterprises as well as huge corporations to do whatever they want (the “freedom” side of
    the coin); to allow small enterprises as well as multinational corporations to come up
    with whatever projects, products, plans, strategies, and organizations they may come up
    with, while reducing the size of the government and the extent of regulations to a
    minimum.
    And the role of the citizen – besides being employed in these small or big enterprises?
    No longer a citizen, but a consumer, with the “rights” and the “power” of a consumer –
    in a jungle of businesses and corporations. This seems more or less to be the US
    definition of a “free” and “democratic” society, the American Model – a model America
    even demands other countries to follow.
    I am not the one to say what America should do. But watching the debate, I`m surprised
    by what the participants are allowed and not allowed to say in a society where the First
    Amendment is supposedly sacred. If someone even hints at other possibilities, other ways
    to arrange societies, something slightly different than laissez faire, they break a
    taboo – and someone will promptly remind them of the excesses of Stalinism and the
    Chinese cultural revolution. But as Dan Kervick says: “There is a vast political space
    of viable options falling between the alternatives of planning *everything* and planning
    *nothing*.” Why is it a taboo to discuss this vast political space?
    Why is it that if you don’t support “planning nothing”, Americans become suspicious, and
    think you may be a bolchevist or stalinist?
    A lot of more or less viable alternatives exist already, from the Chinese state
    capitalism (with its questionable authoritarianism), to the social democracies in
    Scandinavia (a mixture of planning and capitalism), and the broader “European” (moderate
    capitalist) models on the continent, to Chavez and Castro and other high profiled
    radical alternatives.
    Except for Venezuela and Cuba, all of the above mentioned examples are actually
    variations of capitalism; admissions that total state control and undemocratic
    leadership is a receipt for disaster in the long term. But they also represent an
    acknowledgement that no regulation, no control is also a receipt for catastrophe. But
    America seems to prefer the purest version of capitalism, the laissez faire version, and
    use Stalin and Mao as warning signals against any discussion going beyond the
    fundamentalist credo that almost destroyed the global financial system a couple of years
    ago.
    Why is even some sort of European model a taboo, regarded as “socialism”, “communism”
    and even worse? I`m not saying that America should become like Europe. But if the
    Democratic party has been transformed into a center-right party (this started during the
    Clinton years, and is even more obvious now), with a lot of moderate conservatives
    probably joining the Dems in the near future, and the GOP is transformed into an
    extremist party, then there is suddenly a vast political space that is left empty, and
    could be filled with a third option, exploring some of the alternatives beyond the
    current positions.

    Reply

  17. erichwwk says:

    An excellent articulation of what has to happen to address jobs in the current situation was given the other night on the Bill Moyers PBS show by the new AF of L-CIO President Richard Trumka.
    http://video.pbs.org/video/1399685713/chapter/2/
    A transcript link is included.
    The job discussion begins at 31:00 into the show.
    The earlier discussion of Citizens United vs the FEC is not unrelated, as the fact that five SCOTUS justices took it upon themselves to rule on an issue both parties to the suit was not pertinent reveals the extent to which corporations are challenging the legitimacy of the executive branch office holders through their SCOTUS agents, perhaps claiming that Goldman Sachs and Lockheed Martin are the legitimate holders of the office of the President and VP of thw US respectively.

    Reply

  18. JohnH says:

    Nadine is obviously opposed to consumer protection. And to environmental protection. And to work place safety.
    And banks working for the government? What planet are she living on? Apparently she missed the financial meltdown, where the government took no controlling interest, but handed them gobs of corporate welfare checks.
    Nadine’s AEI/NAM line of PR/BS is becoming increasingly obvious and ludicrous.

    Reply

  19. nadine says:

    JohnH, it used to be that only defense contractors like McDonnel Douglas had no market but the government. But as the government controls more and more – cars, banks, mortgages, student loans, health care, regulations up the wazoo – more and more companies find themselves working for the government or being put out of business by the government.
    Sometimes they are put out of business by sheer Congressional idiocy, like the Consumer Protection Safety Act, which was intended to insure that children’s toys don’t have lead in them, but was written in such an idiotic way that it is simply putting manufacturers of children’s toys, ATVs and Jet skis out of business across the country. Also, if you own any children’s books printed before 1985 you must destroy them rather than resell them to kids. No, I’m not kidding. The law was passed in 2008 (so I’m not blaming Obama for this one, but the Dem congress) and Congress won’t fix it.
    But let’s give Congress control of the whole health care sector, what could go wrong?

    Reply

  20. JohnH says:

    Nadine pretends to be so naive! If government is your market, the best way to grow that market is to buy politicians. McDonnell Douglas has no market but government. There is no “free market” in major defense systems. There are only a couple companies–a shared monopoly. To grow their market, the monopolists must pay politicians to increase defense budgets and circumvent the terms of defense contracts.
    Nadine likes to pretend that the world is composed exclusively of struggling small businesses. Where did she get that idea, working for AEI or NAM? In fact many huge corporations have more power than governments themselves. But their PR folks–like Nadine–are intent on creating the myth that they’re nothing more than ordinary small businesses struggling in a savagely competitive market.

    Reply

  21. nadine says:

    “But McDonalds, and more importantly McDonnell Douglas, can buy senators and representatives who tax you, draft you and put you in jail. Corporate power IS government power.” (Dan Kervick)
    You speak as if the control flowed only one way: from the corporation to the politician. Not so. Politicians have very strong levers of their own: taxation, regulation and law. They can can threaten to cost a corporation millions or put it out of business entirely, unless they get paid off.
    Sometimes wealth is power; on the other hand, sometimes power is power.
    The answer is not to give more power to Washington, but less. When the rules are simple and Washington isn’t trying to regulate every business there is in a thousand ways, the businesses don’t have to pay off the politicians to stay in business. They can just obey the law and attend to business. But now, nobody knows what the law is so you have to pay off the politicians or you might be put out of business. This is corrupt.

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  22. Don Bacon says:

    “no one on this thread has defended anything close to Soviet-style central planning”
    Ralph Gomory: “[Our government does] not realize that the corporate goal of profit maximization at all costs does not serve the interests of the nation.”
    Soviet Central Planning: Those who designed the Soviet economic system began with a belief that the problem with capitalism is that it produces for profit instead of for people’s needs, and they set out to build a system that produced directly for people’s needs and not at all for profit.
    Ralph Gomory: ” . . .the heart of the problem is the lack of leadership from our own government. Despite the importance of economic progress, our government, unlike many others, has no clear economic goals for our nation.”
    Soviet Central Planning: A system of central planning evolved, a system in which all decisions about what people needed were decided from the top.
    Ralph Gomory: “I believe that our government should visibly and clearly adopt two national economic goals: (1) To be a productive nation steadily growing a large per capita Gross Domestic Product (GDP). (2) To share widely the prosperity made possible by that productivity.”
    Marxism: From each according to his ability, to each according to his need.
    ———
    So while Gomory isn’t exactly proposing Soviet Central Planning, and he doesn’t go into details about how he might control corporate behavior including their profitability that he doesn’t like, he is proposing Soviet-style Central Planning in that a central government would attempt somehow to control goals and profits, including their distribution.

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  23. Dan Kervick says:

    “…but Soviet-style central planning isn’t a solution.”
    Of course not. But anyone who knows anything about what Soviet-style central planning consisted in will understand than no one on this thread has defended anything close to Soviet-style central planning. There is a vast political space of viable options falling between the alternatives of planning *everything* and planning *nothing*. Self-styled “libertarians” seem attracted to the idea that the right of private firms to plan whatever they want, regarding both their own lives and the lives of others, should be protected, while the right of the broader citizenry to plan anything at all should be denied and thwarted.
    If you stop buying some stuff you used to buy from Super Megacorp, you might in some marginal way diminish your personal dependence on Super Megacorp. But not much, because your personal behavior does not alter the fact that you live in a broader society that is still directed by Super Megacorp and its limited number of peers. If Super Megacorp decides it wants a war, its going to get its war. And you and your children are going to face the consequences of that war, even if you are trying to enjoy your dropped-out, low-dependence, low consumption, small scale entrepreneurialism.
    If you don’t want your life to be governed by powerful outsiders whose values you deplore, and whose ambitions are contrary to your interests, then you need to work in organized solidarity with more like-minded others to seize power and control over the governance of your own lives. That means participating in an effective political organization that undertakes planning and coordination sufficient constitute a power capable of challenging the power of Super Megacorp. And if you want to keep *all* of the Super Megacorps in check, and subordinate to the wishes of the many, then the governing authority in which you participate must be very powerful indeed.
    Now if a whole society – rather than just a few individuals – stops buying a whole lot of stuff from Super Megacorp, they can of course bring down Super Megacorp. But that does little to restore popular control over the direction of society if it just opens up the space for some new Super Gigacorp to step in.
    Suppose you and others stop buying petroleum products. That will decrease the power of petroleum concerns and create the space for the rise of alternative energy concerns. Of course, the result might very well be that some day there will be large and very wealthy wind power corporations who decide that – given our power needs – there aren’t enough windy spaces in the United States, and that we need to acquire more of such spaces. Perhaps they will pony up the resources needed to have one of their own elected President or Vice President. Their comrade in office will then convene a secret advisory panel on the nation’s wind needs, and recommend a forceful, military-driven policy to assert more control and acquire more of a controlling economic stake in the world’s open, windy places.
    Now I suppose you could try to organize people to buy a whole lot less of *everything* and live more simply, locally and in self-subsistence with their cottage industries. That might succeed in bringing down the overall level of economic activity, and make the nation collectively poorer (although arguable improve quality of life in various ways). But it doesn’t, in itself, change the power equation. Because even if the net worth of every private firm and individual were slashed exactly in half, that would do nothing to rearrange the hierarchy of power and control. If Super Megacorp is 500,000 times more powerful than me, and each of us has our wealth reduced by half, they are still 500,000 times more powerful than me. I haven’t achieved any more power or freedom as a result of our mutual impoverishment.
    And of course, if the slashing of economic activity, and move toward subsistence and simplicity, occurs in one country alone, that country just becomes weaker than its competitors abroad, and opens itself up to foreign domination.
    The fact that the very word “planning” has become a dirty world in latter-day, laissez faire America is a quasi-religious perversion wrought by decades of oppressive cold war ideology. To deny people the opportunity to work collectively to plan the shape of their future is to deny them one of the chief fruits of human intelligence and natural sociability, and one of the greatest endowments of human nature. Organized human planning will always play a major role in determining the shape of the world we live in. The question is whether those plans will primarily represent the interests of only a few possessing concentrated wealth and power, or will instead represent the interests of the many in collective possession of broadly distributed wealth and power. When power is concentrated and very unevenly distributed, the people making the plans and executing them in pursuit of their own profits and interests will not be the same people as those who pay the lion’s share of the human and material costs of those plans.
    I suppose we can count for some time on libertarians refusing to take responsibility for actively governing their societies, and allowing governance to rest, by default, in the hands of whatever private property owners have the gumption and foresight to seize the power to govern. While they tend to their own gardens, libertarians will allow their more organized opponents to buy the editorial pages of the Washington Post the Wall Street Journal, the studios of the broadcast media, and the networks and search engines of the internet, and the offices of the government, and to keep the money that funds capital investment concentrated in a few powerful hands. Then they will continue to bitch in outrage about why they are forced to live in a world whose direction is dictated by all of those private owners.

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  24. silver slipper says:

    Dan Kervick says “By changing the subject to the ridiculous examples of Mao and Stalin, who attempted not just to set a broad framework for a national economic strategy, within which free enterprise could build in most of the details – as I have proposed – but who attempted to direct and command each and every aspect of their society’s economic behavior, cultural life and even individual psychologies” – I think it is appropriate to discuss Mao, because officials in President Obama’s staff admire him – Remember Anita Dunn’s speech to high schoolers?
    I suggest that the attempt of our government now to enact it’s new health care laws is an example of the government controlling it’s people. The last I heard, only 33% supported the change in health care laws being considered, but President Obama and House speaker Pelosi say it will happen no matter what. If we ever become a single payer system, Americans will lose a lot of freedom/control. Currently, if I don’t like my current health care, I can change to a different plan during the yearly open benefits at my job. But what does one do if they are unsatisfied with their government run health care system?
    Also, the change made to the government being the only source of student loans is another example of lost control. If a student studies to be a teacher, it will probably cost 40,000. Starting teacher pay is about 25,000. So based on the President’s plan, that person would have to pay 2,500 a year back on the loan, which is a little more than $208 a month. So a person is made a servant to that debt for 10 years (I’m assuming a teacher position would be on in the good graces of the government for forgiveness after ten years), because that amount a month will not begin to pay off the debt. And what happens if a person decides they don’t really like teaching? Would he/she need to stay in teaching just to get loan forgiveness in 10 years? This example of government control is very unappealing to me.
    And to try to say something directly to the author’s essay, I think any attempt to control wages will backfire on our economy. The reason I say this is I’ve seen my wages directly increased when minimal wage is increased. Persons who I directly supervise will start to complain that persons who flip hamburgers almost make as much as they do, when their job requires much more expertise. Pretty soon, they receive a wage increase. Then my direct co-workers will start to complain that those we supervise almost make as much as we do, and then we receive wage increases as well. Just imagine if individual companies start raising their employees’ wages to meet government requirements for a “reward”. It will cause chaos in the work environment.

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  25. Don Bacon says:

    David, dissing Massachusetts voters over jobs makes no sense when the present administration, despite rising unemployment in all fifty states last year, places no emphasis on employment. Go to Obama’s website whitehouse dot gov, click on issues, and you will see twenty-two issues listed and none of them is employment or jobs.

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  26. David says:

    For at least the last 30 years, the corporate imperative has been greed over country. I place it at 1980 and forward, because that is when American voters thought Ronald Reagan was a good idea and the Republicans sold the notion to Americans that greed is good. And I’m still not sure the majority of Americans have grasped anything beyond the fact that a hell of a lot of them are either under-employed or unemployed. The majority of the people who voters in the special election in Massuchusetts certainly demonstrated that they don’t grasp much of anything in any larger context. The only good news will be that that empty suit will not be re-elected.

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  27. jonst says:

    Yeah, the over/under was 4 weeks on when Nadine would start a fresh round of criticism of Turkey.
    “One of the most enduring lies in American politics is the myth of small-business job creation”
    http://www.washingtonpost.com/wp-dyn/content/article/2009/07/07/AR2009070702650.html
    A “Bolshevik” no less. My god.

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  28. Dan Kervick says:

    “MacDonalds cannot tax me, draft me, or put me in jail. Corporate power is limited compared to government power.”
    But McDonalds, and more importantly McDonnell Douglas, can buy senators and representatives who tax you, draft you and put you in jail. Corporate power IS government power. More generally, wealth is power, since to possess wealth is to possess control over the objects of human desire, and thus to possess control over human beings. Those who possess the lion’s share of the wealth will use that wealth, one way or another, to run their societies, whether they run it through the instruments that are honorifically labeled “government”, or they employ some other means. If we possess no democratic control over the extent and distribution of wealth, then we possess no democratic control over the extent and distribution of power – and in turn we thus possess little democratic control over our societies at all.

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  29. Don Bacon says:

    Probably few of us are happy with huge corporations and their purchase of politicians, but Soviet-style central planning isn’t a solution. The opposite is the case.
    The only real solution is for each of us, in our own way, to become less dependent on the organizations that we don’t like. Basically that means less consumption and more entrepreneurship on our parts.

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  30. nadine says:

    “Conservatives are paranoid fools who are so overly impressed by the potentially abusive powers of those corporate entities that we call “governments” that they are willing to indenture themselves to the equally ruthless and less responsive corporate entities that are privately owned.”
    We trust neither of them, Dan. We prefer the privately owned kind because a) they ARE more responsive BECAUSE THEY CAN GO BROKE. They have to please the customer to stay around. b) MacDonalds cannot tax me, draft me, or put me in jail. Corporate power is limited compared to government power.
    Socialists are remarkably unimpressed by the potentially abusive powers of utopian governments, which one would think the 20th century had amply illustrated…okay, let’s not look at Mao; how about Hugo Chavez? Is he making a success of business in Venezuala?
    On another topic, remember how I said that Islamists tended to be only temporary democrats? Barry Rubin has a rundown of how the AKP is working to make sure that future Turkish elections turn into mere formalities:
    Foreign admirers of the AKP regime like to say it is a moderate Islamic government which proves that Islamism is compatible with democracy. It is possible that a few years in the future—when it is too late—observers will look back on its example to prove the opposite.
    But here’s an obscure angle on what’s happening that tells a mountain-load about contemporary politics. Stick with me as we expose a covert operation that ties up the far left with the drive toward an Islamist dictatorship. Briefly, here are the themes:
    –A nominally left-wing newspaper is an Islamist front fed disinformation by the regime in order to discredit the regime’s rivals, both the army and the left of center political parties.
    –This front is praised by leftists in the West as a heroic venture when it is funded by Islamists and does their bidding.
    –The Turkish regime is moving increasingly toward demonizing its secular enemies to the point where they can be repressed and Turkish democracy is, at best, limited and the country is moved toward being at least a partial Islamist state with authoritarian rule by a single party. While there will continue to be elections, the AKP is using extra-parliamentary means to ensure that it always will win.
    rest at http://rubinreports.blogspot.com/2010/01/scoop-how-leftist-islamist-alliance-is.html

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  31. Dan Kervick says:

    “Insofar as China has prospered; it is because it has been allowing more free enterprise.”
    Semi-free enterprise directed by determined and ruthlessly consistent government economic strategies.
    “When the citizen is not a dependent of the state.”
    Being a citizen in a democratic republic is not being a “dependent” on the government. It is being an equal member of a sovereign body that governs itself and is thus the government’s master. If we could muscle corporations out of the blockade they have imposed between the people and their government, we could assume control of that government and bend it to our deliberative will. But right now we have a corporation-run pseudo-republican government that preserves its power by guarding the wealth and station of the most powerful, and by distributing welfare crumbs to the poorest and most impressionable.
    By changing the subject to the ridiculous examples of Mao and Stalin, who attempted not just to set a broad framework for a national economic strategy, within which free enterprise could build in most of the details – as I have proposed – but who attempted to direct and command each and every aspect of their society’s economic behavior, cultural life and even individual psychologies, you have conveniently avoided the subject of the very successful economic planning of the Second World War, and its highly profitable aftermath for Americans. Your argument is about as apt as the argument that we shouldn’t build any large buildings, because some large buildings turn out to be evil castles with dungeons and torture chambers.
    Conservatives are paranoid fools who are so overly impressed by the potentially abusive powers of those corporate entities that we call “governments” that they are willing to indenture themselves to the equally ruthless and less responsive corporate entities that are privately owned. The struggle to control our own government might be an uphill one, but at least we have the premised rights and latent potential of democratic participation in that government. The world of corporations is an impassible private wall of power against which we are granted no participatory rights. Unless we take control of our government and use it to rule corporations, we will be ruled by those corporations.

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  32. nadine says:

    “Well, Nadine, many currently existing companies are going to fail one way or another, because they have made a variety of conflicting bets on the future, and obviously not all of those bets can pay off.”
    Yes, Dan, if companies screw up they go bankrupt. This provides what is commonly known as a “reality check”. Government bureaucracies, on the other hand, are immortal. They never go away no matter how much they screw up. They never get a reality check. That is why they are not competent to pick winners or run private enterprise. Why don’t we see what kind of success the government makes of GM before we hand over health care, hm?
    Insofar as China has prospered; it is because it has been allowing more free enterprise; though may voices say that it is more brittle than it appears.
    “The worst aspect of the laissez faire, weak government doctrine that has such deep roots in America is that it preaches the inability of peoples to plan, organize, and choose their own national future rather than have it chosen impersonally for them.”
    First of all, that’s a false dichotomy: it’s not socialism vs laissez faire with nothing in between. Second, you have it exactly backwards. When the citizen is not a dependent of the state, he must organize for himself; it was ever the genius of Americans that they organized themselves for causes at the drop of a hat. But as the government becomes larger, the citizen becomes smaller. He can do less and less, even with his own property, his scope of action is very small, everything encourages him to become a dependent on the nanny state.
    “We profited for decades off the public investments made by the massive centralized government planning of WWII, during which an entire population was mobilized for a concerted national project.”
    Ah yes, follow the five year plan into the sunlit highlands of tomorrow…you really are a communist, aren’t you? How did that turn out in Russia and China? Here’s the dirty little not-so-secret: when reality refuses to conform to the orders of central committee plan, and people desperately want to make decisions for themselves instead of sacrificing themselves on the communal altar of tomorrow, then the guns come out and the gulags fill. Happens every time. Stalin killed 10s of millions. Mao killed even more.
    Much better to put up with millions of little people making decisions for themselves. Turns out they know their own needs for happiness better than the central planners. It won’t be perfect; but nothing ever is.

    Reply

  33. Dan Kervick says:

    Well, Nadine, many currently existing companies are going to fail one way or another, because they have made a variety of conflicting bets on the future, and obviously not all of those bets can pay off.
    Going forward, we can get a much more efficient use of our capital over the long run, and fewer wasteful failures, if the government sketches a broad national framework for the economy, and organizes public investment to build that framework, letting private enterprise and entrepreneurship fill in all the myriad details in a world with improved rules, structure and reliable expectations of the future.
    As for the record of governments in picking winners, ever since China moved away from communism and into state capitalism, they have been doing very well indeed in that department. They have sustained tremendous growth for a couple of decades, have boosted the average standard of living of their population dramatically, and have doubled life expectancy. We could do even better than them if we moved toward a system of national economic plans that were set via a democratic process, and not by a single party.
    The worst aspect of the laissez faire, weak government doctrine that has such deep roots in America is that it preaches the inability of peoples to plan, organize, and choose their own national future rather than have it chosen impersonally for them. It preaches that the future is in some way out of our hands, and is just the unpredictable resultant effect of whatever small and self-interested steps millions of isolated individuals happen to scratch out in their limited and self-consumed lives. In the end, it is a demoralizing and fatalistic doctrine that undermines human dignity, and crushes the largest imaginative visions and creative urges of humanity. The human mind longs to stretch itself out to its full measure, and engage in the planning and execution of projects with a difficulty and largeness commensurate with human capacity. It is not satisfied *entirely* with projects aimed only at increasing the shelf life of widgets or the processing time of invoices. Laissez faire is a backward and superstitious doctrine of human smallness and weakness, akin to earlier superstitions like the doctrine of the divine right of kings, and over time it results in social backwardness, cultural blindness and numbing stupidity of its citizens, phenomena which we are seeing coming to pass.
    We profited for decades off the public investments made by the massive centralized government planning of WWII, during which an entire population was mobilized for a concerted national project. Those expenditures were at the same time long-term investments, and in the process we built an industrial, defense and transportation infrastructure that secured our prosperity for a generation. We sure didn’t have any problem picking winners then, and our optimism wasn’t crushed by the “can’t do” naysayers of the laissez faire right. We won the war, if I recall, and emerged as the world’s dominant power.
    Did we make use of bidding and innovation and entrepreneurial in the process? Sure. But we didn’t say, “We’re not sure if we are going to fight this war with planes, trains, tanks, jeeps or horses. We don’t know whether we need more roads, bike paths or canals. We’re not sure whether our equipment will run on oil, natural gas or wood. So let a million economic flowers bloom and we’ll muddle it through.” No, we had a plan, and carried it out.
    We should devote the same urgent care, organization and intensity to the project of building the peaceful prosperity of the next generations as we put into winning the great war in a previous one.

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  34. nadine says:

    “Americans need to get a clue. We don’t any longer live in a world in which the dominant players are just large private companies throwing weak governments around. Like it or not, we live in a world of increasingly effective and well-organized state capitalist nation-enterprises.”
    What about behemoth governments, that run around picking winners and losers and putting the losers out of business, causing every “loser” industry to have to waste enormous resources lobbying just to be allowed to stay in business?
    Government’s track record for picking “winners” is atrocious. What in heaven’s name would make anybody expect that Washington has the ability to pick winners? It can pick favored clients and pamper them with taxpayer dollars; it does that well.
    Did you hear Obama say “I am not a Bolshevik” today? Anybody else old enough to remember Nixon’s “I am not a crook”?

    Reply

  35. Dan Kervick says:

    The two national goals seem so vague and broad as to be both unexceptionable and inadequate to the national challenge. Other countries are executing substantive strategic national plans around a concrete vision of the kinds of futures they are trying to build for their countries. We can’t counter those competitors with only the wide-open and incoherent goal of growing our GDP in whatever haphazard way our people choose to bumble into. The American people need to step up and exercise, through their government, more decisive leadership and foresight.
    I understand that the US corporate leadership class reacts with palpitations and vapors to the idea that the people of the United States might “pick winners”. But picking winners for the broadest infrastructural and organizational levels of our economy is precisely what we need to do right now. There are a lot of investments waiting to be made in the new, greener economy that *appears” to be on the horizon. But a good part of that money will continue to stand idle as long as there remains substantive doubt about the national industrial direction, and the shape of the national infrastructure in 2015, 2020 and 2025. The largest economy in the world needs to start acting like a rational organized body of people that are capable of moving forward coherently, and not pull in a million different directions at once.
    Business folks are constantly recommending a weak and disorganized approach to life for the American people and their government that they would never recommend for businesses themselves. When individual businesses look to the future, they develop detailed, concrete, comprehensive strategic plans, and then execute them. I have never received a memo from the company CEO that said our strategic plan for the decade was just to *get richer*, and that the only policy the head people are enacting is to reward rich-making activity, without specifying any corporate direction. Companies never leave it up to their employees to call all their own shots, make all their own plans, and muddle along as they see fit.
    So why should a whole country act this way?
    Americans need to get a clue. We don’t any longer live in a world in which the dominant players are just large private companies throwing weak governments around. Like it or not, we live in a world of increasingly effective and well-organized state capitalist nation-enterprises. Those states are our chief competitors, and if we keep trying to play ball in the AA minor leagues with the private firms who occupy the next rung down on the competitive ladder, we will end up as a AA minor league country ourselves.

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  36. Don Bacon says:

    Well, you and I call it corruption but the Supreme Court calls it free speech.

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  37. Dan E says:

    Two points in this essay that assures me that the author’s desire for equality will NEVER be realized:
    “To share widely the prosperity made possible by that productivity.”
    American style capitalism as it is practiced today is the absolute antithesis of sharing. Corporate America’s unstated objective is to horde every penny they can and deny any benefits or rewards to anyone that does not contribute to their blood lust for ever increasing profit. Unrestrained greed is killing America. Gordon Gecko was a criminal, not a prophet.
    “They do not realize that the corporate goal of profit maximization at all costs does not serve the interests of the nation. They do not realize that the fundamental goals of the country and of our companies have diverged.”
    Of course they realize that the needs of the country are not being realized, THEY DON’T CARE!
    The cash-flow conduit between Wall Street and Congress must be permanently closed before America will have any hope of duplicating the publicly beneficial economic policies being promoted in other more compassionate and generous societies around the world.
    There is nothing exceptional about America today; except for the obscene level of corruption and graft that takes place every day between Washington DC and Wall Street.

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  38. JohnH says:

    It’s “apparently unsolvable” as long as they think they can finesse the problem.
    I believe it can be solved if the US does the following four things:
    1- devalue the dollar and end its reserve status
    2- dramatically cut military spending and put the money into infrastructure, education and health care.
    3- bust the shared monopolies, starting with banking.
    4- control Wall Street leverage.
    With the exception of some slaps on the wrist for Wall Street, none of these things are on the table.
    Washington can’t manage the situation, and adult supervision has yet to arrive.

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  39. Don Bacon says:

    So profit maximization is bad and productivity is good? Actually they are two sides of the same coin. A corporation strives to increase productivity in order to maximize profits.
    A corporation is mandated by its stockholders to maximize profits. Any CEO that might announce that his priority is not to maximize profits but to share the prosperity of the corporation with the wage-earners would quickly become an ex-CEO.
    Asking the government to “realign the goals” of a corporation is similar to asking a CEO to do the same, with the added fact that the government has no business, nor any legal basis, to become involved in the goals of any corporation, much less of every corporation.
    So requiring corporations to increase wages wouldn’t be a realistic way to increase productivity. Currently corporations, as noted, have a much better (to them) way to increase productivity and profits by reducing staff and outsourcing jobs. The company that produced this laptop that I’m pecking on, Dell, has been quite effective in this department. Dell grosses $85bn with 65,000 employees — almost a million per employee. That’s high productivity, and they achieved it by outsourcing nearly their entire production and customer service functions.
    I don’t like this situation either. It is economic treason. But it’s a structural problem, it’s the American way and it’s apparently unsolvable.
    Point by point:
    *productivity goals are a corporate matter
    *rewarding high-wage payers — how?
    *large bonuses are good too, and the companies that pay them should be rewarded?
    *how to achieve balanced trade except by deflating the value of the dollar significantly?

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  40. Pahlavan says:

    It’s important to note that majority of American jobs are created by the small business sector because small businesses are in fact America’s biggest employer, and that is why America’s job outsourcing multi-nationals revamped their p&l models to target small business as a measure to sustain and grow their annual earnings.
    Don’t let the globalization rhetoric and the world is flat marketing and PR ploys from Tom Freidman’s alike have bearing in this. People who had plans to dominate the rest of the world in the same manner they did inside America’s borders, ran into issues. One simple example is the Google’s saga in china.
    The sad fact in all this is that our powers to be don’t have an answer for fixing the mess they’ve got us into. They are just buying time as they render their political talk and gamesmanship, until the rest of America adjusts itself and finds a way to recreate the economy on their onw. Then they will take credit for it when its done, and continue to steal the tax payers effort and portion all over again.

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  41. JohnH says:

    “We also have an elite industrial leadership that too often sees itself with no other duty than maximizing the price of their company’s stock, even if that means offshoring the capabilities and know-how for advanced production to other nations that have no free markets themselves.”
    Dare we call it economic treason?

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  42. Mr.Murder says:

    The corporate entity having more rights than the average person is the modern equivalent of the Dred Scot decision.

    Reply

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