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Common Sense: Vol. #13

Out sourcing has become a common term to many Americans, particularly those that have seen their jobs disappear, only to end up in another part of the country, or more likely, in another country altogether. Is this a bad thing for American labor? That of course depends largely on who is making the assessment. President Bush has said that it is a good thing for the economy. His "head of the Council of Economic Advisors", N. Gregory Mankiw explained that it is just a new way of doing International Trade. Many economists agree, but politically, it is not so easily swallowed.
Proponents are quick to claim that the number of jobs lost is miniscule compared to the size of the U.S. economy and that more people are working now than ever before in our history. While this may well be true, it seems analogous to saying that there are less Condors and Bald Eagles in this country now but the number of pigeons and sparrows has increased substantially so the overall bird population is better than ever.

The whole issue of out sourcing and globalization is happening because as economic analyst Lou Dobbs puts it. "The power of big business over our national life has never been greater. Never have there been fewer business leaders willing to commit to the national interest over the selfish interest for the good of the company's they head."

How did this come about?. For one reason, there has been a adversarial relationship between labor and the companies they are employed by for many years, so the welfare of the workers has not been necessarily paramount in the minds of corporate executives whose performance is tied directly to the bottom line. When they can find cheap skilled labor elsewhere to make their product more competitive, there is little hesitancy on their part. While international trade is a fact of life, this practice of out sourcing has inherent dangers which most either don't realize or just ignore.

What has happened is that the middle class of this country is now competing against millions of Indians or Chinese or any other nation whose prevailing wage is often as little as five percent that of American labor. Healthcare, OSHA, and a lot of other legal regulations imposed here in this country are not part of the labor costs in China or Romania or the Philippines. What is happening is an erosion of our middle class and to these people, out sourcing is just another terrorist attack. If this sounds like a lot of rhetoric, you might consider what has happened to American labor in the "Rust Belt".

The Delphi Corporation, America's largest auto parts manufacturer has recently filed for bankruptcy. This spin-off from General Motors employes about fifty thousand workers in the U.S. and Canada. Delphi plans cutting 12,500 jobs and cutting the wages of thousand of other employees, some as much as sixty five percent or more. Labor has fought hard to get certain concessions from management including health care and pensions and it is difficult to try and imagine living on a wage of less than ten dollars an hour. in many cities, this might be the primary employer and the loss would affect not only those employed by the company, but the rest of the area that depends upon the moneys spent by these employees. Lockport New York, with a population of 22,279, includes 3,800 Delphi employees. There are no other major industries in town that can pay anywhere near this amount. This story is pretty much the same wherever the auto industry has industrial plants. If Delphi has filed for bankruptcy, can this perhaps be the case for companies like General Motors and Ford?

But the Lockport story is just about one city in New York. There are many similar stories to be told elsewhere. Greenville Michigan, a city of 8,000 people lost it's 2,.700 employee refrigerator plant to Mexico. The Electolux plant that made Kenmore, Frigidaire and Kelvinator pays the employees about $15.00 an hour plus good benefits. They will pay their Mexican workers $1.57 plus bus fare and lunch. A fortune in payroll and an estimated 25 percent of city property-tax revenue will be lost immediately, along with hundreds of jobs at local suppliers. "I hate to think that next year at this time, Wal-Mart will be the highest-paying job around," Mayor Porter said.

When Hurricane Katrina hit the City of New Orleans, we were all shocked at the level of poverty and the racial inequality in that city. Guess what? That same week the Census Bureau gave us yet another shocker. Despite four years of economic growth in this country and an aggressive stimulus effort by the government, poverty in America grew for the fourth year in a row, and the Midwest and the Rust Belt took the hardest hit of all. Detroit had a higher percentage of poor people and lower median income than New Orleans! For the poor people in this area, the loss of industrial jobs and the global competition, has been as brutal as the hurricane winds. The midwest and the rest of the rust belt has become a cesspool of poverty and hopelessness. If Blue Collar America keeps losing good paying jobs, the gap between the poor and the rich just widens. Detroit, which once was the envy of cities around the globe has become the most poverty stricken city in America in addition to be the most racially segregated.

What does the Bush Administration have to say about all this? "The movement of factory jobs and white collar work to other countries is a part of a positive transformation that will enrich the U.S. economy over time, even if it causes short term pain and dislocation. George Bush told congress the economy "is strong and getting stronger" thanks to his tax cuts and other economic programs. He said "We are beginning to enjoy a mounting prosperity that will reach every corner in America." i have a feeling they're just not buying that in Detroit George.

Nobody would deny that the Mexicans, the Indians and Chinese and other peoples of the world need to increase their standard of living, but it need not be at the cost of the standards in this country!

"You may break any law in America with impunity. There is an unwritten law that you break at your peril. It is do not attack the profit ystem."
- Mary Heaton Vorse


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