November 8th 2008

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Articles from this issue:

EDITORIAL: Economic crisis: predicted and predictable

COVER STORY: A third way? Allan Carlson's vision of a family-centred economy

CANBERRA OBSERVED: Little room to manoeuvre for Rudd Government

ECONOMIC AFFAIRS: Market failure and the difficult path ahead

SUPERANNUATION: Development bank needed for Rudd's nation-building

RURAL AFFAIRS: Minister confronted by drought's human toll

POPULATION: 'A gigantic, costly and inhumane fraud ...'

RUSSIA: Moscow's campaign of kidnapping and murder

SOUTH-EAST ASIA: Thailand, land of smiles, convulses

HUMAN RIGHTS: Sakharov Prize awarded to Chinese dissident Hu Jia

STRAWS IN THE WIND: Prologue / Just a friend of the family / Epilogue

AS THE WORLD TURNS - Quotes for our Times

OBITUARY - Vale Pat Dunne

Doctor to an aborted boy - a poem

Legalised fraud (letter)

Christian Democrats' role in WA election (letter)

BOOKS: THE BIG SQUEEZE: Tough Times for the American Worker, by Steven Greenhouse

BOOKS: EMPIRES OF THE SEA: The Final Battle for the Mediterranean, 1521-1580, by Roger Crowley

Books promotion page

THE BIG SQUEEZE: Tough Times for the American Worker, by Steven Greenhouse

by Patrick J. Deneen (reviewer)

News Weekly, November 8, 2008
Winners and losers under globalisation

Tough Times for the American Worker

by Steven Greenhouse
(New York: Knopf)
Hardcover: 384 pages
Rec. price: AUD$51.95

Juxtaposed in the business sections of many bookstores are two titles that attest to the existence of two Americas, one enjoying affluence and mobility in our globalised era while the other sees its wealth decline and job security disappear as a consequence of those same global forces.

The first book, written by Wall Street Journal reporter Robert Frank, is entitled Richistan and describes the lifestyles of the nation's growing, if still small, number of millionaires. The second is The Big Squeeze, by New York Times reporter Steven Greenhouse, which describes the losers in the global sweepstakes: factory workers, service-economy workers, and increasingly even white-collar workers whose jobs are outsourced.

Left behind

Frank portrays a cosmopolitan class of global entrepreneurs whose success comes from disassociating from places and nations; Greenhouse focuses on the people left behind.

The point of comparison for Greenhouse is the 1950s. That remarkable period of US history saw extraordinary economic growth as, in the aftermath of World War II, the US emerged as the only significant industrial power. America assumed the role of producer for the world. Because of the need for steady labour and the absence of significant international competition, major corporations created working conditions for middle- and lower-class workers that the world had never seen before: high wages, cradle-to-grave benefits, job security, and a willingness to allow the formation of unions and provide support to local communities. The "working grunt" could expect a level of unprecedented prosperity, from home ownership to foreign travel.

For Greenhouse, this period was marked by the existence of a "social contract". Workers agreed to work long and hard, and in return they were guaranteed lifetime job security, benefits, and the prospect of a comfortable retirement. That contract was fleeting: this idyllic period lasted perhaps 25 to 30 years, until the oil crisis of the 1970s, a point at which the US reached the limits of its power - militarily, economically and politically.

While Ronald Reagan declared "morning in America", the terms of the social contract were being rewritten, almost always to the detriment of employment security and economic stability, if also to the benefit of dynamic growth in the broader American and world economies. There's the rub: the growth of overseas competition and the beginning of globalisation spelled the demise of the social contract.

American workers faced a cutthroat competitive environment in which labour was always expendable. Wages began to stagnate, benefits shrank, and workers were forced to take more risks with their futures. Early on in this process, observers saw that Reagan's promise that "a rising tide lifts all boats" seemed evanescent: some clearly were riding out the stormy seas in their yachts, but the dinghies of many others were taking on water.

By the 1990s, historian and social critic Christopher Lasch was writing about "the revolt of the elites". He described a divided culture in which elite beneficiaries of globalisation no longer identified with their communities or even with the United States, seeing their destiny instead in the bounty of the global economy.

Meanwhile, ordinary workers who failed in the meritocratic sweepstakes found that their life prospects had diminished: job security had all but disappeared due to outsourcing or widespread - and subtly sanctioned - illegal immigration; illness had become one's own problem; retirement was probably not on the cards.

Among the many personal stories that Greenhouse relates are those of Chuck Moehling and Myra Bronstein. Chuck Moehling operated a sausage-stuffing machine for Tyson Foods from 6 am to 2 pm, allowing him ample time to pursue his true calling: coaching Little League and basketball for his children. When Tyson froze salaries and reduced benefits in order to increase competitiveness and please stockholders, Moehling had to take a second job - in part to cover health-insurance premium costs that rose tenfold under his new contract. This ate into the time he could spend as a coach in the community. He notes bitterly, "You hear the reason kids end up the way they do today is because parents don't spend enough time with them." Longer hours for less pay and fewer benefits directly and adversely affect family values.

The example of Myra Bronstein, a software tester, shows that even high-tech white-collar workers are not safe. In spite of regularly working 12-hour shifts, she and her co-workers were summarily fired and told that, in order to be eligible for severance pay, they must train their replacements. The replacements were flown in from India the following week.

Greenhouse paints a wrenching portrait of decent people who, by no fault of their own, have been fired, demoted, downsized, displaced, abandoned. He provides evidence for the widespread sense that something fundamental is broken in the economy, even if measures such as GDP and productivity continue to rise. He shows that while the workplace has been turned into a cornucopia of opportunity - if still a great deal of anxiety - for America's elites, it has become an unforgiving place for the working classes.

Greenhouse's picture should unnerve anyone committed to a stable future for American democracy. Yet his prescription for redressing the plight of the nation's workers is unsatisfactory. He puts forward bland proposals to "change the conversation" or "jawbone" the issue and urges a strengthening of the unions. But the difficulty for Greenhouse lies in deciding to what extent he can accept the current economic model.

Throughout The Big Squeeze, he accepts the logic of globalisation as "inevitable" and "unstoppable", even as he cites workers who decry outsourcing as "unpatriotic" and a CEO of Intel who admits that the ongoing loss of good American jobs "will portend a dimmer future for young Americans".

He eschews "crude measures" to curb the effects of globalisation. He repeats the standard politicians' theme that increasing funding for retraining in high-tech jobs will help solve the nation's employment problems. He encourages scientific education to foster home-grown talent. But surely Greenhouse must know that only a minuscule number of the workers who have lost jobs over the past several decades can hope to reinvent themselves as MIT-trained scientists? Inevitably, many if not most manual labourers - who actually have the skills and inclination to do such work - are not predisposed to become successful free agents in the globalised system.

The retraining and education programs advocated by Greenhouse and others serve to assuage the guilty consciences of liberal elites who lament the "inevitability" of globalisation as they happily play in its privileged fields. In commending such programs, Greenhouse reveals his bias as a "symbolic analyst".

While he highlights the ill effects of globalisation, he also endorses the status quo by arguing that public policy ought to favour workers who are capable of joining "Richistan" rather than those who are unwilling or unable to become part of the global marketplace. (As a sop, he also proposes better poverty programs, presumably for those who don't make the globalisation cut.) But why should we not support decent jobs and wages for people who work with their hands and do not want to abandon their communities?

Greenhouse concludes that globalisation has been a net boon for Americans, but the evidence mustered in his book suggests otherwise. True, the globalised economy has benefited the denizens of "Richistan" and has made available to the consumer cheaper products manufactured in low-wage markets. But Greenhouse and others like him who promote economic efficiency above all do not ask whether the value of cheap products from China - not to mention America's scandalously high levels of national and household debt - is worth the price of stable jobs in stable communities.

Economic logic?

He doesn't question whether a certain kind of economics has trumped the very reason for economics: to make it possible for human beings to thrive in communities where they can put down roots and raise families, where their contributions can be appreciated, and where their children can expect a decent future. We have made a certain economic logic - efficiency, GDP growth and upward mobility - an end in itself while abandoning our commitment to the other treasures of life that are supported by a humane financial system.

An economy should exist to make human flourishing possible, to provide the foundations for the goods that go beyond mere economics: family, community, worship. If the current system is undermining these possibilities for a vast swath of Americans, haven't we ceased to understand the basic purpose of an economy? If we should begin "jawboning" about anything, this question would be a good place to start.

- Patrick J. Deneen is the Tsakopoulos-Kounalakis Associate Professor of Government at George-town University, Washington DC. This review is reproduced here by kind permission of The American Conservative magazine (October 6, 2008 issue).

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