Tomfoolery and Criminal NegligenceBy admin | February 20th, 2011 | Category: Featured Articles, My current Huffington Posting | 1 Comment »
Bad as that is: In this pass, the sort of jobs Americans consider middle class or professional are being thrown to the low-cost global provider.
Unless we face the music, we’re more or less guaranteed to be another Egypt. Even then, we’ve got our work cut out for us.
That may sound less than completely optimistic; but several things cropped up recently that make it hard to reach a different conclusion.
Take, for instance, the recent Deutsche Bourse/New York Stock Exchange deal, which creates the world’s largest public securities exchange. As it happens, it was no merger: The Germans bought 60 percent of the new company and its chairman is likewise German. When the deal passes muster with the regulators, Germany will own the New York Stock Exchange.
Later that same week, The Washington Post published a front-page story proving that as things stand, the interest on the national debt will quadruple in the next decade, soaking up not only most of the Federal budget, but most of the money that would otherwise finance productive job creation in this country.
Worse: Since most US Treasury securities are now owned by foreigners, most of the interest on those Treasuries–interest paid by US taxpayers–will go into overseas pockets.
Even worse: As rates on Treasuries rise, the value of the trillions of dollars in Treasuries bought since 2007 will fall, undermining the reserves of America’s pension funds, bond-based mutual funds, government accounts, and individual holdings. And it won’t just be Treasuries: All bond yields are set by Treasury yields–munis, corporates, mortgage-backed bonds and various derivatives will all be affected.
Icing on this steaming cake: About a week before that news, the International Monetary Fund called for replacing the US Dollar as the world’s reserve currency with Special Drawing Rights, a basket of currencies that it says would be more stable than the Dollar. A big reason for that move: The exploding cost of servicing our national debt. As and when this happens, the Dollar will drop in value like a stone.
Unfortunately for Republicans, they pretty much entirely created that debt.
It’s just facts: As a percentage of GDP, national debt fell under Jimmie Carter, exploded under Ronald Reagan and George H.W. Bush, shrank under Bill Clinton, and exploded again under George W. Bush.
It was all part of the right wing strategy to, in Grover Nordquist’s phrase, “Shrink (the government) down to the size where we can drown it in the bathtub.” Since it meant more money in their pockets, people bought into the idea, figuring that when push came to shove, it would all be painless.
How did that turn out? Now we’re like Russia–just another big country, feeling our way along, negotiation by negotiation.
We’re witnessing what Nordquist’s boast really meant today. And whether the result is the stronger, more vibrant America the Right expects, or the disaster predicted by the Left, is unimportant: Like it or not, the American People voted for this, the arithmetic is undeniable, and we need to deal with it as a nation and not a clutch of factions.
It’s in this pass that events bigger than we are are really driving things, because as we all know in our hearts, we’re in the midst of a historic transition to a new world, a transition as profound–maybe more profound–than the Industrial Revolution, driven by computers, modern telecommunications, and a unified global economy in which the nation state–any nation state–is economically obsolete.
Paddy Chayefsky put it in a nutshell in his brilliant movie, Network:
“You are an old man who thinks in terms of nations and peoples,” says a character. “There are no nations. There are no peoples. There are no Russians. There are no Arabs. There are no Third Worlds. There is no West. There is only one holistic system of systems. One vast and immane, interwoven, interacting, multivariate, multinational dominion of dollars. Petrol dollars, electro dollars, multi dollars. Reichsmarks, rins, roubles, pounds and shekels. It is the international system of currency which determines the totality of life on this planet. That is the natural order of things today.”
And Network premiered in 1976.
Replacing the world we think we’re still living in is what a brilliant new book, The Global Auction, says is the reality of globalization; a world in which all work–from making flip-flops to defending the computers of global banks from cybercrime–goes to the low-cost provider, and devil take the hindmost.
In that world, a good education, highly-developed skills, a perfect CV, or personal connections mean less than what you’ll take in salary, because employers are being driven by institutional investors–themselves driven by actuarial tables and their contractual obligations to pensioners–to maximize profits no matter what and because the world’s supply of perfectly qualified job candidates is enormous.
This relentless phenomenon is already re-forming the cheapest labor markets. Chinese manufacturers, for instance, are shifting their factories from Eastern to Western China, just to widen their operating margins. And as The Global Auction ‘s authors point out, doctors in Singapore are outsourcing their X-Ray interpretation to India–with no loss in quality. This is no surprise, since both sets of doctors went to American universities.
In effect, this means America’s professional class has been atomized like a drop of oil thrown on the ocean. You tell me if the American Dream can stand up to that.
We’re already seeing this at work here. At my local supermarket, one of the part-time workers at the checkout line graduated from Cornell. He has an Ivy League education.
He also has $200,000 in debt, and since even the White House is beginning to admit that by orthodox analysis, it will take at least 5 years to soak up today’s unemployment, he can expect to default on his student loans unless his family pays them, after which he’ll find it hard to get work in a corporate world that runs credit checks on job candidates.
Just to cheer you up: That doesn’t even take into account a hypersonic pace of computer and software development that experts like Ray Kurzwell think will eventually allow machines to perform most every task people now assume can only be performed by humans–surgery, for instance.
If and when that happens, the idea of any human career at all will seem as quaint as earning a living making wagon wheels, taking with it the possibility of, for instance, saving for retirement, or supporting a consumer-based economy.
In other words, since many of the people demonstrating in Tahrir Square had advanced university degrees from Western universities, but no prospect of ever having a real career, what happened in Egypt is a peek at our future,
This is an unstable situation, and I’ll bet you all the money in my pocket against all the money in your pocket that the policy makers in this country know it, and that re-training professionals, pushing for universal education, and all the other nostrums they trot out when they’re forced to talk about this are built on the false premise that the future is going to be like the past, when the employment markets of the past were built on the obsolete idea of nation states and national employment markets. They say this even though they know better–mainly because we’re not prepared to listen.
In fact, we don’t even have a framework today for creating a policy to deal with this, much less a policy. And no politician can even advocate creating one, because it would mean saying out loud that America isn’t top dog anymore, and that our children don’t face a glorious future in which they’ll have a better life than we’ve had. Like I said earlier, any politician saying that out loud will be out of work in about a week.
This is true, even though there are compelling examples of how recognizing reality and acting accordingly can do great things.
For instance, in 1974 Henry Kissinger told Richard Nixon that America would never be stronger vis a vis China, and now was the time to cut a deal. Nixon flew to Beijing and laid the foundations of 40 years of peace and political stability. We may wish China hadn’t prospered quite so splendidly; but the alternative would have been worse, and we’d have had even less to say about it than we have had.
Can we find the wisdom to do something like that again? I don’t know, and I don’t know what the solution is.
I do know that what passes for politics and statesmanship in America today is closer to a Balinese shadow play than anything like the sort of hard-nosed idealism that America displayed after World War II.
And I know that if we keep playing footsie with the enormous forces loose in the world today, instead of acting like adults, we’ll bequeath precious little to our children and our children’s children.
The questions are: Are we grown up enough to face realty and build policy around the facts, or will we keep pretending this is 1955 and we have plenty of time to make attractive choices? And is this really a choice?