Monday, November 28, 2005

Wishful Thinking And More

by Tom Bozzo

From the conclusion of Jason Furman's Wal-Mart: A Progressive Success Story:
Finally, most fundamentally, the “Wal-Mart economy” is not about an economy in which corporations are squeezing workers.
It’s about an economy in which the return to skills is rapidly growing, and technological change, among other forces, is leading to increased inequality.
Depending on how you define "technological change," I'd put a heavy weight on the "other forces" leading to increased inequality.
The most fundamental solution to these challenges is to invest in the education and training necessary to ensure that all Americans have the skills to be successful in a technologically sophisticated, global economy.
That would be a start.

(Note that Furman was the economic policy director for the Kerry-Edwards campaign. I'd considered the K-E economic policy platform to be sensible but non-electrifying. This Wal-Mart paper doesn't strike me as being very sensible.)


On a related note, I'd always found this statement from Maria Farrell of the McKinsey Global Instutute, from a December 2003 NYT roundtable on offshore outsourcing (here for Times Selecters), to be telling:
MS. FARRELL -- There is an assumption by protectionists that these jobs are going somewhere else, and all this money has been pocketed by C.E.O.'s who take it home. A little more sophisticated version is: It's being pocketed by companies in the form of profits. One step further and you say those profits are either going to go as returns to the investors in those companies, or they're going to go into new investment by those companies. Those savings enable me, if I am an investor, to consume more and therefore contribute to job recreation, and if I am a company, to re-invest and create jobs. That's important because I agree that we are migrating jobs away, some of which will never return, nor should they.
Translation: It doesn't just benefit CEOs, it benefits CEOs and other rich people! And anyway, who needs those lost manufacturing jobs?

Immediately following, Josh Bivens of the Economic Policy Institute offered some straighter talk:
MR. BIVENS -- Within nations, trade tends to redistribute a lot of income. The gains get pretty concentrated in the pockets of capital owners. The people who lose out are the blue-collar workers. Now you've got this class of white-collar workers who are much more insecure about their job prospects, and their labor market bargaining power is being undermined. It doesn't mean we need walls all around the economy, but it does mean we need to get really serious about making sure all these gains are distributed.
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