The Disaster of Globalization

    Those who still think that globalization is a good thing for America should read what's been published in our most prestigeous conservative publications in recent months. Here's a sample of some of the more descriptive articles, with commentary:

     Finally! It's beginning to dawn on peoples' thick skulls. The new economy is a class war between wealthy investors and everyone who works for a living.

     No one who actually works for a living is immune (even those who "...long believed they were largely protected from foreign competition because of their advanced degrees, English language skills and the supposed necessity of dealing face-to-face with customers") to the entrenched power of conservative politicians who are closet aristocrats.

From The Wall Street Journal, October 10.

Skilled Workers Mount Opposition
To Free Trade, Swaying Politicians

A new anti-free-trade movement is emerging in the U.S., comprising highly skilled workers who once figured they would be big winners in the globalized economy but now see their white-collar jobs moving overseas in growing numbers….

The new free-trade opponents include design engineers, skilled machinists, information-technology experts, and chief executives of specialized manufacturing concerns, among others. They long believed they were largely protected from foreign competition because of their advanced degrees, English language skills and the supposed necessity of dealing face-to-face with customers. But now they worry their jobs are at risk.

At the focus of their ire are big U.S. companies that have shifted business to China and India, which are becoming increasingly successful at nabbing service, information technology and high-end manufacturing work that until recently have been the preserve of U.S. firms. Companies seeking to lower their costs have either moved operations abroad or have contracted with foreign companies to supply essential services….

Multinational companies counter that globalization brings benefits. A recent McKinsey study concluded that at least two-thirds of the economic benefit from sending jobs offshore flows back to the U.S. economy in the form of lower prices, expanding overseas markets for U.S. products, and fatter profits that U.S. companies can plow back into even more innovative businesses. "If the economy were stronger, there wouldn't be such a negative feeling" about the offshore work, says Dianna Farrell, director of McKinsey Global Institute….

Mr. (Fred) Tedesco (owner of Pa-Ted Spring Co. in Bristol, Conn.) says his company followed a strategy that he thought would preserve its market share. Pa-Ted invested heavily in the latest equipment and has moved into producing ever-more sophisticated products. Among these are tiny clamps made of an exotic alloy used to pinch off arteries in the human body. Still, his business is down 30% in the last two years as big customers relocate abroad and competition grows from ever-more-sophisticated Chinese manufacturers.

The anti-free-trade stance of these groups of professionals comes as a majority of Americans now say that free trade is not worth it because local jobs are lost, according to a recent Wall Street Journal/NBC News poll. The poll found that 54% believe that U.S. companies that send work overseas are giving away jobs….

Tens of thousands of U.S. tech jobs were lost when high-flying Internet companies crashed in the late 1990s, a major cause of the recession. Even though the economy is on the mend, the job market has remained sickly. White-collar worker groups believe that many of their jobs are lost for good. Furthermore, they argue declines will deepen as U.S. companies send more work abroad and replace Americans with lower-paid foreign workers on temporary visas who will later take the jobs to their home countries….

     As usual, the McKensey Global Institute tried to put a positive spin on all the bad news: in effect, "Everyone will benefit in the future." Nonsense. As is usually the case, investors benefit—big time—today, with only the promise to those who are making all the sacrifices that they'll benefit sometime in the future (which never arrives).

     The disruptions to communities and peoples' lives are too massive and too fundamental to ever be overcome by the same policies that were the original cause of it all.

     The insanity continues and the charade is almost over. Globalization is solely designed to destroy wages of the working-class citizens of the world, and no one can seriously pretend otherwise.

From The Wall Street Journal, October 9.

Plastic Bag Fight Pits
U.S. Makers V. U.S. Importers

When fierce overseas competition forced a Sonoco Products Co. plastic bag-making business to close its Santa Maria, Calif., plant last year, ending 100 jobs, the company went on the offensive.

Sonoco and four other U.S. makers of plastic shopping bags, used by grocery and department stories, charged that manufacturers in China, Thailand and Malaysia were violating U.S. antidumping laws by selling the bags in the U.S. below cost. In a petition to the International Trade Commission, the U.S. manufacturers, calling themselves the Polyethylene Retail Carrier Bag Committee, charged that the alleged dumping cost them $300 million a year in sales….

But the fight over products that cost as little as a penny apiece involves a surprising web of allies and adversaries, underscoring just how complex global trade has become.

The issue … highlights the difficulty in distinguishing between U.S. and foreign manufacturers: In the dispute, some U.S. producers are aligned against other U.S. companies that have turned to Asia for their own bag production. Two of the manufacturers crying foul are linked to foreign companies-one Canadian and one Taiwanese-while a third company relies on a Mexican business by the same name to serve as a distributor and supplier. Yet another company supporting the petition just opened a plant in China….

By most accounts, antidumping measures would wipe out the plastic-bag-making industry in China, Thailand and Malaysia. People opposed to penalties say that if those imports are stopped, plastic bags will simply come from somewhere else where labor is inexpensive. "I don't care what the petitioners say," William Perry, a lawyer for some Chinese exporters and U.S. importers, told commissioners, "these bags will never be produced in the United States."

     "…plastic bags will simply come from somewhere else where labor is inexpensive" and "these bags will never be produced in the United States." Of course. That's the whole idea. Not only have American workers lost their jobs, they have entered the labor market and depressed the wages of workers in jobs that cannot be exported to countries that brutalize their workers.

     That's the whole idea, and it always was. And it's all to benefit wealthy investors and corporate executives in the U.S.

     The following long excerpt is only a portion of an extensive article in The Wall Street Journal. It tells the dirty little secret about the total absence of moral standards of those American corporations that deliberately seek out countries that will brutalize workers for them.

     While the American corporations maintain a sanctimonious righteousness, and a façade of deniability, they let the foreign militaries to do their dirty work of ruthless class war against the workers in their foreign operations.

     Articles like this have been appearing—even in America's most prestigious financial publications-for the past 25 years at least.

From The Wall Street Journal, October 6.

Colombian Killings Land
U.S. Company In American Court

Mining Concern Faces Suit
Over Right-Wing Attacks;

One evening in March 2001, a bus carrying Valmore Locarno and Victor Orcasita home from work at a Drummond Co. coal mine in La Loma, Colombia, was stopped by members of a right-wing paramilitary group. The armed men boarded the bus as it stood on a paved road cutting across the hot, open plains, eyewitnesses say in interviews. The fighters called for the pair, leaders of a union at the mine, and accused them of "having a problem with Drummond," eyewitnesses say. Then Messrs. Locarno and Orcasita were hauled off the bus, which Drummond had chartered.

Mr. Locarno, 38 years old, was shot immediately. Mr. Orcasita, 37, was found later by the side of the road, a bullet in his head and his teeth knocked out.

Seven months later, their successor at the union, Gustavo Soler, 36, was pulled off a public bus by paramilitary members who sought him out by name, according to both the union and the company. Farmers found his corpse two days later. He had been shot twice in the head.

No one has been arrested in the killings. A Colombian government spokesman says investigations have been delayed by the refusal of victims' families and union members to talk, because of their fear of reprisal.

What those relatives and the union have done is file a civil lawsuit against Drummond—not in Colombia, but in Birmingham, Ala. The suit accuses the mining company, which is based in that city, of supporting paramilitary fighters at its facilities, thereby making Drummond liable for the deaths.

The plaintiffs have invoked a once-obscure 1789 law, the Alien Tort Claims Act, or ATCA. Activists are using the law to try to police corporate behavior overseas. Among the other companies now fighting such suits: Unocal Corp., Exxon Mobil Corp. and Coca-Cola Co. The Drummond case could be among the first to come to trial, as soon as sometime next year.

Drummond, a family-owned company, denies any role or liability in the deaths of the union leaders. It says it has no ties to Colombia's right-wing paramilitary groups, which have fought a long war against leftist guerrillas.

Companies have said these sorts of suits don't belong in the U.S. It is impractical for American courts to resolve murky disputes from thousands of miles away, the opponents say. The Bush administration has intervened to seek dismissal of three ATCA cases, arguing that they could complicate U.S. foreign policy. It hasn't taken that step in the Drummond case….

Proponents of ATCA suits say the legal actions are sometimes the only way to hold U.S. corporations responsible for human-rights abuses overseas. "The judicial system [in Colombia] doesn't work," says Myles Frechette, the U.S. ambassador to that country for part of the Clinton administration. For that reason, the plaintiffs in the Drummond case didn't sue in Colombia, says Terry Collingsworth, their lead attorney.

Mr. Collingsworth heads the International Labor Rights Fund in Washington, which has filed eight ATCA suits in recent years. The United Steelworkers are helping with the Drummond case as part of a broader effort to stop union killings abroad. Mr. Collingsworth calls the Drummond suit "the cleanest case we have," in part because a wholly owned Drummond subsidiary based in the U.S. operates the Colombian mine. Other ATCA suits have been slowed by questions about the responsibility of U.S. companies for foreign subsidiaries….

The company, one of the biggest foreign investors in Colombia, has built barracks for the Colombian military at La Loma and near the port. More than 300 Colombian army troops are stationed at La Loma, where Drummond provides them subsidized food and fuel. The troops protect company facilities and screen employees, Drummond says….

The arrangement with the army is critical to the lawsuit. The union and relatives of the murdered activists say that regular army units routinely cooperate with paramilitary fighters, some of whom wear army uniforms and function at times as regular soldiers.

Juan Aquas, a former union official who worked at Drummond's port in Santa Marta, says in interviews that in 2000 and 2001, he saw paramilitary fighters eat in Drummond's cafeteria there and fill their vehicles at Drummond's gas tanks three or four times a week. He says these men wore army uniforms, but without the insignia indicating battalion membership. Mr. Aquas is now in hiding in Colombia….

     Even if direct orders were never given by the top executives of Drummond, there can be no doubt about their culpability.

     The insanity continues. The news gets more depressing every day.

From The Wall Street Journal, October 6.

Surviving the Onslaught

U.S. Companies Customize,
Rethink Strategies to Compete
With Products From Abroad

The Oxford expandable folder on your desk was assembled in Mexico. Your Papermate pencil is from Japan, and that blue-and-white J. Crew striped shirt was stitched in Mauritius. The pillowcase on your bed comes from India. Your dining-room table is from Italy; the tea candles on it are from Hong Kong. If you or your children have a Schwinn or Huffy bike, it probably came from China….

In the first half of this year, imports snagged nearly two out of every three dollars of the growth in manufacturing shipments over the same period in 2002, according to the Manufacturers Alliance, a research group based in Arlington, Va. "Although manufacturing supply recovered in late 2002 and in 2003, imports have taken most of the growth in the market," says Daniel Meckstroth, chief economist of the Manufacturers Alliance….

In these particularly hard-hit industries, imports have led to plant closings and bankruptcies. A sorry case in point: the collapse of Pillowtex Corp., the maker of such venerable household brands as Cannon and Fieldcrest sheets and towels.

To avoid such a fate, one strategy for domestic producers is to establish their products as superior to imported counterparts and thus worth a premium. Aside from quality, speedy delivery —facilitated by a company's proximity to its market—can be a powerful asset for a domestic manufacturer. In a 2001 survey, original-equipment manufacturers rated ability to meet delivery schedules the most important factor in selecting a contract manufacturer. Price ranked fifth.

Domestic companies also can differentiate themselves by offering custom-made products—a powerful inducement for consumers shopping for everything from computers to kitchen cabinets….

In some cases, the best strategy is to abdicate production and outsource it overseas or stateside to contract manufacturers. Opting out of manufacturing is most pronounced among high-tech firms like Lucent Technologies Inc., which has shifted from producing 70% of its own products to less than 30% in the past two years. Similarly, 3Com Corp. this month said it would outsource all production to Singapore and a contract manufacturer in Florida….

     There are many valid reasons to locate production in other countries, and this article mentioned a few of them-such as, proximity to the distribution center, offering custom-made products, and so on.

     But that's not the reason for most of the lost production in the U.S. Most of it was lost simply to take advantage of workers in other countries who work for miserable wages and under brutal working conditions.

     The following related article came out on the same day in the same issue.


From The Wall Street Journal, October 6.

Three Countries,
One Dishwasher

JACKSON, Tenn.—Maytag dishwashers have Chinese motors, Mexican wiring, and are put together in a sprawling American factory here.

Some refer to this three-tiered approach to manufacturing as a triad strategy. Maytag calls it trying to keep ahead of imports….

Over time, though, sharply lower labor and production costs in Asia have offset high freight costs, enabling some imported appliances to be sold in the U.S. at lower prices. China's Haier and South Korea's LG Electronics started out small with microwaves and minirefrigerators, but are moving to bigger appliances….

In some cases, after a careful review, Maytag decides it simply can't compete with imports. Profit margins on refrigerators with the freezer on top, rather than alongside or on the bottom, were so measly due to cheap imports that Maytag decided to quit making

them. Instead, next year it will pay Daewoo Electronics Corp. in Korea to produce those models and ship them to the U.S. to be sold under the Maytag name. That decision was linked to the anticipated closing of a sprawling two-million-square-foot refrigerator factory in Galesburg, Ill., where those models are made. That plant, shutting down in stages, is expected to close its doors for good late next year.

     This trio of articles from Business Week go together:

From Business Week, October 6.

U.S.: Corporate America Reaches Its Fighting Weight

Trim, flush, and productive, businesses are ready to answer growing demand

… companies are now fit and ready to roll. They have restored their financial health, rid themselves of unproductive assets and bloated inventories, boosted productivity and competitiveness, and increased their profitability. Given these strides—and a resurgence in demand—businesses are now willing and able to pull their weight in this recovery. Having Corporate America back in the game will ensure a strong and lasting upturn….

The surge in corporate cash partly reflects the payroll savings from layoffs….

Also, productivity gains have cut unit labor costs and boosted profit margins, even at a time of weak pricing power. And margins have benefited from the elimination of excess capacity, which has lowered fixed costs. Now, with sales accelerating, more revenue is going straight to the bottom line. An even stronger second leg of the profits recovery is shaping up for the second half of 2003….


Is Wal-Mart Too Powerful?

Low prices are great. But Wal-Mart's dominance creates problems—for suppliers, workers, communities, and even American culture

…Wal-Mart's seemingly simple and virtuous business model is fraught with complications and perverse consequences. To cite a particularly noteworthy one, this staunchly anti-union company, America's largest private employer, is widely blamed for the sorry state of retail wages in America. On average, Wal-Mart sales clerks—“associates” in company parlance—pulled in $8.23 an hour, or $13,861 a year, in 2001, according to documents filed in a lawsuit pending against the company. At the time, the federal poverty line for a family of three was $14,630.

Wal-Mart insists that it pays competitively, citing a privately commissioned survey that found that it "meets or exceeds" the total remuneration paid by rival retailers in 50 U.S. markets. "This is a good place to work," says Coleman H. Peterson, executive vice-president for personnel, citing an employee turnover rate that has fallen below 45% from 70% in 1999.

Critics counter that this is evidence not of improving morale but of a lack of employment alternatives in a slow-growth economy. "It's a ticking time bomb," says an executive at one big Wal-Mart supplier. "At some point, do the people stand up and revolt?" Indeed, the company now faces a revolt of sorts in the form of nearly 40 lawsuits charging it with forcing employees to work overtime without pay and a sex-discrimination case that could rank as the largest civil rights class action ever. On Sept. 24, a federal judge in California began considering a plaintiff's petition to include all women who have worked at Wal-Mart since late 1998—1.6 million all told—in a suit alleging that Wal-Mart systematically denies women equal pay and opportunities for promotion. Wal-Mart is vigorously contesting all of these suits….

Wal-Mart's philosophy doesn't cut any ice with Wilbur L. Ross Jr., a financier and steel tycoon who soon will close on the purchase of beleaguered textile manufacturer Burlington Industries Inc. Ross contends that Wal-Mart is costing Americans jobs "not only as a business strategy, but as a lobbying strategy"—that is, by using its influence in Washington to oppose import tariffs and quotas and promote free-trade pacts with Third World countries, including the Southeast Asian countries that supply Wal-Mart with denim. "Everybody is now scurrying around trying to find the lowest price points," Ross complains. "It's the Wal-Mart phenomenon."


Hate Your Job? Join the Club

The ranks of the discontented are swelling

…A new Conference Board survey, indicates that just 49% of Americans today are satisfied with their jobs—vs. 58% in 1995, the first time the survey was done. Only 20% are satisfied with their employer's promotion and bonus policies and just a third with their pay.

Job satisfaction fell most among prime-years workers aged 35 to 54. And it was down sharply among workers in the $50,000-plus income group—to 53% from 67% in 1995.

One source of grievance seems to be the ongoing efforts of employers to squeeze more work out of reduced staffs. Although this has resulted in big productivity gains, some economists fear that the discontent such efforts have fueled could well hurt productivity over the long run.

     The first article describes America’s conservatives’ economic ideal. These key phrases explain it all:

     The Wall-Mart story describes the new model for corporate America: below poverty wages, rabid anti-union efforts, and ruthless treatment of suppliers. Through aggressive lobbying in Washington, they get conservative politicians to pursue globalization and various anti-worker legislation—solely to drive down wages worldwide, and to destroy any ability of employees to seek better jobs in the U.S. (And thus create “a lack of employment alternatives in a slow-growth economy.")

     The Conference Board survey summarizes what is happening to employees across the U.S. (“ongoing efforts of employers to squeeze more work out of reduced staffs”)

     Time for a regime change in our Federal Government.

     The following sad editorial in The Wall Street Journal is symbolic of America’s total industrial base.

From The Wall Street Journal, October 1.


Jean Genie


Levi Strauss & Co. has announced that it's closing its last factory in North America. Its blue jeans, a spin-off of the Great California Gold Rush, will now all be made overseas. There's the loss of 800 U.S. jobs, of course, but one is tempted also to lament the departure of this all-American symbol, created out of cheap, durable canvas. Yet the fact is that unless you're a gold miner you haven't got much claim on blue jeans any more. They belong to the world now….

     Not only does the production of blue jeans “belong to the world now” (a euphemism for “not made in America”), so does the production of any manufacturing product in existence.

     Even ultra-conservative Forbes magazine is admitting the looming disaster of globalization—corporate America’s strategy to destroy working-class wages and increase profits.

From Forbes, September 29.

Giant Sucking Sound

Battered by the tech slowdown, EDS is shipping white-collar jobs offshore to catch up with low-cost competitors.

The new Electronic Data System office in Mumbai (formerly Bombay) is half a world away from company headquarters in Plano, Tex….

This is where Amit, 24, works. "This is Andy. How may I help you?" he says politely, hour after hour, to the Midwesterners who have forgotten their e-mail passwords or need the phone number of a colleague. EDS hired Amit and 500 of his colleagues—young men and women dressed in khakis or saris—to answer phone calls and e-mails on behalf of American companies that have outsourced tech work or customer service calls to EDS.

Amit and colleagues are paid $1.25 an hour. His counterpart in the U.S. would get $10. On that difference rests whether or not EDS can wiggle itself out of deep trouble. Victimized by cheap outsourcing by competitors, EDS is playing the low-cost-labor game itself now. It is rushing to hire thousands of mostly Asian college graduates like Amit, who are desperate for the kinds of jobs found in the U.S. Frantic to cut costs, EDSplans to hire 13,800 workers by the end of next year—a of its current global work force of 137,000—in low-wage countries like India, Malaysia, Hungary and Mexico, places where starting pay is as low as $2,400 a year. Meanwhile, EDS plans to lay off at least 2,750 higher-paid workers, mostly in the U.S. and Europe.

Companies as varied as General Electric and Morgan Stanley are making the same calculation. White-collar jobs—in engineering, programming and accounting—are leaving America's shores for low-cost locales at a pace of nearly 4,000 a week, according to Forrester Research. The U.S., Europe and Japan combined are losing 600,000 a year, says McKinsey & Co….

There's also a price to be paid in angry and anxious workers. "I'm sure I lost my job to offshoring," says Richard Randall Mohler, 51, an EDS programmer from Midland, Mich. who earned $68,640 a year until he was let go last year. That job in India pays about $6,500 a year. Mohler remains unemployed and says his former colleagues at EDS are worried, too. "They are all scared to death," Mohler says. "When you can get the same job done for a fraction of the cost, it puts everybody on edge."

Is Jordan the bad guy? If he doesn't export jobs, someone else will.

     "Is Jordan the bad guy? If he doesn't export jobs, someone else will." This one sentence explains two things: the ultimate disaster of globalization for working Americans; and who the bad guys really are.

     First, the inevitable disaster is that the only Americans with jobs will be those who provide products and services that can be produced only in the U.S. And many more millions of those who previously had good-paying jobs will be competing with them in a race to the bottom of the wage scale.

     Second, the real villains are not the businesses who are forced to abandon the U.S. by other businesses without any moral standards. The real villains are the Republicans and conservative Democrats who passed legislation that made this kind of ruthless global competition legal and profitable. In effect, they announced to American businesses that they were removing any and all protections of business persons with moral standards; it's everyone for his own greedy self.

     Want more demonstration of the real reason for “globalization”? This excerpt demonstrates what is left of the power of labor unions to protect American jobs.

From The Wall Street Journal, September 22.

GM, Ford Win UAW Permission
To Close or Sell Eight Facilities

DETROIT—General Motors Corp. and Ford Motor Co. won permission from the United Auto Workers to close three assembly plants and to sell or close five other facilities under terms of the four-year contract agreement struck last week.

In a contract summary prepared by the union, the UAW said it gave GM clearance to close a Baltimore assembly plant that builds vans. The factory employs about 1,100 workers. The UAW is also allowing GM to close an auto-parts factory in Saginaw, Mich., and to sell a GM division that builds locomotive engines. The union also said that it will allow GM to close the Argonaut Building, a Detroit structure that once housed photographic and real-estate offices. In total, about 3,000 GM workers are affected….

Ford said it won UAW approval to close or sell four plants, affecting 4,500 people. Ford will close two assembly plants: a small pickup-truck factory in Edison, Ill., which employs 863, and a full-size van plant in Lorain, Ohio, that has 1,640 workers. Ford will also close Vulcan Forge in Dearborn, Mich., and Cleveland Aluminum Casting in Ohio….

DaimlerChrysler AG, in its deal with the UAW , got union clearance to close or sell five of nine operations the company has deemed uncompetitive. About 4,700 workers at the company are affected.

     Republicans and conservative Democrats finally have American workers where they want them. Unions have almost totally lost their power to protect jobs. They either agree to more lost jobs—and thus retain some jobs for the immediate future—or they totally lose all their jobs to manufacturers who have no commitments to the moral treatment of workers.

     And this is just the beginning of the end, as American auto manufacturers get totally out of the business of making cars. They are becoming investment bankers—not auto makers—by outsourcing every aspect of manufacturing, even including the assembly of the vehicles, to those countries with the lowest labor costs.

     Anyone who doubts that Clinton and Gore were disasters for working-class Americans should read the editorials in The Wall Street Journal.

     Whenever the Journal supports someone, you know it’s got to be a bad sign. And when they oppose the leading Democratic presidential candidates—for opposite reasons—you know it's got to be a good sign for them.

A The Wall Street Journal editorial, September 25.

Trading Places

…We had our differences with Bill Clinton, but there's no doubt one of his achievements was leading his party away from protectionism. Open trade was a pillar of his New Democrat philosophy. He and Al Gore routed the AFL-CIO and Ross Perot to pass Nafta in 1993, followed by bills to create the World Trade Organization and allow most-favored nation trading status for China. A decade later all three have contributed to American prosperity.

But without a Democrat looking out for the national interest from the Oval Office, the party is now slipping back toward trade parochialism. On Capitol Hill, the party's regional and union interests have become dominant; most Democrats opposed giving President Bush new trade negotiating authority last year. More ominous still is the rhetoric coming from the Presidential candidates….

The Democrats insist they don't oppose free trade but only that any new trade agreements must have "labor and environmental standards" written into them. Dr. Dean has told several interviewers that he would withdraw from the World Trade Organization and Nafta if they weren't altered to ensure that foreign workers have "the same labor laws and labor standards and environmental standards" as the U.S….

     Realize what the Journal is saying here. Clinton/Gore “routed the AFL-CIO and Ross Perot….” In other words, they joined the Republicans and the conservative cause and betrayed the interests of workers, which resulted in the giant sucking sound of jobs leaving the U.S., which Ross Perot and many others predicted.

     The “decade of prosperity” that it created was actually the Journal’s version of prosperity: stagnant wages, soaring corporate profits, and a skyrocketing stock market.

     And its been downhill for American workers ever since.

     When will the insanity stop? In the not too distant future, the only jobs left in the U.S. will be those that require a physical presence in this country. Jobs like waiters and waitresses, dentists, garbage handlers, and retail clerks.

From Barron's, September 15.

Call-Center Shuffle

As telemarketing jobs vanish or migrate, who'll absorb the glut of space left behind?

…So many call-center jobs that were moved to rural areas are now being pushed to cheaper Ireland, India and the Philippines….

Other firms closing call centers: Starwood Hotels & Resorts Worldwide, Harrah's Entertainment, Best Western International, InterContinental Hotels, Marriott Vacation Club, Cendant and Carlson Hospitality Worldwide. Carlson, which operates a number hotel brands, including Radisson and Regis International, has closed its call center in Albuquerque, N.M., consolidating those jobs into its Omaha, Neb., center. But that's its only remaining call center in the U.S. The others are in Mexico City, Dublin, and Sydney, Australia.

Technology and telecommunication call-center jobs are being transferred overseas, too. Earthlink, according to The Wall Street Journal, shut six of nine such U.S. facilities, opening a large center in India. Other companies moving overseas for customer service include AOL, Yahoo and IBM. Convergys, which provides customer service, technical support and telemarketing services, employs thousands in India and the Philippines. And it's not just the lower salaries. Many foreign call-center workers are university graduates—unlike most of those in the U.S….

So while call centers business should continue thriving—despite Do Not Call and the Internet—the real estate it will occupy is, increasingly, outside the U.S.

     These jobs are leaving our country because conservatives have created a political climate that has shifted all the power to corporations and away from workers. Corporations can drive down wages with impunity, and that’s exactly what they are doing when they abandon American communities and go to other countries. And that’s the only reason they’re doing it.

     Finally some good news. Poor countries are coming to the defense of their small farmers, and not all agricultural trade policy will be geared to benefit the huge corporate farms of rich countries.

From The Wall Street Journal, September 15.

Trade Talks Fail Amid
Big Divide Over Farm Issues

Developing Countries
Object to U.S., EU Goals;
Cotton as a Rallying Cry

CANCUN, Mexico—In a severe blow to the future of global trade negotiations, talks here among 146 countries collapsed in a dispute between rich and poor countries who failed to bridge differences over farm subsidies and other issues that have plagued trade-liberalization efforts for years….

From the start, however, the talks in this Caribbean resort exposed raw differences between the world's rich and developing countries over what further trade liberalization means.

The talks all along hinged on how deeply the rich countries, particularly Europe, would be willing to slash their huge farm-subsidy programs. Developing countries say the $300 billion a year in rich-country farm payments depress world-wide crop prices, making it difficult for their own farmers to compete….

"The pretense of the development objective has finally been rejected and discarded," said a furious Indian Commerce Minister Arun Jaitley. Instead of special treatment for poorer countries, he said, the WTO was creating new carve-outs for powerful developed countries.

Some delegates said the shifting balance of power within the WTO contributed to the impasse. Not long ago, the U.S. and the EU could largely dictate events at the global trade body. But developing countries have become increasingly well organized and willing to throw their weight around….


     It has taken some time for the world to wake up to the disastrous effects of globalization and the WTO—for most citizens of all nations. The issue has never been, and still isn’t, rich versus poor nations as whole entities. The issue has been rich versus poor citizens in all nations, rich and poor alike.

     The wealthy of both rich and poor nations have formed a club, called the WTO, to ensure the continued accumulation of wealth by pitting workers of the world against each other, and calling the barbaric practice “free trade.”

     Unfortunately for the rich, conditions have gotten so bad that there are real threats to political stability throughout the entire world. Thus, we are seeing the WTO's problems described in the following excerpt:

From The Wall Street Journal, September 9.

Post-Iraq Influence Of U.S.
Faces Test At New Trade Talks

WTO's Clout Is on Trial, Too; Persistent
Rich/Poor Gap Dims Hopes Raised in '01

…As delegates from 148 countries converge here (Cancun, Mexico) Wednesday for a World Trade Organization meeting, they will bring with them all the tensions between rich and poor nations that came to a boil four years ago during a WTO meeting in Seattle, amid tear gas and riot police. And America's ability to bridge those gaps appears much diminished from the last meeting two years ago, in Doha, Qatar….

Except for a breakthrough on poor countries' access to drugs, the trade talks have floundered on nearly all fronts. Europe continues to balk at demands that it slash its massive agricultural export subsidies, blamed by some for deepening poverty across much of the Third World. And many big developing countries, such as Brazil and China, want to maintain high protections for their own farmers and manufacturers while insisting that rich countries drop nearly all subsidies and tariffs….

Mr. Zoellick (U.S. trade negotiator) says the U.S. is willing to slash its farm subsidies and pull down tariffs, but only if other countries, including poor ones, make some concessions too. And if they don't? "Then we'll keep our subsidies," he says, "and I'm going to go around opening markets" country-by-country outside the WTO.

The U.S. wants poor lands to soften their demand for a complete end to farm subsidies in Europe, the U.S. and Japan. It says countries such as India, Brazil and China must also show real willingness to drop their import tariffs, which are still several times as high as those in the West, where import duties average around 3%. All agree that the talks will rise or fall on agriculture and particularly on the $300 billion a year that rich countries spend in farm subsidies….

The outlook isn't much brighter on textiles. The source of great rich country/poor country friction, textiles helped spoil the Seattle WTO meeting in 1999….

Even on drug patents—portrayed as a breakthrough last week—all isn't sunny. The WTO agreed that poor countries can import generic copies of patented drugs to combat ills such as AIDS and malaria. Drug-making nations such as India and Brazil will be able to produce drugs patented by Western companies if they export the copies at low prices solely to needy nations.

Activists are criticizing the agreement. One criticism is that it's worded so vaguely nobody can be sure how it will work. Some fear that poor countries lack the legal sophistication to take the steps needed to receive the drugs. The nations have to find a foreign company to make the drugs for them and then inform both the drug maker that holds the patent and the WTO's committee on intellectual-property rights. Finally, they have to be prepared to fight a challenge to their use of the drugs at the WTO's dispute-settlement body. Several countries, including the Philippines and Kenya, had last-minute worries about the deal but agreed in the face of heavy-duty U.S. arm-twisting.

     America’s self-interest, bordering on naked greed, is evidenced by the U.S. negotiator, Mr. Zoellik, who insisted that poor nations put their poor farmers at a severe disadvantage—if America’s giant corporate farms are to give up some of their own protections and subsidies.

     It always starts slowly. A corporation like GM sets up a new labor force in another country. They train them, give them the very best technology and equipment, and pay them somewhat better wages than they could get otherwise.

     As the foreign workers develop their expertise, they begin to take the jobs of much higher-paid workers in the U.S. to produce products, technology, or services intended for the U.S. Eventually, they replace virtually all the U.S. workers, except those who must physically be present in this country.

     The corporation’s investors and top executives benefit financially from the reduced labor costs and the American consumer may get cheaper products and services.

     But it’s the replaced U.S. workers who make all the sacrifices, and their numbers are growing rapidly.

From Business Week, September 1.

China's Design Dream Team

Industrial designers are making a mark

…Today, though, Sun (Yunbo) is one of 21 Chinese designers working on the Buick Excelle, an new sedan that General Motors Corp. plans to start selling in China this fall. “Now auto design is natural for me,” Sun says.

Sun is at the vanguard of a trend that’s shaking the world of design. As China grew into an export powerhouse over the past decade, most of what its factories churned out was designed elsewhere. Now, like the Japanese in the 1970s and the Koreans in the 1990s, Chinese companies are keen to reap the higher margins and market share that often reward flashy, well-designed products. "Our goal is the transition from 'Made in China' to 'Designed in China,"' says He Renke, chairman of the industrial design department at Hunan University….

Even so, it may be a while before designers in Milan, London, or Detroit need to worry about finding a new line of work. So far, most Chinese designers have simply tweaked color and form for export products, while conceptual work on new cars, appliances, and electronic gadgets is done in Europe or the U.S. "They have good designers, but they don't know the U.S. market" in many products, says Jerry W. Edwards, executive vice-president for merchandising at retailer Home Depot Inc., which hires Chinese subcontractors to produce items such as faucets and ceiling fans….

For a glimpse of the future, check out 28-year-old Fang Zhen, who works with Sun at GM. He sports orange hair, favors black T-shirts and cargo pants, and looks to Italy for inspiration. "First, I want to be the Giorgio Giugiaro of China," says Fang, referring to the legendary Italian who designed Alfa Romeos, Lamborghinis, and the 1967 Oldsmobile Toronado. "Then I want to be a top auto designer globally." With that kind of ambition coming out of Shanghai, designers in the West may want to keep one eye on the rearview mirror.

     When the time comes to face the fact that we have totally destroyed—not only America’s middle class, but also the upper-middle class—will those who profited from the globalization craze be willing to voluntarily pay for the social dislocations and problems they have created? I wouldn’t count on it.

     It’s going to take a new batch of politicians who aren’t afraid of being called “traitors of their class” (as was Roosevelt), and a new “new deal.”

     Supposedly, this week’s Barron’s and Wall Street Journal were giving investment advice to their readers. However, in doing so, they inadvertently blew the cover on the real goal of globalization.

     Sometimes the most revealing part of an article can be one or two sentences. Today’s conservative values were again displayed in an extensive Barron’s article analyzing investment opportunities in German stocks—and concluding that it may be a bad idea.

From Barron's, August 25.

Auf Wiedersehen, German Rally?

…For all the market's embrace of Berlin's proposed reforms, Carl Astorri, head of strategy at Barclay's Private Client division, points out that in reality the easy fixes were the ones accomplished so far, rather than tough-to-swallow measures that could, for example, make it easier to hire and fire in Germany's famously rigid labor market. "We're coming up to the trickier part," he says of September, when the federal legislature considers in earnest the proposed reforms. "That will be much more of a test," he maintains….

     Whereas Barron’s was presenting investment opinion with regard to Germany generally, The Wall Street Journal presented a specific case.

From The Wall Street Journal, August 27.

Despite Rally, the Skeptics
Dial In on Deutsche Telekom

FRANKFURT—Deutsche Telekom AG has dazzled investors this summer with better-than-expected earnings, aggressive debt reduction and a 10% rise in its share price since June 13.

After two years of crisis, has Europe's largest telecommunications operator finally turned the corner? Don't bet on it, the skeptics say….

"It's a utility," says Joerg Schlinghoff, a fund manager at Dusseldorf-based West Asset Management and a holder of Deutsche Telekom shares. "The only possibility they have to generate growth is through cost-cutting, and that's difficult with Germany's labor laws."

It is a problem that won't go away. Deutsche Telekom's 250,000 employees account for about 30% of the company's total costs, analysts say. About 70% of the workers are in Germany, and more than a quarter of those are employed under generous civil-servant contracts—a vestige of the group's state-owned past that makes it all but impossible to lay off people….

It employs 141,000 workers and is the main target of management's plan to cut 50,000 jobs by 2005….

     Those who don’t regularly read investment advice in the conservative financial press may not realize the conclusion that “tough-to-swallow measures … could … make it easier to hire and fire in Germany's famously rigid labor market,” is a regularly repeated theme. It is applied to most of Europe, where workers get up to five weeks vacation a year, have much better working conditions than do American workers, and where unions still have at least a little political influence.

     Americans who actually have to work to make a living should pay special attention to the Journal’s comment that “About 70% of the workers are in Germany, and more than a quarter of those are employed under generous civil-servant contracts.” Implication: Germany had better export most of those jobs to third world countries where working conditions are the worst, and labor costs are least.

     And that’s after they already announced plans to reduce costs by eliminating 50,000 jobs out of 141,000 by 2005.

     Naturally, American investors see good working conditions and decent pay for employees as undesirable because:

  • It means that workers get a greater share of corporate income, either in wages or humane working conditions—as you would expect in a civilized society.

  • Since those workers get more money, corporate profits are not as excessive.

  • When corporate profits are not excessive, investors abandon Europe and move to countries where workers can be brutalized at will.

  • So, if investors have their way, Europe will lose its industry and its jobs, and eventually its workers will have the same kind of lives as workers in China, Indonesia and elsewhere.

     So, conservatives prove that they were right all along when they threaten: “If you treat workers decently and fairly, we’ll abandon you, you’ll lose your jobs, and you’ll be impoverished—even as we investors become fabulously wealthy from the process of pitting workers of the world against each other."

     And they regularly use Europe as an example of how they can carry out their threats. They constantly refer to Germany, France and Italy as examples of countries that have lost industry because of high labor costs. They can't be as open about the U.S. because that would be too inflammatory to American voters.

     The conclusion that Barron's and The Wall Street Journal want to leave the politicians of the world with: National legislatures must have the courage to do the "trickier part" of reforming labor laws. (Meaning, of course, that they had better deliberately screw their workers in order to benefit the investors of the world—or they will lose their industries.)

     It's about time American voters gave politicians a different message: quit screwing workers in order to benefit investors, or we'll vote you out of office.

     The debate about our country’s outsourcing of jobs continues, although the evidence is so clear, one wonders why it’s necessary. The following Business Week article was so large, and the issues are so widely discussed in other sources, only a few key portions were excerpted for purposes of criticism.

     Actually, this is almost a non-debate. Even the debater who warns of the dangers of outsourcing jobs seems comfortable when it's only manufacturing jobs being lost. She becomes alarmed only when the jobs are higher-status.

From Business Week, August 18-25 (a double issue).

Commentary: Outsourcing Jobs:
Is It Bad?

An accelerating pace is raising concerns over its effects.
Two BusinessWeek economists debate whether that's good or bad

These are anxious times for U.S. workers. Sure, the recovery seems to be getting under way. Yet hardly a week goes by without another report of a batch of high-paying, white-collar jobs getting exported to far cheaper locales such as India, China, or the Philippines. In mid-July, IBM set off a firestorm when news of its plans to move more white-collar jobs overseas was leaked to The New York Times. And news service Reuters announced on July 28 that it will move 600 or so jobs from New York, as well as dozens of other slots in England, Scotland, and Singapore, to its operations in India…

As white-collar jobs move away with increasing regularity, a debate that once focused on the loss of manufacturing to foreign outsourcing is once again raging: Just how serious for America, its workforce, and its economy is the shift?…


This is no longer about a few low-wage or manufacturing jobs. Now, one out of three jobs is at risk

Economic evolution is inevitable. Companies will always pursue the lowest-cost structure, which means less skilled work will move out of the U.S. to emerging economies. And that's a good thing, because living standards around the world will rise. Workers in developing nations will get new and higher-paying jobs, and consumers in the U.S. will be able to buy products that are cheaper than if they were made at home. The shift first occurred in textiles and other manufacturing jobs, followed by low-end services such as telemarketing and data entry. Now, it's moving up the labor food chain, leaving white-collar workers increasingly nervous….

Is the angst justified? It's probably too early to know for sure whether this latest shift in jobs is qualitatively different from past offshore movements. But it certainly feels that way. Outsourcing is hitting skilled jobs that were once thought "safe" across a far wider swath of white-collar America. What's more, the new outsourcing is occurring at a breathtaking pace….

Overall, the global economy will do much better, but the U.S. workforce may face frequent career changes and downward pressures on wages through every part of the economy subject to competition from foreign labor. And that's just as baby boomers will be counting on younger workers to pay a lot of money into the Social Security fund….

By Kathleen Madigan
Business Outlook Editor Madigan still believes in free trade.


America's strongest suit is innovation, which will always create new high-paying positions

Think of the world economy as a ladder. On the bottom rungs are the countries producing mainly textiles and other low-tech goods. Toward the top are the U.S. and other leading economies, which make sophisticated electronics, software, and pharmaceuticals. Up and down the middle rungs are all the other nations, manufacturing everything from steel to autos to memory chips.

Viewed in this way, economic development is simple: Everyone tries to climb to the next rung. This works well if the topmost countries can create new industries and products. Such invention allows older industries to move overseas while fresh jobs are generated at home. But if innovation stalls at the highest rung—well, that's bad news for Americans, who must compete with lower-wage workers elsewhere….

The biggest danger to U.S. workers isn't overseas competition. It's that we worry too much about other countries climbing up the ladder and not enough about finding the next higher rung for ourselves.

By Michael J. Mandel
Chief Economist Mandel writes about innovation and economic growth from New York.

     You’ll note that Ms. Madigan subconsciously sabotages her own logic. The looming problems she sees with the loss of higher-skill jobs are exactly what we’ve already seen with the loss of lower-skill jobs.

     Although she doesn't mention them specifically, the problems include the loss of income for masses of workers, the destruction of communities, the breakdown of families, etc., as have been reported elsewhere. When these problems were limited to working-class workers and communities, Ms. Madigan saw only benefits to American society.

     Now that the problems have migrated up to her social level, she’s beginning to get concerned. She says she believes in “free trade.” Not true. She believes that it’s perfectly ok to destroy workers' incomes by constantly pitting them against one another. That’s not “free trade.” That’s barbarism—and what we now know as globalization.

     (Free trade should be based on purely economic factors: nearness to raw materials, access to the distribution system, competence of management and technical talent, etc. It should not be solely a device to drive wages down and destroy workers' ability to negotiate for decent working conditions.)

     Also, when she notes that now "one out of three jobs is at risk," she demonstates that she has no clue as to the real downside of our job losses. When you lose one job out of three, it means that the two jobs that are left pay will now pay less, because of the greatly increased competition for jobs. This is exactly what we have seen happen to working-class wages over the past 25 years (which is of no concern to Ms. Madigan or Mr. Mandel).

     Mr. Mandel, arguing the negative, still sees no problem even when lower-level high-level workers lose their incomes (the lower-upper “rungs on the ladder”). After all, at the same time, a few lucky workers in the breakthrough technologies (the top rung of the ladder) become fabulously rich. But, hey Mike, the ladder is becoming much taller, and the top rungs are fewer and much narrower.

     Of course, for both Ms. Madigan and Mr. Mandel, and for most of the readers of Business Week, everything will turn out ok, no matter what.

     After all, investors, high-level corporate executives, and conservative economists and politicians, will continue to profit from the race to the bottom for international wages.

     Here’s another article that demonstrates the disaster of globalization. The masses of older workers who have lost their jobs are NOT going to be retrained into better ones. In many devastated communities they are likely to find no jobs at all. And when the companies that used to employ them go bankrupt, it will be up to the U.S. taxpayer (through the Pension Benefit Guaranty Corp., a government agency ) to provide them with their pensions.

     Meanwhile, the investors who caused the job losses get richer, have their taxes reduced by the Republicans in Congress and the White House, and continue putting their money into producing jobs in Third World countries.

From The Wall Street Journal, August 20.

Older Workers in the Lurch
For an Employee Laid Off After Decades

On the Job, Question Is What to Do Next

…The closing of factories continues to erode the Southeastern textile and furniture-making industries, especially in the Carolinas and southwestern Virginia. North Carolina alone has shed 160,000, or 36%, of its textile, apparel and furniture-making jobs in the last four years as a result of the soft economy, improved factory efficiencies and intense overseas competition. Still, some economists and labor experts believe these workers can end up better off in the long run, provided they can be trained for, and actually find, higher-paying, less bone-aching work.

But older workers … generally find it harder to change, and often avoid retraining out of fear they wouldn't be rehired anyway because of their age….

Pillowtex says it's unlikely that workers will ever get severance pay. Their pensions are most likely to end up administered by the Pension Benefit Guaranty Corp., a government agency. In most cases, those workers who were fully vested would maintain their benefits, according to Milliman USA, a firm now handling the pensions….

     Ever wonder why the editorial pages of conservative financial publications universally support immigration? That’s supposed to be a liberal cause; a humanitarian attempt to help disadvantaged people from other countries.

     But it’s also a neat way to increase the labor supply and to drive down wages. And that’s the only reason conservatives—not known for their humanitarian instincts—ever support immigration.

From The Wall Street Journal, August 19.

Hispanic Newcomers Damp Wages

Study Calls for More Workplace Rules
And Amnesty for Illegal Immigrants

Hispanic immigrants piling into the labor market are weighing down the wages of all workers in a broad range of blue-collar occupations in big cities across the country, according to a new study….

… research found that occupations in which new Hispanic immigrants account for a quarter of the work-force pay as much as 11% less than those where there are no new Latino immigrant men. Toward the lower end of the wage ladder, where average annual earnings are about $21,600, jobs in which new Hispanic immigrant men account for 10% of the labor force pay $950 less per year than similar jobs with no new Latino arrivals. Where new Latino male immigrants account for a quarter of the labor pool, the wage penalty is almost $2,400.

There are more than 10 million Hispanic immigrants working in the U.S. About an additional 400,000, most of them poor and low-skilled, arrive each year, sucked in by a labor market hungry for their services….

"It all comes down to the marginal status of immigrant Latinos," Ms. Catanzarite (researcher) says. She says immigrant workers are willing to work for less money and are less likely to defend their rights in the workplace, which drag down wages of all workers in the industry.

What's more, Ms. Catanzarite says the natives who suffer most from the wage penalty also are minorities. In jobs in which new Hispanic immigrant men account for 25% of the labor force, the penalty for white native workers is about $200 lower on an average income of $21,600 annually. But nonwhites earn almost $2,900 less in this category. "It is earlier-immigrant Latinos who take the hardest hit," she said. They are far more likely to be employed in brown-collar fields than are natives."…

She says the best way to eliminate the wage gap is to improve working conditions for new immigrants, by enforcing minimum wage standards for immigrant workers, providing an amnesty for illegal immigrants and strengthening their workplace protections. "Policies aimed at raising the social status of immigrants would protect native workers from both immigrant competition and brown-collar wage penalties," she says.

     The problem with the following article is that similar articles have been regularly published over the past 30 years—bad times, like today, and good times, like in the roaring 1980s and '90s. It's not "bad times" that caused the unions' lack of power; it's a dramatic change in the political climate during the last half of the past century.

From The Wall Street Journal, August 22.

Labor Talks Become Marathons

Wary of Economic Climate, Unions,
Businesses Strive to Avoid Strikes

High-profile labor talks this summer have stretched to weeks and even months after contracts expired, a sign that the uncertain economy is weakening the will of both companies and unions to boldly call strikes or lockouts that might jeopardize jobs or business. If other companies follow the same tack, there will be fewer labor disruptions to snarl the budding recovery….

In part, the longer talks over wages, benefits and other issues are part of a trend away from strikes. Companies have proved their willingness to hire replacement workers and wait out the strikers. With only 8.5% of private-sector Americans belonging to a union, strikes don't carry the same resonance with the American public as they did in the past. And with 9.1 million people looking for work, hiring replacement workers isn't so hard these days….

Labor experts say the lack of real hostile moves reflects both progress at the bargaining table and a tougher economic environment. "In the 1990s it was fashionable, and with good reason, to say companies were provoking strikes," says Michael LeRoy, a labor professor of University of Illinois. "Multinational corporations were egging for a major fight. They would make an offer to provoke a walkout, then hire replacements." Today, he says, "companies are trying to hold off using those weapons."

     The real reason labor unions have lost their power to negotiate, in both good and bad times, is that corporations have discovered that, among other things: 1. our labor laws have no teeth and corporations can replace strikers and union supporters at will; and 2. globalization—and its threat of job loss to other countries—has shifted the balance of power almost totally in corporations' direction.

     Another problem was caused by the unions themselves. When they were strong, they should have used more of their resources to increase union membership across more companies and industries—thus getting the political support of more workers. As it is, too many underpaid (and short-sighted) nonunion workers are jealous and have no sympathy for pro-union politicians.

     As you read this excerpt from this past week's Wall Street Journal, bear in mind that the total article was read by the same corporate executives who have caused these conditions to exist. By getting conservative politicians elected, they have deliberately created an economic climate that has no respect for families, workers, or stable communities.

     These bastards know full well that globalization, as opposed to true international trade, is not based on sound economic principles (closeness to raw materials, central to the distribution area, etc.). It is based solely on the theory that workers have no human rights and are to be treated like machinery or raw material—to be callously used and discarded at will.

     When they close down operations in the U.S., they know full well that they are deliberately cutting working Americans out of the wealth-creation process. And they move to areas that are chosen because of—not in spite of—their uncivilized working conditions.

From The Wall Street Journal, August 14.

Textile Powerhouse Learns
Downside of Globalization

Clothes Made Mauritius a Big Name,
But Now It Faces Brutal Competition

PORT LOUIS, Mauritius—When it won independence from Britain in 1968, this tiny island off the coast of Madagascar had little to offer the world except sugar cane and white-sand beaches.

So the government decided to embrace the global economy, creating an export zone with low taxes and relaxed labor laws. And the global economy embraced it right back. Clothing companies rushed to set up textile factories on the island—and, improbably, Mauritius became a powerhouse....

Median household income nearly doubled in the 1990s, to roughly $380 a month last year, making it one of the most prosperous nations in Africa. Its textile business grew so rapidly—turning out clothes for such global brands as Gap and Calvin Klein—that employers had to import workers from China and India to staff their production lines….

But now this poster child for globalization is starting to see the downside of free trade. As trade barriers ease around the world, China and India are flooding the world's markets with their own textiles and undercutting Mauritius's prices by drawing on their own vast pools of cheap labor. Since the late 1990s, thousands of Mauritians have been cast out of the textile factories as they have closed or downsized. The unemployment rate among Mauritians, who are mostly ethnic Indians, crept up to 9.8% last year, from less than 3% a decade ago, and many expect it to top 10% this year....

The unemployment picture is more complicated than it looks. Some factory owners are laying off Mauritians, but not the foreign workers who continue to enter the country. Chinese and Indian workers, the factory owners say, are more skilled and diligent than the locals, since many were trained in overseas factories and don't have family or social obligations to take their attention away from the job. Now expatriate laborers, virtually unheard of a decade ago, make up 23% of the work force that produces garments for export….

Many laid-off natives are sympathetic to the imported workers, but with an edge of resentment. "They're all beasts of burden. They're like machines. When you have a need for them, just call and turn the machine on," says Maryline Olivier, 41, who began working in the factories at 17 and was also among the 23 workers laid off….

In 1970, the government created an export-processing zone, which today gives companies tax and duty breaks, plus key exemptions from many of the nation's otherwise tough labor laws, if manufacturers export 90% or more of their production….

Imported workers are appealing for another reason: They're prepared to do work locals are now reluctant to take on. Many Mauritians say garment-industry jobs in the export-processing zones pay too little to live on. The average garment worker in the zones earns $185 a month, compared with the $319 average for Mauritian workers as a whole….

To spur more productivity from his local workers, he (factory manager) recently pinned on a bulletin board a clipping from the Mauritian French-language daily L'Express that describes China's competitive advantages over Mauritius. "I want my workers to know and to be afraid," he says.

Palmar has shifted some production to Mozambique, where labor is cheaper. The company produces 8,000 garments per day in Mozambique, compared with 50,000 in Mauritius, and hopes to produce 12,000 there beginning this month….

On a recent night, in one dormitory off a muddy country road, a worker named Wang shut his bedroom door to keep a supervisor from overhearing him. Wang, who asked that his full name not be used, said a manager at his factory, displeased with his performance, hadn't paid him since March. Wang, a 36-year-old from the Chinese province of Fujian, said he hasn't seen his wife, his 14-year-old daughter or his son, 11, since he left three years ago….

The government has taken a harder stand in overseeing contract workers after two deaths of Chinese expatriate workers last year, apparently due to illness. It recently sided with Chinese workers who wanted their paychecks in their own hands rather than sent back to China. It banned the occasional practice of some companies that fired workers after 11 months, making them ineligible for a year-end bonus, then rehiring them, says Showkutally Soodhun, Mauritius labor minister….

Looking ahead, the government's problem is moving its work force beyond factories. "You can't run a country on cheap labor. You can't rely on cheap labor. Eventually, you've got to give the people something better," says Jayen Cuttaree, Mauritius commerce minister….

     Same old story. To drive down wages at home, export jobs to desperate states or countries who are willing to sell-out their own workers to the lowest bidders. The wealthy in both areas become richer, workers benefit temporarily, and the bill doesn’t come due until the workers begin to actually benefit from the system.

     Then, naturally, industry moves to a new area, where workers have fewer protections and worse conditions.

     Amazing. Jayen Cuttaree, commerce minister of a tiny island off the coast of Madagascar has a greater understanding of what the survival of a civil society requires—than the entire Bush or Clinton administrations combined: "You can't run a country on cheap labor. You can't rely on cheap labor. Eventually, you've got to give the people something better."

     (Both Clinton and Bush supported NAFTA, WTO, and "fast track" trade negotiations with third world countries. At least Clinton pretended to be conserned about worker and envrionmental provisions in trade agreements.)

     The U.S. has not only lost most of its middle-class, it’s now in the process of losing much of its upper-middle-class. Our loss of jobs and industries now involve high-skilled and professional workers with advanced educations and degrees. Soon, we'll have only two classes of people: investors and those who can still find jobs in the U.S. that can't be exported.

     If you still don't believe that globalization has been an utter disaster, check out other recent excerpts from Previous Weeks’ Conservative Press.

     America’s loss of high-paying jobs is becoming a tidal wave of bad news.

From Business Week, August 11.


China is rising fast as a services outsourcing hub

…After emerging as the world's hottest manufacturing hub, China is joining English-speaking countries such as India and the Philippines as a key destination for outsourced service jobs….

So far, China's role is largely focused on providing back-office support for financial service, telecom, software, and retail companies in neighboring Asian countries. Operators can easily talk to people in Hong Kong and Taiwan in their own languages. China also has plenty of Japanese and Korean speakers. But it is making inroads as an outsourcing base for English-speaking nations, a business dominated by India, because of the influx of Western multinationals who now are bringing back-office work to China….

China's ascent could inflame an already heated debate in the U.S. about companies sending work abroad. With the U.S. economy still struggling and the jobless rate at 6.4%, lawmakers in several states want to make it harder for governments to contract work to low-wage countries. India is the center of attention. But China, which many Americans view as a political and economic rival, is likely to be a bigger lightning rod for outsourcing foes….

Chinese officials aim to give this burgeoning industry a push, by forging partnerships with multinationals to train information technology engineers. For example, IBM has signed deals to train 100,000 software specialists in various Chinese cities over three years. Indian computer-training companies are teaching 20,000 students in more than 100 centers across China….

China's low-cost talent is another edge. Although India is a powerhouse in high-end IT services, latecomers these days must pay higher wages for experienced engineers. That's one reason BearingPoint chose Shanghai for its new software-development center, says the company's Greater China President, Bryan Huang. BearingPoint pays $500 a month for engineers in Shanghai. In India, he says, the pay would be $700, and $4,000 in the U.S. "Where can we sustain our cost advantage for the next 40 years?" Huang asks. "We're convinced that China is the only place."…

     "China's ascent could inflame an already heated debate in the U.S. about companies sending work abroad." No kidding. Why wasn’t there a heated debate when the whole “globalization” absurdity began in the first place?

     There is a massive redistribution of wealth today, going from workers to investors and high-level corporate executives. Some day, our politicians will have to figure out how they can peacefully redistribute wealth in the opposite direction. Either that, or we’ll have a total collapse of our orderly society, as increasing numbers of families cannot meet basic needs.

     The willful blindness of conservative economists and politicains is truly amazing.

     What is the hidden agenda behind the following article? It’s apparently intended as helpful advice for a diverse group of professionals who find themselves in need of new employment.

From The Wall Street Journal, August 5.

Employees Leave Struggling Jobs
In Search for More Fertile Fields

A free-lance photographer no longer makes a good living telling stories through pictures. A podiatrist wishes he were a high-school biology teacher, enjoying regular hours and guaranteed benefits. A stock research analyst worries that a conflict-of-interest scandal engulfing his profession could hurt his employability elsewhere.

Professionals from many walks of life find themselves in turmoil these days, buffeted by diminished pay, increased regulation, lessened prestige—or all three….

"It's much harder to reinvent myself and enter a completely different profession at this point in my life," says Paula Lerner, the struggling photographer. "And I'd still have to start at the bottom."…

Since then, pursuing her passion for her brand of photographic storytelling "has become all but unworkable," Ms. Lerner laments. Adjusted for inflation, magazines typically pay free-lance photographers roughly 35% less than 18 years ago.

Ms. Lerner earns half of what she did three years ago, despite aggressive efforts to supplement her scarce magazine assignments with additional commercial projects. She craves more work "that will feed my soul," she says….

Career specialists urge besieged professionals to undergo a scrupulous self-assessment, pinpointing their favorite and most transferable talents. "Don't think of yourself as an accountant. Think of yourself as someone with strong financial-management skills who, say, understands the hospitality industry," advises Barbara Moses, president of BBM Human Resource Consultants in Toronto and author of several career self-management books….

The most difficult aspect of such a change is the typical drop in income….

     Articles like this suggest that the current professional malaise is just another mid-life crisis, and people simply need to seek out new opportunities—usually at lower pay.

     The hidden agenda: the reduced incomes of all kinds of professionals is a planned result of political and economic policies brought about by rich investors and top corporate executives. These people see workers purely as expenses to be minimized. Increasingly, those workers include everyone from PhD. Chemist, to computer programmer, to electrical engineer, to doctor—to everyone who works for a living.

     When the jobs of whole groups of professionals are shipped overseas—and skilled immigrants imported into the country—people who previously had good jobs enter the job market for photographers, stock brokers, travel agents, and so on. Or they go into the business of industrial cleaning, fast-food franchises, home repair, etc. The inevitable result: more competition for jobs and, if in a business, for customers or clients. Result: lower incomes for everyone.

     And remember, "globalization" is just one of many strategies to destroy incomes of professionals. (Classifying employees as temps, reducing benefits, contracting work outside the organization, etc.)

     It’s basic Econ. 101. And the conservative politicians who brought it about know very well what they are doing, and what the long term effects will be. After all, they read the conservative financial publications cited in the files throughout this website.

     Want more evidence that a higher education or advanced skills training are not the keys to higher incomes in the U.S.?

From The Wall Street Journal, August 5.

Grads Seeking Public Service
Find Few Jobs Are Available

Shan Patel graduated with high honors from Harvard University in June. But that wasn't enough to get him a position with Teach for America or the New York City Urban Fellows Program, two public-service programs….

Neither prior experience nor an Ivy League pedigree, it turns out, is any guarantee of success in the heated-up competition for slots in the public-service sector. Applications for such positions are soaring, while budgetary problems at AmeriCorps, the federal umbrella organization that runs and finances national and community service, are taking their toll on the number of positions available….

Over the past two or three years, the number of employers participating in campus job fairs has dropped by 30% to 40%, with fewer positions being offered by those who still come….

Most service jobs don't pay much, but some -- especially those in teaching -- do provide a livelihood, albeit a temporary one since service terms are typically limited to a year or two. And that has become an increasingly attractive alternative to unemployment.

"There aren't 40 dot-coms saying, 'Come and play with us for a couple of years, and you'll be with a group of extremely smart people, and, if we do extremely well, the world will be your oyster,' " says Bill Wright-Swadel, the director of career services at Harvard. Recalling a time when seniors got signing bonuses to work in business, he says: "That kind of market doesn't exist at this point in time, so students have to be much more assertive."…

     If advanced education and higher skills are not the key to a good income, what is? Easy. Same as it always has been. The groups who have most of the political power always control the economy to benefit themselves and their descendants.

     Right now, those in power believe in aristocracy—that wealth and political power should be inherited, and that those who work for a living should get a marginal income at best.

     Before the next election, voters had better figure out which politicians have the best interests of most Americans at heart—and not just the interests of the few at the top.

     Isn’t there a connection between lowering the incomes of professionals and increasing profits? This article came out on the same day as the previous two.

From The Wall Street Journal, August 5.

Profits at Big Companies Show
Solid Gains in Second Period

Some Executives Are Remaining Cautious
Despite Signs Recovery Is Gaining Steam

It's been a long time coming, but the growth in corporate profits appears to be picking up momentum.

Net income rose 63% in the second quarter among companies tracked by Dow Jones & Co. that had reported earnings as of Friday. At present levels, net income is approaching historic highs and falls just short of the $122.9 billion recorded when the economy was still booming during the second quarter of 2000. The profit improvement, if sustained in the coming months, could contribute to the stronger economic recovery that so many economists are now predicting….

Economists believe an earnings turnaround is critical to a full-fledged economic recovery. They reason that executives will only start hiring and investing again when they are confident their profits are on a sustainable upward trend. Recent economic reports have shown signs that business investment is indeed turning up, although companies continue to cut payrolls, according to the latest Labor Department statistics….

"How much more proof do you need that profits are improving," said Nancy Lazar, an ISI economist. "They are improving and it's good for the economy."

     How nice. Companies are still cutting payrolls and yet their “net income is approaching historic highs.” Of course, that’s how you do it.

     Cut payrolls, intimidate those who are left with the threat of job loss, contract work out to firms that brutalize workers, and then pocket the profits. Naturally, you promise that the economy will get better for everyone after our wealthiest Americans have become true aristocrats.

     In their book, Lessons of History, Will and Auriel Durant concluded that bankers—or those who control money—eventually rise to the top in any society as it grows older.

     Their lessons are not lost on America’s corporations, as they go from manufacturing products or producing services to contracting out all the labor required for the businesses to operate. General Motors is becoming a classic example of a manufacturing company that is becoming a mortgage and investment banker.

From Business Week, August 4.

For GM, Mortgages Are the Motor

But how long can it rely on profits from its finance unit?

Given the weak profits in the auto business these days, General Motors (GM ) Corp.'s second-quarter earnings didn't look too bad. GM weathered a weak economy, falling car sales, and a vicious price war to salvage a $901 million profit….

But hang on a second: GM isn't making all that money selling cars. In fact, the auto maker's all-important North American vehicle operation made a paltry $83 million, down from $1.3 billion a year earlier. So where did the other $818 million in second-quarter profits come from? Try General Motors Acceptance Corp., GM's lending arm. And it's not primarily car loans that helped GM bring home the bacon. Half of those finance profits came from GMAC's mortgage business, including its fast-growing online mortgage subsidiary. These days, GM looks a lot more like a financial institution that happens to sell cars and trucks than a successful auto maker….

In 2004 and 2005, GM will be replacing as much as 22% of its sales volume with new cars and trucks, much faster than Ford Motor Co. and even Toyota Motor Corp. If it can avoid deep incentives, the new vehicles could help lift profits next year, says Prudential Financial Inc. analyst Michael Bruynesteyn.

Until then, GM will struggle and remain dependent on its finance arm. The question, says Deutsche Bank Securities Inc. analyst Rod Lache, is whether GM can turn around its auto business in time to offset the decline in the finance unit. If not, GM could face lean times once GMAC is no longer minting money.

     Although this article deals mostly with GM’s mortgage business, its role of investment banker is far more significant—as it abandons American communities and contracts out its manufacturing operations to Third World countries.

     Articles describing the disastrous effects of globalization have now become a steady stream. The only mystery now is: Why can't American voters see what is clearly staring them in the face?

From The Wall Street Journal, July 30.

In Quest for Steady Work,
A Man Traces State's Decline

Fred Harp, Just 32, Jumped From Mills
To High Tech to Utilities to Government

EUGENE, Ore. -- Oregon has pegged its fortunes to one hot industry after another, and Fred Harp has had a foot in all of them. He started in timber and bounced to paper to electronics to electric power -- only to lose his job as each went into a slump.

Now he's working for his county government, just as that sector faces a big crunch. "My uncle used to tell me get a job and stay with it," the 32-year-old Mr. Harp says, guiding his 1979 Ford pickup past some of his old work haunts. "But I tell him you can't do that anymore."

Mr. Harp's ill-starred odyssey traces the woes of a state that has searched in vain for economic salvation over the past dozen years. Oregon grew faster than most states during the 1990s, only to crash harder as virtually every one of its major industries shriveled….

Oregon's schools are so strapped for cash that some have closed and many have had to sack teachers. In a few cases, schools shaved weeks off their schedules….

In Lane County, a heavily forested area in the foothills of the Cascade mountains where Mr. Harp works, local officials say they have had to eliminate 119 of their jail's 450 beds, forcing the early release of less-violent offenders….

Old-line industries, Mr. Harp concluded, were a thing of the past. The future lay in electronics.

Oregon's planners had decided the same thing and opened their arms to high-tech manufacturers. Microchip giant Intel Corp., custom-chip maker LSI Logic Corp. and others enthralled with Oregon's low-cost labor market were flooding into the state with production plants….

The Sony plant was the biggest economic event ever to hit the Eugene area and was a symbol of Oregon's new economic hope. Built in the neighboring city of Springfield for $50 million, the campus sprawled across 37 acres and created economic ripple effects. Among other vendors who arrived to supply Sony, an International Paper Co. unit opened a big carton plant across the street….

Then, shortly after reporting for a graveyard shift in the spring of 2001, Mr. Harp says he and almost all his co-workers were handed pink slips. Komag Inc., of San Jose, Calif., had bought HMT a few months earlier and decided to send all U.S. production jobs to Malaysia, citing a slowdown in demand for its products and the need to cut costs….

It became clear to Mr. Harp that even his new government job wasn't immune. In late April, Lane County announced it would cut about 80 jobs as part of an effort to slash $20 million from its $408 million annual budget. "We are in the midst of a full-scale financial storm," County Administrator William Van Vactor warned in his budget report….

     It's the same old story:

  • Jobs are shipped overseas,

  • Displaced workers enter the job market,

  • Wages for everyone are reduced,

  • Tax revenues dry up,

  • Public services for those who need it most are eliminated,

  • Conservative investors and top corporate execs get incredibly richer, and use their money to

  • Blame liberals for being "tax and spenders," and

  • More conservatives are elected to public office, who then


An editorial comment from The Wall Street Journal, July 29.

Clothing Costs

Once upon a time the favorite target of American protectionists was Japan. But judging from a complaint just filed by American textile and apparel industry groups, these days the bull's-eye has been painted squarely on China.

The idea here is that a surge in Chinese textile imports to America is causing "market disruption."…

Thursday's petition, moreover, is only a taste of things to come…

It's doubtful that American workers will really benefit in any case. American textile jobs are bound to be lost as protection is peeled away, and by free-market rights probably would have been lost a long time ago. The only real question is to what developing country locale the jobs will go: Bangladesh, Vietnam, China or elsewhere….

The bad news is that Beijing has too often settled for managed trade, and indications are it might settle for voluntary restrictions in textiles too. But China would do American consumers a service if it used its leverage as a large and growing market for American products to accelerate the political demise of the U.S. textile lobby.

     Ten years ago, when "globalization" was rapidly destroying American industry, conservative politicians assured us that American workers—with their ingenuity and their increasing productivity—could compete with any workers in the world.

     Now the Journal editors tell us that we can forget our textile industry, it's history. Not only that, our country (meaning wealthy investors and tight-fisted consumers—not workers, however) are better off for it.

From The wall Street Journal, July 21.

Laid-Off Factory Workers Find
Jobs Are Drying Up for Good

Not Just the Slowdown: Structural Changes
Are Stranding Many With Basic Job Skills

…Trinity Industries Inc. started laying off workers in 2000 and a year ago, in a bid for efficiency, shut down the Butler factory where the Karenbauers and Mr. Mottern worked. After (being terminated), (workers) began scrounging for work. They moved from job to job—shoveling snow, stocking a Wal-Mart Supercenter—but nothing has added up to the pay or fulfillment of their old jobs.

While hundreds of factories close in any given year, something historic and fundamentally different is occurring now. For manufacturing, this isn't a cyclical downturn. Most of these basic and low-skill factory jobs aren't liable to come back when the economy recovers or when excess capacity around the world dissolves.

Railroad cars, unlike buggy whips, are still needed, as are toys, appliances and shoes. But the task of making these goods is increasingly being assumed by more efficient machines and processes. Or they've been transferred to workers who earn less and live in another country. While these changes have been going on to a limited extent for years, the economic slowdown has greatly accelerated and broadened this historic shift. By some estimates, roughly 1.3 million manufacturing jobs have moved abroad since the beginning of 1992, the bulk in the past three years to Mexico and East Asia.

Other plants around Butler also have closed, including one that fabricated steel and another that made vinyl siding. Hundreds of manufacturing workers have been left without jobs and their options for similar work have narrowed significantly in this city of 15,000, an hour north of Pittsburgh….

In June, manufacturing cut 56,000 jobs, the 35th consecutive monthly decline and the longest string of layoffs in that industry since World War II.

"We're saving corporate jobs by moving production jobs to lower-cost areas," says Daniel Meckstroth, chief economist with the Manufacturers Alliance, a public policy and business research group in Arlington, Va….

Stan Donnelly, whose Alexandria, Minn., company makes plastic parts for big equipment manufacturers, imports tools from China to save money. In the long run, bypassing U.S. toolmakers is a mistake, he believes. Those kinds of jobs helped create and sustain the middle class, and he's not sure displaced workers will learn new skills and become higher paid. "Look, we've got millions of people who have failed to get through high school. If their minds are not their salvation, what's wrong with letting their hands be their salvation?" asks Mr. Donnelly. "Over the last two centuries, America has developed a balanced society, with opportunities for a large cross section of people. We're gutting that."…

Then as now, manufacturing paid more and had better benefits than many other jobs. In Butler County, population 174,000, about 20% of the work force is in manufacturing, but those jobs contribute 30% of the county payroll. Nationwide, manufacturing jobs averaged $54,000 in pay in 2000—20% higher than the average of what all American workers earn, according to the National Association of Manufacturers….

Brad Karenbauer (assembly line worker) moved around the floor adjusting machines that were clogged or not working properly. He learned the tool and die trade, the craft of making the tools that form parts, from his supervisor. "He took a liking to me and taught me," Mr. Karenbauer says. That sort of informal teaching was invaluable to companies and workers who couldn't afford other education. And for generations, it sufficed….

Once he was invited to Trinity's headquarters in Dallas to explain his solution to a glitch that had been causing many pieces of a metal post to be scrapped. He figured out that the post was moving slightly when it was in the press, causing a wrinkle. He built a device to hold it firmly. His cousin, Mr. Mottern, came up with a design to replace a part that had been made by welding two pieces of metal together. That eliminated the welding, and helped the department make twice as many pieces of higher quality.

His employers gave him a framed certificate and a grainy video of his talk, which he still shows visitors. "All the bigwigs were down there," he says….

Pennsylvania has lost one out of 10 manufacturing jobs, or 90,300 jobs, in the past three years. Industrial cities such as Butler have been disproportionately hit by job loss. Earlier this year, unemployment in the county jumped to 7.3%, the highest level since 1994….

     This is yet another article describing how conservative economists and politicians have changed our society from one which produces the greatest good for the greatest number—to one which creates a few big winners and many losers.

     Through "globalization," investors and corporate executives make out like bandits, while those who actually built, developed and maintained our country—through their ideas and creativity, as well as their manual labor—lose their livlihoods.

     It's no accident. The negative effects of globalization have been predicted by its critics at every stage of its development. And at every stage conservatives assured American workers that it was being done for their benefit, if they would just wait long enough.

     Now, even the right-wing Journal is admitting that the changes are fundamental and permanent, and conditions aren't going to get better for manufacturing workers. Not only are they losing their jobs, they are entering the job market and exerting downward wage pressures on jobs that can't be exported out of our country.

     Middle-class America is a permanent loser, unless some serious changes are made in our political system.

From The Wall Street Journal, July 21.

The World Bank Wonders
About Utility Privatizations

WASHINGTON—The World Bank, the apostle of privatization, is having a crisis of faith.

What seemed like a no-brainer idea in the 1990s—that developing nations should sell off money-losing state infrastructure to efficient private investors—no longer seems so obvious, especially when it comes to power and water utilities….

Consumers, feeling deceived, increasingly associate privatization with higher rates for them and higher profits for foreign companies and corrupt officials. Rate increases have spurred violent demonstrations against a water concession in Bolivia and private power plant projects in Peru. A 2001 survey of 17 Latin American nations by Latinobarometro, a Latin American polling company, found that 63% of respondents felt that privatization of state companies hadn't been beneficial, up from 45% just three years earlier.

The result of this widespread disappointment is that across Africa, Latin America and Asia, some privatization contracts are being renegotiated and a handful of projects—concentrated in toll roads, power and water—have been canceled. Fewer new projects are getting off the ground….

Privatization hasn't always gone badly. Telecommunications deals have generally been much more successful than water or power projects. When it comes to phones, technology and privatization conspire to provide the public with service that is less costly and better. The advent of cellphones, for example, has made it simpler to introduce competition to improve what was once a state exclusive.

But water and power are tougher. They naturally lend themselves to monopolies, not competition. Why build parallel, competitive sewer pipes or power lines? And, since the public often views low-cost water and light as rights, not privileges, privatization has been the focus of popular discontent.

The unexpected turn of events has left privatization enthusiasts at the World Bank—the main tool the wealthy nations have to influence economic policies in the poor ones—wondering what went wrong….

World Bank officials have now decided it doesn't matter so much whether infrastructure is in public or private hands. What matters is that it be run in a business-like manner, perhaps more frequently combining public ownership and private management. But above all, they now say, bureaucrats, investors and, yes, the World Bank itself must pay far greater attention to the fiery politics of privatization and especially to the effect of rising prices on the poor and disaffected….

     Here's another wake-up call from "surprised" conservative economists. They've found that privitization doen't always work the way they promised us it would.

     And why should it be a surprise when privatization doesn't work? As the article states: "What matters is that it be run in a business-like manner." Suppose Enron executives were in charge of our postal service, Tyco execs in charge of our national parks, etc. Who would ever want that crowd in charge of a public service?

     Unfortunately, that's usually the kind of managers you get when greedy investors dominate business decisions. At least one advantage of government-managed utilities is that the "CEO" and his cronies don't make the outlandish incomes that are now characteristic of corporations, and the public's interests, not profits, are the organization's priority.

From The Wall Street Journal, July 17.

China's Latest Export:
Early American Look

Cheap Furniture Gains,
Quality and Popularity

…As recently as three years ago, a made-in-China label (often slapped inconspicuously on the bottom of chairs and the backs of cabinets) could mean warped tops, weak drawers and loose legs. But thanks to new factories, cheap labor from China's countryside, and design and manufacturing advice from Americans, the quality of Chinese furniture has improved substantially.

Consumers have noticed, making furniture the latest import tidal wave from China. Measured by container volume, furniture is China's leading export, with more containers arriving here than the combined volumes of TVs, toys, shoes and auto parts, according to first-quarter statistics from trade-tracking firm Piers. One industry analyst estimates China-made products represent 35% of the $23 billion American wood-furniture market….

The influx is taking a toll on U.S. manufacturers and this week triggered a trade protest from 14 companies that say China's factories appear to benefit from subsidies and currency issues. Domestic companies have closed scores of factories and laid off more than 34,000 workers during the past 2½ years in the wood-furniture-making industry alone….

     In Barron's, Howard Gold defends globalization and, along the way, dismisses the severe injustices against those in America who still actually work for a living.

From Barron's, July 7, 2003.

Globalization Meets Creative Destruction

…Businesses from private medical practices to large rental car chains to giant corporations like Delta Airlines and Hewlett-Packard are under enormous pressure to keep costs down. And now, with the Internet and the opening up of the world economy called globalization , they have the means to do so.

Globalization allows corporations to scour the world for the highest returns and lets them build a truly international workforce. The Internet makes it easier for managers to monitor that workforce—wherever they are—and integrate them into the global networks that large companies are becoming.

Twenty years ago, it would have been inconceivable for a small private company like ANDA Networks to in effect relocate its engineering workforce from San Jose to Wuhan, China… Not surprisingly, manufacturers are the furthest along… For years they've had to cut costs in the face of overcapacity and a lack of pricing power. But now the outflow of jobs we've seen in industries like clothing, toys and shoes has spread to more sophisticated sectors like industrial machinery and computer technology….

So, where is this all going? Assuming that this is a structural change and not just the outgrowth of a recession and a slow recovery (which some economists argue), we can expect major dislocations in various parts of the U.S. economy over the next few years….

Industries like U.S.-based call centers and the cities that support them could be hit hard. Many blue-collar workers will have to give up their dream of a steady union job and go into business for themselves or retrain as lower-paid teachers or nurses.

Older, highly compensated information technology professionals may have to take pay cuts, and some of them may never work in IT again at the level to which they're accustomed. MBAs in finance from Harvard or Wharton may not land that first Wall Street associate's job out of school, because increasingly those jobs will be filled, at much lower salaries, by graduates of Beijing University or the Indian Institute of Technology….

But it's a necessary part of the ebb and flow of our economy, which sacrifices a false "stability" for real dynamism and growth.

Time after time in our history, critics have proclaimed the U.S. had exhausted its potential and time after time the economy has reinvented itself….

That's why I'm optimistic that though many Americans may be hurt over the next few years, the U.S, economy will emerge from the Great Shakeout more competitive than ever….

     This article needs some translation:

The following article makes a good companion to the above. The minority opinion expressed here suggests that economic policies that destroy American jobs will ultimately end in disaster.

From The Wall Street Journal July 7, 2003:
Bias Toward Optimism

By Jesse Eisinger

The principle of parsimony reminds us that the simplest explanation is the best: We had a huge boom. That ended. Why shouldn't we have a big bust?…

There is much talk of stimulus. But how much is truly new? The dollar has been dropping for well over a year. People have been repeatedly refinancing. The government has cut taxes multiple times. The Fed has trimmed rates in a baker's dozen. The stock market has rallied before in this bear market, though not as strongly as this time.

The unemployment report "raises some fundamental issues: Can we have economic growth without new jobs?" asks Sung Won Sohn, economist of Wells Fargo. "We can have a jobless recovery temporarily but not long. Eventually, the recovery will falter."…

Says Mr. Sohn: "The next three months to me are very crucial. If this massive stimulus doesn't do the job, what would? At that point—maybe it's premature now—you'd have to wonder if this was no longer a cyclical problem but a structural problem."

     How can anyone think that the current loss of American jobs is anything but structural? It certainly isn't cyclical. It is a fundamental change in our society that will affect us for generations. It will eventually show itself in the stock market, and ultimately in all our measures of social health: crime, civil disorder, family stability, etc.

     This week's Barron's is a classic example of the hypocrisy of America's conservative economists and politicians. Again, they express surprise ("Who would have thought it would come to this?") that America is losing so many jobs—that giant sucking sound—to other countries. Of course, they MUST express surprise, because otherwise they would have to admit that their original intention was to depress wages for all categories of workers. They promised us that what this article describes wouldn't happen.

From Barron's, June 30, 2003.

Asia or Bust

U.S. Tech firms increasingly move jobs overseas

THREE YEARS AGO, telecom equipment firm ANDA Networks had about 100 engineers in Silicon Valley. Now it has seven.

Where did those jobs go? Wuhan, China, a city of seven million people about 400 miles west of Shanghai. ANDA employs 65 engineers there.

In Wuhan, San Jose-based ANDA Networks pays an engineer about $17,000 per year, including benefits—about one-seventh of what it pays his or her counterpart in Silicon Valley. No surprise, then, that privately held ANDA has slashed operating costs by 90% since 2001.

ANDA's story is becoming more and more common these days as demand for technology remains weak and investors push for stronger earnings growth, forcing tech companies to cut costs.

How? The same way other manufacturing and services companies are doing so—through consolidation and exporting jobs overseas.

In fact, Silicon Valley may well be the epicenter of the restructuring that's transforming all of American business….

What's more, the personal computer, computer networking and wireless technology—responsible for much of the job growth during the tech bubble—are maturing businesses. And tech companies have to slash costs, just like everybody else.

Increasingly, that means outsourcing jobs to China, India and elsewhere….

Many of those jobs flying the coop will be in technology, which represents about 10% of the gross national product. And not just to India, of course. Companies like Hewlett-Packard are also operating in low-cost countries like the Philippines, Poland and Costa Rica….

It's no longer just customer service jobs, either, that are migrating abroad, but the whitest of white-collar tech jobs such as computer chip design. "Now they are moving engineering teams, where they had just moved production [before]," says Barry Jaruzelski, managing partner of Booz Allen….

"Those companies have sucked the manufacturing prowess out of American industry," Michael Moritz, partner at venture-capital firm Sequoia Capital Partners in Cupertino, Calif., told attendees of the Bear Stearns conference earlier this month. "Now they're embedding the design process in their business."

So, even keeping small staffs of white-collar workers may become a memory, since "innovation is starting to happen overseas," says Jadallah….

Who would have thought it would come to this? Just three and a half years ago, we were in a New Economy whose growth engine was technology, where the U.S.'s competitive advantage appeared well nigh impregnable.

Now, tech companies are slashing costs any way they can, and software engineers in Palo Alto or Menlo Park are fighting for jobs with much-lower-paid counterparts in Bangalore or Wuhan.

Welcome to the Great Shakeout, Silicon Valley. It's going to be part of the way we do business for quite a while.

     I suppose it's possible that conservative politicians didn't know the extent to which "globalization" would destroy incomes, or the range of professions they would affect. But globalization is now affecting those who thought they were immune to the sellout of American workers. Surely, people are about to wake up to what conservatives have done to what was once the greatest economy in history.

The following article makes a good companion to the above. It's a typical "rosy-glow" description of how the elimination of traditional working-class jobs will ultimately benefit everyone.

From The Wall Street Journal June 30, 2003:
A New Blue-Collar World

Workers Need More Skills,
But Get Less Job Security

Mr. Koch … earned a Ph.D. and started the plastics engineering technology department at Pennsylvania State University's Erie campus to teach a new generation of manufacturing workers. They study plastic design and plastics processing and travel abroad to gain global perspectives of the seemingly mundane but critical world of injection molding. Graduates go on to create plastic parts for surgical devices, computers, cars, and toys, with starting salaries of as much as $50,000 a year.

These are new blue-collar workers, although the term seems almost a misnomer today. Recorded first in the 1940s, it described the color of the shirts worn by factory workers, blue preferred over white because it better hid the dirt from the soot-filled air. Over time, the term came to describe a way of life and it split the working world neatly into two: White-collar workers used their heads; blue-collar workers used their hands, and fittingly for manufacturers, the word's Latin roots, manu factus, mean made by hand.

These days, blue collar still means manufacturing, but technology and globalization have transformed it dramatically. Gone are traditional assembly jobs that required little skill and less education, those tasks being automated or sent overseas to less-industrialized countries. Remaining in the U.S., as well as in most industrialized countries, are blue-collar jobs involved in making products with proprietary technology, or items that require frequent tweaks and updates….

The world of blue-collar work has changed as well. What once took two weeks and a dozen workers now takes two people only a few hours. Jobs once considered a lifetime commitment are now more temporary, forcing workers to stay adaptable. Many of them move from one factory or plant to another, from day shift to nights to keep up with changing demands. Far fewer belong to unions and far more take midcareer classes to keep up with the latest in lathes and resins.

Automation and globalization haven't only reshaped jobs but eliminated many, too. The sector lost about two million jobs in the past two years alone. Overcapacity, global competition and rising labor costs make blue-collar work particularly vulnerable to global boom-and-bust cycles….

The notion that automation will create, rather than eliminate, production jobs seems counterintuitive. Ever since the spinning jenny and flying shuttles reduced the number of people needed to turn wool into yarn by four-fifths, many have thought that machines would replace labor. And machines have indeed reduced the number of jobs involved in production, with many of the jobs eliminated—but not all—involving repetitive, injury- and accident-prone functions. At one small factory in Pennsylvania, about 40% of the equipment is automated. But someone has to build those increasingly automated machines, the parts for them and then improve upon them.

Nationwide, about 42% of manufacturers say they face a serious shortage of highly skilled machinists and craft workers. One study shows that 10 million new skilled workers will be needed by 2020 as many retire and few enter the field.

Some manufacturers are so worried about a looming labor shortage that they're teaming up with universities and think tanks to develop programs to attract talent. The recruitment push starts as early as grade school: Fifth graders who demonstrate facility in building with plastic Legos are being wooed to attend a Cleveland high school that has special manufacturing programs.

     Again, the promise: workers will be better off if we ship low-skill jobs overseas and replace them with high-skill jobs that pay better, are safer and are more personally rewarding. Great. Except the promised benefits never get here for most of those whose jobs were eliminated.

     Even those who get the high-paying non-unionized jobs will soon discover that they have no power to defend themselves when investors ship their jobs overseas—just as they shipped the highly technical jobs overseas, as described in the Barron's article above.

     Then, of course, there is the unanswered question no one wants to address: what in the world are we going to do about the millions of workers who are left behind, and who can't afford to support themselves, let alone their families?

     Someday the public has got to wake up: The class war today is between investors/corporate executives—and everyone who works for a living.

From The Wall Street Journal, June 24.

Jobless Workers Switch Fields
In a Scramble to Find Relief

ASHEBORO, N.C. — Tectonic shifts in the nation's job market are playing out at tiny Randolph Community College in this small manufacturing town. Stung by layoffs at nearby furniture, apparel and appliance factories, workers are flooding the school with applications to enroll in nursing and teaching programs.

There aren't many silver linings in a national job market that has shed 2.5 million payroll positions over the past 28 months. But here's one: In a scramble to find stable jobs, many workers are flocking to industries that have suffered through chronic worker shortages in recent years.

Shortages have been forcing American hospitals, for instance, to raid developing countries like the Philippines or Jamaica for nurses. Now there are signs of some short-term relief: Enrollment in four-year U.S. nursing programs rose 12% in the past two years after falling throughout the 1990s, according to the American Association of Colleges of Nursing. At community colleges like Randolph, applications for two-year nursing programs jumped 35% last year, says the National League for Nursing.

"It's [a job] they can't ship overseas," says Angela Freeman, a 32-year-old mother of two who is studying nursing at Randolph. She spent 13 years making upholstered furniture here until April 2002, when her employer, Klaussner Furniture Industries Inc., scaled back. Similar trends are playing out in teaching….

Experts in teaching and nursing say the upsurge of interest helps, though it might not be enough to relieve all of the longer-term pressures these sectors face. And the newfound popularity brings its own problems: Colleges don't have enough faculty to train nurses even though demand for degrees is rising. So many are being forced to turn away eager students….

Asheboro has been hit hard by manufacturing-job losses. A century ago, large furniture manufacturers in Chicago and New York began moving their operations south to this part of central North Carolina, where labor was cheap and raw materials—poplar, cherry and beech trees—grew in abundance.

But now, furniture manufacturing is migrating again, this time overseas. Klaussner, until recently the largest employer in Randolph, has eliminated several hundred positions over the past three years, moving some production to China. The area also has been losing textile jobs for years….

For workers leaving manufacturing jobs, the transition can be tough. Nursing-assistant jobs are abundant, and a certification is possible within 12 months. But the pay is only $7 or $8 an hour and it's grueling work. The school also trains registered nurses, who can make up to $20 an hour. That's more than most local manufacturing jobs. But it takes two years to finish that program and there is a long waiting list to get into it.

This often makes it challenging for many people to make ends meet while they're back in school without income from a job. Ms. Freeman says she has been clipping more coupons, cutting back on shopping by her 12-year-old daughter and relying on help from family....

     This article sums up the real purpose of globalization since the very beginning: It's the single most effective way to destroy wages at the bottom levels of all categories of workers. It's based on pitting workers from region to region against each other. Workers make all the sacrifices-in pay and working conditions-and investors, corporate executives and the established wealthy reap almost all of the benefits.

     Note the intended progression of events this article describes:

  • Industry moved from the North to the South in search of lower wages and fewer protections of working conditions, thus putting severe downward pressures on wages in the North.

  • Then industry started going to other countries, doing to southern workers what it did previously to northern workers.

  • Throughout America, fired manufacturing workers went to lower paying jobs, thus putting downward pressures on pay-rates, even for those in the lowest-paying jobs.

  • An unstated but obvious issue-the shortages of nurses was another result of conservative political skullduggery: they convinced voters to elect politicians who wouldn't adequately fund education-thus forcing American hospitals and schools to go to other countries for qualified nurses. Wealthy conservatives saved money in taxes, more of our uneducated citizens ended up in jail instead of productive work, and imported nurses helped hold down wages for 20 years in the nursing profession-which, in turn, discouraged new students from entering the profession.

From Barron's, June 23.

A Bumpy Road for Foreign Auto Makers in China

MAKING MONEY IN CHINA has always been a touch-and-go proposition for foreigners, and auto makers are the latest to get the jitters. The reason, as it often is in China, is the potential for intellectual-property violations.

Lately, a Chinese car maker called Chery is suspected of illegally copying the design of a General Motors subcompact that the world's largest vehicle producer makes through its Korean unit, GM Daewoo Automotive. Chery denies it....

As a result, executives from foreign manufacturers... are starting to fear their local partners could use their own technology and patents against them while competing in the world market. GM, Automotive News reported, wasn't happy with the Chinese government's proposals that westerners transfer technology to their domestic partners, but has no plans to slow expansion....

A study by Merrill Lynch global emerging-markets strategists Nazmeera Moola and Ed Butchart indicates that GM wants to boost its Chinese production by 35% and Volkswagen by 50% in the near future; Ford Motor wants to increase capacity threefold by '05; Toyota Motor wants to grab 10% of the Chinese market by 2010; Honda aims to double production this year, expand the number of dealerships and launch yearly production of economy sedans through yet another venture; BMW entered a new joint venture with annual capacity of 30,000 starting this year (last year, it sold 6,700 vehicles)....

No surprise, either, that supply will probably outpace demand: Merrill figures that supply of passenger cars in China will hit 2 million units this year, versus demand of 1.4 million units....

Peter Boardman, who invests in foreign stocks for NWQ Investment Management in Los Angeles, and a former auto analyst in Tokyo, Boardman is "nervous" about the auto industry, given vulnerable earnings; GM, after all, has warned that it may not hit its full-year profit target, owing to a weaker-than-expected economic recovery in North America and Europe, and price wars. It's also laying off half its workers in Japan.

Boardman believes, too, that U.S. consumers are tapped out. Meanwhile, Ford, GM and DaimlerChrysler have pushed incentives beyond $2,500 a car. "It's worrying that even Toyota is getting into the game, and they have tremendous capital to spare to raise incentives." Boardman reckons that Toyota is spending about $1,000 per car on incentives....

Thailand and South Korea were among the world's best performing markets last week, as investors who foresee a snapback in global economic recovery plowed into emerging markets stocks. The popularity of the two markets also sent the South Korean won and the Thai baht higher....

     This is the part of the world that American investors have abandoned our country for. Their stock markets are going up because they either have the world's industry or they are about to get it. And it's all beginning to unravel.

     What's especially disgusting is that many of the "intellectual property rights" the Chinese are stealing were originally gained from the same American workers who helped build American manufacturing-and were summarily abandoned by the investors who became rich from their labors and creativity.

     And the above articles, ladies and gentlemen, are not from the "biased liberal news media." They are from our most prestigeous conservative financial publications.

From The Wall Street Journal, June 17, 2003.

GE Workers to Pick Up
More Health-Care Costs

New Contract Agreement Raises
Premiums While Increasing Wages

Tackling one of the hottest issues for companies and their employees today, General Electric Co.'s proposed contract with its two biggest unions succeeds in shifting more of its rising health-care costs to its workers, a move that is likely to encourage other large employers seeking similar concessions….

Despite the optimism of union leaders, the agreement comes at a tough time for unions as a whole. The loss of two million manufacturing jobs since 2000 and turmoil in heavily unionized industries such as airlines and steel have cut further into union ranks after decades of decline.

Last year, the number of union workers fell to 8.8 million, or 8.5% of the private-sector work force, compared with 9.2 million and 8.9% the year before. Continued job losses mean many unions are less willing to fight hard, for fear of losing their jobs outright as companies grapple with the weak economy. With health-care costs rising, many unions have had little choice but to agree to contracts that increase workers' share of those costs.

At GE, unions now represent less than 10% of the company's world-wide work force of more than 300,000, thanks to the company's longstanding efforts to downsize unprofitable operations, move jobs overseas and expand in areas such as financial services where workers aren't represented by unions…....

     Again, another honest explanation for the stagnant wages of working-class Americans for the past 25 years. GE deliberately shut down many of its unionized operations and went overseas. (They also pressured their suppliers to do the same thing.) To some extent, they got out of the businesses that took genuine management talent, and went into areas where they didn't really have to manage workers—and share more of the profits with them.

     With virtually all of American manufacturing going in the same direction, unions have lost their abilities to protect their members, and well as protect workers in non-union companies that have to keep wages high enough to remain non-union.

     And why have corporations gained so much power in negotiations with workers? The answer's obvious: conservative presidents and congresses have passed legislation that was deliberately designed to bring it about. (NAFTA, WTO, fast track trade agreements, reduced workplace protections, etc.)

From Business Week, June 23, 2003.

Savings Tip: Don't Do It Yourself

Human resources and accounting are but
two cost centers ripe for outsourcing

You would think a company as big and profitable as the $179 billion oil giant BP (BP ) PLC would count its own beans. But it doesn't—because it's cheaper to pay someone else to do it. In fact, BP is paying the Global Services Div. of IBM $1 billion to handle a chunk of its accounting for 10 years. In the first two years, BP has saved about $52 million, and over the next eight years, it expects to save $200 million more. "We're very happy with how it's working out for us," says BP Vice-President Thomas Blackwell.

BP is just one of hundreds of global corporations singing the praises of business-process outsourcing. In BPO deals, as they're known among the tech set, companies farm out entire business tasks, such as human resources, accounting, and claims processing. It's one of the few bright spots in techland—and a growing source of revenue for the 11 tech-services companies on this year's Info Tech 100.

While the total tech-services market is pegged to grow 4% this year, IDC expects the BPO market to rise 11%, to $860 billion. By 2006, the market is likely to hit $1.2 trillion. "There are almost no boundaries to the potential," says Marty Cole, managing partner for outsourcing at Accenture (ACN ) Ltd. (No. 36)….

Recently, greater savings have been realized by moving these tasks overseas, often to low-wage locales such as India, the Philippines, and the Caribbean. Of IBM Global Services' 172,000 employees, 7% work overseas doing accounting and human-resource tasks, while Cincinnati-based Convergys (CVG ) has moved 10% of its 44,000 workers abroad since 2000.

    This is just another in a series of conservative articles that celebrates the effectiveness of globalization, which benefits corporations at the direct expense of workers. The real mystery: why can't wealthy conservatives realize the looming disaster—even for themselves—as jobs leave our country and the bottom 80% of Americans lose their incomes?

From Business Week, June 16, 2003, p. 54.

     Here's yet another report from the conservative financial press about how conservative politicans have created a climate where corporations can destroy workers' wages and working conditions—even for skilled workers.

Skilled Workers—or Indentured Servants?

As jobs dry up, abuse of power over visas is on the rise

In 1998, Mohan Kutty, a Malaysian-born doctor who has practiced medicine in Hudson, Fla., since he immigrated to the U.S. more than 20 years ago, decided to open five clinics in rural Tennessee. To find physicians to take such hard-to-fill posts, he sponsored work visas for 17 doctors from a variety of countries, including India, Pakistan, and Romania. But when they showed up for work, Kutty paid them just half the $80,000 a year he had promised—and fired several after they hired a lawyer to help them out....

Such stories have become increasingly commonplace these days. Immigrants have long complained about employers who cheat or abuse them and threaten to have them deported of they protest.

Generally, the problem has been confined to the lowest rungs of the workforce, such as Mexican farm hands who enter the country illegally. But nowadays, the weak economy has sparked an outbreak of abusive treatment among the legions of white-collar employees who flocked to the U.S. on perfectly valid visas during the late-1990s boom....

Experts point out that the U.S. work-visa system gives employers tremendous power over immigrants.... "You're essentially in indentured servant."

     So what would be a proactive solution for filling physician needs in "hard-to-fill" posts? Why not give scholarships for those who want to become doctors, instead of deliberately restricting the number of medical schools and teaching hospitals (the conservative medical profession does not want to create a "surplus" of doctors—as the Wall Street Journal once reported).

     Long-term proactive solution: improve the education and training of ghetto kids so they become doctors instead of prison inmates. I'm sure they would much rather choose that career path.

     And remember, this isn't just about skilled doctors. It's about skilled everything: computer programmers, Ph.D. chemists, engineers, and so on.



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