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Monday, January 24, 2011

What does "competitiveness" in a global economy mean, anyway?
Posted by Jill | 5:40 AM
What does it mean to be "competitive" in an economic sense? Does it mean to make products the rest of the world wants, as used to be the case? Or does it simply mean active participation in a race to the bottom, one in which employers can pay lower and lower wages and salaries so that the only people "competing" are exploited workers worldwise scrambling for scraps? Does "competitiveness" mean American manufacturing workers settling for the wages paid and the working conditions of the developing nations to which American corporations have outsourced far too much of their operations?

Does it mean an educated workforce? How can it, when Republican governors all over the country are seeking to address their budget problems by specifically targeting education? Here in New Jersey, Chris Christie is supporting a voucher program that would, instead of trying to save failing schools or provide support for time-strapped families, provide vouchers for private and especially religious schools that would have zero accountability for their own performance. In other words, parents of children in failing schools would receive vouchers that would not allow them to send their kids to the prestigious prep schools, but to unaccountable religious schools where they would learn about God creating the earth in six days and Adam and Eve living alongside dinosaurs. Of course graduating a generation of ignoramuses would justify paying them ten cents a day, but I don't think that's what most people have in mind when they talk about American competitiveness.

Krugman:

Meet the new buzzword, same as the old buzzword. In advance of the State of the Union, President Obama has telegraphed his main theme: competitiveness. The President’s Economic Recovery Advisory Board has been renamed the President’s Council on Jobs and Competitiveness. And in his Saturday radio address, the president declared that “We can out-compete any other nation on Earth.”

This may be smart politics. Arguably, Mr. Obama has enlisted an old cliché on behalf of a good cause, as a way to sell a much-needed increase in public investment to a public thoroughly indoctrinated in the view that government spending is a bad thing.

But let’s not kid ourselves: talking about “competitiveness” as a goal is fundamentally misleading. At best, it’s a misdiagnosis of our problems. At worst, it could lead to policies based on the false idea that what’s good for corporations is good for America.

About that misdiagnosis: What sense does it make to view our current woes as stemming from lack of competitiveness?

It’s true that we’d have more jobs if we exported more and imported less. But the same is true of Europe and Japan, which also have depressed economies. And we can’t all export more while importing less, unless we can find another planet to sell to. Yes, we could demand that China shrink its trade surplus — but if confronting China is what Mr. Obama is proposing, he should say that plainly.

Furthermore, while America is running a trade deficit, this deficit is smaller than it was before the Great Recession began. It would help if we could make it smaller still. But ultimately, we’re in a mess because we had a financial crisis, not because American companies have lost their ability to compete with foreign rivals.

But isn’t it at least somewhat useful to think of our nation as if it were America Inc., competing in the global marketplace? No.

Consider: A corporate leader who increases profits by slashing his work force is thought to be successful. Well, that’s more or less what has happened in America recently: employment is way down, but profits are hitting new records. Who, exactly, considers this economic success?


The executives pocketing huge sums of cash while 400,000 more Americans become unemployed each month, that's who. After all, they got theirs, what else is necessary?

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