Robert Reich: structural changes

The basic assumption that jobs will eventually return when the economy recovers is probably wrong. Some jobs will come back, of course. But the reality that no one wants to talk about is a structural change in the economy that's been going on for years but which the Great Recession has dramatically accelerated.

Under the pressure of this awful recession, many companies have found ways to cut their payrolls for good. They’ve discovered that new software and computer technologies have made workers in Asia and Latin America just about as productive as Americans, and that the Internet allows far more work to be efficiently outsourced abroad.

This means many Americans won’t be rehired unless they’re willing to settle for much lower wages and benefits. Today's official unemployment numbers hide the extent to which Americans are already on this path. Among those with jobs, a large and growing number have had to accept lower pay as a condition for keeping them. Or they've lost higher-paying jobs and are now in a new ones that pays less.

Yet reducing unemployment by cutting wages merely exchanges one problem for another. We'll get jobs back but have more people working for pay they consider inadequate, more working families at or near poverty, and widening inequality. The nation will also have a harder time restarting the economy because so many more Americans lack the money they need to buy all the goods and services the economy can produce.

So let's be clear: The goal isn’t just more jobs. It's more jobs with good wages. Which means the fix isn’t just temporary measures to accelerate a jobs recovery, but permanent new investments in the productivity of Americans.

What sort of investments? Big ones that span many years: early childhood education for every young child, excellent K-12, fully-funded public higher education, more generous aid for kids from middle-class and poor families to attend college, good health care, more basic R&D that's done here in the U.S., better and more efficient public transit like light rail, a power grid that's up to the task, and so on.

The problem with education as the solution is the one unfolding in California (and present most everywhere else): neoliberalism's finance capital doesn't need more people. As the plutonomy papers made clear, consumerism under advanced inequality can still thrive: the very rich are the doing most of the buying. Reich's investment model presumes that education is the solution but that only works if the problem is a lack of suitable employees; his own analysis shows that there is a surplus of them. He's taking a short cut, providing a salve in a desperate effort to make the fundamental crisis he's identified look like it's manageable within capitalism's terms.

It's not.

via robertreich.blogspot.com

Comments

[Alain]

I agree with you that Reich's analysis points to a contradiction he doesn't recognize. But I wonder if there is another model of economic growth that is still capitalist that could work. Not one built on the empty platitudes of more education and health care, but one built around massive public works, infrastructure (which he does mention) and significant investment (not just rhetoric )in alternative energy? Isn't it conceivable that capitalism could address some of its problems this way?

[andrew]

While the changes Reich cites are and will continue to be painful (I live in Ohio, where the pain has become a permanent part of the landscape) I wonder if some of this structural change isn't for the good. Since regressive tax restructuring helped produce the current gilded age, perhaps the public will to tax the rich--admittedly only part of the solution--will grow as the middle class becomes less middle. The Depression, after all, in part produced the public will for the New Deal. In a larger sense, it's the middle classes that tend to revolt the hardest, because they're not as used to suffering as the poor, and feel more empowered (because of their education, previous wage earning, and so on). But before anything changes, more people will go hungry and skip going to the doctor. And the suburbs have a lot of momentum left--hard to think about revolution when you have high def. Will the US see shanty towns?

[Jodi]

Alain, I think Andrew's points are very good (and my view here is not the same as Zizek's but rather old fashioned Keynesian state socialist). I think, though, that this isn't capitalism in the current, neoliberal, sense, but more like a combination of local markets and state control of major industries.

[Alain]

I largely agree with Andrew as well - in fact I am personally living it (without high def!).

I simply think what i describe will eventually be the response as things get increasingly more difficult for the vast majority of Americans. Andrew is right - the depression created the political environment that made the New Deal possible. I recently read that Goldman Sach's executives have been applying for gun permits - this is a very good sign.

Thanks.

[Jocelyn Atkins]

As far as the promising middle class let alone its suburbarn counterpart--I don't think so:

"fetishists feel satisfied in their fetishes, they experience no need to be rid of them" (zizek, First as Tragedy 68).

and "It would be a fatal mistake to think that, at some point in the future, we will convince the fascists that their "real" enemy is capital, and that they should drop the particular religious/ethnic/racist form of their ideology in order to join forces with egalitarian universalism" (zizek 70).

[Jodi]

I don't think the middle class or its suburban counterpart are fetishists or fascists.

[Jocelyn Atkins]

Maybe I didn't make myself clear. What I mean is that isn't for example, "liberalism" a disavowed fetish, and at the risk of generalizing, doesn't the middle class identify with liberalism?

Further, could the same be said for racist ideology re: immigrant labor, maybe fascist is a leap but nonetheless doesn't this passage retain some relevancy here--the difficulty in undermining ideology.

If the subject is constituted by fetishism, (that is constituted by a "loss") isn't there a way in which we are all fetishists to some degree? I want to think more about this but I think there may be some truth to this?

I am referencing the way Zizek talks about the problem of the proletariat's difficulty to move from "in itself" to "for itself".

[andrew]

I'm not sure I'd describe liberalism (if we mean the idea in its widest sense) as a "fetish," though neoliberalism, in terms of irrational faith in market solutions for every context, probably does qualify. Nevertheless, I think Jocelyn is right that such political fetishes as anti-immigration, gay rights (from the Right's perspective) and so on do stand in the way of real change, just as the Father McCloughlins of the world stood in the way of change in the 30s, by convincing a certain segment of the public that Jews were the real problem, not capitalism. Jodi, I like that you distinguish Zizek's position (which in terms of positive politics sometimes seems utopian) from the Keynesian solution (or set of solutions) that is the only likely near-term possibility in the US. No one is going to shut down capitalism any time soon, but the will to shackle it may well surface, as it started to around AIG and the like.

[Alain]

Speaking as someone close to the edge financially, when somewhere between 1/3 and 1/2 of the United States lives under bridges and shanty towns, I believe people will support any movement or individual who will provide jobs, housing and food. We are obviously heading in this direction. Whether this movement is of the "right" or the "left" is completely up for grabs.

[Bob Allen]

I liked Jodi's original post about education not being the panacea, rare coming from an educator, before the comment thread strayed into Zizekian/Keynesian ether- but would add that the employers want docile workers more than educated ones, that is, to fetishize over having a job at all, to wrap themselves in minutiae and neuroses (Guittari) of the exploitative relationship, in effect more acute wage slavery.
Reich acts as though the solution comes from on high, "investment' somehow 'creates" higher wages etc. No, it doesn't. There is the little matter of class struggle which has been rendered invisible by the culture industry et al.

[threehegemons]

I don't think you should take the plutonomy papers seriously as analysis. If these analysts were competent, Citigroup wouldn't have nearly gone bankrupt (it was those charged with networking with the government and making sure they were perceived as 'too big to fail' who 'deserve' a raise, not their crackpot analysts). Most of the real action in the consumer economy is at the bottom--that is why China is emerging as the superpower of the 21st century. And the long term problem is that the consumer goods available electronically simply don't require many workers. Facebook just announced it has 350 million users, and, according to Wikipedia, roughly 900 employees. Bankers who can't see a contradiction looming there indeed should expect something like the fate of post-golden age Spain to befall them.

[Jan]

This post, its comments, the current desperate attempts to save the banks, and the knowledge of the structural changes understood to be necessary by "our leaders" since the late 60s and early 70s (when the switch to fictitious capital began) leads me to imagine a country that will eventually be emptied of all but those who command and manipulate the financial world structure (plus their servants). That is, if there is no monumental and successful uprising.