Outsourcing Top Management: The Lesson of Fiat-Chrysler
by: Dean Baker,
t r u t h o u t : May 4, 2009
The media coverage of the auto bailouts has focused on the need for union
autoworkers to take big pay cuts, causing them to once again miss the real
story. The Fiat-Chrysler deal shows that the pay problem is at the top, not
the bottom. At the end of the day, the new Chrysler is still likely to be
producing most of its cars in the United States. What the new company will
be getting from abroad is technology and top management.
This big story was so easily missed because it runs against one of the
main myths that our elites have cultivated about the US economy: that the
country has a "comparative advantage" in highly skilled labor. In this
story, the United States will continue to lose manufacturing and other
"less-skilled" jobs as its economy becomes more concentrated in highly
skilled sectors.
This story was convenient for our elites because it meant that the
decline of manufacturing was a necessary, if sometimes painful, part of a
natural economic progression. It also justified the growing inequality in US
society that benefited not just Wall Street bankers and CEOs, but also
millions of doctors, lawyers, economists, and other highly educated workers.
These people took their six-figure salaries as a birthright, even as the pay
of less educated workers stagnated or declined.
While this story of the US becoming a high skills center in the world
economy may have been comforting to the elites, and was widely promoted by
economists and the news media, there was never much truth to it. Highly
skilled professionals did well in recent decades not because they succeeded
in international competition, but rather because they were largely sheltered
from it.
Trade agreements like NAFTA were explicitly designed to remove any
barrier that made it difficult to export manufacturing goods to the United
States, thereby placing US manufacturing workers directly in competition
with their much lower paid counterparts in the developing world. Most of
these restrictions had nothing to do with tariffs. Instead the key issues
were rules protecting investment in the developing world along with limits
on the ability of the US to exclude imports through safety or environmental
regulations.
There has never been any similar effort to eliminate the barriers that
prevent professionals from the developing world from coming to the United
States and competing directly with their US counterparts as doctors or
lawyers or in other highly paid professions.
The economists and the media somehow failed to notice that professionals
were intentionally sheltered from international competition and instead just
trumpeted them as the winners in the global economy. We were just treated to
a beautiful example of this double standard when the media and the
economists got all huffy about the "buy America" provision in the stimulus
bill that might have protected a few manufacturing jobs in steel and other
industries.
While this provision was roundly condemned and eventually watered down,
the buy America provision in the Treasury's latest bank bailout bill went
completely unnoticed. This provision requires that any investment manager
taking part in the program be headquartered in the United States. Even
though the argument against protectionism in financial services is identical
to the argument against protectionism in steel, no one bothered to make the
argument when Wall Street was the beneficiary of protectionism.
The end result of this protectionism for those at the top is a bloated
overpaid sector of top managers, which is what we saw at Chrysler. If we
compare wages for assembly-line workers in Europe and the United States,
there would not be much difference between the pay of UAW members and their
counterparts in Europe. However, there would be a very large difference
between the multi-million dollar pay packages of the top executives at the
US companies and their European counterparts. The pay gaps persist among the
more highly paid engineers and management personnel.
Therefore, it was only logical that a bailout of Chrysler would seek to
take advantage of the lower cost management and design skills available at a
European car company like Fiat. In Chrysler, as in other companies, the high
pay packages for these people are like an anchor dragging them down in
international competition. If the US is to be competitive in the 21st
century, we must either bring the pay of those at the top back down to earth
or we should look to follow the lead of Chrysler and contract out for these
services.
***
http://www.latimes.com/news/opinion/commentary/la-oe-ehrenreich3-2009may03,0,4064609.story
Trying to find a job is not a job
Keeping the unemployed busy is an exercise in denial -- and social control.
By Barbara Ehrenreich
LA Times: May 3, 2009
In most parts of the world, from Paris to Beijing, mass unemployment brings
the specter of mass social unrest. Not here, though, where 13 million people
have accepted joblessness with nary a peep of protest.
Many reasons -- from Prozac to Pentecostalism -- have been cited to explain
American passivity in the face of economic violence. But the truth may be
far simpler: In America, being unemployed doesn't mean you have nothing to
do but run around burning police cars. Unemployment has been reconfigured as
a new form of work
Nowhere is this clearer than in the white-collar world, where the laid-off
are constantly advised to see job searching as a full-time job. As business
self-help guru Harvey Mackay advises: "Once you're fired, you already have a
job. The job you have is tougher than the last one. It's more demanding."
How demanding? He says you need to "plan on 12 to 16 hours a day."
Picture it: People across America rising at the usual time, suiting up in
full corporate regalia and setting themselves down at their laptops to
fiddle with resumes, peruse Monster.com and pester everyone on their address
lists for leads.
Some people have no doubt found jobs in this manner, but there have been no
scientific comparisons of the technique with, say, printing a resume on a
sandwich board and parading around Times Square.
If there is something familiar in the image of laid-off workers soldiering
on, it may be because of films like "Tokyo Sonata" and the 2002 French film,
"Time Out," in which the heroes -- laid-off executives -- conceal their
status from their families and continue to mime the daily commute to work.
In the movies, this behavior seems pathetic -- a case of terminal denial --
but it's exactly what the American "transition industry" of career coaches
and outplacement firms recommends: If you don't have a job, fake one.
In real life, it's OK for a man to tell his wife he's lost his job; he
should just never reveal that he has time on his hands. A February article
in the New York Times featured a laid-off Illinois man who justified his
refusal to do more around the house by saying, "As one of the people who
runs one of the career centers I've been to told me: 'You're out of a job,
but it's not your time to paint the house and fix the car. Your job is about
finding the next job.' "
At the kinky extreme, laid-off white-collar people are advised to further
simulate the office environment by finding someone to play the part of a
"boss" -- a spouse, a friend, a paid career coach -- to whom you report
every few days on your progress.
Is it any wonder there's no time left over for lobbying for universal health
insurance or reading Marxist tracts on the "reserve army of the unemployed"?
It's all a person can do to keep up with the relentless pressures of an
imaginary job.
The blue-collar unemployed are subjected to gerbil-like exercises of their
own. While white-collar layoff victims are encouraged to polish the "brand
called you," blue-collar people are told they have nothing to offer unless
they start all over with "retraining." Hence, in part, the current surge in
community college enrollments.
But in his 2006 book, "The Disposable American: Layoffs and Their
Consequences," Louis Uchitelle raised the obvious question: "Retraining for
what?" At the beginning of the decade, computer skills were all the rage;
then the low-level computer work vanished to India. Air-conditioner
repairing is popular right now, and big-rig truck driving is a perennial
favorite. There are no guarantees, of course, of eventual jobs. In a recent
report for the organization Food AND Medicine on laid-off manufacturing
workers in Maine, Steve Husson, who himself had been laid off as a DHL
driver, found paper mill workers stuck with intermittent seasonal work and
low-paid service-sector jobs despite their stints of retraining.
Even two or three years ago, when the economy was apparently healthy,
average layoff victims "landed" in new jobs paying 17% less than the old
ones -- if they landed at all. Today, with the country losing more than half
a million jobs a month, both white-collar job searching and blue-collar
retraining are becoming surreal exercises in futility. No matter how smart
you are -- how flexible, personable and skilled -- you can't find a job that
isn't there. At least until the unemployment benefits run out and the credit
cards are canceled, you might as well devote yourself to Madden and
"Minesweeper."
Of course, there are a few constructive, work-like alternatives. You could
join one of the emerging efforts to organize the unemployed, like Food AND
Medicine in Maine, the Unemployed and Anxiously Employed Workers' Assn. of
Allen County, Ind., or the nationwide group United Professionals, which I
helped start. Or you could pitch in with one of the several organizations
fighting for single-payer health insurance, or at least a huge expansion of
public health insurance for the unemployed. You could get together with
laid-off friends and co-workers to discuss how you would design an economy
that made use of people's precious skills instead of periodically tossing
them out like so much trash.
But the first step, as in any 12-step program, is to overcome denial. Job
searching is not a job; retraining is not a panacea. You may be poorer than
you've ever been, but you are also freer -- to express anger and urgency, to
dream and create, to get together with others and conspire to build a better
world.
Barbara Ehrenreich is the author of "Bait and Switch: The (Futile) Pursuit
of the American Dream" and "Nickel and Dimed: On (Not) Getting By in
America."
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