On Economics, Blogging my thoughts
In the out-sourcing of labor, it is really to be wished that up and coming countries start getting decent jobs. But there are the transnational corporations, countries, and the global economy. When the corporations out-source labor they are getting very cheap labor, undermining the standard of living of the labor force in more developed countries. (I’ll leave out environmental regulations for now.) It should not be a zero sum game. Why should the labor of one country have to suffer for the sake of out-sourcing jobs? Corporations are of course accruing more profit by this practice. They do not have the real benefit of the labor in those countries at heart or in mind.
I forgot the exact figures that Jeffrey Immelt, the chair and CEO of General Electric, told Charlie Rose on TV (On Thursday, June 25th, 2009), but it was something like the financial industry, that is, Wall Street had grown to 47% of our economy while the manufacturing sector had shrunk to 11%. CEO’s should realize that if they destroy the middle class in this country, they also destroy one of the most lucrative markets in the world, thus hurting their own profits. He suggested that the CEO’s of our country try to balance these figures more and bring our industrial base to 20 or 25% of the economy as a goal.
All of this initiative, if it was not blown away in the wind, should however, think in terms of the global market. Rather than shrink the financial industry, workers should be encouraged to buy into stock and become beneficiaries or take the losses as well of the global industrial base. of course, blatant “bank robberies” by that I mean the way banks are short-selling on the country of Greece right now after knowing and hiding its debt and now standing to reap billions if Greece defaults, need to be stopped and prevented by the governments of countries.
Financial corporations that make their money in the stock market also have shares that can be purchased, of course, but the little investor, really investing for the sake of industrial growth and more productivity, versus the big financial powers that can game the system, need to be protected. The mutual funds help them somewhat, but one gets the impression that the hedge funds and other fancy financial firms leave others with the short end of the stick.
But labor ought to be encouraged to become part of the stock market and partially have ownership of the corporations. CEO’s and management needs to stop taking a lion share of the profits out of the pockets of individual shareholders. Now these have also become middle class and the holders are not merely the great pensions, institution, and the rich.
When jobs are outsourced, labor there ought to receive access to shares in the stock market as much as the middle class and labor here. When labor here is helped by stock market income they too will become middle class. But real investment would not be so much of a gamble if so much irrational speculation and gaming the system was not going on.
When productivity grew in the global market place and and when investment for productivity in the financial industry became reality for the global labor force, the industrial base could grow for many countries and the labor could also enjoy the profits. In consort with corporations countries have to figure out how to guide this growth and not allow industries to do the race to the bottom in terms of environmental regulations and wages. D’Angel Rugina argued that if the irrational speculation, that is, the speculation were taken out of the stock market, then the real investment in productivity would produce full employment. Applying that to the global market place is not utopic for our computer enhanced consciousness.