April 24, 2024

Competition No Longer an American Ideal?

Michael Lind says that southern states have waged an economic civil war on the rest of America, the real America, in Lind’s mind, by creating an economic environment in which companies want to do business and bringing jobs from the heavily unionized north of the country and from overseas.  This, Lind Says, creates wage competition that harms American workers and America’s viability as an international economic power.  Is he right?  Should Americans workers demand an end to competition in labor markets?

Absolutely not.  What Lind calls a race-to-the-bottom rivalry between the south and the rest of the country is really the pursuit of economic efficiency, a necessary action in a country whose labor costs far exceed those paid to workers in most of our economic competitors.

In the early 20th century, the Southern states were the first to adopt conscious statewide economic development policies, which then as now meant poaching industries from New England and the Midwest where wages and public spending and regulation were greater. That’s how the South took the textile industry from New England, before losing it to lower-wage Asia. Now with the help of Nissan, Toyota, and BMW, the South is trying to replace Detroit as the center of U.S. automobile production, using low wages, anti-union laws, and low taxes to benefit from the outsourcing of industry from societies more advanced than the South

What of it?  Is a Massachusetts company obligated to keep its textile mills open even as they bleed the company dry by losing money year after year?  Must a manufacturer in Michigan keep an automotive plant running at a loss simply because they chose Detroit as a location for the plant 30 years ago?

No.  Businesses are obligated to meet the commitments they expressly make to employees, of which there are relatively few: make payroll on time and in full, supply promised fringe benefits, meet or exceed safety standards, provide compensation for on the job injuries, and keep other employee/company-specific promises.  That’s it.  There has never been any guarantee of lifetime employment in any industry, no matter how venerable and/or wealthy the companies.  Nor should there be.  Workers who face no consequences for slovenly work, absenteeism, and safety failures, among others, will inevitably commit these offenses with increasing regularity.  Spend time in any union shop and you’ll understand this quite clearly. 

Lind champions unions in spite of the evidence against them.  Nothing could be more damning than the effects unionization has had on Detroit’s Big 3 automakers.  Yet Lind blames southern states’ efforts to entice Nissan, etc., to do some of their manufacturing in American as the problem.  In his mind, Americans would be better served by having either excluded foreign automakers from the U.S. manufacturing sector or to have forced them to accept a union work force.  The former was certainly an option, though hardly desirable; the latter would never have happened.  Japanese automakers would never have agreed to those terms, knowing full well that drinking the unions’ Kool-Aid would have been akin to slugging it down while in Jonestown.

Lind’s agenda becomes crystal clear halfway through the article:

Call it the Third Reconstruction. The first step is to end the race to the bottom in wages and regulation, by national action. The national minimum wage should be gradually raised until it is a living wage, of $10 to $12 an hour, and it should be adjusted for inflation. At the same time, federal regulations should set a higher floor with respect to worker safety regulations, environmental regulations, and others, preventing America’s own internal rogue states from gaining any advantages by flouting national standards. Most Southern politicians and business leaders will howl that this will bankrupt the South. That’s what they said about the abolition of slavery, child labor, and the convict lease system, too. The South was a better place to live after those reforms, and it will be a better place to live when there is a living wage throughout the South.

Were such legislation to be introduced it would undoubtedly be given a more circumspect name.  Lind is too honest for his own good – he’s actually acknowledged his purpose by calling for the reconstruction of America’s competitive economic culture.  How gauche of him not to wrap it up in a glitzy package with a cute bow on top.

The core problem with what Lind wants to do, economically speaking (there are others, the deliberate destruction of the conservative Christian, Republican south, for one) is that there’s no such thing as a "living wage".  Congress has mandated a minimum wage, right enough, but that’s not what Lind and other progressive types want.  What they want is a floor for wages below which no employee can fall, regardless of how few abilities he or she brings to the table, how incompetent his/her work might be, or how little value the employee brings to the organization.

This last point is essential.  Employees must bring value to a company, value in excess of the resources that they consume.  Otherwise the company eventually dies.  Would a custodian, for example, bring $24,000 worth of value to a bank, for example?  Unlikely.  Perhaps in an upscale hotel or resort that attracts an elite clientele who expect the posh treatment, but not in most businesses.  Forcing wages above the value of the work an employee performs is a death sentence to employers.  It amounts to little more than another welfare program, albeit somewhat disguised in the form of taxable payroll "earnings".

American businesses or the southern states do not need to be reconstructed.  Rather, idealists like Mr. Lind need to realize that businesses will always pursue the combination of low-cost, high-skill labor wherever it exists, inside or outside America.  Punishing the southern states that brought Nissan and other foreign automakers into America and created thousands of new jobs while lowering the cost of good-quality vehicles in the process makes no sense at all when looking at the big picture. 

Reality cannot be legislated away.  That’s the primary reason why the Senate rejected the planned bailout of Detroit’s automakers and that’s why the government must not succumb to the temptation of guaranteeing a living wage to those who don’t perform work that warrants such a figure.


Marc is a software developer, writer, and part-time political know-it-all who currently resides in Texas in the good ol' U.S.A.

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