For nearly a generation, conventional wisdom held that high-tech would be the wave of the future. Job seekers were advised to train in electrical engineering, software design and information technology. Now, as the jobless economic recovery sputters on, there are cries of alarm that high-tech jobs are migrating overseas—not just low-paying positions, like telephone operators taking catalogue orders, but technical ones, like doctors interpreting medical tests, accountants doing tax returns and engineers designing software applications. At the same time, the value of a college degree for first-time employment has dropped significantly, and many college graduates find themselves underemployed.
The bogeyman in the jobless recovery has become “outsourcing,” the transfer of contracts and jobs overseas, especially to countries like China and India, where there is a surplus of technical expertise and, in the case of India, familiarity with English. But the number of jobs “lost” so far to outsourcing, only 365,000, is a small part of the total lost (2.7 million) in the last three years. In addition, foreign companies in the United States employ thousands of workers. Nevertheless, the exportation of jobs has become a symbol of a new economic order hostile to the U.S. middle class.
Just why the 15-month-old recovery has produced so few jobs eludes economists. Globalization and free trade count for a portion of the lack of new employment. More important are gains in productivity and the willingness of workers in an insecure job market to work longer hours for the same pay. Cellphones, faxes and e-mail keep people working at home, on vacation, on the road and in the air. And just as tighter controls over inventories have resulted in a system of manufacturing-on-demand, so too tighter controls over hiring have led to a system of hiring-on-demand and more part-time rather than full-time employment.
Catholic social teaching reminds us to judge an economy by what it does for people. This includes not just our fellow citizens, but people everywhere, especially those in poor countries. For more than 40 years, this teaching has urged trade reform as an engine of development for poor countries. As a result, outsourcing cannot be seen in purely negative terms. The problem of unemployment arises because the business community ignores what Pope John Paul II called “the priority of labor” in economic life. It fails to see job creation as one of its proper roles.
In particular, what the world needs is a form of fair trade that does not pit U.S. workers against workers abroad. Giving unions, community organizations and environmentalists a place at the negotiating table for trade agreements would help. Workers’ rights, not just property rights, should be protected by international agreements.
Public policy can do something to promote employment. As the pope noted in his encyclical Laborem Exercens (1981), government has responsibilities as “the indirect employer.” For example, eliminating tax havens used by multinational corporations would help level the playing field for domestic producers and U.S. employees. And despite current disappointment over job training and education, both will be necessary if the United States is to continue to compete in world markets. The dynamism of the American economy will also depend on the renewal of government funding for basic research.
While government policy can give limited impetus to job creation, substantial improvement must come from the business sector. The failure of job creation demonstrates how dysfunctional the separation of financial markets from fundamental economic measures has become. Wall Street spends billions on options and derivatives in what amounts to high-stakes gambling, with little connection to the productive economy. Rumors and panic can cause dramatic swings in stocks and currencies. Corporate takeovers generate work—and excitement—for arbitrageurs and attorneys, but frequently fail to generate long-term health for the companies involved. And the overweening preoccupation of the stock market with quarterly returns also holds back long-term investment in both “human capital” and equipment.
While the international business world is undergoing a transformation that will force difficult adjustments, only the business community can bring major improvement in employment prospects. Employment figures will rise only when business leaders, corporate directors, management professors, economists and business writers are ready to rein in the aggressive capitalism that is at the heart of today’s economy. In correcting the imbalance between capital and labor, all need to hear the prophetic words written by Pope John Paul II some 20 years ago: “Everything contained in the concept of capital is only a collection of things. Man, as the subject of work and independent of the work he does—man alone is a person.”
To begin, let me compliment you on your initial observation on the “outsourcing” phenomena. The loss of jobs due to their exportation is indeed a very small portion of the overall job losses in the current economy. This is true now as it has been throughout our history. Currently because of its emotive power, it is a lightning rod for political purposes.
As to your further observations on the American economy and your prescriptions for job creation, let me offer the following counsel:
• It is not the role of any business to create jobs. It is the responsibility of a business to make a profit (within an overall defined legal, moral and ethical milieu), and to provide this profit to the investors in the form of a return on their capital. The creation of jobs is an ancillary by-product of American business. Although employee considerations should be an important factor of any business decision, no businessperson who wishes to stay in business long can translate this consideration into a mandate for job creation or retention. To do so would be economic suicide.
• As to your recommendation of the inclusion of labor unions, community organizations, and environmentalists in the negotiating of trade agreements, we should remember that these are international economic compacts, not political ones. Unless you are a proponent of the creation of an international economic quagmire instead of a global market place, these institutions would be better served at the local and national negotiating tables.
• Your two-part prescription for government intervention in the form of increases in new taxes on business and increases in public funding for job re-training are quite frankly tired, old and ill-conceived. Historically, raising taxes and/or increasing the government bureaucracy are steps toward stagnation and decline, and have been no solution for any economic problem.
• As for your proposed formula of improvements by the business community, they are similarly misguided. Contrary to your opinion, the unequivocal facts are : o High-stakes gambling is not the economic function of options and derivatives. Risk-aversion, however, is. Risk-aversion is a fundamental economic principle. o Corporate takeovers do generate enduring health for the companies involved, although not necessarily in their original form. o Preoccupation with quarterly returns, although a factor in business decision-making, is but one of many variables utilized to make decisions on long-term investment.
In conclusion, let me concur with your observation that, “…only the business community can bring major improvements in employment prospects.” However, the purpose of these improvements should not be, as you say, to “rein in ‘aggressive’ capitalism.” (Emphasis mine.) Rather they must be for the purpose of unleashing American capitalism.
Paucis verbis, only free markets can create jobs.
Those of us who manage a business in manufacturing, as well as our friends who manage a service business that renders a genuine service, really do not feel that our function in running a business is primarily “to make a profit and to provide this profit to the investor.” Our prime responsibility is to manufacture a good product or supply good service and to provide constructive and satisfying careers.
Clearly everyone, whether owner, manager, salaried employee or hourly employee, recognizes that we must make a profit to maintain and grow our business, but I challenge Mr. McGreevy and those in their ivory towers with similar mind-sets to go onto the shop floor and ask the individuals there whether they feel the primary purpose of their career is to make a satisfactory return for the investor.
To begin, let me compliment you on your initial observation on the “outsourcing” phenomena. The loss of jobs due to their exportation is indeed a very small portion of the overall job losses in the current economy. This is true now as it has been throughout our history. Currently because of its emotive power, it is a lightning rod for political purposes.
As to your further observations on the American economy and your prescriptions for job creation, let me offer the following counsel:
• It is not the role of any business to create jobs. It is the responsibility of a business to make a profit (within an overall defined legal, moral and ethical milieu), and to provide this profit to the investors in the form of a return on their capital. The creation of jobs is an ancillary by-product of American business. Although employee considerations should be an important factor of any business decision, no businessperson who wishes to stay in business long can translate this consideration into a mandate for job creation or retention. To do so would be economic suicide.
• As to your recommendation of the inclusion of labor unions, community organizations, and environmentalists in the negotiating of trade agreements, we should remember that these are international economic compacts, not political ones. Unless you are a proponent of the creation of an international economic quagmire instead of a global market place, these institutions would be better served at the local and national negotiating tables.
• Your two-part prescription for government intervention in the form of increases in new taxes on business and increases in public funding for job re-training are quite frankly tired, old and ill-conceived. Historically, raising taxes and/or increasing the government bureaucracy are steps toward stagnation and decline, and have been no solution for any economic problem.
• As for your proposed formula of improvements by the business community, they are similarly misguided. Contrary to your opinion, the unequivocal facts are : o High-stakes gambling is not the economic function of options and derivatives. Risk-aversion, however, is. Risk-aversion is a fundamental economic principle. o Corporate takeovers do generate enduring health for the companies involved, although not necessarily in their original form. o Preoccupation with quarterly returns, although a factor in business decision-making, is but one of many variables utilized to make decisions on long-term investment.
In conclusion, let me concur with your observation that, “…only the business community can bring major improvements in employment prospects.” However, the purpose of these improvements should not be, as you say, to “rein in ‘aggressive’ capitalism.” (Emphasis mine.) Rather they must be for the purpose of unleashing American capitalism.
Paucis verbis, only free markets can create jobs.