Who should have the primary strategic
responsibility for making American workers globally competitive – the
private sector or government? This will be a defining issue in the 2012
campaign.
In his State of the Union address, President Obama will make the case
that government has a vital role. His Republican rivals disagree. Mitt
Romney charges the President is putting “free enterprise on trial,”
while Newt Gingrich merely fulminates about “liberal elites.”
American business won’t and can’t lead the way to more and better
jobs in the United States. First, the private sector is increasingly
global, with less and less stake in America. Second, it’s driven by the
necessity of creating profits, not better jobs.
The National Science Foundation has just released its biennial report
on global investment in science, engineering and technology. The NSF
warns that the United States is quickly losing ground to Asia,
especially to China. America’s share of global R&D spending is
tumbling. In the decade to 2009, it dropped from 38 percent to 31
percent, while Asia’s share rose from 24 to 35 percent.
One big reason: According to the NSF, American firms nearly doubled
their R&D investment in Asia over these years, to over $7.5 billion.
GE recently announced a $500 million expansion of its R&D facilities in China. The firm has already invested $2 billion.
GE’s CEO Jeffrey Immelt chairs Obama’s council on work and
competitiveness. I’d wager that as an American citizen, Immelt is
concerned about working Americans. But as CEO of GE, Immelt’s job is to
be concerned about GE’s shareholders. They aren’t the same.
GE has also been creating more jobs outside the United States than in
it. A decade ago, fewer than half of GE’s employees were non-American;
today, 54 percent are.
This is all good for GE and its shareholders, but it’s not
necessarily good for America or American workers. The Commerce
Department says U.S. based global corporations added 2.4 million workers
abroad in first decade of 21
st century, while cutting their US workforce by 2.9 million.
According to the New York Times, Apple Computer employs 43,000 people
in the United States but contracts with over 700,000 workers abroad. It
makes iPhones in China not only because of low wages there but also the
ease and speed with which its Chinese contractor can mobilize their
workers – from company dormitories at almost any hour of the day or
night.
An Apple executive says “We don’t have an obligation to solve
America’s problems. Our only obligation is making the best product
possible.” He might have added “and showing a big enough profits to
continually increase our share price.”
Most executives of American companies agree. If they can make it best
and cheapest in China, or anywhere else, that’s where it will be made.
Don’t blame them. That’s what they’re getting paid to do.
What they want in America is lower corporate taxes, less regulation,
and fewer unionized workers. But none of these will bring good jobs to
America. These steps may lower the costs of production here, but global
companies can always find even lower costs abroad.
Global corporations — wherever they’re based — will create good jobs
for Americans only if Americans are productive enough to summon them.
Problem is, a large and growing portion of our workforce isn’t equipped
to be productive.
Put simply, American workers are hobbled by deteriorating schools,
unaffordable college tuitions, decaying infrastructure, and declining
basic R&D. All of this is putting us on a glide path toward even
lousier jobs and lower wages.
Get it? The strategic responsibility for making Americans more
globally competitive can’t be centered in the private sector because the
private sector is rapidly going global, and it’s designed to make
profits rather than good jobs. The core responsibility has to be in
government because government is supposed to be looking out for the
public, and investing in public schools, colleges, infrastructure, and
basic R&D.
But here’s the political problem. American firms have huge clout in
Washington. They maintain legions of lobbyists and are pouring boatloads
of money into political campaigns. After the Supreme Court’s Citizen’s
United decision, there’s no limit.
Who represents the American workforce? Organized labor represents
fewer than 7 percent of private-sector workers and has all it can do to
protect a dwindling number of unionized jobs.
Republicans like it this way, and for three decades have been trying
to convince average working Americans government is their enemy. Yet
corporate America isn’t their friend. Without bold government action on
behalf of our workforce, good American jobs will continue to disappear.
Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley. He writes a blog at www.robertreich.org. His most recent book is Aftershock.
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