Recently in the New York Time, columnist Tom Friedman declared the Do-It-Yourself Economy. In this new vision of his, which sounds suspiciously like the floating of another book title, we're all buffeted by the meeting of the Great Recession—those without Mr. Friedman's independent wealth probably understand this term more viscerally than he ever will—and the Great Inflection.
To his mind, the Great Inflection means "the mass diffusion of low-cost, high-powered innovation technologies — from hand-held computers to Web sites that offer any imaginable service — plus cheap connectivity" that is "transforming how business is done."
But, as often happens with those who take the grand, stratospheric view of what happens below, he's missing an important detail. The Great Inflection to anyone on the receiving end is otherwise known as Bending Over And Dropping Trou.
In Friendman's cheery world, companies make use of free software, get unbelievably cheap stock photography, hire inexpensive voice talent from over the Internet rather than local people who are pricey, and get music and sound effects "with the click of a mouse, and then buy them for pennies." Or a major furniture manufacturer outsources labor-intensive upholstery work to Mexico, "leveraging technology to cut costs and improve quality."
It sounds good in that first class seat as you pass safely above the hoi polloi. But the Great Columnist misses an important issue. Technology can, indeed, reduce costs, allowing companies and individuals to undertake certain mechanics of business for a fraction of what it might have cost in the past. But the real savings comes not from technology itself, but people taking it in the shorts, making far less and wondering how they're going to scrape by, so those at the other end of the lever can reap the savings.
The labor force in Mexico gets a fraction of what people would get in the U.S. because of the assumption that it is ethical to insist that people accept lower standards of living so a company can bolster profits. No matter how they might protest, the Internet's talents in voice, music, writing, video, graphics, engineering, programming, and other disciplines are pushed to work for comparative chicken feed as they try to rationalize how they are opening business doors even as they lock themselves into working for please-give-me-a-chance rates.
Yes, some businesses are absolutely making smart use of these resources. But the intelligence will only be short-lived, because the pressure continues to demand more and more for less and less. You can continue to want people to work and license their intellectual property for next to nothing, and eventually those people will have to spend their time doing something else. Like moving out of the home they lost. Or pouring shots at a Starbucks, at least while there are still people who can afford the lattes. Because eventually the businesses that depend on those working cheap are expected to join the lines of Those Who Do With Far Less, and they too no longer have the money to dally at a café.
This isn't the Do-It-Yourself Economy. It's the Do-Someone-Else Economy. Unfortunately, if you look at history, there is only so long that people are willing to bend over and take it for the profit of others. Eventually they stand up, angry, and the results are far from pretty: a different kind of Great Inflection, when streets burn and heads roll.
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Dave Cullen
Irma Arkus
emma peel
john blumenthal
Joan Walsh
Bob Eckstein
Salon.com
Comments
An interesting read on it, however.
(I hope that means something, no time to review and compose - this temp has to get back to sorting data.)
"Protesting greed is like protesting the wind. No matter how much damage it does you can't stop it."
You can hope, like eating blueberry pie, eventually people realize that unbridled satisfaction is bad for their own self interest.
"If you do not follow suit availing of the cost savings measures in your business, you won't be around long."
But you don't have to be the one providing the indentured servitude. That's where things could get shaken up. Also, to take advantage of costs savings without a long-term view of the effect on your own business and the entire economy doesn't put one into a better competitive position.
"but lately I'm wondering if the genius of the American system isn't a balance that prevents that rising - a balance of burdens and crumbs just enough to keep hope and need in equilibrium at a level that keeps us taking up our pitchforks."
This is a young country and cultural and economic forces often move slowly. Also, most citizens live in relative comfort compared to much of the world and to history. But it's hardly a permanent equilibrium.
this is exactly the prevalent deception, The Big Lie which millions of U.S. shoppers buy into. 99% of all U.S. light bulbs and light fixtures are made in China. When will the light bulbs come on inside our own heads?
Unfortunately, with the rest of the world paying slave wages, there is probably no long-term way to sustain the artificially high standard of living Americans enjoyed during the golden years.
At some point, as our corporations continue to outsource manufacturing and assembly to countries where 12-year-olds are willing to work 16-hour days for $1, we're inevitably going to sink to their standard of living.
I'm glad I'll be dead before we hit the true bottom, and that I'm not leaving descendents to live through the fall of this empire.
best ...RRR
"Mr. Sherman, you need to go back to Mr. Peabody and compare history by a trip in the WayBak Machine. In 1929, people did get angry and physically intimidated the rich; consider the Bonus Marchers and the rise of fascists like Father Coughlin and Huey Long."
Yes, and it was short-lived. Eventually whatever appeases large numbers of people runs out. That's when things get ugly. To be fair, that can take centuries.
"In 2009, people accept being robbed and raped by the rich. It's 'what happens.' It's 'fate.' It's 'what I deserve for not working harder, working smarter, working myself to death.' There will be no revolution and no change, because people won't get off their asses."
Take a broader view (and, by the way, I'm not calling for revolution, just noting that things can't continue down a certain path without a strong systemic reaction). People said much the same during feudalism, the height of monarchies, and the mid-19th century. Nothing lasts forever, whether resolve, power, or apathy.
Rated.
Wages have been decreasing...for some. Unlike the top few percentiles that have been exceedingly well compensated for their (??) wisdom, expertise, and my favorite, "leadership,' the rest of the population has been sold some kind of fantasy in which we no longer need full time jobs with benefits and retirement plans. Instead, we can work as consultants to other consultants, freelance or work only part time, set our own hours.
Whether this actually does result in a realistic economy is dubious. What happened to just jobs? What happened to just regular jobs that would feed and provide for a family, with set hours, good pay, benefits, retirement?
I guess asking about that from someone like Friedman, who simply married rich, and who picks up most of his column material from random conversations at parties, would be delusional.
It's an interesting issue that runs all sorts of directions. For example, when people point to the US as using more than its share of energy, you also have to ask how much food production/information processing/etc. is done here on behalf of others. I see this as a general problem in discussing global issues because it becomes very difficult to sort out what's really going on and on whose behalf.
"I'm loving your labour perspective. "
I should be clear that I consider the issue as much from a business perspective as labor. Trying to push down costs and, in the process, reducing the income of your home customers is bad business. Or expecting that someone is always going to make it possible to increase revenue or profit is also silly. It's like the argument that some people make for allowing immigration, but only to create an underclass that gets poor wages because businesses in the US "need" the cheap labor. Why do they? Why don't they charge enough and stop expecting public policy to ensure their operations? It would be a lot better for immigrants and for businesses if wages were higher, because it's just the type of goad that forces companies that need labor in the US to find better ways to operating and make money. So long as you underwrite inefficiency and badly-executed business, you ensure it.
Good analysis, Erik. R
rated.
reposted.
I suggest he watch Slumdog Millionaire to get a true glimpse of the face of "globalization"
friedman is a cheerleading whore for the plutocracy.....
I'm not quite disagreeing with you on the labor consequences to globalized outsourcing, but I've always been skeptical of this kind of argument. It was used back in the 50s and earlier when assembly line workers were being replaced by more sophisticated machines and again in the 70s and beyond when computers were feared by some as inevitably resulting in widespread unemployment.
As for the Mexicans working at lower than USA wages, well, what were they doing before? It's not like millions of them left better paying jobs or more staisfying lifestyles to take arduous jobs at low pay for multinationals.
I don't see that. To me, it read (and still reads) not as lament so much as joyous declaration of future wonders.
"I'm not quite disagreeing with you on the labor consequences to globalized outsourcing, but I've always been skeptical of this kind of argument. It was used back in the 50s and earlier when assembly line workers were being replaced by more sophisticated machines and again in the 70s and beyond when computers were feared by some as inevitably resulting in widespread unemployment."
If you look at the patterns of jobs over these decades, there has been a shrinking of the industrial base and an increasing reliance on a service economy. That's fine in theory, only the well-paying jobs at the top are relatively few to the number of people in the work force. In the 1950, a middle class family could do pretty well on one income, own a house, take vacations, etc. Now, it often takes two incomes to get by, and not because of over indulgence. The economic pie is getting bigger; however, the share of the 1 percent at the top is growing far faster than the pie itself, which means others have to do without.
"As for the Mexicans working at lower than USA wages, well, what were they doing before? It's not like millions of them left better paying jobs or more staisfying lifestyles to take arduous jobs at low pay for multinationals."
My point there was not that they did better in the past, but that this country's economy is increasingly dependent on millions of Mexicans and Chinese and Indians and whoever else making far less than we do so we can pull the profits out of the labor arbitrage. (The irony is that the biggest cost in goods is not labor, but generally inept marketing and inefficient corporate operations, which don't get the same treatment.) The result will eventually be what happened to Dell, which was known for sucking out every loose penny created by its suppliers, telling those companies to use the economies of scale to make money off their other customers. Everyone in the industry came to see what was happening, pushed back but hard, and Dell's financial performance has never recovered, because profit levels were artificially inflated. Eventually there will be a push back directed at this country.
One is the vastly bigger income discrepancy between the higher-ups and the regular workers. I'm sorry that I don't have the figures at hand but the ratio betwen the highest 2% of income earners versus the middle 80% is much bigger today than it was a couple of generations ago. It's a long topic as to why but part of it is surely Boards of Directors looking after their peer goup. Ideally, I'd like to see a punitive tax rate applied to that portion of the annual income exceeding a million or so, though it's hard to do so without leaving loopholes and politically a non-starter in today's environment.
The second factor is the greater prevalence of single parents and unmarried singles. Since housing is usually one's biggest expense, as the ratio of households per capita increases, wouldn't there be less discretionary income for everything else? Including bigger homes?
As for companies outsourcing to lower wage countries, how is the solution any different than an investment boycott of those countries?
I would put this slightly differently.
The assumption is that is it good and virtuous to globalize capital, by any means necessary and every means available, while simultaneously that it is bad and evil to the highest degree to globalize labor, even by the most meager or half-hearted means.
Friedman's cozy world -- where everything is flat, you can just replace your Lexus when you wrap it around that damn tree -again-, and every turning point is always, precisely, deliciously six months away -- explicitly assumes that globalism is for the rich but not for the poor.
Labor doesn't need help from ethics. Labor did fine against its bosses when the playing field was (more or less) level. But (for many reasons) as the scope of business has come to encompass the world, the scope of labor organization has not changed in basically 100 years.
In the words of the great longshoreman-activist Yoda, "That is why you fail."
I gulped some quinine water.
Who gonna bail cancan jails?
Cancan can boogie hula hoot.
We figure it out in an eternity.