Raymond, one of our regular readers, had a comment to a post about Friday’s jobs report that’s stuck in my head. “Welcome to the ‘New Normal’ – it’s repulsive,” he wrote. “The middle class of America is getting destroyed. If we do not see real policies that work from government and the private sector, America will be a very different place in a couple of decades.”
If only anybody had been thinking that way a couple of decades ago, we might not be where we are now. There are developments in the global economy that are frankly beyond our control, to be sure, but we could’ve done more to provide for the working classes, rather than just telling them to become “knowledge workers,” shipping their jobs to Asia and papering over the whole thing with borrowed money.
We have been hollowing out the working class for going on 30 years, and that is the great, unappreciated story of our times. Cities like Cleveland, Newark, Detroit have become shells of themselves, and it’s hard to see them coming back. How many Rock-n-Roll halls of fame can you have? The United States today does not create enough of the kinds of jobs that will provide a safe, secure living for the working class. We’ve carefully hidden this fact by replacing living wages with credit, and it worked for a while, but that game has exploded rather messily all over the globe.
Which brings me to Andy Grove’s piece in Bloomberg, as highlighted by Yves Smith over at naked capitalism. Grove, former CEO at Intel, explains why we don’t make jobs here in America anymore, the ramifications of that, and suggests some solutions that will make the Kudlows of the world recoil in horror.
The start-up companies that get all the venture capital, he notes quite plainly, and which the business and political classes lavish praise upon as the great creators of jobs, aren’t creating jobs. A mythology has risen around companies like Intel and Apple; but Apple employs ten times as many people in Asia as it does here. Well, that’s a problem:
You could say, as many do, that shipping jobs overseas is no big deal because the high-value work — and much of the profits — remain in the U.S. That may well be so. But what kind of a society are we going to have if it consists of highly paid people doing high-value-added work — and masses of unemployed?