China Manufacturers Survive by Moving to Asian Neighbors

In a corner of a sprawling factory in this coastal southern city, sewing machines that stitched blouses and shirts for Lever Style Inc.’s clients now gather dust. As the din on the factory floor has dropped, so, too, has the payroll. Over the past two years, Lever Style’s employee count in China has declined by one-third to 5,000 workers.

The company in April began moving apparel production for Japanese retail chain Uniqlo to Vietnam, where wages can be half those in China. Lever Style also is testing a shift to India for U.S. department-store chain Nordstrom Inc. JWN -0.78% and moving production for other customers.

It’s a matter of survival. After a decade of nearly 20% annual wage increases in China, Lever Style says it can no longer make money here.

First in a Series: China’s Changing Work Force

Thomas Lee for The Wall Street JournalA board shows workers’ statuses at each production line at Lever Style’s factory in Shenzhen, China.

“Operating in Southern China is a break-even proposition at best,” says Stanley Szeto, a former investment banker who took over the family business from his father in 2000.

Companies from leather-goods chainCoach Inc. COH -1.05% to clogs makerCrocs Inc. CROX -1.25% also are shifting some manufacturing to other countries as the onetime factory to the world becomes less competitive because of sharply rising wages and a persistent labor shortage. The moves allow the companies to keep consumer prices in check, although competition for labor in places such as Vietnam and Cambodia is pushing up wages in those countries as well.

At Crocs, 65% of its colorful shoes are expected to be made in China this year through third-party manufacturers, down from 80% last year. Coach will reduce its overall production in China to about 50% by 2015 from more than 80% in 2011 so the handbag maker isn’t too reliant on one country, a spokeswoman says.

Manufacturing companies are bypassing China and moving factories to cheaper locales in Southeast Asia. Lever Style’s Stanley Szeto explains why his company is gradually moving production to Vietnam and Indonesia.

Some migration of apparel manufacturing from China is expected, and even encouraged by the government, as the country’s economy matures. As other Asian nations become efficient at mass manufacturing, China must embrace research and high-technology production to transform its economy as South Korea and Japan once did. But healthy economic growth requires that China expand its service sector and create higher-skilled manufacturing jobs at a rapid clip to compensate.

“If costs continue to rise, but China is unable to become more innovative or develop home-grown technologies, then the jobs that move offshore won’t be replaced by anything,” says Andrew Polk, a Beijing-based economist for the Conference Board, a research group for big American and European companies.

Changes Under Way in China

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Thomas Lee for The Wall Street JournalCheng Pei Quan is a winner of the ‘Sweing Olympics’ at a factory. Manufacturers are looking beyond bonuses to retain workers and boost production in China.

China continues to be the developing world’s largest recipient of foreign direct investment, attracting $112 billion last year. But that was down 3.7% from a year earlier. And exports still are rising in the double-digit percentages. Growth is slowing.

Here in the manufacturing hub of Guangdong province, Lever Style’s factories provide a glimpse into the future of China’s apparel industry.

The company, which is based in Hong Kong, used to manufacture its clients’ clothing at three factories in China. But rising labor costs have forced the apparel maker for Armani Collezioni, John Varvatos and Hugo Boss to focus on what it does best: helping clients develop clothing while the company outsources a growing part of production.

In five years, Lever Style expects about 80% of its production to be outsourced to factories it manages throughout Asia, and half its clothing to be made outside China.

As it shifts production to Vietnam, Lever Style says it is able to offer clients a discount of up to 10% per garment. That is attractive to U.S. retailers, whose profit margins average 1% to 2%, according to the U.S.-based National Retail Federation.

This shift is already well under way. Lever Style expects that a few years from now, 40% of the clothes it makes for Uniqlo, one of Lever Style’s biggest customers, will come from Vietnam and 60% from China.

As China production slows for Uniqlo and other clients, Lever Style plans to return one factory here to the landlord and consolidate its shrinking workforce at the other two.

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Uniqlo, the biggest apparel chain in Asia, says it makes 70% of its clothing in China but would like to cut its production in the country to two-thirds, mainly to reduce costs. A spokesman for parent company Fast Retailing Co.9983.TO -1.81% says the retailer has an “ongoing dialogue” with contract manufacturers of its 70 factories world-wide about where to produce its clothing.

Nordstrom, which works with 450 factories in nearly 40 countries, says cost is important but so are product quality and factory working conditions. The company hasn’t seen a “material change” in how much of its apparel is being made in China in recent years, a spokesman says.

Many retailers are less concerned about where a product is made than about price, delivery and quality, says Lever Style’s Mr. Szeto.

Still, he says, while China’s transformation of its economy is “the right move for the country, I see this as a huge challenge for us as a company.”

 

SHENZHEN, China—Kathy Chu, May1, 2013

 

Ratio of Pay: CEO compared to Average Workers

If we do not make the difference between people who earn more than those who earn less, be reasonable. Then the economic world, businesses or jobs will be chaos, for most people, where injustice, selfishness, greed and arrogance is something considered normal executive.

There should be a limit on earnings regardless one has several professional degrees or doctorates at Harvard.

 

We pay fair wages to all workers, without exception, according to the cost of living in the country, where human dignity is quantified.

In this way we will have a better world, a more just and where justice, peace and social solidarity is normal.

Also make sure that the domestic market is positive. Be Sure that most people will have some money left over to use it to make purchases of various products or services. Otherwise only a small group will do it and many companies or businesses will have to close its doors.

See You.

CTsT

 

Poorest Americans give much more to charity than rich

When Mort Zuckerman, the New York City real-estate and media mogul, lavished $200 million on Columbia University in December to endow the Mortimer B. Zuckerman Mind Brain Behavior Institute, he did so with fanfare suitable to the occasion: the press conference was attended by two Nobel laureates, the president of the university, the mayor, and journalists from some of New York’s major media outlets.

 

Many of the 12 other individual charitable gifts that topped $100 million in the U.S. last year were showered with similar attention: $150 million from Carl Icahn to the Mount Sinai School of Medicine, $125 million from Phil Knight to the Oregon Health & Science University, and $300 million from Paul Allen to the Allen Institute for Brain Science in Seattle, among them. If you scanned the press releases, or drove past the many university buildings, symphony halls, institutes, and stadiums named for their benefactors, or for that matter read the histories of grand giving by the Rockefellers, Carnegies, Stanfords, and Dukes, you would be forgiven for thinking that the story of charity in this country is a story of epic generosity on the part of the American rich.

It is not. One of the most surprising, and perhaps confounding, facts of charity in America is that the people who can least afford to give are the ones who donate the greatest percentage of their income. In 2011, the wealthiest Americans—those with earnings in the top 20 percent—contributed on average 1.3 percent of their income to charity. By comparison, Americans at the base of the income pyramid—those in the bottom 20 percent—donated 3.2 percent of their income. The relative generosity of lower-income Americans is accentuated by the fact that, unlike middle-class and wealthy donors, most of them cannot take advantage of the charitable tax deduction, because they do not itemize deductions on their income-tax returns.

But why? Lower-income Americans are presumably no more intrinsically generous (or “prosocial,” as the sociologists say) than anyone else. However, some experts have speculated that the wealthy may be less generous—that the personal drive to accumulate wealth may be inconsistent with the idea of communal support. Last year, Paul Piff, a psychologist at UC Berkeley, published research that correlated wealth with an increase in unethical behavior: “While having money doesn’t necessarily make anybody anything,” Piff later told New York magazine, “the rich are way more likely to prioritize their own self-interests above the interests of other people.” They are, he continued, “more likely to exhibit characteristics that we would stereotypically associate with, say, assholes.” Colorful statements aside, Piff’s research on the giving habits of different social classes—while not directly refuting the asshole theory—suggests that other, more complex factors are at work. In a series of controlled experiments, lower-income people and people who identified themselves as being on a relatively low social rung were consistently more generous with limited goods than upper-class participants were. Notably, though, when both groups were exposed to a sympathy-eliciting video on child poverty, the compassion of the wealthier group began to rise, and the groups’ willingness to help others became almost identical.

Last year, not one of the top 50 individual charitable gifts went to a social-service organization or to a charity that principally serves the poor and the dispossessed.

If Piff’s research suggests that exposure to need drives generous behavior, could it be that the isolation of wealthy Americans from those in need is a cause of their relative stinginess? Patrick Rooney, the associate dean at the Indiana University School of Philanthropy, told me that greater exposure to and identification with the challenges of meeting basic needs may create “higher empathy” among lower-income donors. His view is supported by a recent study by The Chronicle of Philanthropy, in which researchers analyzed giving habits across all American ZIP codes. Consistent with previous studies, they found that less affluent ZIP codes gave relatively more. Around Washington, D.C., for instance, middle- and lower-income neighborhoods, such as Suitland and Capitol Heights in Prince George’s County, Maryland, gave proportionally more than the tony neighborhoods of Bethesda, Maryland, and McLean, Virginia. But the researchers also found something else: differences in behavior among wealthy households, depending on the type of neighborhood they lived in. Wealthy people who lived in homogeneously affluent areas—areas where more than 40 percent of households earned at least $200,000 a year—were less generous than comparably wealthy people who lived in more socioeconomically diverse surroundings. It seems that insulation from people in need may dampen the charitable impulse.

 

 

Wealth affects not only how much money is given but to whom it is given. The poor tend to give to religious organizations and social-service charities, while the wealthy prefer to support colleges and universities, arts organizations, and museums. Of the 50 largest individual gifts to public charities in 2012, 34 went to educational institutions, the vast majority of them colleges and universities, like Harvard, Columbia, and Berkeley, that cater to the nation’s and the world’s elite. Museums and arts organizations such as the Metropolitan Museum of Art received nine of these major gifts, with the remaining donations spread among medical facilities and fashionable charities like the Central Park Conservancy. Not a single one of them went to a social-service organization or to a charity that principally serves the poor and the dispossessed. More gifts in this group went to elite prep schools (one, to the Hackley School in Tarrytown, New York) than to any of our nation’s largest social-service organizations, including United Way, the Salvation Army, and Feeding America (which got, among them, zero).

Underlying our charity system—and our tax code—is the premise that individuals will make better decisions regarding social investments than will our representative government. Other developed countries have a very different arrangement, with significantly higher individual tax rates and stronger social safety nets, and significantly lower charitable-contribution rates. We have always made a virtue of individual philanthropy, and Americans tend to see our large, independent charitable sector as crucial to our country’s public spirit. There is much to admire in our approach to charity, such as the social capital that is built by individual participation and volunteerism. But our charity system is also fundamentally regressive, and works in favor of the institutions of the elite. The pity is, most people still likely believe that, as Michael Bloomberg once said, “there’s a connection between being generous and being successful.” There is a connection, but probably not the one we have supposed.

 

By Ken Stern’s book, With Charity for All: Why Charities Are Failing and a Better Way to Give, was published in February 2013

 

Senator: Should hourly minimum wage be $22?

Elizabeth Warren said that a much higher baseline would be appropriate if wages were tied to productivity gains.

Digital Vision-Getty Images-Getty Images

What if U.S. workers were paid more as the nation’s productivity increased?
If we had adopted that policy decades ago, the minimum wage would now be about $22 an hour, said Sen. Elizabeth Warren (D-Mass.) last week. Warren was speaking at a hearing held by the Senate’s Committee on Health, Education, Labor and Pensions.

Warren was talking to Arindrajit Dube, a University of Massachusetts Amherst professor who has studied the issue of minimum wage. “With a minimum wage of $7.25 an hour, what happened to the other $14.75?” she asked Dube. “It sure didn’t go to the worker.”

The $22 minimum wage Warren referred to came from a 2012 study from the Center for Economic and Policy Research. It said that the minimum wage would have hit $21.72 an hour last year if it had been tied to the increases seen in worker productivity since 1968. Even if the minimum wage got only one-fourth the pickup as the rate of productivity, it would now be $12.25 an hour instead of $7.25.

Some of the news media took this to mean that Warren is calling for a minimum-wage increase to $22 an hour. That doesn’t appear to be the case. She seems to be merely pointing out that the minimum wage has grown more slowly than other facets of the economy.

Warren is taking some hits on Twitter for her comments. One user describes her as “clueless and out of touch” while another calls her “delusional.” But other users are praising her arguments as “compelling,” saying she is “asking the right questions regarding minimum wage.”

By Kim  Peterson

 

Why young Americans are getting poorer

Folks ages 29 to 37 have watched their net worth plummet over the past few decades, and there are several reasons.

Even after a damaging economic crisis and recession, some American households are recovering nicely. If you’re 47 years old or older, you’ve actually done pretty well in the past few decades.
But younger generations are just getting poorer, according to a new study from the Urban Institute. People younger than 47 just haven’t been able to accumulate much money or build up their net worth through homebuying or other investments.
The authors looked at how Americans’ average net worth has changed from 1983 through 2010 and found a dramatic difference between older and younger generations.
Those 56 to 64 and those older than 74 more than doubled their net worth, with gains of 120% and 149%, respectively. The picture was still rosy for those 47 to 55 and 65 to 73, with a rise in net worth of 76% and 79%.
But all that progress comes to a halt with younger generations. Those 38 to 46 saw their net worth rise by just 26%, and those 29 to 37 saw their net worth drop by 21%.
Why are young people getting left behind? One of the study’s authors, Gene Steuerle, says there are several factors:
The housing bubble. Younger homeowners were more likely to have the steepest mortgage balances and the least home equity built up. Consider a home that fell in value by 20%, Steuerle writes. A younger owner with only 20% equity would see a 100% drop in housing net worth, but an older owner with the mortgage paid off would see only a 20% drop.
The stock market. Older investors were more likely to invest in bonds and other assets that have recovered or gone up in value since the Great Recession.
Lower employment. Younger Americans are seeing higher unemployment rates. They’re also seeing lower relative minimum wages.
Less savings. Younger people are seeing a bigger cut of their pay taken out to pay for Social Security and health care.
“Maybe, more than just maybe, it’s time to think about investing in the young,” Steuerle writes.

By Kim Peterson

 

We’re No. 1(1)!

I want to share a couple of articles I recently came across that, I believe, speak to the core of what ails America today but is too little discussed. The first was in Newsweek under the ironic headline “We’re No. 11!” The piece, by Michael Hirsh, went on to say: “Has the United States lost its oomph as a superpower? Even President Obama isn’t immune from the gloom. ‘Americans won’t settle for No. 2!’ Obama shouted at one political rally in early August. How about No. 11? That’s where the U.S.A. ranks in Newsweek’s list of the 100 best countries in the world, not even in the top 10.”

The second piece, which could have been called “Why We’re No. 11,” was by the Washington Post economics columnist Robert Samuelson. Why, he asked, have we spent so much money on school reform in America and have so little to show for it in terms of scalable solutions that produce better student test scores? Maybe, he answered, it is not just because of bad teachers, weak principals or selfish unions.

“The larger cause of failure is almost unmentionable: shrunken student motivation,” wrote Samuelson. “Students, after all, have to do the work. If they aren’t motivated, even capable teachers may fail. Motivation comes from many sources: curiosity and ambition; parental expectations; the desire to get into a ‘good’ college; inspiring or intimidating teachers; peer pressure. The unstated assumption of much school ‘reform’ is that if students aren’t motivated, it’s mainly the fault of schools and teachers.” Wrong, he said. “Motivation is weak because more students (of all races and economic classes, let it be added) don’t like school, don’t work hard and don’t do well. In a 2008 survey of public high school teachers, 21 percent judged student absenteeism a serious problem; 29 percent cited ‘student apathy.’ ”

There is a lot to Samuelson’s point — and it is a microcosm of a larger problem we have not faced honestly as we have dug out of this recession: We had a values breakdown — a national epidemic of get-rich-quickism and something-for-nothingism. Wall Street may have been dealing the dope, but our lawmakers encouraged it. And far too many of us were happy to buy the dot-com and subprime crack for quick prosperity highs.

Ask yourself: What made our Greatest Generation great? First, the problems they faced were huge, merciless and inescapable: the Depression, Nazism and Soviet Communism. Second, the Greatest Generation’s leaders were never afraid to ask Americans to sacrifice. Third, that generation was ready to sacrifice, and pull together, for the good of the country. And fourth, because they were ready to do hard things, they earned global leadership the only way you can, by saying: “Follow me.”

Contrast that with the Baby Boomer Generation. Our big problems are unfolding incrementally — the decline in U.S. education, competitiveness and infrastructure, as well as oil addiction and climate change. Our generation’s leaders never dare utter the word “sacrifice.” All solutions must be painless. Which drug would you like? A stimulus from Democrats or a tax cut from Republicans? A national energy policy? Too hard. For a decade we sent our best minds not to make computer chips in Silicon Valley but to make poker chips on Wall Street, while telling ourselves we could have the American dream — a home — without saving and investing, for nothing down and nothing to pay for two years. Our leadership message to the world (except for our brave soldiers): “After you.”

So much of today’s debate between the two parties, notes David Rothkopf, a Carnegie Endowment visiting scholar, “is about assigning blame rather than assuming responsibility. It’s a contest to see who can give away more at precisely the time they should be asking more of the American people.”
Rothkopf and I agreed that we would get excited about U.S. politics when our national debate is between Democrats and Republicans who start by acknowledging that we can’t cut deficits without both tax increases and spending cuts — and then debate which ones and when — who acknowledge that we can’t compete unless we demand more of our students — and then debate longer school days versus school years — who acknowledge that bad parents who don’t read to their kids and do indulge them with video games are as responsible for poor test scores as bad teachers — and debate what to do about that.

Who will tell the people? China and India have been catching up to America not only via cheap labor and currencies. They are catching us because they now have free markets like we do, education like we do, access to capital and technology like we do, but, most importantly, values like our Greatest Generation had. That is, a willingness to postpone gratification, invest for the future, work harder than the next guy and hold their kids to the highest expectations.

In a flat world where everyone has access to everything, values matter more than ever. Right now the Hindus and Confucians have more Protestant ethics than we do, and as long as that is the case we’ll be No. 11!

By THOMAS L. FRIEDMAN (September 11, 2010)

 

Graphic Humor 161

 

Electronics Maker Promises Review After Suicides

SHENZHEN, China — There were bows and an apology from Terry Gou, one of the richest men in Asia and chairman of Foxconn Technology.

With about 800,000 Chinese employees, revenue of about $60 billion a year and a reputation for military-style efficiency, Foxconn is possibly the world’s biggest electronics maker. It is now also the focus of criticism and troubling questions about a wave of suicides among its workers at a pair of factories here that serve as major suppliers to global brands like Apple, Dell and Hewlett-Packard.
Sensing a public relations fiasco and facing questions from Foxconn suppliers, Mr. Gou traveled here Wednesday from Taiwan on what company executives said was an emergency trip. As part of a hastily assembled, carefully orchestrated news conference and tour led by Mr. Gou, Foxconn executives defended their labor practices, even as they vowed to do everything possible to prevent more young people from taking their own lives.

The company also presented a panel of mental health professionals to discuss the likely causes of suicide in China generally. At least one of the panelists placed the blame on social issues in the country beyond Foxconn’s control.
And perhaps in a sign of desperation, the company said it had even begun putting safety nets up on factory buildings to deter suicide attempts. (Not soon enough in at least one case, apparently. Hours after the news conference, another Foxconn employee fell to his death from one of the complex’s buildings, according to the official news agency Xinhua. It was not immediately known whether the death was an accident or suicide.)

“We’re reviewing everything,” said Mr. Gou, whose Taiwanese company controls Foxconn Technology, which operates two sprawling factories here with about 420,000 employees.
“We will leave no stone unturned and we’ll make sure to find a way to reduce these suicide tendencies,” Mr. Gou said.
Apple, Dell and Hewlett-Packard, whose own corporate images are at risk from the suicides, say they, too, are now investigating conditions at Foxconn.
Mr. Gou, the 59-year-old founder of Foxconn and its parent company, the Hon Hai Group, sought to calm growing concerns that Foxconn’s labor practices and highly regimented operations were to blame for the rash of suicides on its two Shenzhen campuses this year.
The most recent confirmed suicide took place early Tuesday, when a 19-year-old employee fell to his death here. It was the ninth suicide this year at one of Foxconn’s two Shenzhen campuses, police said. Another two workers survived suicide attempts but suffered serious injuries.
In an interview Wednesday, Steve Dowling, an Apple spokesman, said that his company was “saddened and upset” by the suicides and that Apple was determined to ensure that Foxconn workers were treated with respect and dignity. Apple, whose popular iPod is among the products made by Foxconn, has conducted labor audits of the company in the past and sought improvements.

But questions about Foxconn’s labor practices have lingered. At a separate news conference late Wednesday, Shenzhen city officials suggested that the company was partly to blame for the accidents, although they offered few details.
And several labor rights groups are calling for an independent investigation into the deaths and labor practices at Foxconn. Workers are paid about $32 for a regular 40-hour workweek, which is above minimum wage in the area, and often seek to work large amounts of overtime.
“Foxconn’s production line system is designed so well that no worker will rest even one second during work; they make sure you’re always busy for every second,” says Li Qiang, executive director of the China Labor Watch, a New York-based labor rights group. “Foxconn only values the enterprise benefits but totally ignores the social benefits.”

Those claims have been bolstered in recent weeks by some of China’s state-run newspapers, which have published a series of sensational reports about the suicides, alongside exposés detailing what they claim are the harsh conditions inside Foxconn factories.
Some articles have described the company’s authoritarian management style, the heavy burdens workers face in trying to meet Foxconn production quotas. Others say the company has cramped dormitories that sometimes house 10 to a room.
But at Wednesday’s press conference, Foxconn executives extolled Shenzhen campus amenities that they said included modern dormitories, swimming pools and other recreational facilities. The company also said it had regularly passed stringent social audits conducted by Apple and other major customers, although some of those audits have cited labor infractions.

And while executives acknowledged a sharp rise in the rate of suicides on the Shenzhen campuses this year, they said there was no single or clear-cut cause. They insisted that personal problems and social ills, like the nation’s rising income gap, were largely to blame for the deaths — not the company’s management style.
“There is a fine line between productivity and regimentation and inhumane treatment,” said Louis Woo, a Foxconn executive. “I hope we treat our workers with dignity and respect.”

Foxconn executives say they have invited several groups of sociologists and mental health experts here to study the suicides and offer advice about how to prevent additional deaths.
Jing Jun, a sociology professor at Tsinghua University in Beijing and one of the experts Foxconn invited here, dismissed the idea that the company’s labor practices were to blame. He said the victims were young people, ages 18 to 24, almost all of whom had recently moved to Shenzhen from rural areas. He said he believed they struggled with personal problems and the challenges of adjusting to factory life.

Professor Jing also offered a theory that widespread reports about the earlier suicides at Foxconn this year had created a contagion of copycats, particularly after rumors spread about the high compensation the company was paying some of the victims’ families. Some families had received about 100,000 renminbi, or a little more than $14,600, according to several Foxconn employees.
“We don’t know everything yet, but this almost seems like an infectious disease,” Professor Jing said. “And paying high compensation to some may have played some role.”

Health experts say the suicide figures from Foxconn, while troubling, actually remain far below the national rate of about 14 per 100,000 in China, as calculated by the World Health Organization — a figure that compares to about 11 per 100,000 in the United States. Some independent studies, though, say suicide rates in China are higher than reflected in the health organization’s figures.

In any case, Foxconn has drawn growing scrutiny with the sudden surge in suicides at a pair of factories here that company executives say recently hired about 100,000 workers to help meet growing demand for electronics.
Last year, a 25-year-old worker killed himself after he was accused of stealing an iPhone prototype. In e-mail and text messages to friends, he said he had been beaten by the company’s security officers.
Mr. Gou rarely grants interviews and almost never allows journalists onto the Foxconn campus. But Wednesday he made an unusual show of concern, bowing several times at the news conference and apologizing for the tragedies.

And he promised to scrap recently announced plans to have all employees sign a form acknowledging that their relatives would get only basic, government-mandated compensation — and nothing more generous — if they took their own lives.
The company said it originally released the form, which has been widely criticized here, after consulting with the government, because it was worried that rumors about high compensation was a contributing factor in some of the suicide attempts.
Mr. Gou even led dozens of journalists on a tour of Foxconn’s campus, visiting dormitories, a campus hospital, a production line and a center meant for helping employees with personal problems.

And he appealed to the media to be careful in its coverage of the suicides at Foxconn, which he said could fuel even more suicide attempts.
“I’m appealing to the press to take social responsibility: do not sensationalize this,” he said. But he also said the company was re-examining its own operations. “We can be a better company.”

By DAVID BARBOZA, May 26, 2010
Bao Beibei contributed research.

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Some comments:

This is why pure capitalism doesn’t work! Pure communism doesn’t work and neither does pure socialism. Is there something so wrong with us that we can come up with these philosophies but it’s totally beyond us to use elements of them together to create a more workable solution to globalization. We need to insist that countries that treat their employees inhumanely not be allowed to sell their products in the U.S. Don’t give me cheap anything that’s built by tragically desperate and inhumanely treated people. I don’t want young people suiciding so that I can have cheaper computers. If that’s the choice, I want America to be the country that says “NO” to those companies. And this is why we have unions here in America. The unions that are touted to be socialistic, as if that’s a dirty word. Pure capitalism breeds greed. We need government protection against our own selfish inclinations. Our own country, nay the world, is suffering now because of a lack of oversight against this rampant greed. This is the adolescence of humanity. I hope we can make the leap to maturity before we destroy ourselves.

Shouldn’t the finger be pointed towards the west? Don’t we demand cheap goods? There is always a price to pay, and that price is poverty and misery for the majority of the worlds population…. It’s called Capitalism.
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“There is a fine line between productivity and regimentation and inhumane treatment,” said Louis Woo, an aide to Mr. Gou at Hon Hai

This is an unbelievable thing to say with regard to human beings. There are fine lines between many virtues and vices but not productivity and inhumane treatment!

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Americans have to realize that the relatively low-priced things they heavily consume like electronics and clothes, etc., are financed, in large part, by the misery of workers on the other side of the world existing in near slave-like conditions. Would people of the Western world really rest any easier if many of these workers simply continue to live in sub-human, slavery rather than committing suicide?

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I have studied and taught suicide prevention in China for the past five years. What is special about China and suicide is not the overall rate but the fact that it is high among young people (16-30 years old) and especially among young women. There are some cultural artifacts that influence this but the pace of industrialization and urbanization has introduced new elements to the mix. Compounding the problem is the lethal means used in China (jumping off of buildings, stepping in front of a train, pesticides) and the likelihood that attempts will be completed.

With all that, Fox Conn is a definite evil in all this, interviews with workers there document harsh and inhumane conditions, mandatory overtime (sometimes working 12 hour days for 28 days a month), and failure to make proper payments of wages and social welfare benefits. Taiwanese, Hong Kong and Korean owned factories have the worst reputation for these sorts of abuses and the government and its lackey trade union turn a blind eye, favoring economic growth.

Steve Jobs is a leading victimizer here and any notion of third party certification to protect these workers is fantasy. There are well documented abuses here and Mr. Jobs and all those who idolize his sleek, hip products have blood on their hands. No one can say, “I didn’t know!”

 

Millions of Toyotas Recalled, None in Japan

Feeling her Toyota Mark X station wagon lurch forward at a busy intersection, Masako Sakai slammed on the brakes. But the pedal “had gone limp,” she said. Downshifting didn’t seem to work either.

“I tried everything I could think of,” Mrs. Sakai, 64, said, as she recently recalled the accident that happened six months ago.
Her car surged forward nearly 3,000 feet before slamming into a Mercedes Benz and a taxi, injuring drivers in both those vehicles and breaking Mrs. Sakai’s collarbone.
As shaken as she was by the accident, Mrs. Sakai says she was even more surprised by what happened after. She says that Toyota — from her dealer to headquarters — has not responded to her inquiries, and Japanese authorities have been indifferent to her concerns as a consumer.

Mrs. Sakai says the Tokyo Metropolitan Police urged her to sign a statement saying that she pressed the accelerator by mistake — something she strongly denies. She says the police told her she could have her damaged car back to get it repaired if she made that admission. She declined.
The police say it was a misunderstanding and that they kept her car to carry out their investigation.
But veterans of Japan’s moribund consumer rights movement say that Mrs. Sakai, like many Japanese, is the victim of a Japanese establishment that values Japanese business over Japanese consumers, and the lack of consumer protections here.

“In Japan, there is a phrase: if something smells, put a lid on it,” said Shunkichi Takayama, a Tokyo-based lawyer who has handled complaints related to Toyota vehicles.

Toyota has recalled eight million cars outside Japan because of unexpected acceleration and other problems, but has insisted that there are no systemic problems with its cars sold in Japan. The company recalled the Prius for a brake problem earlier this year.

Critics say many companies benefit from Japan’s weak consumer protections. (The country has only one full-time automobile recall investigator, supported by 15 others on limited contracts.)

In a case in the food industry, a meat processor called Meat Hope collapsed in 2008 after revelations that it had mixed pork, mutton and chicken bits into products falsely labeled as pure ground beef, all under the noses of food inspectors.

A 2006 police inquiry into gas water heaters made by the manufacturer Paloma found that a defect had resulted in the deaths of 21 people over 10 years from carbon monoxide poisoning.

Paloma initially insisted that users had tampered with the heaters’ safety device; the company ultimately admitted that the heaters were at fault — and that executives had been aware of a potential problem for more than a decade. Executives are now being charged with professional negligence, and a court verdict is due in May.
When it comes to cars, the rapid growth of the auto industry here and of car ownership in the 1960s and ’70s was accompanied by a spate of fatal accidents. A consumer movement soon emerged among owners of these defective vehicles.

The most active was the Japan Automobile Consumers Union, led by Fumio Matsuda, a former Nissan engineer often referred to as the Ralph Nader of Japan. But the automakers fought back with a campaign discrediting the activists as dangerous agitators. Mr. Matsuda and his lawyer were soon arrested and charged with blackmail. They fought the charges to Japan’s highest court, but lost.

Now, few people are willing to take on the country’s manufacturers at the risk of arrest, Mr. Matsuda said in a recent interview. “The state sided with the automakers, not the consumers,” he said.

It has become difficult for drivers to access even the most elementary data or details on incidents of auto defects, says Hiroko Isomura, an executive at the National Association of Consumer Specialists and a former adviser to the government on auto recalls. “Unfortunately, the Automobile Consumers Union was shut down,” she said. “No groups like that exist any more.”

For the government to order a recall, it must prove that automobiles do not meet national safety standards, which is difficult to do without the automakers’ cooperation. Most recalls are done on a voluntary basis without government supervision.
An examination of transport ministry records by The New York Times found that at least 99 incidents of unintended acceleration or surge in engine rotation had been reported in Toyotas since 2001, of which 31 resulted in some form of collision.

Critics like Mr. Takayama charge that the number of reports of sudden acceleration in Japan would be bigger if not for the way many automakers in Japan, helped by reticent regulators, have kept such cases out of official statistics, and out of the public eye.
In 2008, about 6,600 accidents and 30 deaths were blamed on drivers of all kinds of vehicles mistakenly pushing the accelerator instead of the brakes, according to the Tokyo-based Institute for Traffic Accident Research and Data Analysis.
But Mr. Takayama has long argued that number includes cases of sudden acceleration. “It has become the norm here to blame the driver in almost any circumstance,” he said.
“Regulators have long accepted the automakers’ assertions at face value,” said Yukiko Seko, a retired lawmaker of the Japan Communist Party who pursued the issue in Parliament in 2002.

The police strongly deny pressuring drivers to accept the blame in any automobile accident. “All investigations into auto accidents are conducted in a fair and transparent way,” the Tokyo Metropolitan Police said in response to an inquiry by The Times.
Figuring out who is really to blame can be hard because of Japan’s lack of investigators.
Japan’s leniency has also meant that automakers here have routinely ignored even some of the safety standards for cars sold in the United States. Until the early 1990s, Japanese cars sold domestically lacked the reinforcing bars in car walls required of all vehicles sold in the United States. Critics say skimping on safety was one way automakers generated profits in Japan to finance their export drive abroad.

A handful of industry critics like Mr. Takayama and Ms. Seko have, over the years, voiced concern over cases of sudden acceleration in Toyota and other cars in Japan. Under scrutiny especially after the introduction of automatic transmission cars in the late 1980s, Toyota recalled five models because a broken solder was found in its electronics system, which could cause unintended acceleration.

In 1988 the government ordered a nationwide study and tests, and urged automakers to introduce a fail-safe system to make sure the brakes always overrode the accelerator. This month, more than 20 years later, Toyota promised to install a brake override system in all its new models.
Meanwhile, Toyota maintains a large share on the Japanese market, with about 30 percent. The Prius gas-electric hybrid remained the top-selling car in Japan in February despite the automaker’s global recalls, figures released Thursday showed.

But Japan’s pro-industry postwar order may be changing.
In 2009, in one of the last administrative moves by the outgoing government, a new consumer affairs agency was set up to better police defective products, unsafe foods and mislabeling.

The new government’s transport minister, Seiji Maehara, has been outspoken against Toyota.
He said last week that he would push to revamp the country’s oversight of the auto industry, including adding more safety investigators. The government has also said it was examining 38 complaints of sudden acceleration in Toyotas reported from 2007 through 2009, as well as 96 cases in cars produced by other automakers.

Toyota continues to deny there are problems with unintended acceleration in Japan.
“Yes, there have been incidents of unintended acceleration in Japan,” Shinichi Sasaki, Toyota’s quality chief, said at a news conference last week. “But we believe we have checked each incident and determined that there was no problem with the car,” he said.
Mrs. Sakai said she has called and visited her Toyota dealer, as well as Toyota Motor itself, but has not received a response.

A Toyota spokeswoman, Mieko Iwasaki, confirmed that the automaker had been contacted about complaints of a crash caused by sudden acceleration in September. She said, however, that she could not divulge details of how the company handled each case.
“We are investigating the accident alongside the police, and are cooperating fully with investigations,” she said. “Anything we find, we will tell the police.”
Makiko Inoue and Yasuko Kamiizumi contributed from Tokyo.

By HIROKO TABUCHI-NYT (TOKYO —March 5, 2010)

 

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When Layoffs Are Immoral

In mid-May, British Global Services announced 15,000 job cuts, while Japan’s Sony continued cutting 16,000 jobs. Here in the U.S., 5.7 million jobs have been lost since the recession began in December 2007. To cite one example, Caterpillar, the heavy equipment manufacturer, is moving to lay off more than 20,000 workers. These days such mass layoffs are sadly unsurprising, but are they ethical?

The Argument
They are not, at least until more benign tactics have been exhausted. Caterpillar may not simply pile a bunch of unwanted workers into a van, drive across town, drop them on the doorstep of a flourishing company, ring the doorbell and run away. (All right: these days there are no flourishing companies, but wouldn’t it be lovely if there were?)
To deprive thousands of people of their livelihood can have a catastrophic effect on them, their families and their communities. For a company to get through a recession, suffering may be unavoidable, but ethical management means minimizing that hardship, spreading the pain equitably and bearing some responsibility for its consequences.

Although the law limits the duties employers have to employees, ethics sets a different standard. Caterpillar’s workers have existed for years — sometimes generations — in profound dependence on the company. (No work, no food.) In accepting and profiting from this relationship, Caterpillar (i.e., its stockholders) incurs moral obligations to those workers. In hard times, it may not simply say: find another job. There are no other jobs, or surely not enough of them.

Mass layoffs relegate people to the status of disposable objects. A company can mothball its welding robots (although I hear the new models can wake themselves up and contact some kind of killer robots of the future who will travel back in time and terminate us all). But people are not machines. Many ethical systems mandate that you do not treat a person like a thing. You must regard other people as full human beings with the same moral rights as you. And that must include the right to make a living.

This is not to assert that Caterpillar can never downsize. Companies must be able to shrink as well as grow, to adjust to changing circumstances. (A restaurant with fewer customers needs fewer waiters.) But prudent staffing must be part of an ongoing strategy, not a panicky response to an economic downturn.
It’s easy to say that some must perish so others can survive, if you are sure to be among the survivors. (It is worth noting that Jim Owens, Caterpillar’s chief executive officer, the person ultimately responsible for these layoffs, made $9.77 million last fiscal year. His total compensation over the past five years is $25.89 million. That’s some comfy survival.)

Before adopting the ethics of the overcrowded lifeboat, before tossing thousands of non-millionaires over the side, gentler — and more equitable — methods must be tried. Everyone’s hours might be reduced, diffusing the pain. Dividends to stockholders can be eliminated. Pay cuts can be instituted company-wide, with the deepest reserved for the highest paid (that is, those most able to endure them). To its credit, Caterpillar has done some of this, trimming some executive pay by up to 50 percent, less for other management and support staff, and offering buyouts to some employees.

(Caterpillar is also to be commended for posting cool videos of its construction gear in action, like this backhoe loader and these wheel excavators. Even more amazing video can be found here, of another sort of caterpillar, the Hickory Horned Devil. It is a wonder of nature, nearly as wondrous as the expression on the face of Motorola’s co-C.E.O. Sanjay Jha. His compensation in 2008? $104 million. In late April, Motorola announced plans to lay off 7,500 people.)

It’s no defense of mass layoffs to argue that the worst effects will be mitigated by the social safety net. Indeed, “safety net” is a misleading analogy, one that evokes individual failure — a tumbling tightrope walker — rather than events over which no single worker, however good her balance (or spangly her costume), has much control.

What’s more, that net is badly frayed, particularly when compared to programs in other advanced industrial democracies, where extended unemployment pay, for example, means laid-off workers can still shop in local stores, keeping the store’s staff on the job and buffering the effects of nationwide downturns.

Benefits vary, but most European countries provide 60 percent to 80 percent of a worker’s lost salary — the average is just over 50 percent in the U.S. — and most ensure that workers and their families preserve their health benefits if they lose their jobs. Even with more generous benefits, mass layoffs would still be a slapdash response to a changing economy, jolting to companies and bruising to workers, their families and their communities. When a C.E.O. is earning tens of millions a year, we can ask for more sophisticated — and humane — management.

If Caterpillar is to relegate legions of employees to the care of the public, it may not simply echo Ebenezer Scrooge: “Are there no prisons? Are there no workhouses? Is there no COBRA?” Instead, it must use its considerable political clout to ensure that those programs are robustly funded, hardly a priority either for Caterpillar or its confreres among the Fortune 500. That is, if Caterpillar is to deprive thousands of people of a livelihood, it must either provide for their basic needs or see that the public can do so. To do neither is to dodge a moral obligation.

* By Randy Cohen May 26, 2009

 

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NEW FUEL EFFICIENCY STANDARDS: TOO MUCH OR NOT ENOUGH?

The Obama administration unveiled a plan to boost fuel efficiency standards for cars and trucks to an average of 35.5 miles per gallon by 2016—four years ahead of current schedule and up from an average of just 25 miles per gallon today.

The new standards (pdf) will also impose—for the first time ever—a limit on greenhouse gas emissions from vehicles at 250 grams per mile in 2016 under the new proposed rule. (That’s about 5.5 ounces per kilometer, for those of you who like your units mixed differently.)

There are very few vehicles capable of meeting the new standards today, which would mean more hybrids and possibly even electric or other alternative vehicles would have to hit the road within seven years for automakers to comply.

“As a result of this agreement, we will save 1.8 billion barrels of oil over the lifetime of the vehicles sold in the next five years,” President Obama said in a Rose Garden speech. In a nod to the concerns of beleaguered carmakers, Obama said, “this rule provides the clear certainty that will allow these companies to plan for a future in which they are building the cars of the 21st century.”

The new standards would avoid tailpipe emissions of 890 million metric tons of greenhouse gases by bringing vehicle emissions down from roughly 400 grams per mile today—the equivalent of taking 177 million cars off the road (more than two-thirds of the entire American auto fleet) or shutting down 194 coal-fired power plants.

In addition, all classes of vehicles—from compact cars to SUVs—will be required to make fuel efficiency improvements: cars will need to go from roughly 27 miles per gallon today to 39 mpg in 2016 whereas trucks jump from roughly 23 mpg to 30 mpg. The program is expected to add roughly $1,300 to the cost of a vehicle, according to administration officials.

The U.S. Environmental Protection Agency (EPA) is also considering creating credits to help meet the standard for the development of additional greenhouse gas control technologies, such as multiplier credits for electric vehicles or plug-in hybrids or additional credits for “solar panels on hybrids, adaptive cruise control, and active aerodynamics,” the proposed rule (pdf) says.

The EPA and the Department of Transportation will team up to craft the details. The rule, if approved, won’t take effect until 2012. The new rule would be a compromise between the administration, the state of California and the auto industry. Carmakers have been waging a legal battle over that state’s tough greenhouse gas emissions from vehicles standards. Under the compromise, California would adopt the federal standards.

“Overall, this bartered resolution confirms the pragmatic approach of the Obama administration to resolving climate change issues,” says lawyer Deborah Schmall of the Paul Hastings law firm, while noting that lawsuits may drag on as the details of the agreement are worked out.

Oh, the fuel savings may be overstated, too, says management professor Richard Larrik of Duke University. He argues that gallons-per-mile is a more relevant measure as it directly corresponds to greenhouse gas emissions.

After all, boosting mileage from 10 to 11 mpg or 33 to 50 mpg saves the same amount of fuel (and therefore CO2 emissions): one gallon of gasoline every 100 miles. “As a nation, they’re asking car drivers to reduce gas consumption by 1.14 gallons per 100 miles and they’re asking truck drivers to reduce gas consumption by 1.02 gallons per 100 miles,” Larrik says. Still, he says, “it’s still a great plan because it is accelerating efficiency gains and because Detroit supports it.”

*  Matteo Natale;  May 19, 2009

 

Wages are falling all across America.

Some of the wage cuts, like the givebacks by Chrysler workers, are the price of federal aid. Others, like the tentative agreement on a salary cut here at The Times, are the result of discussions between employers and their union employees. Still others reflect the brute fact of a weak labor market: workers don’t dare protest when their wages are cut, because they don’t think they can find other jobs.

Whatever the specifics, however, falling wages are a symptom of a sick economy. And they’re a symptom that can make the economy even sicker.

First things first: anecdotes about falling wages are proliferating, but how broad is the phenomenon? The answer is, very.

It’s true that many workers are still getting pay increases. But there are enough pay cuts out there that, according to the Bureau of Labor Statistics, the average cost of employing workers in the private sector rose only two-tenths of a percent in the first quarter of this year — the lowest increase on record. Since the job market is still getting worse, it wouldn’t be at all surprising if overall wages started falling later this year.

But why is that a bad thing? After all, many workers are accepting pay cuts in order to save jobs. What’s wrong with that?

The answer lies in one of those paradoxes that plague our economy right now. We’re suffering from the paradox of thrift: saving is a virtue, but when everyone tries to sharply increase saving at the same time, the effect is a depressed economy. We’re suffering from the paradox of deleveraging: reducing debt and cleaning up balance sheets is good, but when everyone tries to sell off assets and pay down debt at the same time, the result is a financial crisis.

And soon we may be facing the paradox of wages: workers at any one company can help save their jobs by accepting lower wages, but when employers across the economy cut wages at the same time, the result is higher unemployment.

Here’s how the paradox works. Suppose that workers at the XYZ Corporation accept a pay cut. That lets XYZ management cut prices, making its products more competitive. Sales rise, and more workers can keep their jobs. So you might think that wage cuts raise employment — which they do at the level of the individual employer.

But if everyone takes a pay cut, nobody gains a competitive advantage. So there’s no benefit to the economy from lower wages. Meanwhile, the fall in wages can worsen the economy’s problems on other fronts.

In particular, falling wages, and hence falling incomes, worsen the problem of excessive debt: your monthly mortgage payments don’t go down with your paycheck. America came into this crisis with household debt as a percentage of income at its highest level since the 1930s. Families are trying to work that debt down by saving more than they have in a decade — but as wages fall, they’re chasing a moving target. And the rising burden of debt will put downward pressure on consumer spending, keeping the economy depressed.

Things get even worse if businesses and consumers expect wages to fall further in the future. John Maynard Keynes put it clearly, more than 70 years ago: “The effect of an expectation that wages are going to sag by, say, 2 percent in the coming year will be roughly equivalent to the effect of a rise of 2 percent in the amount of interest payable for the same period.” And a rise in the effective interest rate is the last thing this economy needs.

Concern about falling wages isn’t just theory. Japan — where private-sector wages fell an average of more than 1 percent a year from 1997 to 2003 — is an object lesson in how wage deflation can contribute to economic stagnation.

So what should we conclude from the growing evidence of sagging wages in America? Mainly that stabilizing the economy isn’t enough: we need a real recovery.

There has been a lot of talk lately about green shoots and all that, and there are indeed indications that the economic plunge that began last fall may be leveling off. The National Bureau of Economic Research might even declare the recession over later this year.

But the unemployment rate is almost certainly still rising. And all signs point to a terrible job market for many months if not years to come — which is a recipe for continuing wage cuts, which will in turn keep the economy weak.

To break that vicious circle, we basically need more: more stimulus, more decisive action on the banks, more job creation.

Credit where credit is due: President Obama and his economic advisers seem to have steered the economy away from the abyss. But the risk that America will turn into Japan — that we’ll face years of deflation and stagnation — seems, if anything, to be rising.

* By PAUL KRUGMAN (NYT; May 4, 2009)

Now, we can read Some comments:

1)
One big reason for falling wages in the USA seems to be that 90 percent of the rest of the world will do the same job cheaper. As standards of living and technological ability rise in India, China and the rest of the developing world, ours will descend.
— Peter Jaffe, Bangkok, Thailand

2)
Sorry but I don’t think you really explained why cutting wages leads to higher unemployment (“when employers across the economy cut wages at the same time, the result is higher unemployment.”). Surely it can’t be any higher than if wage cuts were not done in the first place? The example of XYZ company does not really explain this so called paradox because you sign off with a statement that is unrelated to the original claim : “Meanwhile, the fall in wages can worsen the economy’s problems on other fronts.”
Fall in wages and deflation seem to be two sides of the same coin to me.
— Girish, San Francisco, CA

3)
Mr. Krugman offers an assessment that we all know but not a real solution because he needs to be politically correct. That is what wins awards and invites to TV shows. Wages are a matter of supply and demand. One can’t demand higher wages when there are a lot of jobless people or foreign workers who will work for less. The decline in wages has been happening for a long time, the burst bubble just accentuated it.

Technology, by design eliminates jobs. So a technological society needs fewer people to run it. In addition, when a job goes overseas, it is not only that job that is lost, but all of the backup and support jobs as well. So between a highly technological society shedding jobs and jobs being lost to outsourcing there is little growth in high end jobs. Then while this has been going on we have had incredible amounts of immigration to finish the American middle class off. Some liberal economists have written that this immigration is unnecessary and that the only new jobs being created by it are service sector jobs to service the growing population. This is the mess we have ourselves in. Does anyone believe we have college graduates working as telemarketers because there is shortage of college graduates. Its a shortage of decent jobs. In a recent comprehensive study by a Wharton Buriness professor and a Stern Business professor it was shown that imported high tech workers lowered the wages by 6% and 2-3% for specific managerial jobs. Union construction workers now comprise less than 20% of the construction industry. High wage Union workers have been replaced by low wage illegal immigrants. This drop in wages has been basically from top to bottom for workers.

What lies ahead is much worse and it is certainly not talked about. We have had consecutive bubbles which have helped mask the problem. Now that the bubble has burst we have excess labor being squeezed out of the system in the form of high unemployment. This unemployment will continue due to the above mentioned conditions. So unless there is another bubble we will have permanent unemployment which means permanent lower wages for those working. Japan is trying to address this problem by giving financial incentives for its foreigners to leave. This is what we should be doing if we want to raise wages. The U.S. Chamber of Commerce, agribusiness and billionaire high tech entrepreneurs may not want to hear this but there is no way that injecting 40 million people into a developed society will be benign.
— John, New York

4)
Job creation is the most urgent problem this nation faces – and it seems to me that Obama’s infrastructure project is a step in the right direction. Many of us in the dying middle class have been laid off and simply cannot find jobs, let alone jobs that pay living wages. So direct stimulus is a band-aid at best, and available credit that cannot be secured or repaid will not buy homes or cars or university educations. Jobs first.

But will corporations ever bring back those outsourced jobs in production, manufacturing, IT, accounting, and customer service? How do we get back to work when there is no work to be had? Are all of us who were project managers, marketers, and PR people irrelevant in a world where engineers, entrepreneurs, innovators and architects are needed?

Maybe the direct stimulus that’s needed is help in getting people back to school to learn real skills that will help America transition to a green, energy independent nation that creates goods and services.
— S.P., Saint Louis

5)
This recession/depression will never end until median wages start to go up. We might achieve some ‘technical’ growth, but the economy will be weak and unstable until there will be wage growth.

What this means is that the depression will go on indefinitely. Why? God forbid we give the median worker a raise.

The median worker hasn’t received a raise since 1974. That’s 35 years. In those thirty five years GNP has gone up 150%.

What that means is that even though productivity has increased 150% – all the rents associated with that increase in productivity has gone to the wealthy – the median worker got nothing. Nothing in 35 years.

What that means is that trillions and trillions of dollars have gone to the “supply side” “1%ers” “investing rich”, year-in and year-out, for decades.

Let me repeat that: Trillions of dollars, year-in and year-out, for decades.

Get that: all the purchasing power is locked up on the ‘supply-side’ of the economy and it is constipated – it is not trickling down. Demand is shrinking in the absolute sense.

(When demand shrinks relative to supply, that means investors can’t make good returns on their investments. Over time that leads to investment bubbles and fraudulent investment schemes – subprime loans, credit card loans, payday loans, ponzi schemes, credit default swaps etc – from investors trying to get a good return on their investments.)

Asset values collapsed because there was no purchasing power left on the demand side of the ledger. This was masked for a long time by the massive borrowing in the economy. Take away the debt and you have collapsing demand, collapsing asset values, and a collapsing economy that can’t turn around.

This economy won’t recover – ever, without wages recovering. This is a simple fact.

Without recovering and then rising wages, the economy is a house of straw – highly unstable and prone to further collapses until it finds a new equilibrium in something like a third world economic status.

The best structural thing that can happen to the economy is we get increased union representation (see “Card Check”). Some CEOs have called ‘card check’ the end of civilization – As if we aren’t already living in a post civilization economy.

Personally, I think a CEO making 400 times the workers salary and getting raises and bonuses even during years when the company loses money – to me that’s the end of civilization.

After we get card check, we need to make some adjustments to our laws on corporate governance.

There’s no way shareholders interests are being served by CEO’s capturing as personal gain so much of the rents that the corporation earns. As a shareholder, if I can’t have those rents, I would rather see it spread around to more employees because that would mean better employees, more stable workforce, higher productivity across the corporation, not just in the executive suite, and would contribute to a more stable over all economy.

Somehow, our corporate laws are not serving shareholders and our labor laws are not serving workers, just CEOs. Things are fowled up on multiple levels.

— Tim_Kane, Mesa, Arizona

6)
This article is incomplete in that it does not mention continued offshoring by our large corporations, including several of the banks now receiving billions in welfare. A recently published study “H-1B Visas, Offshoring, and the Wages of US Information Technology Workers” by Prasanna B. Tambe of New York University – Stern School of Business and Lorin M. Hitt of University of Pennsylvania – The Wharton School aims to dispel “the myth that globalization generates no losers,” the authors state:

Our estimates indicate that H-1B admissions at the current levels are associated with a 5-6% drop in wages for computer programmers and systems analysts. Offshoring appears to lower the wages of a slightly broader class of IT workers, including IT managers, by about 3%. These effects are larger for employees exposed to external labor market forces, such as new graduates or job-hoppers.”

I work in the tech industry and have seen my wages fall in actual terms since the year 2000. In 2004 I made less then in 2000, and I now make less then I did in 2004. I have a MS in Computer Science, speak and write perfect English (I majored in the subject), and was born and raised in the US and am basically an average guy. I spend hundreds of hours a year of personal time reading and programming at home to keep up on new technologies. I develop web sites using http://ASP.NET and C# – I am not some antiquated mainframe developer who has not developed new skills. Yet when I send out resumes to try and find a higher paying job I get few callbacks and when I do they want me to take a paycut and a 3 month contract that MIGHT lead to a job, usually with the promise of a lateral salary at best.

The only silver lining I see about wage cuts is the rest of the country will see what we in the software industry have been experiencing for years – that wage cuts are a very real possibility and there’s no reason why they won’t continue.

— Mike, Kansas City

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