Wednesday, February 16, 2011

A Plan for the Future, Part 2: Looking Forward to Jobs, Fairness and a Better Future for Connecticut.

Our nation and state need a strong plan to move forward to a better future, restore prosperity and begin rebuilding an economy in which our middle class grows and prospers rather than shrinks and struggles.

In Part 1 of this article ("A look at the reasons for our current economic and budget mess."), I discussed the fact that it is outsourcing of middle class American jobs to low-wage countries, and the free-trade regime that promotes it, that is responsible for the economic mess we are in and the resulting budget problems for both the federal and state government. And so, if we are to move to a better future, we must begin reversing the damage caused by the the outsourcing away of middle class jobs.

The strongest possible thing that would advance this would be for the federal government to make our nation's trade policies truly fair, so that Americans do not have to accept poverty wages in order to be "competitive" with sweatshops and slave labor abroad.

But I strongly believe that there are strong policies that our state government can undertake to undercut the damage of outsourcing and free trade and to begin rebuilding our middle class economy. Here are plans that I believe would make a real difference:
  1. Ensure that our state and local budgets are spent to support middle class jobs in Connecticut - stopping outsourcing with our taxpayer dollars. This would seem to be a basic thing, yet a surprising amount of what you pay in taxes ends up outsourced to low-wage employment. This has to stop. That is why I proposed legislation to promote jobs in Connecticut that would:
    1. Withdraw Connecticut from the current state policies that voluntary subject our state purchasing to federal free trade agreements and, instead, change our state policies to require the state and municipalities to purchase from Connecticut companies and workers - with an exception allowing purchases from other states that have laws that protect communities, consumers, the environment and workers at a level similar or superior to our state.
    2. In particular, ensure that companies that the state contracts with to provide health care services must employ people in Connecticut for back-office services, like claims processing and customer service. This would mean no more taxpayer funding to redirect customer service calls to low wage workers in another country.
  2. Take this a step further, with an organized plan to create jobs in Connecticut by deeply examining what our state and local governments buy to make sure than anything that can be made here in Connecticut is, if at all possible. This would work by:
    1. Setting up a process to review current state and municipal procurement practices, to identify opportunities for increasing the use of in-state companies to produce goods and services - especially in the manufacturing of goods.
    2. Ensuring sales for these in-state manufacturers and service providers by requiring state agencies and municipalities to purchase from these in-state companies.
    3. Further increasing sales for these in-state companies by requiring vendors doing more than a certain amount of business with state agencies, quasi-public agencies and municipalities to purchase from the in-state manufacturers and service providers.
  3. To help build the new Connecticut manufacturing created under the plan outlined in step #2, above, as well as to help other Connecticut businesses struggling to find the capital to grow and create jobs, our state should redirect all new investments in public pension funds (and eventually all existing investments) to businesses and community banks here in our own state, rather than in Wall Street.
I will say that none of these ideas is currently being received warmly at the State Capitol. It is hard to convince many politicians that that the way things have been working in our economy is the problem that is causing our economic and budget difficulties and that, therefore, we need to be looking to a new and very different way forward.

But while politicians stuck in the status quo may be uncomfortable with the changes I am proposing, in these tough times, these ideas are pretty basic and common sense:
  • Buying from Connecticut companies and workers with our own taxpayer dollars, instead of from China or other low-wage places.
  • Investing in jobs in Connecticut instead of worldwide.
If we do not buy from Connecticut companies and invest our money in Connecticut businesses, what are we saying about our own state economy? That Connecticut-made goods and services are not good enough? That Connecticut businesses are not worth investing in? That our own state economy is a bad investment?

If we are going to start truly turning things around, we need to start believing in our own state enough so that buying from and investing in Connecticut is not just something we do for pride and self-interest, but because we believe that the things our own neighbors in Connecticut make really are the best.

The ideas I have outlined here are certainly not the only strategies that our state can use to leverage our state's purchasing, public policy and investment power rebuild Connecticut's manufacturing base and state economy. We should, and I certainly will, look for other ways to accomplish this. But the ideas here would be a real start.

I sincerely hope that the federal government will change course and move away from free-trade and other policies that allow or even encourage the outsourcing away of middle-class American jobs to low-wage places. But I do not think that we, as the people of our state, can wait for that to happen. Action is needed now to create jobs, rebuild our middle class economy and start to undo the forty years of damage Wall Street has done to the American dream.

I hope, for the good of generations to come, that the other elected officials in our state government will agree.

Friday, February 11, 2011

A Plan for the Future, Part 1: A look at the reasons for our current economic and budget mess.

The changes going on in our nation and state have been so rapid and devastating that many people, including most elected officials, are in a mode merely to cope with and get through the immediate problems in front of us. But, especially in our present crisis, those immediate problems are not going to truly get better unless we confront the real reasons for our present crisis and the solutions that are needed to build a better future.

It needs to be said. The real problem is outsourcing. The real reason that our economy is in a shambles and, thus, causing the revenue problems for our federal, state and municipal governments, is that Wall Street and the big corporations they run have been undercutting the paychecks of middle class American families by outsourcing to low-wage places in the world.

Sometimes the harm has come from moving jobs from places like Connecticut to low-wage parts of our own country, but the real damage has come from moving jobs to low-wage parts of the world - places where yearly wages are often less than weekly wages in Connecticut, places of sweatshops and debt traps of company housing and stores. Even minimum wage jobs here pay many times more than the sweatshop wages (or, worse slave-labor) such as in China.

This did not just start in 2008 when the recession began. It has been going since the late 1960s in a four-decade run of Wall Street transferring middle class American manufacturing jobs to countries where they can pay a pittance in wages, and then make a killing in profits by selling those products back here at similar prices to what they were charging when middle-class-wage American workers made them.

Over four decades, more and more industrial jobs and more and more of our nation's manufacturing capacity has been (and still is being, by the way) shipped overseas. When our economy was healthy and sustainable, back in the 1960s and before, a quarter of our economic output was in manufacturing. Now it is closer to ten percent, a number that is far too low for a sustainable economy. (Click here to see my previous article on this, "Why the Wall Street crowd wants to blame you for the recession.")

Wall Street kept Americans from objecting to this by telling us that the old, dirty manufacturing jobs were, for Americans, being replaced by shiny, new, service-sector office jobs, in which Americans were to be the brains of the world economy, with people in places like Asia and South America doing all the hard, factory work. But, this was a snake-oil sales job the whole time. The real truth is the middle class American economy, minus most of our manufacturing sector, has been increasingly propped-up over these past four decades by debt - massive quantities of consumer and public debt, which Wall Street was very glad to extend in order to keep in motion their buy-low-wage-abroad, sell-high-price-here corporate profit machine.

In recent years, this snake-oil salesmanship has been laid bare, as, now, those shiny, office, service sector jobs, too, are being outsourced to low wage countries. Big corporations are figuring out ever more creative ways to outsource abroad for lower wages, so much so that it seem that any job can be outsourced. And this belies the starry-eyed notions that, if only we improve ourselves as Americans, make ourselves better educated, better trained, more productive and invest in better research, that we can create new jobs to replace the ones that were outsourced. The hard truth is that any new jobs that replace the outsourced jobs will likely also be outsourced to low wage countries, too.

The cold, hard truth is that corporate outsourcing for lower wages - and the free trade regime that allows it - has been destroying the American middle class. And, if this process is not put in check, our country will become much, much poorer.

The economic collapse in 2008 was not just a cyclical recession, and it was also not just a mess caused by irresponsibly exotic derivatives trading on Wall Street. What really happened in 2008 was the moment when middle class America could no longer be propped-up by the fictional economy maintained by the nation-sized ponzi scheme of debt and derivatives Wall Street had been running. In its place, Americans were suddenly exposed to what an economy looks like after outsourcing most of its productive base to low-wage countries.

And so over the course of the past two-plus years - in the face of massive layoffs, a jobless "recovery" and general pressure to lower wages, salaries, health coverage and pensions - Americans have been making tough household choices about what parts of their own middle class lives they must cut in order to balance their household budgets. And, in this process, it is becoming painfully evident that the things that they are now forced to do without are leaving them at a lower standard of living.

On top of this, those same people are being asked to accept a further reduction in their standard of living in the form of reduced public services from the government. That is because, when political rhetoric gives way to reality, the truth is that most of the people benefiting from public services are the middle class. And so, when politicians elected on a platform of cutting government actually have to do it, they must propose things like cutting Social Security, Medicare and education because the reality is that things like that are most of what "government spending" is.

All-in-all, the result of this reduced standard of living is that people are angry - and justifiably. Unfortunately, thanks to a corporate-owned media that would rather not tell people the real reasons behind the reduction in Americans' standard of living - outsourcing and free trade - there is a lot of diffuse blaming going on, but very little real plans for how to get us out of this mess and toward a better future.

While a lot of the needed solutions are the responsibility of the federal government - like making our international trade laws fair - I truly believe that there are important things that our state government can do to in order to build a better future.

And that is what Part 2 of this article ("Looking Forward to Jobs, Fairness and a Better Future for Connecticut.") is about.