"Why are America’s two economies going in opposite directions?
His view of course, if you know much about him, is that the solution to this, if there is one, is entirely regulatory. We could for example have a more progressive tax system, spend more on education, discourage offshoring, and create a non-offshorable green energy industry.Two reasons:
First, big profits are coming from overseas sales of goods and services made abroad, not here. The world’s fastest-growing markets are China and India, whose inhabitants are eager to buy “American” products, and just as eager to work for the American companies that sell them. The U.S. market is barely moving.
Increasingly, American corporations are able to extract healthy gains from their global operations without adding much in the United States except executive talent.
Second, American businesses are boosting productivity by having U.S. employees do more work for less pay. According to the Bureau of Labor Statistics, between the third quarter of 2009 and the third quarter of 2010, productivity rose 2.5 percent, output increased 4.1 percent, the number of hours worked was up 1.6 percent, and unit labor costs dropped by 1.9 percent.In other words, American workers are losing even more bargaining power as a sizeable chunk of corporate profit goes into software and digital equipment that can do what people used to do – but more cheaply."
But is there anything the private sector can (and should) do about this on its own? I should think so.
Trouble is, big U.S. corporations tend to think less and less of themselves as American, with any implied moral obligations to this, or any particular nation. For they are "multinationals." No matter that most all relied on this country in order to get where they are today. And that their executive classes, as Reich points out, are still very much based in the U.S.
It would seem, as I have argued here, that it would be irrational (or merely unethical) for the U.S. government not to enact policies to stem this tide in the interest if its citizens--and for those citizens to continue supporting policies that work in this way against them. Unfortunately, if the current congressional stalemate is any indication, irrationality in the citizenry abounds.
Still, while virtue is its own reward and tends to pay off in the end, shortsightedness pays off right now. So without a government willing to help level the playing field at least a bit by encouraging good corporate samaritans and discouraging bad corporate samaritans, little can be done to stem this (or any) societal hemorrhage.