Wednesday, December 24, 2008

Competition gone bezerk

“Companies [today] are competing with everyone from everywhere for everything.” So say the authors of Globality, a new book about the latest phase of globalization. The Economist quotes those words approvingly in its most recent report on globalization, “A Bigger World.”

Both the book and the Economist favor the global economy as it is, not as it should be. They reflect the perspective of a leading economist, N. Gregory Mankow, former chairman of the Council of Economic Advisors. He holds that when you invoke ethics or morality, you leave the economics department and go over to the philosophy department.

Over at LaSalle University in Philadelphia, a professor of economics, David George, has published a fascinating study, "On being ‘competitive’: the evolution of a word." Diligently, he tracks the six-decade-long evolution of “competitive” as the label for a limited characteristic, or idea, into a universal ideal with frequent perverse results. For example:

“Amazingly, the firm that is least able to be described as ‘competitive’ by the old definition (a single firm in a sea of many firms) now is most able to be described as ‘competitive’ under the new definition (a victorious or most [competitive] firm).”

Most significantly, George shows that "competitiveness" has acquired an excessively high positive value in the business and the public mind. This poses a serious temptation to the Obama administration as a priority goal of its global economic policy. If Obama succumbs, he would be continuing the disastrous policies of the Bush administration.

Let’s leave the world of Real-World Economics Review, where George’s study appears, for the real world where the consequences of the new meaning of competitive are often very perverse. What does it mean to be competitive with everyone from everywhere for everything? When unfettered competition drives economic policy?

It means, as some Southern senators have proposed, cutting the wages of Detroit auto workers to the level of those who work for Japanese-owned non-union plants in the South. It means, too, something that pro-competitive advocates won’t discuss: gradually bringing the wages of all American workers, white- and blue-collar employees, in line with the wages of workers in China and other competitive countries in our bigger world.

But it also means far more than that. American workers cannot be truly competitive until they meet many more conditions of the bigger world, such as:

—cutting or eliminating company health care benefits, a process that has already begun.
—reducing government inspection of labor conditions, another process that is far along.
—trimming private pension plans, also well under way
—eliminating on-job discrimination programs against women and minorities

Those are just a few examples of the consequences of modern competitiveness, of how the “competitive” bandwagon imperils the whole range of human achievements gained (despite stiff resistance) in the United States.

No wonder globalization is in crisis. Competition has gone bezerk.

The sage of Singapore, Lee Kuan Yew, saw it coming. In a special section of the Economist 15 years ago, he predicted what globalization held in store for the United States. “America’s top 10% will enjoy the highest incomes in the world. But the wages of its less-educated citizens will drop to those of workers in the developing countries.”

That trend did not disturb Lee, a self-confessed social Darwinist. He and his government vigorously opposed any global regulation that would, for example, put limits on employing under-age boys and girls full time in factories.

Pope John Paul II extolled a different approach. In an address to more than 200,000 people on May Day eight years ago, he declared: “Globalization is a reality present today in every area of human life, but it is a reality which must be managed wisely. Solidarity too must become globalized.”

Which brand of globalization will the Obama administration follow? I wish I knew.

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Saturday, December 13, 2008

Corruption in politics and in business

Reflecting on the stranger-than-fiction scandal in the Illinois governor’s office, Virginia’s political scientist/philosopher, Larry Sabato, published this comment on his Website two days ago:

A system of government or politics can be at least as corrupting as human nature itself. We have studied politicians in close proximity for years, and as much as it may disappoint the cynics, we have not found politicians to be venal as a class. While there are a number of individual exceptions, most professional politicians, especially those already in public office, want to do good or seek to do the right thing, if doing good is an option that does not result in their political demise.

However, if the "normal and customary" practices of campaigning engaged in both parties are seedy, and if a candidate believes "everybody's doing it, and if I don't do it, I may lose," then most politicians will suspend their ethical codes. They will willingly accept a distasteful means that ensures what they regard as the good and essential end of their continued power. In other words, otherwise ethical people are put at a disadvantage by a corrupting system and almost forced to do unto others as they are being done to.

Strict ethicists will correctly argue that the truly honorable person would not stoop to conquer, whatever the provocation. Yet reasonable reformers must keep in mind that the professional politician has a "power gene" in his or her genetic code that overrides all usual inhibitions to achieve victory or maintain power--and genetic engineering, however advanced it may become, will never be able to change that reality.

That analyis, first published in 1996 in Dirty Little Secrets, which Sabato co-authored with Glenn Simpson, is relevant today beyond the political scene.. Reread those paragraphs with business people replacing politicians. And change the kind of DNA involved: replace victory or maintain power with competitive drive.

After making those changes, you have a pretty good insight into today’s Wall Street scandals and how unregulated competition corrupted even many otherwise ethical people.

But the Sabato/Simpson closing sentence above is too pessimistic. Serious time behind bars can be a great deterrent, if seriously applied to enough guilty politicians and business people.

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Monday, December 08, 2008

The global durability of sweatshops – II

Life for garment workers in Bangladesh is a daily struggle for survival. A 2006 study by a British human rights group, War on Want, documented the “shameful” labor conditions at six factories producing clothes for three leading British retail chains. Now, a new War on Want study finds that nothing has changed in two years. Still the order of the day at those factories are extremely low wages, poor working conditions, arduous hours (up to 80 a week), and a “fierce” management opposition to unions.

“In fact,” says John Hilary, executive director of the War on Want, “given the damaging effects of the global food crisis, workers are now in an even worse position than they were before.”

Two of the retailers, Tesco and Asda, were founding members of the Ethical Trading Initiative, set up 10 years by companies, NGOs, and unions to improve labor conditions. The largest of the three, Primark, joined in 2006. In a press statement, Primark called the latest charges unsubstantiated and claimed that the practices of its suppliers are continually audited.

The new report, “Fashion Victims II,” criticizes the government and the retailers for relying on “the voluntary approach of ‘corporate social responsibility’” as the answer to sweatshops. Now War on Want insists that it is time “to stop companies from using sweatshop labor” by passing legislation regulating the operations of United Kingdom companies both in the UK and abroad.

War on Want’s Website supplies a sample letter to Members of Parliament urging them “to regulate UK companies and allow workers to seek justice in the UK.” In the United States, it is time to send the same letter, with Americanized changes, to members of both Houses of Congress and to the White House.

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Wednesday, December 03, 2008

The global durability of sweatshops

Even after 15 years of antisweatshop campaigns and corporate social responsibility programs, sweatshops are still alive and well throughout the global economy, both in developing and developed countries. So says Garrett Brown, a health and safety expert who speaks from the perspective of a California state OSHA inspector and a coordinator of worker rights projects in Mexico, Central America, Indonesia, and China since 1993.

Brown made that assessment last month in an address to a conference of industrial hygienists in Tampa, Florida. Although he focused on the state of on-the-job health and safety, he also presented an overview of how workers are faring in today’s global production and distribution system. Among the specifics he cited were these:

—Most factories in the global system have a constantly shifting work force. In China, for example, “good” factories have annual turnover rates of 35-40 percent; “bad” factories have turnover rates of 90 percent or more.

—China’s contract factories often have two worksites: a “trophy factory,” clean, well lit, and code compliant for the benefit of visiting clients and monitors, and the “shadow factory” nearby where production actually occurs under sweatshop conditions, outside the purview of monitors or government inspectors.

—Another way used to game the system, in China and elsewhere, is to maintain three different books on financial accounting and the wages and hours of worker: one for internal use only, one for the government, and one set for outside monitors of compliance with codes of conduct. Some large factories producing for (say) four international brands may provide four separate books, each customized for the code of conduct requirements of the specific clients.

Even “high road” employers, the minority with corporate social responsibility (CSR) programs, have made only slight improvements in their treatment of workers, according to Brown. He blames their “schizophrenic” business model of trying to maximize implementation of codes of conduct while also exerting pressures to minimize production costs.

In his Tampa talk on November 10, Brown described this schizoid scenario as typical:

On Tuesday. a brand’s CSR staffers lecture the factory manager to obey all the country’s labor laws and regulations and to meet old and new requirements of the brand’s code of conduct, or else—. On Thursday, the brand’s buyers tell the manager to maintain the same product quality while requiring him to cut contract costs by x percent this year and by xx percent the next, or else—.
The main purpose of Brown’s presentation was to encourage occupational health professionals to be educators and advocates to improve health and safety in the global supply chains.

“Industrial hygienists,” he said, “can take the lead in this effort within our own companies, especially transnational corporations with global supply chains; within our professional associations; as citizens, constituents, and consumers; and as champions of a ‘big picture’ perspective and a pro-worker approach.”

The Website of the Maquiladora Health & Safety Network, which Brown coordinates, has the full text of his Tampa presentation at, as well as a wealth of other information on the global production system and the need to reform it.

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