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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