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Harvest America or Invest in America
Many American voters seem ready to run our country as if it were a business.
Some businesses take a long-range growth perspective, and honor all their stakeholders. A country run that way would be OK.
However, other businesses believe their markets are "unattractive," to use the business school expression. If your business is in an unattractive market, your smart business move is to defer investment in new plant and equipment, cut back on worker training, freeze or terminate pensions, reduce R&D, extract as much value from the business as possible, return the cash to shareholders, and dump whatever remains. I wouldn't run a country that way.
For decades, industrialists have looked at America and concluded that our domestic economy was unattractive compared to low-wage alternatives. We don't invest in industrial capacity, we treat our schools as a cost to be minimized rather than a social investment in our children, we terminate pensions, we reduce our investment in infrastructure to a fraction of other countries', and what R&D we fund seems to create jobs in "more attractive" places, outside the United States.
In business school, this is called a harvest strategy. Economists explain that harvest strategies can be good, pruning away the old to make way for the new.
Something like this occurs in biology, when old dead organisms are scavenged by vultures, dung beetles, funguses, larvae, and bacteria. In biology, scavengers are not "good or bad." Scavenging is just something that scavengers do for a living. They don't get paid 400 times the average wage, nor do other biological organisms treat them with great respect.
Over the last few decades, one American industry after another has been harvested -- home electronics, steel, shoes, clothing, household appliances, wood products, textiles, furniture, power tools, televisions, and domestic manufacture of those delightful Apple products, among others.
Companies harvest to please their investors. Harvest automatically "works," since the purpose of a company is to please shareholders. We have mastered the harvest part, where we prune away the old.
We do a poor job of making way for the new. Creating new industrial capacity doesn't just happen, as if by an invisible hand. It happens when we have well-designed public policies.
The purpose of public policy is to invest in the future and raise our standard of living, not harvest the legacy of past generations.
That's one difference between a company and a country. Markets are notoriously short-sighted. Markets under-invest in future growth.
A dynamic, healthy political system would never permit a harvest business strategy into our political life. In America, we have a strong free press, and established institutions of civil society like good public schools, strong unions, respect for science, a strong social safety net, a strong middle class, citizens who are secure in their futures and willing to defend their interests, and effective institutions for the environment, civil rights, women's rights, human rights, and public health. We have strong historical and constitutional values about one-person one-vote and a government responsive to local communities.
Right?
Well, no. That's not right. Quite the opposite.
Economist Jared Bernstein describes a dramatic shift in economic bargaining power as unions declined. State governments in Wisconsin, Ohio, South Carolina, and Indiana insist that unions are still too powerful, and must be diminished further. Unions are one institution of civil society, but why stop there?
Education is underfunded and is distracted by repeated testing and fear of failure, rather than teaching problem-solving and critical thinking. Science is distorted for political purposes, and environmental standards are following wages in the global race to the bottom.
Our free trade policy is a template or blueprint for putting investor interests first, dismantling and sweeping aside civil society. The principles of free trade policy are a tidy match for domestic policies that take us back to the gilded age, where wealthy people bought influence and operated government for their personal profit.
In our "winner take all politics," wealth dominates political process. Political power for the top 1% and top 0.1% has grown in direct proportion to their share of wealth. Near the close of the gilded age, William McKinley's campaign manager said, "There are two things that matter in politics. The first is money. I can't remember the second."
Our top 1% do well, but the rest of us are headed for a Lesser America. Ask any struggling small business owner the Henry Ford question, "Which would you rather have, lower wages or prosperous customers?" They want prosperous customers!
Our problem is political. Civil society has lost political influence to the top 1%.
First, we need to restore a social contract. As Paul Wellstone put it, "We all do better when we all do better."
Second, and equally basic, money is smothering democracy. In the Supreme Court's worst decision in living memory, it gave corporations the judicial breath of life. The Court may feel that way, but no one gave powerful global corporations citizenship. Large multinational corporations don't act like citizens. They feel no obligation to our country, they don't have families or children to provide for, and their values often conflict with values shown by natural people.
Third, serious work has started on a 21st century industrial policy. Like any other policy, we can have good industrial policies or bad ones. We currently have terrible industrial and trade policies. See above. They are harvesting the legacy of previous generations. Japan, Korea, Taiwan, Singapore, Denmark, and Germany found good industrial policies. China's industrial and trade policies are ugly, disturbing but extraordinarily effective. I'm just sayin'.
American industrial and trade policies have performed well at times in our history, and we can do them well, again.
Comments
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7 Comments so far
Show AllThanks Stan,
But how do we get from here to there? How do we get people in office who see "we the people" and our country and our environment as worthy of long-term strategic investment? Or how do we force those in office to do so? The system is so broken, we can't get a single word into what passes for public dialog. Union identification with the Democrats has led us to where we are today: sold out.
How do we get from here to there? Maybe that's your follow-up piece.
bottoms up!
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"Third, serious work has started on a 21st century industrial policy. American industrial and trade policies have performed well at times in our history, and we can do them well, again."
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oops, doctor, you've made so many valid points, but let's not forget that the rearview mirror provides a somewhat distorted image. a twenty-first century policy aimed at recreating or recapturing the past won't work.
1. we tend to glorify the past as if looking through rose colored glasses.
2. even were the good ole days perfect, we cannot expect maggie and brick to exist forever in their high school glory days.
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"The purpose of public policy is to invest in the future and raise our standard of living, not harvest the legacy of past generations".
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okay, you are a rocket scientist and i'm not. wow! you could fly me to the moon, but don't you realize that the expectation for an expanding human population to continuously "raise the standard of living" on a finite plannet is a mathematically flawed concept? perhaps, i misread you, but i feel we should invest in "quality of life" over "quantiy of consumables".
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"Something like this occurs in biology, when old dead organisms are scavenged by vultures, dung beetles, funguses, larvae, and bacteria. In biology, scavengers are not 'good or bad.'."
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yes! the idea of "good and evil" does not exist in Nature; only what works and what doesn't. humans tend to judge "good and bad: in the monetary and subjective sense that if conditons favor me, that's good but i don't have as much material wealth, that's bad. each begins life as a baby, a sapling. larvae or such and developes into a full grown member. in Time, however, that adult begins to fade away to make room for new growth, new life. our vain attempts to exclude humans from the formula have proved our undoing.
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Education is underfunded and is distracted by repeated testing and fear of failure, rather than teaching problem-solving and critical thinking. Science is distorted for political purposes, and environmental standards are following wages in the global race to the bottom.[…] We don't invest in industrial capacity, we treat our schools as a cost to be minimized rather than a social investment in our children, […]
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oh, i agree wholeheartedly that "we treat our schools as a cost to be minimized rather than a social investment in our children". however, i disagree that we should “teach problem-solving and critical thinking ” but rather encourage that innate Natural ability. our attempts to “teach” problem solving presume that future problems will be identical to today’s problems, so teach them the ropes for climbing the corporate ladder and “we’ll live happily ever after”. tomorrow’s adults will face unprecedented environmental challenges. our survival as a species depends on our ability to react to conditions on the ground. earth’s unfathomable bounty has been tapped out. we’ve just about “civilized” life off the face of this planet: collapsing bee hives, melting snow and ice caps, deforestation, desertification, dying coral reefs, massive extinctions in the air, on the land and sea.
one problem is that you don't ask the wolf or the carrion bird if he wants to work with you to create an 'invested America'. I just think that, at some fundamental level, they would know what that would mean (less food for predators).
" Paul Wellstone put it, "We all do better when we all do better." " Actually I think Wellstone got it wrong. The people elevated by our current bought democracy would do worse under an improved social contract. All wealth and power is relative. Our predator-class understands that manufacturing misery can be as useful to them, if not more useful, than manufacturing happiness, since it can increase their relative power and wealth. I just think that, moving forward, we shouldn't be under some illusion that America's descent into 'harvest' mode was accidental. We shouldn't believe that everyone wants an 'invested America'.
"Our problem is political. Civil society has lost political influence to the top 1%.... money is smothering democracy...." Agreed. The crux of the problem is that the predator class has taken over our democracy, and is writing the rules to 'harvest' the 99%. We have to take the democracy back, by agreeing that a Constitutional amendment for rigid campaign finance reform is absolutely necessary. Fix the democracy, make our public servants, servants of the public, once more. Fix that, and everything else, social contract, wealth distribution, healthcare, trade policy, debt policy, will fix itself in time. But, as long as money is calling the shots...
Thank you Stan Sorscher. This is an excellent article; nailing the shortsightedness of most business leaders. But like most of American society, you have overlooked the true cause of the crisis, the lack of the spiritual nature of our humanity within American society.
Business is the businessman’s world. To businessmen, the world of the human spirit does not exist. It is pure Utopia. Thus, in their pursuit for maximum profits, the cost of redeeming values for society are not to be considered part of their formula for “success”.
What has happened is that a corporate consumer culture has robbed Americans of their true spiritual nature. They no longer know what it means to be fully human. That is also why Christianity as a whole has seriously failed to transcend American culture.
Regarding your example of what happens in biology, I would like to quote Paul Hawken in his book Blessed Unrest. Paul Hawken looks at the entire movement from two perspectives: that of “immunity” and that of environment and social justice. “Immunity” uses the cellular metaphor of how an organism defends itself as a plausible way to describe the collective activity of the movement. The terms “environment” and “social justice” encompass innovative organizations that are redolent of ideas and inventive techniques.
“Nature works in cycles and so does a healthy society. A self-correcting system thrives on feedback. The movement is composed of small organizations because it is on the ground with its people at the scene—a scale at which information can be generated and acted upon. At this level, organizations quickly adapt. Mistakes are hidden treasures because we learn from our failures. The opposite of learning is a runaway system where mistakes are relegated to file cabinets and ignored.
When government, corporation, financial institution, or a religious organization insulates itself, its initiatives, however well intended, create uncontrolled outcome and second order effects that generate new problems. The current state of the world reflects a problem solving methodology never seen in nature: remedies from above imposed on the excluded. The movement offers a solution creating methodology from below that is inclusive, a process that mimics biological adaptation and evolution. Every physical activity of the human body sustains is pat of a cycle, biological system with self-correcting bias. The same should be true of every social activity with a system called democracy”
Yes, as economist William Greider often states, there are few problems in the world that cannot be corrected by MORE DEMOCRACY. And I must add, democracy is as much an act of the human spirit as in the practice of religion, but without the threat of a theocracy. And democracy cannot thrive without spiritual discernment of the political issues by democratic society.
I agree with you Stephen except the "more democracy" quote from Greider. Plato recognized in The Republic that democracy always leads to tyranny because to win democratic elections the politician must resort to flattery (now we would call it bribery) so eventually you get a silver tongued demagogue and then a tyrant. We have reached the demagogue stage and soon we will have tyranny.
I would prefer demarchy -- or selection of government by lot. As William F. Buckley, Jr. said, "I'd rather entrust the government of the United States to the first 400 people listed in the Boston telephone directory than to the faculty of Harvard University."
The oligarchs look down on the plebes, but the plebes of today have as much knowledge as the oligarchs. This will cause tremendous unrest as never seen before because TV and the Internet lets everyone in the world know how our "betters" live and we will rise up and smite them.
Tomcarberry: Thanks for your kind comments. In turn, I agree with William F. Buckley, but probably for different reasons.
The spiritual dynamics of democracy have rarely been written about so therefore most people do not understand its potential dynamics. In turn, the U.S. has seldom functioned as an honest democracy, as well as most nations who call themselves a democracy.
But, the Occupy movement throughout the world is a hunger for democracy and it coincides with an emerging higher global consciousness as so eloquently described by Paul Hawken in his book, "Sacred Unrest".
No, I do not think that "the plebes of today have as much knowledge as the oligarchs", but with the current international financial, political turmoil, broken institutions, and the growing occupation movement, never before have the people been so well informed. Those that are democratic activists understand that they "must choose to know". The pottery is now broken, and the light is getting in. The American people have always been tolerant of financial inequality because they always understood that financial success always followed the rules. But that is no longer true, the system is rigged and Wall St. is nothing less than the grand theft of casino capitalism, hedge funds and derivatives in particular.
The practice of democracy must be mainstreamed, purposely taught and talked about in our universities and churches. Presently, our universities train their graduates to only make the "dirty rotten system work", rather than to critique the system through the eyes of democracy and the common good.
If the people are well informed, far beyond the corporate media, as a whole they will be smarter than their leaders. The public must come to conclude that their leaders are corrupted by money, power, and privilege. The people are not, thus they can see more clearly.
On the positive side, the sooner the US economy craters, then the sooner people in villages on the other side of the planet are free of our aggression. We make war and attack other people for the flimsiest of reasons, but basically because we can afford to. As soon as we cannot afford to attack Afghan farmers, Iraqi merchants, Pakistani truckers, then we will stop attacking them. "Harvesting" of US industrial capacity, under-investing in infrastructure, delegitimizing the US government in the eyes of the US people, all of those negatives have a silver lining of weakening the military machine that kills and kills and kills, seemingly without end. During the Potsdam and Yalta talks near the end of WWII, Stalin argued that Germany must be de-industrialized and made into a nation of potato farmers. He said that if Germany has the ability to make metal tables, then they can make Panzer tanks, and when they have Panzer tanks, they attack Russia. Well, the USA is now similar. The world might be a better place if the US economy is reduced to potato farming. At least until we get over our lust for war.