Tornado Alley (PROG)

[StephanieVanbryce]

America has a problem with "equality of opportunity"

What's wrong with us that suddenly we're the nation chugging backwards instead of forward? Uncomfortable question. Uncomfortable answers.

"Here's a strange fact," Thomas Geoghegan writes in the March Harper's (available at this writing only on paper). "Since 2003, it's not China but Germany, that colossus of European socialism, that has either led the world in export sales or at least has been tied for first."

If you look closely enough, Germany seems to have what many believe to be the most productive combination of capitalism and socialism, a system in which capitalism wins by one vote, but just one vote.

Even as we in the United States fall more deeply into the clutches of our foreign creditors -- China foremost among them -- Germany has somehow managed to create a high-wage, unionized economy without shipping all its jobs abroad or creating a massive trade deficit, or any trade deficit at all. Sure, China just polled slightly ahead of Germany, but that's mostly because the euro has soared, making german goods even more expensive, and world trade has slumped. Meanwhile, the dollar is dropping, and we still can't compete with either nation.

What's supposed to put America ahead is the "flexibility" of our work force. Geoghegan blows that one right out of the water. "Flexibility" turns out to mean we've lost our high-wage, high-skill jobs and have settled for low-wage, low-skill jobs. Unlike their German counterparts, they have become "powerless."

That's bad for the workers, of course, and it's also bad for the economy. The German model -- with worker control built into the very structure of the firm -- keeps bosses and workers in groups, rubbing elbow with each other, and sometimes just elbowing. It creates a group interaction that over time builds and protects what economists like to call human capital, especially in engineering and quality control. It's precisely this kind of valuable capital that our atomizing "flexible" labor markets are so good at breaking up and dispersing.

Sure, he writes, there are good things about our situation. "We spend vastly more on basic research than the Germans do. We have much more land, more labor, more capital, much higher levels of formal education. But with our flexible labor markets we cannot develop human capital or knowledge to wean ourselves away from turning out crap and leaving the high-skill manufacturing to the Europeans."

So what has the German system that we don't? What is it that gives workers a piece of action even though it gives shareholders the "final vote" that keeps the German system basically pro-capitalist?

Let me here cart out the big three building blocks of German social democracy: the works council, the co-determined board, and Germany's regional wage-setting institutions.

It's the work council that really makes the difference.

Let's say you work at the Barnes & Noble at the corner of Clybourn and Webster Avenues in Chicago. You may be just a clerk, no degree. ...You could be elected to a works council at this store. That means you help manage the place. ... How did you get intothis kind of management? Barnes & Noble had no say in it. You were elected by your fellow workers. You went out and campaigned.

Those elected workers get to elect half the board of the corporation. That's real engagement in the system but there's a hitch. Here's where capitalism gets the "final vote."

Under German law, if the directed elected by the clerks and the directors elected by the shareholders are deadlocked, then the chairman can break the tie. And who picks the chairman? Ultimately, just the shareholders. So capitalism wins by one vote...

So why don't we have anything like this system, a system which turns out to be, as Thomas Geoghegan points out, "not just a rival but a better form of capitalism"?

Well, there would be cries of Communism! Socialism! But that's not the real problem.

What's behind our faulty system, I think, is that generations of Americans have grown up with a Robber-Baron-era view of American society. We have a mind-set that unless someone else is doing a lot worse than we are, we're not doing well. It's sick, of course, but it'll take several generations'-worth of cultural change to erase the disgust many Americans feel, even as they celebrate our "democracy," when it comes to real equality of opportunity.

http://prairieweather.typepad.com/big_blue_stem/2010/02/america-has-a-problem-with-equality.html