In most American cities, the once prosperous middle class has been decimated. In major cities like San Francisco and New York, where living costs are high and lower-wage service jobs dominate a large portion of the economy, the rich thrive and the working poor live off government programs. The middle class is too poor to afford the living costs and too rich to qualify for government subsidies.
The Fixes
The easy fix to the problem of the disappearing middle class is to subsidize people who are above the poverty line. The very hard fix is to increase the availability of higher-paying trade jobs, reform the current misguided education system so it produces workers that are able to fill those jobs, and re-think collective bargaining as we know it today.
Most major cities employ the easy fix, while the federal government is attempting to implement a version of the hard fix. This version, however, relies heavily on mercantilism, focusing on tariffs and other methods of discouraging U.S. imports. Worker skills and challenges posed by today’s globalization-influenced and automation-prone economy are not being addressed as forcefully as trade.
An American Factory
American Factory is a Netflix film by Higher Ground Productions, a partnership between former President Barack Obama, his wife Michelle Obama and Netflix. The 2019 original documentary describes the early days in 2016 of an automotive glass production facility owned by the Chinese company Fuyao Glass located on the site of a shuttered GM plant in Moraine, Ohio. Film directors Steven Bognar and Julia Reichert filmed the company’s workers and managers for three years, and released American Factory in August 2019.
Residents of Moraine were jubilant at again having jobs available and a thriving town. But reality soon set in. The company brought in Chinese personnel to train and work along-side the local recruits. Pay stayed lower than at the GM former plant. Tasks often proved dangerous.
Union agitation soon followed, in spite of company warnings from the start that this was to be a non-union shop. A 2017 attempt to unionize failed. Several workers were fired.
Whether the company’s talk of automation was prompted by the unionization attempt or was in the plan all along is difficult to say.
The Changing Workplace
The American middle class, once the backbone of the U.S. economy, boasted strongly-unionized assembly workers. American families drove Ford, GM, Chrysler, and AMC automobiles as they enjoyed rising post-WWII prosperity.
But this period was an anomaly, even if wishful thinking sought to enshrine it as an indication of intrinsic American superiority: by the ’70s and ’80s, what was true all along finally became practicable. Markets opened, information began flowing, capital aggregated, and most of all people in other parts of the world proved that they were willing and able to do the work that Americans firmly believed only we could do. The Obama Film American Factory Backfires, aier.org, August 26, 2019.
By the 1980s The European Common Market succeeded in cementing the fact that globalization was the new way of doing things. So, American leaders and workers alike convinced themselves that the gods of Competitive Advantage had allocated to us in perpetuity the technological niche. We could be OK with Toyota taking over our automobile market because we could make Cray Supercomputers.
However, we neglected a crucial challenge: Things seldom remain static.
A New Reality for Chinese Companies
China, for example, went from being a supplier of our kids’ plastic toys, to a supplier of technology equipment parts, to the manufacturer of the Sunway TaihuLight – the machine that beat the U.S. Cray Supercomputer in 2016. In 2018, China had 206 out of the top 500 fastest supercomputers in the world, while the U.S. had 124.
China’s leaders went from wearing stodgy Mao jackets to wearing dapper business suits. Their negotiating style changed to match their business attires. China developed a moneyed class engaged in business and trade. Efforts to deal with rural poverty are on their way.
Needless to say, with the rise of a moneyed class, comes a rise in general living standards, and with that comes a rise in the cost and complexity of doing business.
China’s evolving life style brings us back to Fuyao Glass. According to some observers, Chinese companies are locating manufacturing facilities externally because of China’s rising labor costs, taxes, and regulations! Among those companies is Fuyao Glass.
The American Worker
American Factory presents a picture of what the American marketplace looks like today: a significant number of American workers employed by U.S.-based foreign companies and facing the turmoil that comes from cultural clashes. The film’s message, however, is open to interpretation.
Workers at Fuyao have filed lawsuits against the company for a variety of reasons, including allegedly illegally punishing workers for trying to unionize. Meanwhile, Fuyao has not been shy in expressing dissatisfaction with the habits of American workers. The threat of automation lurks in the background, as the company’s chairman, Cao Dewang, seeks what he euphemistically calls a future in technology.
The wearying and expensive battle of wills is not productive or conducive to worker satisfaction. However, is it avoidable? Would the scenario be any different if this glass company were owned and managed by Americans? Today marks the third day of a nation-wide workers’ strike against General Motors. So, maybe the American worker faces a deeper challenge than Chinese employers.
An Unintended Wake Up Call
The status quo no longer works in today’s rapidly changing globalized automation-prone world. Would it be better to move on to another model?
One idea might be to return to training skilled production workers, which stopped when the college-loan industry figured it would be profitable to promote the paper-shuffling industry, thereby helping to kill American manufacturing in the U.S. The production of goods by American companies located in foreign countries does no good to the American worker.
Another idea, which goes in tandem with the first, is to promote college as a place you go because you want to be there, can handle a high-level level of purely mental work, and cannot be distracted by constant political agitation. Highly trained technicians can help the U.S. keep up with a modern world not at all lacking in first-class universities offering outstanding technical education.
American Factory succeeds as a wake-up call. However, that wake-up call might not be the one intended by the film’s producers. American Factory perhaps serves as a reminder how American workers have been deceived by their legislators, used by their modern-day unions, and left unprepared to compete in today’s market place.
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