Sunday, July 4, 2010

Cannibalizing Democracy

While sailing recently with a 'more conservative than me' friend of mine, he commented that he felt the model the Irish Government played in helping Ireland become a much more economically well-off land was a good model to adopt, whereas the model the Germans and French followed was a poor idea.

His complaints with the French and German models were (among other things) that their anti-immigration policies, given their low native birth rates, would ultimately be their undoing. They both saw falling tax bases while continuing to spend in ways they should not.

By contrast, Ireland created tax havens for large companies to move their headquarters to and generally encouraged immigration to staff various low-skilled jobs that were created to service a society with greatly increased disposable income. When I commented that in fact Ireland had simply moved jobs out of other European countries, his reply was, "and well they should have."

I challenged whether Germany in fact had a falling tax base, and indeed it looks more like they've simply cut corporate taxes in half, but the real question is simply this? Is the European Union better or worse off with the jobs in Ireland or in France? Does taking a job from one part of "The Continent" make Europe stronger or weaker? Clearly the tax base decreases when the job moves to a locale where taxes paid on that job are considerably lower, and if the salary is also lower, even if it is in a country with a lower cost of living, is the Union better off?

This caused me to consider a new term for what we are doing to ourselves, as a country and as a world. We are not creating new jobs, we are not creating increased consumption (by and large) in the third world, certainly not when considered against plummeting consumption and consumer spending in the United States, we are instead cannibalizing jobs, factories, infrastructure, and simply moving it elsewhere. We are "eating our own" to accomplish it. We are allowing our own governments, educational systems, highway system, power systems, to deteriorate and slowly die.

If moving jobs from Germany to Ireland is good for Ireland (which took out huge loans to incent companies to come to Ireland and to build infrastructure), who will be the next "Ireland" to Ireland? Ireland in fact suffered far more so than Germany in the recent economic Great Recession though they do seem the first to come out of it as well (to be fair). Germany by contrast neither suffered as greatly (they stayed out of debt) and don't have as far to come back - but the question still is, are we in fact "building" anything at all? Are the jobs that move to Ireland (or China) truly helping the global community? Pretty clearly they aren't helping the US (or France), but are we in fact accomplishing anything at all other than making large profits for those whose interests run to moving to the "next" China and then the next and next? We may help the world in the long run by turning over leadership to a Chinese government which is clearly more forward looking about being less wasteful than our own, but was that the goal?

If by cannibalizing our economy to build China's and India's and Ireland's, the western democracies become economic anemics, what then happens to democracy itself? What is the future for our children, let alone our children's children? If we do not find a more wise approach to exposure to globally cheap labor, if we do not manage to build the third world's infrastructure while maintaining our own, then in the end all we will do is bring an end to this great, shining city on the hill, and the American experiment will become instead an exercise in looking around us at fallen down schools, bridges, and dreams.


  1. What your more conservative friend is admiring in the case of Ireland's attempt to become the singapore of the west, the celtic economic 'tiger' through government involvement in attracting or investing in economic growth is the kind of incentivism our very much more conservative friends would object to as statism.

    stat·ism (stā'tĭz'əm)
    n. The practice or doctrine of giving a centralized government control over economic planning and policy.
    stat'ist adj. & n.
    The American Heritage® Dictionary of the English Language, Fourth Edition

    They would object to it on the basis of interference with their sacred free-market principles (anyone else just waiting to see them justify free market principles as god-given next?).

    And let us not leave out the Michele Bachmann's on the right, who are frightened that we might become involved in a GLOBAL ECONOMY.

    Don't look now, Michele, but we have been involved in a global economy for...........forever. We were never NOT involved in a global economy, if you look at the economics in play at the founding of this country (East India Company, anyone?).

    Ya gotta laugh at those conservatives who want to take us back to imaginary ages and imaginary places. The ones where God handed down the Declaration of Independence to Thomas Jefferson (which must have been a shocker to him, being a deist) and gave John Locke his political concepts like handing the ten commandments to Moses.

    We are in a global economy; and it is not something we can or should fear or try to avoid.

    And while we are looking at the real world, and not the magical fantasy world of the Michele Bachmann's in our country, we might want to take a long look at how the countries with which we are competing in that global economy are assisting their businesses to develop, with investment and incentives and government policy.

    Pssssst! Michele! You do know, don't you, that BP stands for British Petroleum, right? Not for Boehner Petroleum, or Barton Petroleum, Barbour Petroleum, or?

    Just checking.

  2. My friend is anything but a statist, and far from ignorant of economic policies. He is a very erudite person on general economic policies, so I certainly do not mean to portray him as anything but.

  3. One of the things that is happening in the IT industries is all the entry level positions are going overseas. I read a couple industry magazines and some online blogs and IT managers are complaining about people not having basic skills. Well the stuff you learn in a six week Microsoft course or a college computer course is nice but it does not give you real world troubleshooting skills. A lot of the call center and help desk type jobs are overseas now. Even among programmers, the basic day to day simple stuff that used to go to the new person right out of college is overseas. And then they wonder why they cannot find any midlevel people with basic skills. That said India is the largest and poorest democracy in the world and as the second largest and the richest I am glad to see us helping them out with jobs but we need to find ways to create more jobs in both places, not just move jobs from here to there.