The myth of the American Elite

May 5, 2009 | By | 4 Replies More

fiat-chrysler

I came across a wonderful post at firedoglake today, a few days after it posted.

Dean Baker, writing about the Fiat-Chrysler merger, highlights the growing disparity between so called ‘knowledge workers’ and the blue-collar manufacturers who have so often been at the sharp end of outsourcing. As he states

The media coverage of the auto bailouts has focused on the need for union autoworkers to take big pay cuts, causing them to once again miss the real story. The Fiat-Chrysler deal shows that the pay problem is at the top, not the bottom. At the end of the day, the new Chrysler is still likely to be producing most of its cars in the United States. What the new company will be getting from abroad is technology and top management.
[…]
While this story of the US becoming a high skills center in the world economy may have been comforting to the elites, and was widely promoted by economists and the news media, there was never much truth to it. Highly skilled professionals did well in recent decades not because they succeeded in international competition, but rather because they were largely sheltered from it.

Over the past ten years those elites have gained in accelerating salaries and in a lower tax burden (see also my earlier post on the rich/poor tax divide) while the blue collar workers wages have largely stagnated, and fallen behind in real terms. As Baker says

If we compare wages for assembly-line workers in Europe and the United States, there would not be much difference between the pay of UAW members and their counterparts in Europe. However, there would be a very large difference between the multi-million dollar pay packages of the top executives at the US companies and their European counterparts. The pay gaps persist among the more highly paid engineers and management personnel.

The remaining differences are that European workers do not need to reserve a significant portion of their weekly wage to cover healthcare costs, that they receive many more vacation days (between four and eight weeks for most Europeans), and that their supervisors, engineers and management are not a world apart in terms of salaries, benefits, and lifestyles.

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Category: Current Events, Economy

About the Author ()

I'm a technophile with an enduring interest in almost anything real or imagined. I suffer fools badly, and love trashy science fiction, plot-free action movies, playing guitar, and baking (especially scones. You haven't lived 'til you've eaten my scones. I've recently undertaken bread, and am now in danger of gaining in a matter of weeks the 60 pounds I've lost in the past 2 years). My wife & I are Scottish, living north of Atlanta, GA, with two children, one dog, and a growing collection of gadgets. I work for a living.

Comments (4)

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  1. Erich Vieth says:

    Staggering comparison. It seems, then, that we're shitting on our workers by not giving them reasonable health care and decent time off. And we're over-rewarding inept high-salaried management for producing their crappy cars. The end result is that people vote with their feet–for cars made by Toyota, for instance.

    For many years, the profit center for the car makers has been financing the cars, not making them. We really (really) can do better, but I often wonder whether incremental change would have ever been possible in such an intransigent environment.

  2. Tony Coyle says:

    Sometimes I wonder why my family and I moved from the UK (I know the answer – it's complex, but for what I do, I can 'progress' further while living somewhere I'd like to live, due to the size of the US market. In the UK we'd need to live in the London suburbs and most of my work would be in London – nice enough, but I'd truly loathe the commute, and I hate commuting)

    However, there were significant trade-offs.

    time off – 4+ weeks in the UK plus (unlimited) paid sick days versus 2 (now 3) weeks PTO (that includes sick days)

    healthcare – non-contributory supplementary healthcare, so I can have my cake and eat it… versus extremely expensive health plans that cover less each year, with higher deductibles and higher premia (now over $800 per month for family coverage)

    work is 24/7 — I am never 'unavailable', and if I don't put work first, then I'm not a team player, am I? This is part of the culture. There are some exceptions, but this is the mainstream US office experience. In the UK my weekends were mine. Intrusion into my weekend would result in 'time in lieu' (even more time off). This is still true for my UK colleagues (but they have horrendous commutes)

    I also earn significantly more (I am one of the professionals mentioned in the article) – consultants in the UK typically earn 60% to 70% of their US counterpart – even less when taxes and cost of living are taken into consideration.

    Does it make me happier? I don't know.

    I truly enjoy what I do, and I enjoy the diversity of opportunities that the US offers.

    I am worried about some of the societal and cultural challenges. Radicalization of religion. Increasing ghettoization of the population. Even in the suburbs, communities and neighborhoods seem to fracture along artificial distinctions (race is not real – color of skin is literally only skin deep – and origin only matters for a short time, but try telling that to some of my neighbors).

    There is a growing divide between haves and have nots, and I expect this to explode if the situation does not improve.

    The current administration is seen (wrongly) as a chance of salvation. It's not. It's simply a change of government. I do hope that more embedded structural changes can be engendered during this administration, but based on the 'disloyal opposition' during the first 100 days – I see a long and difficult path ahead full of compromise.

  3. Tim Hogan says:

    I thought you guys called yourselves "Scots" and "Scottish" was a bad word!

    In the current US environment, the far right has successfully framed the debate about the auto industry in terms of the give-backs needed from workers, not managment. The same has just been done with the Boston Globe which is owned by the NYT.

    The situation is exactly as illustrated in "The Battle for the Soul of American Capitalism" by the creator of the Vanguard Funds; that we have a "managment culture" not a "shareholder culture" and that as a result sharholders and workers (another stakeholder) get the shaft!

    I think the book needs to be read by everyone, especially the people in Congress! I gave my copy to a neighbor kid to give to her dad (a GOP operative now living in DC) as a moving present from me. We miss the whole family (yes, some of my friends worked for Bush and were still real human beings–we skipped politics at the dinner table!).

  4. Tony Coyle says:

    Tim

    Scots are an ethnographic population 'originating' in the northern British Isles and Ireland (early Stone Age 'beaker' peoples)., Scottish is anything or anyone from Scotland (not necessarily 'scots') although current usage allows for both. My families history is 'confused Black Irish' so it would be untrue to claim that I was 'Scots' but perfectly true to claim that I am 'Scottish'! But never Scotch (that should only ever be sipped, at room temperature with plain water)

    But back on topic – You are exactly right. The US has bought into the 'magic of management' (I'm a 'management consultant' – apparently consultant on it's own has insufficient gravitas).

    Problems are no longer solved – they're managed.

    Situations are no longer controlled or policed – they're managed.

    People are no longer led – they're managed.

    Management has a lot to answer to – but more so the wholesale theft of the term makes 'real' management even more challenging.

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