Bennet Harrison of
New York’s New School has pointed out, all conventional
wisdom to the contrary, unskilled workers “barely off the
farm” can be readily trained to operate computer controlled
presses and similarly sophisticated production machinery. In
Harrison’s terms, today’s high tech production
machinery is not “skill demanding” but “skill
enabling”.
“If wages of
poorly educated workers are failing, we need to look for
explanations other then technology. After all, the same
technologies have penetrated factories and offices in Europe and
Asia, yet nowhere outside of the United States have low end wages
fallen so far and so fast.”- Bennet
Harrison
High-tech
manufacturing is necessarily very capital intensive. To the post
industrialists, this seems like a major disadvantage. This is an
incorrect view.
In general the more
capital that is invested in a factory, the higher its labour
productivity is likely to be. Superior productivity = royal road to
high wages
Ultimate example of
high capital intensity is the components side of the electronics
industry.
The investment per
job in some Japanese component factories can reach over one
million- or more then 100 times the rate of capital intensity in
some parts of the world software industry.
Wage component of
costs is very small. Motorola’s locating in Germany is one
example. Though Germany’s worker’s get higher wages;
wages were only three percent of the company’s total expected
cost. Benefits of locating in Germany:
-World-beating manufacturing
infrastructure
-superb utilities
-reliable delivery services
-honest regulators
-pleasant residential environment
-better educated workers
Global photographic
film market dominated by Eastman Kodak, Fuji Photo film, and Agfa-
Gevaert. Kodak’s dominance is being challenged by Fuji Photo,
a Tokyo based company whose wage rate is considerably higher than
American levels.
As recorded in the
1998 edition of Japan: An International Comparison, a publication
of the Japan Institute for Social and Economic Affairs, the average
hourly wage was $21.01 in Japan, $14.79 in Germany, and just $12.37
in the United States.
Post industrialists
place a child like faith in the efficacy of free markets. They
assure that since post industrialism has emerged first in the
avowedly free market economy of the United States, it is a self-
evident good thing.
The basic error in
the laissez-faire model is that it greatly overemphasizes the
interests of capital over those of labour.
The characteristic
side of postindustrial society- large profits for a tiny elite and
low wages for the broad mass of the workforce.
The most obvious way
in which America’s competitors systematically preempt
manufacturing opportunities is via subsidies.
Aerospace is a
notable case in point. The spectacular growth of Europe’s
Airbus consortium, for instance, has been driven in large measures
by subsidies.
One thing is
certain; Europe is unrepentant about using subsidies to build its
aerospace industries. In its own eyes, Europe has merely been
emulating the United States, which, in an earlier era, established
a large head in aerospace with an unabashed programme of direct and
indirect government supports.
Manufacturing
companies in many advanced economies also enjoy the advantage of
much greater access to outside capital as do their American
counterparts. This reflects a fundamental macroeconomic fact: most
advanced manufacturing nations now boast considerably higher
savings rates then the United States.
The tendency for
high-saving nations to invest in their own manufacturing industries
is generally bolstered by government policies.
Another factor that
has contributed to the relative decline of manufacturing in the
United States is an unbalance in the flow of trade secrets and
other proprietary know-how.
Other nations suck
all the information and know-how that they can out of the United
States while revealing little or no information on leading edge
manufacturing technologies.
All the evidence
suggests that a well-organized nation can be highly persuasive in
inducing American corporations to transfer their most advanced
production technologies within their borders. Its trump card is
typically access to its markets.
The really troubling
aspect of this pattern for the American national interest is that
in time the production technologies concerned may be entirely lost
to the American economy.
Q: Why don’t
American executives fight harder against the pressure to transfer
their production technologies abroad?
A: they assure
themselves that they are not losing a technology merely because it
is migrating to one of their foreign subsidies.
The whole trend of
wages has been that in the 1950’s advanced technologies were
only employed in the U.S. which meant higher wages. By the
1980’s Japan and Germany had caught up in the technology race
and their wages have kept rising and have been ahead ever
since.
The worst part of it
is that the free-market dogma has tended to obscure from Americans
how far the United States has been falling behind its principal
competitors in recent years, most notably Japan.
The first eight
years of the 90’s Japan’s current account surpluses
totaled 750 billion. That was more then two and a half times the
total of 279 billion it recorded in the first eight years of the
1980’s.
Japan runs a large
surplus in almost every tradable manufactured product;
Japanese
manufacturers pay some of the highest wages in the
world;
Nations with lower
wage costs, like the Unites States, are rapidly increasing their
trade deficits with Japan in high tech goods, it is surely obvious
that the Japanese economy is one of the strongest in the world,
particularly when judged by the yardsticks that matter to Japanese
policy makers.
The American
economy, faithful to the dictates of laissez-faire economics, is
generally run to boost the short term welfare of the American
consumer, the Japanese economy is run to boost Japan’s long
term ability to project economic power abroad.
Japan in the
1990’s has been growing its net foreign assets faster then
any nation since the United States in the golden years of expansion
in the 1950’s.
Electronics
The electronics
industry is now the prime mover of world prosperity. Electronics
industry supplies a rapidly growing of ever more powerful and
reliable components for virtually every kind of manufactured
product.
Electronics have cut
the cost of appliances and improved their reliability; e.g.
videocassettes, televisions, air conditioning systems,
refrigerators, vacuum cleaners, dishwashers, and
stoves.
Electronics have
drastically improved the performance of cars in the last thirty
years. Electronic fuel injection- cut fuel use in half.
Microchip-controlled airbags, smoother riding, effective braking.
Nearly one-fifth of the cost of a car goes towards electronic
components.
It is common
knowledge that AT&T, Microsoft, and Intel have hastened the
information age. Few, however, are aware of the important
contribution made by the Japanese camera maker Nikon. Even fewer
have any inkling of what goes on at Nikon's glassworks in the
remote Tokyo suburb of Sagamihara.