The Disconnect Between The Global Elite and The American Middle Class
In a recent article in The Atlantic entitled, "The Rise Of The New Global Elite," Chrystia Freeland makes the following startling observation:
"The good news—and the bad news—for America is that the nation’s own super-elite is rapidly adjusting to this more global perspective. The U.S.-based CEO of one of the world’s largest hedge funds told me that his firm’s investment committee often discusses the question of who wins and who loses in today’s economy. In a recent internal debate, he said, one of his senior colleagues had argued that the hollowing-out of the American middle class didn’t really matter. “His point was that if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade,” the CEO recalled"
It is interesting (and disturbing) that the heyday of globalization, i.e., from 1980 through the present, has seen the middle class in America stagnate in terms of income.
Is there a connection?
Probably so. The best argument is that made by Charles Hugh Smith in a brilliant article entitled, "We Don't Need No Stinkin' Jobs (In The U.S.) and can be found here: . He argues: "The erosion of the American middle class is of little concern for one simple reason: it no longer matters much on the global stage. All that Global Corporate America needs from America is a stable foundation that won't offer up any surprises or spots of bother. As the discretionary purchasing power of the American middle class erodes, four times as many new potential customers appear elsewhere, hungry to taste the Oreos, become consumed by the iPhone, etc., and ten times as many are potential buyers of toothpaste and other basics."
Which brings us to the question -- does corporate America owe anything to America or is its sole duty to its shareholders who, for the most part, don't care whether the profits come from India or Indianapolis?
-Karger
"The good news—and the bad news—for America is that the nation’s own super-elite is rapidly adjusting to this more global perspective. The U.S.-based CEO of one of the world’s largest hedge funds told me that his firm’s investment committee often discusses the question of who wins and who loses in today’s economy. In a recent internal debate, he said, one of his senior colleagues had argued that the hollowing-out of the American middle class didn’t really matter. “His point was that if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade,” the CEO recalled"
It is interesting (and disturbing) that the heyday of globalization, i.e., from 1980 through the present, has seen the middle class in America stagnate in terms of income.
Is there a connection?
Probably so. The best argument is that made by Charles Hugh Smith in a brilliant article entitled, "We Don't Need No Stinkin' Jobs (In The U.S.) and can be found here: . He argues: "The erosion of the American middle class is of little concern for one simple reason: it no longer matters much on the global stage. All that Global Corporate America needs from America is a stable foundation that won't offer up any surprises or spots of bother. As the discretionary purchasing power of the American middle class erodes, four times as many new potential customers appear elsewhere, hungry to taste the Oreos, become consumed by the iPhone, etc., and ten times as many are potential buyers of toothpaste and other basics."
Which brings us to the question -- does corporate America owe anything to America or is its sole duty to its shareholders who, for the most part, don't care whether the profits come from India or Indianapolis?
-Karger
posted by Jim Karger at 5:41 PM
8 Comments:
The phrase 'corporate America' puts bias upon the question regarding what if anything is owed to America(ns).
Did the Portuguese traders (stock companies) of old owe something to their Portuguese brethren simply because of shared culture and port? Or did they only owe to their stakeholders who sponsored their actitivities? History shows clear examples through its laws of men and state which were written to support understanding (regarding commerce) about what constitutes a fair trade (what is owed, to whom, and by what schedule it should be settled).
My opinion is to say that I'm not foolish enough to put my faith into a mythical paradigm of corporate bodies being expected to do good for the community, or to be a good corporate citizen; if their officers decide to throw society (non-stakeholders) a bone, they throw a bone - society should take it and be glad. A for-profit corporation's goal state is achieved by producing a positive return to their defined stakeholders, period.
If the myth of a do-gooder (for-profit) corporation still plays to a crowd, I say wake up and smell the ledger. It's a lead pipe cruel world boys and girls and there never was a free lunch, unless of course a shit sandwich is considered edible fare.
In closing, I don't believe there ever was a middle class America; there only two types of humans in commerce: 1) stakeholders and 2) benefactors of stakeholder activity.
Interesting comment but the point that is being missed is that the middle class is the fly wheel of democracy and free enterprise. To this point in history it has only been the US middle class that has provided that stability for the world. The key question is will the burgeoning middle classes from other countries provide the same level of stability? I doubt it.
- C.L.
I think the point that is missed is when will middle class America start throwing “Corporate America” a bone and be willing to forego the cheap imported products and support our own economy and domestic manufacturers. The answer is, as a whole, we probably will not so we are destined to wallow in the, mediocre at best, service economy that has been sold to our government. CEO’s of manufacturing companies had better look across the pond if they want the company to survive allowing them to maintain what manufacturing jobs are left in the US. Meanwhile we as a country will continue to bleed our wealth into Asia and India much like a spoiled child that squanders their inheritance because they did not invest blood, sweat and tears to earn it.
I think the point that is missed is when will middle class America start throwing “Corporate America” a bone and be willing to forego the cheap imported products and support our own economy and domestic manufacturers. The answer is as a whole we probably will not so we are destined to wallow in the, mediocre at best, service economy that has been sold to our government. CEO’s of manufacturing companies had better look across the pond if they want the company to survive allowing them to maintain what manufacturing jobs are left in the US. Meanwhile we as a country will continue to bleed our wealth into Asia and India much like a spoiled child that squanders their inheritance because they did not invest blood, sweat and tears to earn it.
Greedy, greedy, greedy.
The moto of the typical American senior executive.
Change their mores?
Not likely!!
Hence us folks in the middle ..... we get to suck it up.
Considering the population of China and India we could run out of middle class pretty quickly.
These guys do not seem to be like regular people. I guess you get a different perspective when your first job is vice president of a bank or working in a brokerage house. You probably won't have much of a feel for those who had paper routes, mowed lawns, worked construction or waited tables. No wonder they bailed out the banks first and do not seem very worried about job creation.
Welcome to the fray my brother! Now you see why work isn't working and why it has to change. However I will let you in on a little secret that you are going to find out in about 10 more years so you can say, "Oh, I get it now!" yet again. It will not change because the workforce is numbed and secluded from one another to the point that they actually believe what is good for the company is good for everyone! They bought the lie and gave away their bargining power along with their spines to the corporation. Too bad that when the courts were doing everything in their power to make corporations "Gods" no one was paying attention to those who said maybe we should think about this for a minute. It's all too late now. The middle calss is gone and the new generation of workers is as dumb as the schools have made them. No parents to guide or punish or encourage has led to a population of prison raised idiots content with whatever they can get. The government let multi-nationals take over and took our production jobs away to far off places becasue that is what is good for business. Unions got bought off and now they are just middle corporations greedy for power and money and screw the workers. Unfortunately, the workforce isn't smart enough to get mobilized for any kind of mass movement so it looks like they win. The Iron Heel has taken our country, our lives, and our livelihoods and no one said a word.
"I fear for my country when I reflect that God is Just!" Thomas Jefferson
I believe that individual economies in the world are constantly evolving and maturing. The shift from a manufacturing economy to a service economy hasn’t been limited to the U.S. The industrial revolution didn’t occur simultaneously over the planet. European economies shifted similarly in the pre-war era. When the American people decided to stop buying American-made products in order to secure toasters and electric drills that were a third of the former price, Walmart became the largest retailer in the world by responding to that demand. Likewise, U.S. suppliers rushed to source their end products in low-cost countries in order to meet the demands of both the average joe consumer and also the corporate shareholder (and the corporate executives trying to outperform the competition). Everyone was happy for a time. Inadvertently, the global middle class has grown at the expense of America’s middle class. From a corporate standpoint, that means a bigger market for American companies – and overall, that’s generally thought to be a good thing.
The former $50 per hour workers at GM didn’t all become Starbucks baristas at $10 per hour. Some retrained to other trades or professions; some shifted to manufacture other items that are not so easily imported, such as green energy products. We aren’t all able to survive economically by cutting each others’ hair.
Thirty years ago, Mexico was the “low-rate” alternative labour supply pool and as a result many manufacturing jobs were transplanted from the evolved rust belt of middle- America. More recently, the Indo-china region has to a great extent replaced Mexico as the preferred alternative. The “Chindia” middle class that has morphed from this phenomenon will also benefit US corporations; General Motors will soon be selling more cars in those two countries than in North America.
What I wonder is how long will the Indo-China boom be able to fuel our economy and more importantly, what will the world look like once Indo-China’s industrial revolution reaches maturity.
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