CHAPTER 8
Ill fares the land to hastening ills a prey/Where wealth accumulates and men decay.
—OLIVER GOLDSMITH, THE DESERTED VILLAGE
Corrections: In last week’s issue, The Onion mistakenly said that education is the key to success. Being born into money is actually the key to success.
The Onion regrets the error.
—FROM THE ONION, A SATIRICAL NEWSPAPER, MARCH 17, 2011
There are good reasons for seeing poverty as a deprivation of basic capabilities, rather than merely as low income.
—NOBEL PRIZE–WINNING ECONOMIST AMARTYA SEN
The laissez-faire critique of the “welfare state” and promotion of “personal responsibility” has always contained an important kernel of truth, however poorly conservative policy performs in improving quality of life. That kernel: people do not want everything done for them by others, either through state-provided welfare or through private charity.
In his conservative (though again, we would argue that his prescriptions are for radical, not conservative, change) handbook, The Battle, Arthur Brooks writes that “people flourish when they earn their own success.”1 He is correct: Our need for self-esteem is satisfied most effectively when we accomplish things of value through our own efforts.
So far, so good.
But Brooks doesn’t stop there. He suggests that a system that minimizes the public sector and maximizes the role of the “free market” and “free enterprise,” through reduced regulation, low taxes, and privatization of virtually all government services except the military, the police, and the courts (to ensure property rights), is the kind of system most likely to offer its citizens the opportunity for success—however we choose to measure it.
We need to spend a little time with Brooks, both because of his influence as president of the American Enterprise Institute, a powerful think tank, and because his ideas are at the core of the radical conservative defense of inequality. But however commonsensical they may seem, they are profoundly in error.
“More than any other system,” Brooks writes, “free enterprise enables people to earn success and thereby achieve happiness. For that reason, it is not just an economic alternative but a moral imperative” (italics his).2
Because “earned success” is so important, Brooks contends, efforts to reduce inequality are unimportant, even counterproductive. “Earned success means the ability to create value honestly,” says Brooks, “not by winning the lottery, not by inheriting a fortune and” [most of all in his mind] “not by picking up a welfare check.”3
Earned success, Brooks argues, is the “creation of value” in our lives and the lives of others: “It isn’t just related to commerce. Earned success is also what parents experience when their children do wonderful things, what social innovators feel when they change lives and what artists feel when they create something of beauty.”4
We have no quarrel with this. But in each of these cases, “earned success” comes from creating something that benefits others; it is the sense that you made a difference in the lives of other people that provides the happiness Brooks sees as a consequence of such activity. Yet for Brooks, the opportunity to earn success in this way must also include limitless opportunity to earn more money. Why is this so, if happiness comes from creating something of intrinsic benefit to yourself and others?
Brooks has an answer to this question. The wealthy, he writes, “already have enough money to meet every need they could ever have, but they still crave earned success like the rest of us, so they are driven to create value at greater and greater heights. The money is just a symbol, important not for what it can buy but for what it says about how some people are contributing.”5 In other words, expectations for such gains become addictive cravings that drive the rich to accumulate more and more wealth.
This kind of unsatisfied craving—which finds relief only through continual increases in income—hardly seems a recipe for greater happiness. Indeed, all of our great religions see it as the kind of addiction that leads to misery. Yet somehow Brooks feels that without the opportunity of limitless wealth, productive Americans won’t continue to do things that benefit others. To us, this logic is sort of strange.
If the money is just a “symbol,” as Brooks declares, why wouldn’t satisfaction come from the actual services you provide and the lives thereby improved? In fact, happiness research shows that, indeed, satisfaction isn’t about the money. The psychologists Tim Kasser, Rich Ryan, and others have pointed out that those who work with the primary motivation of “making a lot of money” are much less likely to be happy than those who work with the goal of serving others.6 Why, then, does “earned success” require the unlimited opportunity to increase one’s material wealth?
A couple of pages later, Brooks makes another leap of logic. “If money without earned success does not bring happiness,” he writes, “then redistributing money won’t make for a happy America.”7
Sounds plausible, doesn’t it? But isn’t it possible, even probable, that redistribution can broaden the opportunities to earn success and, therefore, contribute to the greatest good for the greatest number? Redistributing wealth doesn’t mean merely giving a handout to the poor.
Improving Capacities
The bulk of income redistribution in western Europe, for example, doesn’t go for welfare; it goes for what Steven Hill terms workfare, contributing to programs that make for a more capable labor force and provide greater opportunities and security for ordinary workers to earn success in various ways.8 It includes, for example, helping workers’ children learn and grow, and giving those workers the time to express their artistic creativity. It is an investment in the workforce of the future.
In fact, the primary purpose of sensible wealth redistribution is to create opportunity for all people by improving what Amartya Sen calls their capacities to make the most of their innate gifts. For example, good, low-cost child care doesn’t just give children a “head start”; it allows mothers to contribute to the world of work outside the home.
As we’ve mentioned before, the opportunity to develop these capacities starts at birth. More equal societies get an immediate jump: Infant and children’s mortality is lower in such countries; they have fewer low-birth-weight babies; they offer mothers more opportunity to breast-feed during work. Most important, they allow parents sufficient paid leave to bond with their children, improving those children’s health, and their capacities to learn, while also improving opportunities for parents to combine work with raising children.
We must concede that, in the short run, the shift of a portion of society’s resources to provide paid parental leave results in either a reduction of business profits or higher tax rates, even for people who do not have children. In both cases, then, it is a redistribution of wealth. According to Arthur Brooks, it should not make anyone happier. But in fact it improves the opportunities for our children to “earn” success in the future.
Those who receive such benefits—all who have children—are not receiving them for doing nothing, but rather, for helping (through their parenting) to improve the capacities of the next generation of citizens. The security offered by such paid leave improves the immediate happiness of the parents and the long-term prospects for happiness of the children. Yet the United States is the only industrial country that does not provide paid childbirth and parental leave by law. Brooks and his allies would keep it that way.
After infancy, policies intended to improve capacities involve redistributing wealth to provide broader educational opportunities for all. Most Americans, including conservatives, believe in this, sort of.
Missed Opportunities
Children’s capacities for earning are powerfully influenced by the quality of the education they receive. In most other industrial countries, professional and high-quality child care or “preschool” is provided between the time parental leave benefits expire and official schooling begins. Such care either is free for parents or comes at very affordable rates. In many of these countries, preschool teachers are highly trained and often have required master’s degrees. They earn excellent salaries.
By contrast, there are few child care subsidies for American parents, and high-quality child care is very expensive. In The Motherhood Manifesto, Joan Blades and Kristin Rowe-Finkbeiner point out that decent child care and preschool can cost well over $1,000 a month, making it more expensive than a typical public university.
Much of the affordable child care is catch-as-catch-can. Child care providers generally earn little more than the minimum wage—an average of around $17,000 a year.9 Their centers are crowded, and often there are long waiting lists for the few spaces. Tax credits are not provided to allow parents to stay home and care for their own children. Even single mothers are required to spend thirty hours working in low-paying jobs or looking for work to qualify for income supplements, while affordable child care is not available for them.
Further, unlike the situation in many other nations, where all schools receive roughly the same funding and are able to attract uniformly competent teachers, there is an enormous difference between the schools in wealthy American suburbs and those in the inner city. Broken windows, graffiti, guns, drugs, old books, and poor equipment compete with the finest modernity has to offer. In a futile effort to keep up, the less-endowed schools organize cookie sales and car washes and, in some states, even sell their wall space to corporate advertisers.
When John was producing the film Affluenza in 1996, he visited a Colorado high school where large advertisements for candy bars and soda pop adorned the walls: M & MS ARE BETTER THAN STRAIGHT A’S! He was shown California math texts that asked students to count and multiply Oreos and corporate “educational” freebies for schools that taught the “history of the Tootsie Roll”! It made John want to scream. We’re not making this up, and it would be appalling to people in almost any other country.
The world’s richest nation ranks below average for industrial countries in all international tests of educational achievement.10 To correct this deficiency, political leaders demand longer school hours and more testing. Blamed for a failure that is a direct result of inequality, teachers must adhere to rigid curricula demands and teach for tests. Many leave the profession, unable to cope with constantly greater demands and less opportunity to control their own syllabi.
In many of the poorest school districts, the idea holds sway that the answer is simply to keep the kids at their desks longer. One by one, they have even eliminated such “nonproductive” times of day as elementary school recess. In Tacoma, Washington, a school administrator defended the elimination of recess by saying, “We must increase instruction time to prepare the children to compete in the global economy.” We’re talking second graders here. Put kindly, this is lunacy, especially in the middle of an epidemic of childhood obesity.
Finland Gets an A in Education
Interestingly, Newsweek’s “best country,” Finland, also ranks highest in the world in its children’s performance on international tests of science and reading and second only to South Korea in math performance. We say interestingly because Finnish students have among the shortest class hours in the world, receive very little homework, and spend more time on art and music ( just the subjects our schools are slashing) than students in other countries. What they have going for them is small class sizes and teachers who are well paid, honored, and not overworked, teachers with the energy to inspire and the chance to teach students how to think instead of how to take tests. School quality is uniform throughout the country because tax revenues are fully shared.
Finland does this, not because it is richer than the United States, but because the Finns understand what is obviously beyond Arthur Brooks: Inequality affects our ability to “earn success,” and right from the start.
Universities in Decline
We Americans, with good reason, do take pride in our colleges and universities. Our postsecondary educational institutions are second to none in the world. But for many lower-income Americans, access to them is getting harder and harder. Through the 1970s, the United States ranked at the top in terms of the percentage of its population with postsecondary degrees. We recognized that a well-educated workforce was a boon for our entire society. Our heavily subsidized public institutions were affordable for nearly everyone.
In 1964, John entered the nation’s then-most-prestigious public university, the University of California at Berkeley. He paid no tuition and barely over $100 in fees each semester. Three years later, at the University of Wisconsin, he could afford tuition and room and board on a ten-hour-a-week work-study job. In her enlightening look at American higher education, DIY U, Anya Kamenetz points out that “since 1980, tuition at both private and public colleges has soared relative to both inflation and family income. College tuition and fees leaped 439 percent from 1982 to 2007, after inflation.”11
A New York Times headline recently announced, HIGHER EDUCATION MAY SOON BE UNAFFORDABLE FOR MOST AMERICANS. According to the story, tuition at even a public university now costs 55 percent of the income of the poorest fifth of Americans. Increasingly, seats in top American universities are filled with students from other countries. An estimated 168,000 qualified American students don’t enroll at all in college each year because they cannot afford it.12
Today, among citizens of developed countries between the ages of twenty-five and thirty-four, the United States ranks twelfth in the percentage of postsecondary degrees and its ranking is dropping steadily. Forty-one percent of Americans in that age group hold at least an associate’s degree. Not surprisingly, the percentages are higher in states that are more willing to tax themselves to pay for education and other social services. Massachusetts, the leading state, has more than twice as many graduates per capita as Arkansas, the lowest-ranked state.13
With notable exceptions such as New York, these state rankings run closely parallel to the gap between rich and poor in various states, with more egalitarian states having higher percentages of graduates. When we see that Americans with college degrees earn 67 percent more than those without them, the impact of inequality on “earned success” becomes even clearer.
Sadly, our university system, once the world’s best, is not just less affordable; it’s in decline. DIY U author Anya Kamenetz writes of a recent visit to the University of Tennessee, where she found tuition climbing and budgets shrinking, while key academic programs, including foreign languages, religious studies, and geology, were facing elimination. At the same time, the university was building a new $200-million football stadium.14
Historical comparisons are often overused and shallow, but somehow the fall of the Roman Empire does not seem so far removed from our condition: the glorification of circuses and entertainment spectacles; the denigration of intellect; the pugnacious patriotism, flag-waving hubris, and bullying of critics; the far-flung phalanxes in foreign lands; the conspicuous consumption and unfettered demands (“drill, baby, drill!”); the slavish devotion to the rich and powerful; the pitiless disdain for the poor and weak.
Surely all of these phenomena had their defenders and rationalizers, then as now. One cannot help but imagine that the modern Vandals and Visigoths are hiding nearby or that Alaric lurks near the White House gates. At least the Roman climate wasn’t changing … But let’s not get ahead of ourselves. We can still change.
Radical Monopoly
For now, let’s just change lanes. In the previous chapter, we presented evidence that economic mobility in America is no longer what it once was. But it’s not only our economic mobility that’s in decline. Consider actual physical mobility, the opportunity or capacity to move easily from place to place. We’re on a downward slide there too. And in this area of life, our vaunted freedom of choice may come up the shortest of all. The United States is car country; there is just about one car or truck for every American adult. It’s said that we just love our cars. But could it be we’ve got nothing else to love?
Decades ago, the brilliant social critic Ivan Illich (in Tools for Conviviality) wrote of what he called radical monopoly, the idea that monopoly was not just about AT&T controlling all the phone lines (a reality then) but about particular modes of meeting needs (such as the automobile) monopolizing all the opportunities to do so and crowding out others.
Our love affair with cars left many Americans with no other methods of mobility, undercut transit systems, crowded out the trains, and left no room for bicyclists and few opportunities to walk from place to place without fear for one’s life. Those with no money for a car, no driver’s license, or other limitations were, in many places, without mobility options at all. Mass transit in most American cities is better now than it was then (but for how long in this era of budget slashing?), yet the radical monopoly of autos still exerts its power.
All Aboard … None Aboard
Our train system, for example, would be an embarrassment in nearly any other industrial country. A few years ago, John traveled around Europe by train. It was an altogether pleasant experience. Virtually every train was on time and comfortable. They glided on smooth tracks through the countryside with only short intervals between them, offering lovely vistas and good wine.
In Austria, John arrived in Salzburg near the end of the day without hotel reservations. Bad idea. It happened to be the celebration of Mozart’s two hundredth birthday, in his hometown. There was not a single hotel room to be found, and night was closing in. So John hopped aboard a bright red train bound south into the Alps. He asked the Austrians on board where he should get off the train to find an inexpensive hotel for the night. They buzzed in German, called on their cell phones to friends, and finally said, “Get off in two stops at St. Johann (a village about an hour south of Salzburg), go left out of the station, then right down the block to a bridge. Cross it, and there will be some good hotels right there!”
The first hotel was both lovely and inexpensive, and the town of St. Johann was exquisite, a hamlet right out of a fairy tale, and with great Chinese food and cheap pilsner besides! John spent a wonderful night and returned to the train station in the morning. In minutes, a local train, bound for Innsbruck and towns in between, pulled up, and John began a ride through some of the loveliest countryside on Earth.
Later in his trip, John rode the really fast trains, the astonishing Trains à Grande Vitesse, or TGVs, of France, which roar through the land at nearly two hundred miles per hour. By contrast, you might have had the experience of lurching and bouncing along on Amtrak, as John has, stopped frequently because the freight lines had priority on the track (on land given to them free by the people more than a century ago!), six hours late on a twenty-hour trip from Seattle to San Francisco (a route French or Japanese trains would cover in five hours), with the bathrooms all stopped up and the bistro out of everything.
Free Wheeling
Besides trains, many other industrial countries also offer slower, more sustainable ways to get around easily. The cities of Europe are replete with pedestrian-only streets and malls. John remembers a visit to Freiburg, near Germany’s Black Forest, in 1997. The entire center of the city was off limits to private cars, thanks to rules installed by the Green Party when it controlled Freiburg’s city council. When the council was debating these rules, local businesses were much opposed, suggesting that their customer base would dry up. But it didn’t.
Instead, people flocked to Freiburg’s pedestrian-friendly downtown, and local businesses are thriving. Yet in John’s own city of Seattle, the city fathers couldn’t even keep a single downtown block, called Westlake Plaza, free from autos. Large retailers, like Nordstrom’s, threatened to close up shop if the street was not reopened to cars. The city capitulated.
Bicycles provide another simple and sustainable mode of mobility. Some American cities and towns are becoming friendlier to them; in all honesty, progress is being made. But in most American cities, you take your life in hand when you ride a nonmotorized two-wheeler on the streets. By contrast, consider the Netherlands or Denmark, those notoriously happy lands where everyone young and old believes in pedal power. Their towns and countryside offer endless kilometers of safe and pleasant bicycle paths completely removed from automobile traffic. Even in the big cities, everyone rides; parking garages boast level after level of bike spaces; visiting Amsterdam, John wondered how, in the immense jumble of bikes, anyone finds theirs again. Do the Dutch have a special sense of smell?
It’s common in the Netherlands’ open-air markets to see men and women in their seventies or eighties on their bikes, groceries hanging from panniers or handlebars, smiling as they pedal. This activity keeps them in shape and living longer. John’s cousin Letty and her husband, Bert, both retired, live in the remote northern Dutch village of Westerbork and would never think of driving somewhere they could bike to in half an hour. But isolated as they are, every couple of hours a fast train stops near their village ready to whisk them to Amsterdam if they desire.
So What’s This Got to Do with Economics?
Answer: plenty.
America’s radical monopoly of autos was in no small part imposed by corporate economic power. Prior to the 1930s and ’40s, the suburbs of U.S. cities were connected to downtown by trolley or rail systems. Commercial centers grew up around the trolley stops, and people lived close enough to the trolleys and trains to walk to the stations or stops. Jim Klein’s popular film, Taken for a Ride, documents how General Motors and other auto companies muscled out the trains and trolleys to create a radical automobile and bus monopoly (GM built buses then too) with payoffs to city officials and other corruption.
And while the Europeans and Japanese were subsidizing the development of fast rail systems, the United States required that gasoline tax dollars support road building only. It kept gasoline taxes low to encourage driving and discourage other forms of transport, with more than a little lobbying help from Big Oil.
But even if there were no conspiracies such as the demolition of urban transit systems, Americans’ economic priorities (as the labor advocate and lawyer Thomas Geoghegan shows in his lively part-travelogue, part-political broadside, Were You Born on the Wrong Continent?)15 drive a geography of urban sprawl and auto dependence.
Geoghegan points out that thirty years of increasing inequality and wage stagnation, as described in the previous chapter, have led American families to work more. Tax cutting has decimated urban schools. A growing underclass has increased fear of crime. Parents flee the cities for the suburbs, where they expect the schools, funded by higher-income taxpayers, will be better and they will be safer (though a study by the Sightline Institute in Seattle shows that you’re more likely to die from a traffic accident in the suburbs than from any cause, including a bullet, in the city).
Geoghegan shows how land costs make homes in the suburbs cheaper than in the city and homes in the exurbs cheaper than those in the suburbs, so people move farther out, unable to buy homes closer to where they work, or worried that urban schools will mishandle their kids. Now they have long commutes on top of long working hours. Exhausted when they get home, they have little interest in or energy for going out, as Europeans do. So they are more likely to stay at home and amuse themselves with plasma TVs and home entertainment centers (how big is yours?).
They seldom know their neighbors and do not share appliances, so they must each buy their own lawn mower, leaf blower (don’t you just hate those things?), or whatever. All of this consumption requires bigger homes and more garage space. When John was making the film Affluenza, he spoke with a man who had four garages. His several cars and boats were all outside. “It’s for storage,” he told John. “You never have enough storage so you can never have enough garages.” The biggest homes are built farther out, where land is still cheaper. People follow the homes. Their commutes get even longer, and they need to work longer to pay for all the stuff their isolated suburban lives require. Driving everywhere, they spend more on exercise machines for their homes—these might need their own rooms …
They drive because their public transit options are limited and because they are too far out to bike or walk (and it’s unsafe anyway). They pay through the teeth for nannies or child care or the exploding costs of health care or colleges, because such social supports are not adequately funded as in Europe. All hands on deck must work to make money, but they work in different places so each must have a car. It’s a vicious cycle. Their decisions are not so much the result of greed as of growing inequality and lack of options.
It’s quite different in Europe, as Tom Geoghegan explains. European economies are more egalitarian despite some increases in inequality in recent years. Life is safer, and schools are more likely to be excellent. No need to go so far out for a house—and in many countries, no room to do it either. Europeans don’t pay through the nose for health care or college or child care, so they don’t have to work as hard. Shorter working hours leave everyone with more energy, while greater attention to public amenities, paid for in part through higher taxes, means more options for fun outside the home: cafés, cultural offerings, pedestrian streets, parks, concerts. There’s less need for so many individual home entertainment centers. It’s a virtuous cycle.
Geoghegan points out that Europeans’ greater equality depends in large part on distributive taxes, but that much of the taxes they pay comes right back to them in the form of services. As with health insurance, buying these services through taxes instead of purchasing them individually in the market has the effect of buying in bulk: You get more for less. The greatest good for the greatest number.
Who Governs?
In one sense, the capacity to “earn success” isn’t just about ability or opportunity; it’s about power to make and influence decisions. We Americans have always prided ourselves on how democratic our country is. For decades, from the 1910s to the 1970s, from the direct election of senators and the establishment of the process of initiative and referendum to the Voting Rights Act, our country was getting more democratic. So democratic, in fact, that some highly placed observers conjured visions of the rabble at the gates, a messy mob storming the Bastille (Wall Street), perilously close to guillotining the establishment. The late Harvard political scientist Samuel Huntington warned of a “democratic distemper” loose in the land, an “excess of democracy,” threatening Western civilization or, at least, the Hamptons.
No such luck these days.
Part of the reason so little concern is paid to the greatest good for the greatest number over the longest run in our economy is that money talks louder here than in other places. The dollars of the rich flow in a ceaseless stream to the politicians to finance their campaigns, and the politicians do their bidding. We won’t dwell on this because you are probably already saying, “You think I’m dumb or what? Everybody knows this.” Indeed everyone does, and the realization makes all of us increasingly cynical about government and less likely to be politically engaged. It should, instead, make us determined to stop this dictatorial distemper and take the money out of politics.
But things only get worse. In 2010, the Republican Meg Whitman of eBay spent more than $130 million of her own money in an unsuccessful effort to buy the governorship of California. A few years earlier, the Democrat Jon Corzine spent almost as much to buy the governorship of New Jersey. But most of the money comes from corporations. Money in politics is a bipartisan thing. Over the years, the Republicans have gotten more corporate donations, but Democrats are certainly not immune to this bribery.
In what must rank as one of the rankest legal decisions of all time, the United States Supreme Court, in the Citizens United case, ruled that limitations on direct corporate financing of elections were a violation of free speech. With such a legal framework, and with corporations granted the legal rights of individuals, is it any accident that candidates who would restrict greed or mandate social-democratic safety nets are so easily defeated? Americans are aware of this problem; 64 percent say they favor an amendment that would, at least, overturn the Citizens United decision.16
Improving the Work Environment
But even if we could get a bit more control over the wholesale auctioning of our political decisions, democracy is more than politics. Many of the decisions that most affect us daily are made in the workplace, the venue where we spend about one third of our lives, if not more. The Gallup organization conducts daily happiness polling in the United States. In April 2011, its national averages were as follows:
Overall Well-Being Index | 66.1 |
Percent Thriving | 50.6 |
Basic Access to Goods | 82.4 |
Emotional Health | 79.1 |
Physical Health | 76.2 |
Healthy Behaviors | 63.1 |
Work Environment | 45.417 |
In other words, Americans rate their work environment lowest among the well-being domains measured by Gallup. Satisfaction with the work environment in the United States is at its lowest levels since Gallup began measuring work satisfaction several decades ago. This finding is worrisome, both for the health of our economy and for our happiness. According to happiness experts, work satisfaction is enhanced by the degree to which work allows people to use their skills, contribute to the common good, and find social connections with others, and by the degree of control people have over their working conditions. But American workplaces are decidedly undemocratic.
The destruction of organized labor, which began in the Reagan era (more on this in chapter 11) and continues with the wholesale elimination of public employee bargaining rights in some states, has meant less democracy on the shop floor, while the globalization of commerce and deregulation of finance have given corporate power brokers greater license to move whole industries and squeeze absolute obedience from workers still lucky enough to have a job after outsourcing and downsizing.
There are alternatives. Perhaps the most intriguing and democratic is a policy called codetermination. In German companies with more than two thousand employees, workers codetermine policy. The law requires that half of the companies’ boards of directors be elected directly by the workers. We’re sure this comes as a shock, so let us say it again: In Germany, half the boards of directors of large companies must be elected by the workers.18
Believe it or not, this extreme measure was not the idea of Germany’s huge and powerful union, IG Metall. It was imposed on Germany by the Allies, particularly the Americans, after Germany lost World War II. The victors wanted to punish the Krupps and other German captains of industry for supporting Hitler during the war. But some were also New Deal believers who saw the new German economy as a possible experiment in social democracy far exceeding what was politically feasible in the United States. At first the rule applied to only a few industries, but in 1974, it was extended to all large companies. As a British historian once explained to John, the real winners of World War II were the German workers. Life is stranger than fiction.
What has codetermination meant for the Germans? Among the highest wage and benefit compensation packages in the world, for one thing. Job security, for another. When American bosses were blissfully transferring their plants to Kathmandu or Timbuktu (actually Juárez or Beijing, but we like the ring of the other place-names), German bosses naturally wanted to follow suit. But guess what? The workers on the boards of directors weren’t ready to ship their jobs abroad. They said Nein to such suggestions, and almost all the plants stayed right there in Germany.
Western economists were appalled. No way could the Germans compete. Not in Thomas Friedman’s flat world where their leading competitors, the Americans, were shipping jobs to China and the Chinese were paying peanuts on the dollar to their workers. Predictions of German economic demise were rife. Surely the Germans would have to slash their obese salaries in order to compete.
But Tom Geoghegan shows how the Germans confounded the odds. They improved the skills of their workers and the capacities of their plants and gained a reputation for quality products and diversification. They kept selling big-time. And they did this while giving everybody six weeks of vacation a year! With one hand tied behind their backs, as Geoghegan puts it.
Indeed, not until 2009 did China exceed Germany for total sales of exports, despite having fifteen times its population. Before that, the Germans sold more abroad than the Chinese, even while the rapidly rising euro made their exports more expensive. In contrast to America’s dismally negative balance of trade, German numbers are highly in the black. Knowing this, American investors, no dummies even if they are a bit greedy, have invested highly in German industry. Codetermination, far from destroying German industry, has helped preserve most of it. The Great Recession that began in 2008 hit Germany hard, precisely because it’s an exporting country. But another enlightened policy, Kurzarbeit, explained in chapter 5, allowed Germany to keep its workers employed while America’s were shown the exits. And now, with the euro dropping in value, German exports are hopping again.
In addition to their power on corporate boards, German workers have power over such issues as scheduling through elected works councils, and major clout in determining salaries and benefits though industry-wide bargaining by their big unions. Geoghegan writes that, paradoxically, Germany is the most “socialist” country in the world when it comes to the power of workers to shape policy, but it is also the most successful big capitalist country. Something for Glenn Beck and other screamers about “European socialism” to consider, though they are unlikely to have their minds confused by facts that don’t fit their frames.
Codetermination as a model is most advanced in Germany, though a form of it exists in other European countries including Sweden, where smaller percentages of seats on the boards of directors must be allotted to workers. In these countries, workers don’t participate in major investment decisions. But they do exercise important power in the day-to-day activities of the plant—such as the speed of the assembly line—through their works councils.
Codetermination and works councils represent real, practical democracy in the workplace, where we all spend so much of our time. Any economy concerned with the greatest good for the greatest number would do well to consider their potential. The idea that such policies make countries uncompetitive is not supported by the facts. According to the World Economic Forum’s 2010 Global Competitiveness Index, Sweden ranks second and Germany fifth. The United States ranks fourth, but of the top twenty countries, eleven are European nations with strong public sectors and high taxes. Four are Nordic countries. Here is the list.
1. Switzerland | 5.63 |
2. Sweden | 5.56 |
3. Singapore | 5.48 |
4. United States | 5.43 |
5. Germany | 5.39 |
6. Japan | 5.37 |
7. Finland | 5.37 |
8. Netherlands | 5.33 |
9. Denmark | 5.32 |
10. Canada | 5.30 |
11. Hong Kong | 5.27 |
12. United Kingdom | 5.25 |
13. Taiwan | 5.21 |
14. Norway | 5.14 |
15. France | 5.13 |
16. Australia | 5.11 |
17. Qatar | 5.10 |
18. Austria | 5.09 |
19. Belgium | 5.07 |
20. Luxembourg | 5.0519 |
Among the criteria are taxation rates and flexible work rules (where the United States ranks high), but also physical infrastructure, the comparative capacities of its workers, health and educational levels, and the quality of its governance (all areas where America ranks low). Our system sacrifices workers’ quality of life to be competitive. The evidence shows that you can do things the American way and be successful in the world market, but you don’t have to. Europeans generally understand that if they do it our way, the capacities of their citizens to “earn success” will be more limited.
The Message of Mondragon
Another model for workplace democracy is the cooperative, in which workers actually own a company through shares of stock or other means. There are thousands of such cooperatives in the United States, and as Gar Alperovitz points out in his book America Beyond Capitalism, they are generally quite successful. Salary differences between top and bottom are much smaller. Greater participation in workplace decisions characterizes such firms, and they are generally more stable than traditional small businesses.
In the Basque region of Spain, a federation of giant industrial co-ops called the Mondragon Corporation was established in 1956 and is now the seventh largest corporation in the country. Founded by Jose Arizmendiarrieta, a Basque priest, Mondragon employs eighty-five thousand people working in 256 companies in four areas of activity: finance, industry, retail, and knowledge. The cooperatives are owned by their worker-members, and power is based on the principle of one person, one vote. Mondragon companies also run a college for workers.20
The difference in pay between managers and minimum-wage workers ranges from 3:1 to about 9:1 at Mondragon, with the average being about 5:1 or less. The workers themselves, as co-owners of the cooperative, set these wage levels. Workers earn about 13 percent more and managers about 30 percent less than in similar noncooperative businessess in Spain, and also earn a share of profits. The cooperatives provide extensive continued training for their employees to regularly update their skills and improve their capacities, not just as workers but as citizens. The success of Mondragon shows again that companies need not operate on a model of squeezing workers and fattening owners to compete in the global economy.
The Capacity for Wonder
In a world running out of resources and increasingly poisoned by industrial waste (as we describe in chapter 9), there is a forgotten capacity that may be most important of all in preparing for the future. It is the capacity to use leisure time well. We live in a society of constant entertainment and the continual introduction of new products, advertised as needs and presented as exciting escapes from the everyday boredom of life.
During the last great era when Americans worshipped wealth, our business leaders suggested that we become exactly what we have indeed become. “The American citizen’s first importance to his country is no longer that of citizen but that of consumer,” the pro-business Flint (Michigan) Journal editorialized in 1924. “Consumption is the new necessity.”21
In what might be called the “Age of Affluenza,” we all have constantly growing expectations of new products, but each seems to satisfy less than the one before—a phenomenon economists describe as diminishing marginal utility. Yet this pattern of disappointment does not lead most of us to question the promises of materialism, but only to demand the next “high” even more quickly. We have become addicted to consumerism. If we did not want all these things, we could have more time, as we pointed out in chapter 6. We could be more instead of simply having more.
To understand earned success as the development of our gifts, rather than the right to endless novelty produced by others and hyped by marketers, requires the capacity for using leisure well. In the 1960s, we Americans assumed that we would soon have enough stuff, and since we could make it faster and faster, we would have a lot of time on our hands. We worried that unless people were prepared for the leisure society, they might simply spend all their time soaking in passive entertainment. All around the country, leisure studies and recreation departments were established at colleges and universities to teach people how to use leisure appropriately.
Sadly, over the past few years, many of our leisure and recreation studies programs have been closing down. They should be expanding. They are needed now more than ever.
Our levels of consumerism are not sustainable. As Dean Fortin, the mayor of Victoria, British Columbia, put it: “Our children are not going to be the consumers that we are. The world cannot stand that level of overconsumption.”22 We must begin trading productivity for time instead of stuff if we are to have a habitable planet for future generations. We need to be able to use this expanding leisure in ways that enhance well-being.
We need to train the teachers who can restore a sense of natural wonder in children jaded by ever-more-addictive and violent electronic media. We need to expose children to the natural world and to the literary and artistic treasures of human history, to the values of meditation and contemplation and focus, instead of more and more multitasking and distraction. They need to take joy in identifying trees and flowers as they now identify corporate logos.
We need to help children become friends and listeners and conversationalists, knowing that human connection is essential to happiness and to health. We need to teach them to grow their gardens and delight in the miracle of awakening life. We need to encourage them to become engaged as citizens and makers of culture rather than mere consumers, puppets on the strings of commerce. We need investments that will prepare them to live in a sustainable society with a sense of joy instead of deprivation.
Lyle Grant of Canada’s Athabasca University, drawing on the ideas of the economist Tibor Scitovsky, author of The Joyless Economy, suggests that “the problem of over-consumption is rooted in the lack of skilled consumption” (italics his). “For Scitovsky, this skilled consumption [means] valuing … literature, music and conversation as worthy and superior alternatives to resource-intensive material consumption … Without acquisition of consumption skills, people generally fall into a pattern of engaging in resource-intensive work to consume resource-intensive material goods.”23
If a nation seeks the greatest good for the greatest number over the longest run, it will invest no small proportion of its resources toward enhancing such capacities in all its citizens. It will understand that we are not truly poor in scientists and engineers and makers of things but poor in those who practice and teach what the nineteenth-century economist John Stuart Mill called “the Arts of Living.” It will not devote all its resources to training technical specialists whose claim to such resources is that they can keep producing more stuff faster and faster.
For those who measure success wholly by the growth of the GDP, such suggestions probably seem frivolous. Yet if we do not invest in preparing our children for a new society richer in connections and capacities but not in things, the results will be catastrophic, as the next chapter warns.