Why Wall Street's Gain Has Been America's Loss
Jobs -- everybody is in such total agreement that we need more of them that the word is in danger of becoming meaningless, of going from tangible policy to talking point. In
At a recent fundraiser
That sounds great, if it's true -- a very big "if." But, even if it is true, the vice president didn't say what kind of jobs these are. And make no mistake: not all jobs are created equal.
Since the recession began in late 2007, we've lost 8.4 million jobs. Over 2 million of those were manufacturing jobs, the kind of jobs that have traditionally delivered American families into the middle class -- and kept them there. We lost 1.2 million manufacturing jobs in 2009 alone. And while job numbers go up and down, the loss of these blue-collar jobs has been going on for decades.
In 1950, manufacturing accounted for more than 30 percent of non-farm employment. As of last year, it's down to 10 percent. Indeed, one-third of all our manufacturing jobs have disappeared since 2000.
Yet the way that the useful section of our economy is being replaced by the useless section of our economy is rarely talked about in
The trend is even starker when you look at the financial sector's share of U.S. business profits. As
That's right -- over 40 percent of the profits of the entire U.S. corporate sector went to the financial industry.
"Remember that financial services are an intermediate product -- that is, we don't eat them, or live in them, or put them on in the morning. They are supposed to enable a more efficient allocation of capital, so that the nonfinancial economy is more productive."
In other words -- it's supposed to serve our economy, not become our economy.
But isn't wringing our hands over the loss of manufacturing jobs the 21st century equivalent of 19th century concerns about America turning from an agrarian society into an industrial one? Isn't America's future to be found in newer, better, more modern service industry jobs?
Actually, no -- for a number of reasons.
For starters, it turns out that manufacturing jobs aren't just more productive and valuable than jobs in the
"Making goods is on balance -- with exceptions -- more productive than providing services, and rising productivity is the fundamental source of prosperity. . . . Without something to export, a nation will either become overindebted or forced to reduce its standard of living."
In other words, in the absence of manufacturing, the only way to compete with Third World nations is to become a Third World nation, which is exactly what will happen if we allow our middle class to disappear.
What's more, it's not just manufacturing and lower-skilled service jobs that are disappearing. According to the
Even more troubling is the reason so many of these jobs are being sent overseas. It's not just about cost control. "What used to be a tactical labor cost-saving exercise," according to a 2006 study by
This is what happens when a country is willing to spend trillions of dollars fighting unnecessary wars while allowing college tuition to rise out of the reach of so many of its citizens. And it's what happens when a country turns its economy over to the casino of
It's not too late to change course. The financialization of our economy didn't just happen. Decisions were made that made it possible -- and decisions can be unmade. But first we need to decide, as a country, what kind of economy we want to have: one that's good for middle class families or one that's built to enrich
It's time to start separating the real economy from the casino economy. And to make sure that with all the talk in
- Why Wall Street's Gain Has Been America's Loss
- Euro Crisis has American Fingerprints
- Wall Street Probes: Collateralized Debt Obligations
- Voters See Debt Crisis. Why Doesn't Washington?
- Social Security Inflation Adjustment Debate
- European Debt Crisis Affects Investments
- Greece: Model of Socialistic Excess
- Who Got Hit Worst in the Market Crash
- Expeditionary Economics: Spurring Growth After Conflicts and Disasters
- Why More Diplomacy Won't Keep the Financial System Safe
- Muddling through Greece's Tremors
- Greece Financial Crisis Raises Doubts About European Union
- Bigger Is Better: Case for Transatlantic Economic Union
- European Union: A Fragile Partnership
- Goldman Sachs Testimony Boost for Financial Reform
- A Culture of Criminality on Wall Street
- Greek Debt Crisis May Hurt Latin America Economy
- Why April's Unemployment Rise Shows Workers Hopeful Again
- Smart Moves for Tomorrow's Higher Interest Rates
- Still the Optimist
- The Global Glass Ceiling: Why Empowering Women Is Good for Business
- Life in the Age of 'Much Worse Than We Thought It Would Be'
- What 3.2 Percent GDP Growth Says About Our Contradictory Economy
- Congress Had a Role in the Financial Crisis
- Just a Few Questions for the SEC
- Financial Crisis - Somebody Must Pay!
- Is Latin America Booming? Not Quite Yet
- Guns vs. Butter 2010
- Your Guide to the Goldman Sachs Lawsuit
- Can SEC Beat Goldman Sachs?
- Time to Break up the Big Banks
- Resisting Wall Street Reform
- Shorting The Middle Class: The Real Wall Street Crime
- Obama Edge on Financial Reform
- 10 Cities Facing Double Whammy of Default Risks
- Capitalism vs. Capitalists
- Business Schools' Great Ethics Debate
Why Wall Street's Gain Has Been America's Loss
(c) 2010 U.S. William Pfaff