November 2010, Week 1


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Sat, 6 Nov 2010 14:42:39 -0400
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The End of Free-Trade Globalization

The following is and excerpt from "The End of
Free-Trade Globalization" By William Greider
The Nation - November 4, 2010


Another leading indicator for potential change is that
a few influential industry leaders are deviating from
the standard corporate line. Jeffrey Immelt, CEO of
General Electric, has called for the revitalization of
manufacturing and suggests that the United States can
become the leading exporter. "In some areas, we have
outsourced too much," Immelt admitted in a speech last
year to the Detroit Economic Club. "We plan to
'insource' capabilities like aviation component
manufacturing and software development." GE's strategic
shift sounds shocking (and unreal to union leaders)
because the company has been the most notorious player
in offshoring assembly lines and jobs. GE's 288,000
worldwide employment is now 53 percent foreign. The
unions that represent workers at GE had more than
100,000 members there in the 1970s; they are now
reduced to about 15,000.

A more persuasive break from past dogma was expressed
by Andrew Grove, former CEO, now senior adviser, of
Intel and a revered figure in Silicon Valley. Grove
wrote a blunt confessional essay for Bloomberg titled
"How to Make an American Job Before It's Too Late." The
government, he urged, must intervene to end the
offshoring game his semiconductor firm and other
computer giants have played for many years. Tax the
product of offshore labor, Grove proposed, and use the
money to help other US companies scale up production at
home. "If the result is a trade war, treat it like
other wars-fight to win," he declared.

Grove took a shot at New York Times columnist and
globalization cheerleader Thomas Friedman, who claims
"innovation" will keep America on top. Not if US
inventions do not lead to US production, Grove argued.
Friedman and other free-traders, he said, don't seem to
understand that the computer industry adheres to its
own exit-to-China strategy for dumping US workers. When
a start-up is in development, investors insist even
before the product becomes a big seller that executives
work out the timing for offshoring jobs.

The US computer industry, Grove observed, employs only
166,000-fewer than in 1975, when the first PC was
assembled-while the industry in Asia employs 1.5
million workers, engineers and managers. The world's
largest computer maker, China's Foxcon, employs
800,000. They make the products Americans know as Dell,
Apple, Microsoft, Hewlett-Packard and Intel.

Union leaders suspect that the same story is playing
out at GE. The company was founded on Edison's
invention of the incandescent bulb, but this past
summer GE closed its last US light-bulb factory, a
highly automated, nonunion plant in Winchester,
Virginia. Old-style bulbs will still be made in Latin
America and Asia, where wages and healthcare are
cheaper, and for a time they will still be sold in the
United States with the GE label. But the company is
moving on, shifting to two new green-tech products that
promise vast reductions in energy consumption. Congress
is effectively banning US production of incandescents
by mandating efficiency standards, starting in 2012.

Both of the new light-bulb technologies were invented
in America. But the new bulbs, GE said, will be made
overseas, and for the usual reasons: US workers are
considered too expensive. They face the same grim
choice that has prevailed for decades: either wages get
busted from $25-$30 an hour to $13-$15, or the jobs
disappear. That trend has been gradually eroding the
American middle class.

Stephen Tormey, representative of the United Electrical
Workers (UE) at GE, sees a shrewd corporate strategy.
"I think GE saw they could make more money with these
new technologies and get subsidized by the government
as energy-efficient if they became born-again believers
in American manufacturing," he says. "I'm all for that.
I will stand on the sidelines and cheer-if it's true.
So far we haven't seen it. You see these little moves
here and there, but so far they are still a globalizing

GE is bringing some jobs home. With lots of fanfare, it
has announced new moves to restore jobs at various US
plants, sometimes to make products like more expensive,
energy-saving home water heaters. But union officials
are not impressed. They read GE's vaguely worded
promises and produce a list of plant closings and job
losses. "Press releases do not create jobs," says Chris
Townsend, UE's Washington representative.

GE is a brilliant example of how a globalizing company
manages its worldwide supply chain, moving elements of
production based on costs and market demand. Divided
loyalty comes with the territory. GE assembles wind
turbines in South Carolina and China. It harvests tax
breaks and subsidies from Washington as well as
Beijing. Which side is GE on? Its own, and it will go
wherever profits are highest. But this race to the
bottom undermines standards in both rich and poor
countries. The downward pressure on wages, and the
obsessive search for lower prices and greater profits,
destroys aggregate demand for the entire system. It
feeds the deflation that threatens to bring down the
world economy.

Read on: http://tinyurl.com/27u2zqw


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