Saturday, September 17, 2016

May we please work on a new social contract?

In the old, old days, I would wander in the library and read whatever interested me.  The key word is "interested"--because there were plenty of occasions when I was interested in what I read but had no idea what the author was writing about.  It is like watching an avant garde movie, La Sapienza for instance, and then later reading up to understand the subtext.

These days, I don't aimlessly walk around in libraries.  I browse from home.  Saves me a whole lot of walking, but my fingers ache! ;)

It is through browsing that I came across this interview in the Harvard Business Review.  I got excited because it features everything that I talk and write about: Globalization, labor, robots, footloose corporations, welfare safety net, gig economy, college education, ... Aren't you, too, impressed with what the interview covers?

HBR's editor interviews some guy who was the head of some firm that I had never heard about.  Let's be honest here; I can't know it all! ;)  The guy is Jeffrey Joerres who apparently " led ManpowerGroup for 15 years before stepping down in 2015."  I had to check with Wikipedia (more achy fingers) to find out how big a firm that is.

I want to focus on a couple of observations that Joerres offers in that interview:
Companies are doing more “micro footprinting,” and that takes a nomadic mentality: You’re ready to pick up and move when required. Large footprinting, on the other hand, means you’re committed to a community for better or worse. More and more, companies will need to take a dual approach, establishing large locations and more-temporary, smaller operations at the same time.
Did you also catch that sentence? "Large footprinting, on the other hand, means you’re committed to a community for better or worse."  In the old days, companies were committed to the communities that were their home.  GM in Flint, Michigan, was that classic model.  But, those days ended almost all of a sudden.  Gone.  Which means that local governments and people can/should never, never, never, assume that a corporation will come to stay for the long haul.

Elsewhere, Joerres says:
In many ways, what we have now in the U.S. is similar to the early 19th century, when the Luddites first worried that machines were going to steal their jobs. We must deal with the reality that when full-scale robotics and AI arrive in a broad-based, affordable, easily justifiable way, we’ll see enormous waves of workers put out of work and ill prepared to take on very different jobs. This is going to create challenges that our institutions are not ready for.
It is one thing for a semi-baked nutcase like me to keep saying that.  As my old grad school professor made sure we understood, it is not what you say but who you are when you say that.  In this case, plenty will/should listen to what Joerres says.

We are not ready for the changes that are coming.  Not only are we far from ready, the existing system is terribly broken:
Our institutions are inadequate. Look at unemployment compensation, welfare, Social Security—these were all put in place in the middle of the past century. And they were based on certain assumptions: that when you lost your job, you would go through a process and on the other side find a job that you’d then have for a long time. Today that’s not going to happen. Look at the gig economy, look at parsed work—all these models just allow us to move faster. My dad had a second job. He went to a gas station after he got home from his first job, and he ate his dinner in between. Well, second jobs look different now. Uber is a second job. So what do you do when someone is collecting unemployment and takes a job with Uber to moonlight while he’s in training for a new full-time job? Should he lose food stamps or health care because he’s earning a little extra money to get by? Our systems look broken because they’re trying to fit things into the way the labor markets worked in the past.
Ahem, how long have I been saying this by yelling all the time about the need for an updated social contract?

Ok, are universities the panacea?
The same goes for broad-access universities. They’re built on the old labor models. They’re not turning out graduates with the skills companies need. So we have to refashion these institutions that are so important to our society.
In case you are wondering what a "broad-access university" is, well, those are the overwhelming majority that are not the elite research universities and liberal arts colleges.  The "broad-access university" description includes the university where I teach.  Again, in how many different op-eds and blog-posts have I been complaining about the old-fashioned higher education structure?

I love a solution that Joerres offers:
I think we need an iterative model. Why does it have to be all in or all out? Why can’t someone be on partial welfare? Or on partial unemployment compensation? If a worker loses her job that paid $50,000 a year but can only find a new job for $40,000, her unemployment compensation goes away, but she has lost $10,000. Why don’t we make up the difference for her for another six months because she had what it took to go out and find a job? Some people might see that as a giveaway. It’s not. It’s a small price to pay to encourage that worker to get back into the market. I’d rather pay someone to be in the market than out of the market.
Exactly!  If only we could talk about such important issues, instead of the wasted time and energy on crap!


Ramesh said...

The solution that Joerres offers is precisely the reason why any social contract is so difficult to achieve. I disagree with you that the social contract is not being discussed and not being modified. Cursory or ill informed it may be, but its happening, all the time. Its outcome may not be palatable, and that is precisely the problem.

For example I would completely disagree that if somebody lost a job earning $50 K and got a job earning $40 K, the person should be compensated for $ 10 K. Even if it only for six months that Joerres is proposing, I don't agree at all. If the idea is that society must guarantee a certain standard of living to everybody, its ,well, an utopian dream.

Let me focus on a problem I have been saying loudly for a long time. Why is it that $40 K is considered too low a wage ? For 90% of the population, it's a fortune. For two thirds of my working life I didn't earn $40 K. I would rather that that there is a serious discussion on why American costs are so uncompetitive as compared to the rest of the world.

Sriram Khé said...

1. "its happening, all the time" is one heck of an optimistic assessment. It ain't happening.
Maybe you are referring to the political fights over social security, Medicare, unemp benefits, etc. But, those are being fought mostly as ideological issues. To stereotype, the GOP hates helping people, and the bleeding heart liberals want to. And this is also how the public views it.
What I, and Joerres and many others, want is a discussion that is not based on whether or not to help people, but one that reflects a rapidly changing global economic geography.

2. "why American costs are so uncompetitive as compared to the rest of the world"?
You are asking the wrong question. Instead, I offer a different set of questions for you. Such as:
a. Despite such high costs, how come the US continues to dominate the economic landscape?
b. Despite the huge cost advantage that should make India competitive, how come stuff is not happening in India?
c. Has China maximized its cost advantage and is it now getting into that middle-income trap, unlike Singapore and South Korea that zoomed into the high income?
d. When will most African countries that have the world's most competitive labor costs be actually tap into that advantage?

I would also suggest that there are no easy answers to a through d. Those are some tangled webs there. No Gordian Knot for Alexander to slice through with his sword ;)

Anne in Salem said...

The GOP doesn't hate helping people. The GOP doesn't think it's the government's job to take care of people. There are myriad more efficient, more direct and more effective sources of assistance than any government agency.

Can there be a social contract that removes the government from the equation?

Sriram Khé said...

That's why I intentionally used the phrase "To stereotype" ... my point was that the discussions/debate over the issues are more out of political ideology than out of an understanding of the changing global economic geography.

If we want to treat all the citizens as deserving of a level of existence, then it will be very difficult to achieve that without a huge organization. If it will not be the government, then it will have to be ...? For example, consider a single-mom with two kids who lost her job. The level of support that she gets from her immediate community might be dependent on the nature of the community itself. This is but one example ... but, yes, also the kind of examples that we have to discuss about in rewriting the social contract.

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