What Did Senator Elect Jim Webb Mean - Road to the Middle Class

the most important--and unfortunately the least debated--issue in politics today is our society’s steady drift toward a class-based system, the likes of which we have not seen since the 19th century.

Certainly we can agree with him when he asserts that

In the age of globalization and outsourcing, and with a vast underground labor pool from illegal immigration, the average American worker is seeing a different life and a troubling future... Manufacturing jobs are disappearing.

And, of course, the average corporate CEO earns about 400 times what the average worker earns, not to mention that he owns most of the stocks. The result, Webb asserts, is an out-of-touch elite:

living in a different country. Few among them send their children to public schools; fewer still send their loved ones to fight our wars.

You can see where he is going with this:

With this new Congress, and heading into an important presidential election in 2008, American workers have a chance to be heard in ways that have eluded them for more than a decade... And our government leaders have no greater duty than to confront the growing unfairness in this age of globalization.

In other words, with the economy a disaster of insecurity and the road to opportunity closed off by an unfair new class system, Democrats want to be able to legislate a whole new tranche of subsidy and privilege over the US economy, details to be provided later.

With all this gloom and doom, you would be surprised to learn that the GDP per head in the United States reported in The Economist’s Pocket World in Figures, 2006 Edition is $37, 240, against $30,280 in the United Kingdom, $29,240 in France, and $29,130 in Germany. You might even be surprised to learn that unemployment in the US is about 4.5 percent.

But let us review a few of the problems that the US worker is facing.

First of all, despite 160 years of public education, the National Assessment of Adult Literacy rates a mere 15 percent of US adults as “proficient” in literacy and 13 percent “proficient” in numeracy. Yet Democrats have truculently resisted reform of the US education system with charter schools and vouchers.

Second, despite the certain knowledge that Social Security cannot deliver its promised benefits without swingeing tax increases and/or benefit cutsÃ¢â‚¬â€a prospect that threatens the security of every American, young or oldÃ¢â‚¬â€Democrats have truculently resisted the president’s proposal to fix Social Security by turning it into a mandatory savings program that would help ordinary Americans get to own a lot more stocks and bonds.

Third, just what is the Democratic plan to deal with globalization and outsourcing? If the US wants to maintain its position as the most productive nation in the world then its workers must perform high-value work. The corollary is that low-value work, aka “manufacturing,” must be outsourced to other countries. As Carl J. Schramm says in The Entrepreneurial Imperative:

Every one of us will be forced to become more entrepreneurial... No government can be rich enough or impose significant enough barriersÃ¢â‚¬â€such as trade restrictionsÃ¢â‚¬â€to protect all of its people from economic insecurity. No institutional force such as unions can protect against the rigors of world competition.

When Senator-elect Jim Webb talks about a new class-based system he is just as wrong about the 21st century as Marx was in his understanding of the economy of the 19th century. Forget bourgeois vs. proletarian, the 19th century was a period of startling transformation driven, in large part, by men who started out on the ragged edge of the proletariat: John D. Rockefeller, son of an itinerant patent medicine peddler; Andrew Carnegie, son of a hand-loom weaver; Karl Benz, son of a locomotive driver.

The 21st century economy is shaping up rather similar to the 19th century. Old established enterprises find themselves threatened on every side by aggressive competition. What kind of class-based system are we drifting towards on a day when upstart Google, founded by Larry Page and Sergey Brin, a couple of twentysomething PhD students, has a market valuation of $147 billion while old, established IBM has a valuation of $137 billion?

How do you “drift” towards a rigid class-based system when everything is in flux from globalization and outsourcing?

It’s easy to write glib op-eds about fairness, globalization, and worker security, and to pompously pronounce that with the new Congress workers will have a chance to be heard. But which workers did the Senator-elect have in mind?

Right now, according to Steve Malanga, the average state-and-local-government worker gets paid about 40 percent more than a comparable worker in the private sector. We private-sector workers, fully exposed to the risks of globalization and outsourcing, earn a lot less than tenured, sheltered, Democrat-voting government workers. Where’s the fairness in that?

What Did Senator-elect Jim Webb Mean?

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