The Mythical Social Contract of Job Creation
posted at 12:34 pm on January 16, 2012 by Jazz Shaw
The “King of Bain” has caused no end of woes for some Republicans, but while largely discredited, it has also given progressives a straw to grasp in this year’s presidential contest. Democrats should note, however, that straws rarely provide much in the way of being serviceable flotation devices. The underlying premise of people arguing against Romney (and Bain) in specific and capitalism in general is found in the oft repeated talking points of Ed Schultz and Elizabeth Warren. The accusation they level runs along these lines: “There is a social contract. You created a factory or a business but you took all the money and failed to create the jobs for everyone. You tricked us.”
The flaw here is the frequently repeated but totally fabricated idea that job creation was ever the chief goal – or even one of the goals – of industry. It never was. Job creation was simply a happy side effect of industrial activity and capitalism in general. (And when I say “happy” I mean happy for the working public at large and the government whose existence relies on keeping the unwashed masses quiet and content.) The purpose of industry, or any capitalistic activity, is and always has been to make money and generate wealth for those who established and invested in those endeavors.
Let’s say you operate a factory which makes widgets, and one step in the widget creation process requires two pieces of metal to be welded together on an assembly line. Given a choice between a human being – or potentially several human beings working different shifts – and a robot which is capable of performing the welding, which would you opt for? If you have one shred of honesty left in you, you’ll admit that you’d take the robot every single time. Why? Because human beings are, by nature, expensive, messy and inconvenient tools to accomplish any such goal. You have to give humans paychecks, provide them with healthcare and other benefits, arrange to take care of their taxes and monitor their performance. They go on vacation. They get sick sometimes and miss work. They get in fights with their boyfriends or girlfriends, become distracted and make mistakes. They see a better job and quit, taking their skills with them. Sometimes they die and you have to retrain someone else from scratch. But the robot sits silently in your factory and welds one widget after another, 24/7, and doesn’t need time off for holidays.
If we look far enough back in time, the Luddites were correct. When they saw the machine which could do the job of many men, they foretold their own doom in terms of the working class. Businesses have always chosen and always shall choose the path which reduces costs and increases profits. When one of the options is to reduce the number of employees (or, failing that, to move the jobs to cheaper locations) they’re going to wind up making that choice in order to fulfill their mandate of remaining competitive and maximizing their profits. Every… single… time. And whether the business is engaged in manufacturing or services, they must strive to be as competitive and profitable as possible, leading to the need for the services of companies like Bain Capital, who assisted many of them in reworking their business models to achieve that maximum efficiency. And, yes, that often involved eliminating or relocating large numbers of workers.
I completely understand how cold and brutal that sounds, but it’s also the absolute truth. This notion that there was ever some sort of social contract between industry and labor in which capitalists had some warm and fuzzy obligation to provide jobs in exchange for the opportunity to succeed is a fantasy. And it was one which I myself subscribed to for years until many spoonfuls of the harsh medicine of reality were shoved down my throat. The only reason businesses used to hire more people is because we hadn’t figured out ways to operate without them yet.
And even though the Luddites were correct, the system still managed to stagger along and function fairly well to the benefit of workers for a long time. This was largely due to the repeating pattern of The Next Big Thing. When workers with scythes were no longer required to harvest the wheat, somebody had to build, maintain and operate the tractors and combines which replaced them. When automation and cheaper foreign competition overtook our ability to profitably produce radios, we invented television and spawned a fresh industry to create those modern marvels. By the time the television manufacturing market had moved to Japan we were cooking up computers. There was always The Next Big Thing to blunt the damage to the working class as industry developed ways to make money with fewer human laborers.
But with technological advances in efficiency moving forward at the speed of light, assisting the ease of globalizing the labor market as they go, those Next Big Things on American shores have become fewer and further between. And those operating businesses responded to those opportunities. This doesn’t explain all of our current employment woes, but it adds to the general climate where the supply of workers exceeds the demand of available jobs. In our anger at these losses of jobs and the perception of a growing disparity in wealth, we seek out someone to blame and find a convenient scapegoat in organizations like Bain, corporate raiders and the Vultures of Capitalism.
The only problem with this argument is that the vultures were always there. It just seems worse to you now because they’ve become much more efficient flyers.