Wednesday, March 14, 2012

Why Is the GOP Suddenly Turning Against College? (or why the U.S. no longer needs a highly trained and skilled blue collar workforce)

Most of the article below comes from James Kwak in this week’s issue of the Atlantic. Tx James.

By (James Kwak) | The Atlantic – Mon, Mar 12, 2012 10:51 AM EDT, Reuters

…..  Paul Krugman argues that Republicans prefer tax cuts to education for political reasons: Their goal to preserve upper-class prosperity comes at the expense of heightened middle-class insecurity. While this is probably true, I think there is more to it. Today, Republicans are turning their backs on higher education because of two historical trends. One is globalization. The other is the anti-tax revolution.

Imagine for a moment that the American political system is controlled by rich people. (That shouldn't be too hard.) In the mid-twentieth century, the United States had by far the largest economy in the world. American companies located most of their operations domestically; foreign direct investment was relatively difficult; and global securities markets were relatively undeveloped, making it hard to invest in foreign countries.

For these reasons, if American elites wanted to make more money, they needed American companies to become more profitable. Since American companies relied on American workers, they needed those workers to become more productive. In that situation, it made sense for the upper class to invest in education for the masses (via taxes and government spending on public education) so they could have a more productive workforce. If, instead, they took all their money and built huge houses in the Hamptons with it, the companies they owned (directly or indirectly) would grow slowly and become uncompetitive.

Today, however, we live in a much more globalized world. Large American companies locate much of their operations overseas and can draw on talented labor all around the world, essentially free-riding off of other countries' educational systems--many of which are at least the equal of our own. We like to think manufacturing has shifted to China because of cheap labor, but it's also because only in China can you hire 8,700 engineers in 15 days . This means that American companies are far less dependent on the American workforce than they were half a century ago.

To which I would add you can also hire a blue collar workforce for 50 cents an hour in China willing to work 12 hours a day 7 days a week reducing the need for a well-trained U.S. workforce reinforcing the migration of manufacturing overseas. 

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