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I've read plenty of both Krugman and others like him that make the same point. I find it entirely very unconvincing. For instance, take the city of New Haven,

I've read plenty of both Krugman and others like him that make the same point. I find it entirely very unconvincing. For instance, take the city of New Haven, where I went to college. In the 1950's the city had a thriving industrial base and tens of thousands of high paying union jobs. Over the next few decades many of these businesses collapsed due to competition from lower priced manufacturing in the South and West. Manufacturing jobs went from 43% of New Haven employment to 20% by 1973. The famous Winchester factory went from an employment of 10,000 to around 700 by 1979. In that year there was a massive strike. The strike caused the factory to hemorrhage money and corporate actually ended up selling it for peanuts to the employees. But even as an employee owned enterprise, it failed to make money, and eventually it closed completely. Today Winchester rifles are manufactured on a multinational basis, with some parts being made in Utah and others in Portugal. This same story was repeated across the rust belt, from Detroit to Philadelphia. None of this fits Krugman's story. The unions were strong, they were just asking for more money than the market would pay them (although the market was rigged, as I note below). If your interested in reading more, I highly recommend Douglas Rae's City: Urbanism and its End. Here is an except from Google books that talks about the decline of manufacturing in New Haven: http://books.google.com/books?ei=FgwCSeeYGoLmygS73cy3Cw&id=Ve0MPmi2LgoC&dq=city+douglas+rae&pg=PP1&lpg=PP1&sig=ACfU3U1vA2iQgGfgwl8_0h0lFC9r4_bjJw&q=winchester#PPA363,M1 http://books.google.com/books?ei=FgwCSeeYGoLmygS73cy3Cw&... A lot of the worst downsizing did indeed happen during the Reagan presidency. But that had a lot more to do with Volcker's strong dollar policies, high interest rates, and the resulting rise in the trade deficit, than it had anything to do with Reagan's policies. For the past thirty years, foreign governments and investors have been selling the U.S. cheap manufactured goods and then buying our financial securities. This has decimated our manufacturing sector as domestic producers have been unable to compete with manufactures in countries with an artificially weak currency. But its been a windfall to everyone in the U.S. who borrows money - from leveraged buyout firms to the government itself.

dangoldin 18y ago
Just curious - have you read Supercapitalism by Robert Reich? He tries to explain the reasons for the various changes in American capitalism over the past 50 years.
- bokonist 18y ago
  I have not. I used to read the American Prospect to which Reich regularly contributed, but I haven't read that book.
  - dangoldin 18y ago
    I think you should take a look. I found it pretty interesting. The general idea is that we sacrificed our citizenship for consumerism and the world adapted to people having this new role. It's well written and an entertaining read, even if you disagree with the points.
mattmaroon 18y ago
There seems to be much more to it than just that though. From Krugman: "Second, again like Reagan, Bush has used the government's power to make it harder for workers to organize. The National Labor Relations Board, founded to protect the ability of workers to organize, has become for all practical purposes an agent of employers trying to prevent unionization. A spectacular example of this anti-union bias came just a few months ago. Under U.S. labor law, legal protections for union organizing do not extend to supervisors. But the Republican majority on the NLRB ruled that otherwise ordinary line workers who occasionally tell others what to do -- such as charge nurses, who primarily care for patients but also give instructions to other nurses on the same shift -- will now be considered supervisors. In a single administrative stroke, the Bush administration stripped as many as 8 million workers of their right to unionize." You can't simply explain the death of unions by saying manufacturing has gone overseas. Those jobs were replaced by retail and service industry ones which, in the 70s, were also largely unionized. Now they're not. Why?
- bokonist 18y ago
  Unions in some sectors are more powerful than ever. Nurse unions in particular are very strong, much more so than they were fifty years ago. The education sector, construction, and government employees at all levels, have very strong unions. If government policies destroyed the unions, why are the public sector unions so powerful? Also, to a large extent occupational licensing has replaced unionization. See this paper for instance: http://ftp.iza.org/dp3675.pdf http://ftp.iza.org/dp3675.pdf Excerpts: "During the early 1950s, less than 5 percent of the U.S. work force was covered by licensing laws at the state level (Council of State Governments, 1952). That grew to almost 18 percent by the 1980s with an even larger number if federal, city and county occupational licensing is included. By 2000, the percent of the workforce in occupations licensed by states was at least 20 percent, according to data gathered from the Department of Labor and the 2000 Census. ...Our multivariate estimates suggest that licensing has about the same quantitative impact on wages as do unions - that is about 15 percent..." It's hard to unionize a hair salon, because anyone can open a competing hair salon and undercut the prices. So instead, the hair dressers lobby the legislature to pass occupational licensing laws which create barriers to entry, thus raising the pay. Those jobs were replaced by retail and service industry ones which, in the 70s, were also largely unionized. Were they? Places like Sears or Sandy's Drive-In were not unionized in the 1970's. Which service and retail jobs were unionized in the 70's that are not today? One theory is that its hard to establish unions in industries that are mobile and have low costs to entry. If Walmart employees unionized, it wouldn't be long before a Target moved in and undercut their prices by using non-union workers. Pre-1950, factories were only profitable near rail lines and ports. The rise of the highway system and power lines made factories much more mobile. This allowed factories to move to locations where unions were not so powerful. This is the Doug Rae theory from the book I recommended above. I don't really buy it though. More likely, I think the high unionization rates of the 1950's were a result of New Deal and World War II corporatism. As the giant "organization man" corporations created by the New Deal gradually declined, so did unionization. I'm curious. You run a company. If you were interviewing a potential employee, and he announced to you that he might strategically refuse to come to work at some point in order to extract a higher wage, would this make you think twice about hiring him? Do you think the government should make it illegal for you to hold the candidate's comment against him in the hiring process?

dangoldin 18y ago

Just curious - have you read Supercapitalism by Robert Reich? He tries to explain the reasons for the various changes in American capitalism over the past 50 years.

bokonist 18y ago
I have not. I used to read the American Prospect to which Reich regularly contributed, but I haven't read that book.
- dangoldin 18y ago
  I think you should take a look. I found it pretty interesting. The general idea is that we sacrificed our citizenship for consumerism and the world adapted to people having this new role. It's well written and an entertaining read, even if you disagree with the points.

mattmaroon 18y ago

There seems to be much more to it than just that though. From Krugman: "Second, again like Reagan, Bush has used the government's power to make it harder for workers to organize. The National Labor Relations Board, founded to protect the ability of workers to organize, has become for all practical purposes an agent of employers trying to prevent unionization. A spectacular example of this anti-union bias came just a few months ago. Under U.S. labor law, legal protections for union organizing do not extend to supervisors. But the Republican majority on the NLRB ruled that otherwise ordinary line workers who occasionally tell others what to do -- such as charge nurses, who primarily care for patients but also give instructions to other nurses on the same shift -- will now be considered supervisors. In a single administrative stroke, the Bush administration stripped as many as 8 million workers of their right to unionize." You can't simply explain the death of unions by saying manufacturing has gone overseas. Those jobs were replaced by retail and service industry ones which, in the 70s, were also largely unionized. Now they're not. Why?

bokonist 18y ago
Unions in some sectors are more powerful than ever. Nurse unions in particular are very strong, much more so than they were fifty years ago. The education sector, construction, and government employees at all levels, have very strong unions. If government policies destroyed the unions, why are the public sector unions so powerful? Also, to a large extent occupational licensing has replaced unionization. See this paper for instance: http://ftp.iza.org/dp3675.pdf http://ftp.iza.org/dp3675.pdf Excerpts: "During the early 1950s, less than 5 percent of the U.S. work force was covered by licensing laws at the state level (Council of State Governments, 1952). That grew to almost 18 percent by the 1980s with an even larger number if federal, city and county occupational licensing is included. By 2000, the percent of the workforce in occupations licensed by states was at least 20 percent, according to data gathered from the Department of Labor and the 2000 Census. ...Our multivariate estimates suggest that licensing has about the same quantitative impact on wages as do unions - that is about 15 percent..." It's hard to unionize a hair salon, because anyone can open a competing hair salon and undercut the prices. So instead, the hair dressers lobby the legislature to pass occupational licensing laws which create barriers to entry, thus raising the pay. Those jobs were replaced by retail and service industry ones which, in the 70s, were also largely unionized. Were they? Places like Sears or Sandy's Drive-In were not unionized in the 1970's. Which service and retail jobs were unionized in the 70's that are not today? One theory is that its hard to establish unions in industries that are mobile and have low costs to entry. If Walmart employees unionized, it wouldn't be long before a Target moved in and undercut their prices by using non-union workers. Pre-1950, factories were only profitable near rail lines and ports. The rise of the highway system and power lines made factories much more mobile. This allowed factories to move to locations where unions were not so powerful. This is the Doug Rae theory from the book I recommended above. I don't really buy it though. More likely, I think the high unionization rates of the 1950's were a result of New Deal and World War II corporatism. As the giant "organization man" corporations created by the New Deal gradually declined, so did unionization. I'm curious. You run a company. If you were interviewing a potential employee, and he announced to you that he might strategically refuse to come to work at some point in order to extract a higher wage, would this make you think twice about hiring him? Do you think the government should make it illegal for you to hold the candidate's comment against him in the hiring process?