A Tale of Two Countries

As economist David Autor (a member of our research team) told the New York Times, “Most people’s fear of technology is really a fear of capitalism, what the markets will do with the technology.”

“Automation Isn’t the Biggest Threat to US Factory Jobs”, Wired, Anna Waldman-Brown, May 1, 2022

In the last post, I provided a link to an article that outlined how America got to where we are now with high inequality, the Great Resignation, and lots of turmoil in society.

But there are different kinds of capitalism; America has one of the more brutal versions. Denmark and possibly Sweden probably has a socialist-capitalist combo version where citizens have some kind of safety net but still labor under a capitalist working system. As part of their safety net that I’m aware of, the nation does provide support for paid family leaves. I am sure there are others because I’ve read references to the Swedes’ comfort with embracing new technology because they have a support system if they find themselves temporarily without a job.

The German corporate structure is a combo of senior executives and labor: both provide input into the decision-making. I believe Germany has a more expansive union system whereas in America, it is nearly non-existent.

America has no, or very little, safety net and every day, certain politicians work very hard to get rid of them (Social Security, food stamps, child support funding, etc.) And it’s been a struggle to get some kind of union drive going because those in the corporate offices do not like unions.

As I mentioned in the last post, our capitalist system is very much geared toward shareholders (who are most likely dominated by the very wealthy) who do not like taxes, regulations, or unions.

That is the current situation we have right now.

Wired recently had an article comparing two countries and the approach to automation of factory jobs and the impact on workers. In Germany, manufacturing firms have been able to move up the food chain and offer up highly specialized products and retain hirely trained workers who stick around. In America, the emphasis appeared to have been more on reducing costs (probably to enable the stream of money to flow to the shareholders) thus the firms, especially smaller ones, have to compete with lower cost firms, especially those in China.

The author says that it is America’s policies that are driving the low-cost strategy, but I feel like it is more likely the drive from the shareholders. Germany apparently has a community system where technology innovators, educational systems, and government work together to provide training and education to workers and generate useful technology for manufacturers. With the shareholder primacy, the American system has no incentive for such collaboration; shareholders will not drive toward such system.

Shareholders have their hands out, saying, “show me the money”. That’s why training and education has been cut from company’s budgets for the last 30 or 40 years, under the guise that there was no return on such training.

Reading the article was interesting but also depressing because as long as the shareholder hold the top spot in our society, the mindset in American capitalism is to use technology to replace workers.

To transition from combustion engines to electric vehicles, Germany’s Bosch launched a €2 billion plan to reskill its workers for equivalent or higher-paying jobs. Meanwhile, America’s General Motors took advantage of the same technological shift to replace $31/hour unionized workers in its plant with $17/hour subsidiary workers doing similar tasks.

This low-wage strategy has been a trend among American auto manufacturers, with predictable consequences

“Automation Isn’t the Biggest Threat to US Factory Jobs”, Wired, Anna Waldman-Brown, May 1, 2022

This American reliance on automation rather than skilled workers has persisted …

“Automation Isn’t the Biggest Threat to US Factory Jobs”, Wired, Anna Waldman-Brown, May 1, 2022