Financial Times: Extend state ownership to save jobs

[marmar]

Extend state ownership to save jobs
By Richard Sennett

Published: October 7 2008 19:00 | Last updated: October 7 2008 19:00


We are entering a period of financial socialism, by which I mean that the government is buying enterprises which cannot survive in the free market – Fannie Mae and Freddie Mac, the $700bn credit bailout in the US, Northern Rock and Bradford and Bingley in the UK. Most observers look at such financial socialism as an emergency measure – and a bad thing. To me it is a good thing; indeed, public ownership needs to be extended from the financial sector to the manufacturing and service sectors.

The reason for this is that Europe and the US have many industries and service businesses which cannot survive in the global economy. In the 1980s it was often assumed that the developing world would get the poor-quality, grunt jobs and the west would reserve for itself higher-quality skilled labour. This has proved in the past 20 years not to be the case. India, Brazil, China and south-east Asia are more than cheap labour markets; they are increasingly places able to provide high-skill, high-quality work.

At home, many of the new jobs created in the past 15 years are low-skilled service work. These jobs are hostage to the fluctuating credit card debt of local consumers. Job losses in the developed world are a fact of life and those losses are going to increase. My own calculation is that structural unemployment in Britain and the US will rise to about 7 per cent by 2015, and that the rate of underemployment will rise by 30 per cent. This is a conservative estimate; some of my colleagues, such as Robert Reich, the former US labour secretary, put the loss factor much higher. Even at my more modest estimate, these figures will prove a huge drain on unemployment and disability benefits. In Europe, with its increasing numbers of elderly and a shrinking labour force, every notch upwards in unemployment spells further misery. Politics enters the picture: people without work are angry, explosive citizens. And so, too, does simple humanity: people gain self-respect through being productive.

How did we get into this dangerous mess? Both Europe and the US have done a poor job and not invested the necessary sums to create new, sustainable work. Britain, justly famous for technological invention, has failed to develop the green industries such as wind turbines that this innovation has spawned. The US has cut down on the vocational education of skilled craftsmen and reacts with surprise that good-quality skilled manual labour has to be outsourced or imported. .........(more)

The complete piece is at: http://www.ft.com/cms/s/0/22c67e70-947d-11dd-953e-000077b07658.html

[TreasonousBastard]

1. As attractive as this sounds...

(and I am one who believes in a certain amount of socialism in things like electricity generation) excessive state subsidies or ouright state ownership does not guarantee anything beyond short term first aid. State ownership often enough has shown itself to be as bureaucratic, stultified, and corrupt as private ownership, if not moreso.

What I would like to see is encouragement for new industries, and vast amounts of government research freely available to the private sector. We no longer have Bell Labs and the other basic research labs doing general science, and we're not all that friendly to garage inventors any more. Rather than have the state buy out the bronze foundries in Connecticut, have the state fund the research for new technologies and assist venture capitalists in getting new ventures going.