27 August 2012

Romney on Creative Destruction

"IT TAKES A LEAP OF FAITH for governments to stand aside and allow the creative destruction inherent in a free economy, but it's a leap that has been successfully made by every advanced economy in the world....Creative destruction is unquestionably stressful -- on workers, managers, owners, bankers, suppliers, customers and the communities that surround the affected business. The pressures these groups put on political leaders to block game-changing innovations can be intense....

"Despite the benefits to the country, the consumer and the overall workforce from productivity-enhancing innovations, they often face considerable opposition. Managers of corporations that are disadvantaged by a competitor's productivity-enhancing innovation may lobby to prohibit the innovation or the competition....Unions as well often oppose productivity innovations that will lead to reduced employment; understandably, they aren't persuaded by arguments that workers will eventually find employment in new enterprises. And they may worry that even if new jobs are created, these jobs will not be in their union. Typically, they work to block such innovations in two ways. First, they threaten to strike a company that wants to adopt a productivity-enhancing new technology. Second, the exert their considerable political clout to convince government to impede the innovation....

"There is no intrinsic reason why unionization must reduce productivity, of course. Some unions go to great lengths, in fact, to provide their members with training and skills that make them more efficient and productive. Forward-thinking unions look for ways to make their employer become more competitive. Unfortunately, some union CEOs are less concerned about an industry's competitiveness than they are with how many of their union's jobs they can protect, how much they can increase wages, and how they can impose even more favorable work rules. In some cases, this mind-set has contributed to companies or to entire industries falling so badly behind their competition that they lose market share or fail altogether, resulting in even greater job losses....The decline in unionization in the private sector reflects a recognition by working people across America that continual improvement and innovation are required in order for an employer to survive in the global marketplace....

"Some years ago, I served as a lay pastor....I cannot count the number of times I consoled or counseled a person who had lost a job. Not one of them, of course, saw their unemployment as 'a good thing for the national economy.' It was indeed a deeply traumatic personal experience. The resultant stress caused a few people to gain weight, but most lost quite a lot. When the unemployment lingered, people often aged. Sometimes problems in the marriage or the home developed....For some, when they found new jobs, they received better or at least equal opportunity and pay. For many, that was not the case....

"Given the beneficial effects for the economy, for the nation and for the average citizen, we should not restrict trade or burden productivity. But as a nation we must do everything we can imagine to help the affected people transition to new and more productive employment....Personally, I don't like to see America lose any good jobs. But when I see an American company challenged by a foreign competitor, I don't look for protectionist policies as an answer to the company's problems. Instead, I look to see how that company can become competitive once more, drive off its foreign foe, and propel its own products into foreign markets."

-No Apology: The Cast for American Greatness, pp 110-116.

For Mitt Romney, global economic competition is the moral equivalent of war, and war requires sacrifices. Whether you agree or not with his premises on the benefits of creative destruction and "productivity-enhancing innovations," observe that the Republican candidate for President, the presumptive champion of individual liberty against socialistic regulation, justifies creative destruction and other competitive measures entirely in collective terms. Individuals suffer, but the economy, the nation and the abstract "average citizen," presumably a consumer rather than a worker, all benefit. Note also how Romney notes that the union man is "understandably" unpersuaded by appeals to faith in future re-employment. Does he believe that they should be persuaded, that they should have faith -- or does it really matter to him one way or another. In his book, Romney goes on to discuss the need for retraining programs, citing a program he undertook while Governor of Massachusetts to compensate employers for the cost of on-the-job training of people who were unemployed for more than one year. He writes, "For all the benefits that productivity improvements bestow on the many, we need to make sure the cost is not borne by the few." An admirable sentiment, even if we question the proportions of benefit and cost he assigns. But can everyone really win -- can even survival be assured for everyone -- when competition is taking as an irremovable fact of social life? "[Y]et there are few things as beneficial for an economy and its citizens as competition," Romney continues. If innovation is only possible, as Romney seems to assume, under competitive conditions, then creation will always carry an element of destruction. For the Man From Bain, the implicit opposite of competition is complacency. That begs a question that is philosophical rather than political or partisan. If philosophy has another answer, that will be the beginning of the real opposition to what Romney stands for.

2 comments:

TinCanMan said...

One of the mandates of our government upon its founding was to provide for the common good, not the corporate good and not the corporate greed. Putting people like Romney and Tea Party members who hate and distrust government in charge of government is a very good way to ensure the destruction of the government. It's looking more and more like their goal.

Aaron Christiansen said...

So it's okay for the corporatists to put all this stress on everyone else to ensure their profitability, but it's not okay for the government to put "stress" on them in the form of regulation or taxes to ensure the public good?

Time to take every self-serving scumbag like Romney for a ride on a rail - right out of the United States.