Authors: David Cay Johnston
Traditional manufacturing work is not the only labor that is going offshore, either. Any work done on a
computer can be moved overseas. Banks, software firms, and airlines now have people in India answering calls, eliminating a
major source of modestly paid work in America. The big accounting firms now hire Indian firms to prepare tax returns. Ads in the
Los Angeles Times
are laid out by a company in India that promises 100 percent
perfect copy every time. Computer-assisted design and engineering work is often sent to India and China. Reuters, the British
news agency, fired 20 American and European journalists in 2004 and replaced them with 60 new hires in India, saying it was to
save money.
White-collar jobs moving offshore may well be the next great economic issue
confronting America. It is a problem that even the most ardent advocates of free trade are beginning to acknowledge has a huge
potential to disrupt our society.
An emerging concern can be found in official statistics on
advanced technology. China is selling ever more advanced technology to the United States, running a trade surplus in this
high-value segment that tripled in just five years.
In the next decade or two, as many as 40
million American jobs will be at risk of moving overseas, according to an analysis by a leading supporter of free trade. That means
that more than one in four jobs in America may evaporate. To put this in perspective, in 2007 there were about 147 million civilian
jobs in America, fewer than 7 million people were unemployed, and another 4 million or so wanted work but had been without a job
for so long that they were no longer counted in the labor force. The loss of 40 million jobs would be an economic catastrophe
worse than the Great Depression.
This estimate was made by Alan Blinder, who was a vice
chairman of the Federal Reserve under Alan Greenspan. Blinder, a respected economist at Princeton University, once wrote that he
is “a free trader down to my toes.” But his detailed analysis of how many Americans hold various types of jobs shows that almost
every kind of work done at a computer or with a telephone is vulnerable.
Losing those jobs
would mean wasting a vast investment in education, not to mention the toll such disruption is likely to take on individuals, families,
our sense of the future and ourselves, and perhaps even the domestic tranquillity we have taken for granted for so many
decades.
“The balance is shifting against us,” Blinder asserted about jobs moving overseas.
“If you look backward you see low-skill, drudgery work like call centers. If you look forward you see a lot of professional work like
accountancy” going overseas.
Trade, he concluded, is no longer confined to products you
can ship in a box, from automobiles to zithers. It now extends to any service that can be performed electronically. We are, Blinder
wrote in
Foreign Affairs
magazine, at the beginning of the third industrial revolution. It
might better be called the Triumph of Global Capital over Jobs Revolution.
The first industrial
revolution was the great movement from farm to factory that began right after Adam Smith's time, as industrialization and the ability
to manufacture identical products on a mass scale created both vast new wealth and a lot of the misery that Charles Dickens
chronicled. Back in 1810, more than 80 percent of Americans lived and worked on farms, a figure that has dwindled to little more
than 1 percent today, Blinder noted.
The second industrial revolution began in the middle of
the twentieth century as services began to supplant the making of things. Today less than a sixth of jobs are in manufacturing,
while services provides roughly the same share of jobs that farming did in 1810, as Blinder wrote.
Blinder says we are in the early stages of the third revolution, one he calls the information age. “The cheap
and easy flow of information around the globe has vastly expanded the scope of tradable services, and there is much more to
come,” Blinder wrote. “Industrial revolutions are big deals. And just like the previous two, the third industrial revolution will require
vast and unsettling adjustments in the way Americans and residents of other developed countries work, live, and educate their
children.”
Blinder believes that direct service jobs, such as making beds in hotels, must by
their nature stay in America. But even some jobs we may think of as direct service are already at risk or may become so as
technology advances. At the Hilton, you can get your room key from a kiosk, reducing the need for front desk clerks. Radiologists
have already begun to see the reading of X-rays move offshore. Blinder said he thinks most physicians' jobs are safe, but a look at
technology journals reveals that doctors have done surgeries with remote robotics, so one day residents of Boston may be
operated on by doctors in Beijing.
There are reputable economists who say Blinder is dead
wrong about tens of millions of existing jobs being at risk. Blinder himself says that fewer than half of the jobs at risk will actually
migrate offshore. And even those who agree with him expect new economic demands to create new jobs. After all, in the sixties,
there was a fear that computers would automate so many functions that by today many millions would be out of work. Instead,
computers created new, and often interesting, work opportunities. And the digital economy has had the curious effect of increasing
demand for paper, ink, and file cabinets. Still, just 15 million jobs going offshore would mean 10 percent of the jobs now in America
would migrate.
The first two jobs revolutions had in common one traitâpeople of average or
even below-average intelligence could do many of the jobs with no more than a high school education. Will that be true in the
digital, high tech third wave? And if it is not, what will be the consequences of living in a society where the brightest and hardest
working are rewarded and almost everyone else is reduced to servant-level jobs and wages?
Among leading economists, the belief is nearly universal that this third revolutionary wave rolling across the
globe is so powerful that nothing can stop it or even alter its course. There are, Blinder says, no cures, just palliatives. He suggests
spending more on job retraining, changing the education system for the future, making health care available to all whether they
have a job or not, and improved protections for pensions. Training and education and health care must be financed, whether by
government or private means. In a future in which tens of millions of high-paying jobs migrate offshore this raises an obvious
questionâwho would pay for these economic Band-Aids?
To just assert that globalization will
have its way with our future and that a jobs revolution is unstoppable and uncontrollable is both irresponsible and dangerous. Yet
that is just what many of our political leaders and their economic advisers say on television every day. On the television programs
that tout stocks, anyone who questions free trade is ridiculed by the hosts, who brook no serious discussion.
Overall, the net result of our government policies is that America is selling its wealth to China and other
countries, not unlike the widow of a profligate husband who must part with the art, the furniture, and eventually the house to
sustain herself. At the end of 2006, the United States was spending more for what it bought overseas than it sold, resulting in a
record trade deficit of $902 billion. That meant that for every dollar generated by the American economy about seven cents was
leaving the country, worsening America's status as the world's most indebted nation. Just a generation ago we were the world's
leading creditor nation.
As Warren Buffett calculates it, America is selling close to 2 percent of
its wealth each year to sustain our appetite for imported oil and cheap manufactured goods, many of them mere trinkets. Once we
get down to selling the house, how will the children and the grandchildren live? And what of generations yet
unborn?
Revolutions, unchecked, bring violent change that destroys the good and the
innocent. Karl Polanyi, one of the most influential anthropologists, wrote in his 1944 book
The Great
Transformation
that the rise of fascism in the thirties and World War II resulted from masses of scared people, with
no sense of control over their economic destiny, acting in ways small and great from economic fear and the panic it induced. In
America today, out among the people who are not major campaign donors, there is economic anxiety aplenty, a rational response
to the loss of so many well-paying jobs to China and other countries with more workers than work. It would not take much to turn
that anxiety into irrational fear. Yet our leaders have little time to truly understand the concerns of people who do not pay to be
heard with their campaign contributions, so we get policies skewed toward the interests of the rich and powerful.
The whole premise of America is that we are free to choose our destiny. It is only through constant critical
evaluation of our circumstances that we can identify new problems and address them. We can react to the forces of change and
shape them, or at least adapt to them, so that we maximize the benefit and minimize the harm. Or we can just let a narrow but
powerful segment of our society continue to have the rules written to suit their desires. Better to elect leaders with the judgment to
explore what can be done than to risk an economic disaster that brings forth leaders who will exploit our misfortune and, as
happened in the thirties, scare us into relinquishing our liberty.
Of course, life is not all work.
But even when it comes to play, the culture of taking from the many to enrich the few infects our society, as we will see
next.
T
HE DOOR TO
APARTMENT
24
C OPENS ON A HALLWAY KITCHEN
THAT
flows into a central room crowded with furniture as plain as it is solid.
Everywhere there are books. A few rest atop the wrought-iron skeletons of three treadle sewing machines, forced into retirement
by the advent of electricity until given new employment as end tables.
Ed Hogi found
Apartment 24C in a nearly new building in the South Bronx in 1976. When he showed it to his wife, Joyce, she knew instantly that
this was the best place to raise Jana, Marc, and Francesca. It came with the luxury of three bedrooms. It was also just steps from a
subway stop, where people living in the poorest congressional district in America are seamlessly transported beneath the
neighboring congressional district, the richest in America, on their way to the vast job market in midtown and lower
Manhattan.
What captivated Joyce was what she saw from the big windows along one wall of
the central room. To the far left, she saw Yankee Stadium. Its noise and bright lights would be an annoyance, but mercifully for only
81 home games each year. What delighted her was a green ribbon of urban parks that seemed to flow from the House that Ruth
Built. One block featured tennis courts, another a swimming pool, others fields of grass for running and playing catch. Hundreds of
oak trees ensured cooling shade in summer. There was even a cement rink where the Hogi children would learn to ice skate in
winter and to roller skate in summer.
The parks that nurtured the Hogi children and countless
thousands more were the dream come true of an Irish immigrant named John Mullaly. He laid an early stone in the foundation on
which America's vast and prosperous middle class was built, a foundation to whose condition few people give much
thought.
Mullaly was a reporter for the old
New York
Herald
in the years after the Civil War. He wrote about the squalid conditions of the immigrant class. He reported on
cramped tenements where disease flourished. And he noticed that poor children had no place to play except the streets, which
before cars and buses were littered with horse apples. In 1881, approaching the age of 40, Mullaly quit newspapering. He
persuaded some men of means to finance a campaign to provide New York City with parks, not just for the nearly 2 million who
then lived there, but the millions more that he was sure would come.
At the time, Paris had an
acre of park for every 13 residents, Chicago and Boston an acre for every 100. In New York the politicians had also promised an
acre of park for every 100 people, but reality was closer to one acre for every 1,500. Mullaly argued that for $8 million, a vast park
system could be built that would make the city more attractive. Delay, he warned, would drive up costs as the tide of immigrants
made cheap land on the fringe of the urban core expensive.
Mayor William Grace fought the
plan, saying it would cost $20 million. That failed to staunch public desire for places to play, relax, and escape urban drudgery, so
the mayor mounted a disinformation campaign. Squads of men spread through the tenements warning that the parks would cost
$50 million. They said it would force big rent increases, a scary prospect in an era when hunger was common. And they said the
whole thing was a scheme to enrich a few by gouging the poor.
The charges resonated.
Poverty was a common experience for both native born and newcomer in nineteenth-century Manhattan. People saw government
as intimately connected with their own fortunes. They paid attention to who was getting rich off their taxes, especially when they
received little or nothing in return. More than a century later, the mayor's false charges would have unexpected
significance.
Mullaly spent the rest of his life fighting for the park system. In the end it cost
what he said. Today the Bronx has the only extensive park system among New York's five boroughs. Greensward today links Van
Cortlandt, Bronx, and Pelham Bay Parks as well as Crotona, St. Mary's and Claremont Parks.
One bitter cold winter day in 1915, John Mullaly, about age 72, was found dead in his tenement bedroom. He
had 15 cents in his pocket, the equivalent of about $3 today. The official lies about soaking the poor so that the few could grow rich
were just that, lies. While today sitting officeholders sometimes arrange to have buildings named for them, 14 years passed before
the city government honored this selfless man, renaming part of Macombs Dam Park after Mullaly.
Joyce Hogi knew none of this when she looked down from the narrow balcony of Apartment 24C. Like
everyone else, Hogi took the parks for granted and assumed they would always be there. She never imagined that someone might
covet this commons until one July day in 2005. Hogi, by then a widow and a grandmother with a swimmer's cap of white hair,
spotted a flyer on the windshield of a car parked along the Grand Concourse in the Bronx near her home. The flyer announced that
Mullaly Park, and part of Macombs Dam Park, would be demolished.
Soon Hogi learned that a
month earlier, in just eight days and with no public notice, the two parks had been taken away from the people and given to a
billionaire. Quickly usurping the commons required careful coordination at every level of government from city council members in
the Bronx and the mayor in Manhattan to the statehouse in Albany and federal officials.
The
beneficiary of this exercise in seizing the commonwealth to promote the
narrowwealth
was George Steinbrenner, principal owner of the New York Yankees. The parkland was seized for a new stadium with 60 luxury
skyboxes, larger and more lavish than the 18 that had been grafted onto the girders at the original stadium. Luxury boxes allow the
corporate rich to enjoy commercial sports without having to mingle with the masses, which is to say with their customers and
employees. The skyboxes at stadiums, both commercial and collegiate, connect to private passageways that permit the box
owners and their guests to avoid the jostling crowds when the game ends and everyone rushes for the exits. The corporate rich
pay a great deal for the privilege of being separated from the crowds, virtually all of it tax deductibleâmeaning, in turn, that the hoi
polloi bear part of the cost of being segregated from their economic betters.
Just as the public
financed Mullaly Park, so too are tax dollars financing the new Yankee Stadium. Estimates of the public share started out at $229
million, then jumped past $300 million and then $600 million. The ultimate cost will almost certainly be more. Refurbishing the old
Yankee Stadium in the early seventies, budgeted at $25 million, actually cost $119 million. For the new stadium, all cost overruns
are supposed to be paid by the Yankees, but more subsidies can be layered on later, too.
How
did Steinbrenner get such solid support from elected officials that they would all work in secret to help him steal the parks like a
thief in the night? He hired people with influence and flattered others, notably former mayor Rudy Giuliani, who could be seen
grinning under his Yankees cap at many home games. The local council and state legislature members were bought off, legally,
with free tickets they could give away to home games and small grants they could direct to community groups.
Federal officials came to inspect the parks. Because tax dollars had been used to improve the parks, the land
could not be seized unless parks of equal value replaced them. The officials were told that the stadium project had the backing of
every important political official. The federal officials were also told that there were no public protests, which was true, but only
because the public had no idea what was going on. While the Joyce Hogis were kept in the dark, Steinbrenner was not. On many of
the e-mails tossed back and forth among government officials at all levels, the Yankees were copied, as Patrick Arden of the
Metro New York
newspaper discovered.
The Yankee
Stadium subsidy was, in an odd way, a vindication for the concerns voiced by Mayor Grace more than a century before. This time
there really was a scheme to use parks as cover to take from the many to benefit the few. The difference was that the
twenty-first-century mayors, Rudy Giuliani and Michael Bloomberg, were eager to open the public purse for Steinbrenner, to take
from the many to benefit the few.
Today, all over America, state and local governments lavish
funds on commercial ballparks while holding public parks to a starvation diet and allowing buildings to deteriorate, grounds to go
to weeds, and activities to grind to a halt. The number of full-time recreation professionals fell during the eighties and nineties.
Adjusted for population growth, park staffing by full-time professionals is below the levels of the sixties.
Cities switched to part-time workers, whose numbers nearly doubled during those years. The part-timers
work for low pay, with few or no benefits. They also tend to have little training.
Starving parks
comes at a price much higher than rundown buildings and absent flowers. It also means idle young hands do not have
opportunities to play games, learn skills, and interact with others in healthy ways, but instead turn to what opportunities are
available, often in the “devil's workshop.”
A few years after the Hogis moved into their
apartment in the South Bronx and began enjoying the nearby parks, something quite different was taking place across the nation
in Los Angeles. In 1978 California voters passed Proposition 13, which promised relief from rapidly rising property taxes. Howard
Jarvis and other promoters of the initiative talked incessantly about how good it was for homeowners. The truth was that
two-thirds of the savings went to industry, business, and landlords like Jarvis.
With passage of
Proposition 13, local governments in California felt an immediate and sharp drop in property tax revenues. Spending on street
maintenance, libraries, and parks, among the more visible areas, were all slashed. Within eight years the Los Angeles city parks
staff was cut in half. These cuts would have been even deeper but for a plan developed by James E. Hadaway, the city parks
director. He devised a fix that has become increasingly widespread at all levels of government: charging fees.
These private funds, Hadaway said, would only be supplements to enhance the parks budget, to provide
extras for those who paid for extra services. But within a few years this policy produced two systems of parks, separate and
unequal.
In the prosperous areas, on the Westside and the hillsides of the San Fernando
Valley, the fees flowed and the parks flourished. Flowers blossomed on the edges of lush lawns while air-conditioned community
centers with clean carpets offered an array of programs, even ski trips.
In places where people
of lesser means lived, like Pacoima on the northern side of the San Fernando Valley and the flats south of downtown, the parks
withered. Not enough people had money to pay fees for recreation “extras” so many recreation programs for children just ended.
Many of these parks, 75 of which the city officially labeled troubled, operated with one staffer, few balls, and dry water fountains.
They became dead parks.
Hadaway's agency sent canvassers out to public places to ask
people directly about the parks. Most people reported being afraid to use their neighborhood park, with the level of fear highest in
working-class neighborhoods, especially those on the edge of public housing projects where joblessness was endemic. “They
feel the parks are unsafe,” Hadaway said of the city as a whole, adding ominously, “I believe them.” His director of security called
them “terrorized parks.”
The parks with yellowed lawns, hot and dirty recreation buildings, and
too little money for qualified leaders to plan and organize activities quickly evolved. They developed a new social ecology, ruthless
and damaging to young lives. Gangs filled the vacuum. In interview after interview those gang members willing to talk to me
expressed remarkably similar views of the world. The police, they said, were just another gang, no better than their own, but
officially sanctioned. Some said it did not matter whether they committed a crime or not, because the cops would find a way to
frame them and send them off to prison. In this, without knowing it, they had intuitively grasped the reason for William Blackstone's
famous observation that it is better that some who are guilty go free than even one person who is innocent be wrongly
imprisonedâso that people have reason to obey the law because it is just.
In the dead parks,
crime was rampant. A careful observer could see folded greenbacks furtively exchanged for packets of folded paper filled with
drugs. Turf wars over perceived slights brought young men brandishing guns while, for reasons we shall see later, frantic calls to
the police by park directors often went unanswered for hours, if at all. The cruel reality of this separate and unequal funding forced
many parents in Los Angeles and other cities to keep their children home, denying them part of the foundation for successful lives
as adults, denying them what Joyce Hogi so treasured in New York for her own three children.
In the elbow of the downtown Harbor Freeway ramp that heads west into the Santa Monica Freeway sits
Toberman Park, one of the deadest of the dead. Herb Price, the Toberman recreation director, sat in one of two decrepit office
chairs that wobbled constantly and seemed about to collapse, their quality on a par with his dark and unpainted office, the sunlight
obstructed by layers of dirt and the shadows from heavy metal screens. Would-be thieves had pried back the screen corners in
several places before they gave up, perhaps realizing there was nothing inside worth taking.