24.5.08

FIRE AT WILL. A number of public policy books, including several that I reviewed in the last quarter of 2007, have suggested that the 1950s might not have been all that bad for the semi-skilled worker in the United States. That the remnants of Jim Crow and a different social norm with respect to female labor force participation and the other great powers rebuilding from war and revolution and the underdeveloped countries underdevelopment might all have contributed to that state of affairs generally goes unmentioned. Louis Uchitelle's The Disposable American, the subject of a long-delayed Book Review No. 10, does recognize global economic development as a source of change in the conditions facing semi-skilled workers, but when it comes to policy recommendations, once again, it's trade sanctions (in this case, if countries are not friendly to unions) and greater unionization and higher marginal tax rates. One could go directly to the policy proposals without the preceding journalism.

Mr Uchitelle focuses on two case studies of plant closings that highlight the inefficiencies of that 1950s consensus while undermining his policy proposals. One is the Stanley Works of Connecticut, where managers grappled with competition from imported tools and ultimately closed the plant. Although I insist on drills and taps made from proper Ohio tool steel, there are a lot of people who will make do with lesser stuff, and much of what we used to understand as heavy industry is routine that people in the developing world can pick up. What happened to Stanley was not fun for anyone, whether they depended on the company for a paycheck or a dividend, but stronger unions or closed-border trade policy or the reincarnation of Franklin Delano Roosevelt Himself was not going to keep routine tool manufacture in Connecticut.

The second case study involves a United Airlines maintenance facility in Indianapolis that was the object of much hold-up behavior between the airline and the city, the airline and the mechanics' union, and ultimately the mechanics union' and private and public social service agencies in Indianapolis. A case study involving a formerly cartelized company, with management unaccustomed to market tests, a union working for a regulated firm, and a bid for tax concessions that ultimately do not save the jobs is hardly a prototype for a new social-democratic paradigm.

One line of thought that Mr Uchitelle might have developed more successfully is the loss of institutional memory that comes with restructuring, downsizing, and layoffs. He notes that several investigations of the productivity gains from such behavior turn up very little gain, much disruption of corporate routine, and a tendency of the surviving staffers to devote more time to crisis management than to thinking about the things that they were hired to think about, such as improving or selling products. To pursue that lead, however, might be to discover that market tests are much more effective correctives of restructuring (or diversification or management buyouts or any of the other business fads I've seen crash and burn over the past 40 years) than any public policy might be.

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