Greetings and Salutations…

I apologize for the lengthy delay in getting a posting up here. Health issues have distracted me from many tasks in my life. Hopefully, though, the worst is past, and I will be able to pontificate here for your amusement again.

I just read a very interesting article online, and, would recommend it to all of you to contemplate: http://www.guardian.co.uk/commentisfree/2011/feb/28/education-jobs-middle-class-decline There are a number of excellent points in the article, and, so I thought I would touch on them a bit here. I shall try to stay off the ranting soap box though.

The author discusses the fact that real wages in the western world (The UK and USA in specific) have not risen for several years. For the UK he quotes 6 years, for example. This is hardly a surprise to those of us who work hard to keep businesses running, either in a support role, or actually producing the product. For some of us, it has been 15 or more years since there has been any significant increase in compensation. Now…why is this happening? I believe that the major reason for this is a terrible change in the mind of management. Years ago, management looked upon the workers at the company as being its greatest asset. So, management’s tendency was to make sure that employees were adequately compensated, and, that there were regular raises to (at least) keep up with inflation. At that time management also realized that an employee leaving was a costly thing for the company, not only because of the knowledge that employee took with them, but, also the costs of training a replacement, and, the loss of productivity to the company in the time it took the new employee to get up to speed. At some point in time, though, that attitude started to change, until today, when it seems that management looks upon every employee as nothing more than a standard cog in the great machine of “company” that can be replaced with no problems by any OTHER “cog”. The concept of lost productivity and the costs of training and such has vanished from their minds. As far as I can tell, too many folks in upper level management fall into the category of people who believe that, no matter what the statement, if it is repeated often enough and long enough, it becomes the truth. This is, at best denial of reality, ranging closer to a delusional point of view that would make operating heavy machinery a bad idea.

So…how did this point of view arise and take such deep roots in the minds of Western Management? I believe there are several root causes, which I want to touch on. There is the increasing level of unemployment that is casting a dark shadow over Western nations. It is a whole lot easier to get a warm body into a vacant position when the unemployment level is at 10% than when it is sitting at 4% or 5%. Desperation will push people to work at jobs that they might not normally consider, either because of lack of job satisfaction, or low compensation. Another factor IS the economy (which is partially responsible for the high unemployment figures). After all, when one is trying to feed one’s family and keep a roof over their head, that desperation kicks in and will motivate a person to work for less. Yet another factor (also mentioned in the article mentioned above) is the fact that, thanks to the economic state of Third World nations, it is possible for employers to pay their employees a small fraction of what Western workers “need” to survive, and still allow those workers to enjoy a huge increase in quality of life. I do not recall the exact numbers, but, for example, it is possible for a doctor in India to get gross $50K per year, and live at the same level that would cost $250K in America. It is possible for a worker in Korea/Taiwan/China/India to make $1.50/hour and have a lifestyle that would require $35 or more per hour in the USA/UK. This was one of the big attractions to outsourcing a company’s product to a third world country. Now, as we are learning, the savings of outsourcing are much smaller than originally advertised, due to other costs and such, but, still, it IS cheaper. Now, this has to do with the “cog in the machine” thing because, by outsourcing, Management is removed from and isolated from the true costs of losing an employee. Typically, if an employee vanishes from a support center chair, or is fired from the production line, the managers there will have another warm body in place almost immediately, and since there may or may not be any formal training involved, the costs tend to get hidden in the noise. Because of the isolation, the idea of corporate memory gets removed – employees that might know a better way to do a task are thousands of miles away from controlling management, and, are, typically, walled off so the employees cannot contact anyone past the manager of their immediate area. So…that knowledge about methods that do not work, or, a better way to perform a task, tends to vanish and be lost. Another serious cost that management ignores is that the employees doing the work are the ones who know where the problems arise, or can see a path opening up that would likely bring more profits and diversity into the company. If, by treating the employees badly), management builds an attitude in the employee that there is no profit for ME in helping the company out, then, those problems that could be fixed, or new areas of production will slip away and be lost forever to the company. The end result is that the company will atrophy away and eventually be eaten by bigger sharks in the economic ocean.

An interesting point made in the original article was that of the concept held by many of “orderly migration” of work offshore. The idea there is that as a given field of work matures, it will, by nature, become boring to Westerners, and so be shuffled offshore, making room for “new technologies and jobs” that the Western world will develop and mature. I find several problems in this point of view, actually. Perhaps the root cause of my discomfort with the attitudes enumerated is the somewhat paternalistic and condescending attitude on the part of Westerners towards the citizens of Third World Nations. The so-called “neoliberals” who hold these attitudes really remind me of the denigrating, racist folks I would (and do) run into in the Southern US and the their attitudes towards people of color.. it is, as the article touches on, as if Westerners believe that folks in the Third World are mentally inferior, and unable to make those intuitive jumps that cause technology and society to forge ahead and to create new technologies. I am in complete agreement with the author that the fact of the matter is that not only are well-educated Third World citizens just as smart and innovative as anyone else, but, I would go beyond that, and say that they likely have more of a hunger to succeed than many Western folks. Putting those factors together means that I can certainly see how, in the next decade or two, we shall see the real innovations and advances in society and technology coming out of the Third World. This burst of creativity, focus on success and hunger to succeed on their part, combined with the increasing apathy and internal rot in Western Society, will ensure that we will fade back. Much like the infamous British Empire, America and the other Western countries will likely see a decrease in abilities, in wages and quality of life as they atrophy away. Finally, in terms of innovation (and why it is less likely to involve Western Societies) is the belief that these innovations come from employees who use their knowledge to explore new avenues in the company and come up with new ways to do a job, or a new product for the company to produce. The major reason this will tend to atrophy away is what I have mentioned before – management’s strongly held view today that employees are easily replaceable cogs, and the lack of concern over their leaving the company. Corporate memory is the shoulder of the giant that current employees can stand on to see further. If a company is losing that knowledge and wisdom, or treating their employees badly (as mentioned above, to the point that those employees see no profit in helping the company improve), then those innovations and service/product expansions will not happen.

Now, what could happen that would help the situation? there are no simple, easy, or quick answers to that question. It has taken years to get Western companies into that pit of adversarial attitude between management and employees and it will likely take several years to get them OUT of it. I would suspect that it would take at least a couple of years just to get employees to a point that they are not instinctively suspicious of any action that management takes, even if it appears to be of benefit to the employee. As a part of this trust building, management will have to make very sure that if it makes a promise (say…a bonus or pay raise) that it follows through on that promise. Conversely, on the employee’s part, they will have to start thinking of ways to improve the company and working to implement those improvements, even if it does not look like it will be “profitable” to them. Another factor that may help the Western World a bit (although I would not depend on this as the saving grace), is the economic changes that we are seeing happen in China and Third world nations. it is a fact of nature that all people have many traits in common and one of those traits is a level of greed (or…the desire to improve their station in life, to put it in a more political correct way). So…for years workers in China/India/Taiwan/Korea/Etc have been building items for the Western World that the worker themselves cannot afford to acquire. However, that is changing. Over the past few years, for example, one of the fastest growing markets for flat-screen displays (Computer and Televisions) has been China. Those folks are tired of making cool toys for someone else, and want to be able to have a big, LCD TV for themselves too! Nothing wrong with that, but, it has two interrelated effects. First…of course, this means that the cost of those big screen TVs and such goes UP in America and other Western countries, as there are fewer of them being exported. Secondly – the wages of the average Chinese worker have to go up quite a bit so they can afford that flat screen TV. This ALSO raises the cost of the TV to the Western Society…beyond that, with more disposable income, the Chinese/Third World worker becomes more of a consumer which starts to change the import/export ratio for the country. All of these changes tend to cut the profit available by outsourcing and influence manufacturers to move their operations back in country. Right now, though, the economic differences between the Western and Third World countries is still so great that there is not huge pressure – yet – for manufacturing to move back onshore. However, we are seeing a trend of manufacturing looking to move its production plants from the Asian countries into Africa (which is still poor enough that $2/day in wages seems like a King’s ransom). If, by some chance, though, this change in economics happens quickly enough, it will return good paying jobs to the Western Countries and counter the decrease in wages and quality of life we are looking at. However, as I have mentioned, I do not think it will happen quickly enough to help us, or our children….

Pleasant dreams!

Bee Man Dave