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8 - Policy Implications for the United States

How to Get Off the Low Road

Published online by Cambridge University Press:  05 June 2012

Harold L. Wilensky
Affiliation:
University of California, Berkeley
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Summary

RECAPITULATION: WHERE WE HAVE BEEN

Since the early 1970s the Anglo-American democracies have increasingly chosen the low road to economic growth and job creation: low and stagnant or declining wages; intensive use of low-skilled, least-educated workers in large, expanding sectors (e.g., retail trades); a widening spread between high-wage, high-skill workers and the least educated; emphasizing low-value-added products and services for much of the economy while upgrading processes and products in the most sophisticated sectors that employ a minority of the work force; meager investment in both physical and human capital; increasing reliance on subcontracting, a system of low-wage, no-benefit workers concentrated in small firms, themselves highly unstable, who are pressed to cheat on payroll and other taxes and evade minimum wage and safety laws; the rapid spread of contingent labor and unconventional schedules; decreasing job security for most of the work force; greater concentration of wealth; increasing poverty and inequality, and associated mayhem.

The corporatist democracies of Continental Europe and Japan followed various versions of the high road: greater participation of unions in workplace and community and in national policy making; relatively high wages, greater job security; labor and social policies that retard the growth of the contingent economy; heavy investment in human capital; more stable relations between large corporations and their subcontracted suppliers and salespeople; high productivity (working smarter, fewer hours); a lesser spread between high- and low-wage workers; much lower poverty and inequality; and a concentration on high-value-added products and processes, with R&D that accents the D. And they avoid the worst pathologies of poverty. Just as the increasing autonomy of central bankers obsessed with inflation, suspicious of growth, and unconcerned about unemployment did nothing to lower the high unemployment rates of the 1990s in Europe (Chapter 6), the high-wage short-hours strategy at its extreme may also play its part in the 1990s’ rise in unemployment in some of the corporatist democracies.

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Publisher: Cambridge University Press
Print publication year: 2012

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