David Hoppe

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:: Government or business

A false choice

By David Hoppe

Is the glass half full or half empty? That's the question we were asked to consider last week as first President Obama, and then Gov. Daniels presented their contrasting views of the economy.

In his annual State of the Union address, the president described what he called “the American promise” this way: “if you worked hard, you could do well enough to raise a family, own a home, send your kids to college and put a little away for retirement.” He then said that, “the defining issue of our time is how to keep that promise alive.”

As far as the president is concerned, the glass appears to be half full. In the last 22 months, he said, businesses have created over 3 million jobs. That's the most jobs created in a year since 2005. He went on to say that American manufacturers are adding jobs for the first time since the 1990s.

But Gov. Daniels, who gave the Republican response following the president's speech, had a different take. For him, the glass is half empty. “The percentage of Americans with jobs is at the lowest in decades,” he said. “One of five men of prime working age, and nearly half of all persons under 30, did not go to work today.”

The governor sounded the alarm. This year, he said, may be our last chance “to restore an America of hope and upward mobility, and greater equality.” He said the U.S. is “only a short distance behind Greece, Spain and other European countries now facing economic catastrophe.”

Like Pres. Obama, Gov. Daniels asserted that creating jobs is the way back to “an America of promise.” But he accused the president of putting business down. “The late Steve Jobs — what a fitting name he had — created more of them than all those stimulus dollars the president borrowed and blew. Out here, in Indiana, when a businessperson asks me what he can do for our state, I say ‘First, make money. Be successful.”

As far as Gov. Daniels is concerned, the president's faith in government is misplaced; it's American business know-how that will see us through. To hear him tell it, the governor's calendar is packed with meetings in which eager business executives are pushing in front of one another to ask what they can do for Indiana — besides make financial contributions to local Republican candidates, that is.

The governor alluded to Steve Jobs. But in an eye-opening piece in the Jan. 22 New York Times , reporters Charles Duhigg and Keith Bradsher write about how the economies of manufacturing have prompted Apple to outsource engineering, building and assembly of iPads and iPhones to overseas contractors. Apple employs 43,000 people in the U.S., but pays 700,000 people in Asia, Europe and elsewhere. A former Apple executive is quoted, saying Apple's entire supply chain is now in China.

The iPhone is assembled at a place called Foxconn City, where 230,000 employees live in barracks and are paid $17 per day to work six 12-hour days per week. Duhigg and Bradsher note that the Chinese government has, in many cases, underwritten the costs of numerous industries in their country, like, for example, the building of worker dormitories.

Given his support for union busting right to work legislation, this story makes you wonder what Gov. Daniels had in mind when he linked Steve Jobs and job creation.

It's worth noting that Indiana already has its own version of the Chinese production model. For years, farms and orchards with a need for seasonal labor have hired Hispanic workers to come here and harvest fruits and vegetables. These workers often work from dawn to dusk. They also live in barracks or bunkhouses. The farmers who hire them will often tell you they've tried to employ local folks, but most Americans either can't or won't do the work as well as their migrant competition. At least, not for that pay scale.

Both Gov. Daniels and Pres. Obama seem to agree that America has a jobs problem. But the jobs problem is actually a competition problem. If the terms of this competition are left to business leaders to decide on their own, the issue will be reduced, as it seems to be in Indiana, to figuring out how to get the most out of workers for the least amount of money.

This is why the president is proposing to create tax incentives, making it more attractive for businesses to stay in this country. Whether these measures are sufficient, though, remains to be seen.

Duhigg and Bradsher write that American business leaders complain our workers lack mid-level skills and that the cost of doing business here is just too high to allow for the profits necessary to spur innovation. What's more, as economist Betsey Stevenson tells them: “Companies once felt an obligation to support American workers…That's disappeared.”

So is the glass half empty, or half full? Maybe, when it comes to our economic dilemma, it's time to stop thinking in such either/or terms. Neither government nor business will be able to fix things by itself.