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DEBTOR NATION

Chapter 1 ♦ AIRMAIL FROM AFTERLIFE

1976

One rainy summer day, I packed my backpack and went to America. I was seventeen. I knew what I was doing: I was escaping from the debacle at home. And I was looking for something. For what exactly, I didn’t know, but I’d go look for it in America. There, the heat burned in my nostrils. Lawns were brown. Cars were big and air-conditioned. Girls went gaga over my accent. Guys thought I was cool. And I fell in love with it all.
          Three years later, I was paying my way through college in Texas when the notion of home, distant and convoluted as it had become, blew up with gratuitous violence. A Boeing had crashed into a mountain in Turkey, killing all 155 people aboard. I heard about it on the radio. But I didn’t connect the dots.
          A few days later, I found a message from the operator in my campus PO Box. Telegram, call Western Union, it said. I called from one of the pay phones. My heart was pounding in my temples, and I had trouble hearing the lady on the other end.
          “I’d read it to you,” she said. “But it’s in German. I think you better come by and get it.”
          “I’m fixing to go to work. Can’t you try to read it to me?”
          “Oh dear.”
          “Is it long?”
          “Two lines.”
          “Can you spell it?”
          “Well, I guess I could. Are you ready?”
          I pulled out a notepad and pen. “Ready,” I said, though I knew that I wasn’t ready, that I’d never be ready for whatever she was about to spell.
          “E-L-T-E-R-N new word,” she said, “A-M new word M-O-N-T-A-G new word M-I-T new word F-L-U-G-Z-E-U-G new word I-N new word D-E-R new word T-U-R-K-E-I—”
          “Stop! Please.” I couldn’t write anymore. Parents on Monday with plane in Turkey.... German sentences, even in abbreviated telegram style, had the main verb at the end, but I didn’t want to hear the main verb, didn’t want to hear it spelled out letter by torturous letter. “Thank you. That’s enough.”
          I’d escaped the debacle at home and had gone as far away as possible. But this wasn’t what I’d had in mind. I stood there in a daze, brain deadlocked, numb, clutching the receiver, drowning in abysmal emotions.
          Then I went to work. It was just a part-time job, but now I needed the money more than ever. Afterward, I drove to the Western Union office and picked up the yellow slip of paper with twelve lines of all-caps alphanumeric gibberish and two lines of readable text. It was from my sister, sent from the town where she was staying with friends. But it didn’t include their phone number. And my brother was on vacation somewhere. So there was no way to reach him either.

Next....

TESTOSTERONE PIT, the novel

Wolf Richter

Chapter 1 ♦ Circle Jerk

It was Saturday, the biggest day of the week, and everyone was working bell to bell, over forty salesmen, though Ferronickel didn’t know exactly how many he had because some hadn’t shown up and might have started selling cars some other place, and because he’d hired a bunch of new guys an hour ago.

“It’s a beautiful day,” he sang in a basso profundo voice as he marched across the showroom in his asymmetric gait. He was the general sales manager at the Ford Superstore. His Tabasco Sauce tie was loosened, his collar unbuttoned. His gut that hung over his belt strained his shirt. He had puffy eyes and was full of mean energy, ready to explode, ready to force things to happen. He blew out the door, came to a halt on the porch that surrounded the showroom on three sides, and lit a cigarette.

Al Millikin, one of his four sales managers and perhaps the best closer in town, was watching Mad Boxer work a customer on the truck lot. Potential deal.

“Why can’t he bring that guy inside and write him up?” Ferronickel said.

“He ought to tell him we got free pussy on the showroom,” Millikin said.

“Don’t give me any ideas for our next live remote.”

“Come to think of it, that would be a hell of a lot more effective than the classical rock-and-roll shit we’ve been doing.”

“For our male customers.”

“We could alternate. Free pussy one day, free Godiva chocolates the next. We’d have both ends of the spectrum covered.”

“You’re a fucking Einstein, Millikin.”

Reginald Pierce, another sales manager, a big guy with a shortish Afro, was jumpy and his eyes darted about. He fretted about Whacker Packer, Hackman Jones, JoAnn Delouche, and several other salesmen who’d formed a dope ring by the plate-glass window. If left alone, they’d make up rumors, complain about dealership coffee, and infect each other with morale problems. He singled out a young guy.

“Freddie T, are you going to participate in a circle jerk?” he growled. They called him Freddie T because of his unpronounceable Greek last name. “Or are you going to sell something?”

It startled them; they’d forgotten all about selling. And they drifted apart.

Lou Massago gesticulated on the phone in one of the closing booths. He wore a white button-down shirt, a red and blue tie, slacks, and ostrich-skin boots. A scar curved upward from the right corner of his mouth, giving him a lopsided grin even when he was serious. His eyes were set close together and peered out from under his bushy eyebrows with ferocious intensity. But he had a soft voice when he wanted to, and now he wanted to because he was talking to a customer about a 15-passenger van that had come out of the rental fleet. There were ten of them. They were scratched and dented and had too many miles on them, and they were overpriced, and no one could sell them, but he was king of sales, and if he could sell them, it would prove he could sell anything.

He hated working the phone. He needed his customers in front of him, needed to stare into the whites of their eyes. But no one had sold any of those vans yet, and to prove he was king of sales and could sell anything, he’d decided to sell them all. Besides, the Saturday rush hadn’t begun yet, and calling old customers was more productive than standing around waiting for something to happen.

Next....

Wednesday

Jan112012

When The White House Touts Falling Wages

Wednesday, January 11, 2012 at 5:57PM

150 factory workers in China threatened to jump off the roof of an iPhone factory unless they received a raise. Similar stories are accumulating. Inflation, especially in food and other essentials, has been rampant over the last few years—and to make ends meet, desperate workers sometimes take drastic measures. These anecdotes underscore a major trend in China: skyrocketing cost of labor.

In the US, it’s the opposite. Since 2000, real wages (adjusted for inflation) have declined. The White House even touts this horrid statistic in its just released paper, Investing in America: Building an Economy That Lasts. Clearly, the paper is not intended for the rank and file. It outlines how current policies are making America competitive with low-wage countries like China. And one of the principal strategies is ... lowering wages:

From the White House paper

The paper also touts the administration’s claim of having created 3.2 million jobs over the last 22 months. But these numbers are based on surveys, formulas, and statistical adjustments. The BLS’s Employment Population ratio, which the paper wisely leaves unmentioned, measures the percentage of people age 16 and older who have jobs. It’s the least corruptible employment number available—and at 58.5%, it's only a fraction above the 58.1% from August, which was the lowest reading since 1983. And it’s far below its peak of 64.7% in April 2000.

BLS Employment Population Ratio

The long decline from 64.7% parallels another statistic mentioned in the paper: from 2001 - 2007, three million manufacturing jobs were lost. Those were the Bush years, obviously. But what happened during the Obama years? Unmentioned, but just as bad.

From the White House paper

The tiny hook at the bottom is the ballyhooed uptick. But during the next economic downdraft, the line will likely plunge again. And the slack in employment will continue to contribute to the decline in real wages.

The problem for a high-wage country in a globalized economy is that jobs will be globalized as well. The decision whether or not to offshore production comes down to calculating the total cost of doing business overseas. This includes worker productivity, transportation, supply chain risks, legal and political risks, currency risks, intellectual property risks, expenses for expats, delays, flexibility, environmental issues, taxes, import duties, etc. Hence, for US manufacturing to be competitive, wages don’t need to match Chinese wages, but they need to be closer. That approach in wages has been happening—at a great expense to US workers. And now there are some results.

The paper mentions Ford and Caterpillar as examples of large companies that have announced investments in the US to ‘insource’ jobs from overseas. Those announcements, when they do occur, are made with great political fanfare.

Yet the same companies are still making massive investments in China and other low-wage countries, though no US politician takes credit for that. And there are many others. Merck disclosed from its headquarters in New Jersey that it would build a new facility in Beijing, part of its $1.5 billion investment in China. Nissan, which has large plants in the US, just announced that it would build a plant in Mexico. And government-subsidized solar panel makers, well, for how they just started a trade war, read... The Trade Debacle with China.

So the net of outsourcing and insourcing among large companies still favors outsourcing. But under certain circumstances and on a small scale, companies might try to insource. And that is a step in the right direction.

Smaller companies face different dynamics. It has always been expensive, difficult, and risky for them to offshore production. Many have done it, lured by cheap wages, only to learn costly lessons. And now anecdotal evidence is piling up that they’re having second thoughts. The paper lists KEEN, a footwear maker, and Master Lock as examples of companies that have brought back jobs. I personally know one consumer products company that shut down its manufacturing operations in China and relocated production back to the US (though it still operates plants in other parts of the world). And this is a trend that will likely accelerate.

But low-wage countries will continue to draw jobs away from the US. The numbers couldn’t be clearer: in 2011, the trade deficit with China hit another record north of $320 billion. So taking credit for a wave of ‘insourcing’ from China, as the paper does, has an aura of political grandstanding.

Even the US auto industry, which is relatively cost competitive, isn’t immune from China. Practically every car or truck sold in the US today contains Chinese-made components, though Chinese-designed vehicles haven't arrived yet. But it’s a priority of the Chinese government. And it’s through the back door. Read.... The US Auto Industry Drifts Off To China.

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Reader Comments (2)

Where in the WH document does it state that "And one of the principal strategies is ... lowering wages"? I couldn't find any such reference to a deliberate strategy or intention. Although I don't doubt that the administration would pursue that (it's Keynes' strategy all over again) I can't seem to find it in that document.

February 14, 2012 |

Tom Amlie

Tom - You're right. No one would dare phrase it that way in an official paper. There are much more acceptably sounding alternatives, such as “reducing the cost of labor.”

February 22, 2012 |

Wolf Richter

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