The Year the White House became Business Friendly

The Year Washington Became “Business Friendly”

MONDAY, DECEMBER 20, 2010

History will record 2010 as the year Washington became “business friendly.”

Not that it was all that unfriendly before. Some would say the bailouts of Wall Street, AIG, GM, and Chysler were about as friendly as it can get. In addition, Washington gave windfalls to drug companies and health insurers in the new health bill, subsidies to energy companies in the stimulus package, and billions to domestic and military contractors.

But for corporate America it still wasn’t friendly enough. Before the midterm elections, Verizon CEO and Business Roundtable chair Ivan Seidenberg accused the President of creating a hostile environment for investment and job-creation. In the midterms, business leaders overwhelmingly threw their support to Republicans.

So the White House caved in on the Bush tax cuts for the wealthy, and is telling CEOs it will be on their side from now on. As the President recently told a group of CEOs, the choice “is not between Democrats and Republicans. It’s between America and our competitors around the world. We can win the competition.”

There’s only one problem. America’s big businesses are less and less American. They’re going abroad for sales and employees. That’s one reason they’ve showed record-breaking profits in 2010 while creating almost no American jobs.

Consider one of most popular Christmas products of all time – Apple’s iPhone. Researchers from the Asian Development Bank Institute have dissected an iPhone whose wholesale price is around $179.00 to determine where the money actually goes.

Some shows up in Apple’s profits, which are soaring.

About $61 of the $179 price goes to Japanese workers who make key iPhone components, $30 to German workers who supply other pieces, and $23 to South Korean workers who provide still others. Around $6 goes to the Chinese workers who assemble it. Most of the rest goes to workers elsewhere around the globe who make other bits.

Only about $11 of that iPhone goes to American workers, mostly researchers and designers.

Even old-tech American companies made big money abroad in 2010 – and created scads of jobs there. General Motors, for example, is now turning a nice profit and American investors bullish about its future.

That doesn’t mean GM will be creating lots more blue-collar jobs in America, though. 2010 was a banner year for GM’s foreign sales — already two-thirds of its total sales, and rising. In October, GM became first automaker to sell more than 2 million cars a year in China. The company is now making more cars in China than in the United States.And GM has just signed a deal with its Chinese partner to try to crack India’s potentially huge auto market.

Meanwhile, back home in the U.S., GM has slashed its labor costs. New hires are brought in at roughly half the wages and benefits of former GM employees, under a two-tier wage structure accepted by the United Auto Workers. Almost all GM’s U.S. suppliers have also cut their payrolls.

It’s much the same even for America’s biggest retailers. 2010 wasn’t an especially good year for Wal-Mart in the United States. Its third-quarter sales fell, as U.S. shoppers continued to hold back.

But Wal-Mart International is contributing mightily to its bottom line. Its UK business, Asda, will be adding 7,500 new jobs next year. Wal-Mart is also doing well in Japan and Brazil, and hiring like mad in both countries.

So when President Obama tells American CEOs our biggest challenge comes from abroad, you’ve got to wonder. The leaders of American business are already abroad, and doing quite nicely.

Just after the midterm elections, the President’s chief  economic advisor, Larry Summers, told a group of top U.S. CEOs that the election was partly a “rejection of elites…that were seen as more citizens of Davos than of their countries.” American CEOs, Summers warned, should “think very hard about their obligations as citizens of this country.”

Yes, they’re citizens. But first and foremost they’re CEOs. And CEOs have to show profits – wherever those profits come from. Under American-style capitalism, profits matter. Jobs don’t.  

2010 was the year Washington became even more “business friendly.” The result has been more and better jobs – but not in America.
Robert Reich. 

Business model fails schools

Forcing a Risky Business Model on Us
By Robert Brower

Shortly after the U.S. Department of Education awarded its first grants last fall in a new $94 million program to fund teacher-incentive pay, a senior fellow at the Hoover Institution described the plan as “revolutionary,” saying it would “promote student learning to the fullest.”
In his op-ed commentary in The Wall Street Journal, Terry Moe claimed the disconnect between pay and performance had an effect on the quality and motivation of everyone in teaching. To Moe and others in government, business and academia, the private sector is the answer to improving the nation’s public schools. Certainly there’s a growing movement afoot to force public schools into a market-driven system of choice, vouchers, competition, charters and other capitalistic business models.

By applying an untested business model to educational reform, political and business leaders are openly promulgating forced competition among schools. They are demanding change for change’s sake, coveting any new idea that comes along to demonstrate anecdotal improvement and using flawed statistics to foist unproven changes on our schools. This strong push is more about political dogma than about raising the performance of public school students.

As educational leaders, we must make our collective voice heard loudly and clearly before it is too late. We are being driven down a tangential road by those with influence in high places who lack even basic expertise in educational research and whose desire for good political sound bites is more important than the future of our children.

Not only is the business model of reform misguided, there is not a shred of statistically significant research that supports the notion that competition will solve whatever ails K-12 education. If we succumb to this experiment of political thought, the consequences may be devastating to our economic and social future.

Market Rules
Prominent conservative thinkers such as Herbert Walbert, Joseph Bast, Gary S. Becker, John Chubb and the late Milton Friedman advocate a market-driven, business model of reform for public education, yet none offers any compelling, scientifically conducted evidence to support these experimental notions. These and well-meaning professionals in other fields offer only subjective supposition and wishful thinking as their research. Simply put, this movement is nothing more than a snake-oil remedy promoted by people who have no expertise in the educational arena.

Unfortunately, many educators do not recognize the hidden agenda — the dismantling of public education. During recent national elections it was common to hear politicians calling for schools to be operated more like retail franchises, competing for customers in a crowded marketplace. “Why,” these proponents ask, “should public schools be protected from competition?” But I ask, "Where is the research that supports such experimentation?"

While many think tanks, politicians and corporate executives believe the rules of business, with its bottom-line mentality, should apply to public education, if the public health field were managed similarly, without scientific rationale, patients would fall prey to quackery. We can’t afford political, social and economic experiments to be performed on children through wishful thinking.

Consider the comments by Marion Brady, a retired public school administrator, in the December 2004 issue of Phi Delta Kappan: “Today’s major education-related debates — about vouchers, choice, competition, merit pay, rewards, school shaming, discipline-based standards, high-stakes tests, accountability, privatization — do not even hint at the problem. … [B]ringing market forces to bear will not improve education. Indeed, present federally mandated ‘reforms’ will do just the opposite.”

Speculative Politics
As a public school educator for the last 33 years, I believe forcing business-like competition onto schools would lead to many undesired outcomes, while paying little attention to cooperative endeavors that could benefit students and school programs. For instance, the competitive business world does not encourage the sharing of successful strategies, but in education cooperation is a necessity.

Rather than shaming schools into improving, we should be supporting low-achieving schools partnering with successful schools. The “produce or die” operating model of the corporate arena and academia may work with manufacturing cogs and college professors, but this business approach to education has no proven track record of success for students and schools.

Those advocating a business model are ignoring what scientific studies demonstrate regularly: Charters, vouchers, choice, privatization and competition do nothing to improve student learning. The reality of this debacle is that speculative politics, rather than scientific research, is driving this movement.

Continuing to advocate a politically motivated, market-driven system of education will only delay the real work that needs to be done to help our public schools grow. We should not be at odds with one another but rather respectful of our separate areas of expertise.
From: The School Administrator.
http://www.aasa.org/publications/saarticledetailtest.cfm?ItemNumber=7945

Robert Brower is superintendent of the North Montgomery Community School Corporation, 480 W. 580 North, Crawfordsville, IN 47933. E-mail: rbrower@nm.k12.in.us