For too many Americans, the “wisdom” of supply side economics — aka trickle down economics, voodoo economics — is accepted as conventional wisdom, as the way things have always been and the way they should be.
Beginning with Reagan and is neo-liberal promoters, the idea that giving the wealthiest — the so-called job creators — opportunities to accumulate more wealth would be good for everyone. Supposedly having money means you will do something good with it, like build factories and create jobs. A quaint idea, especially if you happen to be the wealthy owner of a buggy whip factory.
We live in an economy defined by supply side failure. For the vast majority of people the best that they can hope for in recent generations is to not lose ground. Even the snug and smug upper middle class will feel the pinch eventually when wealth accumulates in fewer and fewer hands.
But we’re still told that supply side works. There’s always some excuse — usually false stories about government excess or greedy “takers” — that are getting in the way of prosperous market efficiency. Well, that narrative is wrong. Despite the shackles that short-sighted that political conservatism has put on the economy, the economy is doing relatively well, especially for those job creators. So where are the jobs?
Let’s take an example. Nearly everyone has had to call a company — a bank, a retailer, an insurer — about some issue or other at some point, right? Who’s is answering those phones today? More often than otherwise, it is someone in an an overseas call center. Of course we’re told this is necessary, it is all about competitiveness and other bullshit. We’re led to believe that these businesses would collapse to global competition if it were otherwise.
Ok, then…what about the benefits of trickle down economics?
Take Bank of America as an example. Bank of American employs overseas call centers. It must be going broke and trying to save money, right? Hardly. First of all, let’s not forget that Bank of America was bailed out with $25 billion of taxpayer money in 2008 to keep it afloat and has been churning a profit ever since. Just this last year Bank of America reported profits of $5.3 billion, more than double the previous year’s profits. And yet somehow — I guess it is uncertainty or something like that — the company has to offshore its customer service centers to save money.
To be fair, Bank of America has been one of the poorest performers among Fortune 500 companies, its margins are modest, and chief executive Brian Moynihan is paid a paltry $14 million in annual compensation…but where the hell are the American jobs?!
This example is not the exception, by the way. It is the rule. Most major U.S. companies have call center operations overseas.
There is some good news, at least for call centers. In recent years some companies are opting to keep call centers in the United States, even cancelling contracts with overseas operations and reopening domestically. Some of that has to do with changes in the labor market (labor costs rising overseas while they come down in the United States, a topic for another discussion) and some of it has to do with practical matters, e.g., consumers were unhappy with the quality of service from overseas.
Nonetheless, with profits soaring and corporate cash reserves at record levels, where are the promised jobs? Why do United States businesses increasing invest overseas? Wasn’t that the promise?
There are a lot of answers to this and few of them are good if you buy into the supply side argument. The bottom line is the bottom line. Corporations don’t care about American jobs, they care about profits. The goal is to maximize those profits…and accumulate as much wealth as possible in the process.
Numerous barriers to job both job and wage growth exist in the United States. It is reasonable to discuss these barriers. However, from a practical matter that we experience everyday, lack of resources for the job creators is not one of them.