China has embraced the idea of a Western college education in a big way. As the NY Times reported recently, the country is making a $250 billion-a-year investment designed to give millions of young Chinese citizens a college education. “Just as the United States helped build a white-collar middle class in the late 1940s and early 1950s by using the G.I. Bill to help educate millions of World War II veterans, the Chinese government is using large subsidies to educate tens of millions of young people as they move from farms to cities.”
But for most of these newly minted college graduates, jobs are scarce. One reason is that these graduates often have few marketable skills and they refuse to take the jobs that actually exist. What China needs are people to work in factories. But for college graduates, factory work has little or even no allure.
Consider the case of Wang Zengsong.
Wang Zengsong is desperate for a steady job. He has been unemployed for most of the three years since he graduated from a community college here after growing up on a rice farm. Mr. Wang, 25, has worked only several months at a time in low-paying jobs, once as a shopping mall guard, another time as a restaurant waiter and most recently as an office building security guard.
But he will not consider applying for a full-time factory job because Mr. Wang, as a college graduate, thinks that is beneath him. Instead, he searches every day for an office job, which would initially pay as little as a third of factory wages.
“I have never and will never consider a factory job — what’s the point of sitting there hour after hour, doing repetitive work?” he asked.
This story is actually not unique to China. In the United States too, we here repeatedly that small businesses are unable to expand because they cannot find qualified workers. The usual reprise is that high school graduates don’t have the skills. Rarely asked is why college graduates don’t apply? I assume the reason is the same as in China. College graduates see production work as beneath them.
Plenty of college graduates, many with debt, are interning for free or working odd jobs that pay little; yet they do not even consider learning a skill and taking a job that would require them to build something. Just like their comrades in China, these young people identify as knowledge workers, not as fabricators. For them, a job making things is seen as a step down. Something that is beneath them.
Disdain for manual labor combined with respect for cognitive work is the theme of Matthew B. Crawford’s book Shop Craft as Soul Craft, based on his article by the same name that appeared in 2006 in The New Atlantis. Crawford’s writing is rich and his thinking profound. But boiled down, I took three main points from his book and article.
First, there is a meaningful and thoughtful component to manual labor. To make something is not thoughtless, but requires both skill and intelligence. This is true if you are building a table, where you must think about the shape, functionality, and aesthetics of a table. But even in factory work, there is the challenge of figuring out how to do something better. And in the modern factory, labor demands technical skill, problem solving, and creativity. Whether you are building a house or making a battery, making things requires thought. What is more, it is good for the soul. Here is how Crawford writes about the soul benefits of craft:
Hobbyists will tell you that making one’s own furniture is hard to justify economically. And yet they persist. Shared memories attach to the material souvenirs of our lives, and producing them is a kind of communion, with others and with the future. Finding myself at loose ends one summer in Berkeley, I built a mahogany coffee table on which I spared no expense of effort. At that time I had no immediate prospect of becoming a father, yet I imagined a child who would form indelible impressions of this table and know that it was his father’s work. I imagined the table fading into the background of a future life, the defects in its execution as well as inevitable stains and scars becoming a surface textured enough that memory and sentiment might cling to it, in unnoticed accretions. More fundamentally, the durable objects of use produced by men “give rise to the familiarity of the world, its customs and habits of intercourse between men and things as well as between men and men,” as Hannah Arendt says. “The reality and reliability of the human world rest primarily on the fact that we are surrounded by things more permanent than the activity by which they were produced, and potentially even more permanent than the lives of their authors.”
Arendt values those who make things, especially things that last, because lasting objects give permanence to our world. And such workers who make things are above all thinkers in her understanding. Work is the process of transfiguring the idea of something into a real and reliable object.
But even laborers who make consumable goods are, for Arendt, doing deeply human activity. To be human has been, for time immemorial, also to labor, to produce the goods one needs to live. A life without labor is impoverished and “the blessing of labor is that effort and gratification follow each other as closely as producing and consuming the means of subsistence.” Granted, in repetitive factory labor these blessings may seem obscure, but then again, Dilbert has taught us much about the supposed blessings of office work as well.
Second, Crawford tells the story of how schools in the U.S. have done away with shop classes, home economics, and auto-repair, all classes I and many others took in junior high and high school. In the pursuit of college preparation, education has ceased to value the blessings of labor and work.
Third, Crawford argues that in a global economy it will be work with out hands and not just work with our brains that pays well. When legal analysis can be outsourced or replaced by robots as easily as phone operators, the one kind of job that will remain necessary for humans is repair work, fixing things, and building things. Such work requires the combination of mental and physical dexterity that machines will unlikely reach for a very long time. Thus, Crawford argues that by emptying our schools of training in handwork, we are not only intellectually impoverishing our students, but also failing to train them for the kinds of jobs that will actually exist in the future.
Many of my students might now agree. I have former students who have written excellent senior theses on Emerson and Heidegger now working on Organic farms or learning the trade of gourmet cheese production. Others are making specialty furniture. One is even making a new custom-built conference table for the Hannah Arendt Center here at Bard. These students love what they do and are making good livings doing it. They are enriching the world with meaningful objects and memories that they are producing, things they can share as gifts and sell with pride.
Many of the best jobs out there now are in the specialty craft areas. These jobs require thought and creativity, but also experience with craftsmanship and labor. Crawford does not argue against training people well in the liberal arts, but he does raise important questions about our valuation of intellectual over manual labor. We here in the U.S. as well as our friends in China should pay attention. Perhaps we need to rethink our intellectual aversion to production. Maybe we should even begin again to teach crafts and skills in school.
Crawford will be speaking at the next Hannah Arendt Center Conference “The Educated Citizen” on Oct. 3-4, at Bard College. We invite you to join us. Until then, I commend to you his book or at least his essay; Shop Craft as Soul Craft is your weekend read.
Governor Mitt Romney released his taxes for the last two years today. He refused to release earlier records. These two years of records are from the years when he knew he was running for President for the second time.
We can assume they are to some degree cleansed of the most egregious of offenses. That said: Wow!
As my friend John Drabinski just wrote:
Romney has Cayman Island, Luxembourg, and Swiss bank accounts (I'm sure that's patriotic), made over $20 million and paid a 13.9% rate (wtf?!), and I'm telling you, if folks don't flip out over this, then we deserve what we get in this country.
Romney's tax rate is below 15%! That is even below the capital gains rate and the unjustifiable carried interest rate for hedge fund investors. Why? Because he has tax havens and secret Swiss bank accounts that he uses to reduce his taxes. He just closed a Swiss bank account (not fast enough I guess).
This is disgrace. Someone who uses the gray zone of tax haven law to hide his income is not simply playing by the rules. Money in tax havens is protected from taxes, but also from regulations and disclosure rules. I am not saying Romney broke laws. But he wants to be President, the personification of the public spiritedness of the nation. To hide money around the world in tax dodges and secret accounts sends a clear message: protecting my money is more important than paying my fair share to the country. While this may be legal, it is hardly a recommendation for public service.
Unfortunately, Romney's approach to financial secrecy is all too common amongst the people in his elite circle. It is one thing to have a low capital gains rate tax for investment in equipment and factories. That does spur investment. I would favor a low 5% or so capital gains tax—but only if it were limited to actual capital investment. However, to tax investment in stocks at that low rate makes no economic sense. And the idea that carried interest (the profit a hedge fund manager or private equity manager makes on their investments) should be taxed at 15% is ludicrous, as every hedge fund manager I know admits in private.
Tax havens and tax policies are not simply economic questions. A just system of taxation is essential to preserve our democracy. You simply cannot have a country that puts the common interest above the private interests of its members when the wealthiest of its citizens are employing armies of lawyers and consultants to hide their money and assets.
The best account of these tax havens is found in Nicholas Shaxson's book Treasure Island: Uncovering the Damage of Offshore Banking and Tax Havens. Here are a few key quotes:
It is essential to understand from the outset that the offshore system is ultimately not about celebrity tax exiles and mobsters.... The offshore system is also about a more generalized subversion of democracy by our increasingly unaccountable elites. "Taxes are for the little people," The New York millionaire Leona Helmsley once famously said.
Much of what happens offshore is technically legal. A lot of it is plainly illegal and often criminal. And there is a vast gray area in between. All of it is profoundly dangerous, corrosive to democracy, and morally indefensible.
The Offshore World is All Around Us. Over half of world trade passes, at least on paper, through tax havens. Over half of all bank assets, and a third of foreign direct investment by multinational corporations, are routed offshore. Some 85 percent of international banking and bond issuance takes place in the so-called Euromarkets, a stateless offshore zone that we shall soon explore. Nearly every multinational corporation uses tax havens, and their largest users—by far—are on Wall Street.
Tax havens don't just offer an escape from tax. They also provide wealthy and powerful elites with secrecy and all manner of ways to shrug off the laws and duties that come along with living in and obtaining benefits from society—taxes, prudent financial regulation, criminal laws, inheritance rules, and many others. offering these escape routes is the tax havens' core line of business. It is what they do.
Just last week, the watchdog Global Financial Integrity revealed that the developing world suffered nearly $1 trillion in illicit financial outflows in 2009, "a number that is almost 10 times larger than the official development assistance they receive each year from Western economies like the United States, United Kingdom and Norway." As Raymond Baker writes:
A shadow financial system consisting of tax havens, secrecy jurisdictions and anonymous corporate vehicles makes it easy for corrupt dictators, terrorists, drug traffickers and tax evaders to quietly shepherd their funds out of the developing world and around the planet without notice.
Again, I don't know if Governor Romney broke laws. I imagine he stayed just this side of illegality.
But we have a moral and ethical problem in this country. A republic, as Montesquieu saw, runs on the fuel of the virtue of its citizens, which Montesquieu defined as their willingness to put the public interest above their private interests. We are a nation in need of renewal, and that demands leadership that inspires us to re-commit ourselves to the American dream and the American story. It is a great story, one worthy of being re-imagined. But how can someone lead us to that promised land when he has, by his actions, shown himself to care more about protecting his money in offshore tax havens than doing his duty as a citizen? He can't.
Andrew Sullivan calls for President Obama to go big and make tax reform a central priority in the State of the Union tonight. I agree. He also says:
It seems to me that this is not about Romney and shouldn't be about Romney. He broke no laws; he seems admirably charitable; his massive wealth is not a marker against him. The issue is the system. My basic view has long been for a flat, simple tax code, in which everyone pays either the same rate, or two or three clear rates, and all deductions are removed. You tax income and dividends at the same rate. You get government out of the way of an economy's market decisions, by not tilting the playing field.
I agree that Romney's tax write is not a marker against him. It is one thing to play by the rules and pay the required capital gains tax rate. And yes, he did give $7.1 Million to charity which comes to something like 17% of his income. But the issue is that he also seems to have taken aggressive measures to hide and protect that money offshore. While this is not technically illegal, it is not simply playing by the rules of the tax system. It is employing accountants and lawyers to seek loopholes and avoid the intent of those rules. And that is wrong, even it is not illegal.
Sullivan gets the main point right on:
To put it more bluntly: The president and the Democrats should not be piling on Romney because he's rich. They should be piling on the tax code because it is so insane. This issue is populist and good economics. With a full-scale Bowles-Simpson attack on deductions, reform could keep taxation simple and low and easier to understand. And that restrains lobbyists, who suddenly have far less to lobby for; and it restrains taxation. If you have three simple rates - say, 10, 20, 30 - then any increase in them is very, very visible. You want a government that can be monitored and controlled by the people? Simplify the tax code!
Read Andrew Sullivan here