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Rob Johnson:
Welcome to economics and beyond. I’m Rob Johnson, President of the Institute For New Economic Thinking. I’m here today with a long-time friend and INET scholar, Bill Lazonick, who’s a professor of emeritus at the University of Mass at Lowell, and has been, how would I say it? Very involved in many, many things, stock, buybacks, and the nature of pharmaceutical, intellectual property rights and all kinds of issues.
He leads a team that INET has always been very, what you all call inspired by, and he’s the president of what’s called the Academic Industry Research Network. And I think that Bill, along with his coauthors, Phillip Moss and Joshua Weitz, who was a PhD candidate in political science at Brown University, have written a magnificent paper that’s the focus of today’s conversation. It’s called The Unmaking of the Black Blue Collar Middle Class. It came out in May and it’s available on the INET website.
So Bill, how would I say? First of all, thank you for being with me. And secondly, I’m just stunned having grown up in Detroit, having worked with you closely on that 2016 conference we did in Detroit on race and equality, just to see how you’ve risen to the challenge. I think this is an extraordinary paper, and it’s a precursor to a book on the same themes. But tell me, what inspired you? What got you to dig deep in this particular realm of concern?
William Lazonick:
Okay. Yeah. Well, first of all, as an economist, I really started out as a graduate student in the early ’70s, and then once I became a faculty member, I was at Harvard and then Columbia, before I went to UMass Lowell, I’d say up to the early ’90s, I was really focused a lot on labor. So I wrote a book that came out with Harvard University Press in 1990 called Competitive Advantage on the Shop Floor, which was about the transformation of employment relations. It originally, looked at Britain, then at the United States, and then it was looking at what was going on in Japan.
And the next year I had a book which was more about what this meant for economics, which is probably more widely read, called Business Organization and the Myth of Market Economy, which also started from this comparative perspective of capitalism in Britain, the United States, and Japan. And actually, up to that point, I was pretty much focused on looking at nations competing, but recognizing that they competed through business enterprises. So one of the problems that I had with, and still have, with economics is it’s states and markets. It’s also a problem, often, with political sciences, sociology, and where’s the business enterprise?
But 80% of the employment, more than that, in United States is in the business sector, which by the way, I always tell everybody I work with, I never call it the private sector because most of those companies are not run and owned by people, whoever built the companies. They’re run by employees. So I call the business sector the government sector, and some of those companies grow to be the size of small countries, and they dominate the economy.
So a statistic I often throw out is the latest data from 2017, but they don’t change that much, although it tends to become more concentrated. There’s about 2,100 companies in the United States that account for about 35% of business sector employment. They’re companies with 5,000 or more employees in the United States. They average about 21,000 employees. They have about 40% of the payroll, so they pay somewhat higher than the rest of the companies, and they have about 45 or 46% of the revenues. And in my view, that’s where the action is. And that’s where the action has been for at least 100 years in these major enterprises, and how they decide to structure employment, how they decide to pay the employees, how they decide to share up productivity gains has a huge implication for the way the rest of society operates.
And so one of the things that I became very interested in, well, at the beginning of my career, looking for an alternative theory, I started looking at Marx in … Not the Marx in theory, but the theories of Marx for the 19th century. And I found that, in fact, where people thought that the workers were just pressed down, turned to a machine, just a commodity, that actually it didn’t happen for the central workers, male workers in the British Industrial Revolution. They actually were able to form unions and get a share in productivity. They were the foundation, ultimately, of the labor party.
And one of the reasons was not simply union power, because if it’s just union power, that companies wouldn’t have been competitive. These people were highly productive and the companies needed to use them, needed their skills and effort. And even as they mechanized machinery, this didn’t get rid of that need. And so there was an important lesson, then, there, and that is that the working class in the advanced economies actually did have a path to upward mobility if it worked in productive business enterprises and if those enterprises shared the gains with them.
Now, in the British case, I was looking at the cotton textile industry where most of the enterprises were pretty small. That’s where, actually, the unions played a role, not just in bargaining, but in actually organizing the industry. So if there was overproduction, they would organize for short-time work. They were better organized than the employers, but then we had a transition, and I was looking at coming into the 1980s and got into a debate with what you might call the neoclassical economic historians, then Donald, now Deirdre McCloskey was one of them, on British decline.
Well, I started looking, of course. I’d been looking at the United States, but I really started looking at how, historically, the United States has surpassed Britain. And at that point, there were two books that had a big influence on me. One was Alfred Chandler’s, The Visible Hand, which came out in 1977, won the Pulitzer Prize in history. And I got to know Chandler. He was at Harvard Business School. I was at the Harvard Economics Department. I first actually met him in 1980. So it was after he had published that book, and it was because he published that book, I had …
I knew there was big business here in the United States, but I didn’t know where it all came from. No one had really pulled it all together, documented in that way, or people had, but not in a such an overriding form, and also with this notion of the visible hand. And actually, one of the interesting things about Chandler’s work was he focused, at least at that point, on economies of speed, he called it, or scale economies. And this had to do with mass production, but he didn’t really talk about the mass production workers. I mean, he deliberately was looking at the organizational structure, and I actually developed, in the ’80s a very good, close relation with him into the ’90s because I was talking about what was happening to the workers in this context.
And so I started looking at a mass production in the United States, and this really is reflected in a lot of the things I did in the ’80s, even starting in the late ’70s, but certainly in the 1980s in that book, Competitive Advantage on the Shop Floor, are reflected in this recent work that we’ve done on black employment on the INET working papers. I started looking at how, really, a middle class came out of the working class in the United States, how post-World War II, particularly, you got a trend toward more income equality because companies did not hire and fire people, and at the union level, it was enforced by first hired, last fired. But even when you laid off people in a downturn, you hired them back in the upturn, and then the unions had enough money to provide supplemental unemployment benefits, so you really maintained your incomes.
And at the white collar level, this is things like C. Wright Mills’ White Collar, and William Whyte, The Organization of Man, and books in the 1950s about the rise of the white collar worker. These were people that companies employed, they trained, they retained, and if they had started just laying these people off as they got older, they wouldn’t have been able to get any workers, and they wouldn’t have been able to build those companies. And so you ended up having a system, post- World War II, which Candler was talking about the companies that were involved, that were building these capabilities that were allowing people to be productive and allowing them to share in that productivity. And that’s really where the action is in terms of getting wages up on a sustainable basis.
One way of looking at is when you say people need jobs, they don’t need jobs for a year or two. They need jobs for now 30, 40 years that have enough productivity that they can make decent wages and be able to save enough for a couple decades of retirement. That’s what an advanced economy does when it operates properly. For all its problems, imperialism, whatever, racism, and the United States was building this economy based on integrating people into these companies and creating a middle class, and that meant that other parts of industry, smaller firms, they had to try to meet those wage demands.
It also led to certain things that are particularly, because of the strength of that system in the United States, where we have problems now. I mean, those companies were the ones that provided pensions, and they provided healthcare. And so the system as a whole didn’t have to really worry about pensions and healthcare on a national level because the companies were providing them. And here is where it really comes, what I did earlier, which was not really … I was interested in the race dimension of it, but I had not been able to dig into it deeply enough to really understand it. This is where doing this work over the last number of years, and I guess about six years now, we really understood it, is that that really was structured as a white man’s world. It was not structured in a way that said, “Oh, we want to employ everybody in this system,” and so there was a highly divided system on the basis of race that exists, as we all know.
And although it started to break down in various ways post-World War II, it was only in the ’60s and ’70s that there was some dramatic change, and the timing is important because when the change occurred, blacks were able to move into a lot of these good jobs, particularly at the blue collar level, that required high school education at most, that whites had been in, where there’s still a strong demand. There was upward mobility from blue collar to white collar inter-generationally among whites, and there was very low level of employment.
Although, you had the opening up of some employment by the 1965 Immigration Act, it was still highly restrictive, and particularly in the ’60s was when I think the lowest level of immigration … was the lowest level in the United States, I meant to say. And so the field was open for, you might say, the indigenous population, blacks to move up. Hispanics were just starting to move into the economy, mainly things like coming into the ’60s [inaudible 00:13:46] program and agriculture, and a lot of undocumented immigrants, et cetera, but not moving so much into these kinds of jobs.
Now, I mentioned there were two books that influenced me, and the other was a book by economist, Edith Penrose, on The Theory of the Growth of the Firm, which came out in 1959. It was really, theoretically, parallel to Chandler’s history and came out around the same time as his first book, Strategy and Structure in ‘62. And that really said the firm grows because it invests in capabilities and it treats these capabilities, at any point in time, as unused labor services. So when you have these capabilities, you don’t just throw them away. And I saw in that mass production that extended to the blue collar level.
Now to make sure that didn’t happen, the unions got seniority as a fundamental principle of employment in virtually every wage bargain and every contract that existed in the United States. But basically, people, once they had a job with a company, it was very hard to lose that job. Now, a lot of economists might say, “Well, then they’re not going to be productive,” but that’s not the case. After all, you might have some people who might be productive. You might have some people that need a lot of supervision, et cetera. But basically, there was a lot of incentive to work hard to get overtime pay.
Basically, it was a set of norms, really, that set in that got relatively high levels of productivity, and people started seeing this show up in their pay packages, the stability of their pay packages, health benefits. They could afford to buy cars, they could afford to move to the suburbs, and education was virtually free in the higher education public system, the land grant college system throughout the United States. And so there was a sense of, “Yeah, you’re going to work hard,” but there was something coming out of this, both for yourself and for your children.
And that’s what blacks were able to move into in the 1960s and the 1970s. And the first is actually, basically, except for the conclusion, there is actually now this would be the fourth working paper on this project that we have with INET. And there’s one more that’s already virtually done. Hopefully, we’ll finish it in the next a month or so, but it’s basically written on the barriers to blacks moving into STEM occupations, moving into the white collar work. But the the critical thing that we started seeing was that when this change started occurring in the 1960s …
Well, first of all, and virtually everybody who writes on this agrees with this, that there was an unusual demand for blue collar workers. There was low levels of immigration, and there’s a civil rights movement, and they came together. And in some ways I would say the civil rights movement could take place because corporate America needed black workers. And of course, Martin Luther king, the March on Washington was for freedom of jobs. Okay, when we started doing this … look at this project. First of all, the first paper we put out, which is actually at the conference, not in 2016, and we did a hell of a lot of research since then. So we were just really getting our perspective at that time and figuring out where to get the data from, and really digging in. But it was called The Equal Employment Opportunity Omission.
And the omission was that it was assumed when the Equal Opportunity Commission was set up, coming out of the Civil Rights Act, that when a company employed somebody, a major company, they would have long-term employment. They would have stability of employment, either at the blue collar or white collar level. And in so far as you had this upward mobility, which you did, a significant scale, of a portion, not all, but a portion of the young black population into these good blue collar jobs, it was because this is a system that was in place, at the time in the ’60s that when you got the job, you would get seniority. As you stayed there, the job would become more secure. If you got a white collar job, you would be trained. You would be moved to some new opportunities, et cetera. And there were lots of opportunities because these companies were going to move up the ladder.
Now, one of the, let’s say a source that we found, and I think we had already seen the source before at the Conference of Detroit in 2016. Yeah, we had, and it’s really influenced us, I believe it was the Ford Foundation. Maybe it was Rockefeller. I forget. They had funded a project at Wharton that led to 31 volumes being produced in the late ’60s and early ’70s led by a guy, a labor economist, I believe he was, a sociologist named Herbert Nordstrom. And it was called The Racial Policies of American Industry. And I have some of these books here on the shelf that I got of of Amazon. So you have the auto industry, electrical manufacturing, the steel industry, et cetera.
You go through these books, one book after the other. The way in which they saw equal employment opportunity being implemented was by people getting a job and moving up the hierarchy within a company, and the critical thing was that blacks, in so far as they were employed by companies coming into the ’60s, they would tend to be employed in labor jobs, unskilled, often denied seniority by the unions, and that is where the real action was in terms of people moving up in these organizations. And they also focus mostly at the blue collar level because that’s where you could find lots of people who could do the job, and able and willing to do the job, and as I said, many whites were moving out of these jobs at that time, or their children were not going into this job. The demand was still there. And so the omission was that they should have said, “This will only work if this system of employment if kept in place.” And that that’s what changed.
And of course, that relates a lot of the other work that I do on financialization, corporate financialization, because the fact that companies in the 1980s just started pumping out all this money, not just in dividends, but buybacks to shareholders, and shareholder value ideology became dominant, which I started critiquing around the mid 1980s. When I was at Harvard business school, they hired this guy, Michael Jensen, there. That was what it was destroying, that notion of once you work for a company, you had certain rights to be there, and the rights were not an entitlement. They were based on that company remaining competitive in its industries and sharing the gains with its employees.
I’ll give you an example. We do a lot of, in the research we do, going back and forth between … We use a lot of company reports and we look back for various things that a company reports from the ’50s and ’60s. And just as one example, I came across one, it was a graph that I just sent out to my colleagues. It was from a General Motors annual report around 1967, and it was showing the progress that General Motors had made in … No, I think it was actually ‘77. So it was from ‘64 to ‘77. The progress it had made in terms of how it had shared its revenues. And it was really bragging at how much it had shared with its workers. It had the dividends there, this was reinvested, plant equipment, and that was the norm. Okay? And blacks started to take advantage of that.
And as we did this research, there were many reasons why that norm disappeared. But doing this research, it started becoming pretty apparent that if this had still been white workers in these positions, there might’ve still been forces of needing to compete with Japan and changing the way you structured employment relations, which had nothing to do, in this case, with black, white, who was working on those jobs.
In this case with black/white, you know, who was working on those jobs. There was the computer revolution that was taking place in a whole new demand of work. There was globalization that was taking place. A new competition.
With all these things, I think the U.S. response would have been very different if that labor force, that middle-class, had be just white and wasn’t moving out of those positions.
Now in the end, we know that working class whites have borne the brunt of this as well, downward mobility. So things that Case and Deaton and others have documented about white males with high school education in the last number of years, having shorter life expectancy and deaths of despair, that was happening to blacks in the late 1980s, because the blacks, when the plant closings occurred in the 1980s, and nobody really did anything to say, “Well, what are we going to do about this?” “How are we going to keep the middle-class whole?” Blacks were hit first. But they weren’t the only ones who were hit ultimately.
And of course, then you can have the politics of so many divisions between two groups of people who are downward mobile or who don’t have opportunity. And I think overwhelmingly the literature on sociological literature on mobility shows when there’s upward mobility, those differences don’t matter as much.
Rob Johnson:
There were a lot of books that I remember, like Christopher Lasch, The True and Only Heaven, about how, if you will, to use a religious analogy, if you delay gratification, we will invest in productivity and we all experienced deliverance. As globalization takes place, delayed gratification ended up creating which, you know better than anybody, stock buybacks and people being laid off and plants being built in other places. And all of a sudden I did the sacrifice part, but I didn’t get the dividend part.
William Lazonick:
Yeah.
Rob Johnson:
Finally, as you’ve talked about in this paper and other places, the infrastructure, which you might call the rungs in the ladder, public universities that were cheap. When I was a senior in high school for the fall of 1975 to 1976, it cost me $600 a year to go to the University of Michigan.
William Lazonick:
Yeah.
Rob Johnson:
And, so all of the, how would you say, the promise was starting to evaporate, as you said, blacks were viewed as others, they weren’t creating the feedback politically that as humans that they deserved, but then it deepened. Not only did you not have the steady employment for opportunity, but the places to go for your children to go to a higher level.
William Lazonick:
Right.
Rob Johnson:
To just be dismantled.
William Lazonick:
And it started becoming… The inflation of tuition and of course, what you had was the… When I was a grad student in the early seventies at Harvard, it was… I had some scholarship, but it was still pretty cheap.
Rob Johnson:
When I was at MIT, it was between $4,000 and $5,000 a year. All up, including where you lived.
William Lazonick:
Yeah. Yeah. In fact, I came to Harvard, I had a master’s degree from London School of Economics in, in economics, and I came to Harvard to do a PhD. And the rule at Harvard is that before you do your PhD and you’d get through all your exams, they will give you a master’s degree. It doesn’t mean anything, but it’s a master’s degree from Harvard. And then when you do your thesis and everything, you get your PhD. And it turned out that because I had done the master’s degree at an LLC, I was able to get around having to take a certain number of the courses at the graduate level and I was able to basically finish my coursework in one year at Harvard.
Now, Harvard had a rule. Totally bureaucratic rule that for each degree you had to have one year of full tuition, not partial tuition.
And so I didn’t want it. It would cost me an extra $1,800 to get the master’s degree. So I said, “No thanks.”
But basically what ended up happening in the eighties, as we all know, is that the private university started raising their tuitions, and the public universities followed suit, and the state legislature said, “Oh, no, people can afford these things” and what is basically a public service and available to virtually everybody who could, in a sense, make the grade, now became hugely expensive.
And then I could never understand, particularly since I grew up in Canada and actually two of my daughters grew up in Sweden, where they pay you to go to university, these extortionate rates coming from the government on student loans. I mean, it just doesn’t make sense.
So there was clearly, that’s jumping ahead a bit to what’s in our next working paper of the STEM occupations. And I’ll say a little bit about this because it’s instructive about because that’s about white collar work. So the paper we just put out I’ll come back to, but it was about basically how blacks were moving into those jobs and we document this in detail. We kind of laid this out at the 2016 conference in a general way, but then we’ve documented in detail using as much data as we could get hold of. There’s lots more data if we could free it up from the Equal Employment Opportunity Commission company data, but we used what we could get hold of. And it’s quite clear that blacks had the opportunity and then the opportunity disappeared and nobody did anything about it.
But then there’s a question, okay, what was expanding in the eighties and nineties was, particularly the computer revolution and computer programmers and software engineers, et cetera.
Rob Johnson:
And tax cuts.
William Lazonick:
Yeah, and tax cuts, yeah. And I had done in a book that I wrote published in 2009. It’s also a labor book called Sustainable Prosperity in the New Economy? It was on a business organization, high-tech employment in the United States that I did with the Upjohn Institute.
I looked at the tech companies and the reason I actually did that book was I said, “Okay, are the people who are best positioned in the economy to get good jobs, are they getting stable jobs? Are they getting jobs that are paying them well?” And of course I found that some of them were getting paid extremely well because of broad-based stock options, but it was totally, it was almost random. But the insecurity was great, through globalization.
And in that book I have a chapter on the globalization of the high-tech labor force. And that’s where I started looking at something we looked at much more in-depth in this project, and which will be in the book when it comes out, which we hadn’t expected to do at the beginning, we looked at the access to an Asian labor force.
And, with all the stuff going on between United States and China and United States… Asia more generally, we owe a great debt to Asia for educating the labor force. And we basically had immigration laws, particularly the Immigration Act of 1990 and the change in H1B visas an L1 visas, that cherry picked the highly educated labor force.
Now that that’s coming back to haunt United States in some ways because many of those people have ended up going back and a lot of the capabilities that they say we’re giving away to the Chinese and others, there are people going back who got an education here, got experience here.
Rob Johnson:
So they’re going back to set up firms that compete with our firms?
William Lazonick:
Yeah, sure.
Rob Johnson:
And so that’s where the pressure comes.
William Lazonick:
Yeah. That’s one way in which it’s occurring. Of course not everybody left those countries, and one of the remarkable things is at the time we were letting go or really upgrading the education of everybody, they were hell bent on it. And even though they had brain drain, Korea and Taiwan and India, at least for a portion of the population in China, we’re doing this.
Now when we… Actually, it turned out that the access to the data on who’s employed by these companies, Apple, Amazon, Microsoft, Intel, et cetera, became much more available from about 2014, and some of it’s still coming out. Although when Trump got elected, they stopped issuing it. It’s the data that they report every year to the Equal Employment Opportunity Commission on race, ethnicity, gender, and it’s about 10 different hierarchical categories.
And the important category is the one called professional because that’s where you have all the software engineers and the people who have advanced education. And you can see in the numbers that they wouldn’t be able to exist without the Asian labor force, and good for the Asians, who had that education and were able to come here, but it meant that it let all these companies off the hook for paying the taxes, supporting the upgrading of the American labor force. And it wasn’t just blacks, it was whites.
But again, if it had been whites who were hit, just whites, there might’ve been a different political coalition. We can’t prove this.
Okay. Now there was… When we looked at the data, there were two companies that were exceptions in terms of not… Okay, so roughly you might find it, and I’m not giving the exact numbers, but at Apple and Intel and Amazon and Alphabet, at the professional level you might see that blacks are maybe 1-1/2%, 2% of the professionals. They’re about 12% of the population. Except for two companies, IBM and Hewlett Packard, which is now two companies, but the companies that was Hewlett Packard, they have about 4.5 or 5%, maybe higher. So it’s appreciably higher. Now why?
Well, I started going back when we discovered this. Now I should say IBM did not really release these data. But what happened was when I was writing that other book, Sustainable Prosperity in the New Economy, IBM was putting… Companies had started putting out these Global Citizenship Reports or Responsibility Supports to show that they had diversity.
And so IBM on its website would have the data it was giving to the Equal Employment Opportunity Commission. And I got that data and I downloaded it from 1996 and 2008, which was lucky because when IBM got to the point where over only 25% of its employees, around 2008, were in the United States, and it didn’t want people to see this. You were able to figure out, because that was data where only U.S. employees, you could figure out how many were in the United States. They didn’t want to report that. They wiped it all out and they didn’t subsequently issue anymore.
But when we look at those data, which are recent enough to see it, we see this very high proportion at IBM, much higher, still underrepresented, but much higher than other companies. And we also see it at HP. So I went back and looked at the annual reports of IBM and HP, and HP it showed up particularly well because HP was at the heart of Silicon Valley.
As soon as the EEOC was put in place, they started writing about this. And, you could say, well, they were paying lip service to it. They weren’t, because they realized that if they could get the best black employees, and they could be the place where black employees wanted to go, that this was not just a service to the country, it was a service to them. They were going to get damn good people, and HP in particular documented this year by year by year. In fact, they started putting the numbers into their reports. So they could have a table that reports on this. They called it minorities, but it was mainly blacks. They stopped reporting it around 1989, I think when they found there were enough Asians around that they also stopped worrying about recruiting blacks.
IBM and Hewlett Packard became IBM in the early nineties. Hewlett Packard about decade later became what I call the downsides attribute companies. They just start laying off lots of workers. They had been epitomized the companies that gave you lifetime employment. Hewlett Packard, the heart of Silicon Valley, it was employment security. It was called the HP Way. IBM was famous for that.
They had changed completely, but despite those changes, you still see this legacy of a much higher proportion of blacks in these higher levels. So I think it’s something to dig into further, but I think the role models were there and the lines of recruitment were there. And it was very difficult to break through that. So we discussed that.
So hopefully people will read it when we come up with this, but we’d go through how all these barriers to upward mobility were put in place, which have to do with education, social networks, and what these companies are doing.
But the real opportunity for whites was not simply that white employees just all of a sudden were sending their kids to college. It was this intergenerational trajectory of getting a middle-class income for someone who might’ve been an immigrant, might’ve been a second generation, but had no more than a high school education, and was going to work in a semi-skilled job. Not necessarily a skilled job. And was had steady pay and employment security to afford a middle-class standard of living. And with the public universities there, where you could send your kids and there could be this upward mobility.
And that was again… Back to that’s what we saw the omission. That world had to stay in place for blacks really to take full advantage of it. As long as it did stay in place, and it stayed in place long enough in the sixties and into the seventies, that we could actually see this movement, and you could see the progress, and between particularly 64 and 74, was probably the most progress that blacks had ever made. Everybody agrees with it.
And that’s why William Julius Wilson wrote this book, which is based on data up to 1974, came out in 1978, called the Declining Significance of Race.
He then of course wrote a book when in the nineties, when work disappeared, The Truly Disadvantage, and then he said, he recognized the fragility of this upward mobility of blacks, and basically did something that we’ve documented, I would say in somewhat more detail, looking more at particular industry, particularly the auto industry in particular, and he then saw the downward mobility.
The other thing that we saw wasn’t just downward mobility. It was really a debilitating downward mobility. And at the last part of the working paper, we just put out is called, From Mass production to Mass Incarceration. And you don’t necessarily see the… You know, you’d have to do a lot more work to see who is going from having a blue collar job to being in jail. But the whole… So all the social problems which arose because of this lack of upward mobility, and this lack of… Not everybody was moving out of the inner cities, but enough people having the prospects of moving out of the inner cities and moving up into the mainstream, which was what Wilson was talking about in that 1978 book, that disappeared, and of course that led to also the crackdown.
I mean, we know that was war on drugs… The drugs were there, but the war on drugs was kind of manufactured to crack down on the victims and of course this is a big difference with the opioid crisis, the police not cracking down on the victims, they’re trying to actually have the drugs available to save them. There’s plenty of documentation about that.
But that really undermined… You weren’t going to get rid of all the racism in the U.S. Society. You weren’t going to get rid of all the inequality, but this pathway toward the middle-class and for intergenerational upward mobility had been put in place, and it was almost like society said, “No, that was not meant for you.” And said, “Sorry.”
Now it didn’t happen quite that way because something that I had focused on in earlier work that I did, which was very important in this it, which was the coming of Japanese competition.
You saw the Japanese competition arising in the seventies, people were saying, “Oh, it’s because they work harder. The low wages.” And I was watching this and saw that the wages were going up. This again was strengthening. The hours are shortening. And it was mainly first from business schools and from some companies, including the auto companies went to Japan. And they said, “No, they have a different system there.” And they put skills on the shop floor.
Rob Johnson:
Just like W. Edwards Demming? Because Deming was-
William Lazonick:
And you know, of course, and by the eighties, they were not just… It wasn’t simply their manufacturing, mass manufacturing it was the management methods that were being exported.
And this created a challenge for American companies, and they… Actually General Motors took the lead with NUMMI in Oakland, which is now a Tesla factory, in doing collaboration with the Japanese later with Saturn, which was in Tennessee, down with the unions. And they didn’t even put the GM name on it. Trying to respond to the Japanese that way. But they never quite did it and they could have done it. There are a lot of reasons why they didn’t do it, but overwhelmingly the victims of these companies not responding to the Japanese was that blacks got hit in the eighties and into the nineties, much harder than whites. They got hit first because they were last hired, first fired.
And losing those jobs they were much more vulnerable in terms of family networks or whatever. Unfortunately, and we document this in the book, stuff that I’d looked at before, but the Japanese, particularly after the export restraints in 1985, when they started investing, building plants in the U.S. in 1983, they were almost all Greenfield plants, and they were done in places where there weren’t many blacks, and the Japanese did not hire blacks. Whether it was racism, whether it was whatever, whether they located and so the blacks did not get those jobs from the Japanese.
And, so you have the whole erosion of the jobs in that sector and with it, the upward mobility. We also look at what happens in the government sector because one of the results of really the rise of the war on poverty and Equal Employment Opportunity, was the creation of a lot of good government jobs, and blacks were very well represented in the government jobs, let’s say in the postal services. Now that was eroded and that was also, I think, a result of this notion that, United States they’re going to globalize, they’re going to get their workers from other places. The old manufacturing locales were not no longer their concern, and so cut taxes, and don’t provide these services to the places where they were needed most.
In terms of mass incarceration, for Mass Production, Mass Incarceration, I think there is a link. We try to draw the link, but I think there’s a lot more work to be done there about how these were two sides of the same coin.
But I always remember that Roger and Me, the documentary that made Michael Moore famous, and the scene in there in Flint, which of course became where he was from, and was central to this whole decline for both blacks and whites.
I don’t know if you remember the scene where they turn… They opened up a new jail and all the elites are coming there from the city with cocktails and jail stripes on them, celebrating the opening of the new jail, and Moore goes into the fact that the PD didn’t focus so much on race, but that both the inmates and the people who were guarding them were former blue collar workers or people who would have had jobs in the plant. So, he made that connection, as he’s made many other connections, which are related to this.
