UNDERSTANDING AMERICA'S "RACE TO THE BOTTOM" ... A TALE OF TWO SYSTEMS

Have you ever wondered why Germany builds twice as many cars as the United States, while paying its auto workers twice as much? Of course not. If you're a normal person you probably haven't given much thought to any of this. That's why I'm bringing your attention to this article (again) that was published in Forbes Magazine almost two years ago.

In it Frederick E. Allen writes that there are very specific reasons why Germany produced more than 5.5 million cars in 2010 while the U.S. produced just 2.7 million.

Quite simply, while the United States is engaged in a "race to the bottom" that encourages outsourcing (sending jobs overseas) and pits management against workers, Germany has a constitution and a political system that promotes cooperation through worker councils. These councils encourage employees and management to "work together on matters like shop floor conditions and work life."

Healthy and well-paid workers are viewed as both a company asset and instrumental to the nation's well-being. This is not the case in the United States.

In the United States the social contract between labor and management (or corporate America) has been under attack since the 1980s. Labor in general has been disparaged while unions in specific have been under political attack for the better part of 30 years. And it's all done under the guise of promoting free market economics, as if labor is some kind of factor of production step-child.

All of this helps us understand why the increasingly corrosive gaps in salaries and wealth between U.S. workers and corporate executives in America exists. It's no accident. It's a product of deliberate policies built around the twisted belief that workers who are both represented and paid well are detrimental to a regions economic base.

But, wait. There's more.

German auto companies haven't brought their collaborative management style to the United States (yet) for one simple reason. Because of domestic political opposition in the U.S. they don't have to. Southern politicians in particular have been especially vocal in their opposition to creating a level playing field for workers, arguing that German style worker councils and unionization could hurt their regions ability to lure other large manufacturers.

This mind-set is so prevalent that Volkswagen's recent revelation that they're talking with the United Auto Workers (UAW) to bring worker councils to its Tennessee plant has state politicians concerned. They're fearful that these talks could spill over into Alabama (Mercedes) and South Carolina (BMW), where German auto manufacturers also make cars.

All of this helps to explain why American auto workers are paid about $33 an hour in salary and benefits while German auto workers get about $67 an hour in wages and benefits.

There's more, which is why I encourage you to read the article. You can also read the study - "A Tale of Two Systems" - that the Forbes article is based on here.

- Mark