American Capitalism

I was struck by the following passage in a column by Washington Post columnist Harold Meyerson:

On March 28, Circuit City announced that it was laying off 3,400 of its salesclerks. Not because they had poor performance records, mind you: Their performance was utterly beside the point. They were shown the door, said the chain, simply because they were the highest-salaried salesclerks that Circuit City employed.

Their positions were not eliminated. Rather, the store announced that it would hire their replacements at the normal starting salary. One can only imagine the effect of Circuit City's announcement on the morale of the workers who didn't get fired. The remaining salesclerks can only conclude: Do a good job, get promoted, and you're outta here.

It was, in short, just a normal day in contemporary American capitalism.

Over at Wal-Mart, the employer that increasingly sets the labor standards for millions of our compatriots, wage caps have been set for certain jobs, and many longtime employees are now required to work weekends and nights in the hope that they'll quit. A memo prepared by a Wal-Mart executive in 2005 for the company's board noted that, "the cost of an associate with 7 years of tenure is almost 55 percent more than the cost of an associate with 1 year of tenure, yet there is no difference in his or her productivity."

The above could never happen in Britain. Labour laws plus the Social Chapter means that you can only be made redundant if the position itself is eliminated, and if you are made redundant you have to be compensated with a redundancy payment (something that doesn't happen in the USA).

There's a world of difference between American capitalism and the British version, something that those who carelessly lump the two countries together should note.

Americans traditionally put up with the harshness of their job market because salaries and job opportunities in general were higher than in Europe. What was the point of job protection if you couldn't get a job in the first place, the argument went, and they used to point to the high unemployment in Britain and Europe through the 80's and early 90's.

But they are no longer better off compared to Britain. Here at last there are jobs aplenty, higher incomes, combined with solid social protection. Under New Labour there is no longer any need to choose between opportunity and a safety net. We are currently among the luckiest people on earth, with an effective and indulgent government that runs the economy well, protects us and patiently puts up with our grumbling. Our prime minister even lets people shout at him in studios, to submit petitions for him to "stand on his head juggling icecream", does skits to entertain the populace on Comic Relief, and indulges the rank and file in the army when they want to sell their stories about how they got neck-flicked by Iranians. Is there another government on earth as indulgent?

And yet still we gripe. The danger is that as a nation we discount all the good things and get so caught up at being cross that the government has not delivered the bliss of nirvana itself, that we ditch what the rest of the would literally die to have. We are at the same point the Americans were at the end of the Clinton administration, when a spoilt nation's obsession with trivia led the population to change party, seduced by the thought that nirvana lay in "compassionate conservatism". There were warning signals about Bush's character (eg his fondness for executions) but the Americans ignored them and instead of nirvana, they got a version of hell.

We are currently living in one of the balmiest periods of British history. The question is, are we smart enough to realise this and to make sure it continues, or will we foolishly throw it all away? There are warning signals about the characters of the Bullingdon Boys too. Are Brits shrewd enough to heed them?