As I See It: In Defense of Entitlement

by Victor Rozek

Two disparate stories caught my attention as I was reading the morning paper. The first was about a 20-something young man who was interviewing for a job. Apparently his expectations were judged to be somewhat unrealistic because the Boomer interviewing him scoffed and said "Ah yes, you're from the Entitlement Generation . . . you think you're entitled to everything." The second story was about China scrambling around the globe trying to secure a reliable source of oil that is not controlled by American interests or subject to American military might.

At first read the two stories didn't seem related, but they most assuredly are. They are bound together by the laws of cause and effect. Given the connective nature of the global economy, where one nation sneezes and another catches cold, a young American job seeker's career expectations may well be realized in inverse proportion to China's success in obtaining oil.

The probable reality is that the more oil China is able to procure, the worse the bargaining position for the next generation of American workers. More oil for China means more jobs for China. And with negligible labor costs by Western standards, the Chinese will be in a position to produce even more goods for export, and provide more outsourceable services. And, since oil is a dwindling resource, a greater Chinese demand means higher domestic oil prices which raise the cost of living and increase the cost of doing business. That, in turn, provides incentive for reducing domestic labor costs by exporting more jobs overseas--none of which provides much leverage for job seekers.

There is one hell of a large butterfly flapping its wings in Asia and eventually the hurricane will reach us. But if China's strategic search for oil is a manifestation of shifting economic fortunes, so is the coming battle over so-called entitlements. Because when the hurricane hits (and the winds are just beginning to buffet our shores), the gains made by generations of American workers will be denounced as entitlements and stripped away. We are already seeing evidence of the rollback with dwindling health care benefits and disappearing pension funds. Server maker Hewlett-Packard killed off its pension for new employees last week, for instance.

"Entitlement" has become a politically-charged word with situationally flexible meanings. As applied to corporations, entitlements are subsidies which maintain competitive advantage or balance competitive injustice and are therefore essential to market dominance. As applied to individuals, they are impediments to competition and therefore antithetical to free market principles. But "entitlement" has yet another meaning. As applied to job seekers it does not refer to handouts or subsidies. In this context it is a baseline of expectations backed by generations of back-breaking labor and negotiation. It is the desire to build a career on a pre-existing foundation, dearly earned by those who toiled before us, rather than expecting every generation to start from scratch.

The "entitlement" to a living wage is the essence of why people work: to achieve a comfortable existence where the basic requirements of life (shelter, food, clothing, education, medical care, elder care, etc.) can be provided. What the pundits dismiss as undeserved is a desire for balanced compensation with sufficient salary and benefits to cover essential expenses and allow for some discretionary spending or saving. That expectation has been earned over many lifetimes by those who worked to eat and ate to work. Each generation toiled with the hope that the next generation would not be required to work as hard. That is the essence of human progress, and this is what is meant by entitlement--that our children are entitled to begin their journey from a baseline of what we have collectively achieved. There are few parents who do not hope that their children will enjoy a better life than they did. But that is precisely what is being rolled back--our next generation's future.

When the market rhapsodizers instruct the American workforce that it must now compete with the developing world's labor market, what they conveniently omit is that to do so, our workers must be willing to adopt a developing world's lifestyle. Because that's what the pay scale supports. Tellingly, a number of Americans with technical skills have sought employment in both China and India, where they can live reasonably well on pay that would be considered inadequate back home. And, they can work.

But that's not an attractive option for most of us.

The antidote for entitlement is not stripping workers of all benefits, and squeezing every ounce of security, stability, and ease from their lives. That, after all, is what work should provide. If you buy a coat, you expect it to protect you from the elements, and not have a dozen holes and missing pieces. When you accept a white-collar job, you expect it to cover reasonable middle class expenses without an assortment of missing pieces that make you vulnerable to accident or illness, or leave you unprepared for retirement after a lifetime of work. The antidote to so-called entitlement is not imposed hardship, but innovation.

Innovation has always kept the U.S. a few steps ahead of its global competition. From aerospace technology, to computing, to the telecommunications revolution; new ideas and products originated here. And since new technologies demanded fresh skills, that, in turn, kept wages high, which fed our expectation that wages would always remain high.

But, as Thomas Friedman argues in his book The World Is Flat, the infrastructure is now in place for innovation to occur literally anywhere in the world. Instant telecommunications, the Internet, global financial markets, open sourcing, technology transfers, international supply chains, or, as Friedman puts it: "a Web-enabled playing field which allows for multiple forms of collaboration without regard to geography or distance and soon--even language."

In a May 2005 interview with Wired magazine, Friedman recounts an insight Bill Gates shared. Gates asked, "20 years ago, would you rather have been a B-student in Poughkeepsie or a genius in Shanghai? Twenty years ago you'd rather be a B-student in Poughkeepsie. Today? Not even close. You'd much prefer to be the genius in Shanghai because you can now export your talents anywhere in the world." Which suggests that B students everywhere are in trouble.

From that perspective perhaps it's not surprising that the president of Intel reportedly said that his company could flourish in perpetuity without ever hiring another American worker again. A sobering disclosure for the unemployed B student.

Indeed, we seem to be missing the point, or perhaps are simply looking at the wrong part of the globalization elephant. While the American worker sees globalization as a race to the bottom, India and China see it as a race for affluence in which they have just acquired starting blocks. For the new generation of job seekers, the baseline is shifting and, curiously, Friedman offers both a warning about entitlements and a way in which the playing field can be re-leveled for the benefit of Americans.

On the one hand he says: "The entitlement we need to get rid of is our sense of entitlement." That point of view is not unexpected from an enthusiastic advocate of free trade and globalization. But on the other, Friedman offers some surprisingly socialized solutions which could ease the transition for the U.S. labor force. He calls for portable benefits, lifelong learning, greater investment in science, government funding for tertiary education, and a system of wage insurance. Such measures would surely help flatten the playing field for the beleaguered American worker, but unfortunately they are strategies toward which the current administration is either blind or hostile.

"Entitlement," it seems, has yet another possible definition: wise investment. But in order to pay dividends, the investment must be made now before our competitors get too far out in front and both jobs and innovation migrate overseas.

In The World is Flat, Friedman recounts the advice he gives his children and, tangentially, reveals how parental admonitions have changed with changing economic realities. When he was a kid, Friedman said, his parents would tell him to finish his dinner because there were millions of people starving in India and China. Now he tells his own kids to finish their homework because there are millions of people in India and China starving for their jobs.

It's enough to make you lose your appetite.