Labor and Regional Economic Development: Lessons from Europe

Abstract

The innovative partnerships described in the preceding articles mark a break from the dominant attitude in American business that individual enterprise decisions should be the primary or sole force in regional economic development. Such decisions do not always produce the best outcomes for the community or even for long-term business health. Companies can remain competitive by investing in workers, introducing new technology in ways that build employee skills, and fostering worker input and more participatory forms of work organization. Firms that pursue such a “high road” produce quality goods and services in productive workplaces that adjust rapidly to changing market conditions.In contrast, most American businesses steer down a communitydestroying low road. Firms compete on the basis of low prices and high volume by slashing labor costs, freeing themselves from community standards, and managing their employees with a military-style chain of command. Wall Street’s preference for short-term returns and twenty years of deregulation and public spending cuts have made the low road more attractive and the high road more difficult.American unions have begun to realize they can no longer “let management run the business”; they must become a voice for the high road. Indeed, the differences between routine practices in Europe and the United States demonstrate that the “let the market decide” approach is not the only or the best way to run a regional economy.