Robert Reich’s blog post The President Ignored the Elephant in the Room, discusses the State Of The Union address of  two nights ago.

But the President’s failure to address the decoupling of American corporate profits from American jobs, and explain specifically what he’ll do to get jobs back, not only risks making his grand plans for reviving the nation’s competitiveness seem somewhat beside the point but also cedes to Republicans the dominant narrative.

This may be the elephant to Reich, but I think there is a pink elephant that even Robert Reich seems to have missed.

To me, the talk of regaining competitiveness by having education as good as our competitors and innovation as good as our competitors doesn’t sound like enough.  If their education and innovation is as good or better than ours and they work for less money, I just don’t see how we are going to get the jobs back.

When I say their education is as good or better than ours, I am reminded that about 60% of the technical PhD degrees granted by our own universities have been going to citizens of these competitor nations.  This has been going on for more than 30, dare I say 40, years.  Add the number of PhDs from the schools in the competitor countries that I can guarantee aren’t giving 60% of their degrees to Americans, and you see the problem even more clearly.

It seems to me that we will have to come close to matching the competitor countries’ salary levels before we can really compete.  Will all the wealth of the U.S. be subject to this adjustment through lowering the value of the dollar relative to the competitor nations?  Or will only the wealth of the working class be lowered by lowering wages in fixed value (gold standard) dollars.  In the second scenario, the wages of the workers decline but their debts remain fixed.  So the wealthy get to collect the full amount that they lent. The wealthy can preserve their wealth and only the workers have to adjust.

The only saving grace that I can think of is to understand how Germany is managing to do so well with highly paid workers in the face of the same competition against which we are losing.  Germany has higher taxes and a more robust government safety net than even we do.  It looks like it would behoove us to find out what their secret is.

Perhaps the German secret will turn out to be the closer ties between German corporate profits and the success of their workers.  In that case, Robert Reich will have identified the correct elephant.  He ought to spell it out more clearly if that is what he is getting at.  There is no better way to make your point for a change in policy than to point to a successful example of the use of that policy.  If there is an example, we don’t only have to look at the abstract concept of tying corporate profits to worker success, but we can look at actual tactics for realizing the concept.