America’s Class Wars: The Assault on Labor, Part III
By Dennis Keith Yergler
The assault on labor did not end with the Reagan Administration. Indeed, the assault on labor only intensified in the succeeding decades; the assault on labor continues even now. Over these intervening decades this assault transfigured itself into an octopus-like onslaught with tentacles stretching not only globally but right into our own backyards. Globally, Corporate America is on the verge of achieving a dream that it has been pursuing since at least the 1930s: an integrated economic world system. Thanks to institutional structures such as the World Bank, the International Monetary Fund (IMF), the General Agreement of Tariff and Trade (GATT) - all of which were created in the years immediately after WWII - to the more recent institutional creations, such as the North American Free Trade Act (NAFTA), the World Trade Organization (WTO), and the free trade treaties only recently signed with Columbia, Panama, and South Korea, Corporate America is within a “hair's breadth” of achieving their goal of a de-regulated world economic system, a laissez faire global economic system that fosters the free flow of capital to anywhere in the world. Such a world system would allow multinational corporations to prey the world in search of the cheapest labor, the cheapest natural resources, the most lax environmental regulations, the lowest corporate tax rates. In the words of Lori Wallach, director of Public Citizen's Global Trade Watch, the basic goal of these institutional structures was, and has been, "to establish a single global market with uniform rules," rules that essentially encourage lowest common denominators. The purpose behind this "single global market" is to make it easier to exploit "human and natural resources" - such as "water, trees, animals - basically all of nature" - more efficiently. In order to do this, however, "all barriers breaking up this single world market" have to be eliminated, "so as to maximize efficiency of scale."
When such areas of "maximum efficiency" are found, multinational corporations either quickly outsource production capabilities to these areas, or they threaten their current work force with the threat of such outsourcing in order to force worker concessions in both wages and benefit packages. What such strategies mean for working America is pretty straightforward: diminished wages; gutted benefit packages that leave only skeletal remains; and, ultimately, the loss of jobs.
To give just a couple of specific examples: since 1990 General Motors has eliminated approximately eighty-five percent of its domestic workforce. Similarly, Ford Motor now produces about sixty-two percent of its automobiles overseas, and, as a result, it has cut approximately fifty percent of its domestic workforce over the past five years. And this is just the tip of the iceberg: overall, since the year 2000, American corporations have created 2.4 million jobs in their overseas operations; during this time they have eliminated 2.9 million American jobs. Primarily because of such actions, according to Roger Bybee, one of the nation's foremost and astute labor journalists, the wages of American workers have been "driven down (in inflation-adjusted dollars) to 1973 levels as employers wage war against unions and take advantage of high unemployment by reducing pay rates."
But such outsourcing has had another significant impact: American corporations no longer see any benefit to improving health care or educational infrastructures here in America. Any such improvements would probably mean higher corporate taxes and higher individual taxes on the rich in order to pay for such improvements. Any increase in corporate or individual taxes would obviously diminish their share of the wealth, and this simply can not be allowed, at least from their perspective. Corporations and the wealthy would rather keep their taxes as low as possible so as to maximize their own wealth. And the best way to maximize their wealth is by outsourcing their production overseas to lesser developed countries. As Bybee writes, "In the past, the corporate class would have fought to strengthen America’s troubled public schools, rationalize a dysfunctional healthcare system and repair a crumbling infrastructure. Today, corporations see little immediate return on such investments of tax dollars and corporate leadership." Why should the one percent want their property taxes on their multi-million dollar estates increase in order to pay for quality public education when they send their own children to elite, private schools? Why should they increase their taxes to pay for a single-payer healthcare system when they already can purchase the best healthcare that money can buy? As Bybee declares, currently General Motors pays its American workers $4 an hour more per worker than it does its Canadian workers just across the Windsor River in Canada, simply due to the costly and profit-driven healthcare system here in the States.. Why should General Motors worry about a better health care system for its American workers when it can just move its production plants a few miles further north for far more significant savings?
Similarly, not so long ago, General Electric also "played a central role in shaping federal policy to meet the long-term needs of Corporate America for well-educated and healthy workers." Now, General Electric has just moved "more jobs overseas where healthcare costs are either minimal because of progressive government policies, or virtually non-existent because governments like China and Mexico are so solicitous of foreign investors that they impose virtually no social responsibilities like the provision of healthcare." For its remaining American domestic workers, General Electric has forced its union workers to accept new health insurance plans that require higher-deductibles for the workers, which has thereby reduced the "corporation’s costs but impose(s) more risk and much larger deductibles and co-pays (up)on their workers." As studies have shown, however, the ultimate consequence of such higher-deductible plans is that workers will be "'significantly more likely to avoid, skip, or delay healthcare because of costs' than those with more comprehensive insurance."
Now one may think: such corporate policies make no sense. Why would American corporations want to impoverish, want to harden, the lives of not only their own workers, but their own potential consumers? Do they not appreciate Henry A. Ford's dictum that corporations need to pay their workers substantial wages so that these same workers can then buy the products that they are producing? The answer to these questions is simple: American corporations no longer even care about the welfare of the American worker, for they have essentially written off the majority of the American population - and also much of the world's population as well. Such corporations have concluded that this majority will never have the resources to buy their products, so why waste time and money on them.
In this regard, in 2005, Ajay Kapur, the global strategist for Citigroup, headed an in-house study group that completed an extensive report entitled, "The Plutonomy Symposium — Rising Tides Lifting Yachts: Time to Re-Commit to Plutonomy Stocks – Binge on Bling." (Plutonomy, by the way, is: "An economy that is driven by or that disproportionately benefits wealthy people, or one where the creation of wealth is the principal goal." "Plutonomy" was a word created and crafted by CitiGroup itself.) Essentially, the report found that there are certain national economies (specifically, the report mentioned the United States, the United Kingdom, Australia, and Canada) where "massive income and wealth inequality – plutonomies – where the rich are so rich that their behavior ... overwhelms that of the 'average' or median consumer...." For example, " ... in the US, the top 20% of consumers might account for nearly 60% of income and spending. The bottom 20% by contrast account, on our data, for about 3% of income and spending.” And what was the conclusion of the Citigroup study group? "We should worry less about what the average consumer – say the 50th percentile – is going to do, when that consumer is (we think) less relevant to the aggregate data than how the wealthy feel and what they are doing. This is simply a case of mathematics, not morality." (Keep in mind that this is the same Citigroup that received $300 billion in taxpayer bailouts in 2008-09. This is the same Citigroup in which three of its top five executives, instead of having to declare corporate bankruptcy, thanks to the bailout, received $12.5 million in bonuses over the next five years. This was the same Citigroup that concluded in its "Plutonomy Symposium" report that half of the American population was irrelevant.)
Because of these simple mathematics, the "key challenge" for corporations, according to the Citigroup report, is to "hit th(is) mass-affluent market." As Frank Emspak, professor emeritus of the University of Wisconsin’s School for Workers, explains, the implications of such mathematics are relatively clear: “There are 6 billion people in the world, and even in relatively poor nations like Brazil, China, India and Mexico, you have 10% of the population — the elites — capable of buying products from the United States. That means roughly 600 million consumers overseas. So there is much less reliance on the U.S. domestic market and maintaining high wages so people can buy what U.S. corporations make." In the words of writer/economist Jeff Faux, founding president of the Economic Policy Institute, more and more American CEOs and "owners of corporations" have simply disconnected themselves - "or are in the process of disconnecting" themselves - from America. As a result, they "have no interest in paying more taxes to make the society they are abandoning more competitive.” As Bybee writes, "In the past, the corporate class would have fought to strengthen America’s troubled public schools, rationalize a dysfunctional healthcare system and repair a crumbling infrastructure." But in today's global economy of plutonomy, "corporations see little immediate return on such investments of tax dollars and corporate leadership."
As the journalist Rick Newman, writing for U.S. News and World Report, declares: "Big U.S. firms—often called 'multinationals,' for good reason—have increasingly followed global growth, with about 40 percent of profit for firms listed in the S&P 500 stock index now coming from overseas. Foreign exposure allows U.S.-based companies to capitalize on rapid growth in emerging markets like China, India, and Latin America, ..." Because of such emerging markets, corporations "earn much stronger profits than if they were totally dependent on the struggling U.S. economy." And to drive this point home, Newman lists a select group of American multinationals and the percentage of profit that is now derived from overseas sales: WalMart, 26%; Exxon-Mobil, 45%; General Electric, 54%; Bank of America, 20%; Ford Motors, 51%; IBM, 64%; Boeing, 41%; Dow Chemical, 67%; Intel, 85%; Amazon, 45%; McDonald's, 66%; Nike, 50%; and Marriott, 16%. Newman also could have mentioned Coca-Cola, which currently derives approximately seventy-five percent of its profits from overseas. According to Coca Cola's CEO, for the last several years it has seen extraordinary growth overseas, particularly in the newly emerging markets of "China, India, Brazil, Turkey, Russia, Eastern Europe and the Philippines, ..." This extraordinary growth has been "offsetting (the) weak results in North America." And the list of similar corporations goes on and on.
Of course, such global growth has created a few problems for American multinationals; American tax laws have placed large barriers in the way of bringing these foreign profits back home. American tax laws have made it, as Wallach would say, difficult for corporations "to maximize efficiency of scale." As of 2010, for example, America's fifty most profitable companies have earned about fifty percent of their profits from overseas operations. Right now these corporations have a "total of $681 billion" in off-shore profits "for which they have not booked any U.S. tax liability." Seven of these corporations - Apple, Cisco Systems, Devon Energy, Google, Microsoft, Oracle, and Pfizer - have "a total of $164 billion in accumulated undistributed foreign profits." These seven, among others, have formed a new lobbying group - "The Win America coalition" - in order to persuade Congress to pass legislation that would give these 50 corporations, and other American multinationals, "a repatriation holiday" in order "to bring that $681 billion back to the United States" with minimal, if any, taxation. According to WIN America, such a "tax amnesty" would allow these American corporations to bring these profits back home which, according to the Win America coalition, would thus stimulate more job-creation here in the good old USA. But according to David Cay Johnston, editor of TaxNotes.com and author of "Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick you with the Bill)," the real goal of the WIN America coalition is to obtain a "tax amnesty" in order "to bring the money home to buy back their own stock and raise their stock prices." As Johnston notes, the current bill before Congress, introduced by Rep. Kevin Brady (R-Texas) as HR 1834, has no provisions that require such corporations to reinvest their repatriated profits in job creation. If such corporations used such repatriated profits to buy up their own stock, thereby raising their stock prices because of the increased demand, the result would be major windfall profits for the CEOs and other managing officers (who often receive a portion of their salaried compensation in stock dividends) and the "one percenters" (who essentially have much of their wealth in stock equity portfolios).
As Bybee writes, "US CEOs and their conservative political allies" have been justifying such "offshoring" by blaming the "high US corporate tax rate." But as Bybee notes, "While the US corporate tax of 35% is higher on paper than a number of nations, pervasive loopholes and exemptions enormously soften the impact of the official rate. In fact, the effective US corporate tax rate is actually among the lowest among the 30 advanced nations belonging to the Organization of Economic Cooperation and Development..." As reported by the Citizens for Tax Justice, "According to a 2007 study by the Bush Treasury Department, between 2000 and 2005 US corporations paid only 13.4% of their profits in corporate income taxes, well below the Organization of Economic Cooperation and Development (OECD) average of 16.1%.”
Because of such corporate policies, over the past decades, the wealthiest one percent of the people in this country now own at least 34.6% of all privately held wealth in this country. In terms of financial wealth, this wealthiest one percent now owns 42.7% of all financial wealth. Throughout human history wealth has always translated into power, particularly political power. One can rest assured that this one percent has been using a portion of their wealth to enhance their political influence. And now, thanks to the Supreme Court decision in the Citizens United case, this one percent's political influence will increase exponentially in the election of 2012. More so than at any other time in American history, the election of 2012 will pit the one percent against the ninety-nine percent. If the one percent wins, the world will witness the crowning of the United States of America, Inc. We, who make up the ninety-nine percent, can expect fewer jobs; lower wages; and extremely more fragmented and skeletal health and retirement benefits, if any at all. If the one percent wins, Welcome to the "Brave New World" of American Serfdom. (To Be Continued)
Dennis Yergler is a lifelong resident of Iowa, and a graduate of both Iowa State and the University of Iowa, with degrees in mathematics, history and political science. He has taught history and political science at colleges throughout the State of Iowa, and is currently teaching at several colleges in eastern Iowa.
Carefully read, but overhelming memories made me wondering, if you ever read "The iron heel", issued 1908, written by Jack London. The great American revolution has eaten their children like saturn. America today - nothing else than the update of the 3rd Reich, just only with the means, methods and mechanism of the US sculls @ bones. Seems the song "First we take Manhattan, then we take Berlin" become true and Germany will develope the 4th Reich supported by the US plutocrats.