Economic Policy | June 22, 2005
Posting in "GordonTalk"
From Left Field"
Year after year,
workers in America "bake an economic pizza pie"
bigger than the year before. But over
the last quarter century, about 900 of every thousand
Americans have each gotten a smaller slice of the pie; 99 have
each gotten a slightly larger slice of the pie; and one, at the
top, has gotten a slice twice as big as before -- a piece of the
pie that's gotten bigger only because of the increased
"productivity" (that's workload, no matter how you
it) of the other 999 of us.
And to add
not only insult but also injury to injury, "economic
security" -- the ability to get and keep a job with
middle-class pay and benefits -- is rapidly becoming an
endangered species. Although
this trend has been increasing over the last quarter century,
the policies of the current Administration, and its allies
controlling Congress, not only are failing to protect the
current and future economic well-being of the vast majority of
working Americans but are aggressively undermining the
economic security of the many, in order to enrich the few.
mistake, this is an attack upon America, being waged both
at home and abroad, just as surely as -- and of enormously
larger consequence than -- any disaster ever inflicted upon us
by some religious fanatics overseas.
Let's take a
glaringly honest look at the problem and then in that light consider
any possible solutions. We literally cannot afford not to.
Wal-Martization of the American Workforce
Perhaps the most telling
"sign of the times" made the headlines quite recently: General
Motors announced it would layoff more than 25,000 blue-collar
workers -- eliminating more than one in every five of its typically
unionized jobs, paying middle-class wages and benefits.
and Poor's downgraded bonds issued by General Motors and Ford to
"junk" status. And it wasn't just because they make
too many gas-guzzling SUVs (a problem exacerbated, as we feel at
the pump, by having Big Oil run the White House). No, investors
were down on the automakers because they are still paying living
wages and substantial benefits.
guys, get with the program! It's the 21st Century. No company can
afford to take care of its employees and compete in the global
marketplace. What do you think this is? 1968?!
1968, GM was the largest corporation in America, the very model of
corporate capitalism. Its workers were the envy of the world,
earning on average $29,000 a year (in today's dollars) --
decidedly middle-class wages for the time -- with good health and
retirement benefits. Many worked for GM for life, secure in
contracts hammered out between their unions and management. And
similar benefits were enjoyed by even non-union workers
Wal-Mart is the largest corporation in America, the icon to be
imitated. Its workers, at least those "associates" fortunate enough to work
full-time, earn on average $17,000 a year -- which the company
itself admits is typically not enough to support a family -- with a health plan covering not
quite half its workers, most of whom cannot afford the plan's
premiums and deductibles (Wal-Mart workers and their families
constitute a large portion of the nation's uninsured emergency
room patients whose healthcare is paid for by counties: Taxpayers
-- increasingly at the local level, as Congress continues to slash
Medicaid reimbursements -- are subsidizing the healthcare costs of the largest corporation in
America). Almost half of Wal-Mart's workers quit each year, and
aggressive tactics by management -- some legal, others found
otherwise in courts of law -- have kept its entire workforce
non-unionized (You can get fired for even talking about
unions on company property -- your workplace).
sometimes Wal-Mart has cut its labor costs to zero. As proved in
infamous court cases, "rogue" store managers -- under
intense, systematic pressure from corporate headquarters to cut
operating expenses -- have tampered with time cards and bullied
workers to work overtime without pay.
where do corporate earnings that previously went to workers now
1968, the head of GM was paid $4 million (in today's dollars),
hardly an inconsequential sum. Last year, H. Lee Scott Jr., CEO of
Wal-Mart, was paid almost $18 million (plus stock options of about
average, it would take each of the over one million employees of
Wal-Mart -- the largest corporation in the world, the business
leader for all to follow -- almost two lifetimes to earn as much
as the CEO is paid every month (less stock options).
to be perfectly honest, Mr. Scott did part with $2000 of his income
in 2003 -- a contribution
to Bush-Cheney '04 -- which was undoubtedly a wise investment,
considering how much this Administration has done to cut Mr.
Scott's taxes (much more so than for his workers).
carrying on the tradition of the founder, the late Sam Walton, Mr.
Scott and the other executives at Wal-Mart empty their own trash,
fly coach, and drive humble vehicles. Just like regular people.
Wal-Martization of the American Marketplace
the Wal-Marts of this country don't make automobiles (at least not
yet), they do do retail -- in a big, big way.
the nation's largest seller of everything from toys and jewelry to
furniture and groceries, Wal-Mart
racks up about a quarter trillion dollars in sales year after year
-- almost twice as much as General Electric, almost eight times as
much as Microsoft.
unprecedented success of Wal-Mart is the result of its unequalled
success in slashing prices. With its sales representing
approximately two percent of the entire Gross Domestic Product of the United
States, Wal-Mart is generally credited for helping keep
inflation in check across the entire nation.
company's supporters say that effectively boosts the buying power
of all workers' wages; the company's detractors ask at what price?
success of the Wal-Mart business model is predicated in large part
upon pitting consumers against workers; unfortunately, consumers
are workers, too. Wal-Martization of the workforce is an
insidiously self-reinforcing proposition: The less one earns, the
less one can afford to spend -- ultimately we are all dragged down
(By contrast, in a healthy, growing economy, there will typically be
mild inflation, as demand -- for products and services, materials
and labor -- outpaces supply).
in ensuring that Wal-Mart offers its customers "Always Low
Prices. Always." others besides its employees also pay
dearly: We don't get something for nothing.
a Wal-Mart supercenter comes into town -- a town that usually
provides big breaks to the big box store, in order to snag big
sales tax revenue (away from surrounding towns) -- local merchants
from mom-and-pop shops to supermarkets, and the shopping centers
they anchor, fail. Their prices simply cannot compete with those
of the world's largest discounter.
average, for every Wal-Mart supercenter that opens, 200 union jobs
are lost at neighboring grocery stores, the wages and benefits at
a Wal-Mart less than half of those paid in a supermarket.
course, the groceries are from 20 to 40% cheaper.
Wal-Martization of the Global Workplace
the loading docks -- where truckers must often unload their own
freight, or pay Wal-Mart to do so (and not get to use the
bathrooms) -- to the factories that supply them, Wal-Mart flexes
its muscle as the world's largest retailer to squeeze the greatest
discounts from its suppliers.
as it pits workers against workers, Wal-Mart
pits vendors against vendors, at home and increasingly abroad.
Such international corporations wield far more raw power than many
of the world's nations (including those 13 original united states,
whose citizens demanded protections under a Bill of Rights).
vendors from across America and around the world make their
pilgrimages to the mecca of modern capitalism, Bentonville,
Arkansas -- headquarters of Wal-Mart Stores Inc. -- to sell their
wares, the prices routinely dictated by the retailer, exploiting
the ever-increasing desperation among suppliers that it creates by
demanding ever-decreasing prices.
the effects have been as relentless as predictable. Living and
dying on their orders from the world's largest retailer -- if your
products aren't on the shelves or racks of the 3,000 Wal-Marts in
America and your
competitors' are, you're pretty much resigned to failure --
manufacturers, and their jobs, have been moving from low-wage
regions of the US (primarily, ironically the reddest of the Red
States) to such countries as Honduras (where half a buck an
hour is good pay), to Bangladesh (which, like many nations, sends ambassadors to the world's largest corporation as it
does to sovereign states, in order to protect its manufacturing
jobs, paying just a few cents an hour), and ultimately to Vietnam and
it is in China, more than anywhere else in the world, that such
corporations as Wal-Mart have found the ideal manufacturing
environment: Wages are low (not as low as in Bangladesh but read
on), raw materials are cheap, factories and transportation
facilities are modern, and -- above all -- the government is very
"friendly" to the Wal-Mart model of business.
reports in the 1990s of scandalous working conditions overseas --
long hours, ever tighter deadlines,
dangerous working conditions, child labor, unpaid labor -- shamed
many American companies, Wal-Mart included, to demand better of
their suppliers (many of whom now just keep two sets of books), at
least as of 2003 Wal-Mart,
unlike other companies, refused to allow independent inspections
of its suppliers.
as the manufacturers of China are infamous for their lack of
worker safeguards, so the government of China is infamous for its open,
sometimes violent hostility towards organized labor.
don't expect the situation there to change anytime soon: Dissent
is a dangerous thing in China. Scholars are harassed. Journalists
are "schooled". And even
such cutting edge American corporations as Microsoft and Yahoo! are
assisting the Chinese government in monitoring and censoring Internet
access for 100 million users in China (a market second only to the
If one is foolhardy enough to attempt to use such words as
"liberty", or "human rights" in an on-line
posting, one receives a
bright yellow warning -- "This message includes forbidden
language. Please delete the prohibited expression." -- and
perhaps a visit from the thought-police (and maybe an extended
stay in a location yet to be announced, or not). Microsoft reassures
us, however, that such Internet filtering of titles used in its
messaging services is not without precedent: It blocks words like
"whore" and "pornography" in America just as
it does "democracy" and "liberty" in China.
Just let that sink in.
Isn't it ironic? Wal-Mart, the world's largest capitalist corporation, has
found the perfect home in China, the world's largest communist nation.
the Compost Heap of Despair,
the Tender Seedlings of
we live in America, not China; and as long as we can speak our
minds, we can change our country. Ever the optimist, I still
believe where there's a will, there's a way. But is there the
will to change? Or have we Americans grown so complacent -- so
mesmerized by the omnipresent corporate culture at work, in
stores, and in our media-saturated homes -- that we are
satisfied with the direction in which we are heading?
one in three Americans thinks our country is on the right track.
particular, George W. Bush has become the most unpopular
President, at this point in his presidency, in modern American
history; and this is largely attributable not only to his
unprovoked and unrelenting war in Iraq but also to his plan for
privatizing Social Security, the centerpiece of his so-called
Although Americans traditionally
preach and practice personal
Americans simply aren't buying the concept of an Ownership
Society, as being so obsessively, increasingly desperately sold by President Bush: They
simply can't afford to buy it.
A majority of Americans --
surprisingly led by white males in Red States -- has come to adamantly
oppose efforts by the Economic Right (at odds with even the Religious
Right) to dismantle the "safety net" programs enacted by
Democratic Administrations, from the New Deal through the Great
Society and beyond. And the reasons are numerous.
mentioned above, employers attempting to be more competitive in the global
marketplace are increasingly shifting responsibilities for retirement and
healthcare onto their employees, even as they downsize and
times as many Americans file for personal bankruptcy now as
did a quarter century ago; not surprisingly, the reasons most often cited are
layoffs and medical emergencies.
of Americans want -- and need -- the government to guarantee
of Americans are "uneasy" about President Bush's
decision-making on Social Security. Most
Americans think his plan, with privatized accounts, would mostly benefit the rich (which most Americans, despite their hard work, are
half of Americans want -- and need -- the government to guarantee
a decent standard of living in retirement.
older, often independent men see privatized Social Security
accounts as a windfall for Wall Street that puts their children
and grandchildren at risk.
suburban Security Moms share that concern.
Baby Boomers have been victims of stock market downturns,
corporate downsizing, "vaporware" pensions, and the
constant threat of outsourcing.
Thirtysomethings need economic security to put their kids through
college and to help take care of their retiring parents.
X-Generation techies have seen not only the glamorous upside but also the
downside of all-too-unfettered capitalism.
and working-class students have access to dramatically
less federal aid to make college, and the American dream,
such breadth and depth of very personal discontent, no time in the last quarter century has been more
ripe for a fundamental change in American economic and political policy than today...with, unfortunately, the probable exception of
an even more desperate tomorrow, if things do not change -- if we
do not make things change.
of the particular problems presented above suggests a particular
solution: Adjusting, not privatizing, Social Security;
establishing national health insurance; making the tax code far
more progressive; enforcing corporate
responsibility, both at home and abroad; guaranteeing employee
safeguards; promoting unionization, both at home and abroad;
ending tax incentives for outsourcing or insourcing (importing
trained workers); publicly financing political campaigns, with the
allotment of equal television time to all qualified candidates, in
order to diminish the corrupting influence of corporate
more than this, there is a general, fundamental principle that
must be adhered to if any such reforms are to be introduced, let
alone succeed: Workers
must work together -- and not be divided and conquered, at the
workplace, at the marketplace, at the polling place, or at any
other place -- if we are to progress and prosper together, if we are to keep "economic security" from
becoming a "prohibited expression".
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