Terrifying Truth: American Business No Longer Needs American Workers



From SIERRA VOICES

[Yep, they got us right where they want us... the legacy of Reaganomics and Clintonomics. -DS]

Harold Meyerson, editor-at-large at The American Prospect, has written an extremely important article that all Americans should read (“Business is Booming“), about a new, fundamental and apparently permanent shift in the conduct of American business, a shift which he himself terms “terrifying.”

Here’s a fact that I’m sure even those of us who only casually follow economic news have noticed: corporate profits are at an all-time high at precisely the time when American workers are suffering depression-level unemployment.

What’s going on?

What does Apple, Hewlett-Packard, Dell and Nintendo, among other well-known American corporations, have to do with this story?

And what the hell is “iPod city?”

When he was CEO of General Electric, in 1998, Jack Welch pithily summarized his vision for corporate America: “Ideally, you’d have every plant you own on a barge to move with currencies and changes in the economy.”

Since then, corporations have discovered that they don’t need barges in order to unmoor themselves from the American economy. As corporate profits skyrocket, even as the economy remains stalled in a deep recession, Americans confront a grim new reality: Our corporations don’t need us anymore. Half their revenues come from abroad. Their products, increasingly, come from abroad as well.

Consider, for example, the crucial role that a company called Foxconn plays in the American economy. Scarcely any Americans had heard of Foxconn until a wave of worker suicides shook its immense factory complex in China’s city of Shenzhen last spring. Within the space of a few months, 10 workers inside the company’s walled-off Longhua industrial village, a 1.2-square-mile development where 400,000 employees live and work, killed themselves.

What made the stories particularly troubling, though, were the revelations about Foxconn’s place in the American industrial system. It’s at Longhua that Apple’s iPhones and iPods are manufactured (which is why Longhua is also referred to as “iPod City”). At Longhua and Foxconn’s other Chinese factory complexes, 937,000 employees also make computers for Dell, games for Nintendo, and several products for Hewlett-Packard. Indeed, the number of Foxconn employees who assemble these companies’ products often exceeds by a wide margin the number of workers these companies employ directly in the United States. At Apple, the ratio of Foxconn employees at work on Apple products to U.S.-based Apple employees is 10-to-1: 250,000 Foxconn workers to 25,000 Apple workers. The same ratio exists at Dell.

Meyerson notices what few policy-makers or economists have noticed, much less discussed: something unprecedented and frightening is occurring in this Great Recession:

The implications of this shift in the conduct of American big business are profound — and terrifying. At a time when small business can’t expand because high unemployment and the decline of home values have depressed consumer demand, big business is increasingly committed to expanding its sales and production abroad rather than at home. That’s why the current downturn is different from its predecessors: Unlike any recession in American history — including the Great Depression — this one has come at a time when America’s leading employers can return to profitability without rehiring large numbers of American workers.

Successful companies in today’s global economy relentlessly lower labor costs, and this can be achieved in several ways: offshoring, hiring of temps (“In November 2010, employers hired 40,000 temps — a number exceeding the total of 39,000 net new jobs created that month.”) and reducing wages for those few American workers who remain employed.

Meyerson finds little reason for hope:

With small business floundering at home, and big business flourishing abroad, where, exactly, will the economic recovery come from? Who will do the hiring? America’s private-sector economy is no longer structured to generate anywhere near the number of jobs it would take to return us to the levels of employment we had in 2007, before the crash.

If you want to understand the new uncharted territory into to which we as a nation are wandering, read Meyerson’s excellent article here.
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9 Comments

Gee, that was depressing. It would be nice if people who write such doom-and-gloom mention what can be done to fix said doom.

We may be looking straight in the face of modern American fascism. Fix: Remove personhood status from corporations, and charge them with treason for their economic anti-American activities. Or, again, get out there demonstrate and resist. Working within the system seems kinda stupid lately.

John

I remain agnostic about using seemingly helpful terms as “fascism.” I don’t find it useful in general discussion for two reasons. First it is a word rooted in the past that was heavily propagandized in the context of WWII, therefore it tends to generate stereotypical thought rather than the critical thinking, analysis and pattern recognition that will lead to effective responses to todays economic and social issues. Secondly, fascism was at its root a nationalistic phenomenon, whereas, what we are confronting today is a fully integrated global system of monetary insanity, not something growing exclusively out of nation states. It is something new and deserves a label, if we must use one, better than global fascism.

Markets seek to grow. Fully globalized markets mean that profits can be extracted from the contradiction arising from the fact labor forces are confined to largely economically irrelevant national boundaries, whereas capital investment is unfettered in its search for cheaper labor inputs. There was a period in the century before last when labor, in the form of chattel slaves were moved to the place of production. Now production moves to captive, often slave like work forces in poverty stricken countries and profits are globalized and move instantaneously as virtual money. A more useful way to think about globalized markets is to relate it to the ante-bellum US plantation slave system. At that time it was in the economic interest of Northern capital to wage war against the South and the system of slavery was collateral damage. Today there is no economic interest in freeing the slaves. The current system is doomed, no doubt, to tear itself apart. But for the time being it makes crazy sense (finance is an illogical religion after all) to enslave Chinese peasants to produce expensive goods for an ever narrower segment of the worlds rich. Regardless of what else happens, this system is burning a short fuse.

So the more things change… We are back around in the circle of human suffering where the mass of people rise up in rebellion against a small aristocracy. Of course, if I am right, and I hope not, the pendulum string is about to break. The game of paying one part of the society to enslave the rest, the program of fear and coercion that has been the playbook of what we have been taught to call “civilization” (really a euphemism for slavery) is about to become irrelevant. If our species survives the stupidity of the last few thousand years, what comes next could be great, or as Khrushchev expected would be the result of all out nuclear war, the survivors will envy the dead. There are lots of reasons why the former outcome is more likely, especially if we wake up and start thinking like adults for a change.

Using cheap goods produced by slave labor (like the computer I am typing on) is a doom maker.

herb

Well, Ross Perot warned us about the “giant sucking sound” that would be heard as American jobs fled to Mexico in the wake of GATT and NAFTA (thanks, Bill!). In the intervening years the other end of the pipe has relocated to Asia, and the sound has only become louder. And Buckminster Fuller, in his pithy tome “Nine Chains To The Moon”, outlined the history of the problem with a description of the first true internationalists, the Great Pirates. We’re in the end-game of that exploitative dynamic now.

It’s time to wake up or go down the drain, and waking up is going to require public participation once again, on a scale we haven’t seen here since the 60’s. Egypt is giving us a demonstration of that right now.

Thank you Herb.

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