Some Labor Day ruminations from a former member of the following labor organizations: The International Brotherhood of Teamsters; The Rochester, New York Local of Hod Carriers; The California Faculty Association. [1]
Doctored AP Photo of Chinese Wal-Mart employees in Shenzhen (UrbisMedia, ©2006)
From the first day that somebody begins to make more of a commodity or service than they need for themselves by exploiting their talents or abilities they become a capitalists. That statement was the lead in one of the lectures I enjoyed giving in my graduate course in Urban Theory years ago.
At about the same time I was giving that lecture I recall the administrators at the university were being served up a 38% pay raise; the faculty, which had not received an increase for a few years, were getting something like 2.8%. This was not too long after unionization had come to our campus.
I begin with these two seemingly unrelated points; one theoretical, the other historical because they are partly illustrative of what has been going on with economics these days. One could really choose other illustrations, but these are the ones that jump to mind this Labor Day.
We are all capitalists because we “sell” our personal specialties to the marketplace for labor. They market has something it needs and you have the ability or talent to do that thing. You have a job, you get paid for what you add to productivity, and you contribute to the economy by buying things, and you pay your taxes for public services.
That’s pretty much the way things work in a general way with market capitalism. So what’s wrong with that? Nothing, really. It’s really more complicated than that, but I’m not writing a Econ 101 textbook here. So let;’s jump to today, where we have an economy that by a couple of measures of capitalism seems to be doing pretty well: the stock market is rising or stable, and productivity is up. In other words, there is profit, which we know is what capitalism is all about.
So why is consumer confidence so low, and why are more people below the poverty line, and why are people having such difficulty keeping up, even with two incomes in more and more families? Well, part of the answer is in what those university administrators have been paying themselves. Management has decided that it is worth a lot more in the marketplace for management than it really is. University presidents began to liken themselves after corporate CEOs, arguing that their universities are like corporations. And we know what CEO’s have been paying themselves, with the complicity of those Boards of Directors and stockholders—some of them make 600 times more than their average worker.
Time to bring in the D word—Distribution. Sure the stock market is rising, sure productivity and profits are up (Wow! Just look at those oil company profits), and so the CEO’s are regarded as wonder-boys, so why nit give them those hundred-million dollar salaries. Why distribute some of those profits down to (this is what “trickle-down” is all about, isn’t it?) [2] those workers when you are in charge of the distribution of the company’s profits. After all, you’re the wonder-boy who came up with the idea that you can increase productivity and profit by shipping production off to China or India, pay workers one-twentieth the wages (with no benefits) and give the stockholders and yourself a nice pretty profit. It’s globalism, baby; deal with it.
Wonder-boy CEO’s don’t have to necessarily do that. You can terrorize your labor to keep their mouths shut and not organize in other ways than threaten to go off-shore. They can force you to work overtime for no compensation, reduce your benefits, cut or eliminate employer contributions to you pension—which, by the way, they might be pilfering, or even decide that they are going to take back your pension (American Airlines).
If you wonder why Democrats have been on the case of Wal-Mart it is because the model for the emerging economy is Wal-Mart: high corporate profits, from selling 90% Chinese made goods out of a huge box, and paying their worker squat with no benefits. That’s the formula a lot of corporations would like to emulate, a descent into cheapness.
American’s might be getting the message, which may be why consumer confidence is not up there with the stock market and productivity figures. Unemployment might me low, but the purchasing power of wages is lower than it was back in 1998.
There’s this notion about market economies tat the market is some magical thing that works like what the old economists used to call the “invisible guiding hand”, or the hand of “providence”. Things will work themselves to the greatest social benefit if the market is just left alone (laissez-faire) to keep things in balance. It is a point-of-view that has been buttressed by the fall of communism, the rocketing rise of China’s post-Deng market capitalism, and the illusion that the stock market and low unemployment rates are accurate indicators of a healthy economy.
But the market is not some transcendent invisible guiding hand of Providence. It is operated and manipulated, admittedly in a competitive arena (and often a collusive arena). But its operators cozy up to political power (and not just the political power in their own countries), influence social policy, stymie regulations that might compromise their profits or competitiveness, hire accountants to fiddle the books, pay ex-politicians as lobbyists or to sit on their boards so that tax policies like those of the Bush administrations will pour more of that trickle down money into their person al bank accounts, and if their companies get in trouble they will have friends in high places to argue that their industry is essential to the national interest and needs some nice loans to keep them afloat.
This is not a brief for socialism, or communism, or any –ism. Systems don’t corrupt people—people corrupt systems.
And so on Labor Day, the workers, the people who sell the talents, abilities, and sometimes just their sore backs to the market for labor that make the economy function, go to the beach or a park and have their picnics, tossing balls and sitting on lounge chairs made in China, eating their burgers and hotdogs, enjoying a respite from their daily travails and wondering how they will pay their bills and send their kids to college, and if there will be enough for them to retire on—while the “invisible guiding hand of Wal-market Capitalism picks their pocket.
___________________________________
©2006, James A. Clapp (UrbisMedia Ltd. Pub. 9.5.2006)
[1] To Republicans this makes me the equivalent of a terrorist. See,
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2006/09/04/EDG3BKSCQI1.DTL
I am not now, nor have I ever been, a member of a country club.
[2] Trickle-down theory is that we should give high salaries and tax breaks to the rich, so they will give the rest of us jobs building their mansions and yachts. “Piddle-down” theory would be more apt.