It’s Golden Week in Japan. That succession of holidays strung together designed to encourage Japanese citizens to go somewhere and spend some of their hard-earned yen. In Japan, May 1st is not a holiday, but many people take it off, and to the rest of the civilized world is Labor Day.
Of course, in the United States, May 1st is not Labor Day because of its association with Communism, so the US labor day is September.
Regardless of what day is observed as Labor Day, what, exactly, are we celebrating anymore? Because if one thing is certain in the United States- hard work is no longer celebrated, and it is definitely not properly compensated. The leverage a worker has vis a vis his working conditions and wages is among the many conditions that have deteriorated in the United States since Reagan was President.
In fact- there is a counter-movement of sorts arising as a result of the pandemic, which has been a time when many people have taken stock of their lives and decided that many of the sacrifices that work demands of their lives are simply not worth it anymore. Corporations do not seem to be getting the message, however.
Here’s a good explanation of part of our current problem:
@gerard.leconte
Today the governor of Montana proved that he has bought into the fallacy of assistance keeping people from working, so he announced that he is stopping unemployment assistance because of “too many employers throughout our state who can’t find workers. Nearly every sector in our economy faces a labor shortage,” Gianforte said in a statement.”
As noted in the video, this not true at all. The Labor Department has not seen evidence that enhanced unemployment benefits are keeping people out of the labor force. It’s just the latest version of the conservative economic lie that companies should get a free pass to f*ck their employees at will – in the name of “shareholder value.”
Bearing the connotations of May 1st in mind, I can’t help but wonder how our vision of a decent economy became so screwed up. And it was in reading the headline about the Montana governor that made me remember a series of stories that appeared on NPR’s Market Place program several years ago. It was called, The Price of Profits:
For many people, it feels like the wheels have come off the American Dream. Wages are stuck. The once sure-fire step up, a college degree, is becoming unaffordable. Jobs a family can plan a future around can seem scarce. Much of the angry passion this election year stems directly from these concerns about Americans’ personal economies……..
What the candidates all shared was an outdated vision of corporate America. They grew up in an economy ruled by big corporations like General Motors, General Electric and IBM, which provided careers and the financial security that defines middle class.
These corporations put customers first, then employees, then community and then shareholders. But in the last half-century — in the candidates’ lifetimes — that corporate ethos turned upside down.
Call it the rise of the Shareholder Value Economy. Corporations had no choice but to react to foreign competition, the globalization of wages and the advantages of new technologies. They had to change how they did business. They had to cut, lay off and restructure.
But what also changed was the idea of what corporations are for. What business schools teach today, and what Wall Street enforces and CEOs carry out, is that a corporation’s only responsibility is to make as much profit as possible for shareholders.
Now, that might seem reasonable. If you have an IRA or 401(k), you’re a shareholder, and you’d like to make as much money as possible. That’s natural. And a lot more Americans are shareholders that way than just 30 years ago. But hedge funds and other investment funds are far bigger shareholders, and their goal is to make as much money as possible now. What are the costs of businesses putting profits for those big, short-term shareholders before everything else?
One answer: middle-class jobs and income. It’s simply faster to raise profits by cutting jobs and wages than by investing in growth. And that’s what big corporations have done the last 30 years, cutting and laying off to increase profits, in the process transferring trillions in wealth from the workforce to Wall Street.
Market Place has a great visual timeline of how we got to this point here.
Instead of being the stakeholders in a companies’ success that they are and should be, employees became just another expendable commodity. And companies were not shy about giving them the shaft – even when they fell into a windfall tax cut that should have helped them build their businesses.
Letter from the CEO of Blackrock Investment Fund to CEO’s of corporations
Reading that sentence makes me think back to a book I read when I was in Japan,
Just like stock buybacks, the leveraged buyout that was all the rage in the 1980’s accomplished nothing to make a company a better producer of goods. Before the buyout, RJR Nabisco was a profitable company – so what if it had a flamboyant CEO and 9 corporate jets? It was a profitable company.
But it wasn’t after Henry Kravis got done with it. And that same story was repeated many times over between 1982 and 1992.
The 2000s saw a similar kind of financial trickery with the development of derivatives and of corporate merger mania – with many of those mergers being on the very extremes of anti-trust law. One reason airlines are screwing you over in both pre and post-pandemic travel is that they eliminated a lot of their competition and screwed over a lot of good employees in the process.
None of it, not one bit of it, was about producing products that were better and more competitive. It was only about bumping up share prices and doing it quickly enough to satisfy the Carl Icahn’s of the world who cared not a whit about the pain they caused for average working men and women. Sheer greed motivated these transactions nothing else.
It was American workers who paid the price for this lunacy.
The editor of the Market Place series summed things up well:
I greatly appreciate all these comments, pro and con, and hope the conversation will continue. Marketplace will continue to report on this subject, particularly in two areas: 1) ways that publicly owned companies are setting their own priorities (from b-corporations to stakeholder philosophy to Mark Zuckerberg’s rigging of Facebook voting rights to going private, and 2) the financial incentives that encourage the business of taking capital out of businesses.
One commenter mentioned that the economy is a zero sum game, but that’s true only if you earn your living by taking money from someone else. The “eat what you kill” financier model, one can argue, is not capitalism. Capitalism, as Schumpeter wrote, “is a bet on the future.” You borrow money to put it to work, betting that when the loan is due, you will be able to pay it off and have a profit. The pie grows larger and there is more for everyone.
The most important point of this series, I’m not sure it’s as obvious as it should be, is that the drive to maximize shareholder value has contributed to a huge transfer of wealth from the middle class. If you don’t like the idea of income redistribution… it has already occurred.
If there is concern about the sustainability of this country’s great consumer economy, the focus should be on what many commenters have said: how can a consumer economy prosper when consumers’ incomes and economic security are left behind?
It does not have to be this way. There is sufficient money in the economy to pay workers well and for companies to make a reasonable profit. 30 trillion dollars flows through the US economy every year. Corporate profits are at record levels for many corporations. Putting more of that money in the hands of lower and middle-income workers benefits everyone in the economy – even those corporations. We have the resources to be better than we are.
We just lack the will.
Workers of the world- unite!