As American families gather to give thanks today, 18,000 Hostess employees are wondering where their next paycheck is coming from. The collapse of the company they worked for has left them out on the street.
Venture capitalists bought the venerable “Twinkies” producer, milked it dry and left it burdened by unmanageable debt. The union representing the employees called an ill-timed strike to protest the wage cuts that ensued. And the venture capitalists who now own the company declared bankruptcy. They will sell off the assets, including the most popular brand names, pocket their profits and move on to some other corporate target.
To me, this sad story illustrates the destructive way in which America’s “free market” has evolved.
There was a time when labor unions were an effective brake on capital’s rapaciousness. In those days – not so long ago – jobs were readily available in America, and holding on to good employees was important. Today, with so much of American industry moving to low-wage, low-regulation countries like China, jobs in America are harder to come by. Consequently management has become a lot less concerned about their workers’ welfare. Now, their obligation to shareholders is their sole concern.
If the workers aren’t happy, let them quit. There are a lot of applicants waiting for their jobs. In that environment, strikes are increasingly futile. And, if all else fails, there’s always China. Or Bangladesh. Or wherever.
This attitude is illuminated by a labor dispute threatening to cause walkouts at 1,000 Walmart stores tomorrow.
Walmart has kept its American payroll low by crushing any attempt to unionize, while exploiting sweatshops abroad. The average Walmart associate makes just $8.81 an hour, and hundreds of thousands of them live below the U.S. poverty level. Meanwhile, Sam Walton’s six heirs have more money than the poorest 100 million Americans combined.
With more than two million workers, Walmart is the world’s largest private sector employer. And the marketing giant exemplifies the heartless profit-making efficiency of today’s “free market.” It is a system that can have a brutally destructive impact on society.
For one thing, the system has widened the chasm between the rich and poor. The richest 10 percent of Americans control two-thirds of the country’s wealth and the richest 400 Americans control as much wealth as the bottom 50 percent of the population.
Income inequality isn’t limited to America. In 17 out of the 22 countries that the Organization for Economic Cooperation and Development tracks, the wealth gap has widened drastically since 1985. And according to a Credit Suisse report cited by the Wall Street Journal, the world’s millionaires control nearly 40 percent of global wealth.
Obviously, there’s no point in trying to turn back the clock. For better and worse, globalization is here to stay. And in that environment, companies will do whatever they can to maximize their investors’ profit. Unions will no longer be able to protect workers from exploitation. The situation will continue to deteriorate.
Unless the government intervenes.
If American workers insist on to demonizing “socialism,” they will pay a cruel price. Despite the propaganda of the filthy-rich elite and the chicanery of their political puppets, American voters will have to recognize that only the government can level today’s economic playing field.
Government intervention can be disastrous, of course. History abounds in examples of failed “socialist” experiments. But government intervention can also be beneficial. The trick will be figuring out how and when – not if – the government should intervene in the America of tomorrow.