In Jamaica, they say “one man’s rise is another man’s downfall.” They also say “strong man never wrong.”
To me, these two old sayings sum up what’s happening in America. The rise of the global corporations has precipitated the downfall of the American middle class. And the trend continues because the corporations are powerful and the middle class is powerless.
In the new global economy, corporations grow wealthy by moving their production facilities to low-wage countries, leaving American workers jobless and impoverished.
This was not inevitable. Germany, for example, is managing to create jobs quite briskly in the global economy.
In a recent Huffington Post article,Robert Kuttner, co-editor of The American Prospect, attributes this to the fact that the Germans have not capitulated to Big Business the way Americans have.
“Industrialists are committed to producing at home,” Kuttner writes. “And just in case they get ideas of making outsourcing a way of life, they have strong unions who negotiate agreements on where production is located.”
America’s unions are not strong because Americans have lost faith in them. For a complex web of reasons – including conservative propaganda mills, political maneuvering, media compliance and union leaders’ malfeasance – there is no longer a vibrant labor movement in America. And if the strategy of current Republican leaders succeeds, what influence the unions now wield will be drastically diminished.
Kuttner writes that:
In the absence of a labor movement, or higher minimum wages, or other pressure for decent retailing wages, the (American) service economy is turning into a Wal-Mart economy, where domestic service jobs that are created mostly pay lousy wages.
He points out that neither of America’s major parties has the will to stand up to Big Business. And he says the Obama Administration is “unwilling to challenge the corporate business model that disdains American workers.”
Because the American worker has no champion in Washington, China has been able to take advantage of globalism to the detriment of the U.S. economy (click on illustration above to see trade patterns).
Kuttner explains it this way:
The Obama administration is not about to take issue with American companies that profit from locating ever more production abroad. The corporate elite is fiercely opposed to any limits on its freedom to relocate, and Obama is on a mission to make peace with big business. The administration continues to promote “free trade” deals on the premise that they will create jobs – but more and more of those jobs get created offshore.
Both political parties are in denial about the plain fact that American industry is competing against an industrial system in China radically different from our own. If a company like GE wants to operate in China, the Beijing regime extracts conditions that violate the spirit if not the letter of the World Trade Organization.
Companies are made to take on Chinese partners, to transfer sensitive proprietary technology, and to shift their production and R&D to China. In exchange, they get government subsidies and docile workers. Eventually, much of their production is displaced by their Chinese partners, but in the meantime they make a lot of money.
In the past two decades, company after company concluded that the U.S. government didn’t really care if we lost our manufacturing base. The Chinese government was making them an offer they couldn’t refuse, so one by one they made a separate peace with Beijing.
I wish I could see some sign that the situation is changing for the better. But, as far as I can see, it is actually getting worse.
Kuttner points to “the latest gestures by the president to show the business elite just what a good fellow he is,” and with this attitude prevailing in Washington, I see little hope for America’s employment picture to improve any time soon.