This review of the conservative press was started on the week of June 2, 2003. In the brief time since then, note the number and diversity of articles that were published in America's most respected conservative financial publications.
In one way or another, they clearly demonstrate the hypocrisy of those conservatives who claim that:
So, grab your barf bag and read on!
(Note: the abstracts below are presented for purposes of criticism only. Because of copyright laws—and in the interests of brevity and readability—they are necessarily incomplete. Those who are interested in the investment or other implications of the articles should read the originals.)
It’s been said, accurately, that economics will never be a science because there are no objective analysts, and every school of analysts creates winners and losers. In other words, every economic theory affects the income and wealth of different categories of people and in different ways.
Each analyst operates from a base of assumptions: that an economy should benefit the greatest number of people, and even the least should have a comfortable living—or it should benefit primarily the elite, however they are defined, and the lowest on the economic scale should be willing to sacrifice some comforts in return for the leadership by the elite.
The following front page story in the Wall Street Journal describes the different philosophies perfectly, and illustrates why our current economy is deliberately designed to create an American aristocracy, with its attendant servant class.
From The Wall Street Journal, April 2.
… Tens of millions of increasingly skilled Chinese and Indian workers are joining the global economy at a moment when technology can dispatch white-collar work overseas almost instantly—from call centers to sophisticated design projects, the very jobs that discouraged U.S. factory workers hoped their children would get.
The good news: The U.S. almost certainly isn't going to run out of jobs, even though history shows that it's impossible to predict what new jobs will replace those that are destroyed. The bad news: Outsourcing overseas and technology could widen the gap between the wages of well-paying brainpower jobs and poorly paid hands-on jobs….
One unpleasant possibility, acknowledged even by those firmly in the trade-is-good camp, is that jobs will proliferate at both ends of the barbell—and fewer in the middle. The result would be an ever-wider gap between well-paying jobs and poorly paid jobs. That, too, has happened before, as recently as the 1980s when unionized skilled manufacturing jobs evaporated….
The overall pace of wage increases in the U.S. generally tracks growth in productivity, the amount of goods and services produced for each hour of work. But in any economy, wages for workers in high demand rise and wages for others lag or even fall….
Without a major change in policy, such as an increase in the minimum wage or restraints on immigration, or a seismic shift in the economy, such as a surge in unions or limits on imports, the economic forces widening the gap between wages of winners and losers appear strong….
"There are two kinds of lies that politicians tell about outsourcing," says Mr. Levy, the MIT economist. "One is that we can turn it all back. But even if you cut off all trade, technology can do the same things to workers. The other is that education is all that matters. That's true, of course, but only in the long run."…
Without better elementary and high schools, wider access to college and more training of mature workers, the gap between those with well-paying and poorly paid jobs is certain to grow.
Over the next five or 10 years, though, better high schools, more college-student aid and more pervasive workplace training don't seem sufficient to stop outsourcing, trade, improving technology and relentless cost-cutting from widening that gap.
The Future of Jobs:
New Ones Arise,
Wage Gap WidensOutsourcing, Technology Cut
Need for Rote Workers;
Brainpower Is in Demand
Hot Area: Massage Therapy
This story betrays the aristocratic goals of today’s conservatives almost better than any other I’ve seen. Consider:
We’ve got to repeat the same kind of 1930’s legislation that allowed our country to overturn the wretched excesses of the 1920s. And it’ll never happen as long as Republicans and conservative Democrats remain in control of Congress and the executive office.
Note: this is a very brief excerpt of a very long front-page article and is intended for purposes of criticism only. Those who wish to gain a greater appreciation of the entire issue as presented by the Journal—or feel that I may have misrepresented the article’s intent (and I took pains to make sure I haven't)—should read the original.
“Bait and switch” is a standard operating procedure for the conservative financial press. They say that outsourcing is good for our country’s progress because that’s the natural result of technological improvements. Then they cite historical precedent in which beneficial technology caused large-scale disruptions in the labor markets.
But today’s outsourcing is not the result of other countries having superior technologies. Today’s outsourcing is purely a strategy to cut wages for American workers.
What’s happening today, and the Journal’s illustrations, are as different as night and day.
From The Wall Street Journal, March 29.
What could be a more modern dilemma? High-speed data links allow employers to ship white-collar jobs from rich countries to India, China and other nations where workers earn far less.
Yet losing skilled jobs to low-wage foreign competition is as old as the Industrial Revolution. In the 1830s, the British textile industry became so efficient that Indian cloth makers couldn't compete. The work was outsourced to England, with disastrous consequences for Indian workers…
In the early 1800s, skilled weavers in Britain who worked on hand looms considered themselves a protected class. For a while, the government banned the use of textile machinery that could do weaving more efficiently and even barred emigration by mechanics as a way to keep technology bottled up in Britain….
The Luddites, often seen as a symbol of futility, were the first of a series of resistors to technology. The Homestead strike of 1892—in which seven Pennsylvania steel workers and three Pinkerton detectives were killed—was sparked by Andrew Carnegie's efforts to automate steel production. In the 1960s, U.S. union protests over "de-skilling"—replacing machinists with automated tools—ended peacefully with unions accepting no-layoff pledges in exchange for new technology….
Lower tariffs make it easy for China to export clothing and electronics to the U.S., battering workers in those industries. But overall, many Americans benefit because the imported goods drive down prices….
Congress is discussing regulation and tax policy to hinder the practice. History shows that in a battle between politics and technology-driven change, betting on technology isn't a sure thing.
Finding Lessons
Of Outsourcing
In 4 Historical TalesTechnology, Trade, Migration
Often Shook Job Market;
Politics Can Slow Effects
Farmers Fall Prey to Railroads
Today’s outsourcing is NOT “technology-driven change.” It’s worker wage-destruction” change.
Sure, today’s workers, as a class, are benefiting slightly from lower prices. But they are losing out big-time because their wages—relative to prices—are actually going down. And unemployed workers can no longer afford to buy products, no matter how cheaply priced.
Who are the real winners from outsourcing? Investors and top corporate executives, of course.
The following two excerpts from the same issue of the same publication go together. They demonstrate the chronic bias in favor of rich investors and against working Americans.
From Forbes, March 29.
By William Baldwin
Pensions are a big waste of money. What do you say we just abolish them? Especially government pensions….
Some, mostly unionized, industries cling to old-style pensions—autos, steel, airlines. They use the system to foist costs onto competitors and taxpayers. If a company doesn't have the cash to give workers a pay raise, it will fatten their pensions instead. When it goes bust, the federal Pension Benefit Guaranty Corp. has to make good on the promises.
For similar reasons, politicians are in the habit of favoring mañana pay--later generations of taxpayers will get stuck with the bills. What a shame that New York City cops and firefighters get half-pay retirement after 20 years. Good ones who should stick around quit their jobs at age 42. Bad ones who should be fired long before then are allowed to stay, because it would be too cruel to erase that precious retirement benefit. There's a perverse incentive for workers nearing retirement to pad their final paychecks with overtime….
The Pension Bomb
From Forbes, March 29.
By Neal Santelmann
…While shoe shopping may not mean the same for a man as for a woman, it would behoove many men to spend a little more time weighing their options the next time they need to stock up on footwear. Contrary to what many people might think, there is a considerable difference between makes and styles, even if it is not always apparent to the untutored eye. The result, too often, is that men end up buying cheap, uncomfortable or overly trendy shoes when, with a little bit of extra thought, they could have spent their money on a shoe that would have lasted them happily for years. In other words, a wingtip is not a wingtip is not a wingtip….
The question, of course, is why a man should choose to wear anything other than Rockports or sneakers. For one thing, a well-made shoe can, and should be, extremely comfortable. For another, a well-made shoe sends the rest of the world a signal about the wearer. More than any other article of clothing, shoes can influence how others view us, not to mention how we view ourselves. There's a reason, after all, why mothers traditionally advise their daughters to first look at a man's shoes….
To start you down the path of sartorial shoe splendor, we've selected nine shoemakers that will help you put your best foot forward. They range in price from $360 to $1,000-plus; in manufacturing from custom-made to factory produced; and in style from edgy contemporary to classically traditional. And they're all ready for stepping out.
Connoisseur's Guide
The Best Men's Shoes
Let’s face it. Those who can afford to pay $360 to $1,000-plus for a pair of shoes will never understand the necessity of pensions for workers who don’t make enough money to save for retirement.
In almost every issue, Forbes has similar articles glorifying conspicuous consumption, and criticizing any governmental or corporate policies that benefit workers.
From the reasons for going to war with Iraq, to assaults on the environment, to the health of our economy—the top members of the Bush Administration are simply a group of deliberate liars.
From Business Week, March 29.
Critics have yet another gripe about the Economic Report of the President, which the White House Council of Economic Advisers (CEA) sent to Congress on Feb. 9. In a Mar. 17 trade complaint, the AFL-CIO blasts the Administration for misleading data about factory job growth. The CEA report explains that although foreign trade wiped out thousands of jobs in low-skill industries such as textiles, it also helped boost high-skill factory employment. From 1950 to 2000, jobs soared 207% in the instrument industry, 102% in printing, and 77% in electronic equipment.
But labor contends that the head count ended conveniently early for the Bush Administration. Citing Bureau of Labor Statistics data, the AFL-CIO shows that after the year 2000, jobs in those industries actually fell—by 30% in electronic equipment, 12% in instruments, and 15% in printing. The CEA and the White House declined comment.
Lies, Damn Lies—And Job Statistics
And when these deliberate liars are caught, all they can do is either decline comment or try to discredit those who are telling the truth.
To Business Week’s credit, it occasionally allows an objective observer write an opinion piece for its magazine.
From Business Week, March 29.
By Laura D'Andrea Tyson
…By this point in a normal economic cycle, a virtuous circle of mounting production, employment, and incomes and their multiplier effects on household consumption could be counted upon to make the expansion self-sustaining without additional policy stimulus.
But this cycle has not been a normal one. According to the Economic Policy Institute, this is the first time since 1939 that the number of jobs has not recovered to pre-recession levels nearly three years after the recession's onset.
Real weekly incomes fell last year for workers in the bottom half of the wage distribution. And overall labor incomes, excluding bonuses and one-time payments, have been virtually stagnant for nearly three years. At this point in a normal recovery, total real labor compensation would be up by about 2.6%. Instead, it is down by more than 3%. As a result of anemic job and wage growth, America's consumers are missing about $350 billion to $400 billion in income, compared with past cycles.
Unless employment and wage growth pick up sharply soon, consumption spending is likely to slow significantly, jeopardizing the expansion during the politically sensitive second half of the year….ECONOMIC VIEWPOINT
This Recovery Could Be Built On Quicksand
This is another person telling the truth—as opposed to the propaganda from the Bush Administration about what a great economy this is.
Here’s still another voice warning the public about abuses in the mutual fund industry.
From Business Week, March 29.
What's the real mutual-fund scandal? Excessive fees, says John Bogle. The Vanguard Group founder believes regulators' next target will be exorbitant management fees and portfolio-trading costs. By Bogle's count, investors shell out nearly $100 billion a year on those fees, which eat into overall fund returns.
Other targets for reformers: the practice of stocking newer funds with initial public offerings to pump up returns, and 401(k) plans, which need better disclosure. "We've got to put shareholders back in the driver's seat," he says….
No Rest Yet For Fund Reformers
Even if Bogle’s criticisms are acted upon—you can count on it: Wall Street will think of new ways to screw the investor.
And that’s the industry that Republicans want to handle the funds of retirees when Social Security is privatized.
Undoubtedly, supporters of globalization will cite the article below as proof that outsourcing will create jobs in the U.S. After all, here’s an example of Indian firms creating jobs in the U.S.
Can you spot the fallacy?
From The Wall Street Journal, April 1.
technology and call-center companies are setting up operations in North America, driven by a desire to be closer to top clients and by political pressure over the outsourcing of U.S. jobs….
As Indian companies do more elaborate work for U.S. clients, proximity becomes vital, Indian executives say, which outweighs the often higher costs of operating in North America….
Not all Indian companies embrace the idea of setting up shop in North America. Many technology companies say India's low-cost labor is their main competitive advantage. Expanding operations in the U.S. "makes no economic sense at this time," says Vikram Talwar, chief executive of Exlservice Inc., a call-center operator based in the U.S. but whose 3,400 workers are nearly all in India. An Indian call-center worker earns about $200 to $300 a month, about a tenth of the comparable U.S. wage….
A number of Indian companies are choosing to establish a base in Canada, which offers proximity to the U.S. but cheaper skilled labor and tax rebates that can help Indian companies limit costs. And Indian executives say U.S. clients appear more at ease with shifting work to Canada than to India, which has become a magnet for political attacks against outsourcing.
But opponents of U.S. companies' outsourcing practices say that setting up shop in Canada instead of India shouldn't shield companies from criticism. "We should be just as concerned about jobs moving to Canada as jobs moving to India, especially when the private sector hasn't created jobs" in the U.S., says Marcus Courtney, president of the Washington Alliance of Technology Workers, a local of the 700,000-member Communications Workers of America union....
Outsourcing to India Sees a Twist
Sure, Indian firms have found it necessary to create jobs in this country—but only because the much larger number of employees in India need to have a few people in this country to serve as a direct interface with American customers.
As the article acknowledged, “India's low-cost labor is their main competitive advantage,” and “Expanding operations in the U.S. ‘makes no economic sense at this time.’”
And that single sentence is the key to understanding the entire article.
At a time when corporate profits are at a 20-year high and the stock market is soaring—and wages of workers are stagnating and they are working harder under more stressful conditions—the greed of investors and their supporters becomes even more apparent.
From The Wall Street Journal, March 26.
When it comes to workers, companies can be accused of not paying enough—or paying too much.
Wal-Mart Stores Inc.'s parsimonious approach to employee compensation has made the world's largest retailer a frequent target of labor unions and even Democratic presidential candidate John Kerry, who has accused the Bentonville, Ark., chain of failing to offer its employees affordable health-care coverage.
In contrast, rival Costco Wholesale Corp. often is held up as a retailer that does it right, paying well and offering generous benefits.
But Costco's kind-hearted philosophy toward its 100,000 cashiers, shelf-stockers and other workers is drawing criticism from Wall Street. Some analysts and investors contend that the Issaquah, Wash., warehouse-club operator actually is too good to employees, with Costco shareholders suffering as a result.
"From the perspective of investors, Costco's benefits are overly generous," says Bill Dreher, retailing analyst with Deutsche Bank Securities Inc. "Public companies need to care for shareholders first. Costco runs its business like it is a private company."…
Costco's Dilemma: Be Kind
To Its Workers, or Wall Street?
“Public companies need to care for shareholders first.” “First” doesn’t quite describe it. Most public companies are taking care ONLY of their shareholders—and the CEOs who look for them. Employees have the status of raw material or machines, and have no vested interest in the success of their corporations (except that they may keep their miserable jobs).
In today’s environment, employees are only an expense to be minimized—nothing more.
Any observer who rates Wall-Mart as a better overall corporation than Costco has to be a right-wing Republican crackpot.
In 1938, with an unemployment rate of 19%, Roosevelt and a progressive Congress passed the Fair Labor Standards Act. It established the 40-hour workweek, with time-and-a-half for overtime, and prevented children under 16 from working full-time non-farm jobs. In effect, it spread out the work among more workers, and increased their share of corporate profits.
That was our country’s answer to the problem of high unemployment and the unfair distribution of the fruit of the labors of working Americans. It was based on the moral assumption that productivity improvements should be shared with workers, as well as with investors and top corporate executives.
The following two excerpts from the same issue of Business Week demonstrate the total turnaround in values in our country, as investors and top corporate executives create conditions in which they take all the benefits or productivity improvements, and share virtually none of the benefits with their own workers.
Indeed, when workers themselves become more productive, more of them get fired. They then enter the labor market and create additional downward pressures on job rates for their entire class of income earners.
A new class of aristocracy is now in charge of our government. In effect, they’ve won the class war against those who actually work for a living.
From Business Week, March 22.
What on earth is going on in the U.S. labor markets? Demand for goods and services is the strongest in years, and profits are going through the roof. Companies are spending again on new equipment, while starting to restock their depleted inventories….
After more than two years of economic recovery—and with only 364,000 new positions created since payrolls turned up last September—the oft-repeated assertion that strong job growth is just around the corner is starting to ring hollow….
So what accounts for the shortfall? To many Americans increasingly anxious about their prospects, the culprit is clear: the outsourcing, or offshoring, of manufacturing and, increasingly, white-collar jobs….
But if the outsourcing of jobs to India, China, and other low-wage centers has caused some of the U.S. job losses of the past three years, it is hardly the primary explanation for the weak job market. Instead, the continued ability of U.S. companies to squeeze out productivity gains on the order of 5% annually, since the recession ended, is having a far greater impact on the jobs picture….
China's emergence as a low-wage powerhouse, for one, has stiffened global competition and forced U.S. companies to become even more efficient. At the same time, the demands for profits by a growing investor class have heightened the pressure on corporations to keep costs low….
The returns on investment in new labor-saving, high-tech equipment have soared. Given that labor accounts for about two-thirds of the cost of making and selling products, greater labor productivity in today's global economy is tantamount to corporate survival. As a result, productivity is growing even faster now than in the late 1990s. And it's a real job killer this time: A one-percentage-point increase in annual productivity growth costs about 1.3 million jobs….
Increased use of temps also reflects the new flexibility of the U.S. workforce. Instead of "just-in-time" inventory management, companies are now talking about "just-in-time" labor. However, that increased flexibility, along with rapid technological change, is what facilitates the process of creative destruction—destroying jobs in the short term but making the economy stronger over the long haul. Unlike in Europe, where greater union power makes labor markets more rigid, it is easier for U.S. companies to hire and fire….
… During the 1980s and 1990s, we wanted more productivity growth, we prayed for more productivity growth—and now we're getting more than we ever expected. Since the start of the recession in March, 2001, output per hour has risen at an astounding 4.6% annual rate. That's far ahead of the 1.8% productivity growth of the previous recession and recovery of the early 1990s….
High productivity has enabled corporations to boost the bottom line while holding down price increases. Corporate operating profits are up $223 billion in the past year, according to the latest data from the Commerce Dept., while an astonishingly low inflation rate averaging 1.5% a year since 2001 has saved consumers hundreds of billions of dollars….
What's lacking so far from the productivity boom—and it's still very early—are new and innovative industries that create jobs to replace those that are lost. In the second half of the 1990s, productivity growth accelerated as big companies became more efficient and manufacturing jobs were outsourced overseas. But overall employment rose sharply as the technology sector expanded, adding not just engineers and programmers, but also marketers, cable installers, Web site designers, and all sorts of high and low-end jobs….
…this recovery has left the unemployed and poor behind while mainly helping owners of assets such as stocks and homes, who also tend to have higher incomes. And although inflation is low, so is wage growth for most of the population.
Indeed, the only group whose wage gains are significantly outpacing prices are managers and executives. Already the best-paid workers in the economy, their real wages have risen 2.6% over the past year, aggravating income inequality….
There are two possible ways that the current productivity boom could play out. In the absence of innovative new industries, the worst fears of pessimists will turn out to be true: Job growth will stay sluggish, demand will eventually sag, and over the course of the next decade, incomes will be driven down under the continued pressure of competition from China, India, and other low-wage countries.
The other, more optimistic alternative is that a new industry arises to take the baton from information technology as the leading sector of the economy. For example, biotech today is in the same situation as info tech was in the 1980s—a relatively small industry in terms of jobs but with enormous potential….
The Price Of Efficiency
Stop blaming outsourcing. The drive for productivity gains is the real culprit behind anemic job growth
Productivity: Who Wins, Who Loses
The U.S. is reaping big—but uneven—gains from its highly efficient workforce
Obviously, the problem workers have is not their increasing productivity—it’s their lack of power. Until they get more power, by voting progressive politicians into office, “the worst fears of pessimists” will turn out to be their future.
The promise of the false optimists—that new industries will provide laid-off workers with jobs—is either a deliberate lie or the ramblings of people who have been conned by the deliberate liars.
There’s no way millions of 40-65 year-old workers can be trained into new productive professions that will pay decent incomes. As more people enter a new industry, the same thing will happen to them as has been happening to workers generally. Investors will pit them against each other—in that new industry—in the race to the bottom for wages.
As bad as the world economy is for people who actually work for a living—it’s going to get worse.
Not only are world-wide wages declining in a race to the bottom, the consumers of the workers’ products may not get a price break as a result.
From The Wall Street Journal, March 22.
HONG KONG—In a conference room at his company's office here, veteran clothing buyer Robert M.K. Yau is surrounded by samples of garments stitched all over Asia. The clothes run the gamut from a simple, button-down woman's dress shirt made in Malaysia for Brooks Brothers to a fancier, crepe-de-chine cocktail dress made in China and destined for a Casual Corner store in the U.S.
Mr. Yau, a middleman who buys clothes directly for Retail Brand Alliance Inc.'s Casual Corner and Brooks Brothers stores, among other company brands, believes some of the merchandise he buys will be cheaper next year. That's when decades-old quotas governing the world garment trade are set to expire….
Without quota premiums, "a $5 T-shirt becomes a $3.50 T-shirt," says Mr. Yau, who has been in the garment business 40 years. That cuts costs for retailers. They also could save money by concentrating their operations in fewer countries after quotas end, since they no longer will be limited by quotas to buying a certain number of garments from any one country. That move is likely to let China boost its share of the world clothing trade even further….
The quota system was created in the 1960s by developed countries including the U.S. and those in the European Union to protect their own textile manufacturers from cheap foreign competitors….
But whether big U.S. retailers from Wal-Mart Stores Inc. to Saks Inc. will pass those savings along to their customers is a matter for debate. Those on the front lines of the garment trade in Asia, which produces about 42% of the world's apparel, say U.S. consumers may not benefit, at least in the short term.
Peter McGrath, the globetrotting chairman of J.C. Penney Co.'s purchasing group, says he doubts consumers will see an immediate difference. "For the near term, I don't think we're going to see a decline in retail or cost prices for textiles and apparel coming into the United States."
That's partly due to retailers' thirst for profit. The incentive for retailers to give consumers a price break after quotas disappear is rather weak, some garment-industry professionals say. Most U.S. consumers already are conditioned to pay a certain amount for basic items—$40 for a pair of khaki pants, $60 for a wool sweater, these people say….
Meanwhile, manufacturers in China have reason to welcome the end of quotas, while clothing makers in smaller countries are likely to be worried….
Apparel's Loose Thread
With End of Trade Quotas,
Will Clothes Cost More, Less?
One Safe Bet: China Will Gain
We’re now seeing the final stage of globalization: the Wal-Marts of the world have totally defeated the world’s workers. We now have reached the bottom for wages (in China), and even the workers in other impoverished areas of the world—but who still make more than Chinese workers—will lose their jobs.
And, of course, Wal-Mart will still charge as much as it possibly can for textile products sold to Americans. And as they drive out corporations with higher moral standards—prices will go up even more, as the most powerful and most ruthless corporations split the spoils of class warfare.
Eventually, everyone will understand the true reason Republicans and conservative Democrats support globalization: It enables investors to drive down the incomes (labor costs) of everyone who works for a living.
From The Wall Street Journal, March 23.
…The list of jobs being affected by the movement of U.S. work to lower-cost countries around the world is growing. American companies have shipped computer-programming and call-center jobs to educated workers in India, the Philippines, Mexico, Canada and elsewhere for the past decade. Now, workers in a wide range of other fields, from accountants to electrical engineers, are discovering that their jobs aren't immune from offshore outsourcing.
"You've got to look in the rear-view mirror when there's someone else coming on the job scene who can do what you can do for less," says John McCarthy, a Forrester Research Inc. vice president. He estimates that as many as 588,000 U.S. white-collar jobs will be "offshored" by 2005—and a total of 1.6 million by 2010. The U.S. had a total of 138.3 million employed workers at the end of February….
In some fields, there is theoretically no reason why the majority of positions couldn't be sent offshore, much as furniture and textile companies gradually moved production overseas or imported foreign-made products. So-called placeless jobs that don't require face-to-face customer interaction are increasingly at risk. Information-based jobs are especially vulnerable, because it is easy and cheap to transmit data almost anywhere these days….
…some job fields in the U.S. are regulated so closely that they are relatively insulated against offshoring. While radiologists often are mentioned as likely casualties as jobs move abroad, federal laws require that anyone interpreting X-rays and other images for U.S. hospitals be trained and licensed in the U.S….
Here are several fields that experts say could see an increasing amount of U.S. work moved to other countries:
Accountants and tax professionals….Technical writers….Architects and drafters….Legal and investment research….Insurance claims processors….
Next on the Outsourcing List
Job Shift to Cheaper Countries
Could Threaten More Careers:
Analysts, Architects, Attorneys
It’s not just the accountants, technical writers, architects, researchers, etc. who lose their jobs who lose out in the globalization craze. It’s everyone in their income class who now must compete with unemployed colleagues for the remaining jobs.
The beneficiaries of globalization: investors and top corporate executives—the supporters of Republicans and conservative Democrats who made the laws that allowed it to happen.
Despite Barron’s editorial policies advocating the privatization of Social Security, they still publish articles like the following, which clearly describe the utter corruption of the securities industry.
From Barron’s, March 22.
By Robert Abrams and Joel Cohen
NEW YORK STATE Attorney General Eliot Spitzer is relentless. He not only attacks time-honored, although questionable, practices on Wall Street that he refers to as "low-hanging fruit," ready to be plucked. He also thinks outside the box in a way that upsets regulators at institutions, such as the Securities and Exchange Commission, that will be around—and still regulating the marketplace—long after his tenure as attorney general is over.
He's going about his business exactly as he should be.
Spitzer creates marketplace unease because he aggressively attacks practices deemed by some as "business as usual," such as investment bankers who effectively dictate recommendations to the "independent" financial analysts in their houses, and mutual-fund managers who "market-time" their funds. And he gives no safe harbor to regulators either, using the phrase "regulatory capture" to describe those who are institutionally in the hip pocket of the markets.
In the wake of the recent scandals, Wall Street executives fear not only for their own financial exposure and personal liberty. They also fear that their institutions, which are vital to the American economy, might be obliterated like the accounting firm Arthur Andersen after a simple, easy-to-get, vote of a grand jury. In the Andersen case an indictment was all it took to destroy the firm; the conviction was almost beside the point….
Competition is good, even among government regulators. Former SEC Chairman Levitt, known for his toughness, recognizes that some abuses should have been addressed earlier, and that they have only been attacked now because of Spitzer's imaginative tactics….
A discriminating eye by a dedicated marksman is the market's best protection….
Explaining Eliot Spitzer
The New York State attorney general understands how to use power
Two points: First, if it were not for an aggressive state attorney general, Spitzer, Wall Street would be just as corrupt as it was two years ago. It gets increasingly obvious that Wall Street—in the interest of its own profits—will resist any pressures to treat the public fairly.
Second, that’s the same industry that the Republicans want to handle the private accounts of retirees after Social Security is privatized.
If you want to know why Republicans always want to let the free market protect the environment, read on.
From Fortune, March 22.
By Nelson D. Schwartz
If ever there was an argument about why last year's invasion of Iraq wasn't a war for cheap oil, it can be found at service stations across California. In early March the cost of a gallon of gas in the Golden State hit an all-time high of $2.18, and across the country things aren't much better—filling up a Ford Explorer in Ohio will set you back $40, enough for a night out for two at the Olive Garden….
"We are just not as energy intensive as we used to be," says David Wyss, chief economist for Standard & Poor's. "Back in the early 1980s the average household spent more than 8% of their income on energy. Today they spend about 4.5%."…
"In the long run prices are likely to go up, so it's better to start adjusting to it now than getting hit with a shock later." Indeed, the low oil prices that prevailed for much of the 1980s and 1990s were a direct result of the gains in fuel efficiency that followed the oil shocks of the 1970s. Says Wyss: "Maybe at $2.50 a gallon, people will think twice about buying that six-mile-a-gallon Humvee."
Why $2.18 Gas May Be a Good Thing
The war didn't usher in an era of cheap fuel, but that may not be so terrible.
So, the Republican solution to the destruction of our environment is let the free market price poor people out of the consumption of energy. That way, the environment doesn’t deteriorate so fast, and the wealthy can drive their Humvees to their hearts’ content.
Republicans certainly wouldn’t want government environmental regulations to make them give up their luxuries or to inconvenience their corporations. Only poor and middle income citizens should have to make any sacrifices for the betterment of our country.
If you ever doubted the commitment of American corporations to the free market—you were justified.
They only believe a market is truly free when they can control it.
From Fortune, March 22.
By Roger Parloff
From the looks of it, Pfizer is gearing up for a drug showdown. In late February the No. 1 drugmaker cut off two Canadian wholesalers that it said were supplying retailers who sell to Americans. It was the most dramatic escalation to date in the raging war between Big Pharma and American seniors over the illicit practice of importing cheap prescription drugs from Canada.
Due to Canadian price regulations, brand-name pharmaceuticals are often 30% to 80% cheaper in Canada than in the U.S. …
Pfizer Is Itching to Start a Drug War With Canada
The No. 1 drugmaker cuts off two Canadian wholesalers it says are supplying retailers that sell to Americans.
What’s especially galling about this situation is that “Big Pharma” is already one of the most profitable industries in the U.S. Incidentally, it is also one of the biggest contributors to our two political parties—which has a lot to do with their profitability.
Who does Wal-Mart pay-off to get favorable pro-business, anti-labor, anti-environment legislation in Washington? Republicans, of course.
And what industry was able to get protections from the Republicans against the immoral Wal-Mart “strangler”? Republican bankers, of course.
From The Wall Street Journal, March 24.
WASHINGTON—China’s entry into the World Trade Organization was essentially a done deal in the late 1990s when Wal-Mart Stores Inc. executives discovered a problem: U.S. negotiators had agreed to a 30-store limit on foreign retailers operating in China, an insufficient figure for the ambitious Arkansas retailer….
In Washington, Wal-Mart has five lobbyists on its payroll, and a bench of hired guns led by Thomas Hale Boggs Jr., one of Capitol Hill's best-known lawyer-lobbyists. The company's political action committee was the biggest corporate donor to federal parties and candidates in 2003, with more than $1 million in contributions—up from $182,000 during the 1997-98 election cycle, according to Federal Election Commission disclosure reports. Wal-Mart's PAC ranks as the second-largest in Washington, according to the Center for Responsive Politics, a nonpartisan organization that tracks political giving….
Unlike most corporations, which contribute to both parties in rough proportion to Congress's partisan split, about 85% of Wal-Mart's checks go to Republicans. And recently Mr. Allen was named a "Pioneer" by the Bush campaign, meaning he has raised at least $100,000 by getting friends and colleagues to make contributions of up to $2,000 each.
The partisan giving is a nod to Wal-Mart's hostile relationship with organized labor and its dependence on free-trade agreements. Wal-Mart defends its lopsided support, saying it's supporting pro-business candidates….
Wal-Mart's pivot toward politics coincided with its rise to become the nation's largest retailer, one with enough market clout to drive down consumer prices, bust through trade barriers and force competitors to demand cost-saving concessions from labor unions….
Small bankers pleaded with Congress to spare them the fate of mom-and-pop hardware and variety stores, which, they said, were strangled by Wal-Mart. "It totally moved the ball into our court," recalls Bill McQuillan, president and chief executive of City National Bank of Greeley, Neb., who testified on behalf of the community bankers.
Lawmakers inserted a clause in the banking bill barring retailers from buying thrifts….
Wal-Mart Opens for Business
In Tough Market: WashingtonFamously Apolitical Retailer
Plunges Into Lobbying
And Becomes Top Donor
A Big Defeat on Banking
The news about our money-dominated political system is so consistently bad, one wonders if we can turn it around soon enough to save our country.
Again, the conservative press documents one of the real reasons corporations are locating in other countries: they can destroy the environment at will—with no governmental restrictions.
From The Wall Street Journal, March 24.
When a fertilizer plant in southwestern China tried to expand production earlier this month, it inadvertently dumped so much nitrate and ammonia into the local river that the chemicals killed 440,000 pounds of fish, halted farm irrigation in the area and poisoned drinking water for several cities downstream.
About the only people who haven't felt any fallout so far: senior officials who run the polluting factory, the Second Fertilizer Factory of the state-owned Sichuan Chemical Works Group Ltd. in the city of Chengdu. "We should have the power to shut down a plant like that immediately, but we don't," says Pan Yue, deputy director of China's State Environmental Protection Administration. "We can only fine them, and such a small amount at that," he said. "They basically decide it's a cost that doesn't matter."
Such is the conundrum facing China's largely toothless watchdog in charge of protecting an increasingly damaged environment. As the country's economy continues to race ahead, it is paying the costs associated with the fast pace of growth. New and bigger factories have fueled the economy and created jobs, but they also are jacking up energy demand, straining natural resources and fouling the air and water.
Top leaders are taking notice of the problems, but they haven't armed China's environmental watchdog with effective weapons to tackle them….
Polluters in China Feel No Pain
Isn’t it time that the globalization advocates gave up the pretension that globalization is good for us?
Whenever a headline doesn’t make sense, just look through the article. Often a single sentence will tell you what the reality of the situation really is.
Consider the following article that supposedly tells us what a great thing outsourcing is for creating jobs in the U.S. Can you spot the sentence that holds the truth?
From The Wall Street Journal, March 16.
Global giants aren't the only companies cutting costs by shifting jobs overseas. Increasingly, small businesses are finding that "offshoring" jobs is a boon to their bottom line—and sometimes gives them room to create new jobs at home.
For example, when Rajeev Thadani wanted to expand Claimpower Inc., his medical-billing service in Fairlawn, N.J., he chose to outsource some of the work to India. But unlike most companies going this route, his business had just five other employees at the time.
Mr. Thadani, who runs the company with his wife, flew to his native Bombay in 2001 and hired four locals to help file insurance claims on behalf of New Jersey doctors. They use a software system that Mr. Thadani, a programmer by trade, developed specifically for the task.
Today, he employs 35 people there. Since he pays his Indian employees the equivalent of $133 to $663 a month—quite good by local standards—he can charge doctors less than his competitors and has more time to offer specialized attention. That has given his business a big lift: In a little more than two years, he says, his client list has soared to 41 doctors from 10, and his firm's annual revenue jumped to $700,000 from $100,000….
At a time when the U.S. has lost 2.3 million jobs over the past three years, foreign outsourcing—to India in particular—is frequently blamed for the jobless economic recovery. But recent employment trends suggest the moves also can trigger the creation of new U.S. jobs….'Offshoring'
Can Generate
Jobs in the U.S.
The sentence that holds the key to the whole outsourcing issue: “he can charge doctors less than his competitors.” The article doesn’t care to publish the number of jobs his competitors lost in this country—because Rajeev undercut them with poorly paid (by U.S. standards) Indian workers.
By abandoning American workers, and slashing his wage costs, Rajeev increased his business by 300%—and took business away from others who were servicing the 31 doctors previously, and employing U.S. workers.
The few additional workers he hired in this country are required to deal with the much larger number of Indian workers who got the lion’s share of the newly created jobs.
The Wall Street Journal’s hypocrisy is subtle, but brazen nonetheless.
Can you spot the Wall Street Journal's con in the following article? Hint: How do you define “more work”?
From The Wall Street Journal, March 15.
WASHINGTON—Despite the political outcry over the outsourcing of white-collar jobs to such places as India and Ghana, the latest U.S. government data suggest that foreigners outsource far more office work to the U.S. than American companies send abroad.
The value of U.S. exports of legal work, computer programming, telecommunications, banking, engineering, management consulting and other private services jumped to $131.01 billion in 2003, up $8.42 billion from the previous year, the Commerce Department reported Friday.
Imports of such private services—a category that encompasses U.S. outsourcing of call centers and data entry to developing nations, among other things—hit $77.38 billion for the year, up $7.94 billion from 2002. Measuring imports against exports, the U.S. posted a $53.64 billion surplus last year in trade in private services with the rest of the world.
Under government accounting, when a U.S. company opens a technical-support center in India that handles inquiries from the U.S., that is considered a U.S. import of services. When a U.S. lawyer in New York does work for a German auto company or a New York investment banker works on a deal for a Japanese company, that is an export of services….
Despite the developments in services trade, the current-account deficit, the most inclusive measure of the U.S. trade gap, hit another record in 2003, reaching $541.8 billion, or 4.9% of the gross domestic product, up from $480.9 billion in 2002, or 4.6% of GDP….
More Work Is Outsourced to U.S.
Than Away From It, Data Show
In order to justify outsourcing, the Journal must try to prove that the U.S. benefits from globalization.
However, it defines work in terms of the dollar value of what is outsourced, not the number or kind of jobs.
Therefore, a large number of good-paying low-level jobs are lost to outsourcing to other countries, while a few high-paying high-level jobs are gained. The dollar value is favorable, but the number of jobs involved is unfavorable.
And, naturally, it’s the low-level worker in this country who makes all the sacrifices, while the high-level professional or businessman prospers. The wealth and income disparity between rich and poor continues to grow.
If you want to know the true state of the economy, never rely on the public pronouncements of conservative economists or politicians on radio or TV.
In order to convince the public that Bush’s tax cuts on the wealthy are working, they always put the best spin possible on any data, no matter how absurd their conclusions.
The best way to find out what they really think is to check out their advice to investors. In their investment letters, they are forced to tell the truth. If they didn’t, their readers would abandon them.
From Barron’s, March 15.
The Steve Puetz (investment advice) Letter
March 12 -- This past week, stock investors finally began paying closer attention to the worsening employment outlook. On the surface, by only looking at indicators such as weekly initial unemployment claims and the US unemployment rate, the employment situation seems to be improving. However, the decline in the unemployment rate came at the expense of the nearly 4.5 million discouraged workers who are no longer counted as part of the national work force.
Over the past three years, the 1.5% drop in the participation rate reflects the millions of discouraged workers who are no longer counted as part of the labor force. Last month's participation rate was the lowest level in sixteen years!
If discouraged workers were counted as unemployed, then the unemployment rate would be closer to 8% rather than the current official 5.6% rate. What is so different about the current employment environment is that an unusually large percentage of workers who lose their jobs never find a new one. After their unemployment benefits end, government statisticians officially exclude them from the work force….
Look Out Below!
The real, unvarnished conclusion of conservative economists and politicians: Bush’s tax cuts for the wealthy simply aren’t creating jobs. (As Clinton’s tax increases on the wealthy in the early ’90s did.)
Robert Kuttner gives us the true scoop about Social Security in the normally conservative Business Week.
From Business Week, March 15.
By Robert Kuttner
Federal Reserve Chairman Alan Greenspan lobbed a useful, if unintended, grenade into the Presidential campaign when he abruptly urged Congress to cut Social Security benefits. Until Greenspan's testimony, President George W. Bush had been insisting that we could have permanent revenue losses from his massive tax cuts without any harm to important social benefits.
Even as Greenspan's testimony was reverberating in the country, Bush was out campaigning to make the tax cuts permanent. Greenspan's little explosion may have been aimed at social entitlements, but politically it will do far more damage to the Bush campaign by lighting up realities that Bush would prefer to keep hidden.
CONSERVATIVE REPUBLICAN FOES of Social Security have been telling Americans for years that the country won't be able to afford the huge entitlements the government has promised them. This message serves the political purpose of shaking voters' faith in the Social Security system, especially younger voters, who start wondering if Social Security will be there for them. They are prompted to ask: If Social Security is going bankrupt and I'm not going to benefit anyway, why not shift my payroll taxes to private accounts now? This then plays into the political hands of Social Security's would-be privatizers.
But let's pause a moment for some facts from the 2003 Social Security Trustees' Report. It turns out that the fiscal crisis of Social Security is grossly exaggerated by its political enemies. The trustees project Social Security balances forward for 75 years. Their report uses pessimistic annual growth assumptions of just 1.6%. Even so, the 75-year shortfall is projected at just $3.8 trillion, or just 0.73% of gross domestic product over this time. By contrast, the Bush tax cuts equal $8.7 trillion, or 1.68% of GDP over 75 years, according to Peter Orszag of the Brookings Institution, and new proposed tax cuts would push the cost to over $12 trillion.
If the Bush tax cuts are pared back by less than half, the money can be used to replenish Social Security, and the vaunted "crisis" disappears. Whether to cut Social Security benefits for the 96% of Americans in the system or reduce tax cuts for the top 2% is, of course, a political choice. But it's one that the Bush Administration would rather not squarely face and one that Senators John Kerry and John Edwards will keep center stage in their campaigns….
All of the conservative proposals for restoring the Social Security system's health are different forms of cuts in benefits. Raising the retirement age is a reduction in benefits. So is fiddling with the cost-of-living formula. Partial privatization is the most costly and intellectually dishonest fix of all. Not only would it reduce the guaranteed part of the retirement package, but it would require the government to borrow $2 trillion to $4 trillion to keep paying benefits to current retirees while payroll taxes of younger Americans were diverted to new personal accounts. The President has insisted that, in the new privatized system, everyone would get benefits at least as good as those under Social Security. But that would require a government guarantee for the performance of everyone's financial portfolio….
ECONOMIC VIEWPOINT
Social Security: Finally, An Honest Debate
Business Week readers can no longer claim ignorance when they try to support Bush’s tax cuts and his attempts to raid Social Security.
The following two articles from Business Week appear to be quite different in content, but actually have much in common. They both represent the conservative economic view that a nation must always be importing cheap labor if an economy is to grow.
As living standards get better for established workers—and their wages go up, it is necessary to import people who are desperate for a job (it’s called “increasing the labor supply”) if corporations are to keep an effective lid on wages.
From Business Week, March 15.
When George W. Bush recently proposed legalizing the status of up to 9 million illegal immigrants residing in the U.S., it reminded some Europeans of just how differently Americans approach the idea of pumping fresh blood into the workforce. "If any Prime Minister in Europe stood up in Parliament and announced something like that today," says Denis MacShane, Britain's Europe Minister, "he'd be dead in the water."
That sense of political expediency, paradoxically, is leading Europe's political leaders to shoot themselves in the foot, an area where they have few equals. Immigration fear is driving the region to miss out on its biggest chance for an energy infusion in years.
It's glaringly obvious that Europe's top priority is reversing its dismal economic record. Over the past decade, the euro zone's average annual growth rate has clocked in at an anemic 2.1%. So the idea of eight raring-to-go nations of ex-communist Eastern Europe entering the EU as full members on May 1 ought to be great news for growth. All those youthful, well-trained Czechs, Poles, and Latvians—what better way to turbocharge Europe's aging, cosseted workforce?
Not if European politicians can help it. One by one, the Old Europe countries of the EU are slamming the door on the workers of the New Europe. When membership agreements were being negotiated with former East Bloc countries last year, EU countries were allowed to restrict, for up to seven years, the right of new EU citizens in the east to work and live freely in the west. But this was done at the particular insistence of high-unemployment Germany and Austria, and for a while they were the only ones to plan immigration barriers.
Yet with the May 1 enlargement fast approaching, countries that once prided themselves on open immigration policies are doing an about-face. Across slow-growth, high-unemployment Europe, fears of being overrun by immigrants are rising….
The booming Hispanic labor force turns out to have an unexpected side effect: Latinos are outperforming blacks in the job market. Part of the reason stems from the fact that many Hispanics have less education or are vulnerable illegal immigrants willing to work for less pay. Economic and cultural factors play a role, too, say some experts, such as Latino immigrants' higher willingness to change cities to find a job. Add it up, and "many are hired to do work that blacks once had," says the Reverend Jesse Jackson.
The EU Is Choking Off Its New Blood
Barring workers from new member states will only prolong economic stagnation
Why Are Latinos Leading Blacks In The Job Market?
It always happens the same way. To cut wages, politicians adopt policies that allow corporations to import immigrants who are willing to withstand terrible working conditions and low pay. As the society begins to disintegrate, conflicts erupt between the established workers and the new ones—even though the villains of the scenario are those in political power who caused the problem.
And the scenario is playing out in both Europe and the U.S., although it looks like Europe is beginning to reverse the destructive trend.
The disparity between rich and poor continues to grow to astounding proportions, as globalization pits workers of the world against each other.
The three following closely associated items from Forbes tell the story from the standpoint of the beneficiaries of globalization. For the stories of those victimized by our billionaires, just read the material throughout the rest of this website.
From Forbes, March 15.
The elite ranks of the world's billionaires gained 64 new members in the past year…
After two years of falling fortunes the ultrarich got even richer in 2003. The collective net worth of the world's wealthiest jumped half a trillion dollars in the past year, to $1.9 trillion. The biggest gainer in sheer dollars was Warren Buffett, who added $12.4 billion to his net worth and now is only a few billion dollars shy of ending Bill Gates' ten-year reign as the richest person on the planet.
This year FORBES reports a record 587 billionaires….
...SARS and the Avian Flu did little to hurt these fortunes. This year Asia adds 17 billionaires to its roster. All 9 Billionaires in India, including 2 new faces, turned in gains....
...The gulf markets rallied on Saddam's capture and a boom in construction. One weak spot: Israel, whose economy grew just 1.3%. The region is now home to 26 billionaires, including 6 newcomers, with $85 billion in total worth....Billionaires
Rising Tide
Asia
Middle East and Africa
Asia, the Middle East and Africa—places of unbelievable poverty—and the rich are getting richer off of their own workers. Globalization isn’t making all countries richer. It is just making the rich of all countries richer.
The following excerpt is yet another example of corporate greed masquerading as legally accepted accounting practices.
From The Wall Street Journal, March 16.
…Time for a reality check: In fact, no matter how high health-care costs go, well over half of large American corporations face only limited impact from the increases when it comes to their retirees. They have established ceilings on how much they will ever spend per retiree for health care. If health costs go above the caps, it's the retiree, not the company, who's responsible.
Yet numerous companies are cutting retirees' health benefits anyway. One possible factor: When companies cut these benefits, they create instant income. This isn't just the savings that come from not spending as much. Rather, thanks to complex accounting rules, the very act of cutting retirees' future health-care benefits lets companies reduce a liability and generate an immediate accounting gain.
In some cases it flows straight to the bottom line. More often it sits on the books like a cookie jar, from which a company takes a piece each year that helps it meet its earnings targets….
The new Medicare law means some companies can get federal subsidies (and thus fresh accounting gains and earnings) even if they shift part of the cost of their retiree drug coverage to the retirees themselves. That's because the way the law is written, the subsidy is based on the whole cost of a company's retiree drug program—including the part retirees have to pay for.
How Cuts in Retiree Benefits
Fatten Companies' Bottom LinesTrimming a Health-Care Plan
Creates Accounting Gains,
Under Some Arcane Rules
A Shield Against Rising Costs
This excerpt demonstrates that ethical standards have absolutely nothing to do with the behaviors of corporate executives. If an action is legal and it benefits the corporate executive—then that’s all that needs to be considered, no matter who is hurt in the process.
I apologize for the redundancy. There have been so many articles of the same nature as the following.
However, it’s so vitally important to working Americans, the repetition is justified.
From The Wall Street Journal, March 17.
Fed Looks at Several Approaches
WASHINGTON—Federal Reserve officials are quietly beginning to contemplate a formidable challenge: How and when to lift interest rates from a 46-year low to more normal levels without disrupting the economy or financial markets….
The Fed also repeated earlier vows that it can be "patient" about raising rates because of low inflation, ample unused factory capacity and still-high unemployment….
Raise rates too soon, and the recovery may be aborted. Raise them too late, and inflation may bubble back. Do it clumsily, and both markets and the Fed's credibility could be injured….
The usual recipe for pushing inflation up is to let the economy grow so fast for so long that it exceeds its normal capacity limits, putting upward pressure on prices and wages….
It Can Take When Raising Rates
So, again, the people who keep telling us that we should not be envious of the rich—are the very same people who watch the incomes of workers like predatory hawks.
An increase in workers’ wages are always considered inflationary and, therefore, bad news for corporate profits and wealthy investors. The job of the Fed is to keep interest rates just right: not so high as to cool off the economy and cut off easy corporate profits—but high enough so the economy doesn’t grow so fast that wages may go up. That’s the delicate balance the article is describing: “Raise rates too soon, and the recovery may be aborted. Raise them too late, and inflation (rising wages) may bubble back.”
You’ve been hearing a lot lately about how “productive” American workers have been recently.
This is how corporations do it.
From The Wall Street Journal, March 17.
Bank of America Corp. is planning to cut as many as 13,000 jobs as it completes its acquisition of FleetBoston Financial Corp., according to people familiar with the expense cuts.
The job cuts would come through layoffs and attrition from the operations of both banks and will begin in April to coincide with the expected completion of Bank of America's $48 billion purchase of Fleet, according to these people. The job cuts, which range from 12,000 to 13,000, amount to about 7% of Bank of America and Fleet's combined work force of 181,000….
Investors now are waiting to see whether Bank of America can make good on its promise, made in October when the merger was announced, to achieve $250 million in cost savings this year and $1.1 billion in 2005. Those projected expense reductions were met last fall with some skepticism by investors because Bank of America officials didn't provide details on how the $1.3 billion in cost savings would be achieved….
Bank of America executives have said some of the cost savings will come from overlapping vendor and software costs as well as back-office processing centers.
Bank of America is in a tricky situation. It must show Wall Street investors that it can achieve the cost reductions, even as it tries to avoid angering employees and customers in New England. Last fall, bank executives said a key condition of the deal was a pledge by Bank of America to maintain employment levels at Fleet's New England operations….
Bank of America
Plans Job Cuts
Of Up to 13,000
The key to productivity is simple: fire many employees, force the remaining employees to work harder (because “competition demands it,”), and reduce the quality of service to customers. And shazam, higher productivity.
And, of course, the CEOs give themselves huge bonuses for being such brilliant leaders. Kenneth D. Lewis, Chairman President and CEO of Bank of America Corp. raked in $21,068,119 in total compensation in 2002, including stock option grants. And he has another $23,638,050 in unexercised stock options from previous years.
Charles Gifford, Chairman and CEO of Fleet Boston Financial Group is a relative piker in the game. In 2002, he raked in $2,459,488 in total compensation including stock option grants from Fleet Boston Financial Group, and has another $915,000 in unexercised stock options from previous years.
What everyone seems to be missing in the globalization debate is that the welfare of most of a nation’s citizens depends on the values and moral standards of its leaders.
Better education of its citizens is, of course, important for a nation’s success. But that doesn’t mean that people will be rewarded fairly for their contribution to the nation’s economy.
As long as corporations are able to ruthlessly pit the workers of the world against each other—only the rich will prosper in the world economy of the future. The following excerpt again demonstrates the deliberate lie of conservatives who claim that education will enable middle and low income Americans have better lives in the future.
From The Wall Street Journal, March 17.
SINGAPORE—American workers needn't worry their jobs will be outsourced to this Pacific island nation. With living standards higher than Germany's, Singapore is costly enough that companies here send jobs to China, too.
But Singapore is one small part of a bigger threat to America's long-term prosperity. You can find it here in primary schools, where students outperform their American counterparts in mathematics and science. In a recent math assessment of eighth-graders internationally, Singapore scored best in the world—and joined five Asian neighbors in beating the U.S.
It is this, not call centers in Bangalore, that most frightens American experts in the flow of goods and services across international borders. The one thing America can't afford to outsource in the global economy is superiority in innovation. That hasn't happened yet. But if U.S. politicians don't do more to bolster education, it could.
"We absolutely must strengthen our talent pool," says Charlene Barshefsky, an Asia expert who served as U.S. trade representative under President Clinton. Otherwise, she warns, "We will lose our competitive edge within a generation."…
Competitive Edge
Of U.S. Is at Stake
In the R&D Arena
Again, we’re seeing that the race to the bottom for wages is going up the education ladder. Investors of the world can pit the workers in almost any classification against each other.
Education level is not the key to the welfare of any economic class. Government protections of the rights of people who work for a living is the key. And right now, wealthy conservatives have all the power in government.
It’s time for a change.
The following editorial by right-wing crackpot Alan Murray clearly demonstrates the disconnect between The Wall Street Journal’s editorial policies and its own news stories.
It’s so full of distortions of reality that it’s hard to imagine that anyone would be shameless enough to publish such nonsense.
From The Wall Street Journal, March 9.
By Alan Murray
George W. Bush and his men are on the right side of the "outsourcing" debate. Still, they are losing it. If they don't find a better way to make their case on this hot topic, it could cost them the election….
America has a genius for reinventing itself. We have the most flexible economy in the history of the world. Yes, we allow companies to freely "outsource" their payroll departments and software operations to Bangalore, India. But that frees American workers to concentrate on new, cutting-edge activities. (As a side benefit, it also keeps consumer prices down.)
Sure, it's easier to get laid off in America than it is in, say, Denmark. But it's also easier to find a new job. The result is a constantly rejuvenating economy. "Outsourcing" isn't a symptom of America's decline; it's part of a process that prevents decline.
That's cold comfort, of course, to the poor fellow in Cincinnati who suddenly finds himself out of work. But let's give Americans a choice. Would they prefer a European-style society, which puts roadblocks in the way of companies that wish to fire workers, and as a result, has fewer new companies wanting to hire? Some Americans might be willing to accept less prosperity and opportunity in return for more stability and security. The majority, I'd wager, wouldn't.
By the way, this isn't—or at least shouldn't be—a partisan argument. Martin Baily, who headed President Clinton's Council of Economic advisers, largely agrees. He points out that the white-collar outsourcing trend started in the 1990s—and did nothing to damp a period of extraordinary growth, low unemployment and rapid wage gains.
The bad news last week was that the economy added only 21,000 jobs in February—a disappointment, to be sure. But like all past job slumps, this one, too, will pass. The good news in these numbers is that the productivity of Americans who are working still is rising at record, 1990s-style rates. That's critical, because as long as Americans are the most productive in the world, they'll remain the best paid in the world. And the faster American productivity rises, the faster American living standards will rise.
The goal of policy makers should be to get the economy back to full employment as soon as possible. It also should be to protect the flexibility and productivity that have made the U.S. economy the envy of the world, and American workers the most prosperous in history….
POLITICAL CAPITAL
Bush Needs to Show
Clear, Firm Support
For Outsourcing
The Wall Street Journal’s own news stories about what’s happening American communities and workers demonstrate absurdity of the above statements:
It’s notable that the above editorial appeared in the very same issue of the Journal in which the following two news stories appeared.
From The Wall Street Journal, March 9.
HAZARD, Ky.—The news was so big that people first heard it from the president.
"I came here to show America who you are," Bill Clinton told several thousand listeners squeezed along a sweltering downtown street in the heart of Appalachia 4½ years ago. "I want people to know a lot of good things are going on here."
The president introduced John Sykes to the crowd and talked about his company: "Sykes Enterprises is making a major commitment—listen to this—to construct two information technology centers in eastern Kentucky that will bring hundreds of new jobs in Pike and Perry counties. Thank you, Mr. Sykes."
Mr. Sykes didn't come cheap. Kentucky had ponied up $7.6 million in cash and incentives to land his company. Officials were betting that computer help-desk call centers would instantly link Appalachia to the New Economy. And for a while, the plan worked. Sykes eventually trained more than 3,000 workers to help frustrated personal-computer callers from coast to coast.
No longer. As Hazard and other small U.S. towns have learned, the phone links on which they had banked their hopes have quickly zipped to even more remote places such as India, China and Central America….
In his closing months at Sykes, Mr. Napier and colleagues searched the Internet for information on federal trade-assistance programs. Those programs, dating back to 1974, offer benefits to workers hurt by imports who enter retraining programs. Mr. Napier and his colleagues discovered that the laws were designed more for manufacturing jobs and that the Labor Department had denied requests for Sykes workers in Eveleth.
"We didn't make widgets," Mr. Napier says. "That law was fine, before the Internet, before you could talk to someone in India for free."
Kentucky Answered
Call of the Future --
But Got Bad NewsOutsourcer Set Up in Hazard,
Then Headed Overseas;
'We Were Blindsided'
Whereas this news item explains the wholesale community disruption globalization is causing—and the disastrous effects on workers—the following describes the special interests who support outsourcing jobs, vs. those who want to protect American industry (and jobs).
From The Wall Street Journal, March 9.
Tension is mounting within the National Association of Manufacturers, with many smaller members urging the big lobbying group to do more to fight the migration of jobs overseas even as many of its larger members embrace the trend.
Such friction reflects a broader conflict in the U.S. economy as a whole. Smaller companies often feel squeezed by rising foreign competition and by the bigger manufacturers that the smaller companies supply, pushing them to cut costs. Many bigger companies outsource work to China or other low-cost nations to achieve those savings.
"This is probably the most difficult case of diverging interests that NAM has ever had to face," says Gerry Letendre, a member of NAM's board and president of Diamond Casting & Machine Co. a small Hollis, N.H., maker of aluminum parts for the electronics industry.
Some smaller members have grown disenchanted and even are quitting the lobbying group….
Outsourcing Splits NAM Members
Small Manufacturers Seek
To Fight Migration of Jobs
As Larger Firms Join Trend
The reason for split between small and large manufacturers is that the large manufacturers have massive investment funds and the small ones don’t.
In effect, the large manufacturers have become investment bankers. They are shutting down their operations in this country and using their money to pit workers across the world against each other.
The small manufacturers, on the other hand, are trying to make it in this country, and are finding that it is impossible to compete with the investment bankers (large corporations) who utilize brutalized workers throughout the world.
Conservative economists have been puzzled, PUZZLED, by the present jobless recovery.
And now they are getting worried.
From The Wall Street Journal, March 8.
Until recently, economists were merely puzzled that the expanding U.S. economy was failing to produce many new jobs. Now they are starting to get worried about it.
In a report described by one government economist as a "limp handshake," the Labor Department said Friday that just 21,000 payroll jobs were created in February; economists had expected about 125,000. The unemployment rate remained at 5.6%, but that was because more Americans dropped out of the labor market, many deciding that job hunting was a waste of time….
The positive news in Friday's report was that it underlined continued improvements in productivity as companies find ways to raise output without expanding their work forces. While painful for many workers, these productivity gains have helped boost corporate profits and held down interest rates….
One major reason for the puny job-creation numbers is that companies have been squeezing more output from their existing workers. Macroeconomic Advisers, a research firm in St. Louis, estimates that the productivity of the U.S. nonfarm work force is growing at a 4% rate in the first quarter, up from the fourth-quarter rate of 2.6% and the 2.3% average during the past 55 years.
Job Growth Falls Short of Estimates
February Data on Payrolls
Fuel Worries Consumers
May Slow Their Spending
How can these economists be puzzled about a jobless recovery, when articles like the following two have been published regularly for the past ten years, by our most prestigious conservative financial publications.
From The Wall Street Journal, March 8.
Last month, International Business Machines Corp. said it would add 5,000 workers in the U.S. this year, an announcement partly aimed at blunting criticism of its plans to move thousands of jobs abroad in 2004.
But a closer look at IBM's hiring and layoff practices shows it may actually wind up extinguishing more U.S. jobs in the economy at large than it creates this year—even while adding a little to its own payroll.
To explain that anomaly it helps to understand the company's big business in "outsourcing." Although the term has come to mean shipping U.S. jobs abroad, it also describes the practice of companies hiring IBM and others to take over their computer rooms, payroll departments or other work….
Only a small part of this kind of outsourcing typically results in jobs being exported to other countries—a trend known as "offshoring." But it does result in another kind of job loss: Often, IBM ends up laying off some of the workers it hires from outsourcing clients as it makes the acquired operations more efficient. Meanwhile, the workers from the client companies who remain on the IBM payroll often suffer cuts in pay and benefits….
"What's pushed the outsourcing to offshoring is the growth of [technical skills] in India" and cheap, fast communications, Mr. Roach says. The result is "a significant shortfall of jobs creation" in the U.S….
"I laugh every time IBM says it's going to add 15,000 jobs," says David A. Anthony, an Alpharetta, Ga., Web programmer laid off by the company last June. "I scream at the TV: 'How many are you going to fire?' "…
New IBM Jobs
Can Mean Fewer
Jobs Elsewhere
From Barron’s, March 8.
NEWS OF CONTINUED TEPID employment growth further deferred expectations of any eventual rise in interest rates, sending bond yields tumbling….
David Greenlaw, chief U.S. fixed-income economist at Morgan Stanley, had thought the Fed would have "the tightening trigger" by the time of the September Federal Open Market Committee meeting, based on three-month average payroll gains in excess of 200,000. But given the current trend, says Greenlaw, "this time frame seems increasingly unrealistic." He is pushing back his expectation for the first rate increase to the December meeting.
"This remains a jobless recovery—pure and simple. We are in uncharted territory given that the expansion is into its 28th month already, and meaningful job creation remains alarmingly elusive," adds Rosenberg. "Offshoring" and productivity growth largely explain why employment has failed to grow meaningfully.
All of which will permit the Fed to remain "patient," to use Greenspan & Co.'s latest buzzword, and hold the funds rate at the current 1% for all of 2004, Rosenberg concludes….
No Jobs, No Rate Hike—Perhaps for All of '04
In November, voters should remember that the “offshoring” of jobs, and productivity improvements (making workers work harder, under more stressful conditions, for less pay) are the direct result of national economic policies.
And those policies were the result of the economic philosophies of Republicans and conservative Democrats who are closet aristocrats and who don’t give a damn about working Americans. Their sole criteria for a healthy economy are increasing corporate profits and a soaring stock market.
(A side issue: The Barron’s article again demonstrates how rigorously conservative economists monitor any hint that working-class wages may be about to go up, and how alert they are about whether or not the Fed should raise interest rates to stop wages from going up.)
The two excerpts below describe the schizophrenic, and self-destructive, nature of American society today.
On the one hand, we’re a gang-busters economy, with millionaires and billionaires being created daily and cheaper prices for most products. It’s a libertarian’s dream come true: everyone for him or herself, with no government involvement.
On the other hand, we’re seeing the destruction of our middle-class, worsening conditions for the poor and disadvantaged, and the degeneration of communities.
And, guess what. The two are connected, and the first is the direct cause of the second.
From Fortune, March 8.
Those of you who have read about Wal-Mart locking in it’s employees overnight or being raided by the feds may be scratching your heads…. But the 10,000 executives, directors, and analysts whom Fortune polled in late 2003 weren’t deterred: They have named the retailing juggernaut America’s Most Admired Company for the second year in a row….
Wal-Mart wins the business world’s esteem because it is the most dominant force in commerce, renowned for its superb efficiencies, unprecedented clout with suppliers, and pervasive influence on everything from pop culture to the consumer price index. …America’s Most Admired Companies
Recent bad press hasn’t dimmed the business world’s affection for Wal-Mart
From Business Week, March 8.
By Jeffrey E. Garten
The current election-year debate makes it clear that Americans are deeply aware that trade, technology transfer, and outsourcing have a huge impact on their jobs and indeed their lives. Not long ago, some of the most powerful corporate symbols of this intensifying globalization were McDonald's, Coca-Cola, and CNN. But now American-style global capitalism could have a new face—Wal-Mart Stores Inc. That would be bad news….
It is noted for highly sophisticated global inventory management as it brings to foreign markets quintessential American values—Darwinian competition, ever-widening consumer choice, and increasing shareholder value.
But the essence of Wal-Mart is that it is propelled by one thing: offering products at the lowest possible price. The big question, which Stephen J. Kobrin of the Wharton School recently posed to me in an interview, is: What does society pay for that benefit? Yes, Wal-Mart provides critical savings for low- and middle-income families. Yes, we can thank the company for contributing to today's low inflation and growing productivity. But the darker side of the story is how Wal-Mart achieves its fabled low prices in part by taking unfair advantage of employees and communities.
A FEDERAL GRAND JURY IS examining whether the company has knowingly hired contractors who employ undocumented immigrants to drive down costs. Some 40 lawsuits in 25 states accuse Wal-Mart of denying overtime pay to those who have earned it. Many workers complain about unreasonable eligibility criteria and prohibitive costs for company-sponsored health-care plans. Charges of sexual discrimination in employment could soon precipitate the biggest civil-rights class action in U.S. history.
On a recent PBS program, NOW With Bill Moyers, former Wal-Mart employees said their wages forced them to resort to taxpayer-funded public assistance for emergency medical care and even food stamps. The program also documented instances—for example, in Cathedral City, Calif.—of the company establishing stores to take advantage of temporary tax breaks and then abandoning them when the fiscal incentives expired. In so doing, it left the local community with empty structures and huge shortfalls in public revenues.
The company vigorously denies all these allegations, but for me there is too much smoke for there not to be a fire. And of course, what Wal-Mart does, every other competing retailer must try to emulate if it wants to survive. Exhibit A is the 70,000 worker strike at supermarkets such as Safeway where employees are protesting reduced health-care benefits that the grocery chains say are needed to compete with Wal-Mart….
Still, in the contest between ruthlessly competitive forces and decent employment in cohesive communities, we should be rooting for the latter. If Wal-Mart succeeds with its low-price-at-any-cost strategy, what kind of message does this send about the ability of U.S. companies to be good corporate citizens? What kind of backlash against international trade and investment would it eventually provoke?…
ECONOMIC VIEWPOINT
Wal-Mart Gives Globalism A Bad Name
It’s hard to believe that the above two excerpts relate to the same corporation.
By ranking Wal-Mart as the most admired corporation, America’s executives, directors, and analysts have perfectly described the moral standards of today’s business leaders: All executive behavior should be judged by the effects on the bottom line. It’s all about profit and an increasing stock price. The impact of corporate actions on the environment, employees, suppliers, and local communities is irrelevant.
Jeffrey Garten’s op-ed piece acknowledges the obvious fact that the quality of life is more important than an individual corporation’s success.
Given the news items relating to Wal-Mart over the past several years—Garten is right on target, and we ignore his conclusions at our peril.
The following excerpt is a sad description of the extent to which the aristocrats of the world have won their class war with the world’s workers.
In celebration of this good news, The Wall Street Journal made it a front page article.
From The Wall Street Journal, March 11.
…Since the late 1990s, when the European Union began laying plans to admit new members from Central and Eastern Europe, manufacturers of tires, furniture, glass, consumer electronics and other goods have been building plants and moving production east to take advantage of lower wages, more accommodating unions—and the prospect of relaxed trade barriers. With them have gone tens of thousands of union jobs. Unions fear more will follow as nine Eastern European nations plus Malta join the EU in May, cementing ties between the low-cost East and expensive West—and creating the world's largest economic entity.
Now some labor leaders in the West are starting to give ground in hopes of preserving jobs. The change could revolutionize labor relations in Europe, hastening a trend toward more flexible labor rules and weaker unions. That would boost Europe's competitiveness, which has suffered under high labor costs and a resistance to reforms, but could also raise social tension as workers face the prospect of losing jobs, taking lower pay and working longer hours.
Car makers have led the way in the eastward migration. Ford Motor Co. recently moved delivery-van production to Turkey, which contributed to a loss of 3,000 jobs in a Belgian plant. France's PSA Peugeot Citroën is building new plants in Slovakia and the Czech Republic. General Motors Corp. now builds small trucks in Poland. And suppliers are hard on their heels: When VW moved production of a small delivery truck from Spain to Poland last year, Spanish firms such as interior maker Grupo Antolin and metal-parts supplier Gestamp Automoción moved production to Central Europe, too.
But union concessions are stanching the losses. For the past few months, Stuttgart auto giant DaimlerChrysler AG has been ramping up production at a new engine plant in Kölleda, in Germany. The factory probably would have been built in Central Europe, if the traditionally hard-line IG Metall union hadn't agreed to new flexible rules, including the use of temporary workers who could be let go after a few years, something the union has long opposed….
Western Europe still has some of the most generous labor laws in the world. France legally limits all workers to a 35-hour work week. In Sweden, married couples are entitled to a total of 480 paid days off when children are born. German unions still negotiate nationwide contracts that set one-size-fits-all wages on companies across whole sectors.
But unions have to realize the landscape has changed, says Klaus Volkert, the top labor representative on VW's supervisory board, the equivalent of a U.S. board of directors. By sticking to the old, hard-line approach, he says, "you only hurt yourself."…
As Jobs Head East in Europe,
Power Shifts Away From Unions
Labor Offers Big Concessions
To Get Companies to Keep
Production Close to Home
Instead of governments of the world mandating that the working week be reduced to 32 hours, and that workers made decent incomes—as was predicted by economists 40 years ago—they are supporting the ability of corporations to totally dictate working hours and conditions. The only organizations that now support worker rights and incomes—unions—have lost any influence they ever had over the governments that rule them.
Voters who actually work for a living should regularly read The Wall Street Journal. When this conservative publication reports in its news stories how the Bush Administration always fights against giving benefits to workers—even the ones who are victims of its own economic policies—you’ve got to believe it.
From The Wall Street Journal, March 11.
WASHINGTON—The election-year uproar over the outsourcing of U.S. jobs overseas is increasing pressure on the Bush administration to extend retraining aid to displaced service industry workers as well as those in manufacturing.
The White House beat back such an effort two years ago to expand the so-called trade adjustment assistance program. But in testimony before the Senate Finance Committee, U.S. Trade Representative Robert Zoellick signaled greater openness to the idea and praised one of the chief proponents, Montana Sen. Max Baucus, the panel's ranking Democrat, for his "important leadership" on the issue.
The Information Technology Industry Council, representing such high-tech giants as International Business Machines Corp. and Microsoft Corp., threw its weight behind the proposal Wednesday, and the full Senate will take up the issue this spring as part of a debate on a pending corporate tax bill with trade implications of its own….
But high-tech industry representatives have already begun meeting with House Republicans to build support, and one lobbyist warned that the administration needs to get in front of the issue or risk being run over given the election-year politics.
Bid to Expand Job Aid Gains Steam
Displaced Service Workers
May Get Retraining Dollars
Amid Election-Year Politics
And guess what. When legislation favoring workers is finally passed, the Bush Administration will claim credit for it.
Globalization was supposed to benefit American workers because, as low-skill jobs left this country, they could then take the higher-skill, higher-paid jobs of the world.
It’s becoming increasingly obvious that this has been a deliberate lie—perpetrated by America’s new aristocrats—from the very beginning. Globalization’s purpose has always been to destroy the ability of those who work for a living to negotiate for higher wages and better working conditions.
From The Wall Street Journal, March 5.
So Mr. Sanchez and other managers (in Mexico) are moving their factories up the manufacturing food chain, retooling to make more advanced products. Now they are competing against factories in developed economies such as the U.S. that earlier thought they were safe from foreign competition….
What's happening in Mexico illustrates how globalization is a double threat to blue-collar workers in wealthy countries such as the U.S as low-skill factory jobs migrate directly to China and countries such as Mexico accelerate their competitiveness for their own survival. By playing the role of upstart global entrepreneur, China isn't just drawing in jobs but forcing factories throughout the rest of the world to become more efficient. "It's Economics 101 in action," says Claudio Bertoluz, head of Mexico's electronics manufacturing association.
While the loss of jobs to China has become a hot political issue in the U.S., nowhere has China's economic emergence been felt more sharply than in Mexico. In the past three years, Mexico lost an estimated 400,000 jobs to China and was replaced by China as the No. 2 exporter to the U.S. market, behind Canada. The lost exports cost Mexico at least $5.8 billion in 2002, Credit Suisse First Boston estimated recently….
As Jobs Move East,
Plants in Mexico
Retool to CompeteChina Takes Low-Wage Work;
So Guadalajara Targets
Products Still Made in U.S.
Beating Boise's Router Maker
Since globalization is destroying the wages of those higher on the skill and income scales—in the “factories in developed economies such as the U.S. that earlier thought they were safe from foreign competition”—maybe the voting public will bring about a change in government.
The following excerpt describes the major contestants in today’s class war as precisely as you’ll find. Of course, it also clearly describes who is benefiting the most from globalization, and who is making all the sacrifices.
From The Wall Street Journal, March 1.
…Some of the best-financed trade groups in the U.S. have formed a coalition to beat back federal legislation that would restrict foreign outsourcing by government contractors and limit visas for non-American workers with technology skills.
Calling itself the Coalition for Economic Growth and American Jobs, the new entity comprises about 200 trade groups—including the U.S. Chamber of Commerce, the Business Roundtable, the American Bankers Association, the National Association of Manufacturers and the Information Technology Association of America—as well as individual companies.,,,
"Money and energy could be better spent to keep jobs at home rather than to try to convince people that there isn't a problem," said Thea Lee, assistant director of the AFL-CIO's international economics department….
One target of the coalition's lobbying is a bill that would require workers at telephone call centers to disclose their physical locations at the beginning of each call….
The coalition also is working against a half-dozen bills that would restrict companies from bringing foreign workers to the U.S. on guest visas to do jobs previously done by Americans. With layoffs among tech workers rising, some U.S. workers and labor unions say the widespread use of so-called H1-B visas for skilled workers is exacerbating U.S. job woes and undermining wages….
In addition, the group says blocking non-U.S. operations from working on state contracts violates World Trade Organization agreements….
Business Coalition Battles
Outsourcing BacklashBig Lobbyists, Companies
Aim at a Blizzard of Bills
Meant to Keep Jobs at Home
Naturally, it’s the usual cast of characters: “the U.S. Chamber of Commerce, the Business Roundtable, the American Bankers Association, the National Association of Manufacturers and the Information Technology Association of America.” It’s the same crowd that has always done everything they could to destroy workers’ wages and increase corporate profits.
And, as usual, it’s the unions who fight for the right of workers to have a decent incomes—even for those workers who aren’t members of unions.
It also shows how these groups are really behind our government’s backing of the WTO—which forces our government to abandon protections of our own workers against world-wide corporations.
Excuse me, Wall Street Journal, but your Freudian slip is showing. In a desperate attempt to show how globalization creates jobs, the Journal unwittingly proves the true—and huge—economic inefficiencies that globalization actually creates.
From The Wall Street Journal, March 1.
…The frenetic pace of global trade, coupled with outsourcing of manufacturing around the world, has transformed delivery into a complex engineering task. Companies enlist logistics consultants to untangle supply chains and to monitor shipping lanes and weather patterns.
In one small indicator of how intricate the task has become, the Massachusetts Institute of Technology has expanded its logistics program and started a new master's degree dedicated to logistics in the school of engineering….
To meet the demand and to cut costs, companies are outsourcing, which adds more players to the supply and distribution channels, making them complicated and longer….
These are precisely the types of value-added jobs the U.S. economy is supposed to create to replace some of the manufacturing jobs that are leaving. They won't offset the number of factory jobs that are moving abroad. Still, they represent a promising area of growth….
Demand for such services is compounded by increasing international uncertainty. The best way to deal with increased uncertainty is to have flexible supply chains and delivery channels. That way, companies can better respond to changing demand, not to mention disruptions caused by political unrest, natural disasters and shortages of raw materials….
Even if supplies are secure, the process of getting them might not be. In China, for instance, where goods flow in and out of ports at increasing rates, shipping lanes often are congested, forcing vessels to wait at sea until ports open up. That is where logistics gurus come in….
Globalization Creates
Logistics Jobs in U.S.
Even the Journal admits that these logistics jobs “won't offset the number of factory jobs that are moving abroad.” When you’re a deliberate liar—trying to show that globalization creates more American jobs than it loses—you’ve got to grasp at whatever straws are available.
Also, consider the huge inefficiencies that are incurred when you have to train new people to do the logistics jobs, the ones that were unnecessary before globalilzation.
In addition, the engineers going into the new jobs will be making reduced incomes because of the increased competition with other unemployed engineers.
For a detailed explanation of how globalization is a horribly inefficient way to do business, see International Free Trade: IT'S NOT "GLOBALIZATION".
Republicans and conservative Democrats stubbornly resist a commonsense solution to saving corporations who want to treat their workers decently.
A simple way to stop predatory corporations like Wal-Mart from destroying its competitors who have some semblance of moral standards—is to maintain acceptable minimum standards of wages and working conditions.
From The Wall Street Journal, March 1.
Even after winning significant wage and benefit concessions in a months-long labor dispute in Southern California, the nation's three largest traditional supermarket chains will carry higher employee costs than does their nemesis: Wal-Mart Stores Inc.
The contract that leaders of the United Food and Commercial Workers union agreed to put to a vote this weekend would give Kroger Co., Albertsons Inc. and Safeway Inc. the right to lower pay for new workers and limit the amount the grocers must put toward employee health insurance, according to people on both sides of the dispute who are familiar with the contract. After a two-day vote, 86% of grocery workers who cast ballots approved the contract, the union said Sunday….
"The costs are still too high," said Burt P. Flickinger III, managing director of Strategic Resource Group in New York, a business-strategy consulting firm that followed the dispute.
Under the contract, a veteran food clerk could continue earning as much as $17.90 an hour, and a new hire could top out at $15.10 an hour, still higher than the $13.75 Wal-Mart is paying its food clerks in Las Vegas. …
Supermarkets Get Concessions;
Wal-Mart Wage Gap Remains
As long as the minimum wage is so unrealistically low, and protections of workers almost nonexistent—immoral predators like Wal-Mart will continue to destroy its moral competitors.
Again, from across the world, we have another example of the race to the bottom for wages and working conditions.
From The Wall Street Journal, March 1.
FRANKFURT—Volkswagen AG is preparing a crash cost-cutting program to prop up falling profit caused by disappointing sales of its flagship Golf hatchback and increasing price competition in important markets….
VW will cut from across its budget—development and capital spending, labor and production costs, and parts and component purchasing, these people said. Workers also may be asked to put in longer hours, and production could be cut at some plants….
VW also has been hurt by high production costs. Auto workers in Germany earn more money per hour than anywhere else in Europe. At VW, costs are even steeper because its union employees sometimes work only four days a week.
VW is likely to seek help from its work force in reducing costs, perhaps through slightly longer hours or more flexible work schedules, a person familiar with the matter said. The four-day workweek dates from 1994, when VW was in its last financial crisis and unions agreed to cut hours.
The company also could reduce costs by increasing production at some of its plants in central Europe, where wages are about one-fifth of those in Germany.
Volkswagen Seeks
To Prop Up Profit
By Cutting Costs
So, who’s making all the sacrifices in corporations’ drive to reduce costs? Those who are doing all the work. A corporation must cut its labor costs—any way it can—or go out of business. Of course, the top execs and the investors are the last ones to feel any pain.
Want a brief demonstration of how our government deliberately stimulates corporate profits and, at the same time, keeps wages from going up? This excerpt is all you need.
From The Wall Street Journal, March 1.
Federal Reserve Chairman Alan Greenspan grabbed headlines last week for his opinions on a variety of big-picture issues, from Social Security and tax cuts to budget deficits and the regulation of housing giants Fannie Mae and Freddie Mac.
But many investors are more concerned with the central bank's bread-and-butter issue—setting the path for short-term interest rates….
Interest rates influence stock prices because they affect the cost of corporate borrowing—and therefore corporate profits. If rates go up, the cost of borrowing from both banks and bond investors rises….
Analysts say the Fed won't raise rates until job growth picks up more. Bond traders agree and have sent Treasury yields lower after a bout of indigestion last summer….
Stock-market bulls may have some reasons to hope for continued slow job growth. After all, the Dow has gained 34% over the past 12 months despite a job market that is limping along. That's because corporate restraint in hiring has boosted profits. But experts say job growth is needed to keep revenue and profits rising over the long haul….
Mr. Lonski doesn't expect interest rates to move higher until payrolls grow by 150,000 a month for three consecutive months. The past three months mustered average growth in payrolls of only 70,000, he adds. The presidential election this fall also "will encourage the Fed to proceed all the more cautiously" in raising rates….
To be sure, inflation could continue to stay under control as it has been for years, thanks to global influences such as outsourcing and technology-led productivity gains. But "the Fed may have a dilemma," if inflation and long-term interest rates pick up without stronger job growth, Mr. Paulsen says. Fed officials don't want to raise rates before jobs take off, but they also don't want be "accused of thwarting the free market" and ignoring long-term bond yields….
Getting the Read on Greenspan
Fed Chief Dominates Headlines
On Surprise Topics, but Investors
Focus on His Core Job: Rate Cop
This, folks, is what has been called the goldilocks strategy. The Fed manipulates the prime interest rate just enough to encourage growth (hot)—and maximize corporate profits—but not so much growth (too hot) that wages actually start to go up.
The following excerpt demonstrates the dilemma the Fed faces in fine-tuning the economy. When it is overly successful in keeping wages from going up, it can negatively affect consumption, and might possibly cause a recession. Or, as happened in 1929, a depression.
From The Wall Street Journal, March 1.
Consumers keep spending but if the labor market doesn't pick up, they can't keep the pace up for long….
Monday, the government puts out consumer spending and personal income data for January. Wages and salaries have slowed, even though employment is off the bottom, a worrisome sign for spending….
Spendy
Only deliberate liars and hypocrites can claim that our Republican and conservative Democrat controlled government gives equal consideration to workers, as compared to investors and the established wealthy.
Conservatives continue the struggle to fight the inevitable wising-up of the American public about the disaster of globalization.
From Business Week, March 1.
By Robert D. Hof
As technology jobs boom in Asia and employment languishes here, it's easy to forgive American tech workers for casting an angry gaze across the Pacific. To find the real job thieves, though, they needn't look so far—a mirror will do. Without the technologies that U.S. techies produced during the 1990s boom, offshore outsourcing never would have happened.
Global high-speed networks, ever-cheaper computers, and ubiquitous run-your-business software made it possible to have operations anywhere from Bangor to Bangalore. Pity the poor tech workers: Who else in business must keep creating the very innovations that may someday obliterate their own jobs?
Yet now more than ever, they have no choice. Continuing to innovate is the one way tech workers and their companies can survive the latest disruption. They must keep creating leading-edge technologies that make their companies more productive—and especially, innovations that spark entirely new markets….
It's not just a matter of creating the next hot product or service, though that certainly will help. Companies need to keep innovating in all of their operations—seeking out and creating cutting-edge technologies and then applying them to transform outdated, inefficient business processes. Says independent business consultant John Hagel III: "At the end of the day, this puts a big innovation challenge on the table."…Commentary
Now More Than Ever, Innovation Is The Answer
Jobs will arise from the creation of new products, processes, and markets
What Mr. Hof neglects to mention, of course, is that one of the things that other countries can do cheaper than the U.S. is to seek out and create “cutting-edge technologies and then apply them to transform outdated, inefficient business processes.”
After all, as previous entries on this web site have noted, other countries are not only demanding that investors give them our manufacturing facilities—they also demand that we give them our cutting-edge technology and the processes to develop it. And their Ph.D. scientists make one-tenth to one-third what U.S. scientists make.
The disaster of globalization is not just that working Americans are losing their jobs—it’s the fact that investors are reaping almost all the benefits and workers are making all the sacrifices—and the promises of a better tomorrow for workers are deliberate lies.
Given the news items like the following, it’s hard to see how conservatives can keep a straight face when recommending that Social Security should be privatized, and put into the hands of Wall Street executives.
From Forbes, March 1.
How could a couple of obscure business professors get the mighty Investment Company Institute into such a lather? By documenting the fund industry's habit of levying exorbitant fees, thus providing ammunition to fundbuster Eliot Spitzer, attorney general of New York.
John Freeman from the University of South Carolina and Stewart Brown of Florida State had the temerity to do a study showing that fund investors are getting ripped off to the tune of $9 billion a year. In a 2001 article in the University of Iowa Journal of Corporation Law, the academics simply compared what fund company managers charge to run their in-house funds for the gullible masses with what they charge for the same kind of work done for pension sponsors, headed by sophisticated folk….
A Bargain at Half the Price
Two academics assert that mutual funds tend to gouge retail customers. The profs seem to have hit a sore point.
Mutual funds are supposed to be the ultimate investment for unsophisticated investors who want to participate in the stock market.
With the gouging, outright fraud and legally-permitted greed exhibited by investment professionals over the past several years—even in the mutual fund industry—it’s obvious that the bare-bones retirements of most workers are better ensured by our present Social Security system.
Those who want to privatize it are those who have most to gain from it: the investment industry itself—not their unsophisticated customers.
The following two excerpts from Barron’s, March 1, demonstrates the chronic preoccupation the “good-ol-boys” club on Wall Street to fight any attempt to disrupt its ability to take ruthless advantage of the public—behind closed doors.
Proxy Power
SEC may help dissidents get on the ballot
THE BATTLE FOR VOTES at Wednesday's annual meeting of Walt Disney shareholders is starting the 2004 proxy season with a bang. Such proxy contests are rare. But come May, the Securities and Exchange Commission hopes to adopt a new rule that would make corporate