Nations Built on Lies
Volume 1 - How the US
Became Rich
Part 3
© Larry Romanoff, October, 2021
NATIONS BUILT ON LIES VOLUME 1
by Larry Romanoff -- FREE PDF
Part 3 – Labor and Wage Theft
Contents Part 3
A Brief History of US Labor
Child Labor in America
Wage Theft
Coca-Cola, Wal-Mart, Apple, Nike, Amazon,
Starbucks
American Education
A Brief History of US Labor
In contrast to most other
industrialised nations, the US has never accepted the concept of labor unions,
which were always described and denigrated in the US media as a kind of
dangerous socialism that would exploit workers. But it was always true that it
was capitalism that exploited workers and socialism that attempted to protect
them. Thanks to the media, most Americans today still have this understanding
backwards from reality. In truth, from examining the historical record, it is
abundantly clear that neither the US government nor its corporations have ever
held workers or employees in much regard. There was a brief period after the
Second World War during which enlightened corporate self-interest driven by
fear produced a rather benign labor landscape, but that was only a kind of
illusion which was dispelled by the 1980s when both government and capital
reverted to their original colors. Beginning in the 1980s, the numbers of
industrial private-sector workers with any kind of union fell by about 70%,
largely through the harsh capitalist and legislative climate. The majority of
American workers still wanted labor unions, but the anti-union conspiracy was
too powerful.
Both the US government and
corporations acted to infiltrate labor unions with corrupt politicians and
other officials in attempts to destroy them from the inside. When those
attempts failed and labor organisers showed signs of being successful, they
were either simply murdered or framed and convicted of crimes, and often
executed. The US government has for all of its history acted with absolute
disregard for the law, whenever the law became inconvenient to the purpose at
hand. One of these purposes was the crushing of labor, where the government
frequently not only fabricated criminal charges against union organisers but
convicted them under laws that had never existed. In one famous case, labor
organisers trying to create a mine workers union in Pennsylvania were charged
by the state with murder and conspiracy. When these charges failed to hold, the
organisers and about a dozen union members were hanged for
"obstinacy".
In February of 2015, Sam
Mitriani wrote an informative article titled "The True History of the
Origins of Police: Protecting and Serving the Masters of Society" (1),
that reflected accurately the origins and applications of the American justice
system. Here is a brief edited summary of his comments.
This liberal way of viewing
the problem rests on a misunderstanding of the origins of the police and what
they were created to do. The police were not created to protect and serve the
population. They were not created to stop crime, at least not as most people
understand it. And they were certainly not created to promote justice. They
were created to protect the new form of wage-labor capitalism that emerged in
the mid- to late-19th century from the threat posed by that system’s offspring,
the working class. Before the 19th century, there were no police forces that we
would recognize as such anywhere in the world. Then, as Northern cities grew
and filled with mostly immigrant wage workers who were physically and socially
separated from the ruling class, the wealthy elite who ran the various
municipal governments hired hundreds and then thousands of armed men to impose
order on the new working-class neighborhoods. Class conflict roiled late-19th
century American cities like Chicago, which experienced major strikes and riots
in 1867, 1877, 1886 and 1894. In each of these upheavals, the police attacked
strikers with extreme violence. In the aftermath of these movements, the police
increasingly presented themselves as a thin blue line protecting civilization,
by which they meant the bourgeois elite portion of civilization, from the
disorder of the working class. This ideology has been reproduced ever since,
and is still the foundation of American law and justice today, which is one
reason corporate executives are virtually immune from prosecution for even the
most egregious of crimes while the lower classes will suffer five years in a
prison for a minor theft or smoking marijuana.
There was a never a time
when the big city police neutrally enforced "the law" - nor, for that
matter, a time when the law itself was neutral. Throughout the 19th century in
the North, the police mostly arrested people for the vaguely defined
"crimes" of disorderly conduct and vagrancy, which meant that they
could target anyone they saw as a threat to "order." In the
post-bellum South, they enforced white supremacy and largely arrested black
people on trumped-up charges in order to feed them into convict labor systems.
The violence the police carried out and their moral separation from those they
patrolled were not the consequences of the brutality of individual officers,
but of policies carefully designed to mold the police into a force that could
use violence to deal with the social problems that accompanied the development
of a wage-labor economy. The police were created to use violence to reconcile
electoral democracy with industrial capitalism. Today, they are just one part
of the "criminal justice" system that plays the same role. Their
basic job is to enforce order among those with the most reason to resent the
system.
One of the most famous
American labor leaders was the Auto Workers' Walter Reuther, whose socialist
views were anathema to the owners of General Motors and other automakers. At
one point, while negotiating for worker safety and livable wages, Reuther was
shot and seriously wounded in his home, that event followed by two more
assassination attempts. Those were followed by the very suspicious crash of a
private plane in which he was travelling. Reuther survived that one, but was
finally killed in a second equally suspicious private plane crash. (2) (3) (4) As of the time of
writing, the FBI still refuses to release hundreds of pages of documents
relevant to Reuther's death (5). Aside from the
deliberate killings and frame-ups, the US government, unique among nations, has
a long and sordid history of using its military to suppress and brutalise its
own citizens whenever they came in conflict with the capitalists who have
always controlled the Congress and White House. It has also accumulated a
history of equally sordid legislation designed to protect and enhance the
profits of its corporate elite at the expense of the people of the nation. (6)
But if we look farther
back, we can see the fundamental attitudes toward the non-elite that had been
embedded in American capitalist and government DNA since the first days of the
Republic. Prior to the late 1800s most people were either engaged in farming,
owned a small shop or perhaps plied a trade like carpentry, blacksmithing or
tailoring, the remainder eking a living from odd jobs and temporary employment.
During this time a massive social change resulted when industrialisation finally
took hold, with a large percentage of the public migrating to urban areas in
search of employment and therefore shifting from independent farmers and
micro-business owners to dependent full-time laborers. In this context, in the
minds of both capitalists and government leaders, these workers and their
desire for livable wages were the enemies of progress. During this period,
workers were almost constantly and universally decrying their virtual wage
slavery and lack of work safety while the government was equally universally
and very callously employing the military to ensure the safety not of the
workers but of the profits of capitalism.
From the late 1800s, the US
military was one of the main tools of worker suppression. In Chicago in 1894 US
troops put an end to a strike by railway workers, by opening fire and killing
dozens of workers. (7) (8) (9) Mining in the US was an
extremely hazardous occupation for centuries as it still is today, with strikes
by mine workers being especially common. In 1914, US troops opened fire on a
group of striking mine workers in Colorado, again ending the strike by killing
the strikers (10) (11). A bit later, individuals
trying to organise a labor union in a coal mine in Pennsylvania were shot and
killed by the company management who were acquitted in a brief trial 9110. Even
the police were not immune; in 1919 a police strike in Boston was ended when
the military was called in to violently end the strike, and many police
officers were killed (12) (13). In the same year, a
labor organiser in Washington was captured, tortured, castrated and then
lynched. (14)
The military weren't
immune, either. In 1932, as the Great Depression became severe, almost 50,000
veterans from World War I, marched to Washington to ask the government to pay a
few years early the $625 bonuses they had been promised (15) (16). The soldiers, most with
their families, camped on some flat land near the Capital to raise sympathy for
their plight, but sympathy was not forthcoming. Instead, then-President Hoover
sent in the police, a move that resulted in brutality, violence, and quite a
few deaths. When that failed, Hoover sent in the active military to disperse
the 'dissidents', who had caused no trouble but only embarrassment to the
government. The military, led by the great General Douglas MacArthur and
assisted by then-Major Dwight Eisenhower (who would later become US President)
and the pathologically-renowned George S. Patton, stormed the encampment,
firing on the veterans and flooding the camp with tear gas, injuring several
thousands and killing some newborn babies (17). MacArthur was so
determined to disperse his own former soldiers that he continued with the
attack even after receiving an order from the President to cease. The veterans
were dispersed and left empty-handed.
By the 1920s, US
capitalists and the government had already developed nationwide plans to
control workers and their wage demands, creating task forces whose duty was to
identify and sabotage all union organisers and critics of capitalism and
government. Many were imprisoned without charge and without access to legal
counsel. The military had improved in efficiency as well, in many occasions now
using bomber aircraft to attack striking workers from the air. In one large
miners' strike in West Virginia in 1921, several thousand soldiers carried on a
shooting war with about 5,000 striking miners.(18) When a clear victory
seemed out of reach, the US government sent in thousands more troops and
employed a chemical warfare unit in addition to bombers and fighter aircraft (19) (20). When the strikers
finally surrendered, the survivors were charged with treason and imprisoned. In
1930, hundreds of farm workers were beaten and arrested in California for attempting
to form unions, and convicted of "criminal socialism" (21) (22). There are many dozens of examples
spanning many decades, of the US military brutally and violently terminating
labor strikes by killing the strikers.
It wasn't only the US
military that was engaged in these atrocities. Many large corporations
supported standing armies of their own to be used against striking workers,
John Rockefeller being one of the worst, but by no means the only example. In
1927, striking miners at one of his mines in Colorado were massacred by his
private army using machine guns. (23) (24) (25) Two years later in North
Carolina, more groups of striking textile workers were ambushed and murdered
(26). A few years later, more than 500,000 mill workers went on strike in South
Carolina, a strike that was so violently suppressed by both US military forces
and private armies that no one dared try to form a union for another twenty
years (27) (28) (29). In 1935, striking electrical
workers at a plant in Toledo, Ohio were attacked and killed en mass by more
than 1,300 US troops including eight rifle battalions and three machine gun
battalions (30) (31). A year earlier, police in San
Francisco shot and killed many dock workers during a strike, shootings so
outrageous as to provoke a general strike in the entire San Francisco-Oakland
region (32) (33). The media were already
playing their part by claiming that "communist agitators had seized
control of the city".
One particularly infamous
event known as the Ludlow Massacre, involved a strike by coal miners against
the inhumanity of the Rockefeller family owners, one of the most brutal attacks
on workers in North American labor history (34) (35) (36) (37) (38) (39) (40). For background, the workers were
forced to work in extraordinarily harsh and dangerous conditions where fatality
rates were very high and wages low. Further, the workers were not paid in cash
but in paper scrip which could be spent only in the company-owned store that
carried very high prices. The mine workers succeeded in organising a labor
union that then attempted to institute safety regulations and have increased
wages paid in real money. These safety and wage problems had already existed
throughout American industry for many decades, but the industrial elites and
the government even then were firmly united against laborers and the poor.
In this case, tensions
reached a peak when a union organiser was killed by the mine managers,
resulting in a widespread general strike against the Rockefeller mining
interests and the installation of the labor union. Rockefeller, who controlled
much of the region through his mine ownerships, was outraged at the union's
demands, and evicted all the miners from their company-owned houses, leaving
them and their families homeless in a wilderness area in the middle of a harsh
winter, beginning a seven-month program of continued brutality and repression.
The Rockefellers, as did so many other large US corporations in those days,
took an astonishingly aggressive stance against the striking workers, hiring
hundreds of armed thugs to harass, beat and kill. Rockefeller obtained armored
cars mounted with machine guns to drive through the tent areas where the miners
were camped and strafe the tents with gunfire, killing many workers and their
children. Union members and organisers were kidnapped and beaten. When the
private army proved insufficient to destroy the strikers' will, Rockefeller
arranged for the government to send in the National Guard that continued the
same belligerent and violent policy. Finally the government ordered the
National Guardsmen to empty the miners' camps, which they did by entering the
camps with massive firepower and machine-gunning the encampment in a battle
that lasted for almost 14 hours.
One miner approached the
National Guard headquarters to attempt the negotiation of a truce, but he was
beaten and filled with bullets. That night, Guardsmen entered the encampment
and set fire to a number of tents, burning alive many women and children, and
shooting dead many others attempting to escape. As news of this massacre
spread, workers all across the US went on a national strike, but in the end the
power of money and the vicious brutality of the US government were supreme, and
the workers failed entirely. No one was ever charged with the murders or other
crimes.
Rockefeller wasn't the only
elite capitalist to have his own private army (41) for dealing with his
workers. Cyrus Eaton, who owned the Republic Steel Company, deserves special
notice, even in a nation dominated by ruthless criminal capitalists, for his
tendency to shoot and kill anyone attempting to form a labor union. His company
maintained an armory of weapons that included military-grade firepower plus
tear gas and other weapons. During one strike, when police proved unable to
disperse the strikers with multiple arrests, Eaton's army moved in with guns,
tear gas and clubs, leaving many workers dead and injured, many of the dead
having been shot in the back (42) (43) (44). I mentioned earlier the
death of the Auto Workers' Walter Reuther, but his prior life was similar to
its end, where in one case he and his staff were severely beaten by the Ford
auto company's private military (45) (46). The Carnegies and other
rich American elite industrial families all fit this same mold (47) (48) .
Repression in the US has
always had a different flavor than in other nations. In America, any
corporation with the ear of the government could count on the assistance of the
US military to support their predatory human practices, but they could also
form their own private military that would operate with almost total immunity
when dealing with the working poor. For those companies without an army, there
was a third option, this infamous source of brutality toward unhappy workers
being the Pinkerton Detective Agency (49) (50) (51) which, at the height of
its power was the largest privately-owned law enforcement agency in the world,
employing more men than the US military itself. During this period,
corporations would hire the Pinkerton agency to infiltrate unions, intimidate
workers and confront strikers with military-style violence. This firm was bitterly
hated by almost everyone who wasn't a major industrialist, the mayor of one US
city describing Pinkertons as follows: "They are a horde of cut-throats,
thieves, and murderers and are in the employ of unscrupulous capital for the
oppression of honest labor."
The problems with low
wages, inadequate or non-existent worker safety, long working hours, the lack
of medical care especially for work-related injuries, continued to build until
1945. During the Second World War, wages in the US were frozen while corporate
profits reached extremely high levels, which situation created intense
bitterness and resentment among industrial workers. During this 5-year period -
when strikes were banned because of the war effort - the US experienced more
than 14,000 strikes involving almost seven million workers, mostly in the
mining, steel and auto industries. Usually, President Roosevelt called in the
military to forcibly put down these insurrections.
These labor problems
increased after the war, when the wartime wage freezes and bans on strikes were
removed. The first six months of 1946 was a period the US Labor Department now
calls "the most concentrated period of labor-management strife in the
country's history", (52) (53) (54) when virtually the
nation's entire workforce finally rebelled against decades of brutality and
injustice. American workers en masse and in totality, filled with rage and
frustration at their system-induced misery, finally reached the point where
they were defiantly unwilling to slave in dangerous and low-paid occupations
while the corporations and their elites celebrated unprecedented and
stratospheric profits. In January of that year, 200,000 electrical workers
called a strike, followed by 100,000 meatpackers and a few days later almost a
million steelworkers staged the largest strike in US history. This was quickly
followed by several hundred thousand coal miners striking and disrupting the
electricity supply for much of the nation, immediately followed by many
hundreds of thousands of railway and oil industry workers. The US government,
true to its roots, used the military to take control of all these industry
locations and President Truman threatened publicly to hang these striking
workers (55) (56) (57) whom he called traitors,
and for whom he proposed severe criminal penalties. It was in this environment
of unprecedented social unrest that Walter Reuther finally met his end.
Then, and almost suddenly,
the climate changed, due primarily to the very real fear among the elite of a
second American revolution. These circumstances of resentment and revolt were
so widespread as to have rapidly created a society so unstable it had become
ungovernable, with the nation in anarchy and facing an imminent economic
collapse. It was this that forced a revision of the social contract with new
norms that included a minimum wage and regular workweek along with regular and increasing
wages and the expectation of steady and perhaps permanent employment. Holidays,
health care and other benefits were eventually added. It was this new social
contract of labor stability, increasing real wages and narrowing income
disparity that produced the superior economic performance the US experienced
for almost forty years. It was this increased labor consistency and wage equity
producing the vast improvements in wages, working conditions and social equity
that permitted even factory workers for the first time in history to own homes,
cars, boats, and to take regular vacations.
Perhaps even more
importantly, this huge adjustment in the social contract, and the increased
wages, produced for the first time in American history a widespread access to
higher education for children of the middle and even lower the class, since
American families with a living wage from employment could afford to abandon
the meager income from child labor and leave their children in school. The
people were filled with suddenly boundless expectations for the future as this
fundamentally socialist approach produced a thriving American economy
simultaneously coupled with transforming technological developments. It was
these children born during and after the Second World War, the first generation
of Americans who grew up in an atmosphere of hope. It was this context that
produced poll results for the first time in American history where citizens
reported increasing hope for the future and expected their childrens' lives to be
better than their own. None of these sentiments existed on any scale prior to
this quasi-revolution. It was only the universal and almost uncontrollable
labor revolt and genuine fear of a widespread and total public uprising that
produced these massive social changes that resulted in the creation of the
American middle class. All this was the result of America's brief
transformation from a brutal "free market" capitalist society to a
socialist democracy. But it wasn't to last.
In typical American style,
having been forced to abandon their sins, the elites not only took credit for
their new excess of Judeo-Christian virtue but began to propagandise yet
another historical myth with America suddenly being redefined as the land of
opportunity, and thus was born the American Dream. It was all propaganda.
American workers went in short order from being some of the most abused and
brutalised laborers on the planet to those for whom life suddenly contained
more than hopelessness and drudgery, and the propaganda machine, led by
Hollywood, went immediately into high gear to convince Americans that things
had always been this way - good, and improving. And they didn't stop there. The
Dream expanded by the year, rapidly leaving behind thoughts of valuable but
boring regular jobs to be replaced with dreams of riches and success that were
possible in no other nation. And of course, the elite capitalists were busy
plotting to relieve this new middle class of all its money by promoting
consumerism and a 'standard of living', firmly entrenching the consumer society
as a way of life. It was all a hoax generated by a massive propaganda campaign
perpetrated on a gullible public to replace revolutionary resentment against
the elites with false hope for a fictitious future.
This 'golden era of labor',
the new social contract and the attendant propaganda were not only a hoax and a
myth but also a mere temporary diversion while the elites regrouped and rebuilt
their political and military strength that had served them so well for so many
prior decades. The elites and their secret government were never pleased with
the financial sacrifices they had made in sharing money with the peasants of
America, and the situation could never have lasted. Many authors and historians
today agree that an operative plan exists to eviscerate the US middle class.
Their conclusion is correct but many miss the essential flavor which is that
the top 1% are not stealing money from today's middle class; rather, they are
reclaiming what had always been theirs. Their generosity in sharing wealth with
the peasantry, and thereby creating America's middle class, was an anomaly
forcibly thrust upon them which they are now reversing by recovering all that
wealth still residing in the middle and lower classes. In simple terms, they
want their money back. Plans to bring to an end all that peasant happiness and
confidence in the future, and to loot all those middle-class bank accounts, had
already been made during the 1970s and were enacted with a vengeance when the
US FED engineered the vicious recession in the early 1980s. And that was the
beginning of the end. The 2008 financial crisis, also engineered by the FED,
was the middle of the process. The end is still to come, and wage theft is one
method of accelerating it.
Then we had Paul Krugman,
in an article in the NYT on March 2, 2015:
"Then there's history. It turns out that the middle-class society we used to have didn't evolve as a result of impersonal market forces - it was created by political action, and in a brief period of time. America was still a very unequal society in 1940, but by 1950 it had been transformed by a dramatic reduction in income disparities, which the economists Claudia Goldin and Robert Margo labeled the Great Compression. How did that happen? Part of the answer is direct government intervention, especially during World War II, when government wage-setting authority was used to narrow gaps between the best paid and the worst paid. Part of it, surely, was a sharp increase in unionization. Part of it was the full-employment economy of the war years, which created very strong demand for workers and empowered them to seek higher pay. The important thing, however, is that the Great Compression didn't go away as soon as the war was over. Instead, full employment and pro-worker politics changed pay norms, and a strong middle class endured for more than a generation. Oh, and the decades after the war were also marked by unprecedented economic growth.” (58)
I find it astonishing that
Krugman should be so ignorant about his own country's economic history. He not
only has his facts wrong, but his understanding of events appears pre-pubescent
at best, then he finishes by trivialising with a foolish comment one of the
most important economic events in American history: "Oh, and the decades
after the war were also marked by unprecedented economic growth."
James Petras categorises
this time as The Great Transformation (59), when the US government,
the FED, the bankers and the large multinationals took their alarming
ideological turn to the extreme right. As you will see a bit later, this was
when labor became disposable and the social contract between employer and
employee was terminally severed along with all pretensions of loyalty, but this
trashing of the social contract was not a result of the recession. Instead, it
was the purpose of Volcker's deliberately-engineered recession to facilitate
the unilateral rewriting of the contract. It is important to understand that
the severe economic contraction in 1983 was not an accidental disaster
resulting from mysterious market forces; it was deliberately engineered and
executed by the elites, by the US FED and the Jewish European bankers who own
the FED. Paul Volcker, as Chairman of the FED and acting under instructions,
induced yet one more savage recession precisely intended to rewrite the entire
financial and corporate landscape as well as trashing the social contract that
had existed for forty years. (60) (61) (62) (63)
The plans for destroying
the post-war social contract and reconfiguring the economic landscape were being
made and put into effect almost immediately after the contract was first
written. The economist Edwin Dickens examined records of the meetings of the
FED's Open Market Committee from the 1950s to the present, with his analysis
proving the FED's actions were consistently intended primarily to benefit the
top 1% by creating conditions to make workers more insecure and therefore more
compliant in terms of wages and working conditions. He identified repeated
occasions where the FED deliberately contracted the money supply and credit
immediately prior to the expiry of major union contracts, intending this to
drive down wages and benefits during the impending negotiations. John Maynard
Keynes was warning the world about the FED and other private central banks when
he wrote "the object of credit restriction is to withdraw from employers
the financial means to employ labor at the existing level of wages and prices
... intensifying unemployment without limit, until the workers are ready to
accept the necessary reduction of money wages under the pressure of hard
facts." (64) In other words, class warfare. Contrary to propaganda and
popular belief, the US FED's policies have never been a matter of monetary
discipline, but of class discipline through control of labor. It should be
obvious that the FED executing policies to maintain full employment would be
self-defeating since it would serve only to create class conflict between
capital and labor, at least in America's predatory style of capitalism.
"The Federal Reserve serves the needs of the powerful. Its role is to
protect capital against the interests of labor. In order to maintain labor
discipline, the Federal Reserve Board is entrusted with the task of maintaining
a level of unemployment high enough to keep workers fearful of losing their
jobs."
Upon his appointment as
Chairman of the Federal Reserve, Volcker announced a determination to break
inflation, but his real determination was to permanently break the back of
labor. Volcker literally launched a class war on the working lower and middle
classes of America, fully intending to spill blood. His pronouncements about
fighting inflation - which the FED itself caused, but which was now being
blamed on labor - was propaganda meant only to silence the masses and keep them
ignorant of the vicious assault he was planning against them. His first act was
to tighten the money supply to such an extreme that he immediately plunged the
country into the worst economic downturn since the Great Depression, and let up
only when the entire US financial system was itself threatened. During all of
this blood-letting, Volcker's only interest appeared to be the terms of labor
contract demands and settlements. His only determination was that wages would
fall, stating repeatedly that "The standard of living of the average
American has to decline" (65) (66) (67). The corporate elites -
the top 1% and the bankers - were increasingly laying fictitious blame on
domestic wages, but it was only greed from the memory of past unconscionable
profits that was driving them. Business Week inadvertently identified the
class-war nature of Volcker's actions when it stated in an editorial,
"Some people will have to do with less. Yet it will be a hard pill for
many Americans to swallow - the idea of doing with less so that big business
can have more" (68). And that was the entire
story.
Michael Mussa, director of
the IMF's research department, highly praised Volcker’s approach, writing,
"The Federal Reserve had to show that when faced with the painful choice
between maintaining a tight monetary policy to fight inflation and easing
monetary policy to combat recession, it would choose to fight inflation. In
other words, to establish its credibility, the Federal Reserve had to
demonstrate its willingness to spill blood, lots of blood, other people’s
blood." (69) And spill "other
peoples' blood", he did. By the time Volcker was finished, millions of
manufacturing jobs had disappeared, wages had dropped by 30% or more, and the
industrial Midwest never recovered. Another arrow in his quiver was
deregulation, intended to further lower wages and break the back of US labor.
As one columnist wrote, "Interestingly, the intended enemy of this war -
the workers - went unmentioned in this recollection, as did the collateral
damage to farmers and the Latin Americans. But what had workers done to make
the state treat them as enemies? Were these people culpable of some evil act
for wanting more than a pittance?" When Obama remarked in a recent speech
that "starting in the late 1970s, the social contract began to
unravel", he was fully aware of the causes but chose not to state them.
There was once an amusing
cartoon series in the US titled 'The Wizard of Id' in which, in one cartoon
some poor peasants accosted the King to ask, "We thought you declared a
War on Poverty", to which the King replied, "I did". The
peasants then asked, "Why are we still poor?", to which the King
replied, "Because you lost". And that perfectly reflects Volcker's
beginning of the Great Transformation. And while the proletariat were licking
their wounds and contemplating their new proximity to poverty, the American
bourgeoisie, the top 1%, were equally as successful in re-applying those stolen
wages to more useful purposes. This is why the top 1% captured virtually all
income and asset gains since that time and why corporate executive salaries
grew from ten times that of the average worker to several hundred times that
level. CEOs who had once earned $300,000 per year were now earning $20 million,
often being rewarded more for incompetence than ability. In what should have
been a stunning condemnation of American capitalism, a study by Michael Jensen
of Harvard’s Graduate School of Business showed that 95% of all CEO contracts
provided enormous severance packages even for executives guilty of fraud or
embezzlement (70). In one typical case,
after announcing that under his leadership Merrill Lynch had lost $8 billion in
one quarter, Stanley O’Neal was 'terminated' with more than $160 million in
stock, options, and other retirement benefits (71). And Warren Buffett told
his shareholders, "Getting fired can produce a particularly bountiful
payday for a CEO. Indeed, he can 'earn' more in that single day, while cleaning
out his desk, than an American worker earns in a lifetime of cleaning toilets.
Forget the old maxim about nothing succeeding like success: Today, in the executive
suite, the all-too-prevalent rule is that nothing succeeds like failure."
(72)
Until the late 1970s,
Americans had better lives with their comfort and financial security having
greatly increased, with family incomes doubling or tripling since the
revolutionary turmoil of 1946. Then, thanks to the US FED and its friends and
owners, the party was over. Wages fell, household incomes dropped, prosperity
slowly evaporated, and both the American middle class and the American Dream
were on their way to extinction. Few realised at the time that Volcker's
recession was not a temporary anomaly as other recessions had appeared to be;
this one was a permanent and on-going assault. John Kennedy was famous for
saying that a rising tide lifts all boats but, as someone wrote, this time
"a growing number of boats have been chained to the bottom". And that
has proven true. Since then, productivity has risen markedly while wages
remained stagnant and even falling. Good jobs have increasingly disappeared to
be replaced by low-wage employment. Benefits have been drastically cut and
employment has become much less secure. It began with the destruction of labor
and deregulation, continued with globalisation and outsourcing, and progressed
to financialisation and what we call "Wal-Martisation" and the Task
Rabbit economy - the replacement of well-paying full-time employment with
part-time poverty. By the early 1980s, the Treaty of Detroit had been
unilaterally repealed and the golden age of labor was at an end.
"If Volcker’s and
Carter’s attacks on unions were indirect, Reagan’s were altogether frontal (73). In the 1980 election,
the union of air-traffic controllers was one of a handful of labor
organizations that endorsed Reagan’s candidacy. Nevertheless, they could not
reach an accord with the government, and when they opted to strike in violation
of federal law, Reagan fired them all. Reagan’s union busting was quickly
emulated by many private-sector employers." And indeed, virtually every
large corporation followed Reagan's lead by deliberately forcing strikes as a
tool to destroy their unions. As one author noted, "the age of
broadly-shared prosperity was over". As was corporate loyalty. At the
beginning of the 1980s, a Conference Board survey found that a majority of
executives agreed on the importance of employee loyalty and that it should be
rewarded, but only ten years later, only 5% held this opinion. Jack Welch, the
CEO of GE, was quoted as saying, "Loyalty to a company is nonsense",
and made clear that in the future his firm would be rewarding only stockholders
and not employees. Under Reagan, the deregulation of the corporate and labor
markets was intended to facilitate the destruction of what we can call the 'job
for life' social contract and to remove labor unions from the landscape
altogether. It eased the transition to out-sourcing and the final
de-industrialisation of the US economy as well as severely weakening the power
base of the political Left. All of this was intended only to resurrect the
slave labor landscape of the 1920s and prior, to turn American labor into a
powerless, odd-job, Task Rabbit contract-employee society.
In 2013 Robert Kuttner
wrote a thoughtful and intelligent article titled The Task Rabbit Economy (74), in which he described the pathetic
labor situation in the US today, the plight of perhaps 40 million Americans
having been reduced to part-time, casual, occasional and odd-job labor in order
to survive. In his article he included this sentence: "As we try to figure
out why the United States is becoming an economy of ever more casual employment
and how to reverse this trend, we had better get the answers to these questions
right." I feel sorry for Mr. Kuttner; he looks, but he doesn't see. In
spite of all the facts confronting him, he still wants to believe that this
destruction of labor in America was some kind of unfortunate accident which his
government and politicians desperately want to repair. But the truth is they
don't want to repair it. They caused it. They brought it about. They wanted it to
happen, to return American labor and capital to the pre-war condition; the
FED-induced recessions, perhaps especially those of 1983 and 2008, were meant
to facilitate this reversion. This transformation is not yet complete; there is
more to come.
We need only look at the
historical record to realise the changes were too drastic and too widespread to
have resulted naturally from a simple economic downturn. Almost as soon as the
recession hit and millions of people were losing their jobs and homes, the large
corporations, as if on command, leapt into the process of suddenly terminating
millions of employees and rehiring them as contract workers. That was neither
accidental, nor a result of economic hardship and necessity; it was part of the
plan to return to the pre-war status of capital-labor relationships and income
disparity. And it succeeded. The top 1% have captured virtually all of the
income gains since 1980 while at least half of the middle class has become
impoverished and descended into the lower class, with the planned income
disparity in America today approximately equivalent to that of many nations in
Central and South America. One columnist stated the situation perfectly when he
wrote, "Only if the suppression of labor’s power is made part of the equation
can the overall decline in good jobs over the past 35 years be explained. Only
by considering the waning of worker power can we understand why American
corporations, sitting on more than $1.5 trillion in unexpended cash, have used
those funds to buy back stock and increase dividends but almost universally
failed even to consider raising their workers’ wages." (75) His assessment is 100% correct.
Psychologists know that
dread - the anticipatory fear of an event - can produce more anxiety and can,
if prolonged, be even more damaging, than the event itself. They also know that
the loss of a job is one of the most damaging experiences to the human psyche,
often worse than a divorce or the loss of a limb. In these latter cases, the
psyche recovers, even if slowly, and the victims return to normal. But
unemployment carries more arrows with which to wound, one of these being a
degradation of social and financial status. Spouses and children often suffer
wrenching emotional distress from losing their standard of living and the
consumption level they had enjoyed. This is especially true in the moralistic
and judgmental Christian society of America where 'winners' are idolised and
'losers' are despised. Richard Layard, a highly-respected British economist,
wrote that unemployment was a very special problem that "hurts as much
after one or two years of unemployment as it does at the beginning". What
this means is that if workers generally have a fear - a dread - of becoming
unemployed, any drop in employment rates will likely silence their discontent.
They become malleable and compliant, non-complaining.
And of course, this
psychological knowledge didn't escape the attention of the US FED, and formed a
pillar of US economic policy when Alan Greenspan was Chairman of the FED,
speaking of what he called the "traumatized worker" (76), referring not to those unemployed
but rather to those with a fear of unemployment. As Robert Woodward reported,
Greenspan saw the traumatized worker as "someone who felt job insecurity
in the changing economy and so was resigned to accepting smaller wage
increases. He had talked with business leaders who said their workers were not
agitating and were fearful that their skills might not be marketable if they
were forced to change jobs."
In testimony to the US
Congress, Greenspan said bluntly that "The rate of pay increase still was
markedly less than historical relationships with labor market conditions would
have predicted. Atypical restraint on compensation increases has been evident
for a few years now and appears to be mainly the consequence of greater worker
insecurity." It was due to this fear and the consequent gutting of
American employment that wages stagnated and that both corporate profits and
income inequality soared to such heights in the US, much the same as in the
early 1900s and during the Second World War when wages were frozen while
corporate profits were not. Of course, Greenspan wasn't blind to the causes of
the enormous increase in income disparity but, evasive and dishonest as always,
he claimed that "There is nothing monetary policy can do to address that,
and it is outside the scope, so far as I am concerned, of the issues with which
we deal." Of course, that was a big lie since not only was the FED
primarily responsible for the income disparity, it deliberately created the
conditions to bring about its occurrence. Massive income disparity in America
was not an accident. It was a plan. In fact, it was exactly the same plan
George Kennan outlined in 1948 for the US versus Asia and the world, with the
fruits of Kennan's international income disparity plan flowing to precisely the
same people - the same 1% - as the domestic fruits of the plans of Volcker and
Greenspan. And just as in the century prior to the 1940s, the American
government, driven by commitment to the top 1%, uses its military power to
suppress dissension. Today it is militarised police forces and the Department
of Homeland Security instead of the regular military, and Occupy Wall Street
instead of striking coal miners, but all else is the same.
In this new race to the
bottom, some parts of the US have already successfully reverted to the
identical labor situations that existed there 100 or more years ago, corporate
farms in Florida being one typical example. Florida agriculture, dominated by
huge agri-business firms, is a multi-billion-dollar industry that is highly
labor-intensive and relies on the most ruthless exploitation of domestic and
foreign workers (77). The day begins at 4:30
AM and includes at least ten hours of work in 90-degree heat with back-breaking
work and exposure to dangerously high levels of pesticides. Workers must pay
$50 per night to sleep in roach-infested slave camps and must pay high charges
for food and other essentials; they work under the supervision of armed guards
and are not permitted to leave. Many of these camps are surrounded by high
fences topped with razor wire just as in prisons, and many have been whipped,
raped and threatened with death if they attempt to leave the camps. This
industry is of course illegal, but is widespread and ignored by the US
government. It is also exacerbated by corporations like Wal-Mart and the huge
supermarket chains ruthlessly using their buying power to drive down wages and
destroy working conditions. With circumstances such as these existing in so
many parts of the US today, we have no doubt about the terms of the new social
contract in today's America.
Just so it doesn't go
unmentioned, the US wasn't the only country where the American government has
employed these tactics in the past and still freely employs them today. The US
has often sent its military to invade other nations on the pretext of defending
democracy or 'protecting American interests', but in reality using the US military
to violently put down strikes at American companies throughout Central and
South America as well as in Asia, and including China. I have elsewhere
included a list of US military interventions, which contains official reasons
for each item, listing causes like "protecting American interests,
suppress civilian general protest strike, battle civilians during anti-US
protests, put down anti-American business protests, control anti-American
civilians, war against civilians to protect dictator". All of these and
more were purely commercial endeavors, with the top 1% using the public power
of the US military as a private tool to brutally enforce what was effectively
slave labor by American companies owned by these same people in dozens of
nations. I have already written of General Smedley Butler's claims that he and
his US marines were busy for decades acting as murderous gangsters for American
capitalism and its bankers. This is what he was talking about. It was for this
reason the US began supplying its 50 or so brutal puppet-dictators with
high-grade weapons and civilian suppression training - to save the US military
the expense and trouble of repeatedly invading these nations to put down
civilian labor protests against the inhumanity of American multinationals and
international bankers. This is yet one more way the US became rich - by using
its military to enforce a virtual slavery on the working populations of dozens
of poor nations. When I wrote earlier that the US "cannibalised" much
of the world, those words were not chosen lightly.
Child Labor in
America
Miners: View of the Ewen Breaker of the Pennsylvania Coal Co. The dust was so dense at times as to obscure the view. This dust penetrated the utmost recesses of the boys’ lungs. A kind of slave-driver sometimes stands over the boys, prodding or kicking them into obedience. South Pittston, Pennsylvania.
Image credit: https://rarehistoricalphotos.com/child-laborers-newsboys-1910/
Many forms of child labor,
including indentured servitude and child slavery, have existed throughout
American history until the recent past but became more widespread and organised
as industrialisation increasingly brought families into the factories and
workshops of urban areas. Factory owners generally preferred children because
they were cheaper, more manageable, and less likely to strike. Children
constituted about 25% of the manufacturing labor force of the industrialising
Northeast, and 40% to 50% in cotton and wool mills.
The Industrial Revolution
in both Britain and America spawned the factory system that William Blake
categorised as "those dark Satanic mills" that exploited and
oppressed children as young as six years old. These children were most often
locked in the factories for sixteen hours a day, and suffered terribly.
Children were constantly exposed to toxic industrial chemicals and heavy
metals, resulting in loss of vision, paralysis, mental illnesses and death.
Those late for work or with insufficient productivity were frequently severely
beaten. Their lack of maturity and experience coupled with pitifully primitive
and unsafe machinery, and fostered by the most cruel disdain on the part of
owners, resulted in countless hundreds of thousands of mangled little bodies.
It was a daily occurrence that childrens' hands and arms were caught in
machinery and torn off. "Little girls often had their hair caught in the
machinery and were scalped from their foreheads to the back of their necks."
Almost always, these children who were wounded or crippled in the factories,
were simply thrown outdoors and left to die in the streets of their injuries. (78) (79) (80) (81) (82) (83) (84) As John Foster Dulles was
so fond of telling us, "There are only two kinds of people in the world:
Christians who believe in capitalism, and the other kind".
In the late 1800s and early
1900s, many individuals and social groups attempted to pressure the US
government to regulate or ban the worst excesses of child labor, usually
without success. Even on the few occasions when a child labor law was passed,
it was immediately rescinded. In 1916 Congress passed the Keating-Owen Act as a
first attempt to control child labor by forbidding the interstate
transportation of goods made in factories that employed children, and
restricted the workday to eight hours. The US Supreme Court quickly declared
the law "unconstitutional". Congress then passed a second law that
heavily taxed the profits of factories employing children but the court,
pressured by the Drexel Furniture Company, also quickly declared this law
unconstitutional. Many women’s groups put pressure on Roosevelt to bring an end
to the tragedies of child labor, but Roosevelt was once again true to his elite
roots and uninterested in labor reform. It was only just before the onset of
the Second World War that new labor laws were passed which contained some
restrictions for child labor. Most economic historians have concluded that the
primary factor for the reduction of child labor was not labor legislation but
rising incomes that permitted families to keep their children out of the work
force and send them to school instead. In other words, the US government,
controlled by its 'invisible people' did nothing to prevent or even ease the
miseries of child labor, this travesty ceasing only through an unplanned
reduction in poverty which was itself brought about by fears of another
American revolution.
The American robber barons
bitterly resented these restrictions and, true to their Judeo-Christian roots,
turned to God and religion to defend their profits. They claimed the lack of
work would turn children into idle tools of the devil and would destroy their
initiative and self-reliance. Many of these companies cooperated in mounting a
large propaganda campaign urging all Americans to accept their "solemn
responsibility to the country" to ensure child labor laws were never
permitted passage, claiming their intention to "save the young people of
all future generations from moral and physical decay under the domination of
the devil himself".
Despite all the
hypocritical noise made by the US State Department about child labor in the
Americas or Asia, child labor is still common in the US today. Kruse and Mahony
did a recent comprehensive study of current child labor in the US and estimated
that, at the least, many hundreds of thousands of minors are employed during a
year, at least some in hazardous occupations, working well over 100 million hours
per year and paid almost $600 million. Family farms have always taken advantage
of family labor, even the youngest contributing whatever effort they were
capable of making. Labor was scarce and expensive, and often a large family was
necessary to ensure a labor supply. But family farms are not the issue at hand.
Current estimates are that about 10% of farm workers in the US today are
children, most employed in industry, with few of them working on family farms.
Most US farms today are owned by large agri-business corporations that are
heavily mechanised and employ great amounts of pesticides and other chemicals.
The child laborers on these industrial farms are often as young as seven or
eight years old and can work 14-16 hours per day, seven days a week. They
receive only short lunch breaks and are not even supplied with toilets or
drinking water. The federal minimum wage is $7.50 per hour but these children
are often paid as little as $2.00.
One would think that any
knowledge of this past history would be sufficient to produce revulsion to any
thought of using small children as laborers, but apparently not. In 2011 US
Senator Jane Cunningham from Missouri proposed the total repeal of all
child-labor laws, at least in her state, permitting even small children to
return to the mills. Tellingly, her proposed law would remove all government
authority to inspect locations that employed children or to force them to
maintain employment records. Her claim is that this law would "loosen an
overly broad prohibition on child labor", and disingenuously pretended she
wanted only to 'legalise baby-sitting'. (85) (86) When this woman was
widely attacked for her repugnant proposal, she blamed the "hysteria"
on "misinformation and politics".
Wage Theft
The economic theory of
slavery continues today in a practice we now term "wage theft. Here is the
rest of the story. During 2014, the New York Times and other media sources ran
several articles on what is now called wage theft, the corporate practice of
underpaying staff which gives signs of becoming an epidemic in the US and today
afflicts higher-paid white-collar workers as well as hourly employees. " (87) (88) (89) (90). The methods and tactics
appear to be limited only by the imaginations of employers, but include paying
below the legislated minimum wage, forcing staff to work extra hours, refusing overtime
pay and stealing tips from restaurant staff. Many employers apparently demand
staff sign blank time cards, then insert false numbers for hours worked. In one
reported case, Google, Apple, Intel and Adobe were involved in a large
antitrust lawsuit for having colluded in a scheme to not hire each other’s
staff, thereby severely depressing wages for engineers and other higher-paid
staff in all of Silicon Valley who claim they were cheated out of $3 billion in
lost wages. Various government departments in many US states and cities have
recovered tens of millions of dollars for some groups of workers, but
authorities claim these recoveries are a minuscule portion of the existing
total, and that wage theft may be the largest continuing financial crime in the
country, one that appears to be increasing every year. In many companies and
industries, workers testify they were forced to work as much as 90 days in
succession, often for 70 hours per week, with no overtime pay. Many firms,
Fedex being one, claim their employees are really independent contractors and
therefore not entitled to overtime nor, in many cases to statutory benefits.
McDonalds and Wal-Mart appear prominent in some of these lawsuits but the
practice is widespread in the US. In another editorial in 2014, the New York
Times wrote that job growth in the US was so slow most economists were claiming
"it would take until 2021 to replace the jobs that were lost or never
created in the recession", a tragic social situation especially considering
that corporate profits were at an all-time high and many companies were sitting
on huge reserves of cash. Productivity has increased substantially while wages
have in fact been falling, a condition not caused by 'market forces' in any
sense but rather from a plan to enhance profits at any cost.
After the savage
FED-induced recession in the early 1980s, Western governments, the
international bankers and their multi-national corporations conspired to
rewrite the social contract, after which wage theft became rampant and the
attack on the middle class was no longer hidden. As one example of many I could
cite, a regional telecom company in Canada fired without notice about 3,500
people, 30% of its workforce. The company re-hired more than 3,000 of them in
the next quarter, but as contract workers only, with salary cuts of 10% to 20%.
However, in addition to the reduced wages, the company was no longer
responsible for paid vacations or statutory holidays, nor sick leave or
training costs. The company was no longer legally responsible for providing
statutory benefits, and therefore avoided the costs of pensions, health care,
unemployment insurance, and much more. In one swoop, the company reduced its
total wage bill by 50% or more, this enormous addition to corporate profits
extracted entirely from the pockets of the employees. Literally thousands of
companies did the same with at least a portion of their staff, this being one
of the main reasons corporate profits soared after the recession and one of the
main reasons Western firms are today sitting on a combined cash pile of
trillions of dollars. This flood of companies rushing to contract labor (and
outsourced labor) was an undisguised assault on the middle class, with the only
possible result (and therefore a clear intention) to impoverish the bottom 90%
and vacuum all revenue into the boardroom. And of course, this was in fact the
result. Since the late 1970s and early 1980s, real incomes in America (and in
other Western nations) have remained static after inflation, meaning no
effective pay increases for about 40 years. Prior to this time, wages had
constantly increased with productivity, this pattern so consistent that
economists taught this as a natural law. But the bankers and industrialists
repealed this law sometime in the late 1970s, and real wages have not risen
since then even though US productivity had increased almost every year. This
was due in large part to the US deregulation of the financial industry,
permitting not only such travesties as 2008 but opening the doors to siphoning
wealth from the workers and out of the corporations into the hands of the top
1%.
Temporary employment
agencies can fill a need in a nation's labor market since it often occurs that
companies in many industries require additional labor during vacation periods
or high seasonal demand. Corporate managers appreciate them because a single
phone call can produce the requisite number of workers for a day, a week or a
month. But the senior executives of American MNCs appreciate them for other
reasons, the main one being that these temporary workers by definition are paid
only an hourly rate, often the legal minimum wage but, even more importantly,
are not entitled to the range of statutory benefits which include health care,
pensions, unemployment insurance, legislated termination notice periods,
pregnancy and sick leave, and many other such requirements. Many statutory
provisions apply only to permanent staff, so you can see the temptation. This
American labor practice has been attracting increasing government attention in
many countries, the alarming tendency to outsource permanent, full-time staff
to temp agencies, primarily to avoid the cost of paying statutory benefits but
also to escape responsibility for a host of other actions which would otherwise
be illegal. Coca-Cola is famous for this American practice. In many nations,
Western and other, it is illegal to hire full-time permanent staff through
temporary agencies or to employ outsourced labor for other than temporary
positions. But, if you have a clever lawyer play with the rules, you can find
ways to pretend these are really only "temporary" employees, and you
can pay them much less while avoiding all responsibility for their welfare and
statutory benefits.
To quote a Huffington Post article,
(Les Leopold; 10/27/2015) 'Wage Theft Comes to America', The Economic Policy
Institute (EPI) provided a national estimate: "The total annual wage theft
from front-line workers in low-wage industries in the three cities approached
$3 billion. If these findings in New York, Chicago, and Los Angeles are
generalizable to the rest of the U.S. low-wage workforce of 30 million, wage
theft is costing workers more than $50 billion a year." And this
conclusion refers only to low-wage workers like clerks at Wal-Mart, the staff
at fast-food chains and similar; it does not include the losses to the middle
class which would be almost infinitely greater. This is free-market capitalism
operating in an unregulated nation, where the immense social destruction is obvious
to anyone who looks. The most telling feature is that the once-large American
middle class has mostly disappeared, more than half of it sliding precipitously
into the lower class during 2007-2008 when the entire American middle class
suffered an average loss of 50% of their total assets. Many more formerly
middle-class have descended since then, a condition that appears permanent,
increasing, and irreversible. One of the methods increasingly used to entrench
this social condition is the outsourcing or reclassification of staff as
contract or temporary workers, the companies shedding all signs of social
responsibility.
Many companies push the
limits in myriad other ways, one of which was Apple's famous
"warranty-avoidance" warranties where the company regularly charged
Chinese customers about 50% of the original cost of a device, for warranty
repairs that were supposed to be free (91) (92). The company also made
repairs so difficult and time-consuming to obtain at Apple stores that many
customers paid for their own repairs at other shops. So, with luck, 'wage
theft' can extend even to a company's customers. Many firms do something
similar by avoiding product recalls, the auto industry for decades being
notorious for this, just another way to privatise the profits and socialise the
losses. We had classic examples of the Ford Pinto, of General Motors' famous
ignition switch, Takata's air bags and Volkswagen's faulty transmissions in
China, in all cases involving badly-designed products which could potentially
kill a great many people but were expensive to fix. I would note here that in
all the merger and acquisition activity we read about, the profitability of the
company being purchased is only part of the equation, and perhaps only a small
part. The reason is that in addition to the potential wage theft of the
company's own staff, there is lurking in the background a much larger pool of
wages to plunder, that of the company's supply chain. Since wage theft is such
a major source of corporate profit today, the longer a company's supply chain
and the more people employed in that chain, the greater the profit potential.
Apple is an ideal example because the company has a long supply chain with one
and a half to two million workers, all of whose pay packets can be plundered,
and this was the source of virtually all of Apple's huge profits. I doubt very
much that without this massive theft of wages Apple would have had any profits.
There are two other aspects
to this theft from workers, one being the Wal-Mart syndrome of violent
opposition to labor unions which has increasingly affected corporate America at
all levels and which leaves the vast majority of workers with no advocate and
no solution other than class-action lawsuits which are seldom successful. The
other is also a Wal-Mart specialty. In the US, Canada, and other Western
countries, a full-time job is generally defined as one consisting of 40 hours
per week, at which level employers must provide a full range of benefits that
includes health care, pensions, unemployment insurance and other items. Wal-Mart
defines 'full-time' as 35 hours, thereby avoiding the entire cost of these
statutory benefits that normally comprise at least 30% of labor costs. There is
perhaps no indication more clear than this of the planned destruction of the
social contract which was the foundation of the American middle class and the
sole contributor to the rising standard of living. The American Dream is truly
dead.
Another practice, that of
unpaid internships (93) (94), emerged after the 2007
financial meltdown and has accelerated to an alarming degree in many sectors of
the US. With a stagnant job market and few employment opportunities for new
university graduates in America, a surprising number of well-known large
companies have turned to these unpaid laborers to fill open staff positions.
The regulations governing internships are explicit but ignored. By law, interns
must receive training in job skills but this seems to almost never occur, and
instances where an intern actually lands a job after the internship period
could be counted on the fingers of one hand. According to many media and
government reports the number of new graduates in these unpaid positions is in
the millions, so many they have formed internship societies to share their
experiences. Many of these young people work as long as one year without pay,
only to be dismissed at the end, clearly indicating no possibility of a
full-time job had ever existed. All this is yet another indication of the class
war that exists in the US today, evidence of the destruction of the social
contract, and the continuing marginalisation of labor. All signs are that this
condition will continue to accelerate. Since the US economy has, after almost
ten years, shown no signs of a recovery, little hope exists for improvement,
and indeed this trashing of labor has become a kind of social movement that is
still gathering momentum and may well become the acceptable norm. It was
interesting to note that the famous (or infamous, for his 'scorched-earth'
practices) General Sherman, a leader in the American civil war, wrote in the
late 1800s that "There will soon come an armed contest between Capital and
Labor. They will oppose each other not with words and arguments and ballots,
but with shot and shell, gunpowder and cannon. The better classes are tired of
the insane howlings of the lower strata, and they mean to stop them."
American multi-nationals
are enthusiastically exporting their pathological labor practices to other
nations, leaving government authorities scrambling to moderate the damage and
create appropriate legislation to deal with this unexpected flood. As in the
US, their wage theft scams appear limited only by their imaginations. One of
the more common and unfair labor practices among American companies in China is
to conduct recruiting in smaller cities in Central China where wage levels are
comparatively low, then position the new hires in the larger centers like
Shanghai or Guangzhou where living costs (and wages) are far higher. Another
American practice in China that has been attracting increasing government
attention is that of out-sourcing permanent, full-time staff to temp agencies,
primarily to avoid the cost of paying statutory benefits. Coca-Cola is famous
for this practice, with some of its 'temporary' employees having been in the
same job for ten or more years. One Coca-Cola employee reported that just prior
to China's new Labor Laws taking effect, "they called us into a meeting
... with no notice, and told us that they were outsourcing our jobs and turning
us over to a third party. We would no longer be Coca-Cola employees". They
were also informed their incomes had been cut in half after the transfer to the
third-party agency. Schering-Plough, a subsidiary of US-based Merck Pharma, did
the same, at one point firing all its staff in Shanghai and relocating them to
a temp agency with a reported 70% reduction in pay. Naturally, most staff quit,
but the company persisted. Many companies have adopted similar strategies in
attempts to lower wages and salaries to a subsistence level while avoiding the
payment of (legislated) statutory benefits like health care and unemployment
insurance. The standard procedure for American MNCs in many countries is to
dismiss all their employees and turn them over to a temporary labor contractor.
The staff still work at the same place for the same company, doing the same
jobs, but are no longer company employees, being now contracted to the temp
labor firm that pays much lower salaries and by law is not responsible for
statutory benefits, thus lowering the labor bill by as much as 50%. The
practice of providing permanent labor through temp agencies is illegal in most
countries since it is obviously a scam, but many companies ignore the laws. If
you play with the rules, you can find ways to pretend these are really only
"temporary" employees, and you can pay them much less while avoiding
all responsibility for their welfare and benefits - and their mistreatment.
The American fast-food
companies like KFC, McDonald's and Pizza Hut have for many years incorrigibly
paid their staff only 60% of the legislated minimum wages, repeatedly claiming
unclear laws and frustratingly repeating these illegalities in thousands of
locations in spite of court orders and fines. We have read of Apple, Nike and
other American companies who subcontract their manufacturing with such tight
margins as to guarantee starvation wages to millions of workers throughout
Asia. US-based P&G have been repeatedly accused of forcing temporary staff
to work 12-hour days without overtime pay, and of heavily lobbying China's
national government against the establishment of minimum labor standards. The
American Chamber of Commerce, AmCham, one of the most stridently anti-social
organisations in the world, is well-known for doing the same. In the meantime,
the US NGOs like Human Rights Watch scold Nike or Coca-Cola for utilising what
they call 'slave labor', while Nike and Coke pretend they had no idea but will
check immediately. And so the story has continued for generations.
Yum, KFC, Pizza Hut, and
McDonald's are renowned as much as Coca-Cola for finding every possible way to
pay their employees less. This is especially true, and especially irritating,
in China where KFC earns half of its worldwide profits on a sales volume half
that of the US. Part-time staff are particularly unfairly exploited, with both
KFC and McDonald's paying only 60% of China's minimum wage, persistently
blaming "unclear regulations" while continuing to violate the laws.
American critics complain that US companies are singled out for this kind of
media attention, but the fact is that American companies came to China boasting
of their high standards and high quality, of employing "international best
practices", and being generally superior in all respects, then proved to
be the least honest and most predatory of all companies.
And it isn't only Coke,
Apple and Nike who prey on the helpless. Most American companies do the same,
including many generally seen as having clean faces, companies like P&G,
Disney, Mattel, all of whom proclaim innocence and virginity while the drastic
labor situations continue unabated. A large variety of American toys
manufactured and promoted in China like Fisher Price, Barbie, Toy Story,
Matchbox cars, Thomas the Tank Engine, Hot Wheels, Transformers, Cars 2, are
all produced in similar circumstances. A SACOM representative said, "Consumers
could never expect that the lovely toys which bring joy to children are
manufactured in such deplorable conditions", asking the public en masse to
convey in graphic terms the repugnance of their actions to these American
firms, and to demand remedial action. They also recommended that parents refuse
to purchase any of these American-branded products until these firms accept
responsibility for their actions and adopt humane employment practices. And in
a truly offensive response, the so-called 'International Council of Toy
Industries' Care Foundation', an American toy industry apologist, said,
"... we refuse to accept the sensationalist, media-oriented declarations
of any group ... The plain truth is that workers in many toy factories in China
are better off now than they were before ..." Lies this big should be
punishable by public flogging.
The labor violations
committed by American firms are legion, and consist not only of
institutionalised meanness, but of a cleverness I would categorise as
pathological. Employees are often forced to sign a 'voluntary' document
agreeing to work far beyond legislated maximum overtime, and often without pay.
Staff have so often testified they are forced (and even offered money) to lie
and give misleading responses to factory audits by government officials, and
threatened with severe punishment for failing to do so. One investigation
discovered employees producing American products were working a six-day working
week, with up to 288 hours a month, and in many other cases a compulsory
seven-day week during peak periods, with the companies paying far below the
minimum wage. Investigators said employees who had attempted to raise awareness
of the abuses and to inspire colleagues to fight for their rights, were
immediately fired. Sacom continued, "Mattel, Walmart and Disney, the
renowned toy companies, always claim they strictly comply with local laws and
adhere to their respective code of conduct. The rampant violations at Sturdy
Products, including excessive overtime, arbitrary wages, unfair punitive fines,
child labor and negligence of occupational health, prove that the pledges are
empty statements. There is no effective enforcement mechanism and remedies for
workers at all." And yet, like Apple and Nike, these corporations are producing
profits from these same products in the hundreds of millions of dollars.
American companies are
world-famous for pressuring local governments to avoid setting health, labor,
environmental or other standards that would interfere with their profitability,
often drawing on the political power of the State Department to bully local
governments into relaxing standards or avoiding prosecution of the executives
of American companies. The executives and management of Coca-Cola in particular
lobby governments everywhere in attempts to prevent or derail labor and wage
legislation, as well as lobbying and interfering with environmental laws. These
problems exist in every nation, but undeveloped countries are hit the hardest
because of inadequate legislation and the lobbying power of these companies
from political pressure and bribery. There has been no shortage of reports that
Coca Cola executives, as a regular business practice, frequently bribe local
officials and politicians to overlook violations and give them effective
sanction to break laws. P&G executives have been repeatedly accused by
labor organisations of labor violations such as forcing "temporary"
employees to work 12-hour days, and company executives deserve public exposure
and condemnation for their lobbying of Chinese government officials against
establishing minimum labor standards in China. Starbucks in the UK was treated
to a media storm that revealed an astonishing pent-up anger directed toward the
company by its own staff, involving mandatory changes in their employment
contracts that would reduce or eliminate many of the staff benefits, including
lunch breaks and the elimination of staff sick days and maternity benefits. The
staff claim they were presented with a new contract and ordered to either sign
or be fired.
Coca-Cola
Coca-Cola's executives and
management have long been accused of mistreating workers in their bottling
plants, of underpaying employees, of forcing extensive unpaid overtime, of
beating employees who claim their wages, and of often resorting to extortion,
physical and other threats, and even murder, to prevent employees from forming
unions to protect themselves. Coca-Cola's representatives in Central America
have a reputation of hiring hit men to kill anyone trying to form a union in a
Coca-Cola plant (95). And, just as in China,
the company claims no responsibility for the actions of their
"agents". The evidence for these claims exists in many countries,
including China. If you want something to open your eyes, do an internet search
for the phrase, "bottling coke and spilling blood". It is for good
reason that Coke is one of the four most-boycotted companies in the world.
South and Central America are among the worst areas, covered in a book Mark
Thomas published in 2009, titled "Belching Out the Devil: Global
Adventures with Coca-Cola" (96). In El Salvador, in
addition to abuse of workers, Coke has been exploiting children by using them
for hazardous labor in sugar cane fields. This issue was first documented by
Human Rights Watch, with some devastating film footage shown in a BBC
documentary. Coca-Cola in the US has been exposed to many lawsuits over the
years for racial discrimination relating to salaries, promotions and
performance evaluations. The New York Daily News reported one lawsuit where
staff claimed that working for Coca-Cola was like being in a "cesspool of
racial discrimination" (97). The company has also
been in litigation for wage theft, with one major class action claiming company
management refused to pay overtime wages among other labor violations. A few
years ago, the company was forced to pay almost $200 million in the largest
settlement in US history for racial discrimination violations.
In 2001, Human Rights Watch
and the United Auto Workers filed a lawsuit in Miami against the Coca-Cola
company and several of its Colombian partners for a series of murders of union
leaders and for conducting "an ongoing campaign of intimidation, terror,
and murder". The executives of Coca-Cola in Columbia have been accused of
"rampant illegal labor practices, intimidation techniques, unfair firings
and physical attacks." In the lawsuit, the union claimed at least six of
its leaders had been murdered by death squads, which it claims secretly worked
for local Coca-Cola plant managers. This is not a new problem. More than 20
years ago, union leaders complained to senior Coca-Cola executives that their
plant managers were employing death squads. On one occasion, hired assassins
shot dead the union leader during contract negotiations, then set fire to the
union hall in an attempt to kill all the workers. When that failed, the killers
returned to the Coca-Cola factory, gathered all the workers at gunpoint and
ordered them to either resign from the union or be killed. The workers all
resigned. One other fact bears noting: The above-mentioned lawsuit was filed
against the Coca-Cola company and its bottlers and partners in Columbia but, in
yet another reminder of the independence of the US courts and judiciary, and in
testimony to the US following 'the rule of law', the US State Department and
the Justice Department intervened in the case and convinced the judge to
release Coca-Cola from the lawsuit, permitting it to proceed only against the
Columbian partners. And, to give you a full appreciation of not only the extent
of support received by Coca-Cola executives for these death squad killings of
union leaders, but also an appreciation of the depth of depravity of American
businessmen generally, listen to the President of the American Chamber of
Commerce: "Why should we worry about the death squads? They're bumping off
... our enemies. I'd give them more power. Hell, I'd give them some cartridges
if I could, and everyone else would too ... Why should we criticize them? The
death squad - I'm for it."(98) Feel free to draw
whatever conclusions you believe are appropriate.
One columnist wrote that
Coca-Cola executives have "a labor record that puts even most other
multinational companies to shame. In Guatemala and Colombia, there is strong
evidence that the Coca-Cola company actively supported the murders of union
activists by paramilitary members at bottling plants run by its subsidiaries
and contractors over the years. In Mexico, El Salvador and other countries
there have also been ample allegations of the company using paramilitary
strength to prevent unionizing and keep employees in line." Coca-Cola
executives said they could not be held responsible for the murders because the
plants were not directly under their control, but the union stated that
"Coke has [a] financial investment in the bottlers and has a working
relationship with them." A senior lawyer from the International Labor
Rights Fund said, "There is no question that Coke knew about and benefited
from the systematic repression of trade union rights at its bottling plants in
Colombia ..." At the time, Coca-Cola spokeswoman Lori Billingsley denied
that the Coca-Cola company employed death squads to prevent the formation of
unions, and said the legal charges filed by the union "are completely
false and are nothing more than a shameless effort to generate publicity using
the name of our company." But then these events generated an extensive
"Boycott Coca-Cola" campaign which forced the company to pay $10
million anyway.
Horror stories of the abuse
of workers by Coca-Cola management emerge from every part of the world. In 2013
or 2014, there was a great scandal reported in the Mexican press that Coca-Cola
forced all its employees to resign their jobs - many of them at gunpoint -
because they agreed to form a union. The employees were rehired the next day,
but they were no longer union members and were unlikely to ever become such. At
the time, the President of Mexico was the former president of Coca-Cola. It was
interesting that the news reports of this criminal extortion flooded the
Mexican media but then totally disappeared within one or two days. It cannot be
found on any US websites, Google has no record of it, and even the original
Mexican news sites lost it. That's influence. Americans complain about China's
censorship, but it's much worse in the US because all these events are totally
censored and Americans don't know what they don't know. In Turkey, workers at a
Coca-Cola bottling plant in Istanbul were immediately fired for having joined a
union so they organised a peaceful sit-down strike in front of the main offices
of Coca-Cola, many with their spouses and children, and had union leaders meet
with company executives to arrange their reinstatement. However, while
Coca-Cola's senior management were meeting with union leaders, they ordered
Turkish riot police to attack the workers, leaving hundreds of people badly
beaten and requiring hospitalisation. Lawsuits are pending. Coca-Cola
executives did the same in India, on at least several occasions when police
were called out to brutally suppress public demonstrations against the
Coca-Cola company. In one case, 500 people marched to the gates of a Coca-Cola
factory to demand the plant be shut down, and were attacked by a huge flock of
Coca-Cola security guards assisted by the local police. You have read about
Citibank in Indonesia persistently using outsourced "labor" - in this
case using thugs and goons to intimidate delinquent customers by the
application of physical violence, in at least one case beating a customer to
death. Coca-Cola is essentially cut from the same cloth, even using the same
brand of thugs and goons, the primary difference being that the beatings are
not conducted on Coca-Cola premises so as to keep company executives one step
further removed from the gallows. There are many American MNCs that fit this
mold.
Wal-Mart
In the US and Canada, and
most Western countries, "full-time" employment normally means a
40-hour week and, for its full-time workers, companies must provide and pay for
a full range of statutory benefits that include unemployment insurance,
pensions, health care, etc. But reports are that Wal-Mart in every location
provide only 30 or 35 hours of weekly employment while still inaccurately
referring to these jobs (and staff) as full-time - which of course they are
not. The advantage to Wal-Mart to provide less than the legislated minimum
hours is that legally these employees are officially classed as "part-time"
and therefore entitled to no benefits. Since these statutory requirements cost
an additional 30% to 35% of payroll which the company avoids, this immense wage
theft is added to corporate profits. Wal-Mart also tends to pay only the legal
minimum wage, or as little as possible in each location. For many people, this
is below the poverty level, which means that Wal-Mart's so-called
"full-time" staff must depend on food stamps, Medicaid and US
government welfare assistance to survive. Wal-Mart also has a habit of
retaliation against workers who dare to speak out, many store managers and
other staff stating their working hours had been drastically cut after making
complaints about the company.
Wal-Mart began in a single
store in Rogers, Arkansas in 1962 and expanded rapidly into a chain of stores.
At that time, the US federal minimum wage was $1.15 per hour, but Sam Walton
was paying his staff only half that amount. When confronted by the government,
Walton argued that the law applied only to businesses with more than 50
employees and claimed each of his stores was a separate business entity. The
Department of Justice and the courts rejected Walton's self-serving explanation
and he was heavily fined for violations of federal law. But that didn't stop Walton
from his insane determination to ensure his staff were paid the least possible
under every circumstance. In retail operations, payroll costs are usually
around 10% to 12% of sales, but Wal-Mart store managers - if they want to
remain managers - are forced to maintain payroll expenses at around 5.5%, and
seldom higher. In cases where Wal-Mart is subjected to extreme political or
other pressure to increase wages, the company will outsource its employees to
so-called temp agencies, thereby lowering wages even further and again avoiding
payment of any statutory benefits. Sam Walton, his successors, and all the
company's executives are violently opposed to labor unions because they would
force the company to pay higher wages and provide benefits, and the company has
been extremely successful in preventing their formation. One media report noted
that "When butchers in one Texas outlet voted to [form a] union, Wal-Mart
eliminated the meat department in that store and in every other store in Texas
and the six surrounding states." In one case in Canada, where the company
failed to prevent employees from forming a union in a newly-opened store,
Wal-Mart immediately closed the store, claiming "poor sales". In both
cases, the message was clear: form a union, and lose your job. After witnessing
the social destruction inflicted by Wal-Mart's inhuman methods on the rural
areas of America, the company had been blocked by politicians and unions from
opening stores in the nation's urban areas. It was therefore a surprise that
Washington DC agreed to permit the construction of five Wal-Mart stores (in
spite of the powerful objection of most of the public), with a stipulation that
the company would open two of those stores in the city's poor districts where
retail was in short supply. Wal-Mart built the three stores in affluent areas,
then reneged on the agreement and walked away, claiming they would be
unprofitable. Privately, city government members stated Wal-Mart executives
confided to them that new proposed laws to increase the city's minimum wage
"would effectively impose a huge tax" on the company. The city
legislators had further proposed to legislate minimum hours for full-time staff
and require DC employers to provide medical leave. With Wal-Mart's profit bible
consisting almost entirely of wage theft, the company violated a legal
agreement and apparently threatened to close its three new stores if the city
proceeded with its minimum wage legislation. Consider in the light of this, the
claims of Wal-Mart executives that they adhere to all labor regulations in the
jurisdictions in which the company operates.
One result of this policy
is that the entry of Wal-Mart into a new area will either drive out all
higher-wage competitors, forcing store closures or bankruptcies and abandonment
of territory, or it compels them to lower their pay to Wal-Mart's level or even
below, in order to survive. The obvious effect is that the company's presence
drives down all wages in the region within a few years, this effect not limited
to grocery or retail marketing. Many studies have been done to adequately prove
this point. Part of the reason this 'Wal-Mart' effect is so widespread is due
to the company's control of such a major portion of the retail and grocery
landscape in the US, permitting the company to force supplier price reductions
throughout its entire supply chains, with the result that manufacturers and
distributors are forced to reduce their own wages to remain solvent, and many
are forced to relocate manufacturing to lower-cost locations in other
countries. Thus, the net effect of the appearance of a Wal-Mart into an area is
to impoverish the entire landscape by the destruction of well-paying jobs.
In its advertising,
Wal-Mart boasts of its low prices, but those come at a high cost to the
suppliers and an even higher cost to their staff. The company is famous for
sending teams of accountants and efficiency experts to a factory (not only in
the US, but to factories in China and other countries), to seek out every
possible change or improvement in a manufacturing process so that a factory can
produce products for Wal-Mart at a lower cost. But the factory doesn't benefit
from these lower manufacturing costs; they must all be passed on to Wal-Mart.
The company has a reputation for beating suppliers with a stick to obtain every
tenth of a cent reduction in price, pushing the suppliers to the wall, forcing
profit margins that are razor-thin, and ensuring that no Wal-Mart supplier will
ever be able to pay decent wages to his workers. In the end, anyone who is
dependent on Wal-Mart, either for jobs or orders, will be unlikely to escape
poverty, since the company's practices inevitably delete all the profits in all
parts of a supply chain, and vacuum them into Wal-Mart's pockets. The company's
operation model is cleverly (I would say, diabolically) designed to accomplish
precisely this result: to extract every last cent of profit in an entire supply
chain, which chain includes the suppliers of raw materials to a manufacturer,
the manufacturing firm, the shipping and transportation firms, the logistics
companies, the overseas freight handlers, warehouse staff, and dozens of other
unseen categories. The end result is not only to vacuum all profits into
Wal-Mart's bank but to impoverish all employees in any part of that chain. It
is a tribute to the power of large corporations in the US, and to the influence
they have on government, that Wal-Mart has been permitted to operate in this
fashion for so long.
I discussed shelf fees and
stocking fees elsewhere, one-time fees charged for acceptance of a product into
the stores, plus a high monthly rental per square meter of allocated shelf
space. Wal-Mart has exhibited exceptional ingenuity in adding to these fees.
For one, the company has begun to charge its suppliers for "storing their
goods" in Wal-Mart warehouses - after purchase - and to pay additional
'fees' for products "passing through" the company's warehouses, all
this in addition to being forced to wait for longer periods to be paid,
apparently as much as 180 days in some cases. And at the same time, Wal-Mart is
demanding yet lower prices from these same suppliers. Wal-Mart's version,
according to an article in the WSJ, is that "All of the changes we are
asking suppliers to make are to be true to our business model and everyday low
prices." The article didn't bother to dwell on the precise nature of that
business model to which the company was being 'true'. The same article noted
that Wal-Mart also demanded suppliers lower their prices immediately on goods
made in other countries, if the exchange rate shifts; these price adjustments
presumably occur in only one direction.
Nevertheless, Wal-Mart
pushes the limits so far beyond reason that in the US at least, the Department
of Justice has frequently laid criminal charges of wage theft, and many groups
of employees and others have initiated class-action lawsuits, all resulting in
large penalties though not large enough to change the company's practices.
Within the past few years, the company paid almost $650 million to settle 63
lawsuits charging the company with refusing to pay overtime, forcing staff to
work through breaks or work beyond their regular shifts, as well as other types
of wage theft. At the same time, Wal-Mart faced an additional 76 similar class
action lawsuits in courts across the country. In a separate case, the company
paid $40 million for refusing to pay overtime, denying employees rest breaks
and tampering with time sheets. A bit earlier, Walmart paid $40 million in back
wages to 85,000 workers, denying workers rest and meal breaks, refusing to pay
overtime, and manipulating time cards to lower employees’ pay. many of them
managers who were denied overtime. Then, Wal-Mart paid $11 million for hiring
hundreds of illegal immigrants to clean its stores, the company claiming
ignorance of contractors employing illegal immigrants. At the same time,
Wal-Mart paid $55 million for reducing workers' break time and employees
working unrecorded overtime. A bit earlier, Wal-Mart paid about $35 million in
back wages to thousands of employees over the previous five years. At about the
same time, workers won a $80 million class-action award for working off the
clock, then won an additional $65 million in damages.
Wal-Mart's labor and
pricing practices extend to China, both from its sourcing of products and from
its retail presence in the country. The incessant demand for lower supplier
prices in China inevitably forces those firms to cut wages, creating
"Wal-Mart sweat shops" across the country. In repeated cases,
officials have found these suppliers paying below minimum wage, withholding pay
from staff who fail to meet sales targets, refusing to pay overtime, and much
more. In many cases, staff are told to lie to government auditors. Of course,
Wal-Mart executives are fully aware of the conditions they create, but then
they have been creating them in the US for more than 50 years and have so far
exhibited no concern. One retail industry consultant said about the executives
at Wal-Mart: "When asked about labor law, they generally say [they] follow
the laws of the jurisdiction in which they are operating, but it’s also clear
when they say that, that they put a lot of weight on shaping the laws in the
jurisdictions where they are operating." This latter is a serious issue
with all American MNCs in China and in any other nation, in that they will use
the entire power of the US government in attempts to force a transfer of their
depraved "standards" onto every other nation while doing all in their
power to obstruct domestic governments from taking action against them, whether
for wage theft or any other criminal activity.
Apple
In spite of its pretty face
and attractive products, Apple has some of most deplorable labor practices of
any American multi-national. I wrote earlier that Steve Jobs' real innovation
was in finding a firm - Foxconn - that would build a one-million employee
concentration camp where it could manufacture and assemble iphones while the
one million young workers were living on the brink of starvation. I noted too
that Apple was sitting on a cash pile of $150 billion (then increased to $200
billion), but that entire cash pile was stolen from the workers who made
Apple's products. If Steve Jobs had paid those employees anything resembling a
living wage, Apple's cash pile would be zero. Steve Jobs wanted Apple to be
profitable, with a margin of about 40%, but Apple's profits did not come from
designing and selling cool products; they came from the theft of wages from
society's most vulnerable young people who needed a job and a start in life. To
succeed in his quest, Jobs first had to ensure they failed in theirs. And he
did. Even in an internal company report, Apple admitted the
"sweatshop" conditions inside the factories that make and assemble
its products, admitting that at least 55 of its 102 factories were making staff
work more than 60 hours per week, that only 65% were paying legal minimum wages
or statutory benefits and that 24 factories paid nothing near China's minimum
wage. The pressure placed on these young people for higher productivity was
truly unconscionable, with dozens of young people committing suicide, a fact
which did not escape the attention of either Steve Jobs or Tim Cook but which
resulted in no action. A human rights organisation accused Foxconn of having an
"inhumane and militant" management, the executives of neither Foxconn
nor Apple being available for comment.
Nike
Few people seem aware that
Nike, along with Nestle, Coca-Cola, and McDonald's, are the four most-boycotted
companies in the world, I would say all for good reason. One of those reasons
is the sweatshop syndrome for which Apple is so famous. A website named
'123HelpMe.com' published an article on September 8, 2012, titled "Knowing
the Strength of Your Buying Power", which made the following observations:
"Nike has been
fighting a boycott of its products since 1996 when an American magazine showed
a photograph of a young Pakistani boy sewing together a Nike football. A year
later, the company's image suffered a further blow when a report revealed that
workers in contracted factories in Vietnam were exposed to toxic fumes at up to
177 times the country's legal limit. By the end of the decade, as the
anti-globalisation movement began to make headlines for its protests at WTO
meetings worldwide, the boycott of Nike stores was causing serious damage.
Reliable news sources publicly exposed the grim working conditions of people
employed by contractors making Nike products in Indonesia, Haiti and Vietnam.
Nike’s association with the exploitation of third world workers fueled a
worldwide boycott of their products. Many publications - the New York Times,
the Washington Post, the Sydney Morning Herald, Life Magazine - reported on the
unjust treatment of workers making Nike products. There are reports of children
sewing soccer balls for 60 cents a day, workers being beaten, sexually
harassed, collapsing from exhaustion, being fired on the account of taking sick
leave, working in hazardous conditions, being paid below a livable wage and the
list goes on."
Another website named
'viet.net' that specialised in Nike in Vietnam, wrote the following:
"You have to meet the
quota before you can go home. She hit all 15 team leaders in turn from the
first one to the fifteenth ... The physical pain didn't last long, but the pain
I feel in my heart will never disappear." The above statements were made
by Thuy and Lap, two female workers at a Nike plant in Vietnam, reported by CBS
in October 1996. However disturbing those comments might have been, they turned
out to be but a scratch on the surface of a far more horrendous reality -
confirmed, quantified, and fully documented in a March '97 report by Vietnam
Labor Watch during its visit to Vietnam. The courage of Thuy & Lap to stand
up to Nike sweatshops helped spark a worldwide movement. In 1998, Phil Knight
promised to change Nike's labor practices in Asia. We observed a few
improvements, but much of Phil Knight's plan of actions were nothing but empty
promises. Soon after, the two women were fired for talking to a reporter.
Despite its progressive image in the United States, Nike is a very different
company in Vietnam and in other Asian manufacturing operations. Reports of
physical abuse, sexual abuse, salary below minimum wage and debilitating quota
systems are confirmed by CBS News, the New York Times, USA Today, Wall Street
Journal, AP, Reuters as well as other non-profit and non-governmental
organizations. Nike continues to treat its labor problem as a PR matter. Behind
closed doors, Nike continues its goal to sabotage any labor organization that
stands in its way. To derail cooperation between US labor groups & Vietnam
labor organizations, Nike sent a "private" letter to a high-level
Vietnam government official accusing US labor activists of harboring a secret
agenda "to change the government in Vietnam"." A bit later, Nike
finally agreed to pay more than $1 million in overtime pay to nearly 5,000
workers in Indonesia, which, according to the Vietnamese website, reflected
more than 500,000 unpaid overtime hours over two years.
Amazon
Like Wal-Mart, Amazon
promises low prices to consumers, but manages to extract most of their profits
from suppliers instead, eventually eliminating the possibility of effective
competition among the starving pack, a result generated entirely from a
monopoly market position. Wal-Mart charges high fees for shelf placement and
Amazon does something similar, with increasingly extraordinary demands, using
its marketing power to gobble up almost all the profits in the publishing
industry. Where Wal-Mart extorts cash from suppliers for promotions, Amazon
extorts payments from publishers to a marketing development fund, absorbing
another 5% or 10% of their profits. Amazon has become a particularly nasty
company, no longer interested in simply making money by providing a service but
having become increasingly predatory. A few years back, the company initiated
what it called the 'Gazelle Project' its lawyers called the 'Small Publisher
Negotiation Program' but which apparently took its name from a gazelle being
pursued by a cheetah - in other words, as prey. The power of a monopoly buyer
has almost no limits, permitting them to impose any terms or demands on their
suppliers. Jeff Bezos and his executives at Amazon are doing precisely the same
as Wal-Mart and all other American MNCs, using their market power to impoverish
the entire supply chain and vacuum all the money into their own pockets. And
once the supply chain's profits disappear, the next to go are the salaries and
wages throughout that chain.
Franklin Foer wrote an
article in the New Republic, titled 'Amazon Must Be Stopped' (99), in which he noted that
many authors, and many in the publishing business, have expressed concerns that
Amazon's apparently insatiable greed combined with its apparently unlimited
contempt for its suppliers, will eventually destroy the advances that
publishing houses pay their writers, thereby eliminating many authors from the
market. He wrote that "advances make it financially viable for a writer to
commit years of work to a project", and more importantly that "This
upfront money is the economic pillar on which quality books rest, the great bulwark
against dilettantism." He is very correct, of course. Foer also exposed
the fact that Amazon, like most large American companies, is astonishingly
predatory, willing to invest huge sums to destroying potential competitors,
writing that Amazon "had a record of shredding young businesses, like
Zappos and Diapers.com, just as they begin to pose a competitive challenge. It
uses its riches to undercut opponents on price - Amazon was prepared to lose
$100 million in three months in its quest to harm Diapers.com - then once it
has exhausted the resources of its foes, it buys them and walks away even
stronger."
Starbucks
Starbucks follows much of
this pattern, though we seldom read of it in the media. The company has been
reported to be loathed by its own staff in the US for many of its business
practices, including a policy of staff closing a shop very late at night and
returning to re-open it only a few hours later. Starbucks' staffing practices
have been described as particularly severe, with working hours and conditions
fluctuating wildly from week to week or month to month, effectively preventing
a normal life. Staff across the US complain bitterly about being paid only
minimum wages and yet being sent home if sales are slow. Media reports were
that the situation deteriorated to the point where staff retention had become
extraordinarily difficult. With American parents strongly disapproving of
Starbucks employment, the company launched what was called a "family
forum", where they would invite the parents of these young people to
listen to "success stories" of kids who "worked their way up the
career ladder" and became managers. No report on whether the parents were
entranced with the prospect of their kids spending ten years to ascend a
two-step ladder. In the UK, the media revealed even more pent-up anger directed
toward the company by its own staff, the most recent involving mandatory
changes in their employment contracts that would reduce or eliminate many of
the staff benefits, including lunch breaks and the elimination of staff sick
days and maternity benefits. The staff claim they were presented with a new
contract and ordered to either sign or be fired. Interestingly, the staff were
also informed that any who discussed the then-current outrage over Starbucks'
UK tax avoidance would be fired immediately. Researchers from the Manchester
Business School claimed in a media report that Starbucks was "suffering an
implosion of their reputation", not only externally with the public but
also internally with their own staff, which combination inevitably sets the
stage for a serious business decline.
American Education
American universities,
having been almost totally financialised, and with their management now
consisting largely of finance types instead of academics, have simply copied
the profit-maximisation theories they learned in business school: the fastest
way to become rich is to have wageless workers while increasing fees. The
elementary and high school systems are beginning to follow in lock-step. Even worse,
with the increasingly extreme emphasis on finance and profits, most major US
universities are doing away with full-time tenured (and professional)
professors and resorting to part-time contract teachers with minimal education
who are paid about $2,000 per course and earn little more than US$20,000 per
year, a bit more than a full-time job at McDonald's. And those who are
full-time are more interested in publishing papers to maintain their employment
than in teaching. Turnover is high since these positions are clearly not a
career. A major part of the US educational business model, what Raj Mehta
called Harvard's "innovative governance model for higher education",
involves what is essentially the hiring of temporary and part-time workers, like
the so-called "associates" at Wal-Mart. These 'teachers' are not
full-time academic staff members but contract workers with insecure employment
status and who are entitled to no benefits, thereby reducing the teaching
payroll costs by 75% and the quality of education by about the same percentage.
This is all about profit maximisation, otherwise known as blind greed.
Today's students at
American universities are receiving their "education" from
unqualified 25-year-old grad students earning less than $20,000 per year, but
are paying tuition fees based on instruction from experienced Ph.D. professors
earning $150,000. It has been reliably reported that 70% of college professors
and instructors in the US are these contract, part time, temporary adjunct
teachers with low levels of education, no teaching instruction, and little if
any experience, even though tuition fees are increasing steadily every year (100) (101). Given that these
so-called professors will be given most of the undergrad classes, this means
that 80% or more of all university students are in this position. In March of
2015 the Washington Post published an article by a young woman who had been one
of these "adjunct professors" in Washington, DC, claiming she taught
as many as five classes each semester at four different universities during
days that often lasted 13 hours, in a job that offered "no job security or
access to benefits, and significantly lower wages than regular faculty".
She said that after two years she could no longer tolerate the stress and
exhaustion, and left the educational field to work as an editor.
This model has been adapted
from the US multinationals as a way to reduce labor costs and increase labor
servility and, as Noam Chomsky noted, is part of the general assault on the
middle class. This model focusing on what we can call "insecure
employment" is a staple in American society. He wrote "When Alan
Greenspan was testifying before Congress in 1997 on the marvels of the economy
... he said straight out that one of the bases for its economic success was
imposing what he called "greater worker insecurity". If workers are
more insecure, that’s very "healthy" for the society, because ...
they won’t ask for wages, they won’t go on strike, they won’t call for
benefits; they’ll serve the masters gladly and passively. And that’s optimal
for corporations’ economic health." And of course, the way to transfer
this insecurity to the universities is by not guaranteeing employment, by using
grad students and other barely-qualified contract individuals to carry the teaching
loads at one-tenth the cost of full professors. This approach of course also
provides US universities with labor "flexibility" which means no
restrictions on firing staff. Chomsky again: "(it enables) the transfer of
funds to other purposes apart from education. The costs, of course, are borne
by the students. But it’s a standard feature of a business-run society to
transfer costs to the people. It’s harmful to education, but education is not
their goal."
This process of literally
trashing the education system has been quietly gathering steam in the US for
decades, only now appearing fully in the open when sufficient legislative and
judicial support has already been obtained, and is now firmly established in
the public-school systems as well. Given the huge push in the US for the
privatisation of elementary and high schools, these same 'Wal-Mart' teachers
will soon be filling all the lower education levels as well. In a landmark
ruling in California in June of 2014, the courts struck down teacher tenure and
other laws that provided any job security to teachers. An educator named
Michelle Rhee, who had been the chancellor of public schools in Washington DC
for some years, wrote that the ruling "represents a clear win for all
children in California public schools ... and for the teaching profession as a
whole." She went on to claim that her purpose in spearheading this court
ruling was to "elevate the teaching profession" and that the ruling
was "a tribute to teachers". No idea how, but I can scarcely imagine
bigger lies. On this one, somebody really needs to follow the money, especially
the money behind Rhee's organisation laughably named "StudentsFirst".
This educational treason is particularly disastrous since the US had already
been experiencing 100% turnover in teachers about every five years, a rate that
will now most assuredly accelerate.
But let's not lose the main
point which is that the universities, and now the school systems, are engaged
in wage theft on a massive scale. They have been financialised to the point
where their main function is raising money and investing endowment funds,
focusing on financial profits rather than education, and stripping wages at
every step of the chain to funnel all the money to the top. And in this case,
to no apparent purpose. If a university does not exist to educate, why does it
exist at all? Many American universities, but using Harvard as an example, have
endowment funds so large that the entire tuition fees for a year are absolutely
trivial in comparison to the size and income from their endowment funds. All
could afford to offer free tuition without even noticing the slight drop in
revenue, but they persist in bleeding the students for higher fees each year
while extracting the maximum wage concessions from the teachers and staff.
Part 4 of 6: IP Theft and
Coping
Image credit: https://www.chinadaily.com.cn/a/202109/17/WS6143dbbda310e0e3a6822281.html
*
Mr. Romanoff’s writing has been translated
into 32 languages and his articles posted on more than 150 foreign-language
news and politics websites in more than 30 countries, as well as more than 100
English language platforms. Larry Romanoff is a retired management consultant
and businessman. He has held senior executive positions in international
consulting firms, and owned an international import-export business. He has
been a visiting professor at Shanghai’s Fudan University, presenting case
studies in international affairs to senior EMBA classes. Mr. Romanoff lives in
Shanghai and is currently writing a series of ten books generally related to
China and the West. He is one of the contributing authors to Cynthia McKinney’s
new anthology ‘When China Sneezes’. (Chapt. 2
— Dealing
with Demons).
His full archive can be
seen at https://www.moonofshanghai.com/ and http://www.bluemoonofshanghai.com/
He can be contacted
at: 2186604556@qq.com
*
NOTES
Reference links Part 3 How
the US Became Rich
Sam Mitriani - The True
History of the Origins of Police
(1) https://www.alternet.org/2015/02/true-history-origins-police-protecting-and-serving-masters-society/
Walter Reuther -
assassination attempts
(2) https://en.wikipedia.org/wiki/Walter_Reuther
(3) https://fornology.blogspot.com/2015/10/walter-p-reuther-assassination-attempt.html
(4) https://www.freep.com/in-depth/money/cars/2020/05/08/uaw-walter-reuther-workers-rights/3084539001/
FBI still refuses to
release documents on Walter Reuther's death.
(5) https://thirdworldtraveler.com/Parenti/Walter_Reuther_DT.html
Protecting Capitalism
(6) https://tarbell.org/2017/11/no-uncle-sam-cant-negotiate-lower-drug-prices/
Railway strike Chicago 1894
(7) https://libcom.org/history/articles/pullman-railway-strike-chicago-1894
(8) https://speakoutsocialists.org/the-significance-of-the-pullman-strike-of-1894/
(9) https://www.journals.uchicago.edu/doi/pdf/10.1086/250782
1914, US troops opened fire
on a group of striking mine workers in Colorado
Labor union in Pennsylvania
coal mine shot and killed by the company management
(11) http://www.illinoislaborhistory.org/labor-history-articles/fannie-sellens
1919 police strike in
Boston
(12) https://www.history.com/this-day-in-history/the-boston-police-department-goes-on-strike
(13) https://libcom.org/history/short-history-boston-police-strike-1919
1919 labor organiser in
Washington was captured, tortured, castrated and then lynched.
(14) https://popularresistance.org/class-war-violence-centralia-1919/
1932 50,000 WWI veterans
marched to Washington to collect $625 government bonuses
(15) https://www.warhistoryonline.com/war-articles/bonus-army-veterans.html
(16) https://www.nps.gov/articles/bonus-expeditionary-forces-march-on-washington.htm
(17) Ibid
Miners' strike West
Virginia in 1921, shooting war with about 5,000 striking miners.
(18) http://libcom.org/history/west-virginias-mine-wars-1920-1921
Bombing miners
(19) https://www.wvencyclopedia.org/articles/1825
(20) https://expatalachians.com/biplanes-over-blair-calling-in-the-air-force-for-the-mine-wars
1930, farm workers beaten
and arrested in California for attempting to form unions
(21) https://mtwsfh.blogspot.com/2008/09/1929-1930-crash-of-29-federal-reserve.html
(22) https://www.history.com/topics/mexico/cesar-chavez
1927, striking miners
Colorado massacred Rockefeller private army one of the worst, but by no means
the only example. In
at one of his mines in were by his private army using machine guns.
(23) https://libcom.org/history/1927-colorado-miners-strike-and-columbine-mine-massacre
(24) https://www.jstor.org/stable/4492179
(25) https://history.denverlibrary.org/news/remembering-colorados-coal-wars
1929 North Carolina,
striking textile workers murdered
(26) https://www.workers.org/2019/03/41513/
500,000 mill workers strike
in South Carolina, violently suppressed US military
(27) https://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/millworkers-strike
(28) https://libcom.org/history/us-national-textile-workers-strike-1934-jeremy-brecher
(29) https://www.workers.org/2012/08/3450/
1935, striking electrical
workers Toledo, Ohio killed US troops
(30) https://parallelnarratives.com/toledo-electric-auto-lite-strike-1934/
(31) https://en.wikipedia.org/wiki/Auto-Lite_strike
1930 San Francisco dock
workers strike killed many
(32) http://picturethis.museumca.org/timeline/depression-era-1930s/political-protest/info
Ludlow massacre
(34) https://www.history.com/this-day-in-history/militia-slaughters-strikers-at-ludlow-colorado
(36) https://www.youtube.com/watch?v=26H9QPVITTw
(37) https://libcom.org/history/1914-the-ludlow-massacre
(38) https://coloradoencyclopedia.org/article/ludlow-massacre
(39) https://military.wikia.org/wiki/Ludlow_Massacre
(40) https://www.pbs.org/wgbh/americanexperience/features/rockefellers-ludlow/
Rockefeller private army
(41) https://www.marxists.org/history/usa/parties/spusa/1914/0900-debs-gunmenminers.pdf
Cyrus Eaton Republic Steel
Company private army
(42) https://chicagology.com/notorious-chicago/1937steelriot/
(43) https://ohiohistorycentral.org/w/Republic_Steel_Company
Ford auto company private
military beat Walter Reuther
(46) https://popularresistance.org/how-the-ford-motor-company-won-a-battle-and-lost-ground/
Carnegie private military
(47) https://timeline.com/dale-carnegie-militia-battle-striking-workers-c0fdc8a75527
(48) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1162526
Pinkerton
Detective Agency
(49) https://www.grunge.com/316708/the-untold-truth-of-the-pinkerton-national-detective-agency/
(50) https://www.infobloom.com/what-was-the-pinkerton-detective-agency.htm
(51) https://thrillingdetective.com/2018/09/10/allan-j-pinkerton-and-the-pinkerton-detective-agency/
"The most concentrated
period of labor-management strife in the country's history"
(52) https://libcom.org/history/world-war-ii-post-war-strike-wave
(53) https://socialistworker.org/2014/06/03/ups-and-the-outlaw-strike
Truman threatened to hang
striking workers
(55) https://www.trumanlibrary.gov/education/presidential-inquiries/steel-strike-1952
(56) https://www.history.com/this-day-in-history/truman-orders-army-to-seize-control-of-railroads
(57) https://sciemce.com/25320732/president-threatened-striking-workers-prevent-crippling
Paul Krugman, iNYT on March
2, 2015: "Then there's history. ..the middle-class society
(58) https://www.nytimes.com/2015/03/02/opinion/paul-krugman-walmarts-visible-hand.html
James Petras The
Great Transformation
Paul Volcker savage
recession
(60) https://theweek.com/articles/618964/forgotten-recession-that-irrevocably-damaged-american-economy
(61) https://www.wsws.org/en/articles/2019/12/11/pers-d11.html
(62) https://jacobinmag.com/2019/12/paul-adolph-volcker-obituary-federal-reserve-chair
(63) https://mattstoller.substack.com/p/corporate-power-protests-and-the
Keynes "the object of
credit restriction is to withdraw from employers the financial means to employ
labor
(64) https://monthlyreview.org/2012/04/01/sado-monetarism/
Volcker - "The
standard of living of the average American has to decline"
(66) https://prospect.org/economy/paul-volcker-without-tears/
Business Week "Some
people will have to do with less".
(68) https://graypantherssf.igc.org/hartrudman.htm
Michael Mussa, IMF
"The Federal Reserve had to show that when faced with the painful choice
between maintaining a tight monetary policy to fight inflation
(69) https://monthlyreview.org/2012/04/01/sado-monetarism/
Michael Jensen of Harvard’s
Graduate School of Business showed that 95% of all CEO contracts provided
enormous severance packages
(70) https://www.newsweek.com/2017/04/14/harvard-business-school-financial-crisis-economics-578378.html
Merrill Lynch Stanley
O’Neal 'terminated' with more than $160 million
(71) https://www.thestreet.com/investing/stocks/oneal-skates-with-160-million-10387295
Warren Buffett
"Getting fired can produce a particularly bountiful payday for a CEO.
(72) https://www.mlrpc.com/articles/executive-compensation-much-much/
"If Volcker’s and
Carter’s attacks on unions were indirect, Reagan’s were altogether frontal.
(73) https://www.usw.org/blog/2014/age-of-crushing-anxiety-how-the-bottom-fell-out-in-america
2013 Robert Kuttner article
The Task Rabbit Economy
(74) https://prospect.org/power/task-rabbit-economy/
"Only if the
suppression of labor’s power is made part of the equation can the overall
decline in good jobs over the past 35 years be explained.
(75) https://prospect.org/article/40-year-slump-d2/
Alan Greenspan the
"traumatized worker"
(76) https://prospect.org/article/40-year-slump-d2/
Florida agriculture
ruthless exploitation of domestic and foreign workers.
Child labor in America
(78) https://www.bls.gov/opub/mlr/2017/article/history-of-child-labor-in-the-united-states-part-1.htm
(79) https://rarehistoricalphotos.com/child-labor-america/
(81) https://www.history.com/topics/industrial-revolution/child-labor
(82) https://www.history.com/news/child-labor-lewis-hine-photos
(84) https://www.projectcensored.org/3-child-labor-in-the-us-is-worse-today-than-during-the-1930s/
2011 US Senator Jane
Cunningham from Missouri proposed the total repeal of all child-labor laws
(85) https://www.riverfronttimes.com/newsblog/2011/03/16/bill-to-repeal-missouris-child-labor-law-is-dead
NYT wage theft
(87) https://www.nytimes.com/2020/09/03/business/economy/wage-theft-recession.html
(88) https://www.nytimes.com/2014/09/01/business/more-workers-are-claiming-wage-theft.html
(89) https://www.nytimes.com/2014/04/22/opinion/wage-theft-across-the-board.html
Apple's
"warranty-avoidance" warranties charge Chinese customers 50% of the
original cost of a phone
(91) https://www.hardwarezone.com.sg/tech-news-apple-apologizes-chinese-consumers-over-warranty-policy
(92) https://bkreader.com/2019/06/28/apple-sales-in-china-projected-to-fall-50-this-year/
Unpaid internships
(93) https://www.allaboutcareers.com/internships/unpaid-internships/
(94) https://greenlining.org/blog-category/2020/unpaid-internships/
Bottling coke and spilling
blood
(95) http://www.killercoke.org/downloads/spilling-blood-11_11_03.pdf
Mark Thomas 2009,
"Belching Out the Devil:
(96) https://www.amazon.ca/Belching-Out-Devil-Adventures-Coca-Cola/dp/B00NPMQPTK
New York Daily News
Coca-Cola a "cesspool of racial discrimination".
President of the American
Chamber of Commerce: "Why should we worry about the death squads?
(98) http://www.thirdworldtraveler.com/Haiti/Quotations_Uses_Haiti.html
Franklin Foer New Republic
'Amazon Must Be Stopped'
(99) https://newrepublic.com/article/119769/amazons-monopoly-must-be-broken-radical-plan-tech-giant
70% of college professors
and instructors in the US are these contract, part time, temporary adjunct
teachers
(100) https://www.aft.org/sites/default/files/adjuncts_qualityworklife2020.pdf
Copyright
© Larry Romanoff, Moon of Shanghai, Blue Moon of Shanghai, 2021
