Writing in this morning's Guardian, Robert Reich explains what is behind GM's decision to close plants in Canada and the United States. But, first, he takes a trip down memory lane:
Much has changed since 1953. Then, GM was the largest employer in America and had only a few operations around the rest of the world. Now Wal-Mart is the largest employer in America, and GM is a global corporation that makes and sells just about everywhere.
Moreover, in the 1950s, a third of America’s workforce was unionized, and GM was as accountable to the United Auto Workers as it was to GM’s shareholders. That’s why, in the 1950s, GM’s typical worker received $35 an hour (in today’s dollars).
GM now produces cars for a global market, not the American market. And that has effected the wages it pays:
Today, GM’s typical American worker earns a fraction of that. The bargaining clout of the United Auto Workers has been weakened not only by automation, but also by the ease by which GM can get cheaper labor abroad.
In 2010, when GM emerged from the bailout and went public again, it boasted to Wall Street that it was making 43% of its cars in places where labor cost less than $15 an hour, while in North America it could now pay “lower-tiered” wages and benefits for new employees.
So this year, when the costs of producing many of its cars in Ohio and Detroit got too high (due in part to Trump’s tariffs on foreign steel), GM simply decided to shift more production to Mexico in order to boost profits.
Trump is demanding that GM close a plant in China. But he doesn't understand that GM's Chinese plants produce cars for the Chinese market:
GM doesn’t make many cars in China for export to the United States. Almost all of the cars it makes in China are for sale there.
In fact, GM is now making and selling more cars in China than it does in the United States. “China is playing a key role in the company’s strategy,” says GM’s CEO, Mary Barra.
The other thing that Trump doesn't understand is that China isn't stealing American technology. That technology is going to where it can be used most efficiently:
In shareholder-first global capitalism, technology doesn’t belong to any nation. It goes wherever the profits are. If a particular technology is vital to American national security, the US government could stop American corporations from doing business in China – just as it does, in effect, when it blocks Chinese companies from acquiring American components if the purchase poses a national security threat.
When Trump claims that he's making America great again, he's really making American business great again. And American business believes it is only responsible to its shareholders, not the broader society. China sees things differently:
The difference between China and America is that big Chinese companies are either state-owned or dependent on capital from government-run financial institutions. This means they exist to advance China’s national interests, including more and better jobs for the Chinese people.
American corporations exist to advance the interests of their shareholders, who aren’t prepared to sacrifice profits for more and better jobs for Americans.
The Chinese are hamfisted in the achievement of their objective. But, for them, business serves the nation. In the United States and Canada, it serves individual greed.
Image: Tony Dejak/AP
8 comments:
American corporations? When does GM move its head office to China? It's only a matter of time.
It's an old story, Toby. Follow the money.
GM will never move its head office to China. China executes executives who fall afoul of the party. Besides, China doesn't have anywhere near the opportunities for tax evasion offered by Delaware, Wyoming and Nevada.
Cap
Good point, Cap. But GM most certainly will follow the money. Profit is king.
It has always been shareholders first. That is the prime obligation of directors and corporate officers of corporations and they can be personally liable for breaches or neglect.
Unfortunately that corporate duty meant one thing before neoliberalism and another thing afterwards. Before we freed up capital to move wherever it found the best deal while still giving capital unfettered access to our markets directors duties were performed in a slightly different manner to which, I believe, Reich alluded. The key to globalism was to give capital all the powers with no commensurate return to the public. What in hell did we expect?
Take Nike. When globalized free trade came in, Nike realized it could have a worker in Vietnman turning out $150 a pair track shoes for $3 per day rather than having an American worker produce the same pair of shoes for $25 per hour plus benefits. Still, Nike wouldn't have moved those jobs to a factory in Vietnam unless they were still able to flog their now dirt cheap runners on the American market for $150 a pair. That's what can happen when you hand business the reins and the whip too.
Cast your mind back to the days of Thatcher, Reagan and Mulroney when they pitched this globalism nonsense on the promise that manufacturing jobs lost would be replaced by far more and better paid jobs in the "new economy." We were all going to be rolling in prosperity, our ease and comfort assured. The new economy, however, focused on automation displacing costly and sometimes cantankerous labour. Governments went along with that too. They haven't done a goddamned thing about defending labour for decades and, accordingly, organized labour declined.
Today we're left with precarious working conditions, security now called "job churn" and governments so committed to "everyday low taxes" that they're neck deep in deficits, effectively defunded and, hence, incapable of meeting society's needs. So, how do they respond to this societal and economic malignancy? They double down, trying to pump perpetual exponential growth to gloss over what are structural failings.
No one was against profit, Mound. But surely the communities which these corporations depended upon for labour and infrastucture were entitled to a piece of the action. But the new rule was simple: Winner takes all.
As usual, Riech is right on the $$$ and it doesn't take a rocket scientist to sift through all of GM's hot air about its "global strategy" to move away from fossil fuels and see that the plant closures boil down to shareholder profits. Of course, lots of things contribute to it, Trumps stupid tariffs haven't helped but this would've happened regardless. Since the "middle class" tax cuts didn't do it, plant closures will, witness the immediate jump in share price. Grab your popcorn for the next industry that follows suit and be prepared for the same lines of bullshit spewed- at the end of the day its all about profit and tax evasion. The likes of Donald Trump have mastered the art of extreme bullshit and his masses of stupid (educated) and just plain uneducated supporters have swallowed this swill hook line and sinker. If they really cared about the masses, they would make them all shareholders and have them pay 15% or less instead of the whopping 30-40% tax rates they pay on their meagre wages.
Your last point is on target, waterboy. It's all about shareholder profits. And why shouldn't the least of us get a share in those profits?
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