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
