South Carolina recently celebrated the 150th anniversary of its secession from the United States to protect its system of slave labor.
Meanwhile, a more quiet and gradual secession has been taking place, but for similar reasons. Corporate America has been staging its own withdrawal from U.S. workers, and its traditional sense of responsibility American society. The corporate secession reflects how America is increasingly fracturing apart along economic lines, according to one of capitalism’s most ardent advocates, former Federal Reserve cairman Alan Greenspan.
Instead of spewing out his customary “trickle down” theory of spreading wealth, Greenspan admitted to Congress that we are witnessing a “significant recovery” for the investor class, for CEOs, big corporations and banks.
Much like John Edwards’ still-resonant description of “two Americas”, Greenspan depicted a situation of “‘fundamentally two separate types
of economy” headed in distinctly in divergent directions. Greenspan’s remarks echo a now-infamous internal report by Citibank officials about the emerging “plutonomy” in America and the world — a new new economy of, by, and for the few. The Citibank crew almost gleefully portrayed the brutal, globalized polarization:
There are rich consumers, few in number, but disproportionate in the gigantic slice of income and consumption they take. There are the rest, the ‘non-rich’, the multitudinous many, but only accounting for surprisingly small bites of the national pie.
The data bears out this description. America now has a pyramid of inequality that is more unequal than many traditional “banana republics.” Slate’s Timothy Noah, in “The United States of Inequality,” wrote, “Income distribution in the United States [has become] more unequal than in Guyana, Nicaragua, and Venezuela, and roughly on par with Uruguay, Argentina, and Ecuador.”
Those in the bottom 80% remain vulnerable to lower wages (wages now take up the lowest share of income on record, with earnings from
stocks, bonds, and othr capital comprising far more), continual
insecurity about layoffs and offshoring, joblessness, hunger, severe health problems associated with unemployment and social disintegration (alcoholism, spousal abuse, delinquency, etc.)
But Corporate America is comfortably insulated from these problems
which they had a rather huge part in creating. Fortune magazine reported that in 2009, the 500 largest U.S. companies cut a record 821,000 jobs while their collective profits increased threefold to a record $391 billion, as Paul Buchheit states.
THE NEW GLOBAL PERSPECTIVE: YOU’RE NOT NEEDED
The new corporate perspective is exemplified in comments like these:
- Michael Splinter, CEO of Applied Materials, “This year, almost 90 percent of our sales will be outside the U.S “The pull to be close to the customers — most of them in Asia — is enormous.” In other words, as we cut US workers’ wages and lay them off, it makes increasing sense to move even more factories offshore.
- Thomas Wilson, CEO of Allstate, “I can get [workers] anywhere in the world. It is aproblem for America, but it is not necessarily a problem forAmerican business … American businesses will adapt.”
In the past, more enlightened sections of the corporate elite recognized the need for social reform and government programs to ensure long-term social stability and pump up US domestic spending power.
However, even as America requires better education, healthcare, and technological innovation, the globalization enthusiast Thomas Friedman openly worries that the U.S. corporate elite is not stepping forward:
When I look around for the group that has both the power and interest in seeing America remain globally focused and competitive— America’s business leaders — they seem to be missing in action….
In today’s flatter world, many key U.S. companies now make most of their products abroad and can increasingly recruit the best talent in the world without ever hiring another American.
But showing concern for America’s long-term well-being is so yesterday for the new crop of CEOs. The new corporate elite is thinking in terms of short-term quarterly returns, if not daily stock fluctuations. The long-term well-being of American workers and American society are largely cut out of the picture.
So CEOs of major firms are relatively unified in a program of slashing wages, destroying unions, resisting regulation, minimizing their taxes, and neglecting the education and health of their future workers. At the same time, their campaign contributions and legions of lobbyists have successfully tilted the political playing field to further increase their wealth.
Economist Jeff Faux of the Economic Policy Institute clearly saw the emerging imbalance of power between Corporate America’s investor class and the majority of citizens in his 1996 book, The Party’s Not Over: “Political power has so shifted to those who invest for a living that their political representatives have no incentive to strike a deal.”
With this enormous shift in economic and power to corporations and away from working people, the main “incentive to strike a deal” possessed by labor remains our ability to create social instability at the local level, as it did in the 1930s.
We can’t out-donate or our-lobby Corporate America. But while they have the money, we still have the numbers — and the creativity to raise hell against plant closings and foreclosures.