He is always an insightful writer. Today's column, a Sin and a Shame, focuses on a critical issue, which is the mistreatment of American workers by American corporations during the economic troubles that began in the last administration. In his first paragraph Herbert labels this treat as "treacherous" because there was no reason for so many to be laid off, or for corporations to refuse to hire them back.
In his 2nd paragraph we read
Many of those workers were cashiered for no reason other than outright greed by corporate managers. And that cruel, irresponsible, shortsighted policy has resulted in widespread human suffering and is doing great harm to the economy.
He then quotes economics professor Andrew Sum, part of whose statement is
"Not only did they throw all these people off the payrolls, they also cut back on the hours of the people who stayed on the job."
One of the issues is productivity. Another is clearly corporate greed. Read Herbert. I want to explore these issues.
Years ago when I first got interested in economics I remember asking a professor why it was in workers' interest to be more productive if the end result would be that many would lose their jobs - companies could produce as much or more with fewer workers. To my mind he did not have a good answer, which in a sense he acknowledged. He talked about how as they produced more those workers who continued would be paid more. Only our labor agreements, unionized or not, rarely guarantee even that for the workers.
We have heard the contrary argument used by those who oppose raising the minimum wage, that if we raise some employers will replace workers with machinery as the increase in labor costs make that ever more attractive.
And then there is the nature of corporations. Some legitimately argue that corporations exist for the sole purpose of maximizing value for their owners, the shareholders. That value can be increased by driving the price of the stock up, or by distributing profits in the form of dividends, or both. Should those running the corporation do anything else without the specific approval of the owners, they can be accused of violating their fiduciary responsibility towards their owners/shareholders.
As corporations are currently structured and governed, to win an argument about hiring back or not laying off, we would have to phrase in fiduciary terms, how it would be of greater benefit to the corporations.
Yet when a corporation cuts jobs, those running large mutual funds and those rating stocks for the markets tend to reward that action - the stock price usually goes up because costs have been controlled.
Before you get too angry, remember that most of us are responsible, even if like me you do not directly own a single share of stock in any corporation or in a mutual fund. The key word is directly. I am a teacher. Like most public employees, I have a government run pension, in my case one for Maryland State Employees. Those funds are invested in the market. Those running pension funds have a responsibility to maximize the value of the investments they make on my behalf, on behalf of the participants. State-run pension funds are among the largest holders of stocks, as are universities, which is why both were targets during the disinvestment campaign aimed at South Africa during the latter years of apartheid - it was intended as a way of putting pressure on corporations still doing business in South Africa to either pull out or to put real economic pressure on RSA to move away from the policy and begin to equalize things for the majority black population of that nation.
Perhaps you did not read all of the Herbert. Two brief paragraphs from the middle of the piece are quite important, and help explain a lot:
The recession officially started in December 2007. From the fourth quarter of 2007 to the fourth quarter of 2009, real aggregate output in the U.S., as measured by the gross domestic product, fell by about 2.5 percent. But employers cut their payrolls by 6 percent.
In many cases, bosses told panicked workers who were still on the job that they had to take pay cuts or cuts in hours, or both. And raises were out of the question. The staggering job losses and stagnant wages are central reasons why any real recovery has been so difficult.
The continuation and even increase in foreclosures is related to the loss of jobs. Those without jobs often cannot keep up with their mortgage payments. As unemployment compensation runs out they cannot even continue what minimal purchases they were making. Layoffs among major employers can devastate communities, because the gas stations, grocery stores, barber shops and beauty parlors, etc., all see a loss of customers and thus of revenue. Some of them fail. Many lay off their staff. And the spiral continues downward.
We are seeing the amount of cash corporations are holding skyrocket. They are not using that money to hire workers back. Too many are too far removed from the consumer to recognize the wisdom offered by Henry Ford, a man who many ways (his anti-semitism for example) was not particularly admirable: he recognized that if he paid his workers sufficiently they became customers for the product he was making, and his business would thrive even more.
We often here refer to the footnote in the Santa Clara case that established corporations as persons under the Constitution. We are rightly concerned about the impact of the Citizens United decision, and if we consider the content of Herbert's column, we can realize that many corporations will use the power of influencing elections against any attempt to require them to hire back workers, just as they previously fought against requirements to provide notice of major layoffs.
While I teach social studies, I do not claim expertise in economics, nor in some aspects of history. But if my memory is not completely gone, one reason that this nation allowed the development of corporations was to do large-scale public works, for example, canals. We might even remember that George Washington was involved in several such ventures,such as the Great Dismal Swamp Canal, and he founded the Potowmack Company, which built a number of canals to help make the Potomac River more usable for commerce. Until the development of railroads beginning with the Baltimore and Ohio, dedicated on July 4, 1828, canals seemed to offer the best hope of opening up large scale development in the interior (it is ironic that the Chesapeake and Ohio Canal was dedicated the same day, and one reason for its lack of success was the competition by the B&O and other railroads, including the Chesapeake and Ohio's development of its own railroad).
I am not knowledgeable enough about the legislation that allowed for incorporation of such ventures to say how much of a public benefit was included in the law. Clearly later one reason railroads were given land for their right of way is because state legislatures saw railroads as a means of encouraging major development within their borders.
A similar logic has applied over the years since, when to encourage companies, usually incorporated, to locate facilities (factories or offices) within a state or a specific community, governments will offer tax breaks or free or cheap land or promise improvements to things like roads and other infrastructure as a means of creating jobs and therefore additional economic development. Insofar as a corporation has received such benefits, one should be able to argue that it has a responsibility beyond the pure fiduciary, and in fact if corporations could not so easily play off one location against another, I suspect that the deals negotiated might include language specifically addressing non-fiduciary responsibilities.
Even at a federal level, corporations benefit from a lower tax rate, from the ability of managers to receive benefits that are considered a cost of doing business (limousines, housing, memberships) without being taxed for the value of those benefits while the far lesser equivalents for most workers are paid for by post-tax dollars.
Herbert quotes Professor Sum as noting that in the period from the 4th quarter of 2008 to the 1st quarter of 2010 payrolls went down by $122 billion while corporate profits went up by $572 billion. Consider that for a moment. Then ask yourself what if any action should be appropriate, not merely on the part of corporations, but by us, the American people, under whose laws such corporate action is completely legal.
Productivity, the supposed goal of so much corporate management. We read
Worker productivity has increased dramatically, but the workers themselves have seen no gains from their increased production. It has all gone to corporate profits. This is unprecedented in the postwar years, and it is wrong.
The more productive people are as workers the more at risk their employment. How do they benefit? Why do they not benefit?
You will read that as of July the nation's non-financial corporations had since 2007 since their cash increase by 27%, to a total of
$1,870,000,000,000
If you are having trouble with the string of zeroes, that's $1.87 trillion
You will in Herbert's piece read about the CEO of Alcoa, who is not only happy at how many jobs have been cut, but brags about additional restructuring to eliminate even more jobs.
Herbert's penultimate paragraph is brief and to the point:
There can be no robust recovery as long as corporations are intent on keeping idle workers sidelined and squeezing the pay of those on the job.
He then notes that Germany and Japan have taken a different approach, and as a result have suffered far less job dislocation, and in many cases less suffering.
If part of the responsibility of our national government is to help maintain a healthy economy, so that people can be productively employed, then clearly we need changes of policy. I note how often the arguments in favor of the "reforms" to which public schools are being subjected are being made on the grounds of economic competition with other nations. But what is the point of being trained for jobs that will not exist, or if they do can be eliminated at the whims of corporate management to increase profits with no regard for the dislocation and suffering being created?
"We the people of the United States" did not in 1787 when those words were drafted include in the 3rd word corporations. And if we do not change what is happening, I wonder if we will have to rewrite the Preamble to read "We the corporations"??? After Citizens United I worry that we are well on the path to such a change.
Herbert's last sentence is key:
Until we begin to value our workers, and understand the critical importance of employment to a thriving economy, we will continue to see our standards of living decline.
To value our workers is to value the American people. If humans are seen as just one resource among many whose primary existence is to provide labor at the cheapest possible cost to corporations, then regardless of how we label our political system we have embarked on the original vision of a fascist system.
One reason we need a reinvigorated union movement is to have some way of preventing corporations from running rampant over the rest of us. It is one reason I continue to advocate for teachers unions, for if we can be broken, there will be little hope for other unions - there are four million of us. And we should use our numbers to address issues of all workers.
Remember, we are responsible, because we benefit in our ownership of stocks directly, through mutual funds, through pension funds.
We therefore are the owners. And as owners we can demand of our corporate servants - for they should serve us the owners - that they take a different approach. That is within our power even with changes in our legal structure.
If we do not act forcefully, and soon, the economic dislocation will continue.
We will see more of our kith and kin, our friends and neighbors, losing jobs and homes. Some of us will experience that.
Eventually some at the corporate level may realize, far too late, that the short-term maximization of profit can lead to the long-term unviability of the corporate entity.
I said you must read Bob Herbert today.
If you are still here, I thank you for also reading me.
Now, what the hell are we going to do about it?