James Clay Fuller

Things We're Not Supposed to Say

Wednesday, August 25, 2010

Pushing working people down

The true nature of the great recession is beginning to show in ways that until very recently were pretty well hidden.

Probably the most obvious example so far of how the very rich are using this economic downturn to consolidate their power is the strike by 305 hourly workers at the Mott's apple juice plant in upstate New York.

Those who are benefiting from the rotten economy are the wealthiest 20 percent of the American people, who hold upward of 85 percent of the country's wealth.

For those who are manipulating the situation, you probably can look to the the richest 1 percent of Americans, who, among their tiny number, hold more than one third of the private wealth in the United States. They're the ones with the real power, the ones who hold the deeds to key politicians and mortgages on the Republican and Democratic parties.

The New York Times presented a clear picture of the Mott's situation in its Aug. 18, 2010, business section. See http://www.nytimes.com/2010/08/18/business/18motts.html or check out The Nation's recent story “Rotten Apples, Core Values“.

In a nutshell: The workers went on strike more than three months ago when Mott's parent company demanded they take pay cuts of $1.50 an hour, accept a freeze on pensions and give in to other reductions in benefits.

In insisting on the pay and benefits reductions, Mott's, owned by Dr Pepper Snapple Group, a beverage conglomerate, makes no claim of hardship, economic or otherwise.

Quite the contrary: the company is bragging about record earnings. It proudly reported earnings of $555 million in 2009, a big upward swing from the $312 million loss of 2008. Results for the first half of this year showed further improvement, including from Mott's, which also showed a substantial gain in its over-all share of the juice market.

The company is unusually forthright in its explanation of its demands. It is trying to push its employees to lower rungs on the economic ladder simply because it thinks it can get away with it. That's it, pure and simple. Poorer employees mean richer shareholders and executives.

New York Times writer Steven Greenhouse quoted Mott's spokesman Chris Barnes as saying the wage cuts and benefit reductions can be done because they will bring the Mott's plant in upstate New York in line with “local industry standards.”

In plain English: Unemployment is high because of the recession, and desperate people are taking whatever jobs they can get, even if the pay is low. So Mott's figures it can force its employees to work for less and thus enhance its already soaring profits.

Left unsaid, but clearly in a big cartoon bubble over the company management's head is this: “If you don't want to work for less, we'll find a way to get rid of you and hire others who will take much less.”

A number of people on Wall Street have defended the drink producer's position on the grounds of “fiduciary responsibility” -- the claim that a corporation's responsibilities are are solely to produce the greatest possible profit for its shareholders (and executives, though they don't say that).

Fiduciary responsibility, in case you were wondering, does not extend to such things as worker safety or concern for the environment.

We're going to see more of this very soon from corporations that are doing very nicely in this recession-cum-depression.

American corporations continue to feed their captive media the false story about wanting nothing more than to “create jobs” while, in fact, they do everything they can come up with to reduce employment in this country. Now that there is very big, long-term, if not permanent, unemployment in the United States, it was and is inevitable that the next move is to force those who have jobs to accept less and less for their labors.

If you're reading this on my blog, look below to the essay headlined “Economic recovery? Not for you and me” for a more detailed look at the current economic situation. If you're reading this elsewhere, go to http://blog.jamesclayfuller.com

The Duh Factor, or Biz School Brilliance

For the most part, I am an admirer of professional academics. Their roles as researchers, thinkers and teachers are essential to the maintenance and enhancement of a civilized society.

However, I confess to major reservations about those who work in and for the business schools that now take up far too much otherwise valuable space on most major college and university campuses.

An article in the New York Times for Sunday, Aug. 22, 2010, may explain that attitude, to some degree. It also may call for the loudest “DUH” of the year.

The writer, Louise Story, tells us that David A. Moss, an economic and policy historian sheltering under the roof of the Harvard Business School, has “spent years studying income inequality” and “has long believed that the growing disparity between the rich and the poor was harmful to the people at the bottom” (a sort of medium Duh! here) but until recently hadn't seen any risks caused by such disparity to the “world of finance, where many of the richest earn their great fortunes.”

About a year, ago, said the writer, the esteemed academic followed the suggestion of a colleague that he chart economic inequality and financial crises.

Eureka! The charts showed that growing disparity between the rich and everybody else equates directly with bank failures and such like.

As Ms. Story quoted Moss: “I could hardly believe how tight the fit was –- it was a stunning correlation. And it began to raise the question of whether there are causal links between financial deregulation, economic inequality and instability in the financial sector. Are all of these things connected?”

Yes, indeed. Moss charted economic disparity –- big money at the top, increasing poverty at the bottom of the human pile –- and was shocked to learn that just maybe when the very rich get richer while everybody else gets poorer, general economic crises occur.

Like, maybe, when people don't have money to buy the stuff peddled by the rich, the rich get hurt, too?

Income disparities before the Great Depression and before our present great recession were the greatest of the last 100 years, Moss discovered.

I know. The shock has taken your breath away. Sit still and breathe deeply for a few minutes.

Or simply slap your forehead and yell DUH!!!! at the top of your voice.

Ms. Story goes on at considerable length, noting that many high ranking individuals, such as R. Glenn Hubbard, top economic adviser to George W. Bush, have never seen income inequality as a factor in economic crises. She also notes that quite a few high rankers remain skeptical of the relationship despite Moss's research.

And those people not only make big bucks, but they also teach and affect government and corporate policy. Now you can hyperventilate.

You can read Louise Story's article at http://www.nytimes.com/2010/08/22/weekinreview/22story.html?_r=1&ref=louise_story