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in today's Washington Post.

Let me begin with the ending:  

Problem is, the Wal-Mart model of employment and service not only reflects but also reinforces the declining economic prospects of the majority of Americans. The nation’s largest private-sector employer has used its market power to impose its low-wage model all along its supply chain, leaving millions of Americans with no shopping option other than the kind of discount, and frustrating, experience that Wal-Mart provides. The U.S. economy that Wal-Mart has built — with plenty of help from Wall Street and the government — is in the shape of a downward spiral, and it will take all our ingenuity, and a mass movement for worker power, to free ourselves from that path.
This paragraph caught my attention because it ironically reminded me of Henry Ford, who chose to pay his workers enough that they could afford to buy the cars they manufactured:  many did and Ford became very wealthy, partly because of that.

In Taking the ‘service’ out of the service sector Meyerson presents us with a picture of which many may already be aware -  taking the approach of slashing the workforce may not be healthy for the long-term viability of the company, and cites as examples J. C. Penney, which just fired a CEO who took precisely that path, and Walmart, which is now becoming known for shelves that appear bare because it lacks sufficient employees to keep them stocked.

Yet minimizing the number of employees would SEEM to be an appropriate path for a CEO to follow, as Meyerson notes in his opening paragraph:  

For decades, U.S. corporations have been told to slim down. Not to abandon corporate jets or cut CEO pay, mind you, but to produce more with fewer employees. The conventional wisdom couldn’t have been clearer: The minimum number of required workers yields the maximum level of profits, all else being equal and the creek don’t rise.
I would argue that corporate America has still not learned the dangers of that path, and seems far too intent on having that ultimately unsuccessful vision imposed upon the rest of America, in Government as well as business.  

The column is important and I suggest you read it.

I want to pivot from it to make two arguments

1.  what is ultimately says about the inherent weakness of capitalism practiced without restrictions

2.  why it represents a strong argument for the rejuvenation of a union movement in this country.

First, it is not that ALL corporations necessarily take this approach, even in the service sector.   Meyerson cites as contrary examples two places I am known to shop, Costco and Trader Joe's,  writing

As MIT management professor Zeynep Ton argued in Harvard Business Review last year, Costco and Trader Joe’s pay their workers far more than many of their competitors, offer their employees opportunities for promotion and enjoy markedly lower worker turnover and far higher sales per employee than their low-road counterparts. Sales per employee at Costco are nearly double that at Sam’s Club.
And yet, we saw many corporations push back at the notion of raising the minimum wage, most push back at any change to the tax code that might mean they paid anything like the share of general revenues that helped this country among other things build the infrastructure that assisted America in become a middle class country -  schools, interstate highway system, etc.  - move away from defined benefit pensions while raiding existing pension funds for other purposes on the grounds that they were "overfinanced."  

The predatory nature of Walmart, including forcing its model of low-wages and anti-unionism down its supply chain, has meant that many people whose incomes are reduced have little choice but to shop at Walmart, which does maintain a very low price structure, even if the service seems to be on a downward spiral.   As Meyerson notes of the company,  The idea that unrestrained capitalism contains the seeds of its own destruction is hardly new.   After all, Marx (among others) made that argument, and we have at this site recently seen dueling diaries as to the correctness of that Marxian assessment.  My contention is that the modern version of capitalism cannot survive absent government intervention on its behalf.

Consider that our model of capitalism presumes government assistance.  After all, we have copyright and patent protection assumed in the Constitution among the powers of Congress.   A true market economy would have no restrictions upon who could enter any market or make any product, and would quickly descend into the economic equivalent of the Hobbesian vision of a war of every man against every other man.    

The emphasis on profits in the short term often blinds corporate management to the long term interests of the corporation, as J. C. Penney found out under its most recent CEO.  

Capitalism seems to rest upon a predatory model, where increasing market share as a goal can lead to taking actions designed more to undercut the competition than to sustaining the viability of the corporation.   While in  theory the representatives of the share holders should be ensuring that management is acting in the best interests of those owners, in practice the short-term vision predominates, in part because so many of the directors are themselves corporatists and the voices of individual shareholders are almost never heard.  As close as the interests of individuals are the representatives of public sector pension funds insofar as they still exist - and remember, much of the corporatist model is opposed to the "cost" of pensions and having eliminated defined benefit pensions for their employees now attack defined benefit pensions for public employees.

This has led to a philosophical approach to government that is undermining its ability to serve the people.  Unless the government function leads to revenues and thus profits for the corporations, many in the corporate world want to eliminate or at least reduce that function so that they do not in any way have to pay taxes to support it.  They will play off one jurisdiction against another for reduction of taxes as a condition of locating a new manufacturing plant or warehouse.  They will seek control of the taxes they are still required to collect so that they can benefit from the use of that money.  They will seek to change laws to benefit them even at the expense of the communities in which they operate.  And, in part thanks to a Court that has empowered their corporations as "persons" in a way never conceived of by the founders of this nation, they seek to control the political process that defines the operation of government by unlimited expenditures on political activities for which they want - and get - a deduction from the taxation that funds that very government.

This results in s downward spiral of government service.  In my own field of education it means a reduction of teaching staff,  an increase of class size, a decrease in the ability of public schools to serve the needs of the children of those not in the dominant corporate class - who by and large choose to opt out of public education.  Some even seek tax credits against what little they pay now on the grounds that they are saving the public the cost of the education of their children, even though public education should be a public good, even though such education should be considered a necessary part of providing them a competent work force.  They are satisfied to create a situation of those desperate for work to enable them to maintain downward pressure on wages to fulfill the model of low wages as the primary means of increasing their own wealth, even though that model has failed J. C. Penney, is failing Walmart, and is, according to Meyerson, undercutting McDonald's.

The only way of stopping this is to change the paradigm, and in my opinion that begins with collective bargaining and organizing, which requires a rejuvenation of a meaningful union movement.

This nation saw the increase of the middle class at a time when unions were at their maximum share of the American workforce.

It is also interesting to note that defined benefit pensions and truly effective health plans are now both becoming rare in the private sector even as they remain a major part of working for governments - which is why some in the corporate world are attacking them in government.   What is interesting to note is the parallel one finds when one looks at unionization.  A higher percentage of unionized workers are in government service than in the private sector.

While acknowledging that correlation is not causation, nevertheless there is little doubt historically that strong unions have meant better compensation and benefits for workers not only in unionized work places but also in non-unionized work places in those places where unions are vibrant.   That means greater purchasing power which is better for the overall economy.  It also usually means more effective schools, a better educated work force, and all that flows therefrom.

The danger as I see it is that the Walmart vision is driving too much -  that includes the false notion that somehow we have to reign in the social safety net, that we cannot "afford" it at a time when corporate profits are at an all-time high, when corporations are sitting on trillions of cash, when the ratio of top management compensation to that of the average worker is exploding.  Social Security does NOT contribute to the deficit, and that a Democratic administration would act as if it does threatens the very viability of the American economy those advocating for Social Security cuts claim they are trying to save.

Something has to change.

There has to be a countervailing force.

Meyerson points at it, as I have just written about it.

So let me end as I began, and again remind you of his final words:

The U.S. economy that Wal-Mart has built — with plenty of help from Wall Street and the government — is in the shape of a downward spiral, and it will take all our ingenuity, and a mass movement for worker power, to free ourselves from that path.

Originally posted to teacherken on Wed Apr 17, 2013 at 04:28 AM PDT.

Also republished by In Support of Labor and Unions.

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Comment Preferences

  •  Tip Jar (34+ / 0-)

    "We didn't set out to save the world; we set out to wonder how other people are doing and to reflect on how our actions affect other people's hearts." - Pema Chodron

    by teacherken on Wed Apr 17, 2013 at 04:28:01 AM PDT

  •  the power to change this exists but (8+ / 0-)

    people so far fail to take it.

    Join us on the Black Kos front porch to review news and views written from a black pov—everyone is welcome.

    by TomP on Wed Apr 17, 2013 at 04:41:59 AM PDT

  •  Truth be known (11+ / 0-)

    We, the taxpayers pick up costs from the low pay and rotten treatment of Walmart's workers in poverty benefits we provide (SNAP & other assistance programs).  Their model creates a downward spiral in acceptable corporate behavior and puts pressure on the greater society to copycat the conventional advice to "slim down" to improve profit, that forms the push for government austerity.

    I very much liked the point

    For decades, U.S. corporations have been told to slim down. Not to abandon corporate jets or cut CEO pay, mind you, but to produce more with fewer employees.
    I think we need to take a serious look at  the CEO pay that has grown exponentially and look at the true cost we pay for low paying jobs.

    Be the change you want to see in the world. -Gandhi

    by DRo on Wed Apr 17, 2013 at 04:54:34 AM PDT

  •  Over a century since Marx (7+ / 0-)

    over a century of the industrial labor movement, 90 years after the bloody battles of the gilded age and robber barons, 80 years after the New Deal. We're still talking about the same basic structural problem. Those who make money from money are wont to do so on the backs of labor.

    “Birds…scream at the top of their lungs in horrified hellish rage every morning at daybreak to warn us all of the truth. They know the truth. Screaming bloody murder all over the world in our ears, but sadly we don’t speak bird.” Kurt Cobain

    by RadicalParrot on Wed Apr 17, 2013 at 05:10:56 AM PDT

  •  This article gives a very good explanation (6+ / 0-)

    of the current situation.  Since the Wagner Act of 1935 has been whittled down to where it is almost useless*, the best way to grow a labor movement would be to do it outside the bounds of that Act.

    I call this "small-u unionism".  Others call it "nonmajority unionism".

    The rercent Wal mart ans fast-foed strikes are good examples.

    *(This is why government entities have a higher rate of unionization then the private sector.  They don't fall under the Wagner Act.)

    "One of the greatest tragedies of man's long trek along the highway of history has been the limiting of neighborly concern to tribe, race, class or nation." Martin Luther King, Jr.

    by brae70 on Wed Apr 17, 2013 at 06:02:25 AM PDT

    •  that's: "recent Wal Mart and fast-food strikes" (1+ / 0-)
      Recommended by:

      "One of the greatest tragedies of man's long trek along the highway of history has been the limiting of neighborly concern to tribe, race, class or nation." Martin Luther King, Jr.

      by brae70 on Wed Apr 17, 2013 at 06:08:48 AM PDT

      [ Parent ]

  •  The inherent logic of unregulated capitalism (3+ / 0-)
    Recommended by:
    sfbob, Heart of the Rockies, jeannew

    is no different from the inherent logic of unregulated human behavior in any domain. The powerful, greedy, cruel and uncaring will ALWAYS end up ganging up on and dominating the weak and good, leading to a state of corrupt stasis akin to feudalism that only really benefits a few at the top.

    Having a fair, healthy, prosperous and growing economy is like anything else, be it sports, gardening or physical fitness. You must have and impose prudent and sound rules and stay ever-vigilant against anything that might undermine things from within or without. Like a garden, neglect an economy and it fails.

    "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

    by kovie on Wed Apr 17, 2013 at 07:03:11 AM PDT

  •  Wal Mart (1+ / 0-)
    Recommended by:

    They are the egomaniacal lead guitarist in heavy metal band called capitalism.  

    They just want to solo over the whole song.  


    by otto on Wed Apr 17, 2013 at 07:22:16 AM PDT

  •  Predation = exploitation and destruction. (4+ / 0-)
    Recommended by:
    sfbob, teacherken, shypuffadder, jeannew

    Capitalism = humans predating their own kind + memory.

    Intellectual predators realize it is imprudent to eat oneself out of house and home. So, predatory humans exploit long-term and indirectly via human husbandry. In the U.S., human husbandry was first institutionalized as slavery, but, even with the support of the law, the returns to the exploiters were not sufficient to sustain their life-styles. The workers, whose hands were on the plow and the scythe and the lathe, kept too much of the product for themselves.
    Labor mediated by money looked to be cheaper in the long run. Also, material rewards were equated with freedom and, even after the Civil War, owning property was considered the route to independence and autonomy.
    But, what happened to all the real property stolen from the natives and distributed to immigrants is the same thing that happened to the gold plundered from the Americas by Spain. Within a generation, the gold ended up in Dutch banks, which then issued certificates of deposit and invented paper money tied to gold. Similarly, within a couple of generations, the family farm, the family business and the family store were acquired and concentrated into industrial enterprise.
    How was it accomplished? Mostly by moving people around in the pursuit of better opportunities. How was it possible? Paper money, strictly rationed by Washington had much to do with it. Cities, large and small, were starved for dollars, while funds were invested in the suburbs. For some people, the intentional destruction of Europe actually served as a model. The rebuilding seemed quite miraculous. Hardly anyone noticed the dollars that were poured in. And, of course, the new infrastructure was better than the old.

    Money makes the world go round. Rationing leads to hoarding and hoarding leads to rot. Why shouldn't that be true of dollars, as of everything else?
    It's our money. Why should it all not come back to Washington, where it comes from, as revenue? We should take a close look at the euro zone. They've just recently done what was done in the U.S. after the Civil War -- reduced multiple currencies to one. At whose behest? The banksters.
    Who thrives on exploitation, on taking profits that haven't been earned by labor? The banksters. Money makes it easy to hide the theft -- taking without compensation.

    We organize governments to deliver services and prevent abuse.

    by hannah on Wed Apr 17, 2013 at 07:22:40 AM PDT

    •  "hoarding" (0+ / 0-)

      About two weeks ago a woman came into a local library and said some man had throat cancer and that Medicare wouldn't cover that man's experimental surgery.

      [Actually standard costs would be covered by Medicare.]

      The woman said the man didn't have enough money to pay the extra costs himself. The librarian wasn't able to help.

      That man will probably die because he didn't "hoard" enough money.

      This is a time when baby boomers need to put money aside to pay for expenses in their old age.

      The economy is going to slow for about a decade. It will pick up again when the baby boomers need to pay to have their homes repaired in their old age and also for their own "experimental" medical treatment.

  •  "Wal-Mart" "predatory" (0+ / 0-)

    Wal-Mart got to be big because it offered a better deal than existing retailers to people living outside of the cities and suburbs.

    In the 1960's and 1970's one typically paid 10% to 25% more for general merchandise and food simply because one lived in rural areas.

    Sam Walton offered suburban pricing to rural folks and got very rich for fulfilling a need.

  •  Retailers are notoriously cheap (0+ / 0-)

    because they are required by law to post prices.

    Retailers and consumers fight over pennies so retailers generally pay poorly.

    A doctor or hospital doesn't legally have to post prices.

    The very labeling of medical charge items is copyrighted by the AMA.

    I couldn't make a substantial medical service price list without violating AMA copyright.

    The two-tier treatment of retailers and medical providers by the legal system is a major backbone of our unjust society.

    I have called for posted Medicare multiple pricing. If the provider's chosen multiple was 1.3 and Medicare would pay $200 for the care item, then the charge to people not on Medicare or Medicaid would be $260.

    One posted multiple per provider (only changeable once every three months) would make price shopping for medical services practical.

  •  The stock market (0+ / 0-)

    boomed after WW2.

    It made it possible for private companies to offer defined benefit pensions.

    In the 1960's the stock market saw many semiconductor and computer stocks fizzle.

    My uncle, who enjoyed chatting with the Hollywood stars who stayed at his luxury building while on tour, lost everything he had.

    In 1970 the great Penn Central Railroad went bankrupt.

    There was WHOOPS(?). There was Seabrook. Nuclear power, once thought so promising, died on the back of cost overruns and poor plant designs.

    Then there was the Vietnam War inflation. By 1974 the stock market and the real estate market were down on their knees.

    In 1975, New York City was basically told by the Republican President of the United States to "Drop Dead" financially.

    A lovely mansion on Fifth Avenue facing Central Park fetched a mere $600,000 in 1977.

    Another building sold for a mere $51,000 in the city and forgotten about impacted a race for the Vice-President.

    My father's business partner in 1979 bought a 12,000 square foot retail department store building in downtown Albany, New York for $71,000, or about $6/square foot.

    One car company, once the greatest in the world, had its name turned into a slogan "Fix Or Repair Daily" and was producing cars with poorly designed gas tanks. I think its stock sold for about $1/share in 1978.

    In 1982 the stock market was worth about $600 billion in total, or if adjusted for inflation about what the federal government ran as deficits in just the years 2009 and 2010.

    In the 1970's and 1980's defined benefit plans without defined payout stocks proved to be a bad mismatch to companies faced without having to make pension payments or rebuilding their factories to compete with the clever and industrious Japanese.

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