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By: Wayne Brown
So you don’t like big corporations? You think all that is wrong in America is because of big corporations. You think by their very nature that they are evil from the very moment of their birth and you firmly believe that any reliable government of a free people would take control of all of them and make them what you think they should be in the first place. For those out there who are thinking this whole line of thought to be absurd, you might want to stop and give some thought to the fact that we, here in America, do have a significant number of people who think in that manner and they spend their time looking for like-minded types who can help them erase the corporation from the earth. That erroneous thinking is multiplying like rabbits on a spring day and cannot be ignored.
Corporations form the backbone of the American private sector ranging all the way in size from a small Sub-Chapter S Corporation like mom and pop might choose for their business all the way up to monster-sized global giants who are publicly held by stockholders in the open-market. All of them who operate as a business entity in the USA must comply with the laws and regulations regarding their existence and functionality as well their environmental impact and profitability. In that sense, the playing field is level and the free-market of capitalism is alive and well.
After World War II, America had become an industrial giant with its manufacturing base prime to move and grow transitioning from war components and products to items the consuming public could use in their everyday life. That ability was sitting in the middle of a nation that had already birthed the “baby boomer” generation and was watching those children grow up. Manufacturing jobs begin to grow in the 1950’s as companies expanded beyond their local markets and attempted to reach all consumers who made of the population of this great land. The job market flourished as did the earning potential of the American worker. For those coming out of the pre-dominantly agriculture sector that had dominated America prior to the war, the opportunities for good work and good pay abounded.
As the American industrial sector grew so did the unionization of labor, especially in the northeastern and upper mid-western sections of the country where the work force was dense and the rust-belt had its roots in the manufacturing sector. Initially the unions sold that vitality through the improvement of working conditions, the establishment of defined work days, and the concept of a fair day’s pay for a fair day’s work. Employers felt the pressure as they competed for the available skilled workers in the marketplace. Soon various skillsets begin to merge into specialty unions like machinists, mechanics, long shore-men and the like. This brought a new element to the labor picture as negotiations became more focused on benefitting particular workers in the workplace. As these workers benefitted or appeared to, others wanted in letting groups like the Teamsters expand their reach into multiple segments of the labor force. In many ways the playing field was still level as all competitors had to deal with the union approach and carry the overhead associated with it.
As with any set of circumstances, things begin to change, especially in the post-1960’s decades. Technology began to take its place in industry and open up new options that could only be addressed with mass amounts of labor in the past. The transistor, the printed circuit board, and crude computers, and eventually computer chip technology which allowed the advent of software to replace punch-card programming, brought opportunities like American industry had never dreamed of in the past. This change was not all positive for the unionized labor in America as the arrival of technology spelled the demise of some aspects of the labor force and took away leverage the union had with the corporations. Tasks that had once been done by people was now being done with machines run by computers. The people who populated these environments needed specialized training and higher education. The exchanges in the labor force were not tit for tat. The stakes had gone up for the worker to qualify for the job in many instances.
Unions became more and more divisive in their approach creating greater and greater divisions between companies and the people they employed. Union organizers and promoters spread propaganda focused on stirring up friction in the workplace. Any foothold which could be gained over the employer was used even if it bordered on illegal actions on the part of some people. The idea was to disrupt the company’s ability to do business to such a degree that further pay and benefits could be extorted from it in exchange for peace in the workplace. Some companies caved to this intimidation and took on the burden attempting to survive in the moment. Like the actions of the federal government, they “kicked the can” associated with the expense of meeting union demands down the road further and further with each negotiation for new contracts. Eventually, they hit the wall and slipped from existence.
Eastern Airlines went head to head with the unions after it reached such a point in its financial position. Both sides held firm with the unions showing no mercy in the process. In the end, Eastern ceased to exist and thousands of workers were on the street without jobs. General Motors faced the same situation in recent years only to have the federal government bail it out as a favor to the unions who had supported the election of the governing administration. General Motors did not get better in the process and the American capitalism system did not make any gains as the demise of this organization was only delayed by intervention on the government’s part. Yes, jobs were saved but mindsets and attitudes on the part of the worker were not and eventually those processes which created the downfall in the first place will come to bear again.
The world did not sit back and watch America flourish without reacting themselves. America was truly the land of opportunity. Europe was in post-war shambles; lucky to recover what they had prior to the war much less make any real progress. Asia was still very much a third-world agricultural economy with its local giant, Japan, trying to pick of the pieces of a nuclear attack brought down on them by their aggressive focus on war. America was the one place on the globe with the opportunities to make money. So, it was only natural that companies based in other parts of the globe would beat a path to America’s door and knock on it loudly. They did so by attempting to knock down the legal barriers which kept them out of the American market and kept the playing field unavailable to them. They lobbied politicians to gain access, to get laws and tariffs changed, and to become players with a chance to grab the golden ring. With this coming of the global businessman, change again was visiting itself in the American job market.
Politicians were pressured with favors by these suitors of the market and soon were enticed to take them. As any good politician will tell you, every cloud has a silver lining. In this case, our elected officials reasoned that America was a free-market economy and the more competition which entered into it the better things would get for the consumer, the voting citizens of America. In that respect, the politicians were looking at a win/win…better product prices for the consumer affecting a better standard of living bringing more votes in their box along with the favors they had slipped into their pockets along the way. American business recognized the dilemma and could not sit back idly and let things go that way. They too begin to lobby and press for controls and sanctions only bringing more competition to the process that eventually lined the pockets of the career politician in America.
Soon, outside companies were enjoying access to the American consumer markets. Industries began to suffer with the competition while trying to operate under the strain of the big labor costs imposed on them by the unions. The automotive industry reeled under the competition and screamed for the government to induce sanctions to keep foreign manufacturers out of the market if they did not have a production base in the USA. The pleas fell on deaf ears and soon other industries were facing a similar circumstance. The reality of change or perish was ever present in the minds of these American companies. With the broad abyss between American management and its unionized labor force, there was little compromise to be obtained to answer the issues faced in the marketplace. In essence, the worker was telling the company that they would have to meet the pressures of the outside competition while continuing to raise labor costs and benefits. It was a formula for destructive disaster in terms of the American manufacturing sector of the economy.
In the 90’s, Bill Clinton and his North America Trade legislation entered the scenario throwing the borders open for movement of products in both directions between the USA, Canada, and Mexico. American companies, especially the automakers, saw this as a relief valve to the economic pressures they faced. Companies like GM, Ford, and Chrysler began to make their vehicle components and sub-assemblies across the borders in both Mexico and Canada taking advantage of the cheaper labor costs and the buying power of the U.S. Dollar in the capital investment markets of the other countries. Production plants shutdown in the USA and moved across the border. Trucks rolled to the borders in both directions on a daily basis moving the materials to final assembly points and distribution warehouses throughout the USA. The American consumer was truly the beneficiary of these changes but some of those consumers also lost their jobs in the process as that faction of labor was driven cross border by market pressures.
Eventually, more and more manufacturers in America faced this reality of cross border economic relief and had to make those hard decisions to close U.S. based plants with high labor and benefit overhead in order to compete in the retail market. This reality had come about as a result of a demanding un ionized labor force in America and a political base in our federal government willing to sell out on the reasoning that the benefits of outside products should not be denied to the American consumer. The playing field was no longer level and American-based companies had to choose or die ignoring that choice. Further complicating this process was the emergence of “big box” retailers in the marketplace like Wal-Mart and Home Depot who made strong connections with foreign suppliers and sold them into the U.S. market bringing heavy competitor pressures to U.S. producers of the same products.
Another significant change was also taking place in the world over the course of the 1990’s decade. China was emerging from third world status shifting from a predominantly agricultural society to an industrialized one. Along with that shift, a small amount of capitalism was invading the communist controlled Chinese economy. This was no accident by any means. In fact, it was a necessity if China was going to feed its people and maintain a peaceful co-existence in its population. On that basis, outsiders were a necessity as were outside products. As China emerged, other Asian economies were also following a similar pattern. The global business sector took notice and realized that a successful worker base in these Asian countries would eventually produce a retail consumer market that outshined that once focused on in America. From that perspective, America was rapidly becoming a “mature market” as the population of young consumers diminished and the “baby boomer” generations slipped into retirement. America was an expensive place to do business. China and Asia were the new lands of opportunity.
The Asian culture is a very hard one to crack for an outsider and the controls are very much in place to keep outsiders at bay in the marketplace. Companies quickly learn that they must partner up with existing Asian entities and invest in production bases in those countries if they are truly going to have a chance at the golden ring of profitability in those markets. Capital money now flows heavily into Asia driven by the enormous market potential at the consumer level and by the lure of a cheaper and more productive workforce. The reality of the business model indicates that products made inside the USA become very expensive do not always fare well on global markets if there is competition. This is due in large part to the significant costs of labor, taxation, and regulatory control encountered by USA based production. On the other hand, products produced in Asia are competitive in those respects and have the flexibility of meeting market competition almost anywhere in the world. This is an edge no company can ignore in its business plan.
Let’s stop for a moment and consider an example. Recently, the Obama Administration set up loan guarantees for a number of “green” enterprises. These loans were guaranteed with taxpayer resources. Many of those companies were short-lived and took bankruptcy within months of receiving the loans. Let’s look at one that made the news, Solyndra, a producer and marketer of solar panels for commercial industry on a global scale. At the height of its operation, Solyndra’s gross sales were $140 million dollars annually. In light that fact, the U.S. government guaranteed loans to the company in excess of $500 million dollars. Solyndra’s business model was based in a product which looked much like a long fluorescent bulb. It was called a photo-voltaic cell. These tubes were arranged in rows in wired racks which allowed them to collectively function as a “solar panel” and pass that energy collect from each tube to wherever the energy was being applied. This approach to creating a solar panel was much less labor intensive and cheaper to produce thus giving Solyndra a competitive edge to approach the global market. On the surface, it would sound as if the government loan guarantees were going to the right place but there was a fly in the ointment and those who ran Solyndra knew it yet ignored it as they took the money.
The product which Solyndra had developed had a significant short-coming in terms of its efficiency in the process of energy gathering. While the tubes were more easily produced at less expense, the physical design of the tube contributed to the inefficiency. The surface of the tube was round just like a fluorescent light tube. As the surface expanded out from the exposed center it curved away from the plane of the center and as that plane took on a more and more acute angle, the efficiency of the tube diminished especially when compared to the capability of a truly flat solar cell panel. Solyndra was aware of this short-coming in their product but they counted on the inability of their competition to produce an economical-priced competitive flat solar panel as their insulation blanket in the market. Enter the Chinese and all bets are off in this instance. China producers were able to take the solar flat panel concept and overcome the labor issues and complexities associated with building an array of truly flat solar panel products which they could sell at competitive prices world-wide. Suddenly, the short-comings of the Solyndra tube are quite evident to the potential consumer and customers shift away to the more efficient method for the same price in droves. Solydra’s flawed business model came apart at the seams at the expense of the American taxpayer. Never has there been a better lesson for the American taxpayer in terms of dressing a pig up in a suit and tie and calling him a preacher.
Today, those of us in America watch as our federal government grows in leaps and bounds with the potential to increase in size by 50% over 2008 dimensions by the year 2016. It is a monster which consumes money like a machine designed specifically for that process and it does it quickly. It provides not product to the marketplace and it yields not profit or savings to the consumer…it only takes and takes and takes. And it will continue to take as long as the voters of this country will tolerate it. With that out of control growth also comes out of control regulation of the private sector which constricts the opportunity for startup or growth of business in the private sector. American is losing its manufacturing footing yet our government continues in a direction which is destroying it and weaving the country into the global mat. Corporations are taxed at higher rates than in most any country of the world. Environmental regulation and red-tape is through the roof. In recent months, we have seen examples in which agencies of the government are now telling companies where they can and cannot invest their money for future growth and that process is oriented in support of the large labor union agenda which choked down the process in the beginning.
Those who would blame corporations for our demise as a country need to open their eyes. The playing field is designed and arranged by those who populate our government as elected officials. Decisions have been made, regulations and laws have been skirted over time which has blatantly undermined corporations’ ability to profitably exist in the American market. Contrary to the thought process of these people, that is why companies exist…to make a profit. In the process they also provide jobs and trickle money into local and regional economies which affects and improves the standard of living for citizens who do not work there. The income of any given employee expands into the economy with an effect on at least six to seven other people who are not employed at that company. There is a synergy there which comes from having jobs and earning profits.
Like it or not, the lack of jobs in America cannot be laid at the feet of American corporations or any corporations for that matter. There are no corporations out there who are in the business of creating jobs for Americans as an act of good will. Americans must embrace that reality. Americans must embrace the fact that unions cannot speak for them in terms of their employment. The American business or corporation owes us nothing except the next paycheck we earn by working for them. Competition for the market and the worker will take care of the rest contrary to the propaganda spewed by the community organizers in the labor movement. Your current president understands that concept and has employed its divisiveness many times in his work as a “community organizer” to manipulate the system to his desires regardless of the long-term effect.
America will not see an economic turnaround of any significance until we change our political and social issues regarding that sector of the marketplace that makes a profit and creates jobs in doing so. This is truly the engine that drives our economic success and it is being ignored and painted over with a face of evil and corruption. Our sold-out politicians, along with big union labor, are killing opportunity in America and driving it to other shores and we, as voters, are standing by watching it happen. Shame on us.
©Copyright WBrown2012. All Rights Reserved.
10 February 2012