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The New Slum Lords

Updated on April 10, 2013

European firms exploiting American cheap labor?

The newest slumlord in Los Angeles is a pillar of German capitalism. Earlier this month( 5/1/11), the city attorney's office filed suit against Deutsche Bank, the world's fourth largest bank, for letting many of the more than 2,000 Los Angeles homes it has foreclosed on descend into squalor and decay.

A year long city investigation of the properties on which Deutsche Bank forclosed turned up tenants compelled to live in crumbling apartments the bank would'nt fix, houses taken over by gangs, faucets from which water either would'nt flow or would'nt stop and tha occassional unidentified body. Nothing, in other words, that would be allowed to happen to bank holdings in Frankfurt, the-neat-as-a-pin German city that is home to Deutsche Bank and much of the rest of German finances.

Deutsche Bank responded to the suit by blaming the loan servicers that were supposed to have maintained the bank's properties. But Los Angeles City Attorney Carmen Trutanich insisted the blame belonged with the owner. "We are not going to allow them to play the shell game," he said.

But slumming in America is fast becoming a business model for some of Europes's leading companies, and they often do things here they would never think of doing at home. These companies-no banks, primarily, but such gold-plated European manufacturers as BMW, Daimler, Volkswagen and Seimens, and retailers such as IKEA-increasingly come to America (the South particularly ) because labor is cheap and workers have no rights.

Manufacturing On The Cheap

Non-Union Workers bear the cost

In their eyes , we've becoming the new China. Our labor costs may be a little higher, but we offer stronger intellectual property protection and far fewer strikes than our unrul Chinese comrades.

Don' t take my word for it. Check out a study released by the Boston Consulting Group, which concluded that when you compare China's soaring wages and still-low levels of productivity with our stagnating wages and rising levels of productivity, the price advantage of manufacturing in China instead of the U.S. will shrink to insignificance by 2015.

In vestment in the U.S., the group says, "will accelerate as it becomes one of the cheapest locations for manufacturing in the developed world.."

Those investments are well under way. European and Japanese auto companies have open factories in non-union South over the past decades. Not one of them has agreed to refrain from waging a union-busting campaign should their workers wish to organize. Their stance could'nt be more different from their attitude toward workers and unions in their home countries.

As a report released by Human Rights Watch late last year documents, companies that rountinely welcome unions, pay middle class wages and workers' representatives on their corporate boards in Germany and Scandinavia have threaten their U.S.-based employees with permanent replacement by other workers, as the penalty for protesting wage cuts(that was the German manufacturer Robert Bosh), ordered workers to report on fellow workers' pro-union activities (that was T-Mobile, a subsidiary of Deutsche Telekom) and disciplined workers who could'nt show up for scheduled weekend shifts announced o Friday night (that IKEA, according to a Los Angeles Times story).

In Germany, Robert Bosh, according to Human Rights Watch, has never threaten a single worker with losing his job for protesting wage cuts, and Deutsche Telekom repeatedly touts its 'social partnership" with its union. In Sweden, IKEA, like the vast majority of Swedish companies, is unionized and affords it workers a range of rights and benfits that are all but unimaginable to American retail workers.

German manufacturing workers, making the world's most sophisticated products and machinery, earn on average $1.50 for every dollar that American workers make (Despite that, because its German policy to foster high-end manufacturing and highly skilled labor, Germany also has a huge trade surplus, while we have a mammoth trade deficit.) In the new global pecking order, the decline of American unions and the steady downward mobility of American workers are making us the destination of choice when European companies

want to get the job done on the cheap.

America as the beacon for workers of the world? No more. If anything, our relationship with with Europe has become a latter-day version of the one that characterized the years leading up to the Civil War, when our southern states provided cheap, slave-produced cotton to the mills of Manchester.(That's why British and French business favored the Confederacy.) Once again, we're where Europe comes to slum- in the low wage factories of the South and the run-down houses of south Los Angeles.(Harold Meyerson, LA Times)

Has a home foreclosure touched you or someone you know? - When the housing bubble burst it revealed many shoddy banking practices

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    • profile image

      othellos 4 years ago

      Home foreclosure touched a family we know in America with many unhappy events... Thank you for sharing all the informative details here.

    • TransplantedSoul profile image

      TransplantedSoul 4 years ago

      When a house gest to a state of disrepair it is so hard to recover. I think the owner (an individual or the bank if that is the case) should be liable to keep the house in reasonable repair.