Posted by: kevinfortruth | October 12, 2011

Capitalism and America – strange bedfellows.


When our forefathers had their vision for America, I am sure it did not include American companies eventually growing to become multinational entities.

Decades ago Capitalism and our Republic were in harmony. The relationship was not perfect but there was a mutual respect between corporations and citizens in America.

Obviously all things evolve – ideally in a positive direction but over the last three or four decades large corporations have been turning their backs on the same American workers who have dedicated their entire working lives to these companies. Greed for profits and stock prices have replaced a commitment to their workforce.

In the past, many Americans would have maybe one or two jobs their entire lives. Some towns were one company towns, whether it be a coal mining company or a steel mill. People could count on being employed as long as they were dedicated hard working employees.

Of course, these symbiotic relationships between corporations and workers could not remain the same forever – as companies expanded into multiple locations, some employees had to uproot and relocate to the new location across the state or even the country. Those who did not take the company up on the offer were sometimes left behind to find work elsewhere. Some corporations relocated from up north to the south for tax benefits and many employees were offered relocation packages, while others were given pink slips.

Eventually many of these corporations became multinational in nature – many companies shut down their manufacturing facilities in the U. S. and relocated to countries in Asia, Mexico, or South America in an effort to produce their products cheaper in an effort to increase profits. Unfortunately, this left, in some cases, thousands of previously dedicated workers out of work. Depending on the age and skills of these workers, future employment opportunities sometimes became almost non-existent.

First of all, I am more than aware that what these companies chose to do is perfectly within the law and I can understand their desire to increase profits – but at what cost to their workforce?

In addition to relocating overseas, other companies chose to merge or buyout other companies to increase profits due to economies of scale. When two companies merge, expenses can be greatly reduced by the elimination of redundant employees – i.e. cutting back some of the accounting, sales, IT, marketing, and even management staff. Again, all of this makes sense to a degree.

There is an old English saying that goes “Penny wise and pound foolish”. It has nothing directly to do with Karma but this corporate strategy cannot go on forever without adversely affecting our Democracy – and Capitalism itself. Some people have no idea what it means. In a nutshell it means where someone is overly cautious with pennies but foolish with large amounts of money.

Corporations sometimes choose to outsource functions to reduce employee benefits like retirement, healthcare and periodic salary increases. Companies constantly think of changes that might increase their bottom line.

Profits usually go up by increasing sales of products or services. Eventually, the increase will gradually taper off and corporations will need to reduce expenses by thinning their staff or saving money on raw materials in an effort to maximize profits.

Some corporations even “cook the books” so to speak to make their company appear more profitable that they really are.

One problem with corporations moving major segments of their business overseas is that it will eventually have a dramatic effect on our national unemployment rate or maybe a regional employment rate.

Border’s Books closed a month or so ago and 12,000 workers were on the street in one fell swoop. Pfizer Chemical laid off tens of thousands of chemists in the last decade, just like other pharmaceutical companies and the net result is that employment opportunities for pharmaceutical chemists has all but dried up.

All Chemists are not alike – chemists in one industry are not welcomed in another industry – i.e. Pillsbury or General Mills will not hire a chemist from a drug company.

Over the last decade or two, millions of jobs have been relocated overseas. Millions of other jobs were lost in America due to mergers and acquisitions.

Some individuals have the attitude that all people who become unemployed should be able find suitable employment almost at a drop of a hat. People having this mistaken opinion soon change their mind when they join the ranks of the unemployed. Then it becomes more personal and immediately look to others for consolation.

Tens of millions of Americans are currently unemployed while an additional tens of millions of Americans are under employed because they sometimes take whatever is out there. Highly skilled individuals such as IT professionals, scientists, medical professionals, and engineers are flipping burgers because that is all they can find.

Something has to change and it has to change very soon.

Corporations are sitting on trillions of dollars and they are pondering when or if to increase their staff – even in small increments. Their profits are up because they either outsourced, moved facilities overseas, consolidated or merged or even cut even more fat here and there. The employees that they shed in the process are currently idle because they cannot find work and as a result are no longer consumers like they used to be. They no longer have discretionary income like they once had and as a result when they do shop they look for good deals when available. They also are putting off major purchases out of necessity.

These same corporations that have done everything imaginable to maximize profits will soon see reductions in sales because of the trickle down effect in the reduced purchasing power of the unemployed and under employed in America.

When home sales suffer, so do sales of carpeting, small and large appliances, roofing, and even the timber industry – and decreased sales eventually overflows into shopping malls, car dealerships, and the restaurant industry.

I believe multinational corporations that started here in America will need to rethink some of their strategic decisions and might need to consider moving some of their overseas operations, including manufacturing, back here to America. Note, I said “SOME”, because if a corporation is doing business overseas, some of the manufacturing needs to be in countries where they desire to sell their products.

The bottom line is that if these large corporations keep turning their backs on Americans – these unemployed and under employed Americans will eventually turn their backs on them and rightly so.

The day after 9/11, Congress and the White House wanted all American citizens to immediately put their “consumer hats” on and return to shopping almost like nothing happened. What is happing now is much worse because millions of Americans have lost any hope of ever finding employment. Many of these same Americans are involved in the protest movement called Occupy Wall Street.

Occupy Wall Street is probably well intended – but it appears to a centipede without a head – going in different directions without a cohesive strategy. I believe one of its’ goals is to encourage corporations to alter their corporate strategies for the good of America, American workers, and these corporations themselves. Marching in streets carrying thousands of signs that say different things might eventually work, but I think Occupy Wall Street needs a new name, a committee that can present a focused purpose and a way to rally Americans behind them in an effort to rebuild the relationship between big corporations and the American worker.

Something needs to change in America and soon or America’s best years will be in the rear view mirror.

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Responses

  1. Capitallism is very good for capitalists, Where can I get some capital?

    • Probably at your “friendly” Bank of America branch if you are in the upper income level to warrant their attention. Maybe if you are a rich artist or even a published author they might welcome you at the door.


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