Cold New World
It's not news that North America's top corporations are doing better than ever while the average North American is falling on harder times than at any time in the past quarter century.
In his groundbreaking 1998 book Cold New World, journalist William Finnegan summarizes this reality after nearly a decade's worth of travel and research across America's urban and rural hard places: "While the national economy has been growing, the economic prospects of most Americans has been dimming."
What does this look like for the average North American?
"For young people and males and those without advanced degrees - for, that is, the large majority of working [North] Americans - reall hourly wages have fallen significantly over the past twenty-four years. Even during the time since I began this book, a period marked economically by low inflation, one of the great bull markets in Wall Street history, and an unemployment rate that has reached, as I write, its lowest level in twenty-four years, the median household income has fallen and national poverty reate has risen. What the triumphalism of most American business writing ignores is a frightening growth in the number of low-wage jobs." (xi)
In other words, unprecedented corportate profits aren't trickling down to the little guy, the worker who actually makes those profits happen.
Some would argue (and with a degree of merit) that it's neither the goal nor the function of corporations to "share the wealth." Corporations are not in business to improve the standard of living of their employees, by creating some kind of internal profit sharing-based welfare system. They exist to make money, plain and simple. And what exactly is wrong with that?
Workers are taken care of, so the argument goes. Labour unions have done more than enough to level the playing field. They've made the workplace safer, safeguarded workers against arbitrary demands and dismissal, gained legal protections against abusive treatment by employers, fought for minimum wage and won. (Some, including this author, would even say unions have gone too far sometimes, asking more from employers than was either fair or reasonable.) Whether by choice or political pressure - and a stronger case can be for the latter, in my opinion - corporations today treat their workers much more fairly than did the sweat shops of the nascent industrial revolution a century or so ago.
So why make more demands? Yes, many corporations make obscene profits; but that's just the way capitalism works. Why should we ask big business to do any more than they already have?
Bypassing all appeals to altruism - even though I think that is where the best arguments lie - I'll jump straight to simple economics.
From a purely selfish profit perspective, it just doesn't make sense to leave your employees out when it comes to a fair and reasonable wage. Because the ultimate survival, not only of corporations, but of the entire Western - and by extension, the global - economy depends on people being paid well for the work they do.
Here's how. Some experts have suggested that a "contributing member of society" is, by definition, a consumer. Let's assume this is true. After all, who can deny that consumption is the heart and blood of capitalism, and that it is this which keeps our Western economy (and standard of living) alive? The math, therefore, is simple:
1. A society built on the principle of consumption requires consumers.
2. Consumers requires money to consume.
3. To have enough money to consume, a consumer must have a source of adequate income.
4. Therefore, workers who are paid barely enough to pay their bills simply cannot consume beyond this, except by indenturing themselves (a topic that will get special treatment in a differnt article). This obviously limits the number of products and services sold and thus threatens the bottom line.
It also begs the question: will corporations really gain anything in the long run via their current techniques of "staying competitive"?
Is this not the epitome of the old saying, "What does it really profit a company, if it gains the whole world but loses its own soul?"
But that's looking at it from a purely selfish point of view.
CEOs, what about the people who work for you? Do you feel any responsibility to them? Or should they just be happy they have a job at all? Do you really not feel there's anything unfair in the disparity between your $30 million and the floor guy's $15,000? Has business leadership's Ethical Imperative been lost in a hostile takeover by Expediency, Inc.?
I know your books tell you what's profitable. But what does your gut say is right?
Don't get me wrong: I think top executives who do their job should be paid well, even very well. They carry huge responsibilities that come with big stresses. I'm not looking for an equalization of wages. But something is clearly amiss when, as Benjamin DeMott puts it, "within our borders an opportunity society and a caste society co-exist".
I'm not suggesting corporations should pay their workers too much, though that, of course, depends on one's definition of "too much". The point is moot, really: Most North Americans aren't in any immediate danger of living too well - though this can't be said for senior executives whose salaries have been rising in direct proportion to the drop or stasis in average wages.
Is this capitalism at its finest?
Is this the "better way", the new global market economy we are so urgently, even fanatically, preaching and pressuring other nations to embrace? And better for who, exactly?
Now is the time when we can turn this thing around. Judging by history, however, and by our political responses to other issues such as, say, the environment, I'm not anticipating a turnaround anytime soon. Perhaps not, as usual, until it's too late.
Oh well, there's always revolution.
posted by Paul Donnett at 10:36 PM
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