Job (Business) Killing Regulations

Ever since Ronald Reagan told us in his 1981 Inaugural Address, “Government is not the solution to our problem; government is the problem.” government bashing by right-wingers, Republicans and many Democrats has been a constant drumbeat of political rhetoric. Now we have Trump with his “Kill 2 regulations for every new one” and a government dominated by Republicans for whom destroying government has been an objective for decades. We are faced with the probable destruction of many government agencies whose job it is to protect us from capitalism.

Someone Else Will Pay – A Basic Feature of the Capitalist Economy

One of the basic features of capitalism is the requirement that businesses avoid any costs that they can. Basically they are required by the rules of the competitive game to get someone else to pay for anything they can shirk off. Without countervailing forces, the government, unions, and other social organizations, stepping in, capitalists will externalize any cost they can. This results in capitalist firms destroying the environment by unsustainable exploitation of the earth (see mines, forests, rivers, oceans); polluting the environment (air, water, landscape); maintaining unsafe working conditions; paying wages below that required for people to have a sustainable life; engaging in speculative risky gambling (see our financial sector for the most recent egregious examples of this); creating and marketing products and services based on manipulating demand through false, misleading and manipulative advertising.

None of this being done because capitalists are evil people.

This happens because the rules of the capitalist game require it to happen. If another firm, lets say a paper mill, is avoiding the costs of cleaning the water used in production before returning it to the river, the competitor paper mill must do the same. Otherwise, their paper would cost much more and they would not survive in the marketplace. Without government, unions, and social groups setting the rules of the game with regard to “external costs” capitalist firms must cast off as many costs as possible. This is the simple inescapable law of capitalist competition.

The EPA is a favorite target of government bashing. Let’s look back to why the EPA was formed in 1970 by Republican President Nixon. Many readers are too young to have first hand knowledge of how widespread environmental pollution used to be.

From the Empire St building – photo by Neil Boenzi originally published in NYTimes.

New York City looked like this in 1966. That’s not fog, that is smog, a noxious pall of automobile exhaust and emissions from power plants, petro/chemical plants and others. These days you have to travel to Beijing and other places without an EPA to experience this first hand

Another example

Here is a comparative shot from Los Angeles – 1968 – 2005.

From: http://geoprojectgrp7.blogspot.com/2015/03/air-pollution-in-los-angeles-location.html

Rivers on Fire

Industry polluted water so badly that some burned. Here is a short documentary on the Cuyahoga River in Cleveland. It begins with a snip from Randy Newman’s song “Burn On”1 :

The catalog of capitalism’s inevitable sins is way too long for this brief piece. The breadth of the costs of this central feature is quite astonishing and in some perverse way, inventive. In recent years we have seen new forms of externalized costs unthought of earlier. Do a search on “farm waste pollution” or “chemical pollution” for more examples from our current situation.

You Eat the Next Cost Avoidance Every Day

Another cost that capitalists seek to reduce, or eliminate, is labor, wages and salaries. The food industry is a good example of where non-union, minority workers are exploited because no one will protect them from the cost avoiding behavior of the capitalist system. Without government protections capitalists will pay as low a wage as possible regardless of whether the wage allows workers to live a reasonable life, raise their families and educate their children. Capitalism is not concerned with how the human resources of society survive and reproduce the next generation of workers.

The food we eat every day is plentiful and comparatively inexpensive because the farms that grow it are largely outside the protections of fair labor and minimum wage laws. Many farm workers are undocumented migrant workers from Mexico and other countries to our South. “Annually, the average income of crop workers is between $10,000 to $12,499 for individuals and $15,000 to $17,499 for a family. To give you an idea, the federal poverty line is $10,830 for an individual or $22,050 for a family of four (in 2009). Thus, according to NAWS, 30% of all farm workers had total family incomes below the poverty line.”2 Many are migrants and therefore their children do not have stable school lives. 

This is not a new story. In 1960 Edward R. Morrow reported on this exploitation in one of the most famous documentaries of the TV history, Harvest of Shame. The facts today are only marginally better than 57 years ago.

Externalized costs, cost avoidance and shirking wherever possible are structural features of capitalism that people can and must control. Capitalism is structurally unable to control these outcomes. It has no capacity to see or react to the consequences of the actions of it participants. It requires perpetual mindless growth with no regard to any needs outside of its own needs. People and nature be damned.  With the present weakness of unions and other social forces, government is the tool. We must take the government back from the rich and corporations. Capitalism was created through the joint action of government and private entrepreneurs. It is not some ideal system, rather the result of struggle between various elements in society.  Its present structure is the result of more than forty years of political action by the rich and corporations furthering their ends. Time now for the vast majority to assert their needs to be expressed in the economy.

  1. audio of song here: https://youtu.be/VtW8RkI3-c4 []
  2. http://nfwm.org/education-center/farm-worker-issues/low-wages/ []

Job Creation – A Pliable (Fraudulent) Rhetoric in the Current Debate over Debt and Debt Ceilings

When it comes to job creation both Democrats and Republicans reflexively trot out small business as the engine of growth. These flights of breathy admiration for plucky small business owners are part of our national myth, right up there with cowboys. There probably is some truth in this myth as long as you accept the other side of the equation which includes the fact that jobs in small businesses are lower paying and less stable than those in the middle and big size companies.

But to demonstrate the extent to which today’s political environment has lost any sense of consistency, we now have the Republicans saying that any tax increases on the wealthy and corporations are “job killers”.

Since when have wealthy individuals created jobs? They don’t start new entrepreneurial ventures. They do buy extra vacation homes and fly to Vermont and Colorado and Switzerland more frequently in their private jets for skiing and apres ski fun. Much of this extravagance also occurs outside of the US. It is well known that unlike poor and middle class people, wealthy people do not spend incremental income. They save a large portion of it. Poor and middle class must spend every dollar to keep up. I defy you to find data that supports the wealthy as a source of new job creation.

As for big corporations, they are sitting on huge pools of cash and not creating jobs now. 

Companies had a record $ 1.91 trillion in cash and other liquid assets at the end of the first quarter, the report also showed, up from $ 1.86 trillion in the prior three months. Six consecutive quarters of profit growth helped fuel a 96 percent jump in the Standard & Poor’s 500 Index from its recession-low in March 2009 through March 2011.  ((http://www.businessweek.com/news/2011-06-09/household-worth-in-u-s-increases-by-943-billion-fed-says.html))

There has been consternation that though corporate profits and productivity have soared since the 2008 meltdown, corporations are not investing in the US economy. To some extent this may merely be a symptom that big corporations are not beholden to any nation state. Just because IBM has headquarters in Armonk, NY does not mean that it is primarily US-centric in its business activities and future plans. IBM’s 2010 Annual Report reported sales as follows:  Americas $42,044 billion; Europe/Middle East/Africa $31,866 billion; Asia Pacific $23,150 billion. The report further glows about the opportunities in the emerging boom economies of India and China. The US (not even reported separately, just as part of the “Americas”) is not a high growth region.

To satisfy you own curiosity about how widespread this global phenomenon is look up some recent annual reports for companies like GE, Walmart, Caterpillar, or just choose your favorite large company that has headquarters in the US.

Returning to wealthy individuals, it would not be surprising if one could look into their portfolios to discover that they reflect the same global thinking as found in the IBM example.

A final note must be made that during the 1950’s and into the 1960’s and again in the 1990’s Federal taxes on wealthy individuals and corporations were significantly higher than they are today. Yet, those periods are marked by higher than average job creation. George Bush’s huge tax give aways tot he wealthy (really a transfer of Chinese liquidity to the US wealthy through the Federal tax system) in the 2000’s coincided with the lowest job creation period in US history dating all the way back to Hervet Hoover.