“What’s good for General Motors is good for the country,” was a statement attributed to former GM CEO Charles Wilson in 1953, during hearings before the Senate Armed Services Committee. Could he, as Defense Secretary, make a decision adverse to the interests of General Motors? Wilson assured the Committee such a situation was inconceivable “because for years I thought what was good for the country was good for General Motors and vice versa”. Later this statement got reduced.
But the words resonated because GM employed more workers than the U.S. government–second only to the number on payroll for Soviet state industries. In 1955, General Motors became the first American corporation to pay taxes of over $1 billion. (Wikipedia)
Behind Wilson’s apparent gaffe, however, GM had its gigantic reality base. It did create many millions of jobs, not only in the direct manufacture, shipping and sale of cars, trucks, and other products, but in its peripheral stimulus for rubber, glass, and all the other components required to make a car.
In the 1950s, the United States was the producing mammoth of the world. Banks made loans to companies that then produced goods. That America has evolved into a center for exporting jobs and playing with (gambling) money not investing it in U.S. production.
General Motors executives could claim today “what’s good for their company is good for the country” if they referred to China where more autos are manufactured than in the United States. GM now earns more from foreign sales than it does from U.S. car sales. A skilled welder for GE in Michigan in the 1980s earned $35 an hour; his equivalent in today’s Mexico doesn’t earn that much in a day.
The much heralded–by Bill Clinton, for example–“globalization process” stimulated General Electric, once the company who hired Ronald Reagan as a TV host to represent their “Americanism”. And it has repeatedly reduced its U.S. staff. Recently, however, it announced plans to hire more than 1,000 Brazilian workers for a new plant it will initiate down there for a cost of over half a billion dollars. GE also plans to invest $2 billion in its Chinese operations.
Corporate headquarters can remain in the United States, but the guts of the old companies–remember “as American as apple pie and Chevrolet”?–have found greener pastures for production and sales. U.S. workers became simply too costly, even as the corporations cut their wages and benefits steadily from 1973 on.
When the credit bubble burst along with the inflated housing bubble, the companies looked to India, China, Brazil and Indonesia where economies were growing and wages remained “reasonable.” They could produce and sell their goods more easily there and slice higher U.S. payrolls. That equals profit or capitalism.
Corporate profits rise, meaning good news for the stock market, and wages drop or stagnate (more productivity per worker). In addition, the large pool of long-term unemployed tends to keep wages down. Without full employment, U.S. credit and housing sales will not make robust comebacks and poor people will not return to their consumer habits quite so easily.
After a decade of depression in the 1930s, U.S. entry into World War II brought a monster-sized surge in government spending, which also translated into massive job creation–and economic boom. As corporate profits rose in manufacturing, the companies hired more workers and expanded, because paid workers bought stuff–even before some genius thought of developing shopping malls.
The irony of 2011 is that the consumers in the consumer society don’t have the money or credit to do what they’ve been conditioned for. They still owe money and struggle to pay their rent and mortgage payments and worry about not having a pension–and we now face the seemingly uncertain future of social security.
The media duly reports the condition of the Dow Jones Industrial Average although most of those who say those words–like their listeners–don’t understand what they mean. Wall Street has risen. The GM that needed our bailout money makes its products elsewhere; its executives shudder at the notion they had to take money from the hated government.
Investors and traders celebrated the New Year, thinking the market will boom in 2011. The tens of millions unemployed, foreclosed or already homeless went to sleep early–to escape the pessimism that has descended on the middle and lower middle classes in much of the country. Their home prices, the basis of their future, have slipped, their jobs, if they still have them, have grown insecure and their grown kids have moved back in.
The Republicans who control the House will try to cut Social Security and Medicare–they don’t dare tinker with the useless defense budget. Some Democrats will get bought by the usual buyers. Members of both Houses will demand more tax cuts–from which banks, corporations and the disgustingly rich will benefit–on the grounds that this will create jobs–not. The energy lobbies will successfully deter moves to make serious inroads in emissions and our leaders will continue to talk of the American dream which will still be there for the poor and much of the middle class, when they’re sleeping.
Saul Landau’s new film is “Will The Real Terrorist Please Stand Up”.