When it comes to reducing the unemployment rate, America's investors are not only missing in action, they're making the situation worse. Their principle motivation is, and always has been, to pressure corporate managements to reduce or eliminate labor costs.
If you want to know what's happening to our economy, forget what politicians and special-interest economists tell you. Instead, pay attention to the Wall Street gurus who advise investors. Although they disagree about the future of specific stock prices and the overall market, they're in basic agreement about our economy.
Consider the debate between advisers who predict the stock market will go up, versus those who feel we are headed for a double-dip recession. Those predicting recession cite the chronic unemployment rate, reduced consumer spending, the bankruptcy of state governments and the weak housing market, among other things.
Those who feel that the stock market will go up point out — as one guru on CNBC put it — “corporations have become lean, mean, money-making machines,” and are almost immune to weaknesses in the U.S. economy. Note that this debate is not about chronic unemployment, stagnant wages or the housing market. It's about how those factors will affect American corporate profitability in other countries.
Business Week recently offered insights into our economic future when it quoted Allen Sinai, former chief economist for Lehman Brothers, about the economy: “We are not going to generate a lot of jobs. The cost of labor is too high. We are having a huge substitution of technology for people to save money and make profits.”
In its article “Bloodied, Juárez Still Lures Big Companies,” Business Week also noted that Juárez is one of the most violent places on earth and recorded 5,200 murders in the past 28 months. Yet its factories have added 27,000 workers in the past 10 months. “Blue chips like Johnson & Johnson, Delphi Automotive and Scientific Atlanta show no signs of leaving … Alan Russell, who runs industrial parks in Juárez for dozens of corporate clients, mostly American, says he has landed more business in 2010 than all of last year.”
All pretenses are gone. It's now out in the open. To enrich themselves, investors and top corporate executives are willing to outsource all jobs — from any country and no matter what the skill level — to that part of the world that has the lowest wages and worst working conditions. In addition, technological advances are to be used to reduce work force and save costs, and the benefits are not to be shared with workers.
America's Congress, leading economists and pundits seem incapable of acknowledging the obvious. International trade based on exploiting cheap foreign labor is a disaster. Instead of globalization improving the living standards of all the world's citizens, it's created huge wealth at the very top — all across the globe — and put the screws to those who work for a living by pitting them against each other in a race to the bottom.
We're losing our industries, our national debt is ruinous, wealth disparity between rich and poor is exploding, and China and India are becoming the world's leading economic powers. It's time to acknowledge an uncomfortable fact: Those who control government, either elected officials or powerful people behind the scenes, always determine the extent to which different classes of people share society's productivity. Whatever is happening in an economy — those in control are getting the results they actually want — not what they claim they want.
The politicians who conned us into globalization are the same ones who created the conditions they now cite as reasons why workers must accept a lower standard of living: Working Americans, at all levels, can't compete globally unless they're willing to work harder and for less money.
When the U.S. adopted the Third World standard that classifies workers as machines or raw materials, it forfeited its ability to control its own economy. Before globalization, our government could balance the interests of investors, workers, consumers and the environment through its regulatory, fiscal and monetary policies. When this was done well, say from 1932 to 1980, we had an economy that benefited all classes of society. When done poorly, as from 1980 to today, it results in the destruction of the middle class and the creation of a new aristocracy.
Face it. Working Americans are increasingly powerless and under the control of the world's investors. And we all, eventually, are going to suffer for it.