 If you read economists' reports, you'll find the word productivity
mentioned a lot. It's key to competitive advantage and a healthy
economy, they say. Ours is dropping, compared to other countries where
people work harder and/or work smarter, they say. Automation improved
it for factory workers and agriculture, but we need to improve it for
office workers, they say.
This is sheer propaganda. Productivity is a euphemism for profit margin.
Of course the corporatists obfuscate this fact by defining productivity
deliberately obscurely: as the amount of 'output' per unit of 'input'.
What this means is the ratio of revenue (that's how right-wing
economists measure 'output') to cost (that's how they measure 'input').
This is precisely the definition of profit margin. When neocons lament
that worker productivity is inadequate, what they are really saying is
that their corporate profits are inadequate, and that unless workers
make severe and continuous sacrifices to increase these corporations'
profit margins from domestic operations they will take the money they
gouged from consumers in this country and invest it all in struggling
nations that are so desperate that they will do anything, .
This
is the Wal-Mart Dilemma, illustrated above in the red boxes, but taken
to the next level. What Wal-Mart is doing to suppliers, forcing them to
lower prices every year to keep their contract, until they are
bankrupted, is what corporatists are now trying to do to workers,
forcing them to accept lower real wages, fewer benefits, and work
longer hours, or they'll find another 'supplier' for their labour --
China.
More specifically there are six ways you can increase corporate profit margins, oops, I mean productivity:
- Increase
revenues by charging customers more for the same thing. This is
accomplished by forming oligopolies with competitors to reduce customer
choice and fix prices, and by false advertising.
- Increase
revenues by getting the government to pay more for the same thing, or
buy more, using taxpayers' money. This is accomplished by bribing
politicians for no-bid contracts, 'privatization', and massive
corporate welfare subsidies, and by encouraging wars and other
activities that entail massive increases in government spending with no
benefit to citizens.
- Increase margins by charging customers the
same price for an inferior product that does less and needs to be
replaced more often. This is accomplished by squeezing out or buying
out (or suing out, using new insanely broad intellectually property
laws) any new and quality producers of products, so the customer simply
has no choice left but to buy Chinese-made crap that will break as soon
as you open it.
- Reduce labour costs. This is accomplished by
threatening workers with shut-downs and massive layoffs if they try to
organize unions, or if they refuse to work longer hours each year (to compensate for the fact that they're now effectively doing two or three people's jobs),
for lower real wages and reduced benefits. It is also enabled by
cheating on cost-of-living increases for workers by bribing and
coercing government officials to deliberately understate (by at least
half) the actual annual increase in the cost of living.
- Reduce
material costs. This is accomplished by using inferior materials, by
blackmailing struggling nations and bribing their officials to sell
goods at lower and lower prices (in turn requiring even more brutal
slave labour in those nations to make this possible), and through
bullying governments to sign so-called 'free trade' agreements that
prohibit countries, through massive, crippling fines, from passing or
enforcing laws that provide social or environmental protections to
workers that exceed those of the most lax signatory.
- Reduce
regulatory costs. This is accomplished by bribing politicians to
reduce, roll back or simply not enforce social and environmental laws
and regulations.
While of course none of these things is
sustainable indefinitely (the Robber Barons tried a century ago), when
you have corporations and governments conspiring together to do all six
of these things, this race to the bottom can continue for years.
That
is precisely what is happening now. We now have a situation where
year-over-year profit margins of the world's largest corporations have
been increasing by 20% or more every year for a decade, and are
expected to continue to do so indefinitely. The average annual profit
growth rate predicted by analysts for the S&P 500 stocks is about
23% annually, for at least the next five years, and it is on that basis
that stock prices are so wildly overvalued and shareholder expectations
are so relentlessly excessive. The return on investment for these
companies is now at least three times a reasonable ROI for investments
with commensurate risk.
We, the citizens and consumers, are
completely funding this windfall for the executives and controlling
shareholders of big corporations, and we are expected to continue doing
so indefinitely:
- We are paying more each year for many
products and services, simply because corporate oligopolies are allowed
to fix prices and gouge us.
- We are getting shoddier products
each year, produced in countries that don't give a damn about quality,
and our landfills are filling up faster and faster with this junk.
- More
and more of our tax dollars are going to private companies for absurdly
overpriced contracts with no competitive bidding and no accountability
for what we get for that money.
- Corporate welfare subsidies,
which also come from our tax dollars, are out of control, often
deliberately hidden in 'omnibus' bills so the hapless media can't even
tell us (even if they were inclined to) how our money is being stolen
and used to repay political favours.
- The commons, public lands and resources that belong to the people, not the government, are being given away to friends of government at fire-sale prices.
- Our
wages are being reduced, in real terms, by eliminating our colleagues'
jobs and forcing us to do two or three jobs, requiring longer work days
and weeks for what, after real
inflation (which varies from 6% for staples to 20% or more for health
and other costs, but is deliberately and radically understated by
governments) is actually a cut in salary.
- Wage benefits are being eliminated, further contributing to the average worker's double-digit annual cost of living increase.
- Pensions
are being cynically converted from defined benefit to defined
contribution plans, which will be essentially worthless in the extent
of a severe recession.
- Struggling nations are being robbed,
bankrupted, poisoned with our toxins and our utterly unregulated
industrial and extraction activities in those countries, and driven
into brutal wage slavery, and not surprisingly they hate us for it and
often take it out on innocent citizens.
- Free trade agreements are gutting social and environmental regulations in countries rich and poor.
- Deregulation is enabling more and more corporate fraud, abuse of workers and the poisoning of our air, water, soil and food.
The
chart above, which proposes a solution for the Wal-Mart dilemma by
converting the red 'vicious cycle' into the green 'virtuous cycle',
also suggests the solution for all of these corporate abuses. It would
require our intervention, through citizen and consumer action as well
as through our elected officials, to do all of the following (take a
deep breath):
- Smash oligopolies, by re-enacting
antitrust/anticombines legislation with teeth in it, and imprisoning
and confiscating the property of corrupt executives who defy it.
- Prohibit false advertising and corporate propaganda in the media, and make it a serious criminal offense.
- Require minimum, no-hassle, no-charge warranties on all products and services.
- Place a severe tax on products that produce waste and pollution and/or use non-renewable resources.
- Require
suppliers, not customers, to take back and reuse and recycle products
at the end of their useful life, and to take back all packaging, at no
cost to the customer.
- Eliminate privatization of government
services. Governments must be held accountable to provide essential
social services effectively using their own resources, and auditors of
government programs should have the authority to report, fine, dismiss
and prosecute unethical and incompetent public employees, including
elected officials, supported by enabling whistle-blowing legislation.
- Eliminate all corporate subsidies, except to fledgling small businesses that create substantial new employment.
- Prohibit
the sale or lease of the Commons to private interests, and commence a
program to re-expropriate lands already sold or leased, for amounts not
exceeding what the government received from their sale.
- Increase the minimum wage to 150% of the local poverty level.
- Prohibit work weeks longer than 35 hours for anyone.
- Revamp the computation of cost of living indices to make them reflect workers' real annual increases in costs.
- By
global agreement, and subject to trade sanctions for non-complying
nations, establish strong minimum standards for social, worker and
environmental protection in all countries, including high-quality,
universal, free health care and education, a guaranteed minimum annual
income (through a negative income tax), and defined-benefit pensions.
- Teach
all students entrepreneurial skills in high school, and support,
through government programs, the establishment of local, sustainable
entrepreneurial businesses.
- Establish trade regulations that
encourage and favour locally and domestically-made products and
services, by prohibiting the offshoring or importing of goods and
services that can reasonably (given considerations such as climate and
availability of raw materials) be produced domestically.
- Tax
the owners of corporations proportionally on the profits generated by
those corporations, regardless of if and how they are distributed, at
marginal personal income tax
rates. Apply a 100% excess profits tax on personal incomes in excess
of, say, 25 times the minimum wage, and a 100% excess wealth tax on
accumulated net assets in excess of 25 times the country's median
personal net worth. You want to see 'a rising tide lift all boats', that's the way to do it.
- Forgive
all debts of struggling nations, and return to them 100% ownership of
all property, companies and resources located in those countries.
Other than invoking the above-noted trade sanctions on countries that
fail to comply with high global social and environmental standards, do
not intervene otherwise in the economic system of other countries in
any way.
- Likewise, allow a reasonable time in our own countries for 100% ownership of all property, companies and
resources to be transferred from those who are not citizens or landed immigrants, and
full-time residents of the communities
in which these assets are
located, back to those who are, or, if these properties are
undeveloped, to the Commons for the benefit of all citizens, for a
reasonable compensation.
This
is all, of course, dreaming in technicolour. All of these actions are
perfectly reasonable, and could be put into place quite quickly and
inexpensively. But it would entail the most massive redistribution of
wealth and power in the history of civilization. Those who have 'worked
the system' to gain a wildly disproportionate share of each nation's
wealth and power now undoubtedly believe they are entitled to keep it,
by force if necessary.
So it won't happen, at least not in an
orderly, reasoned way. But I'm not suggesting ideal, radical solutions
here just to be provocative or to make you feel badly about their
impossibility. The status quo is unsustainable, and eventually, by one
means or another, these changes will occur.
The next Great Depression, pandemic disease, global and regional wars,
the End of Oil, global warming, and ongoing revolutions of various
types will all force us to come to grips with the fatal flaws in our
economic system and in the political system that enables it to
continue. We will implement all these changes when, and only when, we
have no other choices left.
But the next time you hear corporate
executives or government officials lamenting our lack of 'productivity'
and blaming it on lazy or uneducated workers, just ask them why 23%
annual growth in corporate profit margins isn't enough, and by what
magical thinking they believe such increases are somehow sustainable
forever.
Or better still, ask them to explain to their children
why this year's and next year's profits are more important than leaving
them with a world, an economy or a society that is sustainable, just,
or even livable. |
MADE IN CANADA
trust your
instincts 
