LABOR
IN THE
NEW WORLD ORDER
How Wal-Mart is Remaking our World Bullying people from your town to China
THE LOOTING OF AMERICA, by Web Icon Michael Rivero of WHATREALLYHAPPENED.COM
How Corporations Came to Rule the World, by Richard Heinberg, August 19, 2002
From:
Date: Tue, 7 May 2002
1. How Wal-Mart is Remaking our World . Bullying people from your town to China.
2. Wal-Mart: world outlet for the products of oppression. Wal-Mart's Connection To Burmese Dictators Challenged.
3. Wal-Mart's shirts of misery
4. Saipan: lawsuit charges Gap, Wal-Mart, others for sweatshops
5. Wal-Mart sweatshops in Honduras
________________________________________________________________________
Bullying people from your town to China
Corporations rule. No other institution comes close to matching the power that the 500 biggest corporations have amassed over us. The clout of all 535 members of Congress is nothing compared to the individual and collective power of these predatory behemoths that now roam the globe, working their will over all competing interests.
The aloof and pampered executives who run today's autocratic and secretive corporate states have effectively become our sovereigns. From who gets health care to who pays taxes, from what's on the news to what's in our food, they have usurped the people's democratic authority and now make these broad social decisions in private, based solely on the interests of their corporations. Their attitude was forged back in 1882, when the villainous old robber baron William Henry Vanderbilt spat out: "The public be damned! I'm working for my stockholders."
The media and politicians won't discuss this, for obvious reasons, but we must if we are actually to be a self-governing people. That's why the Lowdown is launching this occasional series of corporate profiles. And why not start with the biggest and one of the worst actors?
The beast from Bentonville
Wal-Mart is now the world's biggest corporation, having passed ExxonMobil for the top slot. It hauls off a stunning $220 billion a year from We the People (more in revenues than the entire GDP of Israel and Ireland combined).
Wal-Mart cultivates an aw-shucks, we are-just-folks-from-Arkansas image of neighborly small-town shopkeepers trying to sell stuff cheaply to you and yours. Behind its soft homespun ads, however, is what one union leader calls "this devouring beast" of a corporation that ruthlessly stomps on workers, neighborhoods, competitors, and suppliers.
Despite its claim that it slashes profits to the bone in order to deliver "Always Low Prices," Wal-Mart banks about $7 billion a year in profits, ranking it among the most profitable entities on the planet.
Of the 10 richest people in the world, five are Waltons the ruling family of the Wal-Mart empire. S. Robson Walton is ranked by London's "Rich List 2001" as the wealthiest human on the planet, having sacked up more than $65 billion (£45.3 billion) in personal wealth and topping Bill Gates as No. 1.
Wal-Mart and the Waltons got to the top the old-fashioned way, by roughing people up. The corporate ethos emanating from the Bentonville headquarters dictates two guiding principles for all managers: extract the very last penny possible from human toil, and squeeze the last dime from every supplier.
With more than one million employees (three times more than General Motors), this far-flung retailer is the country's largest private employer, and it intends to remake the image of the American workplace in its image which is not pretty.
Yes, there is the happy-faced "greeter" who welcomes shoppers into every store, and employees (or "associates," as the company grandiosely calls them) gather just before opening each morning for a pep rally, where they are all required to join in the Wal-Mart cheer: "Gimme a W!" shouts the cheerleader; "W!" the dutiful employees respond. "Gimme an A!" And so on.
Behind this manufactured cheerfulness, however, is the fact that the average employee makes only $15,000 a year for full-time work. Most are denied even this poverty income, for they are held to part-time work. While the company brags that 70% of its workers are full-time, at Wal-Mart "full time" is 28 hours a week, meaning they gross less than $11,000 a year.
Health-care benefits? Only if you've been there two years; then the plan hits you with such huge premiums that few can afford it, only 38% of Wal-Marters are covered.
Thinking union? Get outta here! "Wal-Mart is opposed to unionization," reads a company guidebook for supervisors. "You, as a manager, are expected to support the company's position. . . . This may mean walking a tightrope between legitimate campaigning and improper conduct."
Wal-Mart is in fact rabidly anti-union, deploying teams of union-busters from Bentonville to any spot where there's a whisper of organizing activity. "While unions might be appropriate for other companies, they have no place at Wal-Mart," a spokeswoman told a Texas Observer reporter who was covering an NLRB hearing on the company's manhandling of 11 meat-cutters who worked at a Wal-Mart Supercenter in Jacksonville, Texas.
These daring-do employees were sick of working harder and longer for the same low pay. "We signed [union] cards, and all hell broke loose," says Sidney Smith, one of the Jacksonville meat-cutters who established the first-ever Wal-Mart union in the U.S., voting in February 2000 to join the United Food and Commercial Workers. Eleven days later, Wal-Mart announced that it was closing the meat-cutting departments in all of its stores and would henceforth buy prepackaged meat elsewhere.
But the repressive company didn't stop there. As the Observer reports: "Smith was fired for theft after a manager agreed to let him buy a box of overripe bananas for 50 cents, Smith ate one banana before paying for the box, and was judged to have stolen that banana."
Wal-Mart is an unrepentant and recidivist violator of employee rights, drawing repeated convictions, fines, and the ire of judges from coast to coast. For example, the Equal Employment Opportunity Commission has had to file more suits against the Bentonville billionaires club for cases of disability discrimination than any other corporation. A top EEOC lawyer told Business Week, "I have never seen this kind of blatant disregard for the law."
Likewise, a national class-action suit reveals an astonishing pattern of sexual discrimination at Wal-Mart (where 72% of the salespeople are women), charging that there is "a harsh, anti-woman culture in which complaints go unanswered and the women who make them are targeted for retaliation."
Worker's compensation laws, child-labor laws (1,400 violations in Maine alone), surveillance of employees you name it, this corporation is a repeat offender. No wonder, then, that turnover in the stores is above 50% a year, with many stores having to replace 100% of their employees each year, and some reaching as high as a 300% turnover!
Worldwide wage-depressor
Then there's China. For years, Wal-Mart saturated the airwaves with a "We Buy American" advertising campaign, but it was nothing more than a red-white-and-blue sham. All along, the vast majority of the products it sold were from cheap-labor hell-holes, especially China. In 1998, after several exposes of this sham, the company finally dropped its "patriotism" posture and by 2001 had even moved its worldwide purchasing headquarters to China. Today, it is the largest importer of Chinese-made products in the world, buying $10 billion worth of merchandise from several thousand Chinese factories.
As Charlie Kernaghan of the National Labor Committee reports, "In country after country, factories that produce for Wal-Mart are the worst," adding that the bottom-feeding labor policy of this one corporation "is actually lowering standards in China, slashing wages and benefits, imposing long mandatory-overtime shifts, while tolerating the arbitrary firing of workers who even dare to discuss factory conditions."
Wal-Mart does not want the U.S. buying public to know that its famous low prices are the product of human misery, so while it loudly proclaims that its global suppliers must comply with a corporate "code of conduct" to treat workers decently, it strictly prohibits the disclosure of any factory names and addresses, hoping to keep independent sources from witnessing the "code" in operation.
Kernaghan's NLC, acclaimed for its fact-packed reports on global working conditions, found several Chinese factories that make the toys Americans buy for their children at Wal-Mart. Seventy-one percent of the toys sold in the U.S. come from China, and Wal-Mart now sells one out of five of the toys we buy.
NLC interviewed workers in China's Guangdong Province who toil in factories making popular action figures, dolls, and other toys sold at Wal-Mart. In "Toys of Misery," a shocking 58-page report that the establishment media ignored, NLC describes:
13- to 16-hour days molding, assembling, and spray-painting toys,8 a.m. to 9 p.m. or even midnight, seven days a week, with 20-hour shifts in peak season.
Even though China's minimum wage is 31 cents an hour which doesn't begin to cover a person's basic subsistence-level needs these production workers are paid 13 cents an hour.
Workers typically live in squatter shacks, seven feet by seven feet, or jammed in company dorms, with more than a dozen sharing a cubicle costing $1.95 a week for rent. They pay about $5.50 a week for lousy food. They also must pay for their own medical treatment and are fired if they are too ill to work.
The work is literally sickening, since there's no health and safety enforcement. Workers have constant headaches and nausea from paint-dust hanging in the air; the indoor temperature tops 100 degrees; protective clothing is a joke; repetitive stress disorders are rampant; and there's no training on the health hazards of handling the plastics, glue, paint thinners, and other solvents in which these workers are immersed every day.
As for Wal-Mart's highly vaunted "code of conduct," NLC could not find a single worker who had ever seen or heard of it.
These factories employ mostly young women and teenage girls. Wal-Mart, renowned for knowing every detail of its global business operations and for calculating every penny of a product's cost, knows what goes on inside these places. Yet, when confronted with these facts, corporate honchos claim ignorance and wash their hands of the exploitation: "There will always be people who break the law," says CEO Lee Scott. "It is an issue of human greed among a few people."
Those "few people" include him, other top managers, and the Walton billionaires. Each of them not only knows about their company's exploitation, but willingly prospers from a corporate culture that demands it. "Get costs down" is Wal-Mart's mantra and modus operandi, and that translates into a crusade to stamp down the folks who produce its goods and services, shamelessly building its low-price strategy and profits on their backs.
The Wal-Mart gospel
Worse, Wal-Mart is on a messianic mission to extend its exploitative ethos to the entire business world. More than 65,000 companies supply the retailer with the stuff on its shelves, and it constantly hammers each supplier about cutting their production costs deeper and deeper in order to get cheaper wholesale prices. Some companies have to open their books so Bentonville executives can red-pencil what CEO Scott terms "unnecessary costs."
Of course, among the unnecessaries to him are the use of union labor and producing goods in America, and Scott is unabashed about pointing in the direction of China or other places for abysmally low production costs. He doesn't even have to say "Move to China". This purchasing executives demand such an impossible lowball price from suppliers that they can only meet it if they follow Wal-Mart's labor example. With its dominance over its own 1.2 million workers and 65,000 suppliers, plus its alliances with ruthless labor abusers abroad, this one company is the world's most powerful private force for lowering labor standards and stifling the middle-class aspirations of workers everywhere.
Using its sheer size, market clout, access to capital, and massive advertising budget, the company also is squeezing out competitors and forcing its remaining rivals to adopt its price-is-everything approach.
Even the big boys like Toys R Us and Kroger are daunted by the company's brutish power, saying they are compelled to slash wages and search the globe for sweatshop suppliers in order to compete in the downward race to match Wal-Mart's prices.
How high a price are we willing to pay for Wal-Mart's "low-price" model? This outfit operates with an avarice, arrogance, and ambition that would make Enron blush. It hits a town or city neighborhood like a retailing neutron bomb, sucking out the economic vitality and all of the local character. And Wal-Mart's stores now have more kill-power than ever, with its Supercenters averaging 200,000 square feet, the size of more than four football fields under one roof! These things land splat on top of any community's sense of itself and devour local business.
By slashing its retail prices way below cost when it enters a community, Wal-Mart can crush our groceries, pharmacies, hardware stores, and other retailers, then raise its prices once it has monopoly control over the market.
But, say apologists for these Big-Box megastores, at least they are creating jobs. Wrong. By crushing local businesses, this giant eliminates three decent jobs for every two Wal-Mart jobs that it creates and a store full of part-time, poorly paid employees hardly builds the family wealth necessary to sustain a community's middle-class living standard.
Indeed, Wal-Mart operates as a massive wealth extractor. Instead of profits staying in town to be reinvested locally, the money is hauled off to Bentonville, either to be used as capital for conquering yet another town or simply to be stashed in the family vaults (the Waltons, by the way, just bought the biggest bank in Arkansas).
It's our world
Why should we accept this? Is it our country, our communities, our economic destinies, or theirs? Wal-Mart's radical remaking of our labor standards and our local economies is occurring mostly without our knowledge or consent. Poof, there goes another local business. Poof, there goes our middle-class wages. Poof, there goes another factory to China. No one voted for this . . . but there it is. While corporate ideologues might huffily assert that customers vote with their dollars, it's an election without a campaign, conveniently ignoring that the public's "vote" might change if we knew the real cost of Wal-Mart's "cheap" goods and if we actually had a chance to vote.
Much to the corporation's consternation, more and more communities are learning about this voracious powerhouse, and there's a rising civic rebellion against it. Tremendous victories have already been won as citizens from Maine to Arizona, from the Puget Sound to the Gulf of Mexico, have organized locally and even statewide to thwart the expansionist march of the Wal-Mart juggernaut.
Wal-Mart is huge, but it can be brought to heel by an aroused and organized citizenry willing to confront it in their communities, the workplace, the marketplace, the classrooms, the pulpits, the legislatures, and the voting booths. Just as the Founders rose up against the mighty British trading companies, so we can reassert our people's sovereignty and our democratic principles over the autocratic ambitions of mighty Wal-Mart. (Jim Hightower, Alternet April 26, 2002 More of Jim Hightower's writing can be found in his monthly newletter, The Hightower Lowdown. For more information, see www.jimhightower.com .)
2. WAL-MART: WORLD OUTLET FOR THE PRODUCTS OF OPPRESSION
Wal-Mart's Connection To Burmese Dictators Challenged (Maquila Solidarity Network, 2000)
Brutal repression, widespread human rights violations and a government tied to drug thugs has brought international condemnation of the country's dictatorial regime. But the record of the Burmese military dictators was not enough, apparently, to keep Wal-Mart, the world's largest retailer, from stocking its shelves with garments made in Burma.
Since December 1999, Wal-Mart Canada has imported almost 70 tons of garments from Burma. Despite Wal-Mart claims that it broke its Burma connection in January of this year, records show continued imports from Burma to Wal-Mart as recently as May.
On July 13, 2000, Wal-Mart was identified in a Thai newspaper as buying garments from a factory owned by Burmese drug thug, Lo-Hsing-han. Ever Green Overseas garment company, owned by Lo-Hsing-han is one of three Burmese companies that have shipped garments directly to Wal-Mart over the last year. Wal-Mart claims it does not do business with Burma.
Burma's drug thugs and military dictators are tied together in an economic and political alliance of repression and exploitation. The International Labor Organization (ILO) has condemned Burma for "widespread and systematic" violations of the prohibition on the use of forced labor. Burma has been censured for allowing the modern-day practice of slavery. Drug money and revenue from trade relations with few multinational corporations has kept the regime firmly in place, and riding on the backs of an increasingly impoverished population.
The United States imposed sanctions on Burma in 1997 barring all U.S. investment in the country citing that the country is governed by a "highly authoritarian military regime that is widely condemned for its serious human rights abuses." The State Department points to "money from the trafficking of illicit narcotics" as the likely primary source of income for the rogue nation. http://www.transnationale.org/bd/walmart2.htm
3. WAL-MART'S SHIRTS OF MISERY (National Labor Commitee, 2000)
When you purchase a shirt in Wal-Mart, do you ever imagine young women in Bangladesh forced to work from 7:30 a.m. to 8:00 p.m., seven days a week, paid just 9 cents to 20 cents an hour, who are denied health care and maternity leave; screamed at to work faster; with monitored bathroom visits; and who will be fired for daring to complain or ask for their rights?
At the Beximco factory in the Dhaka Export Processing Zone in Bangladesh, there are 1,000 workers, at least 80 percent of them young women, sewing shirts and pants for Wal-Mart and other retailers. Beximco is a sweatshop, where human rights are systematically violated.
Beximco Factory Dhaka Export Processing Zone (EPZ) Savar, Dhaka Bangladesh
Forced Overtime: 12 1/2 hours × Seven Days a Week × 80-hour Work Week Daily workshift: 7:30 a.m. to 8:00 p.m. Seven days a week: Monday through Sunday At the factory 87 hours a week -- paid for 80 hours (the hour lunch break is unpaid) Paid less than 1/3 of the legal overtime rate Not uncommon to be forced to remain in the factory beyond 8:00 p.m., working a 24-hour shift right through the night Days off are very rare http://www.transnationale.org/bd/walmart_misery.htm
4. SAIPAN: LAWSUIT CHARGES GAP, WAL-MART, OTHERS FOR SWEATSHOPS (Sweatshop Watch Press Release January 13, 1999)
According to the lawsuits:
* Garments made in Saipan's sweatshops may carry a "Made in the USA" of "Made in the Northern Marianas, USA" label. American consumers are deceived into believing they have purchased a product made by American workers protected by U.S. labor laws, that guarantee a decent wage and a clean, safe work place.
* Last year alone, the federal government estimated that contractors and U.S. retailers avoided more than $200 million in duties for $1 billion worth of garments shipped from Saipan, that would otherwise have been paid for the same clothing if it were manufactured in China or the Philippines. Some Chinese garment interests have moved their textile operations to Saipan virtually "lock, stock and barrel," in large part, to avoid U.S. duties and quota restrictions. The federal government estimates that this increase in Chinese apparel production in Saipan has allowed China to exceed its import quota by 250% in 1997 alone.
* Although Saipan's garment factories are owned predominantly by Chinese and Korean companies, quality-control inspectors from The Gap, The Limited, and other U.S. retailers allegedly oversee the manufacturing process. Still, they have refused to exercise their power to mitigate the intolerable working and living conditions.
* Over 90% of garment industry jobs in the Marianas are held by foreign "guest workers." These and other foreign workers make up more than half of the estimated total Marianas population of 70,000. This is largely due to the Island's exemption from U.S. minimum wage and immigration laws instituted to encourage local economic development. Since 1996, over 200,000 apparel industry jobs were lost in the continental United States.
* With promises of a good job and a new life, workers agree to repay recruitment fees from $2,000 to $7,000. They often must sign "shadow contracts" waiving basic human rights, including the freedom to date or marry.
* The crowded, unsanitary factories and shanty-like housing compounds are in flagrant violation of federal law. The heat in some factories is so extreme it can cause workers to faint. Many live in a room with up to seven other people in inward-pointing barbed wire-enclosed barracks. Their movements are strictly supervised by guards, and are subject to lockdowns or curfews. Complaints about the conditions are met with threats of termination, physical harm, and summary deportation.
"Unfortunately, slavery and indentured servitude is alive and well in the many parts of the world, including the United States," said another lead attorney, William S. Lerach. "Companies like The Gap and Wal-Mart have reaped millions in profits from this scheme -- now they will be held accountable."
Conditions in the Marianas have generated a host of highly critical reports from federal agencies and Congressional oversight. One recent report on the Marianas from the U.S. Department of the Interior sharply criticized "the heavy and unhealthy dependence upon an indentured alien worker program and on trade loopholes to expand its economy."
Garment production in Saipan continues to increase, already exceeding that of Malaysia and Jamaica. Although the legal limit on foreign garment workers is 11,000 recent estimates exceed 15,000, and more factories are being built.
The plaintiffs are represented by a coalition of law firms, including Milberg Weiss Bershad Hynes & Lerach LLP -- class action specialists with principal offices in New York and San Diego. The firm has successfully litigated numerous connsumer lawsuits against such companies as R.J. Reynolds ("the Joe Camel" case), Prudential Insurance (for life insurance fraud) and Lincoln Savings (for defrauding depositors).
Most recently, the firm negotiated a $1.2 billion settlement from Swiss banks as reimbursement to surviving families and victims of the Holocaust. They are currently seeking compensation for Holocaust victims forced to work as slave laborers in factories. http://www.transnationale.org/bd/saipan.htm
5. WAL-MART SWEATSHOPS IN HONDURAS (National Labor Commitee, 1999)
"Going into these factories is like entering prison, where you leave your life outside. The factory owners do not let--and don't want--the young workers to think for themselves. They want them to be stupid. The workers need permission to use the bathroom, and they are told when they can and cannot go.
"Young women enter these factories at 14, 15, 16 and 17 years old. They become a mechanism of production, working 9 hours a day plus two, three or four hours overtime, performing the exact same piece operation over and over, day after day. A woman in the pressing department is required to iron 1,200 shirts a day, standing on her feet, her hands and fingers swell up from the hot iron. These young workers rarely last more than six years in the maquila, when they leave exhausted. They leave without having learned any useful skills or developed intellectually. These young workers entered the maquila with a sixth grade education, with no understanding of the maquila, the companies whose clothing they sew or the forces shaping where they fit into the global economy. They soon feel impotent, seeing that the Ministry of Labor does nothing, or almost nothing, to help defend their rights.
Once the women start working in the maquila they often fall into debt. The wages are very low and no one can survive on them." --A Jesuit Priest in Honduras
Factory Conditions in Honduras Where Wal-Mart Clothing is Sewn SUMMARY
Forced overtime--in some factories up to 14-hour daily shifts / occasional mandatory 24-hour shifts, working right through the night / seven--day work weeks / if a worker cannot stay for the overtime, they are suspended without pay or fired.
Forty-three-cent-an-hour starvation wages--the 43-cent-an-hour base wage meets only 54 percent of the cost of survival. Workers sewing Wal-Mart clothing cannot afford to purchase milk, juice, meat, fish, fruit, cereals, or vitamins for their children. Nor can they afford to buy new clothing. Christmas is just like every other day for these families. There is no money for a special meal or even the cheapest of toys to give as gifts to their children.
The majority of the workers are young women--some as young as 14, 15 or 16 years old / The women sit on hard wooden benches, without back rests, in long production lines of 60 or more sewers, for 12 hours a day or more, in a hot, windowless, dusty factory. They enter at 7 a.m. and leave at 7 p.m. when it is already dark. They are not allowed to talk, and they need permission to use the bathroom, which is monitored and limited. Everyone works by piece rate, repeating the same sewing operation 1,200 to 1,500 times a day. Often loud music is blasted in the factory, as if it will make the women work faster.
Humiliation--It is common for the supervisors to scream and yell at the workers to go faster, and even to throw the garments in the women's faces if they see so much as a loose thread.
Denial of sick days and health care--Permission to be absent is almost never given, even if there is a sick child at home that requires care. Though money is deducted from the workers' wages, they are rarely allowed to use the Social Security health clinic during working hours. Many factories simply cheat the workers by illegally pocketing their Social Security deductions. It is also common to be shortchanged of the legal vacation period.
There is absolutely no right to freedom of association--The right to organize is totally denied. Anyone even suspected of organizing a union is immediately, and illegally, fired. The workers do not even have the right to meet so they can learn their rights, let alone raise a grievance.
No worker in these factories ever heard of the Wal-Mart Code of Conduct--Once again, the so-called Wal-Mart human rights screening of contractors, their Code of Conduct and its implementation, in reality is completely phony. Once again, it is a failure.
If Wal-Mart actually believed in human rights, and they were not trying to cover up serious abuses, they would provide the American people with the names and addresses of the factories they use in Honduras and other countries around the world.
Wal-Mart must be made to comply with all local labor and human rights laws in Honduras. http://www.transnationale.org/bd/walmart_honduras.htm
Wal-Mart profile (brands, shareholders, subsidiaries in the Cayman Islands, sub-contractors in the Third-World, manager salary and stock-options etc.) http://www.transnationale.org/anglais/fiches/-1989161467.htm
The Transnational Corporations Observatory B.P. 96 13693 Martigues Cedex FRANCE http://www.transnationale.org/anglais/
by Web Icon Michael Rivero of WHATREALLYHAPPENED.COM
By now it is obvious that CEOs of public corporations have been engaging in a grand round of looting their own corporations, building their "golden parachutes" with reckless disregard for their investors, their employees, and the long term future of their corporations. It may well be that the CEOs, who are paid in part for their ability to predict the future of the business climate, know that these corporations do not HAVE a future.
It does not, after all, take a Harvard Business School Graduate to understand that the US Government is bankrupt, to the extent that all the income tax paid by all Americans cannot even keep up with the interest on the loans. Even during what were claimed to be unprecedented boom times of the 90s, the Federal Government had to raid Social Security and other trust funds for cash to balance the Federal books. This year, three states had to put holds on the tax refund checks issued to their own citizens.
Then there is the balance of trade problem. Again, anyone who understands business understands that long term profitability requires the manufacture of a product that can be sold. But America's manufacturing has been in decline for decades. Even products invented in the United States are licensed for manufacture in other nations. While the license holders may do well from such an arrangement, the jobs and profits from that manufacturing leave this nation. In the 80s, this loss of manufacturing was concealed behind the "service economy", a notion that the country could be made prosperous by doing each other laundry for a fee. The present circumstances show the folly of that belief.
Finally, there is the curse of the stock market derivatives. One of the reasons that this nation lost the love of making things is that people who had money fell into the derivatives trap. Derivatives are a high-stakes stock market maneuver which can make or lose a fortune in a moment. It is, from a psychological point of view, a form of gambling every bit as addictive as its Las Vegas counterpart. In an investment market, the worth of the stock and the dividends it paid were the important facts. In a derivatives market, the price of the stock is what counts, even if the price is not supported by the stock's real worth. Huge fortunes could be made if a stock price went up and since it was easier to drive up the price of a stock with chicanery than to drive up a stock's worth by making a better product that sold to other nations. Even the government fell into this mindset, via the "Plunge Protection Team" which worked to keep stock prices up but never addressed the problems of worth in the actual stocks themselves. The results have become obvious in recent months. The stock market is highly overvalued and with each "restatement" of profits, trust and confidence in the entire market erodes. Central banks have been dumping gold reserves to depress gold prices to keep investors from deserting the stock market, but that tactic cannot last forever.
Taken together, anyone with any business sense knows that the US dollar faces a steep devaluation in the near future. People of wealth based on fixed assets, such as houses, factories, etc. will have to ride that devaluation down. But for those people whose wealth is "liquid", they can convert their wealth into a foreign stable currency, such as Euros, and leave it there while the US dollar devalues. Then, that currency can be brought back into the US, where the buying power will be multiplied many times. As an example, let us say that I, as CEO of my company, looted $10 million from my company and stashed it in Swiss Francs in a bank in Stockholm. The US dollar is devalued, as it was back in 1985. When I convert those Swiss Francs back into US currency, I now have $20 million dollars, and can buy twice as much in the United States (labor, building supplies, raw materials, fancy cars, homes, etc.) as before. And that's just with a 1/2 devaluation as in 1985. A greater devaluation brings greater gain in this scheme.
This looming devaluation may well explain why stock market swindles are rampant, in order to convert the proceeds and take the cash outside the nation prior to a massive dollar devaluation, then to bring it back in after the devaluation at the new rate of exchange. Members of Congress, whose stock trades also do not bear close scrutiny, have stood silently by while this is taking place, forced to act only under public pressure (and producing little more than some photo-ops as an answer to the suffering of small investors and employees).
Long ago I wrote the observation that the last official act of any government was to loot the populace, and we may well be seeing that very process in the current epidemic of stock swindles and corporate lootings taking place before us.
To learn more about why WhatReallyHappened.com is becoming one of the most visited news venues in the Internet, click below. Written by Michael Rivero of WhatReallyHappened.com, Posted 8/11/2002
How Corporations Came to Rule the World
http://www.bankindex.com/read.asp?ID=1139
by Richard Heinberg
August 19, 2002
The corporation was invented early in the colonial era as a grant of privilege extended by the crown to a group of investors-usually to finance a trade expedition. The corporation limited the liability of investors to the amount of their investment, a right not held by ordinary citizens. Corporate charters set out the specific rights and obligations of the individual corporation, including the amount to be paid to the crown in return for the privilege granted. Thus were born the East India Company, which led the British colonization of India, and Hudson's Bay Company, which accomplished the same purpose in Canada. Almost from the beginning, Britain deployed state military power to further corporate interests-a practice that has continued to the present. Also from the outset, corporations began pressuring government to expand corporate rights and to limit corporate responsibilities.
The corporation was a legal invention-a social-economic mechanism for concentrating and deploying human and economic power. The purpose of the corporation was and is to generate profits for its investors. As an entity, it had and has no other purpose; it acknowledges no higher value.
Many people understood early on that, since corporations do not serve society as a whole, but only their investors, there is therefore always a danger that the interests of corporations and those of the general populace will come into conflict. Indeed, the United States were born of a revolution not just against the British monarchy, but against the power of corporations. Many of the American colonies had been chartered as corporations (the Virginia Company, the Carolina Company, the Maryland Company, etc.), and were granted monopoly power over lands and industries considered crucial to the interests of the crown. Much of the literature of the revolutionaries was filled with denunciations of the "long train of abuses" of the crown and its instruments of dominance, the corporations.
As the yoke of the crown corporations was being thrown off, Thomas Jefferson railed against "the general prey of the rich on the poor"; later he warned the new nation against the creation of "immortal persons" in the form of corporations. The American revolutionaries resolved that the authority to charter corporations should lie not with governors, judges, or generals, but only with elected legislatures. At first, such charters as were granted were for a fixed time, and legislatures spelled out the rules each business should follow. Profit-making corporations were chartered to build turnpikes, canals, and bridges, to operate banks, and to engage in industrial manufacture. Some citizens argued against even these few, limited charters, on the grounds that no business should be granted special privileges, and that owners should not be allowed to hide behind legal shields. Thus the requests for many charters were denied, and existing charters were often revoked. Banks were kept on a short leash, and (in most states) investors were held liable for the debts and harms caused by their corporations.
All of this began to change in the mid-19th century. According to Richard Grossman and Frank Adams in Taking Care of Business, "Corporations were abusing their charters to become conglomerates and trusts. They were converting the nation's treasures into private fortunes, creating factory systems and company towns. Political power began flowing to absentee owners intent upon dominating people and nature."
Grossman and Adams note that "In factory towns, corporations set wages, hours, production processes and machine speeds. They kept blacklists of labor organizers and workers who spoke up for their rights. Corporate officials forced employees to accept humiliating conditions, while the corporations agreed to nothing." The authors quote Julianna, a Lowell, Massachusetts factory worker, who wrote: "Incarcerated within the walls of a factory, while as yet mere children-drilled there from five till seven o'clock, year after year . . . what, we would ask, are we to expect, the same system of labor prevailing, will be the mental and intellectual character of future generations . . . a race fit only for corporation tools and time-serving slaves? . . . Shall we not hear the response from every hill and vale, "EQUAL RIGHTS, or death to the corporations?"
Industrialists and bankers hired private armies to keep workers in line, bought newspapers and (quoting Grossman and Adams again) "painted politicians as villains and businessmen as heroes. Bribing state legislators, they then announced legislators were corrupt, that they used too much of the public's resources and time to scrutinize every charter application and corporate operation. Corporate advocates campaigned to replace existing chartering laws with general incorporation laws that set up simple administrative procedures, claiming this would be more efficient. What they really wanted was the end of legislative authority over charters."
During the Civil War, government spending brought corporations unprecedented wealth. "Corporate managers developed the techniques and the ability to organize production on an ever grander scale," according to Grossman and Adams. "Many corporations used their wealth to take advantage of war and Reconstruction years to get the tariff, banking, railroad, labor, and public lands legislation they wanted."
In 1886, the U.S. Supreme Court declared that corporations were henceforth to be considered "persons" under the law, with all of the constitutional rights that designation implies. The 14th amendment to the Constitution, passed to give former slaves equal rights, was actually invoked in their behalf only a few times; corporations invoked it repeatedly. Likewise the first amendment, guaranteeing free speech, was invoked to guarantee corporations the "right" to dominate public discourse. Corporations, after all, were "persons" with qualities and powers that no flesh-and-blood human could ever possess-immortality, the ability to be in many places at once, and (increasingly) the ability to avoid liability. They were also "persons" with no sense of moral responsibility, since their only legal mandate was to produce profits for their investors.
Throughout the late 19th and early 20th centuries, corporations reshaped every aspect of life in America and much of the rest of the world. The factory system turned self-sufficient small farmers into wage earners and transformed the family from an interdependent economic production unit to a consumption-oriented collection of individuals with separate jobs. Advertising turned productive citizens into "consumers." Business leaders campaigned to create public schools to train children in factory-system obedience to schedules and in the performance of isolated, meaningless tasks. Meanwhile, corporations came to own and dominate sources of information and entertainment, and to control politicians and judges.
During two periods, corporations faced a challenge-the 1890s (a depression period when populists demanded regulation of railroad rates, heavy taxation of land held only for speculation, and an increase in the money supply), and 1930s (when a profound crisis of capitalism led hundreds of thousands of workers and armies of the unemployed to demand government regulation of the economy-and to win a 40-hour week, a minimum-wage law, the right to organize, and the outlawing of child labor). But in both cases, corporate capitalism emerged intact. In the words of historian Howard Zinn, "The rich still controlled the nation's wealth, as well as its laws, courts, police, newspapers, churches, colleges. Enough help had been given to enough people to make Roosevelt a hero to millions, but the same system that had brought depression and crisis . . . remained."
World War II, like previous wars, brought huge profits to corporations via government contracts. But following this war, military spending was institutionalized, ostensibly to fight the "cold war." Despite occasional regulatory setbacks, corporations seized ever more power, and increasingly transcended national boundaries, loyalties, and sovereignties altogether.
Global Pillage
In the 1970s, capitalism faced yet another challenge as post-war growth subsided and profits fell. The U.S. was losing its dominant position in world markets, the Vietnam war had weakened the American economy, and Third-World countries were demanding a "North-South dialogue" leading toward greater self-reliance for poorer countries. President Nixon responded by doing away with fixed currency exchange rates; later, newly-elected president Reagan, at the 1981 Cancun, Mexico meeting of 22 heads of state, refused to discuss new financial arrangements with the Third World, thus effectively endorsing their further exploitation by corporations.
Meanwhile, the corporations themselves also responded with a new strategy. Increased capital mobility (made possible by floating exchange rates and new transportation, communication, and production technologies) allowed First-World corporations to move production "off-shore" to "export-processing zones" in Third-World countries-usually, military dictatorships like Korea. Corporations also undertook a restructuring process, moving toward "networked production"-in which big firms, while retaining and consolidating power, hired smaller firms to take over aspects of supply, manufacture, accounting, and transport. (Economist Bennett Harrison defines networked production as "concentration of control combined with decentralization of production".) This restructuring process is also known as "downsizing," because it results in the shedding of higher-paid employees by large corporations and the hiring of low-wage contingent workers by smaller subcontractors.
Jeremy Brecher and Tim Costello write in Global Village or Global Pillage that "As the economic crisis deepened, there gradually evolved . . . a 'supra-national policy arena' which included new organizations like the Group of Seven industrial nations (G-7) and NAFTA and new roles for established international organizations like EU, IMF, World Bank, and GATT. The policies adopted by these international institutions allowed corporations to lower their costs in several ways. They reduced consumer, environmental, health, labor, and other standards. They reduced business taxes. They facilitated the move to lower wage areas and threat of such movement. And they encouraged the expansion of markets and the 'economies of scale' provided by larger-scale production."
All of this has led to a globalized economy in which (again quoting Brecher and Costello), "All over the world, people are being pitted against each other to see who will offer global corporations the lowest labor, social, and environmental costs. Their jobs are being moved to places with inferior wages, lower business taxes, and more freedom to pollute. Their employers are using the threat of 'foreign competition' to hold down wages, salaries, taxes, and environmental protections and to replace high-quality jobs with temporary, part-time, insecure, and low-quality jobs. Their government officials are justifying cuts in education, health, and other services as necessary to reduce business taxes in order to keep or attract jobs."
Corporations, no longer bound by national laws, prowl the world looking for the best deals on labor and raw materials. Of the world's top 120 economies, nearly half are corporations, not countries. Thus the power of citizens in any nation to control corporations through whatever democratic processes are available to them is receding quickly.
It remains to be seen: given a situation in which environmental, health, and economic conditions are worsening, how will the general population respond? Here again, a little history may help us understand the options available.
Hurdles in the Path
The populism of the 1890s failed for two main reasons-divisiveness within and co-optation from without. While many populist leaders saw the need for unity among people of different racial and ethnic backgrounds in attacking corporate power, racism was strong among many whites. Most of the Alliance leaders were white farm owners who failed, in many instances, to support the organizing efforts of poor rural blacks-and poor whites as well-thus dividing the movement. "On top of the serious failures to unite blacks and whites, city workers and country farmers," writes Howard Zinn, "there was the lure of electoral politics. . . . Once allied with the Democratic party in supporting William Jennings Bryan for President in 1896 . . . the pressure for electoral victory led Populism to make deals with the major parties in city after city. If the Democrats won, it would be absorbed. If the Democrats lost, it would disintegrate. Electoral politics brought into the top leadership the political brokers instead of the agrarian radicals. . . . In the election of 1896, with the Populist movement enticed into the Democratic party, Bryan, the Democratic candidate, was defeated by William McKinley, for whom the corporations and the press mobilized, in the first massive use of money in an election campaign."
Today, a new populist movement could easily fall prey to the same internal divisions and tactical errors that destroyed its counterpart a century ago. In the coming American presidential election, populists face the choice of supporting their own candidate (Ralph Nader) and thereby contributing to the election of the "right-centrist" pro-corporate Republican candidate (Dole), or supporting Clinton and seeing their movement co-opted by "left-centrist" pro-corporate Democrats.
Meanwhile, though African Americans, Asian Americans, Hispanic Americans, European Americans, and Native Americans have all been victimized by corporations, class divisions and historical resentments often prevent them from organizing to further their common interests. Currently, ultraright candidate Pat Buchanan is appealing simultaneously to "populist" anti-corporate and anti-government sentiments among the working class, and to xenophobic white racism. Buchanan's critique of corporate power is shallow and of questionable genuineness, but at present it is the only such critique showing up in the corporate-controlled media. One cannot help but wonder: Are the corporations looking for a lightning rod to rechannel the anger building against them?
While Buchanan has no chance of winning the presidency this year, his candidacy does raise the specter of another kind of solution to the emerging crisis of popular resentment against the system-a solution that again has roots in the history of the past century.
A False Revolution
In the early 1900s, workers in Italy and Germany built strong unions and won substantial concessions in wages and work conditions; still, after World War I they suffered under a disastrous postwar economy, which fanned unrest. Meanwhile, heavy industry and big finance were in a state of near total collapse. Bankers and agribusiness associations offered financial support to Mussolini-who had been a socialist before the war-to seize state power. Within two years, the Fascist party (from the Latin fasces, for a bundle of rods and an axe, symbolizing state power) had shut down all opposition newspapers; crushed the socialist, liberal, Catholic, democratic, and republican parties (which had together commanded about 80% of the vote); abolished unions; outlawed strikes; and privatized farm cooperatives.
In Germany, Hitler led the Nazi party to power, then cut wages and subsidized industries. In both countries, corporate profits ballooned. Understandably, given their friendliness to big business, fascism and nazism were popular among some prominent American industrialists (such as Henry Ford) and opinion shapers (like William Randolph Hearst).
Fascism and nazism relied on centrally-controlled propaganda campaigns that cleverly co-opted the language of the left (the Nazis called themselves the "National Socialist German Workers Party"-while persecuting socialists and curtailing workers' rights). Both movements also made rational use of irrational symbols-scapegoating minorities, appealing to mythic images of a glorious national past, building a leader cult, glorifying war and conquest, and preaching that the only proper role of women is as wives and mothers.
As political theorist Michael Parenti points out, historians often overlook fascism's economic agenda-the partnership between Big Capital and Big Government-in their analysis of its authoritarian social program. Indeed, according to Bertram Gross in his startlingly prescient Friendly Fascism (1980), it is possible to achieve fascist goals within an ostensibly democratic society. Corporations themselves, after all, are internally authoritarian; and as they increasingly dominate politics, media and economy, they can mold an entire society to serve the interests of a powerful elite without ever resorting to storm troopers and concentration camps. No deliberate conspiracy is necessary, either; each corporation merely acts to further its own economic interests. If the populace shows signs of restlessness, politicians can be hired to appeal to racial resentments and memories of national glory, dividing popular opposition and inspiring loyalty.
In the current situation, "friendly fascism" works somewhat as follows. Corporations drive down wages and pay fewer taxes (through mechanisms outlined above), gradually impoverishing the middle class and creating unrest. As corporate taxes are cut, politicians (whose election was funded by corporate donors) argue that it is necessary to reduce government services in order to balance the budget. Meanwhile, the same politicians argue for an increase in the repressive functions of government (more prisons, harsher laws, more executions, more military spending). Politicians channel the middle class's rising resentment away from corporations and toward the government-which, after all, is now less helpful and more repressive than it used to be-and against social groups easy to scapegoat (criminals, minorities, teenagers, women, gays, immigrants). Meanwhile, debate in the media is kept superficial (elections are treated as sporting contests), and right-wing commentators are subsidized while left-of-center ones are marginalized. People who feel cheated by the system turn to the Right for solace and vote for politicians who further subsidize corporations, cut government services, expand the repressive power of the state, and offer irrelevant scapegoats for social problems with economic roots. The process feeds on itself.
Within this scenario, Pat Buchanan (and similar ultra-right figures in other countries) are not anomalies, but rather predictable products of a strategy adopted by economic elites-harbingers of a less-than-friendly future that could ensue if "moderate" tactics for the consolidation of power were to fail.
Cause for Hope?
These circumstances are, in their details, unprecedented; but in broad outline we are seeing the reenactment of a story that goes back at least to the beginning of civilization. Those with power are always looking for ways to protect and extend it; and to make it seem legitimate, necessary, or invisible, so that popular protest seems unnecessary or unfeasible. If protest comes, they always try to deflect anger away from themselves.
The leaders of the new populist movement appear to have a good grasp of both the current circumstances and the historical ground from which these circumstances emerge. They seem to have realized that, in order to succeed, the new populism will have to:
avoid being co-opted by existing political parties
heal race, class, and gender divisions and actively resist any campaign to scapegoat disempowered social groups
avoid being identified with an ideological category-"communist," "socialist," or "anarchist"-against which most of the public is already well inoculated by corporate propaganda
keep the public discussion narrowly focused on the most vulnerable link in the corporate chain of power-the legal basis of the corporation
internationalize the movement so that corporations cannot undermine it merely by shifting their base of operations from one country to another.
The formation of the new Alliance was announced in an article by Ronnie Dugger in the August 14, 1996 issue of The Nation. In that article, Dugger wrote: "I propose the emphasis on Populism because the 19th-century Populists denied the legitimacy of corporate domination of a democracy, whereas in this century the progressives, the unions and the liberals gave up and forgot about that organic and controlling issue. I propose that we seize the word Populism back from its many hijackers, its misusers-the George Wallaces, David Dukes, Irving Kristols, Newt Gingriches-and restore its original meaning in American history, that of the anti-corporate Populist movement of the 1880s and 1890s. Our point, our purpose, is the well-being and enhancement of the person."
As Lawrence Goodwyn noted in his definitive work, The Populist Movement, the original Populists were "attempting to construct, within the framework of American capitalism, some variety of cooperative commonwealth"; this was "the last substantial effort at structural alteration of hierarchical economic forms in modern America." The new populists are, in Dugger's words, "ready to resume the cool eyeing of the corporations with a collective will to take back the powers they have seized from us." The more specific tactics and goals of the Alliance are to be determined by "democratic conversations" to be held in and among local Alliance groups, which are now forming around the country. In his article, Dugger makes a few policy suggestions, with the caution that they represent "only one person's contribution to those conversations"; these include: a prohibition of contributions or any other political activity by corporations; single-payer national health insurance with automatic universal coverage; a doubling of the minimum wage, indexed to inflation; a generic low-interest-rate national policy, entailing the abolition of the Federal Reserve System; statutory reversal of the court-made law that corporations are "persons"; a national public oil company; limitations on ownership of newspapers, magazines, radio and TV stations to one of any kind per person or owning entity; and the halving of military spending.
The Alliance draws at least some of its inspiration from the work of Richard Grossman (one of its founders), whose Program on Corporations, Law & Democracy explores the legal basis of corporate power. Grossman believes that it is possible to control-and, if necessary, dismantle-corporations by amending or revoking their charters. For the past two years, the Program on Corporations, Law & Democracy has been organizing "Rethinking Corporations/Rethinking Democracy" meetings around the country.
Since the largest corporations are now transnational in scope, the new populism must confront their abuses globally. The International Forum on Globalization was founded for this purpose in 1994, as an alliance of 60 activists, scholars, economists, and writers (including Jerry Mander, Vandana Shiva, Richard Grossman, Ralph Nader, Helena Norberg-Hodge, Jeremy Rifkin, and Kirkpatrick Sale) to stimulate new thinking and joint action along these lines. In a position statement drafted in 1995, the IFG says that it "views international trade and investment agreements, including the GATT, the WTO, Maastricht, and NAFTA, combined with the structural adjustment policies of the International Monetary Fund and the World Bank, to be direct stimulants to the processes that weaken democracy, create a world order in the control of transnational corporations, and devastate the natural world. . . . The IFG will study, publish and actively advocate in opposition to the current rush toward economic globalization, and will seek to reverse its direction. Simultaneously, we will advocate on behalf of a far more diversified, locally controlled, community-based economics. . . . We believe that the creation of a more equitable economic order-based on principles of diversity, democracy, community and ecological sustainability-will require new international agreements that place the needs of people, local economies and the natural world ahead of the interests of corporations. . . ."
Leaders of the new populism appear to realize that anti-corporatism is not a complete solution to the world's problems; that the necessary initial focus on corporate power must eventually be supplemented by a more general critique of centralizing and unsustainable technologies, money-based economics, and current nation-state governmental structures; efforts to protect traditional cultures and ecosystems; and a renewal of culture and spirituality. Nevertheless, the Alliance and IFG provide useful rallying points for citizens' self-defense against tyranny in its most modern, invisible, effective, and occasionally even seductive forms.
Written by Richard Heinberg, Posted 8/19/2002
Reproduced gratefully from: http://www.bankindex.com/read.asp?ID=1139
