Economic Depression: The New Corporate Profit Model

“Civil government, so far as it is instituted for the security of property, is, in reality, instituted for the defense of the rich against the poor, or of those who have property against those who have none at all.” ~ Adam Smith, Wealth of Nations

Last fall, as the worst recession in eighty years got into full swing, many employers, including one I worked for, began laying off workers. The reason given was almost universally, “to keep the company profitable.” Got that? Not to keep the business from going bankrupt, not because demand for services suddenly dropped into the basement (though I’m sure that was the case in some industries), not for any reason other than greed. Millions of people lost their jobs over the last year just so many companies could remain profitable.

I’m not sure if I posted my thoughts about this greed motivated move at the time, but I wondered then what I know now: it seemed mighty suspect for so many people to be laid off, in my industry at least, while actual work loads hadn’t dropped by much at all. Many of the layoffs since last fall were layoffs of convenience. Corporate America took advantage of a bad situation in a few sectors of the economy and used those conditions to shore up bottom lines and rake in larger profits for shareholders.

In the industry I work in one needs to complete certain number of service calls per day to be profitable. Those of us who’ve been in the industry for many years know what that magic number is. So when my former employer began laying people off last fall and limiting overtime, everyone I worked with was still getting more than enough service calls everyday to break even. In fact, most of us were producing much more than the minimum; maybe not as much as in years past, but we were still making plenty of money for the company.

While our former co-workers were spending their days in the unemployment line, those of us who remained “gainfully employed” were doing a lot more work than before the economy turned south, for less pay and in less time, since over-time was strictly prohibited. The executive class, in my industry and many others, are now reaping record profits compared to their operational costs; all by screwing hundreds of thousands (millions by now) out of their livelihoods.

That may account for the occasional news items I’ve seen in recent months declaring that the recession is over for Wall Street, the one demographic in this country who could probably stop working for several years and get by just fine. The non-working investment class is making money again, if they ever stopped, but the comparatively poor working class still has months or years of unemployment left to suffer through.

The recession has worsened (I don’t care what Wall Street says) into a full blown depression and the thoughts I had a year ago are beginning to pop up in conversations and blog posts all over the place. A few days ago, Natasha Chart posted a few excerpts from the a recent Bureau of Labor Statistics report which confirm my earlier suspicions about the lack of pain at the top and corporate America’s all to eagerness to screw the little guy in order to maintain their unearned lavish lifestyle.

Chart points out: “American workers have been producing more, in less time, and not getting raises. In short, your boss is stealing from you…They make more money off of your work and they don’t share the increased returns. They invest money, you invest time and expertise, blood, sweat and tears, hours spent commuting and separations from your family. They get to realize a profitable return on their investment, you get to keep treading water and waiting for a ship that probably isn’t coming.”

While the big corporate bosses are busy making more money with less overhead, they aren’t about to share a bigger slice of the pie with us, the people who actually baked it. When big business owns both the government and the labor unions, this is exactly what we should expect, and it’s why the lying bastards will stop at nothing to defeat legislation like the Employee Free Choice Act, which would have made union formation much easier in this country. Organized labor means sharing the wealth with those who create it, and the non-working class won’t stand for that at all.

Most employers will openly admit that they hate unions, but few will own up to the fact that they hate their workers too, whether they realize it or not. Most of them don’t see their actions as hateful, but it sure ain’t love we’re feeling down here in the trenches these days.

Yves Smith over at Naked Capitalism recently noted, “The oft recited, “Our employees are our greatest asset” is pure Orwellian prattle; most companies treat employees as liabilities, doing everything they can to minimize labor costs, getting rid of workers whenever possible. And this now extends well up into the management ranks, with most people who are still on the corporate meal ticket assigned responsibilities that would have constituted 1.5 to two jobs a decade ago.”

Things like that almost make me feel sorry for the few folks I’ve known over the years who climbed up out of the labor pool and entered management. Poor ignorant fools that they were, they sold their souls for what, a slightly newer crappy car or a newer house with an upside-down mortgage? While I may still have some sympathy for middle managers, I have zero pity for the corporate executive class that profits so much at the expense of the rest of us.

While they reap the lion’s share of the profits derived from our labor, we get the crumbs that fall from their table, and it is from those meager crumbs that we must struggle to cobble together a decent home for our families, food and clothing for our children, and if we’re exceptionally lucky, we’ll have decent medical insurance to help us when tragedy strikes.

Perhaps Hystery said it best when she wrote that  “poverty is … a mark of your shame and your failure to live up to your obligations as a human being.  You have no right to your extra income, to your extra homes, to your extra cars, to your fancy clothes and your jewelry…, your boats or your vacations or your air travel until no one’s has to walk in broken, ill-fitting shoes. You have no right to your plastic surgery and your yoga classes and your health gurus until no one has to watch their child die of a tooth abscess.”

Nothing would please me more than to see Wall Street and the non-working investor classes get taxed, if not into oblivion, at least into the same economic caste as the rest of us. I can’t imagine any job description short of curing cancer or AIDS that would merit more than a few hundred thousand dollars per year in compensation. I know it ain’t gonna happen any time soon, but everyone needs a fantasy of some kind to keep them warm on a cold winter night.