On November 18, 2012, John Nichols writes in The Nation:
What happens when vulture capitalism ruins a great American company?
The vultures blame the workers.
The vultures blame the union.
And vapid media outlets report the lie as “news.”
That’s what’s happening with the meltdown of Hostess Brands Inc.
Americans are being told that they won’t get their Twinkies, Ding Dongs and Ho Hos because the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union ran the company into the ground.
But the union and the 5,600 Hostess workers represented by the union did not create the crisis that led the company’s incompetent managers to announce plans to shutter it.
The BCTGM workers did not ask for more pay.
The BCTGM workers did not ask for more benefits.
The BCTGM workers did not ask for better pensions.
The union and its members had a long history of working with the company to try to keep it viable. They had made wage and benefit concessions to keep the company viable. They adjusted to new technologies, new demands.
They took deep layoffs—20 percent of the workforce—and kept showing up for work even as plants were closed.
They kept working even as the company stopped making payment to their pension fund more than a year ago.
The workers did not squeeze the filling out of Hostess.
Hostess was smashed by vulture capitalists—“a management team that,” in the words of economist Dean Baker, “shows little competence and is rapidly stuffing its pockets at the company’s expense.”
This situation, and countless others, would not have happened had we, as a nation, long ago adopted an OWNERSHIP CULTURE, whereby EVERY American is enabled to acquire individual ownership in the productive capital assets of the companies they are employed by or not employed and pay for their acquisition out of the future earnings of the productive capital investments.
The net worth of ordinary Americans, and that is inclusive of the so-called 99 percenters, is anemic when compared to the CONCENTRATED OWNERSHIP of productive capital wealth controlled by the wealthiest 1 to 10 percent of the population The wealthiest Americans have essentially rigged the system to ensure that all FUTURE economic growth of newly formed income-producing productive capital assets will be owned by them, while the majority of Americans remain dependent on jobs and welfare––the modern-day equivalent of serfdom.
If we, as a nation, want to build an affluent economy whereby EVERY American can as President Obama stated “earn enough to raise a family, build a modest savings, own a home, and secure their retirement,” then we need to create an OWNERSHIP CULTURE which consciously and purposely strives to broaden the private, individual ownership of the FUTURE productive capital assets of the America’s growth economy.
As long as working people are limited by earning income solely through their labor worker wages, they will be left behind by the continued gravitation of economic bounty toward the top 1 percent of the people that the system is rigged to benefit. Working people and the middle class will continue to stagnate, resulting in a stagnated consumer economy. More troubling is that this continued stagnation will further dim the economic hopes of America’s youth, no matter what their education level. The result will have profound long-term consequences for the nation’s economic health and further limit equal earning opportunity and spread income inequality. As the need for labor decreases and the power and leverage of productive capital increases, the gap between labor workers and capital owners will increase, which will result in upheaval.
The labor union movement should transform to a producers’
ownership union movement and embrace and fight for this new democratic
capitalism. They should play the part that they have always aspired to––that
is, a better and easier life through participation in the nation’s economic
growth and progress. As a result, labor unions will be able to broaden their
functions, revitalize their constituency, and reverse their decline.
Unfortunately, at the present time the movement is built on
one-factor economics––the labor worker. The insufficiency of labor worker
earnings to purchase increasingly capital-produced products and services gave
rise to labor laws and labor unions designed to coerce higher and higher prices
for the same or reduced labor input. With government assistance, unions have
gradually converted productive enterprises in the private and public sectors
into welfare institutions. Binary economist Louis Kelso stated: “The myth of the ‘rising productivity’ of labor is used to conceal the increasing productiveness of capital and the
decreasing productiveness of labor, and to disguise income redistribution by
making it seem morally acceptable.”
Kelso argued that unions “must adopt a sound strategy that conforms to the economic facts of life. If under free-market conditions, 90 percent of the goods and services are produced by capital input, then 90 percent of the earnings of working people must flow to them as wages of their capital and the remainder as wages of their labor work…If there are in reality two ways for people to participate in production and earn income, then tomorrow’s
producers’ union must take cognizance of both…The question is only whether
the labor union will help lead this movement or, refusing to learn, to change,
and to innovate, become irrelevant.”
Unions are the only group of people in the whole world who can demand a real Kelso-designed ESOP, who can demand the right to participate in the expansion of their
employer by asserting their constitutional preferential rights to become
capital owners, be productive, and succeed. The ESOP can give employees access
to credit so that they can purchase the employer’s stock, pay for it in pre-tax
dollars out of the assets that underlie that stock, and after the stock is paid
for earn and collect the capital worker income from it, and accumulate it in a
tax haven until they retire, whereby they continue to be capital workers
receiving income from their capital ownership stakes. This is a viable route to
individual self-sufficiency needing significantly less or no government
redistributive assistance.
The unions should reassess their role of bargaining for more and more income for
the same work or less and less work, and embrace a cooperative approach to
survival, whereby they redefine “more” income for their workers in terms of the
combined wages of labor and capital on the part of the workforce. They should
continue to represent the workers as labor workers in all the aspects that are
represented today––wages, hours, and working conditions––and, in addition,
represent workers as full voting stockowners as capital ownership is built into
the workforce. What is needed is leadership to define “more” as two ways to
earn income.
If we continue with the past’s unworkable trickle-down economic policies,
governments will have to continue to use the coercive power of taxation to
redistribute income that is made by people who earn it and give it to those who
need it. This results in ever deepening massive debt on local, state, and
national government levels, which leads to the citizenry becoming parasites
instead of enabling people to become productive in the way that products and
services are actually produced.
When labor unions transform to producers’ ownership unions, opportunity will be
created for the unions to reach out to all shareholders (stock owners) who are
not adequately represented on corporate boards, and eventually all labor
workers will want to join an ownership union in order to be effectively
represented as an aspiring capital owner. The overall strategy should assure
that the labor compensation of the union’s members does not exceed the labor
costs of the employer’s competitors, and that capital earnings of its members
are built up to a level that optimizes their combined labor-capital worker
earnings. A producers’ ownership union would work collaboratively with
management to secure financing of advanced technologies and other new capital
investments and broaden ownership. This will enable American companies to
become more cost-competitive in global markets and to reduce the outsourcing of
jobs to workers willing or forced to take lower wages.
Kelso stated, “Working conditions for the labor force have, of course, improved over
the years. But the economic quality of life for the majority of Americans has
trailed far behind the technical capabilities of the economy to produce creature
comforts, and even further behind the desires of consumers to live economically
better lives. The missing link is that most of those unproduced goods and
services can be produced only through capital, and the people who need them
have no opportunity to earn income from capital ownership.”
Walter Reuther, President of the United Auto Workers, expressed his open-mindedness to
the goal of democratic worker ownership in his 1967 testimony to the Joint
Economic Committee of Congress as a strategy for saving manufacturing jobs in
America from being outcompeted by Japan and eventual outsourcing to other Asian
countries with far lower wage costs: “Profit sharing in the form of stock
distributions to workers would help to democratize the ownership of America’s vast
corporate wealth, which is today appallingly undemocratic and unhealthy.
“If workers had definite assurance of equitable shares in the profits of the
corporations that employ them, they would see less need to seek an equitable
balance between their gains and soaring profits through augmented increases in
basic wage rates. This would be a desirable result from the standpoint of
stabilization policy because profit sharing does not increase costs. Since
profits are a residual, after all costs have been met, and since their size is
not determinable until after customers have paid the prices charged for the
firm’s products, profit sharing [through wider share ownership] cannot be said
to have any inflationary impact on costs and prices.”
Unfortunately for democratic unionism, the United Auto Workers, American manufacturing workers, and American citizens generally, Reuther was killed in an airplane crash in 1970 before his idea was implemented. Leonard Woodcock, his successor, never followed through. The modern-day labor movement needs another leader like Walker Reuther.
http://www.thenation.com/blog/171331/vulture-capitalism-ate-your-twinkies
