Class Warfare Blog

August 4, 2020

A Pandemic Rude Awakening?

The GOP and to some extent the Democrats have been suppressing wages of working people for decades now. Worshiping at the altar of profits, the route to greater and greater profits has been to lower taxes on businesses (in essence transferring them onto individuals) and reducing the cost of production, which is dominated by wages paid to workers. So, wage suppression has become a fine art in corporate circles.

A consequence of this approach is that people, aka “consumers,” have less and less disposable income to buy the output of American businesses. American companies have taken the strategy to the max. Many jobs that could be kept here have been exported to “low wage” countries, which now turn out to be not so low wage because the wages in those countries have been rising (It’s the demand, idiot!) and transportation costs, obviously, went up a great deal, management, too.

The Pandemic Recession, looking to morphing into the Pandemic Depression, is showing the short-sidedness of the short-term pursuit of profits, profits, profits. Here is an excerpt from a Naked Capitalism post on small businesses:

“It’s depressing, but not exactly surprising, to see a major New York Times story about one-third of the small businesses in the city have died or expected to shutter. Needless to say, it’s not just restaurants.” How’s Your Economy, Small Businesses Death Watch Edition

Small businesses in NY City, it is reported, constitute 98% of the employers and account for 3 million jobs in the city. The businesses close, the employees are without jobs, and while jobless, they will be having trouble paying their bills. This will crater other small businesses and away we go . . . spiraling down the economic toilet.

So, I am told (by Dwight Eisenhower, no less) that one shouldn’t criticize unless one has a better alternative. (It is far too easy to tear something down and much harder to build something up. Take that you “creative destruction” purveyors.) So, what is the alternative? Easy peasy. Be patriotic. Keep jobs here, pay higher wages, make less profits.

What was that? I just saw a Republican running past me with his hair on fire, sputtering “Higher wages . . . less profits . . . Arggghhh!” Please do realize that many believe that in our “pay as you go culture,” a business must make a profit to continue to exist. But even this dictum is soft. I had a fellow professor leave teaching to set up his own business. His first major mistake was he didn’t pay himself enough. At the end of his first year, he had profits, which he paid business taxes on, which he then paid to himself, which he then paid income taxes on and thus got double taxed on what he had made. He learned to pay himself everything that might be considered to be a business profit, and paid income taxes on those sums but no business taxes. His business happily perked along make no profits to speak of . . . but I digress.

The titans of commerce have taken the “We have to make a profit,” an acceptable dictum, to “we have to maximize our profits over every other consideration we can conceive of.” This is dubious at best. There is no limit to how much profit can be extracted from a business (as a percentage, not in absolute terms) consequently using “we have to maximize profits” as a motivation is an incentive without any boundaries whatsoever. This is a fatal flaw of capitalism: there is no limitation on greed.

What if corporations considered one of their “products” to be “reliably good jobs for people in our community,” or “creating healthy lives for our employees,” or even “creating happiness for our employees.” Don’t laugh, all of these have been stated by corporations as goals in the past (or their equivalents).

No one begrudges companies or corporations reasonable profits. Everyone should begrudge corporations who make obscene profits by grinding their employees under their heels to make them.

7 Comments »

  1. In the UK taxes are higher than US. Every time the govt increases the tax or cost of bureaucratic compliance on a business the business makes savings the only place it can (taxes, rates, utilities are non negotiable) by laying off workers, making them work harder and longer or replace with a cheaper labour force. In how many steps will it become obvious that we are all slaves of the government? Considering the huge amount of money we all give the government are we getting value?

    Liked by 1 person

    Comment by con — August 14, 2020 @ 6:12 am | Reply

    • This is the ongoing question, is it not? “Government” is us just doing things collectively. Unfortunately, in this country, and I think in yours, the government has been captured by agents of the rich. Everything we do “collectively” is distorted into something that benefits the rich more than the rest of us. This is the fatal flaw of capitalism and democracy. There is no limit on greed.

      Liked by 1 person

      Comment by Steve Ruis — August 14, 2020 @ 8:22 am | Reply

      • Greed. – one of the 7 deadly sins. When you consider the other deadly sins it looks like the world elites have adopted all of them as winning tactics.
        We really do need a govt by the people for the people. Otherwise we are just handing our wages over to get kicked in the face.

        Like

        Comment by con — August 14, 2020 @ 9:35 am | Reply

        • It seems long past the time to take to the streets with pitchforks and torches. Maybe the people in Portland, OR will lead the way.

          On Fri, Aug 14, 2020 at 9:35 AM Class Warfare Blog wrote:

          >

          Liked by 2 people

          Comment by Steve Ruis — August 14, 2020 @ 9:43 am | Reply

          • As a Brit that is long overdue in this country. Americans are smart, brave and freedom loving and have thrown off tyrants before. They have the best chance of any land to free themselves again. Here’s hoping.

            Like

            Comment by con — August 14, 2020 @ 10:49 am | Reply

            • And, we have gotten fat, lazy, and privileged. A sorry lot we are to put up with our current government. The government is corrupt (at least the leaders), the media are corrupted, the courts are corrupted, it is sad. Much work to do. Election in November between awful man and barely acceptable man. All candidates are vetted by the wealthy elites to make sure that, no matter who wins, they do not lose.

              On Fri, Aug 14, 2020 at 10:49 AM Class Warfare Blog wrote:

              >

              Liked by 2 people

              Comment by Steve Ruis — August 14, 2020 @ 10:58 am | Reply

              • Agreed. And everything you say applies here too. The problem is the powers behind the throne. They pull the strings in every effective institution and nobody knows who they are. They keep throwing scapegoats before the mob to vent frustrations and carry on invisible and unaccountable. To develop the political and criminal sophistication to deal with them would be a full time occupation and ordinary folk have their work cut out just keeping a roof over their head. But look on the bright side. If ever most of the population developed the nonce to deal with the political charlatans that class would be finished forever.

                Like

                Comment by con — August 14, 2020 @ 11:20 am | Reply


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