Winning Back the Working Class: A Time of Reckoning for Progressives
Published on
Wednesday, November 16, 2016
by
Common Dreams
Winning Back the Working Class: A Time of Reckoning for Progressives
By not acting on behalf of the nation's struggling workers, the left will
continue to cede the jobs terrain to Donald Trump
by
Les Leopold
Democrats, along with their allies on the left, must take to the streets for
the cause of the working class. (Photo: AP)
Over the next two years 1,400 Carrier air conditioner workers will see their
decent paying jobs migrate to Mexico. This highly profitable Indiana
facility, represented by the United Steel Workers, will make even more money
south of the border where workers earn less in one day than the Indiana
employees make in one hour, according the New York Times. (A YouTube video
of the heartbreaking plant closing announcement has nearly 4 million views.)
While Hillary Clinton remained silent on this impending catastrophe, Donald
Trump turned this facility into the poster child for what's wrong with U.S.
trade policy. He pledged that if the plant moved, he would place a 35%
tariff on all Carrier products imported from Mexico as well as a similar
duty on the Mexican products of its parent company, United Technologies.
Trump boasted he would make the company cry uncle: "I'll get a call from the
head of Carrier and he'll say, 'Mr. President, we've decided to stay in the
United States. That's what's going to happen - 100%."
Carrier became the 100% battering ram with which to pound Hillary Clinton
and her embrace of NAFTA and other trade deals. In doing so, Trump snatched
the plant closing issue away from the Democrats, something the party
apparatchiks didn't recognize until the Trump votes poured in from the Rust
Belt.
"If progressives were well organized - a very big if to be sure - we should
join with these workers (represented by the United Steelworkers) to build
mass demonstrations at United Technologies headquarters, hedge funds offices
and the White House. Such a series of protests would keep the Carrier
shutdown on the front burner and provoke Trump to live up to his job
promises."
The Carrier case, however, was not just the usual media meme about Trump
backing the less educated, white working class. In fact, the threatened
Indianapolis plant is 50 percent African-American. Women make up half the
workforce on the assembly lines and the facility also employs dozens of
recent Burmese immigrants, well regarded by their co-workers. So making this
facility great again actually means coming to the aid of America's
increasingly diverse labor force.
But Trump is stumbling into something far more problematic than trade deals.
At the heart of this story is the financial strip-mining of America
organized and led by Wall Street.
Why does United Technology want to move to Mexico?
Let's round up the usual suspects: .
. They can't turn a decent profit using unionized American workers?
No. Carrier is the most profitable division of United Technologies.
. NAFTA caused this proposed move? Not likely. NATA is 22 years old,
so unless United Technologies is the corporate Rip Van Winkle, they could
have moved long ago.
. New technologies make the destruction of decent paying manufacturing
jobs inevitable? Not at all. In this factory transplant, they are
redeploying the same technologies already in use, machine by machine.
So if profits, trade and automation are not the driving forces, what is?
The major pressure to shift jobs abroad comes from the big hedge funds and
private equity investors who have one goal only - to siphon as much wealth
as possible out of companies like United Technologies.
High profits, low profits, or no profits, they pressure company after
company to squeeze their costs as much as possible so that there is more
money available for the company to buy back its own shares.
Why? Because stock buybacks immediately raise the share price and give the
big hedge funds an instant windfall.
Before a 1982 SEC rule change - a major turning point in the disastrous
deregulation of finance - massive stock buybacks were illegal because they
were considered stock manipulation, and a major cause of the 1929 crash.
Now, Wall Street extracts billions from this destructive activity. It's what
drives runaway inequality. (For the definitive account see Professor William
Lazonick, "Profits Without Prosperity" Harvard Business Review)
CEOs cherish this process because they now derive the majority of their
compensation through stock incentives. So by acting as Wall Street shills,
they drive up the price of stock and become richer and richer themselves.
In 1970, before stock buybacks became the norm, the pay gap between the top
CEOs and the average worker was $45 to $1. Today it is an incomprehensible
$844 to $1. (See Runaway Inequality) So there's a co-dependency between the
big hedge fund investors and the United Technologies CEO to move the Carrier
facility, obtain more cash flow, and use it all to buy back more stock.
What proof do we have? Since 2006, United Technologies has spent over $25
billion on stock buybacks, amounting to over fifty percent of its net
income. Last year, just before it announced the move to Mexico, the parent
company instituted a $10 billion stock buyback and the stock price
immediately jumped 5%. This means United Technologies used 131.4 percent of
its net income to move money from the company to its major investors and top
officers.
Gregory Hayes, United Technologies CEO, gets his share of the booty. Since
2012, he received $44,100,000 in total compensation, about half of which
derives from stock incentives. Fifty-six top hedge funds have taken a stock
position in the company to reap the bounty from these stock buybacks. (Many
thanks to Matt Hopkins for this data.)
And so Trump bluffed his way into the soulless heart of an economy dominated
by Wall Street. Does he have the guts to take on the fundamental evil of
stock buybacks? Not unless he is forced to. It's so much easier to blame
Mexico and China.
Is Carrier a major opening for the Democratic Party?
Hillary Clinton's benign neglect of these workers is symptomatic of the
party's ongoing romance with Wall Street elites - the source of so much of
the party's funding. These political leaders, their high level campaign
officials and the party's financial backers have never had it so good. They
won't suffer one iota from the loss of those 1,400 Carrier jobs. They won't
have to contemplate finding a replacement job at Wal-Mart for $13 an hour.
They won't have to worry about how to pay off their kids' student loans.
Instead, they will continue to enjoy the fruits of America's wealth that is
rapidly flowing to the top 1 percent.
Unless the party is captured by the Sanders forces, there will be little
concerted action to outlaw stock buybacks. The establishment Democrats will
do next to nothing about the never ending rip-off of the American people by
Wall Street elites.
What Should Progressives Do?
Right now we are in the streets bearing witness to the threats posed by
Trump to immigrants, people of color, Roe v Wade, LBGTQ rights, and the
environment. These protests build a protective sense of community, a public
space to share pain and anger, a place to shield each other against
deportation and Trump vigilantes.
But to date, these emotive and reactive responses provide no alternative
path or program. Love trumps hate is no match for what will soon be jammed
through Congress.
Moving from Trump, the person, to the Wall Street horrors that give us
Trump.
The Carrier relocation offers new possibilities. It allows us to protest en
mass about what Trump either does or does not do in behalf of working
people.
If progressives were well organized - a very big if to be sure - we should
join with these workers (represented by the United Steelworkers) to build
mass demonstrations at United Technologies headquarters, hedge funds offices
and the White House. Such a series of protests would keep the Carrier
shutdown on the front burner and provoke Trump to live up to his job
promises.
Imagine if Black Lives Matter, the Sierra Club, 350.org, the Moral Monday
movement, the Sanders supporters, and other unions and church groups rallied
around these at-risk workers. That would send a loud, clear message that the
progressive movement for economic, environmental and social justice cares
deeply about the plight of working people - black, white, Hispanic and
immigrant alike.
Not only would it challenge Trump's bluster, but it would create a litmus
test for the Democratic Party. If we took to the streets for this kind of
working class cause, the Democrats would finally be forced to decide whether
they are, as economist James Galbraith put it, "the party of the predators
or the prey."
The Democrats lost this election because they tried to be both. That's why
Hillary didn't think twice about taking all that Wall Street cash for her
inane private speeches. That's why she could talk so glibly talk about "the
deplorables" to a closed-door donor meeting. The Democratic elites were
confident that they could build a new winning coalition of women, people of
color, immigrants and upper income voters. They thought they didn't really
need the working people left behind by Wall Street's financial strip-mining.
They do now.
There are other critical political realities to consider. By not acting in
behalf of these workers, we continue to cede the jobs terrain to Trump. If
for some reason Carrier does not move, Trump will get all the credit - and
justifiably so. But if our movement sustained the demand in a systematic
way, the victory would be for all working people, not just Trump. We would
become the movement for jobs and justice.
But wait, why fight to save these manufacturing jobs when the planet is
heating up, black men are being slaughtered by the police, and millions of
immigrants are about to be deported?
This is a time of reckoning for progressives. It is time to face up to the
fact that we will win very little unless we recognize that working people of
all shades must become a vital part of a common progressive movement.
Their inclusion, however, requires that we climb out of our issue silos. We
need to build a state, local and national progressive alliance that unites
our specific issues. Bernie Sanders proved that such a common effort has
enormous potential. He successfully made the case that the actions of the
rapacious billionaire class unites us all as we struggle to reverse runaway
inequality, eliminate discrimination, provide universal health care and free
higher education, while also protecting the planet. We came together then
around a broad social democratic platform. We need to do it again.
For starters, Sanders should deploy his prodigious list of small donors to
raise substantial funds to build a national movement infrastructure. An
opening campaign could focus on Carrier and highlight the evils of stock
manipulation. Working people all over the country would take notice.
Yes, we are hurting. Yes, we are fearful. Yes, we are incredulous that the
country we love could turn to a demagogue. But, we have just entered one of
those rare historical moments when the poignant words of Joe Hill, the labor
troubadour, again ring true. In a telegram written to the radical labor
leader Bill Haywood, just before Hill was executed on trumped up charges 101
years ago, he wrote:
"Don't waste anytime mourning: Organize!"
This work is licensed under a Creative Commons Attribution-Share Alike 3.0
License
Les Leopold
Les Leopold, the director of the Labor Institute in New York is working with
unions, worker centers and community organization to build a national
economics educational campaign. His latest book, Runaway Inequality: An
Activist's Guide to Economic Justice (Oct 2015), is a text for that effort.
All proceeds go to support this educational campaign.
Skip to main content
//
. DONATE
. SIGN UP FOR NEWSLETTER
Wednesday, November 16, 2016
. Home
. World
. U.S.
. Canada
. Climate
. War & Peace
. Economy
. Rights
. Solutions
. President-Elect Donald Trump
. #NoDAPL
. 2016 Key Ballot Issues
. Election 2016
. Hillary Clinton
. Bernie Sanders
Winning Back the Working Class: A Time of Reckoning for Progressives
Published on
Wednesday, November 16, 2016
by
Common Dreams
Winning Back the Working Class: A Time of Reckoning for Progressives
By not acting on behalf of the nation's struggling workers, the left will
continue to cede the jobs terrain to Donald Trump
by
Les Leopold
. 30 Comments
.
. Democrats, along with their allies on the left, must take to the
streets for the cause of the working class. (Photo: AP)
. Over the next two years 1,400 Carrier air conditioner workers will
see their decent paying jobs migrate to Mexico. This highly profitable
Indiana facility, represented by the United Steel Workers, will make even
more money south of the border where workers earn less in one day than the
Indiana employees make in one hour, according the New York Times. (A YouTube
video of the heartbreaking plant closing announcement has nearly 4 million
views.)
. While Hillary Clinton remained silent on this impending catastrophe,
Donald Trump turned this facility into the poster child for what's wrong
with U.S. trade policy. He pledged that if the plant moved, he would place a
35% tariff on all Carrier products imported from Mexico as well as a similar
duty on the Mexican products of its parent company, United Technologies.
. Trump boasted he would make the company cry uncle: "I'll get a call
from the head of Carrier and he'll say, 'Mr. President, we've decided to
stay in the United States. That's what's going to happen - 100%."
. Carrier became the 100% battering ram with which to pound Hillary
Clinton and her embrace of NAFTA and other trade deals. In doing so, Trump
snatched the plant closing issue away from the Democrats, something the
party apparatchiks didn't recognize until the Trump votes poured in from the
Rust Belt.
"If progressives were well organized - a very big if to be sure - we should
join with these workers (represented by the United Steelworkers) to build
mass demonstrations at United Technologies headquarters, hedge funds offices
and the White House. Such a series of protests would keep the Carrier
shutdown on the front burner and provoke Trump to live up to his job
promises."
The Carrier case, however, was not just the usual media meme about Trump
backing the less educated, white working class. In fact, the threatened
Indianapolis plant is 50 percent African-American. Women make up half the
workforce on the assembly lines and the facility also employs dozens of
recent Burmese immigrants, well regarded by their co-workers. So making this
facility great again actually means coming to the aid of America's
increasingly diverse labor force.
But Trump is stumbling into something far more problematic than trade deals.
At the heart of this story is the financial strip-mining of America
organized and led by Wall Street.
Why does United Technology want to move to Mexico?
Let's round up the usual suspects: .
. They can't turn a decent profit using unionized American workers?
No. Carrier is the most profitable division of United Technologies.
. NAFTA caused this proposed move? Not likely. NATA is 22 years old,
so unless United Technologies is the corporate Rip Van Winkle, they could
have moved long ago.
. New technologies make the destruction of decent paying manufacturing
jobs inevitable? Not at all. In this factory transplant, they are
redeploying the same technologies already in use, machine by machine.
So if profits, trade and automation are not the driving forces, what is?
The major pressure to shift jobs abroad comes from the big hedge funds and
private equity investors who have one goal only - to siphon as much wealth
as possible out of companies like United Technologies.
High profits, low profits, or no profits, they pressure company after
company to squeeze their costs as much as possible so that there is more
money available for the company to buy back its own shares.
Why? Because stock buybacks immediately raise the share price and give the
big hedge funds an instant windfall.
Before a 1982 SEC rule change - a major turning point in the disastrous
deregulation of finance - massive stock buybacks were illegal because they
were considered stock manipulation, and a major cause of the 1929 crash.
Now, Wall Street extracts billions from this destructive activity. It's what
drives runaway inequality. (For the definitive account see Professor William
Lazonick, "Profits Without Prosperity" Harvard Business Review)
CEOs cherish this process because they now derive the majority of their
compensation through stock incentives. So by acting as Wall Street shills,
they drive up the price of stock and become richer and richer themselves.
In 1970, before stock buybacks became the norm, the pay gap between the top
CEOs and the average worker was $45 to $1. Today it is an incomprehensible
$844 to $1. (See Runaway Inequality) So there's a co-dependency between the
big hedge fund investors and the United Technologies CEO to move the Carrier
facility, obtain more cash flow, and use it all to buy back more stock.
What proof do we have? Since 2006, United Technologies has spent over $25
billion on stock buybacks, amounting to over fifty percent of its net
income. Last year, just before it announced the move to Mexico, the parent
company instituted a $10 billion stock buyback and the stock price
immediately jumped 5%. This means United Technologies used 131.4 percent of
its net income to move money from the company to its major investors and top
officers.
Gregory Hayes, United Technologies CEO, gets his share of the booty. Since
2012, he received $44,100,000 in total compensation, about half of which
derives from stock incentives. Fifty-six top hedge funds have taken a stock
position in the company to reap the bounty from these stock buybacks. (Many
thanks to Matt Hopkins for this data.)
And so Trump bluffed his way into the soulless heart of an economy dominated
by Wall Street. Does he have the guts to take on the fundamental evil of
stock buybacks? Not unless he is forced to. It's so much easier to blame
Mexico and China.
Is Carrier a major opening for the Democratic Party?
Hillary Clinton's benign neglect of these workers is symptomatic of the
party's ongoing romance with Wall Street elites - the source of so much of
the party's funding. These political leaders, their high level campaign
officials and the party's financial backers have never had it so good. They
won't suffer one iota from the loss of those 1,400 Carrier jobs. They won't
have to contemplate finding a replacement job at Wal-Mart for $13 an hour.
They won't have to worry about how to pay off their kids' student loans.
Instead, they will continue to enjoy the fruits of America's wealth that is
rapidly flowing to the top 1 percent.
Unless the party is captured by the Sanders forces, there will be little
concerted action to outlaw stock buybacks. The establishment Democrats will
do next to nothing about the never ending rip-off of the American people by
Wall Street elites.
What Should Progressives Do?
Right now we are in the streets bearing witness to the threats posed by
Trump to immigrants, people of color, Roe v Wade, LBGTQ rights, and the
environment. These protests build a protective sense of community, a public
space to share pain and anger, a place to shield each other against
deportation and Trump vigilantes.
But to date, these emotive and reactive responses provide no alternative
path or program. Love trumps hate is no match for what will soon be jammed
through Congress.
Moving from Trump, the person, to the Wall Street horrors that give us
Trump.
The Carrier relocation offers new possibilities. It allows us to protest en
mass about what Trump either does or does not do in behalf of working
people.
If progressives were well organized - a very big if to be sure - we should
join with these workers (represented by the United Steelworkers) to build
mass demonstrations at United Technologies headquarters, hedge funds offices
and the White House. Such a series of protests would keep the Carrier
shutdown on the front burner and provoke Trump to live up to his job
promises.
Imagine if Black Lives Matter, the Sierra Club, 350.org, the Moral Monday
movement, the Sanders supporters, and other unions and church groups rallied
around these at-risk workers. That would send a loud, clear message that the
progressive movement for economic, environmental and social justice cares
deeply about the plight of working people - black, white, Hispanic and
immigrant alike.
Not only would it challenge Trump's bluster, but it would create a litmus
test for the Democratic Party. If we took to the streets for this kind of
working class cause, the Democrats would finally be forced to decide whether
they are, as economist James Galbraith put it, "the party of the predators
or the prey."
The Democrats lost this election because they tried to be both. That's why
Hillary didn't think twice about taking all that Wall Street cash for her
inane private speeches. That's why she could talk so glibly talk about "the
deplorables" to a closed-door donor meeting. The Democratic elites were
confident that they could build a new winning coalition of women, people of
color, immigrants and upper income voters. They thought they didn't really
need the working people left behind by Wall Street's financial strip-mining.
They do now.
There are other critical political realities to consider. By not acting in
behalf of these workers, we continue to cede the jobs terrain to Trump. If
for some reason Carrier does not move, Trump will get all the credit - and
justifiably so. But if our movement sustained the demand in a systematic
way, the victory would be for all working people, not just Trump. We would
become the movement for jobs and justice.
But wait, why fight to save these manufacturing jobs when the planet is
heating up, black men are being slaughtered by the police, and millions of
immigrants are about to be deported?
This is a time of reckoning for progressives. It is time to face up to the
fact that we will win very little unless we recognize that working people of
all shades must become a vital part of a common progressive movement.
Their inclusion, however, requires that we climb out of our issue silos. We
need to build a state, local and national progressive alliance that unites
our specific issues. Bernie Sanders proved that such a common effort has
enormous potential. He successfully made the case that the actions of the
rapacious billionaire class unites us all as we struggle to reverse runaway
inequality, eliminate discrimination, provide universal health care and free
higher education, while also protecting the planet. We came together then
around a broad social democratic platform. We need to do it again.
For starters, Sanders should deploy his prodigious list of small donors to
raise substantial funds to build a national movement infrastructure. An
opening campaign could focus on Carrier and highlight the evils of stock
manipulation. Working people all over the country would take notice.
Yes, we are hurting. Yes, we are fearful. Yes, we are incredulous that the
country we love could turn to a demagogue. But, we have just entered one of
those rare historical moments when the poignant words of Joe Hill, the labor
troubadour, again ring true. In a telegram written to the radical labor
leader Bill Haywood, just before Hill was executed on trumped up charges 101
years ago, he wrote:
"Don't waste anytime mourning: Organize!"
This work is licensed under a Creative Commons Attribution-Share Alike 3.0
License
/author/les-leopold
/author/les-leopold/author/les-leopold
Les Leopold, the director of the Labor Institute in New York is working with
unions, worker centers and community organization to build a national
economics educational campaign. His latest book, Runaway Inequality: An
Activist's Guide to Economic Justice (Oct 2015), is a text for that effort.
All proceeds go to support this educational campaign.
