“What’s good for General Motors is good for the country,” Defense Secretary nominee—and former GM CEO—Charles Wilson famously told the Senate Armed Services Committee in 1953. These weren’t his exact words, but they have resonated nonetheless.
Behind Wilson’s apparent gaffe was an undeniable truth. GM did create millions of jobs, not only in the direct manufacture, shipping, and sale of automobiles, but in its peripheral stimulus for rubber, glass, and all the other components required to make a car.
This was reflective of the post-war era, when the United States was the world’s manufacturing behemoth. Banks gave companies loans to produce goods domestically. Today, U.S. business and finance invests in exporting jobs instead of creating them.
General Motors executives can now claim that what’s good for their company is good for the country—if the country referred to is China, where GM manufactures more vehicles than within U.S. borders. GM also earns more from foreign sales than it does from U.S. car sales, and it pays its workers less to do it. A skilled GE welder in Michigan in the 1980s earned $35 an hour. His equivalent would be in Mexico now, failing to earn that much in a day.
General Electric, the company that once hired Ronald Reagan to represent its “Americanism,” has repeatedly slashed its American workforce. Tellingly, GE recently announced plans to hire more than 1,000 Brazilian workers and to invest $2 billion in its Chinese operations.
Plenty of American corporations that remain headquartered in the United States have found greener pastures for actual production and sales. U.S. workers simply became too costly, even as the corporations have steadily cut their wages and benefits since 1973.
When the credit bubble burst, our companies increasingly looked towards India, China, Brazil, and Indonesia, where economies were growing and wages remained “reasonable.” There, they could produce and sell their goods more easily and slice their payrolls. That means bigger profits, with few benefits for the U.S. economy.
Stagnant wages are good news for corporate profits and the stock market. But without full employment, reliable credit, and a robust housing market, working people won’t resume their consumer habits quite so easily.
In the years following World War II, companies expanded and hired more workers because employees actually bought stuff. The irony of 2011 is that the consumers in our consumer society don’t have the money or credit to do what they’ve been conditioned to do. They struggle to make their mortgage and rent payments, while worrying about their pensions—and perhaps the future of Social Security as well.
Wall Street, however, has grown richer and richer. Investors and traders rang in the New Year expecting a market boom in 2011. Meanwhile, the tens of millions of unemployed, foreclosed upon, or already homeless went to sleep early—to escape the pessimism that has descended on the middle and lower middle classes in much of the country. The value of their homes—the basis of their future—has slipped. Their jobs—if they still have them—are insecure. And their grown kids have moved back in.
The new Congress will doubtlessly hand the wealthiest Americans more tax cuts while shrinking Social Security and Medicare benefits for the rest of us. America’s leaders will continue to talk of the American Dream, which still exists for the members of the working class—but only when they’re asleep.
Saul Landau is an Institute for Policy Studies fellow. His new film is Will the Real Terrorist Please Stand Up. www.ips-dc.org