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Globalization and America's Assault on the Middle-Class

February 1, 2006       Commentary Archives

Globalization: "the term refers to the overall increase in political or economic interdependence between global partners. Globalization creates new markets and wealth, breaking down regulations while wreaking havoc in cultures, national and local politics." The long and short is, it creates wealth. But whose till is seeing the Lion share of this wealth? The corporate till.

Entitlements and Corporate America

Back in the 1930s corporate America antagonize over the effects social security would have on America, as they put it "permanently weaken the fiber of the American people."

Later Medicare and Medicaid brought cries of socialize medicine. American business fought it tooth and nail, predicting all kind of negative results. For decades the republican party carried the holy banner of corporate Americas anti-entitlement crusade.

Believe it or not we have now come full circle. To the chagrin of these republi-cans. Business is now pushing an agenda that support some entitlements. What brought about this change? The globalization effect.

Global competition has put American business in a position where they think they need to cut benefits they have been giving their workers for decades.

Retirement benefits are being frozen, and in some cases cut, they're passing on the increase medical cost to workers and retirees. Retirees on fixed pensions.

Many of these cost are being passed on to the government. This of course shines light on the new found support for entitlements by corporate America, who sees Medicaid as a benefit to its bottom line.

The new Medicaid program, while under the pretense that this expansion is somehow to the benefit of the people. In fact the principal benefactor is corporate America. Hell, they wrote it. They see it as a way to shift some of their burdens onto the government. The government doesn't seem to mind.

The Writing is on the Wall

For the American worker the writing is on the wall. Recently General motors announced a  25,000 workers will be cut by 2008, citing they didn't think they would get from the United Auto Workers (UAW) the needed cuts in medical benefits.

Ford has also announce 14 plant closings and some 30,000 job cuts in the next four years. A quarter of its North American workers. This amidst 4th quarter profits of 124 million, up 19 percent over the previous year.

Most of these gains came from international operations. In a word North American operations are not paying the bills. Some of these international...ah, global operations, are right here in their front yards.

According to the Automobile Manufactures Association the number of Japanese Auto plants in the United States increased from 11 in 1993 to an expected 38 this year. The Japanese among other are getting nice tax incentives from southern states like Texas, in an environment that makes it difficult for unions to organize.

Late 2005 Verizon the second largest telephone company in America, declared that it was freezing pensions for their managers, at present levels. At this time their stocks are doing well and profits are up. The reason for this as they put it. They competitors doesn't have these cost, and so it puts them at a competitive disadvantage. Who are these competitors? They're global.

The carnage is also being waged on the domestic front. Sears also froze their pension plans stating that they major competitor including Wall Mart doesn't offer their workers pension plans.

This year already IBM, Sprint/Nextel, and Alcoa. Hewlett Packard, Motorola froze their pension plans. While promising to beef up their 401k plans.

Biting the hand that feeds you

Globalization is indeed wreaking havoc across economic, political, and cultural boundaries. Some American companies are finding out it can even come home to haunt them.

Many public officials are expressing concerns, that the American public's anxiety over the freezing of retirement plans, and the well publicized short fall in retirement goals. Not to mention stagnant wages and rising health cost. May lead to less consumption and higher savings by Americans, in an economy that's better than two thirds consumer driven. It's getting ugly folks.

Estimates are that the average cost of plants and equipment in foreign countries are half that in the U.S. Labor cost: ten percent of what it is in the U.S.

Medicaid original mandate as an anti-poverty program.   Have been up scaled in many states Taking on a broader role.

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Estimates are that the average cost of plants and equipment in foreign countries are half that in the U.S. Labor cost: ten percent of what it is in the U.S.

Medicaid original mandate as an anti-poverty program.   Have been up scaled in many states Taking on a broader role.