Bad Job - Why corporate America is so much more awful than it used to be.

[applegrove]

By Isaac Chotiner at Slate

http://www.slate.com/articles/news_and_politics/interrogation/2017/09/why_companies_and_ceos_treat_their_workers_like_garbage.html

"SNIP...........


Isaac Chotiner: What is it specifically that you think has changed about American corporate and business culture?

Rick Wartzman: The four big companies that I use to tell this story are GE, GM, Kodak, and Coca-Cola. There was a shift from a stakeholder orientation, where the CEOs of these giant corporations talked in terms of balancing all their constituents in this postwar era. They talked about taking care of their customers and the communities they operated in; they even bragged about how much they paid in taxes. Corporate America shifted to a model that is now largely centered around maximizing shareholder value. Investors have explicitly been put quite above all of these other stakeholders, so when you carve out the pie, a bigger share is now going to investors, and a smaller share is going to labor. That’s what happened.

Why do you think companies 50 years ago were not interested in maximizing profits given that many people think of doing so as human nature?

One argument is that companies could afford to be generous and balance the interest of their workers in that era because the U.S. had global competition on its knees and the big American companies produced an inordinate amount of the world’s goods. This was an extraordinary time. Another reason is that they were forced to the table by the power of organized labor, and indeed unions did have a lot to do with creating a social contract, and not only for those carrying union cards. Another is that there was a belief then that was pretty prevalent among CEOs that we have to pay workers enough to keep the consumer economy humming. We’ve got to put enough wages in their pockets, as Charlie Wilson, the president of General Electric, said in the ’40s, so that they’ve got enough to buy my refrigerators. This was the kind of logic that went back to Henry Ford when he famously raised workers’ wages, and lo and behold they could afford to buy cars, including Ford.

There was also an element of fear; specifically, there were tens of millions of service men about to return home from war. A number of executives talked about how if we don’t provide good jobs with good security, good benefits, we may well invest in another depression, perhaps one even worse than what unfolded in the 1930s. If that happens, we might end up with socialism or God forbid even communism on American soil. Those were of course very real alternatives at that time, or seen being by many as such.

There is also a big cultural reason. I am quite convinced in doing all the research that I did that there was just more of a “we’re all in this together” effort at that time in America. I think it was more of a “we” culture than an “I” culture. Remember, this was a generation that had come through the depression and World War II together. I think that corporate culture in that way both kind of reflected and reinforced those larger societal norms.

............SNIP"

[gopiscrap]

1. Fucking Ronald Reagan turned it into an "I" culture

[flamingdem]

3. Those who supported him were Trumpian-lite

I knew several. Real airheads who thought Reagan would be "entertaining" as potus

[Hortensis]

9. Wasn't Reagan a symptom, rather than a cause? One huge factor was the medical revolution.

Corporations across the nation had committed to paying retired workers pensions and healthcare for the rest of their lives, many retiring at 55.

Only instead of some dying before they could retire, most living less than a decade longer, and few living long, now a large majority were living another 20 to 25 years, some even 40 years, AND the costs of medical care were skyrocketing as new, extremely expensive advances in care were developed.

And this was happening, as said, as the rest of the world was catching up to us technologically and driving profits down. And with that, poof! went the pensions and benefits younger people grew up expecting, even built their life plans around.

[flamingdem]

11. Don't remember any of that, what I remember is Reagan breaking the backs of unions

such as the air traffic controllers.

[OregonBlue]

7. It had already changed or he would not have been elected.

[applegrove]

2. I believe it was business schools who began to teach in the early 90s attack everyone

but shareholders, including customers and government. That was how it was disseminated. Or one of the ways.

[JHB]

8. It began long before the early 90s. More like the 60s and 70s...

...and probably earlier in some places. The theories behind it go back to the 40s or earlier.

By the 70s other areas of the world had recovered from the war, inflation was high, changing technology was having an impact on industries that previously hadn't been too affected, a new generation had grown up -- the oldest of which had been babies or children during the Depression and war -- who were looking to make their mark, etc. All these came together to make a receptive audience for other ways of doing business.

And then there's the Movement Conservatives, Powell Memo crowd, Economic Royalists, and plain old Greedy Rich Bastards who saw the New Deal as an abomination and always wanted to get rid of it and all the ways it had changed the way business was done. Especially their goddamn taxes.

They ensured business schools had full funding to promote their views. By the early 90s, their ideological takeover of business schools was pretty much finished.

[JHB]

10. Also court decisions that led to a marked increase in shareholder lawsuits

From Harvard Business Review:
Ending the Shareholder Lawsuit Gravy Train
by Justin Fox
February 27, 2014
https://hbr.org/2014/02/ending-the-shareholder-lawsuit-gravy-train

2. In 1964, the Supreme Court unanimously ruled that (I’m quoting Barnard here) “in order to effectively supplement the often-overwhelmed enforcement efforts of the Securities and Exchange Commission, it would recognize an implied right of action, enabling private investors to seek damages and other relief under … the Securities Exchange Act of 1934.” In 1970 it provided for the award of plaintiff’s attorney fees in such cases, and in 1971 it upheld a Rule 10b-5 case. So the whole securities class-action thing was basically a creation of the Supreme Court, with Congress and the SEC playing supporting roles.

3. These decisions led to a doubling in the number of securities lawsuits filed in federal courts from 1970 to 1975, after which the Supreme Court, now with a majority of Nixon and Ford appointees, began making it harder to file shareholder lawsuits in federal courts. For time the lawsuit tide ebbed, then the frenzied Wall Street activity of the 1980s and the rise of fraud-on-the-market theory in the lower courts sent the numbers back up.
***

6. Fraud on the market got crucial backing early on from conservative University of Chicago Law School scholars Frank Easterbrook (now a federal appeals court judge) and Daniel Fischel, both big believers in the efficiency of markets and the need to defend it. “The law should protect markets; markets will then protect investors,” is how Langevoort summarizes their thinking.

[area51]

4. Kick for the night crew, n/t

[socialist_n_TN]

5. You can tweak the system all you want but in the end.........

it's still capitalism. The ONLY consideration is profit. And if the rate of profit is falling in the productive sector, they'll invest in the financial sector if that makes them higher profits.

The only way this will even change temporarily is if the system itself faces an existential threat to its very existence. At that point they WILL allow reforms and even lose profit if it staves off that threat to the system. But as long as you allow private ownership of the means of production and inherited property, you will see the same pattern repeated over and over again. Like it HAS been repeated over and over again.

[kacekwl]

6. And surprisingly corporations , CEO's seemed to do very well while paying workers a fair wage

and providing benefits. Of course doing very well at one point was not enough anymore they had to do obscenely well while paying less and busting unions.