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Cogs in the Great Machine

By Heidi Niebauer

The world in which we live requires us to work to get what we want and need. The world in which we live does not require us to like our jobs, just do them, and do them well enough not to get fired. “It’s not part of my job description to do that” is something that we all want to say, when faced with a new task, because, frankly, we do not get paid enough for our time.

Our country in particular, has been statistically shown to be the lowest paying and has one of the largest gaps in pay of the lower class to the upper class in advanced economies, such as Great Britain, France, the Netherlands, Germany and Italy. In terms of compensation for time spent on the job, the hourly wage compensation was 60% higher in 1992 than in the United States, 50% higher in Sweden, and 36% higher in Belgium, according to Richard B. Freeman, who cites the US Bureau of Labor Statistics in 1992 (268-269).

Not everyone is feeling the crunch however. It is true that CEOs and their cohorts get more money than the rest of the working class and the upper middle class. It is also true that the largest gap in income distribution is in the United States, when being compared with other economically developed nations (How Labor Fares in Advanced Economies 270).

These however, are not the only things that differ between the United States and these nations. As a general rule, these European developed nations have government mandates on work place related rights and benefits. The United States, does not have regulations on vacations, sickness leave, or severance pay, and did not legislate maternity leave until the late 1980s and early 1990s. The United States also did not require firms to give workers early warning of mass dismissals until 1988. Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Netherlands, Portugal, Spain, and the United Kingdom have included laws mandating all of these things. This may seem to be a little of a stretch of governmental power, but in the United States, the people who have the power over workers rights are the corporations, who only have profits in mind. This does not allow for generous vacations, sick leave, maternity leave, severance pay, or unemployment insurance. As I stated earlier, some of these things were only instated in the last 15 years in the United States, and the only reason that they ever were, was because the government stepped in. It could be argued that the government should take a more active role in the economic system.

On the other hand, there is a place where the government has not been even somewhat giving to the lower and middle classes. The government has been giving special treatment to the corporations of America, including the Fortune 500 companies. Corporations have been receiving large sums of money from the government, directly and indirectly, for running their companies successfully. These corporations include Sunkist Growers Inc, Dole, Brown-Forman Corporation, Jim Beam, Pillsbury, Tyson Foods, M&M Mars Company, Caterpillar, General Electric, Xerox, Boeing, Hewlett-Packard, Texas Instruments, and Coca-Cola.

The government puts up scholarship-type awards to corporations through many department offices. These include marketing services and other areas that some would assume the individual corporations would take care of as a regular part of business (Stansel and Moore, Federal Aid to Dependent Corporations: Clinton and Congress Fail to Eliminate Business Subsidies 1-2). According to these Cato Institute estimates, the federal government currently spends $60 billion a year on programs that provide spending subsidies to businesses. These departments give money to businesses that have plenty, without requiring a spending plan.

Dollars have been cut from federal housing, nutrition, health and education programs. Remaining relatively unscathed are billions in aid for dependent corporations in all its omnipresent forms. The Cato Institute has compiled a list of 55 of the worst corporate welfare abusers. The programs listed in the twenty-page report are considered by those of both the left and the right of the political spectrum to be the most wasteful, or the most unwarranted giveaways to business. This list, compiled from statistics for 1997, includes the Agricultural Marketing Service, which was appropriated $50.3 million; the Advanced Technology Program, which is opposed by both sides when the topic of corporate subsidies comes up, was allocated $225.0 million; the Army Corps of Engineers, $3,503.2 million; Energy Conservation programs, $569.8 million; the Bureau of Reclamation (Department of the Interior), $775.3 million. These programs are only a sample of the spending programs that are being saved despite some cuttings that have been made in corporate welfare. (Stansel and Moore, Federal Aid to Dependent Corporations: Clinton and Congress Fail to Eliminate Business Subsidies 1-20)

Unfortunately, it’s not easy, by looking at these names, to see where the money is actually going. The Agricultural Marketing Service collects data on agricultural commodity markets and helps agribusiness promote cotton, potatoes, eggs, milk and dairy products, beef, pork, soybeans, honey, watermelon, mushrooms, wool, lamb, mohair, and cut flowers. The Advanced Technology Program subsidizes Caterpillar, General Electric, and Xerox by giving them money to enhance competitiveness and to acquire and make better use of their research. It is given in hopes of allowing these companies to give the marketplace more profitable products. The Army Corps of Engineers is allocated money for the nation’s inland waterways system, which is particularly helpful to private barge companies and bulk commodity shippers who make frequent use of those waterways. The Energy Conservation program also sounds like a really good investment. However, most of the projects that are involved in this program are direct links to privately owned businesses. Energy conservation programs include Industries of the Future, the Technology Access, and Transportation Technology. These programs fund such experimental projects as the alternatively fueled vehicles and electric drive vehicles (Stansel and Moore, Federal Aid to Dependent Corporations: Clinton and Congress Fail to Eliminate Business Subsidies 7-8, 10).

In recent economic events, Enron has collapsed. Enron filed Chapter 11 bankruptcy on December 2nd. This company has had some very substantial government subsidies. They have received monies directly and indirectly through the energy conservation programs. This excerpt from the Citizens for Tax Justice website explains the problem; [There are] $2.6 billion in new tax breaks [to be proposed] for oil and gas companies. Besides $1.8 billion in added multinational tax breaks (also included in the total multinational figure above), these include even bigger tax breaks for exploration costs and expanded tax refunds if the tax "losses" generated by these and other special write-offs make a company's taxable income less than zero. Another provision, apparently targeted primarily (or solely) to Enron Corp., would exempt tax-haven profits from foreign oil and gas pipelines. (Citizens for Tax Justice, Corporate Welfare Rides Again: Business Giveaways in the 1999 Tax Bill http://www.ctj.org/html/welfar99.htm)

Kenneth Lay, the chief executive of Enron, has personally given at least $250,000 in soft money to Bush's political campaigns. He is also one of the "Pioneers"--a Bush supporter who has collected $100,000 in direct contributions of $1,000 or less. This obvious tie between the government and the corporation is just an example of ‘I’ll scratch your back if you’ll scratch mine’ in today’s economy and politics. The corporations are using their money to place the people they want in political high places and then receive more money.

The folly of corporate subsidies is clearly evident in this last case with Enron filing bankruptcy. If a corporation not only is the 7th largest in the nation, but also has branches across the globe with a very large income, and on top of that, receives federal funding, and still files bankruptcy, there is a problem somewhere.

Bush’s economic stimulus package is really a new way of going about handling the economy the way that Reagan did. The House bill is almost entirely tax cuts for corporations and these breaks are permanent. This would provide little immediate stimulus to the economy. A permanent repeal removes any incentive for companies to make new investments while the economy is in trouble. The bill would also permanently legitimize the tax dodge, worth $21 billion over 10 years, that allows the companies to not pay taxes on any profits made abroad, provided they don’t bring the money home. This bill however, is a step worse than Reagan. The bill actually is going to attempt to repeal one of Reagan’s few laws on regulating corporations. A web-exclusive story from Robert Borosage explains:

The House bill repeals the alternative minimum corporate tax, the tax signed into law by Ronald Reagan that ensures that profitable companies pay at least something in taxes no matter how clever their accountants. To add insult to that legislative injury, the bill doesn’t only eliminate the tax permanently; it repeals the tax retroactively for 15 years (The Stimulus Scam, Borosage).

While the corporations of the United States and some foreign governments are getting all of this public dole, the citizens of these nations are being left out. Statistics show that the majority of welfare recipients work at a minimum wage job, sometimes even more than the recommended 40 hours a week, where there are no unions and no one to enforce the rights of workers in the corporations. Despite how hard people work, the wage is still not high enough to pay the bills.

The stereotypical welfare recipient is the welfare mother. This welfare mother is painted as a person who continues to have children out of wedlock so that she can continue to receive more and more funds from the government. This, however, is largely untrue. Most welfare mothers indeed do work. Over half of the mothers on welfare worked during the last 24 months, and 41% worked approximately 1,000 hours per year (The Corporate Power and the Amercan Dream 122). During this period, those mothers on welfare earned an average of $4.29 per hour, and in 90% of the cases they received no unemployment benefits. The commonly held jobs in their cases included maids, cashiers, nurse’s aids, childcare workers and waitresses, the jobs with the least pay in the economy. Americans are apt to believe that with enough freedom and opportunity, hardworking individuals can provide for themselves, see little reason to call for sweeping governmental intervention to aid the poor. The problem is that this belief does not reflect reality.

People still believe the quote of Benjamin Franklin, “If they are poor [in America], they first begin as Servants or Journeymen; and if they are sober industrious, and frugal, they soon become Masters, establish themselves in Business, marry, raise Families, and become respectable citizens” (The Forgotten Americans 277). This is why the majority of Americans do not understand that the upward movement of society generally doesn’t work. The majority of the new jobs created in the past twenty years have been service jobs, such as cashiers and store employees. These jobs are low paying with no benefits, and usually the employee will not get the respect that a person of a higher status will. These jobs are also unskilled jobs, and these people can be replaced easily. The employee does not have any skills with which to move upward. It is uncommon to see two-parent families with a single income because it is difficult to make ends fit neatly, with a little bit of luxury on the side.

Workers with service jobs and especially unskilled workers in the corporation have the hardest time securing rights in the workplace. The meatpacking industry is responsible for some of the worst atrocities committed and overlooked in American industries. This industry even goes as far as knowing of deaths in the production line at a given time and will not allow the chain to stop. Eric Schlosser, the author of Fast Food Nation, has called the industry, dominated by Iowa Beef Packers (IBP) and IBP subsidiaries such as ConAgra, “the most dangerous job in America”. The reason he feels it is so dangerous is because of the high turnover rates that are mainly caused by high injury rates and the corporation not allowing the employees to seek outside medical attention through a legal waiver that the employees sign upon hiring. The corporation is large enough and strong enough to keep these claims on their employees, and terminate those who do not follow these rules. Of course, the workers who get fired are not fit to work at another plant because of the severity of their injury (Fast Food Nation, 186-190).

Unionization of these plants is nearly impossible because of the high turnover rate; statistically a typical worker will not stay more than a year at this type of plant, and also the large number of illegal immigrants in the plants. These immigrants do not believe their employers are victimizing them. They feel they are being paid an extraordinary wage in comparison with that which they would receive in their native countries. They do not believe they have the power to unionize because they are not citizens of the United States. In addition the unions are simply not present in this industry, or in many other (Fast Food Nation 184, 153-158,).

Many corporations actively fight against the unionization of their workforce. McDonald’s actually has closed down at least one of their restaurants because of the inability to squash a group who wanted to unionize (Fast Food Nation 233). My roommate has known of an instance where a worker at Wal-Mart who spoke of unionization and was asked by management if he had particular problems with the workplace. This and other means can force unions out without management actually going head to head with union officials.

Some people feel that American Labor Unions are just another special interest group that is struggling for control of politics, and some people, especially laissez-faire capitalists would rather that power be in the hands of corporations (American Labor Unions in the Electoral Arena 3-5). However, wouldn’t it be better for the worker in general if Unions had a better political foothold than corporations?


Works Cited
Asher, Herbert B, Eric S. Heberling, Randall B. Ripley, Karen Snyder.
American Labor Unions in the Electoral Arena. Oxford: Rowman and Littlefield Publishers, 2001.
Borosage, Robert. “The Stimulus Scam.” Mother Jones 22 Nov. 2001
“Corporate Welfare Rides Again: Business Giveaways in the 1999 Tax Bill.”
Citizens for Tax Justice 13 December 2001. 17 August 1999
http://www.ctj.org/html/welfar99.htm.
Schlosser, Eric. Fast Food Nation: The Dark Side of the All-American Meal. Boston: Houghton Mifflin Company. 2001.
Freeman, Richard B. How Labor Fares in Advanced Economies. 1994. Crisis in American Institutions. Eds. Jerome H. Skolinick and Elliott Currie. University of California, Berkley: Longman, 1997. 267-274.
The Labor Institute. Corporate Power and the American Dream. 1995.
http://www.motherjones.com/web_exclusives/commentary/opinion/sti ulus.html>. Schwarz, John, and Thomas J. Volgy. The Forgotten Americans. 1992. Crisis in American Institutions. Eds. Jerome H. Skolinick and Elliott Currie.
Stansel, Dean, and Stephen Moore. Federal Aid to Dependent Corporations: Clinton and Congress Fail to Eliminate Business Subsidies. Cato Fact sheet 1997.
http://www.cato.org/pubs/wtpapers/corpwelfare.html. Nov. 18, 1999.

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