History will record 2010 as the year Washington became "business friendly."
Not that it was all that unfriendly before. Some would say the bailouts of Wall Street, AIG, GM, and Chrysler were about as friendly as it can get. In addition, Washington gave windfalls to drug companies and health insurers in the new health bill, subsidies to energy companies in the stimulus package, and billions to domestic and military contractors.
But for corporate America it still wasn't friendly enough. Before the midterm elections, Verizon CEO and Business Roundtable chair Ivan Seidenberg accused the president of creating a hostile environment for investment and job-creation. In the midterms, business leaders overwhelmingly threw their support to Republicans.
So the White House caved in on the Bush tax cuts for the wealthy, and is telling CEOs it will be on their side from now on. As the president recently told a group of CEOs, the choice "is not between Democrats and Republicans. It's between America and our competitors around the world. We can win the competition."
There's only one problem. America's big businesses are less and less American. They're going abroad for sales and employees. That's one reason they've showed record-breaking profits in 2010 while creating almost no American jobs.
Consider one of most popular Christmas products of all time -- Apple's iPhone. Researchers from the Asian Development Bank Institute have dissected an iPhone whose wholesale price is around $179.00 to determine where the money actually goes.
Some shows up in Apple's profits, which are soaring.
About $61 of the $179 price goes to Japanese workers who make key iPhone components, $30 to German workers who supply other pieces, and $23 to South Korean workers who provide still others. Around $6 goes to the Chinese workers who assemble it. Most of the rest goes to workers elsewhere around the globe who make other bits.
Only about $11 of that iPhone goes to American workers, mostly researchers and designers.
Even old-tech American companies made big money abroad in 2010 -- and created scads of jobs there. General Motors, for example, is now turning a nice profit and American investors bullish about its future.
That doesn't mean GM will be creating lots more blue-collar jobs in America, though. 2010 was a banner year for GM's foreign sales -- already two-thirds of its total sales, and rising. In October, GM became first automaker to sell more than 2 million cars a year in China. The company is now making more cars in China than in the United States.And GM has just signed a deal with its Chinese partner to try to crack India's potentially huge auto market.
Meanwhile, back home in the U.S., GM has slashed its labor costs. New hires are brought in at roughly half the wages and benefits of former GM employees, under a two-tier wage structure accepted by the United Auto Workers. Almost all GM's U.S. suppliers have also cut their payrolls.
It's much the same even for America's biggest retailers. 2010 wasn't an especially good year for Walmart in the United States. Its third-quarter sales fell, as U.S. shoppers continued to hold back.
But Walmart International is contributing mightily to its bottom line. Its UK business, Asda, will be adding 7,500 new jobs next year. Walmart is also doing well in Japan and Brazil, and hiring like mad in both countries.
So when President Obama tells American CEOs our biggest challenge comes from abroad, you've got to wonder. The leaders of American business are already abroad, and doing quite nicely.
Just after the midterm elections, the President's chief economic advisor, Larry Summers, told a group of top U.S. CEOs that the election was partly a "rejection of elites... that were seen as more citizens of Davos than of their countries." American CEOs, Summers warned, should "think very hard about their obligations as citizens of this country."
Yes, they're citizens. But first and foremost they're CEOs. And CEOs have to show profits - wherever those profits come from. Under American-style capitalism, profits matter. Jobs don't.
2010 was the year Washington became even more "business friendly." The result has been more and better jobs -- but not in America.
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
Bethany Moreton: The Walmart Mom Goes to Washington
People, planet, and peace. My priorities.
The $64,000,000 question is, how does this country get these "people" (thank you Supremely Stupid Court for That ruling,) to reign in the greed? They already either pay next to Nothing in taxes or No taxes... Hmmmm....
The formerly vibrant and expanding American working middle class has been sold down the river ... ESPECIALLY by the political party which was once responsible for successfully elevating labor and the working person!
"De-regulation" of business is now a political synonym for "surrender" of the working person.
The US Businesses must relocate and/or outsource labor expenditures as much as possible to reduce labor and environmental production costs if they want to satisfy the US consumer's demand for the lowest price possible for the US consumer's purchases.
If the businesses do not outsource outsource labor and environmental expenditures, they will be under-priced by their competitors that do and this will cause the business to go bankrupt of to cease operations and lay off their US workers.
If US citizens want those businesses that are exploiting the Labor Work Force of other competing industrialized nations to be held to the same rules, environmentally and human rights wise, that our country's Corporations are required to adhere to on these shores or overseas, then US citizens need for the US congress to repeal the various "FREE TRADE" legislation the US congress passed that ENABLED, ALLOWED AND ECONOMICALLY REQUIRED US businesses to outsource their jobs and relocate their plants to overseas locations.
The US government goal is apoparently to export all US manufacturing jobs!
Do you believe that maybe the foreign manufacturers might have paid US lobbyists to spend hundreds of thousands of dollars on wine, food, women, song, vacations, cash, sexual services, corporate jobs for the (unemployable) children/wives/girlfriends of the congressmen (and their congressional aids who actually control the members of congress) plus campaign contributions to entice (bribe) each of our Republican and Democratic US Congressmen and Senators for the past 40 years to create all of these various "FREE TRADE LEGISLATION" and treaties that ALLOWED, CAUSED, and ECONOMICALLY REQUIRED our businesses to take advantage of the lower labor costs, lower business taxes, lower payroll taxes to pay for health care costs, lower unemployment insurance costs, lower environmental manufacturing costs and other anti-business costs that are not required in various foreign countries with less anti-business laws that are applicable to businesses in the USA?
For example its been said many times that 1000-2000 dollars of the cost of a new car is health care costs
You would think there would be a much greater discussion about how badly the high costs of the US health care system is an economic negative for the US, and sadly HCR does little to nothing to address this
The amount of the payroll tax increases that businesses will be required to pay for national healthcare are unknown.
As of now, I see no way out of our current dilemna and probably lasting jobless recovery. My one hope though is that the American people will form local CO-OP Businesses -- like the Alvaraedo Bread Company -- where all employees are treated and paid equally in order to produce American made products and foods that serve both local and nationwide communities.
And yes, I think women will pay a large role in this co-opt business as we are seeing it happen all over the U.S.
As far as high tech products are concerned....well if the underpaid, underemployed American populace can no longer afford to buy software, cars, cheap computers, iphones and blackberry's from China and Asia, then the only good news is that Dell, Cisco, Miscrsoft and Apple will find their bottom line profits bottoming out in American sales much like Walmart is experiencing now -- and let that be a lesson to the Waltons, the Gates, Steve Jobs and all the other Benedict Arnolds of the formerly Made-In-America Corporations.
And we should slap high tarrifs on all their products and tax the hell out of them.
But what is the actual response? Well, maaaaaaybe we shouldn't give them tax breaks for stabbing their country in the back. Maybe. We'll see.
Not good enough.
And here's another thing to ponder: In 2008, the average American manufacturing wage was $32 an hour, and the country was running a huge trade deficit, especially in manufactured products. In Germany in 2008, the average wage in their thriving manufacturing sector was $48 an hour. AND their workers get superior health care at half the cost here in the States, 6 guaranteed weeks of vacation a year, and a real pension (their social security pays twice what ours does and kicks in at an earlier age). Meanwhile, Germany posted a trade surplus that year, as they do every year.
We're told that American workers can't compete with others around the world because our wages are too high. But that's a lie, because other high-cost advanced industrialized countries are competing -- and winning.
So the question remains: What are we going to do about it? The political system isn't responding, and hasn't been listening for the past 30 years. That's a pretty long stretch. So? What next?
The IT field is super saturated, and US citizens must compete with each other for who will work for less wage than others competing for each job.
This is just one more reason that the "Citizen's United" Supreme Court decision is so revolting. Murdoch famously contributed at least one million dollars to the Republican Party, but he refers to "home" as being in China. How much did he give to the PAC's? Money he did not have to disclose. How many other CEO's did the same while living outside the U.S.?
This is the biggest cause of the looming class war in America. It is already happening in Europe. When the rich no longer identify themselves as Americans, why do we allow them to throw their money around inside our elections? Indeed, why let them vote at all? Will the American working class delegate their decision making rights to the rich? Shouldn't we want to retain the ability to run our own lives? We must address this, NOW!
If you look at Europe up until the beginning of WWI, the king and queen of a country was related through marriage with royalty of other countries.Their concerns were centered on positioning themselves to gain maximum political power. Interest in the commoner living in the same politically demarcated geographical location was only as a means not an end - just like it is today.
As long as the corporate media set the public discourse and the manufacturing of consent proceeds unimpeded nothing will change short of a catastrophic incident that impacts those who truly wield power..
Just exactly what burdens are the "libs" putting on business? I have worked in heavy industry for 35 years and the "burdens" on business from government have never been lighter. The EPA is a joke, OSHA and MSHA have been gutted, unfair labor practices are never prosecuted, women and minorities are discriminated against...
In India when a company builds a new factory they also build and run schools and health clinics for the local population. They also provide meals for all their local workers. They receive no government subsidies at all.
It is just part of being a good corporate citizen.