The U.S. economy is picking up steam but most Americans
aren’t feeling it. By contrast, most European economies are still in bad shape,
but most Europeans are doing relatively well.
What’s behind this? Two big facts.
First, American corporations exert far more political
influence in the United States than their counterparts exert in their own
countries.
In fact, most Americans have no influence at all. That’s
the conclusion of Professors Martin Gilens of Princeton and Benjamin Page of
Northwestern University, who analyzed 1,799 policy issues — and found that
“the preferences of the average American appear to have only a miniscule,
near-zero, statistically non-significant impact upon public policy.”
Instead, American lawmakers respond to the demands of
wealthy individuals (typically corporate executives and Wall Street moguls) and
of big corporations – those with the most lobbying prowess and deepest pockets
to bankroll campaigns.
The second fact is most big American corporations have no
particular allegiance to America. They don’t want Americans to have better
wages. Their only allegiance and responsibility to their shareholders — which
often requires lower wages to fuel larger profits and higher share
prices.
When GM went public again in 2010, it boasted of making 43 percent of its cars in place where labor is less than $15 an hour, while in North America it could now pay “lower-tiered” wages and benefits for new employees.
American corporations shift their profits around the
world wherever they pay the lowest taxes. Some are even morphing into foreign
corporations.
As an Apple executive told The New York Times,
“We don’t have an obligation to solve America’s problems.”
I’m not blaming American corporations. They’re in
business to make profits and maximize their share prices, not to serve America.
But because of these two basic facts – their dominance on
American politics, and their interest in share prices instead of the wellbeing
of Americans – it’s folly to count on them to create good American jobs or
improve American competitiveness, or represent the interests of the United
States in global commerce.
By contrast, big corporations headquartered in other rich
nations are more responsible for the wellbeing of the people who live in those
nations.
That’s because labor unions there are typically stronger
than they are here — able to exert pressure both at the company level and
nationally.
VW’s labor unions, for example, have a voice in governing
the company, as they do in other big German corporations. Not long ago, VW even welcomed the UAW to its auto plant in
Chattanooga, Tennessee. (Tennessee’s own politicians nixed it.)
Governments in other rich nations often devise laws
through tri-partite bargains involving big corporations and organized labor.
This process further binds their corporations to their nations.
Meanwhile, American corporations distribute a smaller
share of their earnings to their workers than do European or Canadian-based
corporations.
And top U.S. corporate executives make far more money
than their counterparts in other wealthy countries.
The typical American worker puts in more hours than
Canadians and Europeans, and gets little or no paid vacation or paid family
leave. In Europe, the norm is five weeks paid vacation per year
and more than three months paid family leave.
And because of the overwhelming clout of American firms
on U.S. politics, Americans don’t get nearly as good a deal from their
governments as do Canadians and Europeans.
Governments there impose higher taxes on the wealthy and
redistribute more of it to middle and lower income households. Most of their
citizens receive essentially free health care and more generous unemployment
benefits than do Americans.
So it shouldn’t be surprising that even though U.S.
economy is doing better, most Americans are not.
The U.S. middle class is no longer the world’s richest.
After considering taxes and transfer payments, middle-class incomes in Canada
and much of Western Europe are higher than in U.S. The poor in Western
Europe earn more than do poor Americans.
Finally, when at global negotiating tables – such as the
secretive process devising the “Trans Pacific Partnership” trade deal —
American corporations don’t represent the interests of Americans. They
represent the interests of their executives and shareholders, who are not only
wealthier than most Americans but also reside all over the world.
Which is why the pending Partnership protects the
intellectual property of American corporations — but not American workers’
health, safety, or wages, and not the environment.
The Obama administration is casting the Partnership as
way to contain Chinese influence in the Pacific region. The agents of America’s
interests in the area are assumed to be American corporations.
But that assumption is incorrect. American corporations
aren’t set up to represent America’s interests in the Pacific region or
anywhere else.
What’s the answer to this basic conundrum? Either we
lessen the dominance of big American corporations over American politics. Or we
increase their allegiance and responsibility to America.
It has to be one or the other. Americans can’t thrive
within a political system run largely by big American corporations — organized
to boost their share prices but not boost America.
ROBERT B.
REICH, Chancellor’s Professor of Public Policy at the University of California
at Berkeley and Senior Fellow at the Blum Center for Developing Economies, was
Secretary of Labor in the Clinton administration. Time Magazine named him one
of the ten most effective cabinet secretaries of the twentieth century. He has
written thirteen books, including the best sellers “Aftershock" and “The
Work of Nations." His latest, "Beyond Outrage," is now out in
paperback. He is also a founding editor of the American Prospect magazine and
chairman of Common Cause. His new film, "Inequality for All," is now
available on Netflix, iTunes, DVD, and On Demand.
