|If you read economists’ reports, you’ll find the word productivity mentioned a lot. It’s key to competitive advantage and a healthy economy, they say. Ours is dropping, compared to other countries where people work harder and/or work smarter, they say. Automation improved it for factory workers and agriculture, but we need to improve it for office workers, they say.
This is sheer propaganda. Productivity is a euphemism for profit margin. Of course the corporatists obfuscate this fact by defining productivity deliberately obscurely: as the amount of ‘output’ per unit of ‘input’. What this means is the ratio of revenue (that’s how right-wing economists measure ‘output’) to cost (that’s how they measure ‘input’). This is precisely the definition of profit margin. When neocons lament that worker productivity is inadequate, what they are really saying is that their corporate profits are inadequate, and that unless workers make severe and continuous sacrifices to increase these corporations’ profit margins from domestic operations they will take the money they gouged from consumers in this country and invest it all in struggling nations that are so desperate that they will do anything, .
This is the Wal-Mart Dilemma, illustrated above in the red boxes, but taken to the next level. What Wal-Mart is doing to suppliers, forcing them to lower prices every year to keep their contract, until they are bankrupted, is what corporatists are now trying to do to workers, forcing them to accept lower real wages, fewer benefits, and work longer hours, or they’ll find another ‘supplier’ for their labour — China.
More specifically there are six ways you can increase corporate profit margins, oops, I mean productivity:
While of course none of these things is sustainable indefinitely (the Robber Barons tried a century ago), when you have corporations and governments conspiring together to do all six of these things, this race to the bottom can continue for years.
That is precisely what is happening now. We now have a situation where year-over-year profit margins of the world’s largest corporations have been increasing by 20% or more every year for a decade, and are expected to continue to do so indefinitely. The average annual profit growth rate predicted by analysts for the S&P 500 stocks is about 23% annually, for at least the next five years, and it is on that basis that stock prices are so wildly overvalued and shareholder expectations are so relentlessly excessive. The return on investment for these companies is now at least three times a reasonable ROI for investments with commensurate risk.
We, the citizens and consumers, are completely funding this windfall for the executives and controlling shareholders of big corporations, and we are expected to continue doing so indefinitely:
The chart above, which proposes a solution for the Wal-Mart dilemma by converting the red ‘vicious cycle’ into the green ‘virtuous cycle’, also suggests the solution for all of these corporate abuses. It would require our intervention, through citizen and consumer action as well as through our elected officials, to do all of the following (take a deep breath):
This is all, of course, dreaming in technicolour. All of these actions are perfectly reasonable, and could be put into place quite quickly and inexpensively. But it would entail the most massive redistribution of wealth and power in the history of civilization. Those who have ‘worked the system’ to gain a wildly disproportionate share of each nation’s wealth and power now undoubtedly believe they are entitled to keep it, by force if necessary.
So it won’t happen, at least not in an orderly, reasoned way. But I’m not suggesting ideal, radical solutions here just to be provocative or to make you feel badly about their impossibility. The status quo is unsustainable, and eventually, by one means or another, these changes will occur. The next Great Depression, pandemic disease, global and regional wars, the End of Oil, global warming, and ongoing revolutions of various types will all force us to come to grips with the fatal flaws in our economic system and in the political system that enables it to continue. We will implement all these changes when, and only when, we have no other choices left.
But the next time you hear corporate executives or government officials lamenting our lack of ‘productivity’ and blaming it on lazy or uneducated workers, just ask them why 23% annual growth in corporate profit margins isn’t enough, and by what magical thinking they believe such increases are somehow sustainable forever.
Or better still, ask them to explain to their children why this year’s and next year’s profits are more important than leaving them with a world, an economy or a society that is sustainable, just,or even livable.
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