How The Rich Benefit From The PoorHow the Rich Benefit From the Poor The United States is the most developed capitalist economy in the world. The markets within the economy provide profit-motivated companies endless potential in the pursuance of pecuniary accumulation. Throughout the twentieth-century competitive companies have implemented modernized managerial procedures designed to raise profits by reducing unnecessary costs. These cost-saving procedures have had a substantial effect on society and particularly members of the working class. Managers and owners of these competitive and self-motivated companies have consistently worked throughout this century to exploit the most controllable component of the production process: the worker. The worker has been forced by the influence of powerful and affluent business owners to work in conditions hazardous to their well being in addition to preposterously menial compensation. It was the masterful manipulation of society and legislation through strategic objectives that the low-wage workers were coerced into this position of destitute. The strategies of the affluent fragment of society were conceived for the selfish purpose of monetary gain. The campaigns to augment the business position within the capitalist economy were designed to weaken organized labor, reduce corporate costs, gain legislative control and reduce international competition at the expense of the working class. The owners have gained and continue to gain considerable wealth from these strategies. To understand why the owners of the powerful companies operate in such a selfish manner, we must look at particular fundamentals of both capitalism and corporation strategy. Once these rudiments are understood, we will more clearly relate the perspective of the profit-seeking corporations of America. Legal discussion will also be included to show how the capital possessing elite operate through political parties to achieve their financial objectives. It is the synergist effect of these numerous strategies that have lead to the widening income gap in America, persistent attempts of contraction in worker’s rights and increased corporate political influence. These campaigns have come at an expense to Americans and will only continue to benefit the affluent society. Creating Corporate Value The United States is a capitalist economy. In a capitalist economy individuals who wish to gain wealth can invest their capital into markets in hopes of future returns. If this investment gains in value then the investor has earned a return, which can be reinvested. This creates a cycle of investing and reinvesting for potential future return. This wealth creating cycle is a fairly simple concept to understand, but wealthy individuals have learned to fabricate this cycle into different situations. A common form of investment is purchasing and selling of corporate stocks. The stock market works like all markets on the fundamental theory of supply and demand. The more demand for a stock the higher it is valued and conversely the less demand the less it is valued. Corporations are legal entities which issue stock to investors who purchase them and become shareholders of the company. The risk taken by investors is that when they buy stocks it is possible that the individual company will not do well, or that stock prices will generally weaken. At worst, it is possible to lose entire investments, but no more then that. Therefor, shareholders of a corporation are not responsible for corporate debts. So, a corporation would be a very attractive type of investment for potential investors to consider. Corporations compete against each other in markets in the United States and around the world. These corporations have employees who perform various functions that contribute to successful strategic goal completion. Corporations often will offer stock incentive plans strategically to employees in positions of importance. The enticement to employees is to work in a manner that will increase the value of the company and their shares of stock. These incentive plans were strategically developed by major shareholders because the corporate executives felt that people would be motivated to increase their own wealth. Most employees are motivated by money and will work harder when the chance is given for more money. The very nature of this strategy consolidates all the employees to act as one self-motivated entity in the pursuit of monetary accumulation. In Piven and Cloward’s Regulating the Poor, this point is illustrated: “Capitalism, however, relies primarily upon the mechanisms of a market-the promise of financial rewards or penalties-to motivate men and women to work and to hold them to their occupational tasks” (4). The increased motivation of important members of the workforce by the enticing tactics of greed for wealth is a result of strategic planning by the major shareholders of the firm. The cost to these primary shareholders is the stock incentive plans needed additional stock to fulfill, which reduced the valuation of all stocks. The major shareholders know this devaluation is only temporary because self-motivated employees will act in a manner that will increase the value. The primary concept for discussion purposes is that self-motivated major shareholders have utilized the capitalist theory and thus, created a business compact with employees that will make self-motivated decisions on all levels. The strategy worked and throughout the country employees are busy increasing the value of their stock, but most importantly, they are increasing the value of the major shareholders. We will see this investing concept throughout most this paper because the wealthy resist adverse conditions with money. The Grand Old Party The Republican Party remained dominant throughout the 1920’s, remaining unaffected by factionalism that plagued the Democratic Party. The party continued to align its platforms with the southern whites, and owners and managers businesses. Even in extraordinary economic times of prosperity for the wealthy, the Republican Party continued to advocate industrial economic values. The primary dilemma to republican business interests was the labor problem. “The Republicans finally concentrated their discussion on four broad approaches to labor problems: the progressive approach, the open shop approach, the efficiency-engineering approach, and the political approach” (Zeiger 11). Most businessmen resolved harshly to end labor activism and to quietly continue their profitable business interests. This behavior of this standpoint took the pattern of employer resistance to labor unions, but originally the open shop crusades proved to be the most fruitful in the short-run. The open shop crusade, now illegal because it gave employers the ability to hire prospective employees on the basis if they belonged or support trade union activities. This restricted the employee’s ability to strike on a particular issue because they lack the power of numbers that a union possesses and could be replaced. Open shop enthusiasts were a major and vocal part of the Republican Party because of the financial resources they possess. Many republicans determined them intemperate and adherent, and their perspectives were damaging and extreme. “These open shop enthusiasts constituted a vocal and influential segment of the party. They often proved quite effective in their efforts to chastise organized labor, for many Americans shared their concern. Still, many Republicans considered them extreme and doctrinaire, and their views harmful and inexpedient” (Zieger 74). It was these Republicans that lamented these controversial assaults on labor problems, such as Herbert C. Hoover who wished to devise a whole new style of labor relations based on the philosophies of efficiency and cooperation. By 1921 industrial engineers and other experts had developed the Taylor Society, the Federated American Engineering Societies. The Taylor Society was designed to improve the efficiency of a job-place in hopes of reducing severe factory working conditions. This in theory would increase aggregate production, which would lead to more available jobs and lower-unemployment. The main points to be established is that the Republican Party was support by wealthy business owners. The worst opponent of the worker is the wealthy business owner within the Republican Party. These are the characters that advocate extreme hostile tactics such as the open shop crusades. Regardless, they support the Republican Party financially and therefor the Republican Party acts as their voice politically. The Industrial Revolution One component of the production process that can be controlled by management is automation. Regardless, the employee still performs a necessary function in the production process. The taylorization theory states employers have an incentive to make a job function more efficient. The increased efficiency results in lower production costs, lower aggregate unemployment rates and higher company profit returns. The industrial revolution was characterized by the widespread replacement of manual labor by machines that could perform the job functions quicker and or at lower costs. The industrial revolution was the result of interrelated fundamental changes that transform smaller market economies into an industrialized economy. Many products that were made at home or in small work units were transferred to large factories. Since the factories could produce at lower costs the product could be sold at a lower cost. This competitive advantage drove the smaller competition out of business. The people who profited from this effect were the owners of the mechanisms of production. This marks the beginning of an era where these wealthy owners would prosper over the working class. The aggregate effect of the increase production efficiency lead to the development of massive industrial parks. These parks expanded the scale of production dramatically and became concentrated in cities and large towns. Since traditional production relied heavily in the needs of local subsistence it gave way to the more market orientated production devices. This economically forced large numbers of the rural poor who moved to towns and cities to become the wage seeking labor force necessary to run rapidly expanding industries. This extensive movement of communities had a considerable result on labor prices and ultimately constrained these people to become the urban poor. The effect of the Industrial Revolution on American society was substantial. Income following workers increased the population of large towns and cities severely. From 1860 to 1900 the number of urban areas in the United States expanded fivefold. Even more striking was the explosion in the growth of big cities. In 1860 there were only 9 American cities with more than 100,000 inhabitants; by 1900 there were 38. Labor markets were flooded with eligible workers seeking employment and through pure labor competition they were willing to work in any environment for any wage. The environments factory laborers were forced to work in were considered by many Americans to be despicable. Regardless of the factory working conditions, many people were obligated to take the employment. Employment was necessary to generate income to support oneself and family. As a result, the Exploited workers received no power to contract with the owners of production. Instinctively managers and owners of capital have contrasting labor interests then those perspectives of employees. Wages and profits incomes divide the value that production adds, so by definition, labor and capital interests often are on opposing sides of social policy that affects the price level of the real wage. “The real wage can be regarded as the price that equates the supply of and demand for labor”, (Foley and Michl 70). Owners and mangers of capital seek a flexible labor force, which is counter for the worker’s desire for stability and security in their employment and conditions of life. At this point in history, the affluent society of the United States was generating immense wealth by capitalizing on the poorer worker’s needs for minimal financial requirements. The wealthy invested their capital into factory production devises, which drove out smaller competing business from the market place. This profit seeking strategy worked because it economically forced resource deficient workers into the cities. The supply for labor increased, which coerced many employees to work for the affluent owners at a corresponding cut-rate real wage rate. These events began to illustrate a scenario that would set the scene for modifications in worker’s rights. The laborers had to develop a strategy to counteract the poverty-stricken working conditions imposed upon them by the owners of the factories. The Labor Market The labor market surplus further developed the worker’s dependency upon the self-motivated employer. Trade unions were formed to advocate alleviation of some dependency and support the worker’s efforts by gaining a quantifiable measure of power over their economic standing. Initially, the trade unions had limited success until they exercised the real true power worker’s have over employers: The strike. The strike in labor relations is a completely organized halt of work and production carried out by a large group of employees. The purpose of the strike is either enforcing worker’s demands that relate to unfair labor practices and or to employment conditions created by the self-motivated owner. The response to labor unions by business owners was the use of open shop tactics. “Employers’ organizations and business groups commenced a vigorous campaign for the open shop. Armed with the then-legal yellow-dog contract, by which an employer could require a prospective employee to agree not to join or support a union” (Zeiger 20). The wealthy opposed the trade union’s use of the concept of collective bargaining because it advocated the subject of worker’s rights. Collective bargaining is where individuals with interest in the matter negotiate their stipulations until a compromise is found. The wealthy industrialists despise that their interests would are in constant danger by collective bargaining. In response, “America’s industrialist launched a well-financed general attack on the very concept of collective bargaining” (Zeiger 20). The use of collective bargaining proved to be an effective tool in bargaining with owners and managers. This meant that worker’s have finally developed a technique through labor unions that competently combats the proprietor’s regimen. The Strike During the 1920’s and 1930’s, strikes occurred as a natural feature of nationwide unions of the American Federation of Labor and other groups soon to be recognized as the Congress of Industrial Organizations. Striking had become a major weapon in the labor movement and was threatening the profitability of the production owners. “The strikes and threatened strikes, the radical agitation, the sharp industrial depression, and the whole atmosphere of discord and unrest that pervaded the country endangered the Republic and demanded action” (Zeiger 74). The wealthy republicans had to promote an offensive campaign to end this threat. So as previously stated, they adopted well-financed strategies aimed at the courts to obtain injunctions, which would legally prevented strikes in specific circumstances. The success of these strategies is confirmed in Zeiger’s Republicans and Labor 1919-1929, “The 1920’s marked the climax of antilabor judicial activities”. (260) The basis the owner persuaded the courts with was that their property was either damaged or threatened and that they were powerless without legal solutions. It was the possession of financial resources that allowed the wealthy to recruit and employ powerful and persuasive lawyers. Legally persuading the courts of law with expensive lawyers was the sole purpose of the use of financial power to authoritatively force workers back into the production factories and produce profit for the owners. From the perspective of the wealthy, the application of financial resources to generate future income is honorable capitalism regardless of the situations’ context. The power of wealth even can influence courts of law through lawyers and thereby, give the wealthy extreme power in legislation during this period in history. The Rise of the Labor Party The Democratic Party during this era was experiencing outbursts of factionalism. The convention in 1924 was racial divided by southern whites and the northern urban blacks. The future success of the party was depended on the need for a change. The strategy developed by the leaders was to begin the alteration of the Democratic Party appeal. The leaders of the Democratic Party realized that poor people could be a powerful voting coalition. The great depression of 1929 forced millions of people into unemployment and poverty. These unemployed workers practiced approaches of protest through disruption demonstrations. These massive demonstrations help encouraged the working class voter’s hostility and defection of the Republican Party. The Democratic Party thus capitalizing on this realigned their platform to advocate the needs of poor people with the intent to gain votes. This re-alignment of party policy angered the southern democrats whose views were becoming more Republican. Having lost the southern support, the Democratic Party became the primary political instrument of vocalization and evolution of labor class politics. “During the electoral realignment of the 1930’s, the Democrats gained the overwhelming allegiance of most manual workers and their unions”, (Piven and Cloward 421). The alignment of the working class with the Democratic Party coalition developed two powerful strategies to combat the wealthy and business leaders. As stated previously, the workers held extreme striking power over the means of production in factories. Now they had power in the organization of the working class population and could coordinate their votes to consolidate political force for their perspectives. The concept is similar to how the employees of a corporation have incentives to pursue company goals as a team. “The main political project of labor parties became the use of state power to develop the welfare state” (Piven and Cloward 21). Therefor, in the 1930’s the democrats became a party of vigorous government intervention in the economy and thus the social realm. The goals of the party were to regulate, redistribute economic wealth and to protect people who are in need of assistance in an increasingly competitive society. The depression of 1929 and the coming of Franklin D. Roosevelt into the presidency with the New Deal help syndicate and enlarge the commitment to governmental expansions of assistance programs and industry regulation. Due to the economic conditions of the era, the advocators of economic assistance proved to be attractive to society and The Democratic Party flourished. The result of these campaigns was increased worker’s rights and a seemingly practical welfare state. Worker’s Rights Massive unemployment during the Great Depression created a socially dysfunctional society. Without the ability to create income through employment, basic physiological necessities were not being met. “When large numbers of people are suddenly barred from their traditional occupations, the entire structure of social control is weakened and may even collapse” (Piven and Cloward 7). During the depression, society experienced this symptom, which resulted in massive protests. The Democratic Party under the direction of Roosevelt recognized the need for government intervention. The party aligned itself with the working class and began to advocate worker’s rights legislation. Under Democratic Party control, federal funds were used to establish the Works Progress Administration, now known as the Work Project Administration, which distributed assistance to citizens in need of subsistence. In 1935, Roosevelt again used federal funds to create public works programs, which gave employment opportunities to the unemployed. As a result of declining republican political power, these and other initiatives were introduced to help increase worker’s rights. These worker’s rights that the Democratic Party supported were the same rights that the Republican Party had worked so hard to repress from regulation. In addition to passing labor rights laws, legislative action was taken against the wealthy industrialist’s use of legal injunctions. These lawful injunctions were used as an intimidating scheme to suppress union membership and ultimately strikes. In 1932 the U.S. congress enacted the Norris-La Guardia Anti-Injunction Act. This legislation severely limited the self-motivated employer’s use of injunctions as a standard operating procedure against strikes. Another tactic of wealthy employers to combat unions was the use of the open shop strategy. Abolishment of the open shop regime was usually one of the primary demands by labor unions in collective bargaining. The National Labor Relations Act of 1935, known as the Wagner act, because of its sponsor Robert Wagner was adopted and help end the open shop crusades. This act federally guaranteed workers the right to organize through trade unions, use of collective bargaining and firmly incorporated a set of employment standards. It also restricted employers from practicing pre-employment tactics such as the open shop strategy. This reduced the power that republican business representatives could exert over the prospective and employed worker. In addition, the federal mandated right of collective bargaining guaranteed workers negotiation hearings in which employers had to listen to the worker’s needs. Congress also established the Social Security Act, which is a form of social welfare. In 1938, the United States Congress implemented the Fair Labor Standards Act. This primary functions of this act was to eliminate labor conditions that are dangerous to work’s health and productivity, it also established a minimum wage to eliminate the disastrous effects of high labor supplies, overtime wages were developed to eliminate excessive work weeks, and finally it eliminate oppressive child labor. The result of the Democratic Party effect on legislation during the labor movement is essential a bill of rights granted to the working class of America. No longer would the wealthy elite of America victimize the low wage working class in such inhumane techniques. Instead, these legislative acts marked the beginning of a new challenge to the Republican Party. Now the party had to reclaim lost legal ground by slowly returning to power of the United States Government. Political Phenomena The legislative mandates of the Roosevelt era helped establish what is now known as the labor movement. Society was suffering adverse conditions and the Democratic Party mobilized the people into a political voice. The Republican Party was essentially powerless, regardless of their financial position because government officials were responding to public outcries. This historically proves that when conditions are unfair, a political party can mobilize society and gain control. Roosevelt also initiated measures that resulted in higher taxes on the rich and restricted private utility companies. Although these combinations did not stop the wealthy republicans from continuing to gain additional wealth, it only slowed their progress. History when again prove that the Republican Party would come back into power and restrict the rights of workers. This occurred when a Republican majority Congress passed the Labor-Management Relations Act of 1947, known as the Taft-Hartley Act evidencing this reoccurring political phenomenon. This act retracted some of the rights that were implemented during the labor movement. These provisions included restricting supervisory employee’s protection from the NLRA and emphasized the right of employees not to join a labor union. These restrictions of labor rights were in the interest of the Republican Party and were created to reduce the power previous legislation granted labor unions. The successful creation of this statute reinforces the evidence that wealthy Republicans continually attempt to swindle the blue-collar labor class. Their motives are based within selfish financial greed and capitalist economy theory. This congressional act illustrates the phenomenon that bipartisan control and power is cyclical. The Democrats did regained majority of congress and implemented numerous anti-business and social interest acts in the 1960’s. Due to the political cycle, The Republican Party inevitable would gain control of congress once again, but the question was when? Globalization During the economic crisis of the seventies, particularly the great recession of 1973-1975 businesses began to understand their role in the world’s economy. America was importing more then it was exporting, which was creating an unfamiliar and enormous trade deficit. “In 1971, for the first time since the 1890’s, the U.S. imported more then it exported”, (Cohen and Rogers 36) Increased competition from foreign firms posed a substantial threat to American corporations. The result of this threat forced American corporations to compete with globalization. Corporations could no longer produce simple marketing campaigns to develop brand loyal consumers. Global competition forced these companies to produce the highest quality, lowest price and distribute through efficient channels. The international competition however, operating in countries were labor is cheaper, taxes are lower, there is fewer industry regulations and an absence of unions. In addition to these competitive forces, managers of the corporations must also answer to the wealthy shareholders of the corporation. Many business leaders formed think tanks to devise strategies to compete with this new threat. “American business leaders set about developing a political program to shore up profits by slashing taxes and business regulation, lowering wages and welfare spending, and building up American military power abroad”, (Piven and Cloward 443). The sources of all of these objectives were rooted within government policies. These policies would inevitable have to change for these goals to be achieved. So, the corporate elite implemented a political strategy that would slowly form over decades to achieve. Corporate Politicians Even in modern times the wealthy elitist of society still could influence political matters through the power massive financial resources. During the 1980’s business elite continued to align themselves with the Republican Party for it conservative ideals. The methods the wealthy corporation shareholders influence legislation during modern times has extremely advanced. The development of political action committees has encouraged corporations to channel financial contributions into political campaigns. Corporations will develop a PAC, establish a set of issues that it promotes politically. If a politician is campaigning for an election with corresponding views, then it is in the best interest of the PAC to contribute to the campaign. More importantly, corporations are to contribute to groups and individuals not directly affiliated with a candidate, such as the GOP. These groups or individuals can register, persuade voters, endorse a platform, advocate a candidate and oppose another. The Supreme Court ruled that the First Amendment of the Constitution protected this type of spending as a form of free speech in its 1976 decision, Buckley vs. Valeo. These donations are referred to as “soft money” because they are not directly related to a campaign. The absence of regulation on soft money donations results in the option for corporations to contribute millions of dollars to further their political interest. This advantage has a profound effect in the corporate political strategy. “[Corporations] can simply treat politics as a business expense, a budget item like advertising, research and development, or public relations” (Clawson, Neustadl, and Weller 109). Through the strategy of the use of campaign contributing “soft money”, corporations have vastly increased their influence on political issues. This new corporate political influence has succeeded in their campaign to minimize threats to profitability. These threats were reduced most noted during the Reagan years when the Republican Party dominated the government. “The administration has made significant cuts in social spending, particularly in low income programs, and made plain its desire for deeper cuts; achieved a massive, and massively regressive, revision of the Federal tax system in 1981; dramatically scaled back the enforcement of regulations that posed any significant limits to business power”, (Cohen and Rogers 38). This success demonstrates the influential power that wealth has over the United States government. The government by definition should act in the best interest of the population and not the elite. Instead the influx of soft money continues to be unregulated and as proven by the Supreme Court decisions in 1976. This decision closely resembles how the courts protected the rights of employers in the labor disputes of the 1920’s. Why the Poor? The reasons why the rich corporations target the government are because the government holds the supreme lawful power over the entire population. History has proven to these elitists that with well financed operations targeting campaigning officials over time favorable legislation will be passed. The legislation usually reduces some sort of cost or regulation in that firms industry. This increases the profitability of the company, which is directly related to the owner’s wealth. These incremental increases in profits have lead to more investments to further heighten the value of the wealthy. This is apparent by the vast and increasing gap between the rich and the poor in America. The poor are relatively easy targets in comparison to the costs of soft money contributions. In America, it is very difficult for the poor to change their financial status. So, once a person is poor they are generally poor for the rest of their lives. They will continue to spend their lives spending the little money on the products these corporations provide. In short, the corporations are developing an enlarging consumer base that is dependent upon their products. The middle class is slowly disappearing because of the loss of blue-collar jobs. The loss of blue-collar jobs is a symptom of the increasing presence of globalization. Globalization has privileged companies to outsource their production needs to other countries with lower regulation and labor costs. This resembles much of the labor practices of companies in the 1920’s were the labor rights were essentially ignored. Another easy solution to minimize the firms operating costs is by eliminating valuable jobs. These sometimes massive downsizing satisfied the wealthy stockholders because the firm had lower production costs and higher profitability. “Investors often applaud the news of a layoff as a sign of corporate turn-around. The payroll is a large, ongoing liability to the balance sheet, and investors are titillated by anything that reduces it”, (Downs 14). History repeats itself as we see that wealthy investors and managers again behave in manners regardless of people’s needs. The forces unleashed by corporate executions and globalization have brought into the labor market thousands of unskilled job seekers with little or no income. A new underclass has of previously employed individuals has become a nationwide trend in our social and economic condition. These people are forced to take jobs within the service sector and these jobs typical pay wages that are lower then those of manufacturing jobs. These trends have formed a synergetic effect on the growing wealth gap between the rich and the poor. Conclusion In today’s modern economy companies do not have to worry about the United States government regulating the labor industries in other countries because of jurisdiction. The use of soft money in the United States government has proven that even at home corporations can freely advocate legislation that is favorable to their terms. This has had a profound effect on the income gap in American society. The wealthy possess financial resources that provide enormous opportunities to create more wealth. This need for excessive wealth is deeply rooted into the personalities of these individuals. In America, society considers the pursuit of wealth has a fundamental right of capitalism. The ethical boundary was crossed by the use of financial resources to victimize portions of society for hopes of future gains in wealth. Since the industrial revolution, the production owning wealthy has continually endeavored systems to reduce labor costs at the expense of the worker. . The labor movement was a result of government intervention in the 1930’s. The resulting legislation of this intervention produced several benefits to the working class, in particular the ability to form a labor union. Regardless, the republican elitist developed strategies to undermine the strength of labor unions. Unfortunately, history has proven time and time again that the cost of labor is all too easy to reduce. Today’s global economy requires the use of an educated workforce in technology related jobs. This has left unskilled workers to seek low wage employment in the service industry. Closely resembling the falling labor costs that characterized the Great Depression. Once again government action is required to limit the power of the wealthy elite. The masses of society’s working class must again be reunited and organized to act as political class if the power is to return to the people.
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