Home > Uncategorized > “For years I thought what was good for our country was good for General Motors, and vice versa”

“For years I thought what was good for our country was good for General Motors, and vice versa”

from David Ruccio

That was Charles Wilson, the president of General Motors, during a Congressional hearing in 1953. Wilson had been asked whether there was any conflict between his job and becoming Secretary of Defense. His answer has since been shortened to “As goes GM, so goes America.”

In any case, GM is a perfect example of the argument I made the other day about capitalism and international trade.

The existence of low wages for American workers is both a condition and consequence of these trade agreements. It’s a condition to the extent that, with stagnant wages and slowly growing consumption, U.S. businesses often look abroad to sell the commodities they produce. And it’s a consequence in the sense that cheap imports and corporate decisions to relocate production abroad negatively affect the wages and working conditions of American workers.

So, there’s a real problem with international trade, which workers in Michigan and elsewhere have every right to be concerned about.

But the problem is not just with trade. It’s capitalism, too. Or, to put it differently, it’s capitalist trade that’s the problem.

That’s because capitalism means that capitalists get to appropriate the surplus and do with it what they want. They get to decide when and where commodities will be produced, and therefore when and where jobs will or will not be created. If that means offshoring production or purchasing inputs from producers in other countries in order to boost profits, they’ll do so. And workers in the United States will either lose their jobs or be forced to accept lower wages and fewer benefits in order to “compete” with the production of commodities elsewhere.

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It’s relatively easy to find out that GM retains the largest share in the U.S. auto market and that it had some 216 thousand employees in 2014. But how many of those vehicles are made by U.S. workers? That’s much harder to determine. I did manage to discover that the United Auto Workers represented just 48,513 GM workers in 2014 or just over 22 percent of the GM worldwide labor force.* The rest of the jobs have been outsourced—mostly to the Right to Work South and to Mexico and the rest of the world.

BT-AF012_UAWGM_16U_20151026181808

Meanwhile, GM profits have been soaring but workers’ wages have been stagnant.

And that’s the case throughout the U.S. manufacturing sector. While so-called onshoring has been all the rage in recent years, workers’ wages have been flat.

these are not your father’s manufacturing jobs. Many of the companies are locating their new plants in right-to-work states where it’s less likely their workers will join a union, and the prevailing wages are far lower.

In fact, nationally, the average wages of production and non-supervisory employees in manufacturing are lower than they were in 1985, when adjusted for inflation. In September, those employees made an average $8.63 an hour, in 1982 to 1984 dollars, while they made an average of $8.80 an hour in 1985, according to the Bureau of Labor Statistics.

As readers know, I have no nostalgia for U.S. manufacturing. On top of that, I simply don’t expect manufacturing to experience any kind of resurgence in the United States, not when lower cost conditions exist elsewhere in Mexico and the rest of the world.

But it remains the case that international trade deals and capitalist control of the surplus have combined to boost corporate profits and to undermine, via job losses and downward pressure on wages, the condition of American manufacturing workers.

In other words, what has been good for GM and other large American corporations has been good for only a tiny minority at the top, and vice versa.

Final note

As if to highlight the divergence in fortunes between GM and the rest of the country, we should remember that the corporation, which remains the biggest employer in Flint, Michigan, managed to switch its engine plant from Flint’s tainted water system to a fresh supply from neighboring Flint Township. As a result, the plant was able to sidestep a crisis that befell everyone else in the city where GM was born more than a century ago.

*That figure is very close to Kristin Dziczek, Debra Menk, and Yen Chen’s estimate of 50,700 hourly and salaried employees at GM’s 40 manufacturing facilities in the United States in 2013.

  1. March 17, 2016 at 3:52 am

    As the British Empire taught us long ago there are many ways to “convince” a company, a group of companies, a business sector, or even an entire industry to change where and how it does business. Maybe it’s time we re-considered these options that haven’t been used in several decades. The Chinese government has certainly adopted and tailored many such approaches to its own needs and desires.

  2. March 17, 2016 at 11:36 am

    Inequalities is a buzzword of the hour and this analysis is about inequalities, the inequalities across national boundaries, between the USA and Mexico and China…

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