The president is hammering the company for cutting US jobs – but that’s the reality of our shareholder-driven system
By Robert Reich | The Guardian | December 3, 2018
Trump’s “America first” economic nationalism is finally crashing into the reality of America’s shareholder-first global capitalism.
Last week GM announced it would cut about 14,000 jobs in the politically vital swing states of Michigan and Ohio.
This doesn’t quite square with the giant $1.5tn tax cut Trump and the Republicans in Congress enacted last December. Its official rationale was to help big corporations make more investments in America and thereby create more jobs. Trump then told Ohio residents “don’t sell your homes”, because lost auto-making jobs “are all coming back”.
GM got a nice windfall from the tax cut. The company has already saved more than $150m this year, according to GM’s latest financial report. But many of those Ohio residents probably should have sold their homes.
Trump is (or is trying to appear) furious – tweeting up a storm of threats against GM, including taking away its federal subsidies.
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In reality, GM gets very few direct subsidies. Before the tax cut, the biggest gift GM got from the US government was a bailout in 2009 amounting to more than $50bn ($11.2bn of which is still outstanding).
But neither last year’s tax cut nor the 2009 bailout required GM to create or preserve jobs in America. Both government handouts assumed that, as the former GM CEO Charles Erwin “Engine” Wilson put it when he was nominated secretary of defense by Dwight Eisenhower in 1953, what was good for GM was good for America.
Yet much has changed since 1953. Then, GM was the largest employer in America and had only a few operations around the rest of the world. Now Walmart is the largest employer in America, and GM is a global corporation that makes and sells just about everywhere.
If Trump were serious about his aims, he’d do better trying to reduce the chokehold of Wall Street on US corporations
Moreover, in the 1950s, a third of America’s workforce was unionized, and GM was as accountable to the United Auto Workers as it was to GM’s shareholders. That’s why, in the 1950s, GM’s typical worker received $35 an hour (in today’s dollars).
Today, GM’s typical American worker earns a fraction of that. The bargaining clout of the United Auto Workers has been weakened not only by automation, but also by the ease by which GM can get cheaper labor abroad.