The real rationale for the GM job cuts? Corporate greed.
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THIS WEEK
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The massive corporate tax cuts Congress passed last year handed American companies a mighty windfall – a $500 million windfall in the case of General Motors. And where did General Motors spend its windfall? Certainly not on its workers. GM announced last week that it would end thousands of jobs in North America.
Why did job cuts so quickly follow the tax cuts? According to CEO Mary Barra, GM is “taking these actions now while the company and the economy are strong to stay in front of a fast-changing market,” an explanation totally at odds with the standard corporate lobbyist claim that any company gains from tax cuts will make their way to workers. The real rationale for the job losses? Corporate greed. We’ve got more on the blatant self-interest of GM’s execs in this week’s newsletter.
Chuck Collins, for the Institute for Policy Studies Inequality.org team |
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INEQUALITY BY THE NUMBERS
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FACES ON THE FRONTLINES
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Barbara Ehrenreich Speaks Truth to Royalty
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| Barbara Ehrenreich, renowned for her biting essays and books on poverty and inequality, recently found herself in the unusual position of being honored by European royalty. On November 27, King Willem-Alexander of the Netherlands presented her with the 2018 Erasmus Prize in the Royal Palace in Amsterdam. The Praemium Erasmianum Foundation recognized Ehrenreich for “writing about the widening gap between rich and poor, about the working poor and the middle-class fear of losing its comfortable existence…when they were hardly on the political agenda.” A member of the Institute for Policy Studies board of trustees, Ehrenreich also founded the IPS-affiliated Economic Hardship Reporting Project, which supports investigative journalism. As she accepted the award in the opulent Dutch Golden Age palace, Ehrenreich pulled no punches in her critique of today’s extreme inequality. |
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WORDS OF WISDOM
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PETULANT PLUTOCRAT
OF THE WEEK
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| Charmer Has a Severe Case of Upper Class Angst |
| The business press has pinned the label “charming” on Iain Tait, the 40-something with an inside track at becoming the top banana at one of the UK wealthy’s top wealth managers. But Tait himself acknowledges that money managers can be “strongly opinionated” and “picky.” What these days has Tait at his prickly pickiest? The prospect of Labour Party leader Jeremy Corbyn becoming the UK’s next prime minister. His wealthy clients, Tait told one British journalist last week, are worrying themselves sick about Corbyn’s egalitarian, pro-worker leanings: “It is now, without a doubt, the first thing that clients ask us: ‘What can we do to protect our wealth against Corbyn?’” Fears about Corbyn, Tait adds, “have doubled over the past couple of weeks.” What are Tait and his wealthy pals not particularly worried about? The new stats showing that British workers have just experienced the weakest paycheck decade since the 1870s. |
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GREED AT A GLANCE
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TOO MUCH
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| GM and Corporate America’s Incentive to Exploit |
| General Motors last week announced plans to shut down production at five plants in the United States and Canada and eliminate 15 percent of the company’s salaried jobs. The moves will cost 14,700 GM workers their livelihood. The communities where those workers live will lose out, too. Local officials in one of those communities estimate that every GM job cut will cost seven other workers their employment. Did the GM execs who made the shut-down decision take that spin-off devastation into account? Or do their job cuts reflect, in the end, nothing more than naked corporate executive self-interest? Inequality.org co-editor Sam Pizzigati, author of The Case for a Maximum Wage, explores the incentives that can’t help but tip the GM corporate decision-making scales. |
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MUST READS
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This week on Inequality.org
Jim Hightower, Free the Free Press From Wall Street Plunder. Our right to a free press has become meaningless if hedge funds can gobble up and gut the community newspapers that exercise it.
Scott Sinclair, Future of NAFTA 2.0 Could Turn on Labor Rights. Approving yet another free trade deal with substandard and largely ineffective protections for workers would be indefensible.
Elsewhere on the web
Rob Reich, Plutocratic politics and the age of gilded giving, Washington Post. A reflection on the new Institute for Policy Studies report on how growing inequality is distorting charitable giving.
Josh Hoxie, It’s Too Easy for the Ultra-Rich to Pass Down Wealth. Here’s How to Fix That, Fortune. The best way to keep great wealth from concentrating into dynastic fortunes may be to tax large inheritances as ordinary income.
James Mumm, Leveling Up and Down, Social Policy. A review essay that explores the viability of a universal basic income for people at our economic order’s bottom end and a maximum wage for people at the top.
Sam Pizzigati, What Does Inequality Cost the Average American? About $150k, OtherWords. Americans pay a steep price for not spreading wealth around as well as other developed countries.
Chuck Collins, Be wary of billionaire beneficence, Baltimore Sun. Philanthropy is no substitute for a fair tax system and adequately funded public services at all levels of government.
Dean Baker, Restore Higher Tax Rates for Corporations That Can’t Contain CEO Pay, Truthout. Why we should hike the corporate tax rate on companies that pay their CEOs over 50 times what their workers make.
Ed Grover, Economist calls for creation of global tax authority to tackle inequality, City University of London. This new authority would target the super rich.
Nathan Vardi, How a Mysterious Tech Billionaire Created Two Fortunes — and a Global Software Sweatshop, Forbes. A look at who gets trampled in the chase for grand fortune.
Thorvaldur Gylfason, Why Inequality Matters, Social Europe. Since the early 1970s, the share of national income paid to workers in advanced economies has fallen from 55 to 40 percent. |
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