As an economic theory, we’re told, there’s nothing that creates the most wealth for the most people more than capitalism.
This system of goods and services, exchanged on an open marketplace, allows opportunity to exist and thrive. It allows each individual to identify his or her skill set, perfect it, and trade it to others for money or other goods and services that are better performed by someone else.
And that sounds like a pretty happy way to run an economy and a country. Unless you don’t have a particular skill set and lack the capacity to develop one. Or you’re really sick or cursed with bad genetics. Or have a mental illness, or a developmental disability, or a physical impairment that limits your work options. Then capitalism alone doesn’t work. That’s where other systems, likely borne out of some societal compassion, decide that we’ll all throw in our lot together to either provide for these people or help them develop skills they need to prosper.
We’re doing that, right? Not so much, I guess.
But that’s not the only scenario in which I think capitalism fails us.
Several people at my workplace were laid off this week. It wasn’t because they were bad at their jobs, nor was it that what they produced stopped needing people to produce it. What they did will still be done each day. They were laid off because it’s more efficient and cost effective to move the work elsewhere. It was a business decision. Nothing personal.
Except there are few things more personal than losing your source of income, and, thanks to really outdated policies, your health insurance.
I get it though. Years ago, when I worked as a machinist on a CNC lathe and people were being laid off all around me, the shop foreman made a very simple statement about the cutbacks.
“Businesses exist to make money, not to employ people,” he said, before walking down the rows of machines to deliver bad news to the next name on his list.
And that’s true. But there are still different ways, I think, to view this.
On one hand, employees benefit from an employer who had a great idea, invented a great product or offers some spectacular service. This employer might be so good at what he or she does, it requires the hiring of others to do some of the work. As demand for that product fluctuates, so does the demand for employees. That’s fair, because ultimately, if this employer goes all philanthropic, he might one day employ no one, even himself.
But I don’t feel or think that’s the system we largely find ourselves in. Rather, under what we see now, my former foreman might have offered the following answer to my question.
“You exist to make this company money. If it can make more money some other way, that’s what it will do.”
I see that thinking all over the place. And it seems that it doesn’t just happen with employees – large corporations have been dinged for unsavory practices designed to boost their bottom lines. Verizon, Comcast, Sears, drug companies all do this. Just last week, I had an ordeal with a credit card company that I’m sure was a designed plan to get more money from me. And then there are the instances of companies just lying outright on their books to fool investors into thinking that they are seeing constantly increasing value in their portfolios.
I’m not an economist. But this is the internet, and since when did someone have to be qualified to offer an opinion? That’s not the world we live in! So here’s what I see:
We are trapped in a weird loop that isn’t really capitalism so much as it is corporatism that is funded by all of us little worker bees hoping to get our little slice of the pie. Or at least live a life that’s not miserable.
“There are a thousand hacking at the branches of evil to one who is striking at the root.” – Henry David Thoreu
This article, I think lays it out pretty well with regards to the new owners of my employer. Basically, the driver behind everything is profit. Shareholders demand it, and companies that rely on capital from investors do whatever they can to seem like attractive investments. And what investors want is perpetual growth. The days of long term investing, it seems, are over. We look at quarterly reporters and year over year growth in stock value and that’s how we decide if things are moving in the right direction. This article also throws in the salt-in-the-wound fact that in many cases it is the employee’s money – via their retirement accounts at places like T. Rowe Price, Wells Fargo, Vangaurd and others – that allow bigger companies to purchase smaller companies that then lay off employees after the purchase.
We are literally giving people the resources they need to harm us. All so that someone else very far away can increase his or her wealth. Or so that we, provided we can hold on to some gainful employment in our working age, might have enough money to retire in our old age.
That doesn’t seem like a workable model for an economy. It seems like something that will eventually consume itself, because the only thing it desires is constant feeding so that it can continue to grow.
The other side of capitalism is that there has to be people who have enough money to turn over voluntarily to fuel other aspects of the economy. If wages are depressed and stagnant – as they have been – and companies increase practices to boost their bottom lines, either through price increases or layoffs, there’s less left for people to put into the economy and keep it churning.
I might be wrong about all that. But I know I’m right about this: Getting laid off sucks. It happened to me about 15 years ago. One day, the shop foreman came up to me, and it was my name on the list. I wasn’t doing anything different than the day before. My productivity hadn’t suddenly fallen. In fact, I lasted longer than many because I hadn’t been there as long, and my wage wasn’t as high. I was one of the ways in which the company made more money, because I was cheaper than a guy with 20 years’ experience.
That was the case again this week, and it’s an unpleasant thing. The only solace I can offer is that I lost I job I didn’t particularly care for and landed in one I loved. I hope for a similar miracle for my co-workers.
When I hear employers complain about the work ethic and lack of loyalty they say exists in the Millennial generation, I nearly laugh myself out of my chair. Why, in this system, would employers, particularly the large corporate employers, expect anyone to be loyal? For the past 30 years, I’ve watched companies explain away their devastating families’ lives as necessary to meet investors’ expectations. They typically don’t care about the institutional knowledge they lose, the work experience, or the dedication this employee might have shown throughout his or her life. They are a spreadsheet entry, nothing more. If the numbers work out better some other way, that’s that. There’s no talk of how these affected people will have to go without, maybe take public assistance for a while, learn a new skill set at a later age in life, lose their health insurance or any of the things that go along with suddenly and unexpectedly losing a job.
The operational costs go down. The stock price goes up. And everyone is happy.