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The Story That Will Expose Trump’s Phony Trade Talk

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The Story That Will Expose Trump’s Phony Trade Talk

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Will Trump save manufacturing jobs in the U.S.

Reprinted with permission from AlterNet

Over the next two years 1,400 Carrier air conditioner workers will see their decent-paying jobs migrate to Mexico. This highly profitable Indiana facility, represented by United Steel Workers, will make even more money south of the border where workers earn less in one day than the Indiana employees make in one hour, according to the New York Times. (A YouTube video of the heartbreaking plant closing announcement has nearly 4 million views.)

While Hillary Clinton remained silent on this impending catastrophe, Donald Trump turned this facility into the poster child for what’s wrong with U.S. trade policy. He pledged that if the plant moved, he would place a 35% tariff on all Carrier products imported from Mexico as well as a similar duty on the Mexican products of its parent company, United Technologies. Trump boasted he would make the company cry uncle: “I’ll get a call from the head of Carrier and he’ll say, Mr. President, we’ve decided to stay in the United States. That’s what’s going to happen—100 percent.”

Carrier became the 100 percent battering ram Trump used to pound Hillary Clinton and her embrace of NAFTA and other trade deals. In doing so, Trump snatched the plant closing issue away from the Democrats, something the party apparatchiks didn’t recognize until the Trump votes poured in from the Rust Belt.

The Carrier case, however, was not just the usual media meme about Trump backing the less educated, white working-class. In fact, the threatened Indianapolis plant is 50 percent African American. Women make up half the workforce on the assembly lines and the facility also employs dozens of recent Burmese immigrants, well regarded by their co-workers. So making this facility great again actually means coming to the aid of America’s increasingly diverse labor force.

But Trump is stumbling into something far more problematic than trade deals. At the heart of this story is the financial strip-mining of America organized and led by Wall Street.

Why does United Technology want to move to Mexico?

Let’s round up the usual suspects:

  • They can’t turn a decent profit using unionized American workers? No. Carrier is the most profitable division of United Technologies.

  • NAFTA cause this proposed move? Not likely. NAFTA is 22 years old, so unless United Technologies is the corporate Rip Van Winkle, they could have moved long ago.

  • New technologies make the destruction of decent paying manufacturing jobs inevitable? Not at all. In this factory transplant, they are redeploying the same technologies already in use, machine by machine.

So if profits, trade and automation are not the driving forces, what is?

The major pressure to shift jobs abroad comes from the big hedge funds and private equity investors that have one goal only—to siphon as much wealth as possible out of companies like United Technologies. High profits, low profits or no profits, they pressure company after company to squeeze their costs as much as possible so there is more money available for the company to buy back its own shares.

Why? Because stock buybacks immediately raise the share price and give the big hedge funds an instant windfall.

Before a 1982 SEC rule change—a major turning point in the disastrous deregulation of finance—massive stock buybacks were illegal because they were considered stock manipulation and a major cause of the 1929 crash. Now, Wall Street extracts billions from this destructive activity. It’s what drives runaway inequality. (For the definitive account see Professor William Lazonick’s “Profits Without Prosperity,” Harvard Business Review.)

CEOs cherish this process because they now derive the majority of their compensation through stock incentives. So by acting as Wall Street shills, they drive up the price of stock and become richer and richer themselves.

In 1970, before stock buybacks became the norm, the pay gap between the top CEOs and the average worker was $45 to $1. Today it is an incomprehensible $844 to $1. So there’s a codependency between the big hedge fund investors and the United Technologies CEO to move the Carrier facility, obtain more cash flow, and use it all to buy back more stock.

What proof do we have? Since 2006, United Technologies has spent over $25 billion on stock buybacks, amounting to over fifty percent of its net income. Last year, just before it announced the move to Mexico, the parent company instituted a $10 billion stock buyback and the stock price immediately jumped 5 percent. This means United Technologies used 131.4 percent of its net income to move money from the company to its major investors and top officers.

Gregory Hayes, United Technologies CEO, gets his share of the booty. Since 2012, he received $44,100,000 in total compensation, about half of which derives from stock incentives. Fifty-six top hedge funds have taken a stock position in the company to reap the bounty from these stock buybacks.

And so Trump bluffed his way into the soulless heart of an economy dominated by Wall Street. Does he have the guts to take on the fundamental evil of stock buybacks? Not unless he is forced to. It’s so much easier to blame Mexico and China.

Is Carrier a major opening for the Democratic Party?

Hillary Clinton’s benign neglect of these workers is symptomatic of the party’s ongoing romance with Wall Street elites, the source of so much of the party’s funding. These political leaders, their high-level campaign officials and the party’s financial backers have never had it so good. They won’t suffer one iota from the loss of those 1,400 Carrier jobs. They won’t have to contemplate finding a replacement job at Walmart for $13 an hour. They won’t have to worry about how to pay off their kids’ student loans. Instead, they will continue to enjoy the fruits of America’s wealth that is rapidly flowing to the top 1 percent.

Unless the party is captured by the Sanders forces, there will be little concerted action to outlaw stock buybacks. The establishment Democrats will do next to nothing about the never ending rip-off of the American people by Wall Street elites.

What should progressives do?

Right now we are in the streets bearing witness to the threats Trump poses to immigrants, people of color, Roe v. Wade, LBGTQ rights, and the environment. These protests build a protective sense of community, a public space to share pain and anger, a place to shield each other against deportation and Trump vigilantes.

But to date, these emotive and reactive responses provide no alternative path or program. Love trumps hate is no match for what will soon be jammed through Congress.

Moving from Trump, the person, to the Wall Street horrors that give us Trump.

The Carrier relocation offers new possibilities. It allows us to protest about what Trump either does or does not do on behalf of working people.

If progressives were well organized—a very big if, to be sure—we should join these workers to build mass demonstrations at United Technologies headquarters, hedge fund offices and the White House. Such a series of protests would keep the Carrier shutdown on the front burner and provoke Trump to live up to his job promises.

Imagine if Black Lives Matter, the Sierra Club, 350.org, the Moral Monday movement, the Sanders supporters, and other unions and church groups rallied around these at-risk workers. That would send a loud, clear message that the progressive movement for economic, environmental and social justice cares deeply about the plight of working people—black, white, Hispanic and immigrant alike.

Not only would it challenge Trump’s bluster, it would create a litmus test for the Democratic Party. If we took to the streets for this kind of working-class cause, the Democrats would finally be forced to decide whether they are, as economist James Galbraith put it, “the party of the predators or the prey.”

The Democrats lost this election because they tried to be both. That’s why Hillary didn’t think twice about taking all that Wall Street cash for her private speeches. That’s why she could talk about the “deplorables” to a closed-door donor meeting. The Democratic elites were confident that they could build a new winning coalition of women, people of color, immigrants and upper-income voters. They thought they didn’t really need the working people left behind by Wall Street’s financial strip-mining. They do now.

There are other critical political realities to consider. By not acting on behalf of these workers, we continue to cede the jobs terrain to Trump. If for some reason Carrier does not move, Trump will get all the credit—and justifiably so. But if our movement sustained the demand in a systematic way, the victory would be for all working people, not just Trump. We would become the movement for jobs and justice.

Why fight to save manufacturing jobs when the planet is heating up, black men are being shot by police and millions of immigrants are about to be deported?

This is a time of reckoning for progressives. It is time to face up to the fact that we will win very little unless we recognize that working people of all shades must become a vital part of a common progressive movement.

Their inclusion, however, requires that we climb out of our issue silos. We need to build a state, local and national progressive alliance that unites our specific issues. Bernie Sanders proved that such a common effort has enormous potential. He successfully made the case that the actions of the rapacious billionaire class unites us all as we struggle to reverse runaway inequality, eliminate discrimination, provide universal health care and free higher education, while also protecting the planet. We came together then around a broad social democratic platform. We need to do it again.

For starters, Sanders should deploy his prodigious list of small donors to raise substantial funds to build a national movement infrastructure. An opening campaign could focus on Carrier and highlight the evils of stock manipulation. Working people all over the country would take notice.

Yes, we are hurting. Yes, we are fearful. Yes, we are incredulous that the country we love could turn to a demagogue. But we have just entered one of those rare historical moments when the poignant words of Joe Hill, the labor troubadour, again ring true. In a telegram written to the radical labor leader Bill Haywood, just before Hill was executed on trumped-up charges 101 years ago, he wrote, “Don’t waste any time mourning: Organize!”

Les Leopold, the director of the Labor Institute, is currently working with unions and community organizations to build the educational infrastructure of a new anti-Wall Street movement. His new book Runaway Inequality: An Activist Guide to Economic Justice serves as a text for this campaign.  All proceeds go to support these educational efforts.

IMAGE: Assembly workers work on the underside of 2015 Ford Mustang vehicles on the production line at the Ford Motor Flat Rock Assembly Plant in Flat Rock, Michigan, August 20, 2015. REUTERS/Rebecca Cook

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13 Comments

  1. Jim Stoner November 16, 2016

    No. He won’t have to keep that promise because he didn’t make that promise to anybody. He just said it. That’s it.

    The Republican base couldn’t care less about Washington insiders, or what Trump does with trade deals, or how many companies move out of the country any more then they gave a damn when they openly voted for the destruction of their own unions or huge tax cuts for the rich sending all of the money to the top.

    White Christian conservatives voted fro Trump because of his racist, bigoted, misogynistic and xenophobic rhetoric and not a damn thing else. The only way White Christian conservatives will have any problem whatsoever with what the Trump administration does is if he doesn’t keep his racist and bigoted promises. They have never voted for economic or social or foreign policy in their lives. They have always voted for whatever party implied or flat out said they were as racist and bigoted as they are.

    Reply
    1. FireBaron November 16, 2016

      Very true. In the South, prior to 1968, it was the Democratic Party with its Southern Segregationist wing. After that, thanks to Nixon’s “Southern Strategy”, they migrated to the Republican Party, displacing the Progressive (dare we say it – LIBERAL) Wing of the Northeast and West Coast! Today, it is hard to find a true Progressive among the GOP. They are all fighting over which one can be more reactionary than the other.
      Ironically, this was “wink-wink-nudge-nudge” form of Racism prior to Sarah Palin’s open opposition to anything President Obama proposed because of her “He isn’t like us” speeches, firing up the base and gelling into the basis of the Tea Party. Tax Revolt my keister! If these folks were against government spending, where the Hell were they during the entirety of the Bush Administration? Nope. They exist for one purpose only – to give vent to their racist scree!

      Reply
      1. Jim Stoner November 16, 2016

        Think of the truth of it. The Sons and Daughters of the Confederacy openly support the very party that attacked and destroyed the South and their way of life. They will even go so far as to claim that because Lincoln destroyed the South, their way of life, and belief system, is why they shouldn’t be seen as racists today! Nonsense. If you have to go back 150 years to find the last time the people you support did something for a minority you have already lost the debate.

        They voted Republican since the 60’s because the Republicans told them “We are in your racist corner now”. The reason they got so pissed at the Republicans when Obama got elected was because the base kept its end of the bargain that allowed the Republicans to move all of the money to the top, and the Republicans didn’t keep their promise to give the base their Jim Crow America back. After 50 years! I would have been damned mad at the Republicans the day Obama got elected if I had voted knowingly voted against my own interests, union and jobs for 50 years and that was the outcome too!

        That they have voted for their racism alone is an objective truth because the very first thing the Tea Party base did when they took control of the party was reenact Jim Crow everywhere they could, and codified bigotry back into law using the LGBT community to do it. They already have the precedent of legal bigotry to use against other demographics in the future, and they did it long before Donald came along. And they continued to move all of the power to the top even after they took over anyway. They sure as hell can’t claim putting a stop to it all is why they elected Donald.

        “Racism is over in America. A Black man was elected President. So lets cut parts of the civil right s act out and get Jim Crow voting laws reinstated just as fast as we can.”

        Confederate ancestor – “How long did it take you to be rid of that damn Republican Party that destroyed your heritage and our way of life?”

        Sons and Daughters of the Confederacy – “Get rid of them? We have been supporting them for 50 years now!”

        Flying a Confederate flag and supporting the Republicans at the same time.

        Seems an awful lot like a NAZI Jew, or a Native American Christian to me. Complete contradictions.

        Reply
        1. dbtheonly November 17, 2016

          There were quality Republicans well into the 1970s. Ed Brooke comes to mind. You don’t have to go back 150 years.

          Equally there are any number of Christian Churches on any number of American Indian Reservations.

          Reply
          1. Jim Stoner November 18, 2016

            “Equally there are any number of Christian Churches on any number of American Indian Reservations.” After what Christianity did to Native North American religions and culture I think you just made my point for me.

            Reply
          2. dbtheonly November 18, 2016

            No, merely that there are thousands of Christians with an Original American heritage.

            Reply
      2. Dominick Vila November 17, 2016

        Perhaps more to the point, why did the same folks that rejected President Obama’s proposal to invest in infrastructure because of spending limits, lift the spending limits one week after Trump won the election, and are now enthusiastically supporting spending billions of dollars in infrastructure. McConnell’s acknowledgment that the obstructionism was designed to make Barack Obama a one-term President comes to mind.

        Reply
    2. Dominick Vila November 17, 2016

      I agree with what you said, but only if the debate is about why every single red states was solidly in the Trump camp, but that does not explain why all the battleground states, and several blue states turned red. For most voters in states like Ohio, Wisconsin, Michigan, and Pennsylvania, what really mattered is that Trump heard them, and proposed solutions that, while totally unrealistic, and hypocritical, resonated among those that are unwilling to make sacrifices to meet the challenges that prevent them from finding a good job and get ahead. Hillary took them for granted, ignored them until it was too late, and lost the election.

      Reply
      1. Jim Stoner November 17, 2016

        That all came from a country that refuses to hold conservatism responsible for what it does. America won’t even admit to who and what they are let alone hold them responsible for what they do.

        From Reaganomics and tax cuts that have killed the middle class, to lying us into a war, to racist and bigoted laws, to their constant lies about everything from Planned Parenthood to Hillary. When a country refuses to, or doesn’t know who to hold responsible for their problems a tyrant will step up.

        Here is Supreme Court Justice David Souter explaining why America refusing to hold White Christian conservatives and their Republican Party responsible for a single thing they ever do would inevitably lead to Trump.

        https://www.youtube.com/watch?v=qyxawIuqbjM

        Reply
  2. kathlyn.gauthier November 17, 2016

    One yr have passed since I decided to resign from my last work and it changed my life… I started doing a job from my house, for a company I stumbled upon online, for several hrs /a day, and my income now is much bigger then it was on my previous job… Last check i got was for Nine thousand bucks… Amazing thing about this job is the more time i got for my loved ones… http://chilp.it/8d93f4b

    Reply
  3. bobnstuff November 17, 2016

    I have been talking about this problem for years, it;s not new. We once had CEO’s that were proud of the products their companies made and the profits that they handed over to their investors. Now it’s all about raising stock prices. The people who are actually running the companies know nothing about production numbers or even what the company makes as long as they can inflate the stock prices. In 1993 there was a book and a movie dealing with the subject, “Barbarians at the Gate”. We had a presidential candidate once who made his money by raping companies, Romney.

    Reply
  4. Jon November 17, 2016

    Trump talked about Carrier and jobs as if he cared and knew what he was talking about. Only the gullible would believe a man who built his wealth by not paying laborers, small businesses, suppliers, and his employees. Only the gullible would believe that a man who made tons of money fraudulently stealing money from hard working Americans trying to improve their lives with scams like Trump University. Trump never understood the complexities, lied and made up “facts”, and never cared in the least about the working class he had spent a lifetime holding in contempt.
    The only thing that matters to Trump is Trump. When you look at his transition team and the people he has surrounded himself with what Trump was concerned about comes into focus. His campaign was all about greed, power and white power. Those who voted for him will soon find Trump doesn’t like to share. Those with money can buy favors from him but he won’t give anything away.

    Reply
  5. Dr. Samuel Taddesse November 18, 2016

    I believe that worker and managers should start to buy up the share of their company and own the companies they work for. As owners of the company worker will put in their best work to make the product and services they produce competitive and attractive in both the US market and for the export market as well. Workers should take less pay and more profit. Be your own boss! I like that!!

    Reply

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