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How about this for a business plan? Grow your corporation by slowly killing off your customer base. Well, that might not have been the original stated intention, but that's exactly the business plan that many U.S. based transnational corporations created when they allowed their greed for more and more profits to overrule rational, long-range thinking.
Transnational corporations, the most powerful economic and political entities in the world, are currently riding high, rolling in wealth and enormous profits. While America remains mired down in a severe economic crisis involving massive unemployment and a deteriorating manufacturing sector, these corporations are doing quite well as they continue to follow the ingenious, politically-inspired business plan that was developed during the Reagan administration embrace low-cost foreign labor and throw the American worker under the bus.
Those who have a background in business should be very familiar with business plans. A business plan is a formal statement of a set of goals or objectives, the reasons why they are believed attainable, and the specific plan for reaching those goals. Large businesses, in particular, must have a solid business plan and one of the key objectives is the maximization of profits.
That means selling lots of your products while minimizing costs of operation. Operating costs include elements such as research and development, product design, marketing and advertising strategies and, yes, I almost forgot Labor. Actually, labor happens to be the largest single cost of manufacturing, so when a company looks to reduce overall costs, labor represents the greatest potential for savings.
All of that is well and good, it's a necessary part of any viable business and it does produce results. However, in the case of these global corporations, they identified the American worker as their avowed enemy and, thereafter, the transfer of jobs to low-cost overseas workers was taken to historical heights; this trend rapidly escalated through the 1980's, the 90's and the first decade of the 21st century. Companies' bottom lines showed significant improvement while, at the same time, multi-millions of American workers lost their jobs.
While these manufacturing giants generated monumental profits, they gave little thought to the long-term consequences of their policies and strategies. They did not realize that by maximizing their utilization of overseas labor they were, in effect sowing the seeds of their own demise, that at some point in the future, these decisions might come back to haunt them. And, whether they know it or not, they have now arrived at that point in time when their selfishness and greed has begun to catch up with them.
Here is the dilemma that they are facing. Yes, many of these giants are still riding high with enormous profits; however, slowly but surely, that is changing as America slides deeper into recession and more and more Americans line up for unemployment checks. This, in case it slipped their minds, is a consumer-driven society, the largest in the world. It is driven by those millions of Americans who buy their products, or, used to buy them.
Could anything be more clear? When you outsource and get rid of your American workers and they have no income they no longer have purchasing power; they can't afford your products; millions of them are former corporate employees who lost their jobs to outsourcing and are now barely surviving on something like $300 per week. Well, in this situation what is a corporation to do? Trying to sell their products to low-income overseas workers is not an option because with their low wages they cannot afford them and, besides, many of their governments place severe restrictions on imports.
This seems to be a good example of a Catch-22, "A contradictory or self-defeating course of action." That's it, that's exactly what these corporations have succeeded in doing after having embraced the Reagan-inspired war on labor. No, we won't see all of these corporations collapsing in the near future but this is an insidious process of debilitation and, as it generates further momentum, many, many of these corporations are going to lapse into bankruptcy as their customer bases dry up.
It is inevitable, it is unavoidable. As many of the most respected economists point out, this recession is not the usual cyclical model where, once we go through the normal pain and suffering, and the recession runs its course, everything will just go back to where it was. No, that is not going to happen, it cannot happen this time. Those many millions of jobs that were outsourced to overseas nations are gone forever; there is no way that they are going to come back.
That very important part of the customer-driven economy is passé and there is nothing in the foreseeable future that is ready to take its place. The old U.S. economy is a thing of the past and we all are going to have to adjust to a wholly different kind of an economy in which American lifestyles will no longer be the same.
When this situation peaks, probably over the next ten years or so, corporations are going to have to look at an entirely new business plan that will not be very palatable, but there will be few if any options. This new plan will call for a complete reversal of the poisonous outsourcing plan of the past, something that corporations will find to be very difficult to accept.
Corporations are going to have to create new products and new industries to provide American workers with the jobs and the income to, once again, contribute to this consumer-driven economy. If they fail to do this, they will find that, as the demand for their products continues to diminish, they will have no choice but to lay off more workers to further reduce labor costs. Then as the population of willing and able buyers continues to decline, this vicious circle will devastate the corporate sector. These corporations will either have to accept reality and change, or die.
If these giant corporations deliberately planned and carried out a strategy that destroyed their workers' jobs and their livelihoods in the quest for greater and greater profits and all evidence clearly indicates that they did - then they will have, unwittingly, planted the seeds of their own destruction.
Michael Payne
