Turning their backs on US:
American corporations are cutting costs. Clearly, such cost
cutting will result in lower consumer prices for American consumers,
assuming they have jobs...”
Posted March 15, 2004 thepeoplesvoice.org
By: Ted Lang
Part of the format I have established
when interviewing local area businesses for my business feature column in a
local newspaper is a section on "corporate citizenship." By
the term "corporate," I actually mean the businesses' implied
responsibility to the community and its residents. I look for the
contribution the business makes to the public good; things like cash
donations to local charities, or if the owner or owners get involved in
coaching Little League, or Scouts, or make free donations of goods and
services to local churches and synagogues to establish goodwill.
Good corporate citizenship was once a basic standard that differentiated not
only a socially responsible capitalist endeavor domestically, but
distinguished American business ventures from the deplorable social behavior
of foreign and overseas businesses. At one time, unscrupulous, vile
and greedy American entrepreneurs herded workers into poorly lit and poorly
vented sweatshops, required workers to work long hours six days a week, paid
poorly, and employed child labor as well.
Although most American businesses at the turn of the latter century were
ethical for the most part, this is difficult to accept when many
unscrupulous entrepreneurs had enriched themselves via outrageous labor
and/or irresponsible business practices. It readily maligned
capitalism with a reckless abandon of social responsibility. The
motive to do wrong was always there in the frenzy of our booming industrial
revolution during the age of the machine and the factory worker.
Government legislation was required to protect the masses from unscrupulous
and unethical profiteers. Of course, there were probably more ethical
businessmen than unethical ones, but that made little difference when women
garment workers were burned to death in the Triangle Shirtwaist fire, or
when "muckrakers" Upton Sinclair [The Jungle], Lincoln Steffens
and Frank Norris [The Octopus] launched books and articles rallying the
public to agitate for reform.
There were, though, instances where both businesses and government teamed up
to force certain conditions upon the nation and its citizens. The
Lincoln administration was notorious for championing westward railroad
expansionism. The team of government and private railroad enterprises
brutalized both American landowners in their way, as well as virtually
exterminated the plains Indians by massacres as well as deliberately
destroying buffalo herds that the Native Americans were so dependent upon.
And bank foreclosures in the 1930s resultant of the Great Depression
represented yet another general public abuse driven by "big
business" and government foul-ups.
In addition to the folk heroes such corporate abuses generated, such as
Jesse James, the public's anti-railroad hero, and the bank robber gangster
heroes of the 1930s such as Dillinger, Bonnie and Clyde, the designation of
big name corporate kingpins as "robber barons" kicked in.
Whether or not that moniker was totally accurate in the many cases where
invoked, enough anti-social and unethical behavior was ascribed to a
significant number of high rollers to warrant a justified suspicion of big
business in general.
Perhaps it is this latent revulsion on the part of the public that motivated
Thomas Watson Sr., to conduct his business dealings at the highest level of
social responsibility. Perhaps it was his humble beginnings in
business, including the time when he stopped off for a quick drink in a
saloon only to find his horse-drawn wagon and all his wares contained
therein stolen. He was forced to reimburse his employer for the horse,
the wagon, and the lost wares.
Thomas J. Watson Sr. was the founder of the International Business Machines
Corporation, IBM or "Big Blue." He started from humble
beginnings, and was swindled out of his life's savings by one fast-talking
"salesman" but was then hired by yet another master of
salesmanship and captain of industry while badly down on his luck. His
capitalist savior was John Henry Patterson, founder and CEO of National Cash
Register. Patterson paid his sales force extremely well, and Watson
learned his techniques of selling and his successful management style as
well. But Patterson was also a ruthless tyrant and egotist, and when
he felt Watson becoming a threat, disgraced him so at a company meeting that
"T.J." finally quit after a very successful 18-year executive run
at the "Cash."
Writing with Peter Petre, Thomas J. Watson Jr., in his book Father, Son
& Co. [New York: Bantam Books, 1990] describes how his father adapted
what he learned from Patterson about running his own newly acquired company,
the Computing-Tabulating-Recording Company, or CTR, the name of which was
changed to IBM in 1924. Watson writes of his father: "Dad used
some of Patterson's techniques to light a fire under CTR's ragged work
force. He created CTR slogans and CTR songs, a CTR newspaper and a CTR
school, all modeled on those of the Cash. Whatever seemed good about
Patterson's way of doing business, Dad copied; whatever seemed bad, he
boldly reversed. His code of discipline for CTR employees was as rigid
as that of the Cash, but his philosophy of management was far more humane.
Patterson loved to make heads roll, but when Dad arrived at CTR he made a
point of firing no one." Compare the latter point to what happens in
today's business environment of acquisitions and mergers.
Watson Jr. continues: "He told the men that he was going to depend on
them, and that his job would be to build them up. Since he'd worked
hard to pull himself up from the farm, Dad knew that the way to win a man's
loyalty is by bolstering his self-respect. When I joined IBM many
years later, the company was famous for high pay, generous benefits, and the
intense devotion of the employees to Dad." And when Watson Jr.
took over the business in 1956, he continued the company's tradition of
great benefits, great pay and continued to inspire the astonishing loyalty
The Watsons developed their beneficent roles not as a result of government
intimidation, but by being truly dedicated in a patriarchal sense to their
employees. Having worked there 20 years, I can say that there was a
sense that each and every employee represented the Watsons and their
corporate citizenship in relation to their social responsibilities.
Employees were told: You are better than the average employee - that's why
we hired you. Go out to your community and help the people! You're
more educated, intelligent, and gifted! Volunteer! This was the
way my fellow workers and I were encouraged to spread goodwill in our towns
But all that changed between the time I started working there and the time I
left. The growing corporation increased in layers of management, which
greatly filtered and diluted the guiding principles that originated from
Armonk, New York, the company's world headquarters. If I have to point
to the one issue that hurt the company and changed its market share
dramatically, it had to be the impact of the desktop personal computer.
Key corporate executives didn't realize the PC's potential, and got the
company out of the starting gate late.
Loss of market share, increasing office politics, and loss of their most
important employee relations principle, "respect for the
individual," began a change in the company. Retired employees
have told me of the continuing cutbacks in their retirement benefits.
Medical and dental expense that were totally paid for by the company, are
now requiring increasing levels of co-pay on the part of the retiree.
And current employees are now co-paying for benefits that were previously
entirely paid for by the company.
Regrettably, I saw this all coming. The organization was a huge
battleship, and slow to turn around. It's kind of similar to our
increasingly bloated and inefficient government. Individualism, the
cornerstone of IBM as well as the US, is disappearing. The
"little guy" no longer matters. It was eventually going to
happen: a company that never fired anyone would now start initiating layoffs
[downsizing, rightsizing, etc.]. A company that always offered
generous benefits to employees as an increased incentive to join and stay
with the company now offers run-of-mill benefits available virtually
everywhere. And the current level of office politics and backstabbing
are beyond description according to reports provided to me by current
In a Reuters news article entitled "IBM Is Cutting More Than 15,600
Jobs," dated August 13, 2002, the "new" IBM is now in
operation. A company that never had a single layoff during the Great
Depression is described this way in the article: "International
Business Machines Corp. is cutting more than 15,600 jobs - above what had
been expected - in its computer-services and microelectronics businesses,
according to a regulatory filing made public."
And on November 4th of last year, an article from the Australian-based
news.com.au entitled "IBM adds 10,000 jobs this year," seemed to
indicate some sort of recovery. But a closer look reveals, "IBM
has announced plans to create 10,000 jobs next year and will also retrain
100,000 employees for computer services and software work, according to
chief executive Sam Palmisano." The article goes on quoting
Palmisano, "'We are committing $282 million to train and educate
100,000 existing employees to compete for these new high-skill jobs,' Mr.
Palmisano said." The article then offers, "But investors and
analysts say most of the jobs will be added in low-wage countries such as
India and China."
In yet another Reuters article carried in The New York Times on August 3,
2003, "IBM Ruling Creates Headache Over Pensions," the article
describes yet another dimension of the shakiness of our American network of
business empires. The article states: "A once popular pension
plan adopted by many large companies to save money threatens to turn into a
corporate headache, as conflicting rulings on whether they are unfair to
older employees pile up. Underfunded pension plans and higher pension
costs have been in the spotlight in recent months as the falling stock
prices of the past three years and declining interest rates hurt portfolio
returns at many major companies. The latest salvo over controversial
pension plans came on Thursday, when a federal judge in Illinois ruled that
[IBM's] switch to such a pension plan in the 1990s discriminated against
IBM was the front running corporation in terms of pay, benefits, job
security and retirement security. It was apparent that when IBM began
to hedge on these staples of the ideal American corporation that every
college graduate or promising high school graduate could always hope to gain
employment with began to lose vitality and stability, the rest of the
corporate world would fare even worse. Our beginnings as a nation of
farmers, even as that transition was experienced personally by IBM's
founder, T.J. Watson Sr., was our launching pad to personal economic
freedom, our high-tech service and information jobs are being farmed out and
outsourced overseas to "low-wage countries such as India and
Clearly, American corporations are cutting costs. Clearly, such cost
cutting will result in lower consumer prices for American consumers,
assuming they have jobs to allow them any kind of serious purchasing power
to begin with. But what about the high-paying jobs? Recent
reports indicate that these too are being outsourced as well. This
would tend to indicate a drop in consumer purchasing power. And should
this happen, then the huge cost savings generated by foreign outsourcing
will lead to just one outcome: a lower standard of living for America's
workers and huge profits for those already wealthy and in control of the
mighty corporations, corporations that once had intended only the best for
both its workers and its customers.
THEODORE E. LANG 3/13/04 All rights reserved. Ted Lang is a political
analyst and a freelance writer.
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