Article 43
Friday, November 30, 2007
Patronizing Greed
Banks Gone Wild
By Paul Krugman
AlterNet
November 27, 2007
“What were they smoking?” asks the cover of the current issue of Fortune magazine. UNDERNEATH THE HEADLINE are photos of recently deposed Wall Street titans, captioned with the staggering sums they managed to lose.
The answer, of course, is that they were high on the usual drug—greed. And they were encouraged to make socially destructive decisions by a system of executive compensation that should have been reformed after the Enron and WorldCom scandals, but wasn’t.
In a direct sense, the carnage on Wall Street is all about the great housing slump.
This slump was both predictable and predicted. “These days,” I wrote in August 2005, “Americans make a living selling each other houses, paid for with MONEY BORROWED FROM THE CHINESE. Somehow, that doesn’t seem like a sustainable lifestyle.” It wasn’t.
But even as the DANGER signs multiplied, Wall Street piled into bonds backed by dubious home mortgages. Most of the bad investments now shaking the financial world seem to have been made in the final frenzy of the housing bubble, or even after the bubble began to deflate.
In fact, according to Fortune, Merrill Lynch made its biggest purchases of bad debt in the first half of this year—after the subprime crisis had already become public knowledge.
Now the bill is coming due, and almost everyone—that is, almost everyone except the people responsible—is having to pay.
The losses suffered by shareholders in Merrill, Citigroup, Bear Stearns and so on are the least of it. Far more important in human terms are the hundreds of thousands if not millions of American families lured into mortgage deals they didn’t understand, who now face sharp increases in their payments—and, in many cases, the loss of their houses—as their interest rates reset.
And then there’s the collateral damage to the economy.
You still hear occasional claims that the subprime fiasco is no big deal. Even though the numbers keep getting bigger—some observers are now talking about $400 billion in losses—these losses are small compared with the total value of financial assets.
But bad housing investments are crippling financial institutions that play a crucial role in providing credit, by wiping out much of their capital. In a recent report, Goldman Sachs suggested that housing-related losses could force banks and other players to cut lending by as much as $2 trillion—enough to trigger a nasty recession, if it happens quickly.
Beyond that, there’s a pervasive loss of trust, which is like sand thrown in the gears of the financial system. The crisis of confidence is plainly visible in the market data: there’s an almost unprecedented spread between the very low interest rates investors are willing to accept on U.S. government debt—which is still considered safe—and the much higher interest rates at which banks are willing to lend to each other.
HOW did things go so wrong?
Part of the answer is that people who should have been alert to the dangers, and taken precautionary measures, instead blithely assured Americans that everything was fine, and even encouraged them to take out risky mortgages. Yes, ALAN GREENSPAN, that means you.
But another part of the answer lies in what hasn’t happened to the men on that Fortune cover—namely, they haven’t been forced to give back any of the huge paychecks they received before the folly of their decisions became apparent.
Around 25 years ago, American business—and the American political system—bought into the idea that greed is good. Executives are lavishly rewarded if the companies they run seem successful: last year the chief executives of Merrill and Citigroup were paid $48 million and $25.6 million, respectively.
But if the success turns out to have been an illusion—well, they still get to keep the money. Heads they win, tails we lose.
Not only is this grossly unfair, it encourages bad risk-taking, and sometimes fraud. If an executive can create the appearance of success, even for a couple of years, he will walk away immensely wealthy. Meanwhile, the subsequent revelation that appearances were deceiving is someone else’s problem.
If all this sounds familiar, it should. The huge rewards executives receive if they can fake success are what led to the great corporate scandals of a few years back. There’s no indication that any laws were broken this time—but the public’s trust was nonetheless betrayed, once again.
The point is that the subprime crisis and the credit crunch are, in an important sense, the result of our failure to effectively reform corporate governance after the last set of scandals.
John Edwards recently came out with a corporate reform plan, but it didn’t receive a lot of attention. Corporate governance still isn’t regarded as a major political issue. But it should be.
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Wall St. Handing Out Record Bonuses Despite Layoffs, Stock Market Woes
By Greg Wilson
NY Daily News
November 20, 2007
Wall Street firms plan to hand out a record $38 billion in bonuses to cap a year in which many firms wrote off billions in losses, laid off scores of workers and saw stock prices plummet.
The bonuses, split among about 186,000 workers at Goldman Sachs, Merrill Lynch, Morgan Stanley, Lehman Brothers and Bear Stearns, come to an average of $201,500, Bloomberg News reported.
The average is misleading because Wall Street’s most prominent execs and biggest revenue-producing stars will pull in bonuses of $10 million or more apiece, while many will get less than six figures.
“It shows that it is possible for the firms to lose a lot of money and the stocks to be down - and people on Wall Street make a lot of money,” said compensation consultant Alan Johnson. “It’s counterintuitive.”
If the bonuses are that large, that’s great news for the city.
Wall Street’s largess typically spurs a buying spree that’s felt in the real estate and art markets, at fancy car dealerships, high-end stores and restaurants, and at charities.
Yet the bonanza can’t please stockholders, who have suffered through the worst year in the securities industry since 2002 and have seen share prices lose $74billion.
“Other than Goldman, which has had an extraordinary year, it seems outrageous that these companies would be putting these kind of bonuses together,” said John Challenger, CEO of the recruiting firm Challenger, Gray & Christmas.
Meanwhile, Merrill’s newly appointed CEO, John Thain, told reporters last week that, while top performers will be well-compensated, those involved in the subprime mortgage collapse that led to the firm’s $8.4 billion third-quarter writedown will be penalized.
City Hall officials declined to comment on the bonus projections. They noted they have lowered profits forecasts for Wall Street, a key contributor to the city’s tax base and economy.
The expected megasized bonus pool - topping last year’s record total of $36 billion - is the result of record fees for setting up corporate mergers, underwriting initial public stock offerings and bond sales. Those fees helped make this year the industry’s second-most profitable, despite the mortgage meltdown.
Investment banks usually spend a little less than half of their revenue on salaries, benefits and bonuses, with year-end bonuses making up an average of 60% of compensation.
The $38 billion bonus forecast was based on expected revenues of $135 billion at the five biggest firms, and doesn’t include the large bonuses expected at hedge funds, buyout firms and commercial banks.
Goldman Sachs has had the best year, with an estimated $11billion in profits. The other four have seen profits slide, but experts said they’ll have to pay their top people well to keep them from defecting to rival firms.
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End Of The Middle Class
Our Wealth-Oriented Economy: “America, the Beautiful ain’t so pretty any more”
By Peter Stern
Baltimore Chronicle
November 28, 2007
Our irresponsible leaders cannot be permitted to continue ravaging profits all over the globe, like unruly children grabbing for all the merchandise in a candy store.
Once upon a time in America, there was a large working middle class and competition was goodbut that was then, and this is now.
I’ve been writing about the brutal American economy for the past seven years, since the Bush administration’s special interest budget and political power-plays began forcing more Americans to and below the poverty level. Finally, as America’s rulers are gaining vast wealth, they also are eliminating the remainder of America’s middle class.
The middle class has become an endangered species much as the Amazon rainforests, African elephants and mountain gorillas, India’s Bengal Tigers and our own American Timber Wolves. We have witnessed our government of hell-bent money mongers swooping down on the ideology, and reality, of making profits above all else.
We are watching helplessly as our government pushes for toll roads and coal plants and for the protection of the wealthy in the eyes of what once was the proud law of our AMERICAN CONSITIUTION, which has become a political and legal table tennis platform for all sorts of proposed amendments and modifications to offer more protection for the Kings and Queens of America.
Even the famous playwright Arthur Miller could not have prophesied all this in his writing the true “American Tragedy” we currently are witnessing. He might have called what is occurring “Death of the American People.”
The end of the American middle class is approaching, and millions of Americans have no jobs, no way to pay their mortgages and daily living expenses. The Bush administration, via its recurring lawmaking benefiting the business and credit corporations, has forced more Americans into poverty than since The Great Depression days of the 30’s. Home foreclosures are at an all-time high. American jobs continue to be sent overseas for cheaper labor. The businesses of energy (oil, gas, electricity), technology, religion, health care, pharmaceuticals, etc., all are doing very well and are reaping vast fortunes for the favored few. The majority of Americans are scavenging to earn their living expenses. Most of us are trapped inside some invisible prisontrapped by our over-use of revolving credit with huge sums of interest flying over our heads. The majority of us are doomed.
America’s government is doing more for people overseas than for its own citizens. We do more for illegal immigrants working here than we do for our own.
Computer guru multi-millionaire BILL GATES, CEO of Microsoft, has the audacity to writean article in the Washington Post (of which his wife Melinda is a Director) that innovation and competition are the key to a greater American economy. This from a man who has forged a monopoly in the computer field, having fought “tooth and nail” for all technology companies to use his Windows Operating System. Gates writes in his February 22nd article, titled “How to Keep America Competitive”: “Two steps are critical. First, we must demand strong schools so that young Americans enter the workforce with the math, science and problem-solving skills they need to succeed in the knowledge economy. We must also make it easier for foreign-born scientists and engineers to work for U.S. companies.”
The great Tao philosopher Lao Tzu (600 BC) is credited with stating, “Beware of the man who blows hot and cold in one breath.” This prophecy, my friends, often holds very true for men like Bill Gates.
In one breath we’re told by Gates and our elected officials that educating our children is the most important issue we faceחbut in reality we ensure that the public school systems fail throughout our nation, and that a higher education for most is unattainable. Our children are our most precious natural resource; however, we exploit and neglect them, just as we’ve done to most of our natural resources.
In the same breath we’re told by Gates and our elected officials that we should make it easier for those outside our nation to come into America to work at American jobs if companies can’t get Americans to do the technical and other jobs. But how can American children get those jobs if the cost of higher education remains unaffordable to them? At the same time, we make it easy for immigrants from, for example, India and China (whose advanced education in those countries costs them very little) to receive U.S. work visas. They then will work here for less money than their American counterparts, often without health and other benefits.
According to an article titled, “U.S. economy leaving record numbers in severe poverty” by Tony Pugh of McClatchy Newspapers, Sunday, February 25, 2007:
“The portion of poor Americans who are living in severe poverty has reached a 32-year high, millions of working Americans are falling closer to the poverty line, and the gulf between the nation’s “haves” and “have-nots” continues to widen.”
One thing is very clear, the U.S. economy cannot continue to DENY AMERICAN CITIZENS THE BASIC NEEDS of daily living. Our nation has swiftly moved from a Representative Democratic Republic to a seemingly Fascist Monarchy in which only the chosen few get the wealth and perks. In short, we are hurting our own people socially, politically and economically by denying them successful lives.
We must all stand up and demand accountability, starting with a big change in America’s management, and a requirement that our government provide all Americans with:
* Jobs at all skill levels for any American who wants to work
* Affordable public schools and higher education that provide quality programs for all children
* Make higher education more affordable for all American children
* Affordable and quality health care
* Enforce our immigration laws
* Fairer distribution of taxation
* Holdback on “rogue” cutthroat profiteering
* Decrease/stop outsourcing of American jobs
* Find fair alternative sources of tax revenue
* Provide quality affordable health insurance
* Provide affordable Rx medication and insurance premiums
* Provide our veterans with the goods and services they need
* Develop more controls on the financial credit/cards industry and high runaway interest rates
* Provide more tax dollars for domestic needs and decrease the budget for overseas ventures.
Most of all, whatever happened to that great American virtue of getting “an honest day’s pay for an honest day’s work” ?
While it’s true that the America we once knew has changed over the past several generations, there are values that still should be employed by all of us to make this nation great again. We can’t do that if our leaders continue to be irresponsible. They can’t be permitted to continue ravaging profits all over the globe, like unruly children grabbing for all the merchandise in a candy store.
I look at this once-great nation with tearing eyes and sadly shake my head, remembering what it once was and how we all once worked together to keep it great.
Are those days gone forever?
Peter Stern of Driftwood, TX, a former Director of Information Services, university professor and public school administrator, is a political writer well-known and published frequently throughout the Texas community and nationwide. He is a Disabled Vietnam Veteran and holds three post-graduate degrees. You may contact him at: .
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Thursday, November 29, 2007
Consumer-Driven Culture Is Killing Our Democracy
By Terrence McNally
AlterNet
November 28, 2007
Here’s a quick quiz. Do you love bargains? Do you enjoy the power and convenience of shopping online for the best deals on electronics or travel or anything else? Do you favor cutthroat corporate competition that devours small, local businesses? Do you applaud the sweatshop labor it takes to produce your sweatpants for less?
Feeling schizophrenic, yet?
Former Secretary of Labor Robert Reich believes we are all suffering from this split agenda—as consumers we want low prices, while as citizens we may oppose corporate behaviors that make them possible. And he believes—at least on a national scale—OUR CITIZEN SELVES ARE LOOSING.
Shoppers are elbowing citizens out of the public arena. The last three decades have seen the emergence of a supercharged capitalism fueled by open markets and cutthroat competitiveness. According to Reich, “supercapitalism” is overwhelming government with lobbyists and money, while citizens are dazzled by the promise of previously unimaginable riches and consumer choices.
In his new book, Supercapitalism, Reich tackles the big question: Can democracy survive in this environment?
Professor of public policy at the University of California, Berkeley, Reich served in three national administrations, most recently as secretary of labor under President Bill Clinton. He is co-founding editor of the American Prospect, and his weekly commentaries on public radio’s “Marketplace” are heard by nearly 5 million people. He is the author of eleven books, including The Work of Nations, The Future of Success and his latest, Supercapitalism.
Terrence McNally: In Supercapitalism, you describe the almost golden age of the ‘50s and ‘60s. What are some things you value from that period that your sons will never experience?
Robert Reich: Well, stable jobs. My father was a retail merchant. He had a little store that catered to factory workers and their families, and those factory jobs were pretty stable. People typically stayed with the same company for 40 years. I’m not sure we should or can go back to those days, but job stability was a value that people held very dear. These days nobody knows whether they’re going to be working for the same company next week, next year or tomorrow.
There’s the issue of inequality. In the ‘50s and ‘60s, the “almost golden age,” we had less inequality of income and wealth than at any time before or since. I’m not saying everybody’s income necessarily has to be the same, but inequality is bad for society and bad for democracy.
TM: You’re not in any way saying that we can return to that age?
RR: No, and I don’t think we should. I call it “the not quite golden age,” because a lot of things were wrong with our society. African-Americans were still relegated to second-class citizenship. We passed a civil rights act and a voting rights act, but we still had a long way to go. Women were blocked from most professional careers. The environment was more polluted. We passed the Environmental Protection Act of 1975 and made progress on that. Joe McCarthy and the communist witch hunt of the 1950s scarred American politics. The CIA was up to no good abroad. I don’t want to paint this era as a wonderful place we should necessarily go back to, but it’s important to understand that our democracy, although far from perfect, was trying to grapple with all of those problems.
When people were asked in opinion polls, “Do you think that our system is working in your interest and in the interest of things you believe in?” the vast majority of Americans between 1945 and 1975, said “Yes.” These days it’s just the reverse. In most polls, when asked that same question, “Do you think that the democratic system is working in the interests of average Americans like you?” anywhere from 68 to 75 percent of Americans say, “No, it’s working for the big guys.”
TM: In his recent book, Deep Economy, Bill McKibben looks at whether our gains in material possessions since the ‘50s and ‘60s have made us happier. According to polling, people are not as happy now as they were then, and he believes it’s because they’ve paid too high a price in the loss of community.
RR: As consumers and investors, we’ve made great progress over the last 30 years—if you put quotation marks around the word “progress.” We have access to a much greater range of choices. We get better products, more gadgets, more bells and whistles. We comparison shop like mad on the internet. We’re getting great deals, and those great deals have become progressively better. But as citizens, we are doing arguably worse and worse, because we have fewer and fewer ways of expressing the values and goals we share with other people.
TM: There were two surprises for me in this book. First, despite the title, it seemed to me the subject of this book is democracy. Second, you seem to say that campaigning for social and environmental responsibility from corporations is either a distraction or a failed strategy.
RR: Yes on both counts. Let me explain briefly.
I don’t think we can separate capitalism from democracy. If capitalism is working well and democracy is working poorly, democracy is working poorly in part because capitalism is working so vibrantly. Capitalism has overrun democracy. In the 1940s, ‘50s and ‘60s, we talked about “democratic capitalism” with a small “d.” We talked about it very proudly—to ourselves and to the world—as the alternative to Soviet communism.
Secondly, your point about corporate social responsibility—a very important theme in the book is that corporations are not people. They are just contracts, they are just pieces of paper. And it’s a fallacy to treat them as people, whether it’s giving them constitutional rights or the right to engage in our political process, or treating them as people in terms of requiring or assuming that they can be moral.
It’s kind of an anthropomorphic fallacy, and it’s very dangerous. Corporate social responsibility is a nice idea, but corporations will not be socially responsible, if by socially responsible we are suggesting that they sacrifice consumer deals and investor returns. They won’t.
TM: Though they may do things that can be described as socially or environmentally responsible, we should not expect them to do these things unless they are also profitable ...
RR: Exactly. It’s a distraction from politics to push companies to be socially responsible when it runs counter to their bottom line.
For example, I dislike Wal-Mart’s hiring practices very strongly, and I dislike that Wal-Mart pays rock bottom wages. I could go on against Wal-Mart for a long period of time.
I’m sympathetic with people who are climbing on the anti-Wal-Mart bandwagon, but it seems to me the one productive thing we can do is to make things so hot for Wal-Mart that they have to recognize a union.
Don’t expect Wal-Mart to suddenly become more moral. Wal-Mart is a piece of paper, it’s a contract. Wal-Mart has consumers who love the good deals they can get, and it has investors who want the highest possible return. Wal-Mart is not going to do anything that hurts its bottom line.
TM: It seems to me we’re talking about two big problems in this book. One is the power and influence of corporate money on politics. The other is the social and environmental consequences of corporate behavior. It looks to me like we can’t hope to solve the second till we solve the first.
RR: People may disagree on what the problem is. I’ve talked to a lot of conservatives who say the biggest problem we face with our market economy is the coarsening of our culture, the spewing forth of sex and violence from the media. I don’t want to get into a debate about what is the biggest problem. Let’s just all agree that companies are not going to change their ways because we are yelling at them to do so. They spew out sex and violence because there are consumers who love sex and violence, and investors make a high return on sex and violence. So the real issue is, what kind of laws and regulations do we have to constrain the market?
In the first decades of the 20th century, we enacted laws against child labor and laws that said the 40-hour work week will be the norm and above that is overtime. We’ve since enacted laws with regard to workers’ safety, laws against discrimination at work. So if we’re unhappy about the social consequences of our current supercapitalist economy, then we’ve got to work through politics and pass legislation. To do that, we’ve got to rescue democracy from the supercapitalism that is now overwhelming it.
TM: How are we going to pass needed regulations when the corporate dominance of democracy makes passing such legislation harder than ever?
RR: We need to wall off democracy. We say highly competitive supercapitalism, that’s fine for the private sector where we’re going to be consumers and investors. We recognize the cognitive dissonance between the part of our heads that’s a consumer and an investor and the part that may be a citizen. We’re going to wall all of that off—in order to address the trade-offs and have a democracy that is not going to be engulfed by the lobbyists and money coming from supercapitalism.
How are we going to ever get to that point and rescue democracy? The system is not going to reform itself from the inside.
Stop trying to get corporations to be socially responsible. Stop trying to achieve any particular social objective like global warming or a national healthcare system ... Put all of our efforts into a citizen’s movement for democracy. That would include the public financing of campaigns and would require any network, any broadcaster using the public airwaves to provide advertising for all candidates.
We have a long list of what we all know democracy needs in order to be shielded from supercapitalism. I actually offer one additional idea to that list that I think is important and useful.
Each candidate sets up a blind trust that receives all political contributions, so that no candidate can ever know who contributed what. Once all political contributions become anonymous, I would predict a substantial drop in contributions, because there can no longer be any quid pro quo.
T: You may still be inclined to give a candidate money based on past record or on current promises, but the candidate won’t know it, so no strict quid pro quo would happen.
You say corporations are just pieces of paper, that you can’t expect them to serve anyone but shareholders. Is this as true in other cultures?
I’ve heard that in Germany, for instance, the customer is rated higher than in America and that in some of the European countries, the employee’s rated higher. Is that true, and is it becoming less true?
RR: It used to be true. In large companies Germany still has a separate board that’s supposed to represent other stakeholders, including employees. Japan has until quite recently had a fairly egalitarian pay structure, but that’s being eroded by the power of American supercapitalism.
Money is now global. Investors are now demanding high returns wherever they are around the world. These days if a company in Germany wants to sacrifice shareholder returns for the sake of employee benefits, global capitalists say, “No, you can’t do that.” There’s an irony here—there are people inside our pension plans trying to get the highest return for us by putting pressure on Germany and other countries to reduce the extent to which those companies cater to employees or other stakeholders.
TM: In the U.S., has the shareholder always been in the paramount position with any other stakeholder a distant second?
RR: Yes, but look again at what I talk about as the not quite golden age, the period 1945 to 1975, when 35 percent of Americans were unionized in the work force—you had industrywide bargaining, you had pluralist interest groups and regulatory agencies. You had political parties that were not just sump pumps for campaign financing but were political organizations that reached down to the community level. In those days corporate investors were not kings, consumers were not kings. The power was divided in a way that gave us much more say as citizens.
TM: At the time, even if a corporation wanted to focus on shareholder return, they couldn’t ignore the power of the unions.
RR: Exactly.
TM: I’ve been saying since the 2004 election that we need a Restore Democracy Trifecta: media reform for a more informed democracy—stop (and reverse if possible) media consolidation, offer less false balance (i.e., global warming skeptics are equal to global warming scientists) and more statements of fact. Campaign reform—public financing, free TV time. Election reform—transparent, accurate, inclusive and verifiable.
If all progressives got together, campaigned for those three things and succeeded to a meaningful extent, only then would they have a realistic chance to get environmental, healthcare, education, civil liberties or whatever legislation passed. Is that basically in sync with what you’re saying?
RR: Absolutely. I keep telling progressives who have particular issues they want to advance [that] nothing is going to happen on your issue or any other progressive issue unless you get together with everybody else who wants change and rescue democracy first.
TM: In some sense you’re saying we could nibble at the problem, we could hit a few singles, steal a base, sacrifice—or we could go for the home run. The home run is to restore democracy, and let the chips fall where they may.
How is that going to happen? In working on this book, you must have talked to Public Campaign, Common Cause, the League of Women Voters, etc. Do you feel there is the energy, the interest, the passion in an election year for people to actually go there?
RR: There are three steps.
Step No. 1: Buy my book.
Step No. 2: Don’t be cynical. I think cynicism about politics and our democracy is one of the most corrosive things that we have to deal with. A lot of people use cynicism as an excuse for not taking action. They say nothing will change, the big guys are in charge, I’m not going to get into politics, I’m going to look at my own little community and work there. That’s fine. I respect that. But if people are motivated by cynicism to not roll up their sleeves and do something that rescues democracy, then we are all in deep trouble.
Step No. 3: This is the most important. We have had in America social movements that have produced tremendous change. I’m thinking of the suffragettes and others in the first decades of the 20th century, all the way through civil rights and the environmental movement. The anti-war movement during Vietnam. These were successful movements. Now why can we not have a citizens’ movement to rescue democracy?
TM: It seems to me when people look at Katrina, when they look at the healthcare issue, when they look at education ... I’m talking about everyone in America who has an impulse to take action—Boy Scouts, PTAs, seniors ... Why not take this on with no regard for the particular partisan policy that might follow, but just go for democracy?
RR: And the beauty of this is, it transcends ideological lines. I mean, we all believe in democracy. Regardless of what we want democracy to accomplish, we want democracy to work.
Interviewer Terrence McNally hosts Free Forum on KPFK 90.7FM, Los Angeles (streaming at kpfk.org).
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Victoria’s Secret
Victoria’s Secret, Slave Labor And So-Called “Free Trade”
By Jonathan Tasini
Huffington Post
November 27, 2007
When you slip on your Victoria’s Secret garb, remember this: it comes to you partly due to the wonders of so-called “free trade.” And, in particular, that little Victoria Secret garment (I guess “little” is redundant in this context) may even hail from Jordan--which was supposed to be the poster child for how one forges the “right” kind of so-called “free trade” deal. But, instead, Victoria Secret exposes the exact fallacy of so-called “free trade.”
My friends at the National Labor Committee have just released a REPORT on some appalling conditions at Victoria Secret production facilities in Jordan:
D.K. Garments is a subcontract factory with 150 foreign guest workers (135 from Bangladesh and 15 from Sri Lanka), which has been producing Victoria’s Secret garments for the last year. None of the workers have been provided their necessary residency permits, without which they cannot venture outside the industrial park without fear of being stopped by the police and perhaps imprisoned for lack of proper documents.
The Victoria’s Secret workers toil 14 to 15 hours a day, from 7:00 a.m. to 9:00 or 10:00 p.m., seven days a week, receiving on average one day off every three or four months. All overtime is mandatory, and workers are routinely at the factory 98 to 105 hours a week while toiling 89 to 96 hours. Treatment is very rough, as managers and supervisors scream at the foreign guest workers to move faster to complete their high production goals.
Workers who fall behind on their production goals, or who make even a minor error, can be slapped and beaten. Despite being forced to work five or more overtime hours a day, the workers are routinely shortchanged on their legal overtime pay, being cheated of up to $18.48 each week in wages due them. While this might not seem like a great deal of money, to these poor workers it is the equivalent of losing three regular days’ wages each week.
Workers are allowed just 3.3 minutes to sew each $14 Victoria’s Secret women’s bikini, for which they are paid four cents. The workers’ wages amount to less than 3/10ths of one percent of the $14 retail price of the Victoria’s Secret bikini
And when workers protested a speed up demand? Management had six of the workers arrested. A strike is under way:
The workers begged management to free their unjustly imprisoned friends and co-workers. Management refused and the workers stopped working at 10:30 a.m. on November 12. The strike continues. The owner of the factory is now threatening to have all the guest workers forcibly deported back to Bangladesh and Sri Lanka. The owner says food and water will be cut off and following that, the workers will be forcibly removed from the dorms.
The workers paid anywhere from $1,500 to over $3,000 to purchase three-year work contracts in Jordan--an enormous amount of money in Bangladesh and Sri Lanka. Workers had to go deeply into debt, borrowing the money on the informal market, often at five to ten percent interest per month, If the workers are deported, they will never be able to pay off their debts, and they and their families will be ruined.
This is nothing new. The National Labor Committee has been documenting slave-like conditions in Jordan for some time.
The larger point here is this. The U.S.-Jordan so-called “free trade” agreement was held up as the model deal. It was approved by a voice vote in the Senate in 2001--with virtually no Democratic opposition. When Sen. Hillary Clinton announced her decision to vote against the so-called “free trade” called CAFTA (Central American Free Trade Agreements), she said, in a statement:
The most problematic elements are its labor provisions which retreat from advances made in the late 1990s and that culminated in the labor provisions of the U.S.-Jordan Free Trade Agreement. The U.S.-Jordan Free Trade agreement included internationally recognized enforceable labor standards in the text of the agreement.
And…
The Chile, Australia and Singapore free trade agreements, which I supported, contained similar “enforce your own law” labor provisions to DR-CAFTA, but as I noted when I voted for these agreements, I was greatly disturbed by these provisions’ departure from the labor rights standards negotiated in the U.S.-Jordan Free Trade Agreement. In the end, I supported these agreements despite these concerns because I believed the agreements would not harm the average working person in those nations and, thus, the flawed labor provisions did not outweigh the benefits offered by the agreements.
This is not intended to find fault with Sen Clinton alone; then-Senator John Edwards also supported the agreement and you can find many other Democratic senators making similar supporting statements. They all held to the same general belief that so-called “free trade” deals could be “improved” with provisions inserted on labor and the environment.
The problem is that these deals, as I’ve pointed out before, are primarily about protecting the rights of capital. You can never hope to enforce labor rights (or for that matter environmental protections) under a regime that is focused on profit first, and community second. It will not happen. And all the statements to the contrary are just rubbish. Why we would pretend that labor rights can be enforced as an after-thought, as a secondary issue, in countries around the world--when we can’t even enforce basic labor rights here (such as safety and health regulations) because they are subject to politics and the free reign of the so-called “free market"--exposes the true fallacy of so-called “free trade.”
In fact, once the so-called “free trade” deal was signed, Jordan attracted a huge number of sweatshop operations that were thrilled to operate in a zone from which they could export to the U.S. under a so-called “free trade” regime. And so you end up with scores of factories like the Victoria Secret operation.
You can do this. Writeto Leslie Wexner, the CEO of Limited Brands, which puts out Victoria Secret clothing, and protest the treatment of the workers in Jordan:
Leslie Wexner, CEO
Limited Brands Inc.
3 Limited Pkwy.
Columbus, Ohio 43230
United States
Phone: (614) 415-7000
Fax: (614) 415-7080
E-mail:
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Wednesday, November 28, 2007
The 10 Worst Jobs In America
Low pay, no benefits put these workers in a tough spot
By Ruth Mantell
MarketWatch
November 21, 2007
Models are paid millions to twirl in the latest bra and panty set. Right? Nope—not unless they are one of an extremely small (and beautiful) handful of young women.
Last year, models made a median hourly wage of $11.22, according to the Bureau of Labor Statistics, a bit less than twice the minimum wage of $5.85. Not so glamorous.
“Most models take other jobs. They’re waiters. It gives them the flexibility to go to model calls and auditions,” said Ean Williams, executive director of DC Fashion Week, a designer showcase held twice a year in the nation’s capital. “There are a lot of people that are very beautiful, very talented, that don’t make it in the business.”
The young and beautiful aren’t the only ones working like dogs and earning peanuts. In fact, models, demonstrators and product promoters rank No. 8 on a new list of the 10 worst jobs in America.
Who gets the shortest end of the stick? Coffee shop hosts and cafeteria counter attendants, according to a report by the Center for Economic and Policy Research and the Center for Social Policy at the University of Massachusetts.
Eighty-seven percent of restaurant-host and counter-attendant jobs were categorized as “bad,” meaning they paid less than the median wage in 1979, adjusted for inflation, and had neither employer-sponsored health insurance nor a retirement plan. That translates to a wage today of $16.50 an hour or $34,320 per year for a full-time, full-year worker, according to the report.
About 79% of jobs in the models, demonstrators, and product promoters category are bad, according to the report, which covers 2003 through 2005 using Census Bureau data.
John Schmitt, a senior economist with CEPR, said the categories heavily composed of bad jobs haven’t improved in recent years.
“The composition is basically the same. It’s not like suddenly it’s a different world for people,” he said.
In 2005, almost one-third of American workers had a job that met all three bad criteria, about the same share as in 1979, according to the report.
“Even worse, despite substantial economic growth since the end of the 1970s, the share of bad jobs in the U.S. economy has remained essentially unchanged for over a quarter century,” according to the report.
Quite a few of the bad job categories are those that might typically be considered summer jobs for teenagers or students trying to save for a car or help pay for school. Many are in the service industry, with categories such as tour guides, ticket takers and dishwashers making it into the top 10 bad occupational categories. Jobs typically found in food service took four of the 10 spots.
Getting dished on
Joseph, a 22-year-old host at a restaurant popular for lunch near the White House who asked that his last name not be used, said his job, which pays his rent, also makes it easier to take classes as night. However, mornings at the restaurant can be rough, he said.
“I find myself waking up in the morning with melancholy—the malaise of doing the same job over and over,” he said, adding that dealing with people at their “worst,” i.e. making rude demands, can lead to anger and depression.
Joseph receives an hourly wage but no benefits, and there’s no tips pool of which he can take a cut. The host added that the waiters, who have to deal with the kitchen staff, diners and the boss, have it even worse.
Darrell Luzzo, president of National Career Development Association, said even people in jobs that pay well and provide benefits can have extreme dissatisfaction. A good career is one that matches your interests on top of providing adequate financial compensation, he said.
“There is a very weak link between the amount of earnings and benefits and true job satisfaction,” Luzzo said.
He added that people with jobs that don’t provide enough to meet a basic level of need should try to move on. Federal job-training programs can help workers gain skills to find better employment.
“If [a job] is not providing shelter, food or health, you can’t exactly find purpose in work,” Luzzo said.
The stresses of working at restaurants, especially, affect a substantial chunk of America: With 12.8 million estimated employees, the restaurant industry is the largest employer outside of the government, according to the National Restaurant Association. By 2017, the industry is expected to add 2 million jobs, according to NRA.
“The restaurant industry has been a jobs juggernaut in the economic expansion,” said B. Hudson Riehle, NRA’s senior vice president for research and information services. “The industry has become a national training ground.”
‘Bad’ is in the eye of the beholder
James Sherk, a fellow in labor policy at the Heritage Foundation, said jobs such as waiting tables can be a good opportunity.
“A lot of people are working part-time and in school. The job gives the flexibility they need,” he said. “Somebody who just graduated from high school isn’t trying to support a family of four.”
Sherk should know—he worked as a lifeguard as a teenager.
“It was fun, it was good work to do. At the same time it doesn’t shock me that I wasn’t earning the equivalent of $30 an hour,” he said.
Randy Miller, founder and chief executive of career counseling firm ReadyMinds, said bad jobs can be good training, especially if a worker wants to advance in a particular field.
“I wouldn’t see anything wrong with being a host or hostess. You may work at a smaller restaurant, get the experience you need, and then go to a larger restaurant or hotel chain,” he said. “It might be a very good starting point for someone young who has very high aspirations in that field.”
Not just young workers that are hurting
Yet for each top bad occupation, most of the workers are above 20 years of age. For example, among wait staff, almost 17% are 16- to 19-years-old, 33% are between 20 and 24, and 50% are between 25 and 64, according to CEPR’s Schmitt.
Lifeguards and other protective-service workers comprise the occupation category with the highest proportion of teenagers, reaching almost 48%.
“Teenagers are an important part of some of the occupations, but in no case are they the majority of workers in the occupation,” Schmitt said. “In most cases, teenagers are only a fairly small share of total employment.”
Women who have their first baby before 25, as well as parents and other workers between 20 and 25 years of age, could use employer-sponsored health insurance, he said.
Yet few are receiving it.
“A substantial number of people in that age range have family responsibilities. So having health insurance is a big deal,” Schmitt said.
He added that it’s also important for young people to have a defined benefit or contribution plan: “We’re constantly being reminded that people should start [retirement saving] when they start working.”
Occupations with the highest concentrations of bad jobs
1. Hosts and hostesses, restaurant, lounge, and coffee shop—87.0% bad jobs
2. Counter attendants, cafeteria, food concession, and coffee shop—87.0%
3. Ushers, lobby attendants, and ticket takers—85.4%
4. Fabric and apparel patternmakers—82.2%
5. Lifeguards and other protective-service workers—81.6%
6. Waiters and waitresses—80.4%
7. Tour and travel guides—79.4%
8. Models, demonstrators, and product promoters—79.2%
9. Dishwashers—78.8%
10. Motion picture projectionists—78.1%
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