Finally, someone in power has said the words. And it wasn’t Donald Trump. It was Canada’s own Prime Minister Justin Trudeau, speaking to the elite in Europe.
“No more brushing aside the concerns of our workers and our citizens,” the prime minister said in prepared remarks. “We have to address the root cause of their worries, and get real about how the changing economy is impacting peoples’ lives.”
“When companies post record profits on the backs of workers consistently refused full-time work — and the job security that comes with it — people get defeated,”
“For business leaders, it’s about thinking beyond your short-term responsibility to your shareholders,”
“It’s time to pay a living wage, to pay your taxes. And give your workers the benefits — and peace of mind — that come with stable, full-time contracts.”
Globalization has come with a price.
Not all globalization is bad, but it is when combined with greed.
There was a company that made a good product. The product was made in North America. Workers worked, made a good wage. The owners of the company made money. The people buying the products got a good product. It was a win/win/win situation.
Then, the owner of the company decided that he wanted to make more money. He outsourced a portion of the production to an offshore country. His costs went down. He made more money. He laid off some of his workers in North America. Not a whole lot, but … some. The workers still remaining wondered “will it be me next?” The greed began, and the fear began.
Then the owner sold his company. He didn’t just sell it to anyone. He sold it to a ‘private equity company’. The purpose of a private equity company is to create profit for the equity holders – the shareholders.
The only responsibility a private equity company has is to its shareholders. Period. Their job is to make as much money as possible for the shareholders. The Equity Fund managers are paid, highly, to maximize returns. Sometimes these interests coincide with the interests of others, such as “if you make a really crappy product, your sales will drop and the shareholders will not make as much money”, so a company which wants to make profits for more than a little while will do something to assure ‘quality’ of some measure in their product. But it is a balancing act. They will always be looking at the bottom line.
Sometimes they’ll sugarcoat the drive for more money with a little bit of ‘social responsibility’. But their goal is always to increase profitability. It’s all business.
Sometimes rules by government will force them to do business in a certain way. Under NAFTA, the majority of the goods traded between Canada, the USA and Mexico are supposed to be created in one of these countries. But many manufacturers have skirted the regulations by importing large portions of the manufactured portions from offshore, while claiming the ‘design costs’ as a North American cost, and sometimes doing ‘final assembly’ work in North America.
But have no doubt: the majority of the jobs related to the production of many pieces of equipment have been exported to other (lower wage) countries. It’s a way to maximize profits.
Another way to maximize profits is to play on the fear of the workers. Lowering benefits, increasing work hours (i.e. productivity) without having to pay higher wages, laying off older, more experienced (and higher paid) workers: all these actions benefit the bottom line of profitability.
The fear part of the equation is all on the worker’s side. There is no such thing as job security anymore. Millennials have grown up with ‘contract’ jobs, where the companies have no responsibility to the workers beyond a 6 or 12 month stint. Twenty-five or thirty year careers with the same employer are only for small business operators and public servants.
The results of that growing fear can be seen in the election south of the border.
Greed now rules business. Globalization has made it easier for greedy people to prosper.
What can everyday people do about this?
- If you are a shareholder in a company, don’t be greedy. Support ethical companies. Do research. Invest in your local credit union.
- If you are buying something, make sure that you’re not just buying the cheapest thing available. Don’t be greedy by being cheap. Learn the difference between ‘need’ and ‘want’.
- Speak out when you see injustice. Vote with your dollars and with your feet.
- Think of others, not just yourself and your own immediate needs. Become an informed consumer. Read labels. Support local, ethical, businesses.
Business is all about profitability. Businesses must make a profit in order to stay in business and keep their employees employed. Many companies were started and operated by owners who were content with ‘enough’. They knew the value of a dollar, but also the value of a local committed workforce. They weren’t greedy.
There are still ethical companies around, but they’re few and far between, and in many cases their owners are aging and want to retire, or the original owners have died and their children want to cash in on the equity in the company. More and more of these small manufacturing companies are being bought up by larger companies, or private equity companies.
The focus has shifted from ‘making a profit’ (or ‘enough’) to ‘making ALL the money’. It’s time for that to stop.
We, the consumers, have made it too easy, for too long, for businesses to be greedy. In a consumer based society, the power is in the hands of the consumer. Use it. Ask questions. Be an informed consumer.