[Marxism] Call to Create Jobs, or Else, Tests Trump’s Sway

wytheholt at cox.net wytheholt at cox.net
Tue Jan 24 11:42:35 MST 2017


There can be no clearer statement that capitalism is about profits first and foremost, and public welfare and national "needs" and anything else come in a very distant second.  And the writer(s) do not seem to be the slightest self-conscious about this.  Thanks, Louis.  Wythe


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NY Times, Jan. 24 2017
Call to Create Jobs, or Else, Tests Trump’s Sway
By NELSON D. SCHWARTZ and ALAN RAPPEPORT

President Trump summoned the titans of American business to the White 
House on Monday for what was billed as a “listening session,” but it was 
the new president who delivered the loudest message: Bring back domestic 
manufacturing jobs, or face punishing tariffs and other penalties.

The contrast between Mr. Trump’s talk and the actual behavior of 
corporate America, however, underscored the tectonic forces he was 
fighting in trying to put his blue-collar base back to work in a sector 
that has been shedding jobs for decades.

Many of the chief executives Mr. Trump met with have slashed domestic 
employment in recent years. What is more, their companies have 
frequently shut factories in the United States even as they have opened 
new ones overseas.

Mr. Trump said he would use tax policy, among other means, to deter 
companies from shifting work abroad. “A company that wants to fire all 
of its people in the United States and build some factory someplace 
else, then thinks that product is going to just flow across the border 
into the United States,” he said, “that’s just not going to happen.”

Union leaders also met with Mr. Trump on Monday afternoon, the same day 
that Mr. Trump withdrew the United States from the Trans-Pacific 
Partnership trade agreement. While unions often ascribe the shift of 
manufacturing jobs abroad to “corporate greed,” the migration is a 
result of a more complex corporate calculus.

Wall Street is pushing industrial companies to increase earnings at a 
double-digit rate when the American economy is growing by only 2 
percent, and the quickest way to deliver higher profits is by reducing 
labor costs, whether through automation or by moving jobs to cheaper 
locales like Mexico or China.

In some cases, Gordon Gekko-like hedge fund managers are to blame, but 
much of the time, it is the drive for bigger returns on 401(k) accounts, 
pension plans and other retirement vehicles that depend on steadily 
rising corporate profits and, in turn, a buoyant stock market.

Just as significant is the desire by multinational corporations to go 
where the growth is, and many emerging-market economies, as well as 
China, are growing at more than twice the rate of the United States.

“Global capital doesn’t have a social conscience,” said Kevin W. Sharer, 
who teaches corporate strategy at Harvard Business School and served on 
the boards of 3M, Northrop Grumman and Chevron, in addition to running 
the biotech giant Amgen. “It will go where the returns are.”

A case in point is Dow Chemical, whose chief executive, Andrew N. 
Liveris, leads a panel on manufacturing that Mr. Trump created. Mr. 
Liveris was at the White House on Monday.

At the end of 2015, Dow employed 49,500 people, about half of them in 
the United States, nearly 5,000 fewer than it did at the end of 2012. 
During the same period, the number of domestic Dow manufacturing 
locations fell to 55, from 58, but increased by five in Latin America 
and Asia.

Not that Mr. Liveris is necessarily to blame — he and the company were 
targeted in 2014 by the activist investor Daniel S. Loeb, who called for 
splitting the company in two to bolster profits and for the ousting of 
Mr. Liveris. After a multiyear battle, Mr. Loeb essentially prevailed, 
and Mr. Liveris will exit Dow after it completes a merger with DuPont 
later this year, with a breakup to follow.

Dow is hardly the only company to reduce its head count in recent years. 
International Paper, whose chief executive also attended the White House 
meeting, had its work force in the United States fall to roughly 34,000 
in 2015, about 2,000 fewer than at the end of 2010.

The final piece of the manufacturing jobs puzzle is technology, said 
Bill George, who formerly ran Medtronic, a producer of pacemakers, 
stents and other medical devices, and who now teaches at Harvard 
Business School.

Mr. George noted that Ford Motor, which Mr. Trump has tangled with and 
whose chief executive was at the White House on Monday, employed a 
fraction of the workers it did two decades ago because its production 
lines were now highly automated.

Even boosters of the factory sector, like Scott Paul, president of the 
Alliance for American Manufacturing, an advocacy group, reacted 
cautiously to Mr. Trump’s initial approach Monday.

“It’s easy to get C.E.O.s to come in on the first day of his presidency 
and warn them they are on watch,” Mr. Paul said. “I believe a lot of the 
C.E.O.s in that room want do the right thing and create jobs in America, 
but the realities of Wall Street pressure and a globalized economy leads 
them to offshore a lot of these jobs.”

Mr. Paul added that “there are a lot of villains to go around” and that 
he hoped Mr. Trump would send a similar message to Wall Street chiefs 
like Stephen A. Schwarzman, chief executive of Blackstone, and Jamie 
Dimon of JPMorgan Chase, both of whom sit on an advisory panel of 
private-sector leaders Mr. Trump created last month.

Mr. Trump made clear on Monday that his plan to reshape the economy and 
revive the manufacturing sector went beyond exhortations, however. Taxes 
are up next, he suggested, and when it comes to tax policy, one of his 
top priorities is to punish American companies that move jobs abroad.

To curb such behavior, Mr. Trump said, he plans to impose a 
“substantial” border tax on such firms. In the past, he has said the 
tariff could be as high as 35 percent.

The logistics of such a tax continue to befuddle both Republicans and 
Democrats. Many wonder what penalties companies such as General Motors, 
which already has a plant in Mexico, might face, or what would happen to 
a technology giant such as Apple that has contracts with manufacturers 
in China but does not manufacture there itself.

It also remains unclear whether the threat would be carried out as part 
of a broader tax overhaul or would be imposed through executive powers. 
While Congress generally sets tax policy, the president does have 
authority to impose tariffs under certain circumstances.

Michael R. Strain of the conservative American Enterprise Institute said 
that Mr. Trump’s idea to punish companies for sending jobs abroad was a 
protectionist proposal and that he anticipated corporate backlash if it 
came to fruition.

“Everything he’s said about this has been so vague and ill defined, it’s 
hard to think about it sensibly,” Mr. Strain said. “It could be that the 
business community really starts pushing back against this stuff and it 
becomes a broader fight.”

During the meeting on Monday, Mr. Trump also made the case that building 
in the United States would soon become a more cost-effective proposition 
because of his plans to cut the corporate tax rate to 15 or 20 percent 
and to reduce regulations.

He pointed to onerous environmental regulations as one area where 
changes could be on the way, and he insisted that, despite the more lax 
regulatory environment, protections would improve under his administration.

“There will be advantages to companies that do indeed make their 
products here,” Mr. Trump said.

Of course, financial considerations like taxes and regulations alone do 
not guide corporate decision making.

Terry Gou, the chairman and founder of the Foxconn Technology Group, the 
largest contract electronics manufacturer in the world, is weighing a 
major investment to build a factory in the United States.

Mr. Gou, speaking at a company event in Taiwan on Sunday, suggested that 
the factory, a $7 billion plant making flat-panel screens, could create 
30,000 to 50,000 jobs and that Pennsylvania was the front-runner as a 
likely location.

Technology analysts were puzzled by the job projections Mr. Gou 
described because flat-panel displays, like computer chips, are produced 
in highly automated factories. But if Foxconn does proceed with a 
factory in the United States, it will be as much a matter of the 
politics of trade as the industrial economics of high-tech 
manufacturing, analysts said.

Foxconn is based in Taiwan, but its largest operations are in China. 
Apple is its biggest customer, representing about half of Foxconn’s 
sales, and opening an American plant might be a way to alleviate White 
House pressure on Asian exporters like China and Taiwan.

Steve Lohr contributed reporting.
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