The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

United States:
Who's Killing the Jobs?
China?
No
– U.S. Bosses Are!

Jul 30, 2005

The U.S. news media has been putting out sensational and lurid stories about Chinese industry taking U.S. jobs. Newsweek, for example, featured "China's Century," as its May 9 cover story. The magazine's international editor, Fareed Zakariah, proclaimed that China is the new "workshop of the world ... completely dominating low-cost manufacturing." To prove his case, he cited the often used example of how much WalMart, the world's largest retailer, has come to depend upon Chinese-made goods to stock its shelves. "Of Wal-Mart's 6,000 suppliers, 5,000 – 80% – are in one country, and it isn't the United States," said Zakariah.

One would believe that 80% of everything WalMart sells is made in China. Not true! Only 18 billion dollars came from China (according to Zakariah's own estimate of China's sales). Eighteen billion is only 7% of WalMart's actual sales (which were 256 billion dollars last year) – and not the 80% as Zakariah would have us believe. Obviously, the bulk of the 5,000 suppliers based in China cited by Zakariah produce on only a very small scale.

Here is another story of the same sort: Business Week, in its June 6 issue, carried a cover headline announcing, "Here Come Chinese Cars," as if a tidal wave of Chinese cars were about to smash into the U.S. car market.

But read the article, and one finds something else entirely: a highly speculative joint venture between a start-up Chinese auto company and the maverick Canadian "entrepreneur," Malcolm Bricklin of the defunct Bricklin Motors, which produced only a small number of sports cars in the 1970s, will try to market a few thousand cars in this country over the next year under the "Chery" brand.

That is all. There are no plans for a big number of cars to be exported to the U.S. or anywhere else. Last year, China exported only a total of 90,000 cars worldwide, and none came into this country. Business Week, in fact, explains why if you bother to read to the end of the article: "Low quality and high component costs will keep Chinese auto exports to the U.S. and Europe in the novelty category for the next few years, analysts say."

Obviously, Business Week would have been more accurate if its headline had announced: "Here Comes One Chinese Car! – Maybe!"

These articles are typical of the drumbeat of distortions, half-truths and outright lies that the U.S. media has been churning out lately about the so-called "China threat." Not that this kind of thing is new. In the 1970s and '80s, the news media said similar things about Japan. In the 1990s, it was Mexico's turn. One country after another was supposed to have threatened the very existence of U.S. industry – destroying millions of U.S. jobs and people's livelihoods in the process.

Certainly, it is true that manufacturing jobs are being destroyed in the U.S. – 2.4 million in just the last five years. But they are being destroyed by what U.S. manufacturers are doing inside the country, and not by imports – from China or anywhere else.

Three industries that show this clearly are among the very ones that are supposed to have been decimated by imports: garment, textile and auto.

Textiles and Garment: The "Disappearing" Industries

There has been so much talk for decades about the garment and textile industries disappearing that most people probably believe there's no production carried out here at all. On top of that, if we were to believe the recent propaganda, most of that production is now in China.

Once again, not true.

Let's look at the reality. Textile production today is more than twice as high as it was in the early 1950s, and even garment production, which has been hit harder, stands at a level somewhat higher than in the early 1950s. That is, production in both industries remains higher than during what was considered to be the supposed Golden Age of American manufacturing, before anyone even thought about imports.

But look at what happened to employment. Three-quarters of the jobs are gone, a virtual bloodbath. In the period after World War II, overall employment in textile and garment stood at 2.3 million workers, with about equal numbers employed in each industry. Today, despite the fact that production is higher overall, and much higher in textile, there are only 501,000 workers left.

It's true that textile and garment production inside this country finally began to decline eight years ago, and the decline was even severe. But when you look at the job cuts both for when production increased and when it declined, you see that something is at work here other than cutbacks in production.

That something is enormously increasing productivity – productivity the workers didn't benefit from. In textile between 1947 and 1997, while the companies tripled production, they slashed half their workforce. During the last eight years, when they actually cut production by 33%, they slashed their workforce even more – 50%. As for garment, while production doubled in the period running between 1947 and 1997, employment barely increased at all. But starting in the late 1990s when production began to turn down, the garment companies slashed employment twice as fast as they cut production.

The results: in textile a workforce which today is only one-third its 1949 size is putting out twice as much production; in garment, a workforce one-quarter its 1949 size is putting out the same production as in 1949 – and, in fact, somewhat more.

Both industries have enjoyed enormous productivity gains, the results of investment in labor saving machines, of speed-up and of the lengthening of the work day, that is the greater intensity and extension of exploitation.

Yes, there has been a sizeable increase in imports over the last few decades, but if the workers had enjoyed the benefits of the productivity increases in production carried out in this country during all these years, including the last eight, there would be more jobs today than in the past, not fewer.

These great productivity increases would have allowed reductions in work time – with shorter work weeks, more vacations and holidays – with wages increased. The fact this did not happen means that almost the full benefits from the workers' greater productivity went to the corporations. The workers paid for this with greater joblessness at one pole, while at the other pole the workforce that remained worked harder and longer.

Decades of Propaganda about Imports – but Big 3 Still Make Profits Here

In auto too, imports have been presented as the reason behind massive job cuts today. And China is being portrayed as the latest culprit to steal U.S. production and jobs. But this supposed threat to auto jobs is even more absurd than it is for textile and garment.

More imports may be sold today than 30 years ago, but domestic vehicle production is not declining. Domestic production of cars and small trucks hit 11.3 million units in 1978, the high point of U.S. auto employment. Today production stands at 12 million units, but employment is much lower.

Several things have changed inside the domestic auto industry. In the first place, sales of vehicles produced in this country by American workers at companies like Toyota, Honda, Nissan, Mazda, Mitsubishi, Mercedes, BMW and Hyundai now make up about 20% of the vehicles produced in this country – significantly, as foreign companies moved production facilities here, imports went down. But the still more important cut in production at the U.S. companies came not in assembly plants but in auto parts production, as the Big 3 first shifted a big share of its parts production to lower wage, so-called "independent" parts makers in this country, many of whom produced the parts on the same machinery in the same factories the Big 3 had run only a few years earlier. They may have been low-wage, but they were hardly foreign – nor were they independent of the Big 3.

But there's another factor to look at, beyond the number of vehicles produced. The actual amount of production involved in putting vehicles out goes up since vehicles are more advanced, with more elaborate features. And the government's measurement of output shows that actual production in the whole auto industry has almost doubled since 1978. But all the companies have slashed jobs. This is true of the Big 3, it's true of the "independent" parts companies, and it's true of the "transplants" owned by companies based in other countries. Since 1978, total employment in vehicle production was cut by 17%.

Imports did not wipe out these jobs. Big productivity increases did.

Auto workers could have benefitted from the fact that they were producing more. Instead of losing jobs, the work could have been spread around. Workers could have had higher living standards, shorter working hours.

Instead, the auto companies expropriated the wealth and kept it for themselves through higher profits, which they then distributed to the rest of the capitalist class through higher stock prices, dividends and executive salaries. Ironically, it is out of those very same profits that the big U.S. auto companies are now investing a small part of their profits in China – in order to produce for China's growing internal market. Just as in the past, when GM and Ford took part of the wealth that they extracted from workers in this country to invest in Europe, Central and South America to win a bigger share of the market in these countries and increase their global domination, today GM and Ford are using the wealth created by workers here to build big production facilities in industrial Chinese cities like Shanghai in order to gain domination of the market there.

The companies are already threatening that they will import cars into this country that they will produce in China. What cars? GM and Ford factories in China are completely unable to provide for the U.S. market. This is nothing but extortion – aimed at getting even more concessions from workers here. The main production facilities of the Big 3 are still in the United States – despite decades after decades of such propaganda. The center of Big 3 production, along with a growing share of Japanese production, is right here in this country, in reach of American workers, whenever they begin to fight for their own interests.

Trade, Production and Jobs

None of this reality prevents the bosses from pushing the idea that Chinese industrial growth will soon eclipse U.S. industry, while China's low wages will wipe out jobs around the world, including in this country.

It's absurd. China remains a very poor, underdeveloped country with an economy that is barely one-tenth the size of the U.S. economy, made worse by the fact that its population is almost five times larger than the U.S. population. The very low wages in China reflect the country's poverty and underdevelopment. Its industry is highly inefficient and problematic, with low worker productivity, poor infrastructure, and expensive and often unreliable sources of energy – all marking China's underdevelopment.

Nonetheless, you would think, from all the propaganda, that Chinese industry could flood the world with exports. In fact, there is a country whose exports are flooding the world, but it's not China, which ranked ninth globally, supplying less than 4% of the world's exports. The number one exporter remains the United States, accounting for almost 15% of the world's total export volume.

But even if imports into the U.S. increase, that does not mean that production in this country must fall. Since 1973, when imports began their steady increase, production inside the U.S. has doubled – which is not what most people have been led to believe. In the last decade alone, when the trade deficit really widened, U.S. production still increased by about 26%.

Imports contribute only a very small part to the overall U.S. market, which, as the Princeton University economist Paul Krugman noted 10 years ago, "... is still almost 90% an economy that produces goods and services for itself." This percentage more or less holds true today. Even if imports increase, this does not have to mean a downturn in production.

"Contrary to the view out there that American manufacturing is dead or dying, [production] is growing at a pretty good clip," Joseph Carson, director of global economic research with Alliance Capital Management LP in New York, told the Wall Street Journal (July 18). The business press is usually more forthright and truthful to its readership – investors and business people – than is the press intended for "popular" readers.

The problem is not the decline in manufacturing – there is no decline. It's the big decline in jobs. Moreover, the disaster of permanent job cuts is gaining speed, since 2.4 million of those production jobs were lost in just the last five years.

But, as can be shown in industry after industry, the loss of these jobs is the direct consequence of the fact the workers have not taken the benefits of increased productivity for themselves.

The Unions – Pushing the Capitalists' Line

The U.S. news media brandishes the threat of "American jobs going overseas" to divert attention from the fact that the U.S. capitalists are the ones cutting U.S. jobs. This campaign of lies deliberately makes the workers in China – and elsewhere – the scapegoats for all the plant closings and waves of job cuts in this country. The capitalists use the threat of sending jobs overseas to extort ever more concessions from their workforce, under the guise that concessions are supposed to be necessary for companies here to stay "competitive" with products from low wage countries.

Not only do the big union apparatuses not fight against these lies – they are the ones who embrace and propagate these lies with great fervor. In a "Fact Sheet on Trade and Manufacturing Jobs," which came out in June, the AFL-CIO claimed that "escalating trade deficits with China has resulted in the loss of 410,000 U.S. manufacturing jobs over the last two years." Last year, AFL-CIO Secretary-Treasurer Richard Trumka blamed China for the loss of 700,000 jobs in the U.S. over the last 10 years.

In this supposed fight to stay competitive with production overseas, the union officials stand as partners with the capitalists, seeking ways to make production cheaper, more efficient and more profitable – agreeing that the workers should make the sacrifices, giving up wages, benefits and jobs. Effectively, their argument boils down to this: in order to keep work in this country, the workers have to accept a range of concessions, including speed-up, which takes their jobs – a complete betrayal of the workers' interests.

Making this argument is adopting the bosses' point of view, identifying capitalist interests as the unions' own. The end result of this policy has been a disaster for the workers.

When some imports of clothing began to come into the country in the late 1950s and early 1960s at the same time that the garment shops were changing locations inside this country to avoid unions, the garment unions signed a series of sweetheart deals that undid the gains of decades of hard fought labor battles. They pushed through a return to the piece rate system of pay and the system of subcontracting that had been banned under old contracts. Workers were driven to infernally increasing speed-up, longer hours and poverty wages. In the 1960s, the ILGWU, the largest garment union, which had its biggest base in the New York City Garment Center, actually opposed increasing the minimum wage to $1.50 per hour in both New York City and New York state, in order, supposedly, to stop higher wages from pushing manufacturers to relocate elsewhere. Keeping jobs at home became the rationale for the continued acceptance of concessions – and one of the main concessions was acceptance of speed-up, which eliminated jobs.

Later leaders of the garment and textile unions were no different. In 1993, for example, the successor union that came from the merger of the ILGWU, the Amalgamated Clothing Workers union and the Textile workers union made an agreement with the Clothing Manufacturers Association covering approximately 40,000 workers nationwide: "The union and the CMA have also agreed to develop a relationship that will help to further the companies' continued productivity and viability."

In other words, the union pledged to work with the companies on programs to reduce the workforce – under the guise of keeping the work from going overseas or to non-union workshops. Outsourced? No, the jobs just went up in smoke inside this country.

The UAW officialdom followed the same policy. As far back as the mid-1970s, the UAW sponsored the most virulent and chauvinist policies, blaming Japanese imports for taking American workers' jobs. These included the infamous rallies led by local UAW officials, replete with the smashing of Japanese cars, and the ban on Japanese cars from union parking lots, etc. While blaming Japanese manufacturers for driving U.S. car companies to the brink of ruin, the UAW rammed through a series of contracts in fast succession that set in motion a spiral of concessions, resulting in, among other things, widespread layoffs. The Big 3 auto companies made record profits, while the workforce shrank to a small fraction of it previous size. After Japan came Mexico, which was supposed to be on the brink of swallowing up parts production. Today, the UAW is raising the specter of parts production going to China, which is even more absurd, given the fact that China doesn't have the facilities to produce for the U.S. market.

The UAW did not stand in the way of the real elimination of higher-paid jobs, when the auto companies began shifting their operations to low-wage so-called "independents" inside this country, nor when GM and Ford spun off their parts plants as separate companies, Delphi and Visteon, set-up to have a lower wage structure. In the last few years, UAW leaders pushed through agreements to cut wages, benefits and jobs for workers at Delphi and Visteon. Overall in the domestic auto makers' plants, the number of jobs went down year after year – according to provisions in contracts pushed by the UAW leadership. In the last contract in 2003, the UAW agreed to allow the Big 3 auto companies to cut over 50,000 jobs during the life of the four year contract. Since then, UAW President Ron Gettlefinger bragged that the UAW had allowed the companies to cut even more jobs than was allowed in the contract, with 6,000 more jobs cut at GM and 5,000 more at Chrysler.

This policy, which has been disastrous for the workers, has even weakened the union. Today, about one-quarter of the workers involved in auto assembly are working for the transplants, and almost none of them are in unions. A big majority of workers who work for independent parts companies are also not unionized. Why should workers join up with something run by a union apparatus which increasingly limits itself to being little more than an intermediary for the company?

The Workers Concern Should Be Their Own Needs and Class Interests

The union apparatuses want U.S. workers to see Chinese workers as their enemies, when their own imperialism is the enemy – entering China, buying up companies, setting up factories in order to suck up the wealth produced by the Chinese workers for its own profits, even while attacking workers at home.

Blaming China is little more than a justification by union leaders for supporting not only their own bosses, but U.S. imperialism, the most dominant imperialism in the world, economically, politically and militarily. It's not an accident that union officials who put Chinese workers forward as the enemy of U.S. workers also rush to support whatever new war imperialism embarks on. They are just different sides of the same policy.

In fact, by putting the blame for the workers' problems onto "foreign" imports, the union bureaucracies are putting the workers in a trap, one that paralyzes the working class from fighting against the real cause of the loss of their jobs – their own capitalists.

To fight for more jobs would mean for the workers to organize themselves to take the benefits from their own productivity increases, that is, to fight for a shorter work week, longer holidays, better wages and a more humane pace of work.

It's not the lack of wealth that stands in the way of this – it's the lack of a policy that puts the workers' interests first.