Mar 18, 2019
The following was taken from a SPARK public meeting in Detroit this February:
We live in an era of instability and uncertainty. This is not new, but each year seems to bring more drastic events. The age of the mom and pop grocery store or a bakery on every block, or having relatives living on a farm, is long gone, long wiped out by their bigger competitors and by the banks.
Look back at the last 200 years of capitalism. We have seen the self-serving rich devastate families, whole areas, even countries, even continents. We have seen boom and bust cycles, that close the factories even while people still need the goods. We have seen the banks shut down farms when people are hungry. We have seen world wars, which murdered tens of millions of people, all in the name of profit.
The world depression of the 1930s shook capitalism to its core all over the globe. Tens of millions would die in the name of power and profit. The war showed the international depth of the world crisis. After the war, the U.S. was relatively untouched. Their capitalists were able to sink their teeth into an international explosion of rebuilding markets that was fueled by the world-wide devastation. This expansion, however, had its limits. The capitalists hit a wall, starting with the recessions of the 1970s.
Since the rich had hit a wall in their expansion of new markets, they could only increase profits by squeezing what they already controlled. Fewer workers were made to do more and more work – for less pay and benefits. In the bumpy economic times of the 1970s, and in the recession of 1979-1980, over 20 auto plants closed just here in Detroit. The steel mills of Pittsburgh and Baltimore were shuttered. New plants were built, but with fewer workers, producing faster and faster. Work that used to be done by “the Big Three” [auto companies] was outsourced, some to UAW plants in Detroit for $9 an hour.
Lower wages for workers meant fewer people in the world could afford to buy the capitalists’ products. To increase their profits, they turned away from production and toward finance capital, that is, making money on money. Gambling on the stock market, charging fees and interest, and expanding the use of credit cards are just some of the ways they made a quick buck. Capitalists also turned to raiding and stealing value from existing businesses.
Sears is a classic example of a company that was raided and destroyed. Sears was the original innovative retail company. It was Amazon before Amazon was born. It seemed to be the best capitalism had to offer. Oodles of products churned out by mass production were available for sale. Rural America could buy from their remote farm from the famous Sear’s catalog: clothes, farm equipment, paint, pre-fab houses, even cars.
When people started moving to the cities, Sears was one of the first to build huge stand-alone department stores. They had dazzling displays: corsets, soda fountains, a dentist office, tombstones, tools and tractors. When malls became the thing, they were the first anchor store. When cars became dominant, they sold batteries with a lifetime warranty, tires, car parts, and offered convenient car repair. Their Craftsmen tools had a lifetime warranty. They offered decent reliable appliances: Maytag, Whirlpool, Kenmore. Salespeople were knowledgeable and friendly, and made good wages and commissions. Yes, profit came before everything else, but it seemed like capitalism could work for working people. If you had money to spend, it seemed like a store that represented the possibility of a decent life.
However, Sears felt the crunch as fewer and fewer had money to buy what companies could produce. In the 1980s and 1990s, things began to change. Lifetime warranties were no longer for a lifetime. Kenmore washers were no longer repair-free. Products the working class had come to rely on were no longer as dependable. There were cuts not only in product quality, but cuts to workers in pay, in benefits and pensions. The CEO turned to profit from credit sales and the high-interest Discover cards, the first one to offer a cash-back bonus. The CEO led Sears to sell insurance through Allstate. As early as 1999, 61% of Sears’ operating income was from credit services, not sales and service.
By the 1990s, selling cheap, undependable products had caught on. Walmart, Kmart and Target surpassed Sears in revenue. By 2001, Walmart had revenue five times that of Sears.
This was when the slime ball, Eddie Lampert, made an entrance on the retail stage. He learned the ropes working at Goldman Sachs, famous for arranging financing corporate takeover raids. He used something called a leveraged buyout to purchase Kmart in 2003 for one billion dollars. He paid hardly any of his own cash, saddling Kmart with the debt. He slashed inventory, expenses, labor costs and advertising. Of course, profits went through the roof. Ever find a worker to help you at Kmart?
In 2004 Lampert arranged a leveraged buyout of Sears by the much smaller Kmart. How could that happen? Again, he put out hardly any of the 11-billion-dollar price and saddled Sears with almost all of the debt. He was the new CEO and their banker: Sears had to make the debt payments to him and to his hedge fund. From 2005 to 2012, he also extracted six billion dollars for stock buybacks, enriching stock owners. He squeezed money out of cuts in pay, staff, inventory and building maintenance. Shoppers and staff reported stained carpets, broken windows, new and untrained staff.
The recession of 2008 hurt the sales of the cash cow he had been milking. He started selling off Sears piece by profitable piece. In most cases, he was, or wanted to be, both the seller and the purchaser!
The pension fund, which had most of its funds stolen over the years, held the valuable assets of Kenmore Appliances and DieHard Batteries as collateral. In bankruptcy court in 2019, Lampert wanted the judge to sever that relationship and give the assets to him. The fund is short 1.7 billion dollars. The judge and the U.S. pension board agreed to accept a settlement of less than half. Lampert got to keep Kenmore and Diehard, and the government is liable for the pensions!
This is the world we live in today, where more and more of the economy is ruled by parasitic financiers. The stock market surges higher and higher, but only because investors are chasing the quick buck, not because they are producing more goods. Companies try to sell products with old-fashioned famous brands known for their dependability, but in truth more and more are nothing but an empty rotting shell. As more and more products and companies are consumed, workers are squeezed tighter and tighter by less jobs, lower wages, cuts in health care and pensions, and higher prices.
Look back at the takeover of Chrysler by Cerberus. It had a 7-billion-dollar purchase price, and Cerberus was able to hang Chrysler with 10 billion dollars of debt. The looters kept the difference! No wonder they had no new models for years! That was just one of the takeovers of Chrysler. It was the same story with Daimler. All the cars and trucks have more and more recalls, production is rushed out faster and faster. Carfax announced yesterday that there are 45 million cars and trucks on the road with active recalls.
Today, these vultures are moving into new markets: for example they are purchasing senior assisted-living housing and nursing homes and bloodsucking them. Can you imagine what this means? Cutting staff at a nursing home that already doesn’t have enough workers. Our elders sitting in urine or vomit, no one to help. Doping them so they don’t complain. Or they are cornering the rental market in city after city. When you’re late on your rent, you can imagine having to pay a $50 late fee on a rent of $1,000. But these leeches have no limit to their greed. They are getting away with charging $700 fees on a rent of $1,000.
Understand, no sector is untouched. These corporate raiders are buying whole grocery chains and sucking out all value, forcing them into bankruptcy. They already have been taking over some public schools and prisons. Over 50 percent of all schools in Detroit are for-profit charter schools, run by these money vultures. They cherry pick the students, forcing out anyone who needs any kind of extra help. And if the young students are not generating enough profit, they close the doors in the middle of the school year, throwing out the students and teachers! There is no commitment to our community, our common good. Privatized prisons? Have you seen the pictures of the maggots in the food? Guards’ pay and benefits cut so they’re forced to work double shifts, tense and exhausted? Hospitals, health care? The pharmaceutical companies are taking over. They push profitable dangerous drugs like OxiContin. A drug like insulin that’s been around 100 years? They tweak a tiny aspect of the formula, say it’s a new drug, and raise the price through the roof. Every aspect of our lives is under attack.
When will this end? They are consuming and destroying every good thing we fought to build. All food that we eat will be a poison. All cars and trucks will be life-threatening ticking time bombs. Toys are covered with lead-tainted paint. Water has lead and is full of all kinds of poisonous chemicals.
Understand, the capitalist barons did not give us these things. Our labor created them. Capitalism says it is the most efficient organization of society. But how is it efficient if it can only bring good times when it is rebuilding from a catastrophic world war? How is it efficient if, when faced with a crisis caused by limits on expansion, its solution is to raid and rob its neighbors? How is it efficient to loot, starve and pillage existing businesses? Or to propose to solve the housing crisis by making people homeless? How is it efficient when it turns to death and war as a solution?
Will the working class continue to let the rich destroy everything we have built, and destroy us and the earth in the process? Or will the working class say no, you cannot poison and destroy us and our children, our elders, our planet, we will not let you. Step aside, we are going to take over, get out of our way.