Barron's and The Wall Street Journal Reveal the Dark Side of Globalization -- Their Message to Germany: Treat Workers Humanely, and Investors Will Abandon You
by Chuck Kelly
August 31, 2003
Supposedly, this week’s Barron’s and Wall Street Journal were giving investment advice to their readers. However, in doing so, they inadvertently blew the cover on the real goal of globalization.
Sometimes the most revealing part of an article can be one or two sentences. Today’s conservative values were again displayed in an extensive Barron’s article analyzing investment opportunities in German stocks—and concluding that it may be a bad idea.
From Barron's, August 25.
Auf Wiedersehen, German Rally?
…For all the market's embrace of Berlin's proposed reforms, Carl Astorri, head of strategy at Barclay's Private Client division, points out that in reality the easy fixes were the ones accomplished so far, rather than tough-to-swallow measures that could, for example, make it easier to hire and fire in Germany's famously rigid labor market. "We're coming up to the trickier part," he says of September, when the federal legislature considers in earnest the proposed reforms. "That will be much more of a test," he maintains….
Whereas Barron’s was presenting investment opinion with regard to Germany generally, The Wall Street Journal presented a specific case.
From The Wall Street Journal, August 27.
Despite Rally, the Skeptics
Dial In on Deutsche Telekom
FRANKFURT—Deutsche Telekom AG has dazzled investors this summer with better-than-expected earnings, aggressive debt reduction and a 10% rise in its share price since June 13.
After two years of crisis, has Europe's largest telecommunications operator finally turned the corner? Don't bet on it, the skeptics say….
"It's a utility," says Joerg Schlinghoff, a fund manager at Dusseldorf-based West Asset Management and a holder of Deutsche Telekom shares. "The only possibility they have to generate growth is through cost-cutting, and that's difficult with Germany's labor laws."
It is a problem that won't go away. Deutsche Telekom's 250,000 employees account for about 30% of the company's total costs, analysts say. About 70% of the workers are in Germany, and more than a quarter of those are employed under generous civil-servant contracts—a vestige of the group's state-owned past that makes it all but impossible to lay off people….
It employs 141,000 workers and is the main target of management's plan to cut 50,000 jobs by 2005….
Those who don’t regularly read investment advice in the conservative financial press may not realize the conclusion that “tough-to-swallow measures … could … make it easier to hire and fire in Germany's famously rigid labor market,” is a regularly repeated theme. It is applied to most of Europe, where workers get up to five weeks vacation a year, have much better working conditions than do American workers, and where unions still have at least a little political influence.
Americans who actually have to work to make a living should pay special attention to the Journal’s comment that “About 70% of the workers are in Germany, and more than a quarter of those are employed under generous civil-servant contracts.” Implication: Germany had better export most of those jobs to third world countries where working conditions are the worst, and labor costs are least.
And that’s after they already announced plans to reduce costs by eliminating 50,000 jobs out of 141,000 by 2005.
Naturally, American investors see good working conditions and decent pay for employees as undesirable because:
* It means that workers get a greater share of corporate income, either in wages or humane working conditions—as you would expect in a civilized society.
* Since those workers get more money, corporate profits are not as excessive.
* When corporate profits are not excessive, investors abandon Europe and move to countries where workers can be brutalized at will.
* So, if investors have their way, Europe will lose its industry and its jobs, and eventually its workers will have the same kind of lives as workers in China, Indonesia and elsewhere.
So, conservatives prove that they were right all along when they threaten: “If you treat workers decently and fairly, we’ll abandon you, you’ll lose your jobs, and you’ll be impoverished—even as we investors become fabulously wealthy from the process of pitting workers of the world against each other."
And they regularly use Europe as an example of how they can carry out their threats. They constantly refer to Germany, France and Italy as examples of countries that have lost industry because of high labor costs. They can't be as open about the U.S. because that would be too inflammatory to American voters.
The conclusion that Barron's and The Wall Street Journal want to leave the politicians of the world with: National legislatures must have the courage to do the "trickier part" of reforming labor laws. (Meaning, of course, that they had better deliberately screw their workers in order to benefit the investors of the world—or they will lose their industries.)
It's about time American voters gave politicians a different message: quit screwing workers in order to benefit investors, or we'll vote you out of office.
Chuck Kelly is at http://www.KellySite.net. He holds a Ph.D. in industrial communications from Purdue University, is now a retired management consultant, and author of the books, The Destructive Achiever, The Great Limbaugh Con, and Class War in America. This article is originally published at opednews.com. Copyright Chuck Kelly, but permission is granted for reprint in print, email, blog, or web media so long as this credit is attached.