Looting the corpse of capitalism

2009-Feb-09

Yeah, I remember capitalism. I remember the fables that company officers have a fiduciary responsibility to manage the company for the benefit of the shareholders. Yeah, right. From the Economist, The bonus racket:

In its last three years, Bear Stearns paid $11.3 billion in employee compensation and benefits. According to its 2007 annual report, Lehman Brothers shelled out $21.6 billion in the three years before, while Merrill Lynch paid staff over $45 billion during the three years to 2007.

And what have shareholders got from all this? Lehman’s got nothing (the company went bust). Investors in Bear Stearns received around $1.4 billion of JPMorgan Chase stock, now worth just half that after the fall in the acquirer’s share price. Merrill Lynch’s shareholders got shares in Bank of America (BofA) which are now worth just $9.6 billion, less than a fifth of the original offer value. Meanwhile, Citigroup paid $34.4 billion to its employees in 2007 and is now valued by the stockmarket at just $18.1 billion.

So the “employees” got five or ten times as much as the shareholders. But, you say, doesn’t that mean that we got that money because we are employees? Nope.

For the last decade these companies and most others have been getting rid of all the “rank and file” employees they can, and replacing them with cheap foreign labor. Fifteen years ago most workers were Americans. Now the executives and middle management are American, but a huge percentage of the rest are guestworkers, except where whole operations have been offshored. (The janitors and such are often illegal workers now.) Most of the “employees” who are getting so much more than the shareholders are the CEO and top executives.

At a typical Fortune 500 corporation such as those listed above the project manager and a lead tech may still be American workers, but most the the rest of the staff, the analysts, the programmers, the systems administrators, the database administrators are now mostly contract workers rather than permanent staff. And the contract workers are mostly guestworkers. At my last gig, I was brought in on contract to a major financial services firm (not one of the above) to work on a major project. I found myself in a room of 90 people. Two of us were Americans, me and a secretary to handle the paperwork. All the rest were guestworkers, mostly from India, but the rest from a wide variety of countries. And that is the “new normal”. Not one was brought in because they had unique skills, and nearly all of them ended up getting canned after a few weeks because they couldn’t do the job they claimed. But they were brought in because they were being paid half as much as the standard wage for American workers. And all the money that was saved on employee expenses became bonuses for the upper management. Just look again at the Economist article. Who got the money and who got the shaft?

They don’t care about the shareholders, they don’t care about the quality of the products they create, they don’t care that when they lay off their workers that those workers they lay off can no longer buy their products. They care only about getting as much as they can get before it all comes crashing down.

And the time for it to all come crashing down is just about now…


Resource Management

2006-Dec-30

I’m finally employed again (at least for a few months) after two years of unemployment. For the last six years all of my jobs have been short term as the corporations find they can pay 30% less if they bring someone here from offshore, or save 70% if they move the whole job offshore.

The money they save does not go into lower prices for you or higher wages for employees or even higher stock prices or dividends for stockholders. It goes into higher salaries and golden parachutes for the top executives. Because only the top executives are human beings whose lives and futures matter.

It can be difficult to sit in a meeting listening to my boss discuss which “resource” they will bring in after I’m gone. But that’s life for a contractor. We are not employees we are not human beings, we are “resources”, we are entries on a spreadsheet. If you fire a human being you feel some moral responsibility if as a result of your choices they go bankrupt, lose their house, have to take their kids out of college because they can no longer afford tuition, or even die ten years earlier because they couldn’t go to a doctor in time because they lost their health insurance. It would be unconscionable to do that to a fellow human being…

But we are not human beings. We are “resources”. And resources can be “managed” without the slightest thought that there are human consequences.

But it’s not just us contractors…the day I came to the company on my previous contract with them, I got there the same day that hundreds of permanent employees had to decide whether they would take a layoff or take a job with the Indian contract agency which could, if it felt like it lay them off without a moment’s notice. Because permenent employees are not human beings either, they too are merely “resources”.

I sit here in “H1B row”, a boiler room where ancient, battered desks are piled together as tightly as they can be, no privacy, so space, not even the tissue-thin partitions that they have upstairs in the cube farm where the “permanent” (snicker) employees sit and ponder how it came to be that they no longer have any career path and will be stuck in their jobs until they too are replaced by guest workers.

And I guess the H1B guestworkers are somehow even less than less than human. They guy next to me from India was told if he lasted two weeks he could expect to stay out his contract, so after two weeks he signed a lease on an apartment. The next day at three o’clock in the afternoon they dumped him.

But no matter. What happens to us has no moral consequences. Not as if we were humans to be treated with concern and dignity. We are commodities, to be traded across borders like so much meat on the hoof.

And whether you realize it yet or not, your turn is coming. The elite at the top, the top one tenth of one percent, are the only humans, the only ones whose lives matter. The rest of us are merely “collateral damage” along the path to corporate profits.

Enjoy your holidays while they last.