Part I – Kaufman’s Plant Closing
The top headline in the Sullivan Review [a weekly newspaper in Sullivan County, Pennsylvania] on April 2nd, 1998 reads, “Kaufman Footwear Will Close Dushore Plant: Blame El Niño.” This misses the main reason for the plant shutdown. The unseasonably warm weather was not to blame for the plant closing; other, far more human, or inhuman, factors were at work. The title gets it wrong. The deteriorating economic conditions cannot be blamed on uncontrollable fate.
While two mild winters back-to-back may have somewhat undermined the immediate need for winter apparel and gear, Kaufman’s manufacturing is more likely a casualty of NAFTA, the North American Free Trade Agreement, which – in its first few years of existence – has had a devastating impact on mid-level manufacturing in the U.S. and Canada and also on agriculture and mid-level industry in Mexico (co-signer of NAFTA with Canada and the U.S.).
Later in the Sully article, Paul Spurrell, the man “in charge of all Kaufman manufacturing,” explains “that competitive manufacturers were not as big a factor in 1991 as they are now [even though] many of these have [also] experienced a downturn.” That is, ever since NAFTA became law (and cut back or eliminated protective trade regulations with Mexico) numerous mid-size manufacturers in the U.S., Canada, and Mexico have suffered greatly, including Kaufman’s, a Canadian corporation with plants in the U.S. Because Mexican workers are paid so poorly and Mexican environmental laws are often non-existent or not enforced, many large U.S. and Canadian manufacturers have shifted business over the border where they can obtain or produce goods at much lower cost, and thus compete with (and create more) imports which undercut small and mid-sized U.S. and Canadian manufacturing firms, like Kaufman’s.
Similarly in Mexico, because U.S. agribusiness is heavily subsidized, many Mexican farmers have been wiped out by a flood of cheap U.S. imports, in the wake of NAFTA. Additionally, mid-sized Mexican manufacturing firms have also been hard hit by NAFTA, which mostly benefits huge trans-national corporations.
Moreover, the decline of mid-level Mexican manufacturing, along with anti-labor and anti-environmental NAFTA provisions, has caused wages to tumble in even the harshest and lowest paying Mexican factories, such as the maquiladoras on the U.S. border-even though these Mexican workers were making only a few dollars a day before NAFTA. U.S. and Sullivan County area workers do not suffer alone from the effects of NAFTA.
Kaufman manufacturing and the Dushore area are merely two in a long and growing list of NAFTA victims. El Niño may have been the straw that broke the camel’s back, but a couple of warmer than average winters is nothing new; El Niño is simply a new buzzword, not a new weather phenomenon. Even with average winters, Kaufman’s probably would not have lasted long, thanks to NAFTA and the ever-increasing number of pro-big business and anti-labor laws in the U.S.
II – Sullivan County and “Free Trade”
The recent closing of Kaufman’s manufacturing in Dushore shows that what comes around goes around: in 1988 the U.S. and Canada engineered NAFTA’s predecessor, the Free Trade Agreement (FTA), which had the effect of raising the number of increasingly low wage jobs in the U.S. while boosting the profits of large corporations. Likewise, huge Canadian trans-national corporations also did well, partly because investment dollars can easily cross “free trade” borders to make money. However, workers and their families cannot move so easily, nor should they have to. In merely the first two years after the FTA was passed, Canada lost over 400,000 manufacturing jobs to the U.S., where the economy is more friendly to corporations and less friendly to workers than the Canadian economy. A few dozen of these jobs were the Kaufman manufacturing positions that came to Dushore as a direct result of the FTA. Fewer jobs in Canada means fewer tax dollars and more need for social services, which together have placed Canada’s relatively advanced social supports under severe strain.
The U.S. situation is somewhat different. By maintaining a low minimum wage, low corporate taxes, and weak environmental safeguards, the U.S. continues to make itself attractive to low wage industries, as compared to other industrialized countries which generally set higher levels for wages and environmental standards (as well as taxes, including corporate taxes). Thus, U.S. economic policy increasingly guarantees that a vast number of jobs in the U.S. will always be low wage. This is why the most progressive (i.e. democratic) labor unions fought and continue to fight tooth and nail against FTA, NAFTA, and other laws having similar effects.
It was no coincidence that shortly after the U.S. and Canada passed FTA, Kaufman manufacturing came down from Canada (1991) to open a plant in the Appalachia town of Dushore where taxes and wages are lower. For Kaufman’s to thrive or even survive after FTA was made law, it probably had to open or expand plants in the U.S. For Kaufman’s to survive now under NAFTA, it may have to move to Mexico, Bangladesh, Thailand, you name it, or try to limp along at home and in the U.S. by closing plants, shedding workers, stripping benefits, and/or stagnating and lowering wages.
Ever lower wages is the primary effect of FTA and NAFTA for many Canadian, U.S., and Mexican workers. The vast majority of the populations in all three countries are seriously hurt by these laws, while a minority of investors, bankers, certain high level professionals, and big corporate executives reap the benefits.
Meanwhile, despite worsening social conditions that cry out for help, the U.S. continues to cut its meager social services. Yet relative government spending scarcely declines because corporations (which threaten to leave the country if they don’t receive special treatment) are getting more-more state funding and more tax breaks, all the while setting record profits.
There’s plenty of constructive community work that needs doing which the government could and should fund, but this money flows away from communities to already rich corporations, not to mention the military that continues to get funding at average cold war levels despite the lack of need. Most military funding ends up with huge corporations.
It should be a national scandal that in Sullivan County as well as in the United States-the wealthiest country in history-one in four children grows up in poverty, and that the official poverty line is set well below the actual cost of minimally adequate housing, health care, food, and other necessities. NAFTA and similar laws further widen the already vast divide between the financially prosperous (investors and executives) and the financially struggling (workers and their families).
The giant financial, legal, and corporate business players, those who largely staff the U.S. government and heavily influence it with their elite outlook and enormous wallets, these are the people and groups making out like bandits. It’s a buy-partisan approach: Democrat and Republican fingers are more-or-less all wiggled by the same corporate hand.
It doesn’t have to be this way, but it will be as long as U.S. geographic communities remain essentially unorganized. In this case, the highly organized and heavily funded corporate community will continue to control the Dem-Reps and keep walking all over not just the poorest and most vulnerable sections of the population, but basically the bottom three-fourths of people in this country-not to mention plenty of people in the rest of the hemisphere and by now the world.
III – Sullivan County: Victim of a Premeditated Attack
No one who pays serious attention to U.S. economics should be surprised that since NAFTA went into effect, plants like Kaufman’s in Dushore have shut down or laid off workers all across the U.S. and Canada. It’s not as if the likely effects of NAFTA were not known in advance. The facts may have been toned down, edited out, trivialized, and devalued in corporate mainstream media, but the likely impact was widely understood beforehand, especially by those primarily responsible. After all, corporate powers push hard for these trade pacts and laws explicitly to make bigger profits; they know what they are doing. We should too.
For example, on November 18, 1993-the day after the House of Representatives voted to approve NAFTA-The New York Times published and analysis and prediction (accurate, as it turned out) of the economic impact of NAFTA in the New York City region (yet an analysis and prediction that could be applied across the country in general). The Times calculated that the big gainers from NAFTA would be sectors “based in and around finance,” especially “banks and wall street securities firms,” also “a vast assortment of professional service firms, from management consultants and public relations to law and marketing,” along with some manufacturers primarily in high tech and capital intensive industries (which push around a lot of money while offering relatively few jobs).
In passing, the Times article also happened to mention who the NAFTA losers would be: “predominantly women, blacks and Hispanics” along with “semi-skilled production workers” (white, blue collar labor in other words, Kaufman’s workers, for example).
Thus The New York Times-the leading corporate newspaper in the U.S. and perhaps the world-correctly predicted that the losers of NAFTA would include the vast majority of the U.S. population, almost everyone except for the very rich and super rich, the high level corporate world.
And the Times, like virtually all other corporate media, heavily supported NAFTA. Which makes sense since most U.S. media are themselves huge corporations, which get about 75 percent of their money from advertisers-other corporations.
Some folks who had nothing to do with the passage of NAFTA also clearly understood its consequences yet disapproved strongly, unlike the major media. On January 1, 1994 (the very day that NAFTA first went into effect), the impoverished Mayan Indians in the southernmost Mexican state of Chiapas declared that for them, NAFTA was a “death sentence,” and launched the Chiapas uprising, eventually reclaiming about 2,000 farms and ranches, which they re-organized as village co-operatives-land long promised to them by the Mexican government as part of reform but never delivered.
Since that time, the Mayans have formed 31 independent town councils that operate parallel to Mexican local governments which are usually apathetic or hostile to the Mayans’ desperate living conditions. In some ways, the Mayans’ relationship to the ranches and ranchers in Mexico is similar to most U.S. citizens’ relationship to corporations and corporate executives. Yet unlike the Mayans of Chiapas (who had been organizing for years before NAFTA), U.S. citizens have not been as strongly self organizing.
Like the Mayans, we should recognize NAFTA for what it is in Sullivan County and the U.S.: a crippling blow to workers, at the least, and even for some a “death sentence,” since lack of health insurance (resulting from unemployment or part-time and lesser jobs with no benefits) is associated with a 25 percent higher risk of early death.
Many other U.S. laws similar to NAFTA have the same effect and will never be changed if we do not create constructive and peaceful independent community movements and electoral parties separate from the Dem-Reps, who brag and propagandize about the few coins they drop in our pockets while directing box-loads of dollars to corporate welfare. This ongoing problem has intensified in the past 2 or 3 decades, enabling wealth to grow faster and causing poverty to spread more widely more quickly (see statistics in Part V).
IV – Sullivan County Compared to Native America
In spite of the closing of Kaufman’s plant in Dushore, there are places in the U.S. with weaker economies than Sullivan County, places that suffer enormously for it. For example, Native Americans in the U.S. today have an average life expectancy at 1940s levels and an infant mortality rate far worse than the rest of the U.S., which itself has the worst, dead last, infant mortality rate of industrialized countries.
In northwestern New Mexico, where I have taught on reservation, conditions among the local Native Americans are problematic at best. The Navajo, Pueblo, and Zuñi reservations have unemployment rates of over 50 percent. Meanwhile, the nearby city of Gallup, New Mexico which is virtually enclosed by these reservations, has the highest per capita rate of millionaires of “anyplace in the world” according to the Gallup Convention and Visitors Bureau. “Most of the approximately 200 millionaires,” in a city of 20,000, “made their fortunes in the commerce of Indian art.”
Gallup, which is virtually enclosed by the massive Navajo reservation and smaller Zuñi and Pueblo reservations, describes itself as “the Indian center of the Southwest” in its promotional brochure. The City of Gallup makes no comment in this brochure on the lack of justice in the fact that there is over 50 percent unemployment among the people responsible for producing the quality art that sustains 200 millionaires, mostly non-Native businessmen, in “the Indian center.” A white friend and I were somewhat stunned by our experience of walking into the Gallup Chamber of Commerce on our first day-to get a map of the city-and to almost immediately be met with comments from a white employee dripping with racism in words and attitude about the Navajos’ desire, their outlandish temerity, to wish to protect culturally sacred sites from the potentially despoiling, exploitative effects of hikers. Wonder if the Gallup millionaires and the Gallup Chamber of Commerce have anything in common?
Sullivan County and surroundings also produced a few millionaires back when being a millionaire was an even more exceptional feat than today. By now, most of the coal and all the great virgin trees with their immense profits are long gone. Great wealth and poverty are not linked by chance-not anywhere-not between Gallup businesses and Native Americans, not between Mexican industry and the maquiladoras, not between colossal corporate power and workers of the U.S. and Sullivan County.
V – Class Warfare from Above
The Kaufman plant shutdown adds as many as forty-five people to the unemployment list in Sullivan County, Pennsylvania. With unemployment relatively low in the area and nation, the situation may not seem all that grave. Unfortunately, unemployment figures are always underestimated because people are counted as employed if they are working as little as one hour per week, whether or not they need a full-time job to support themselves and their family. Neither are you counted if you are jobless but haven’t been looking for work in the past four weeks because you can’t afford child care, gave up looking out of frustration, or refuse dangerous, unhealthy types of work.
Let’s say you find a job. Full-time work at minimum wage pays below the official poverty line for a family of two. Almost two-thirds of women with children younger than 18 are in the paid workforce, yet affordable child care and after-school programs are scarce. One out of four officially poor children live in families in which one or more parents work full time, year round. There simply isn’t enough work, let alone decent and adequately paying work, yet rich corporations get as much or more support from the government than communities and people who really need it.
The world has never seen a greater gap between rich and poor than it sees in the U.S. today. This grossly unequal distribution of wealth is related closely to other ill conditions. For example, among the more than 20 most industrialized countries, the U.S. ranks at or near the least humane end of the scale in many categories that indicate societal well-being and justice or lack thereof, categories such as: infant and child mortality rate (under age five), percent of population imprisoned, percent of poor, percent of billionaires, percent of elderly who go hungry (as high as 1 in 6), child poverty (nearly 1 in 4), literacy rates, homelessness, length of workweek, percent with inadequate or no health insurance, amount of vacation time, availability and affordability of child care. . . . The list goes on and on. These conditions should be perceived as scandalous even if the U.S. were not history’s wealthiest, most bountiful country, which it is by far.
Conditions are bad enough, and getting worse. Since the 1970’s, the top 1 percent of families have doubled their share of the nation’s wealth-while the percentage of children living in poverty has also doubled. This situation is caused not by the weather but by corporate power forcing the government to work for the benefit of wealth above all. Consider:
Corporations have been setting record profits throughout the past decade while workers’ wages have largely stagnated or declined (when adjusted for inflation). Entry-level wages have plunged (detailed below).
The average CEO of a major corporation was paid as much as 12 factory workers in 1960, 42 factory workers in 1980, 122 factory workers in 1989, and 209 factory workers in 1996. [In The Wall Street Journal, Ira T. Kay defends high CEO pay as a “crucial factor making the U.S. economy the most competitive in the world,” because without the high pay, U.S. CEOs would be left with “no economic incentive to face up to difficult management decisions, such as layoffs.” Inspiring words. Pay the bosses more to give them motivation to fire the workers. No thanks, Ira.]
The entry-level hourly wages of male and female high school graduates fell 27.3 percent and 18.9 percent respectively between 1979 and 1995. [Why should laborers have a work ethic, when industry lacks a pay ethic? Nevertheless, the U.S. has the most productive labor force in the world.]
The entry-level wages of male and female college graduates fell 9.5 percent and 7.7 percent respectively between 1989 and 1995.
The percentage of young full-time workers (ages 18-24) earning low wages doubled from 23 percent in 1979 to 47 percent in 1992.
Families with household heads ages 25 to 34 had 1994 incomes that were $4,611 less than their 1979 counterparts.
The top 1 percent of families have about the same amount of wealth as the bottom 95 percent.
Before 1980, when the U.S. had at least a somewhat progressive income tax, super rich individuals could be taxed at 90 percent. By 1995, the richest could only be taxed at 39.6 percent. Meanwhile, with creative use of deductions, most of the wealthy pay only 20 percent or less.
If the tax code were as progressive as it was even as late as 1977, the top 10 percent of income earners would have paid $93 billion more in taxes than they paid in 1989. $93 billion equals the combined 1989 government budget for all these programs for low-income persons: aid to families with dependent children, supplemental security income, general assistance, food and nutrition benefits, housing, jobs, and employment training, and education aid from pre-school to college loans.
If corporations were taxed in the 1990s as they were in the 1950s, the government would reap a windfall worth billions more. [Laws could be passed to hinder big corporations and big money who might then wish to flee the U.S.–as is happening anyhow, since U.S. labor cannot ever compete with “third world” labor, not even if U.S. wages are lowered further toward obscene levels.]
In 1955, one out of three workers was a union member; today one out of seven is unionized.
[Most of these statistics above are by Holly Sklar, as published in Z Magazine. Similar statistics and more may be found in U.S. Government studies and publications. Contact the Departments of Labor, Commerce, Education, etc., or look up the Statistical Abstract of the U.S. (from the Commerce Department) in the library. Also see Z Magazine, Andrew Shapiro’s We’re Number One, Howard Zinn’s A People’s History Of The United States, and the independent press and media generally. Also, much of the information on NAFTA is taken from various writings and research by Noam Chomsky.
VI – The Way the Wind Blows
We should understand the closing of Kaufman’s plant in Dushore (and the Endicott Johnson shoe factory in Mildred years before it) as the result of the predictable consequences of anti-worker, anti-community, and anti-family corporate economic practices made law, not as uncontrollable results of the weather. “El Niño,” after all, has been around for thousands of years.
On the other hand, global warming, a phenomenon of certain environmentally reckless practices of industry, has the potential to make El Niño look like child’s play. About the same time NAFTA was passed, NASA came out with new satellite data announcing the best evidence yet for a rise in sea levels-which means the threatening effect of global warming. NASA also announced, in the same satellite data, that they traced the effect of the depletion of the ozone layer to industrial chemicals.
NAFTA hastens the day when global warming may strike full force, by encouraging the relocation of industry to countries with the weakest environmental regulations. Thus in the future it might be accurate to link economic turmoil in the U.S. and elsewhere to truly severe and out of control changes in the weather. Until then, blaming El Niño or other forces beyond anyone’s control is certain to lead us nowhere. Understanding and working to improve basic economic conditions hold more promise than blaming the weather or making other fatalistic assumptions, which merely guarantees ongoing community victimization.
Most people’s economic difficulties can be fairly blamed on corporate power and weak government (weak for the people, strong for big money), along with a lack of community and solidarity among ourselves-our failure to create healthy, co-operative economic and political circumstances independent from corporate power. It will take more than an occasional vote at the ballot box to bring about improved conditions, especially when the best candidate and party on the ballot is usually None of the Above, and in any case the judicial, legislative, and executive systems are largely “locked in,” by law, to the service of corporate privilege.
It is no secret which way the economic wind blows in this country. Apart from the extremely biased perspective radiated by TV news and the daily paper, it is also equally clear exactly what and who blows these largely damaging winds: corporate power and apologists for corporate power. No democracy exists in a corporation; workers have no voting rights. Rule is from the top down, period. All vital decisions are made by wealthy owners, which is at least partly why so many people struggle so hard to escape the corporate world and become their own “boss”-a word that comes, notably, from baas, the Dutch word for “master.”
Traditional authoritarian terminology-totally anti-democratic-reveals a system of power that has had historically repugnant effects and thrives in modern form as corporate practice today. Civilization could have developed and progressed in a more hospitable way. It still can.
Only the actions of many people united in diverse democratic force may harness, tame, and redirect the powerful economic winds to much wider and beneficial effect. If that day ever comes, Sullivan County and surroundings will enjoy work much more rewarding and plentiful than Kaufman’s can ever provide, let alone larger trans-national corporations.
And El Niño, or whatever the fluctuating weather pattern will be called in the future, might then likely be more appreciated for bringing a wide variety of the elements into our lives, rather than being made the scapegoat for destructive societal acts and conditions-a situation for which the weather cannot be made responsible, at least not in an incredibly wealthy and technologically sophisticated society like the U.S.
This country has not entirely reduced and returned itself to the economic situation of the “third world.” But check it out. Over the past few decades (partly in backlash against the democratic movements of the sixties, which won civil and human rights for the poor, for blacks, women, workers, gays, students, youths as well as somewhat better protection for the environment, and so on) corporate power in this country has made great strides toward creating widespread third world economic conditions in the U.S.
Upon the closing of Kaufman’s plant in Dushore, it remains as true as ever that the people of Sullivan County, the U.S., and the world do not, or should not, “need a weatherman to know which way the wind blows.” It is blowing at us, knocking us over, and sweeping some of us clear away, as it always has and always will, except in the most decent pockets and types of societies. How big those hospitable pockets and societies might ever be depends on our actions today. It’s up to us, not the weather.
A Practical Policy 