U.S.-ECONOMY: Big Business Sleeps Easy

By Jim Lobe Reprint | | Print |

Jim Lobe

WASHINGTON, Mar 5 1996 (IPS) - Chief executives of major U.S. corporations are breathing easier this week.

Senator Bob Dole appears to have contained the threat posed by fire-breathing populist Patrick Buchanan as Republicans seek their party’s nomination for candidacy in November’s presidential race.

President Bill Clinton is also shying away from calls by some of his closest advisors to seek new laws to make big business more accountable to their employees and their communities.

In a major campaign speech in Michigan this week, Clinton confined his remarks onH:4e hot issue to moral exhortations. He called for passage of a higher minimum wage law and for big corporations to ensure “fairness and decency in the work place.”

“I urge our employers in America to look at the things that make families strong, that help people to succeed at work and at home,” he said. But he failed to offer any new legal initiatives to achieve that goal.

The speech confirms that, despite the recent spate of business bashing by Buchanan and some sectors in the media, Clinton has no intention of going after Wall Street during his 1996 re-election campaign.

It also appears to confirm that, for now at least, an ongoing struggle within the White House between the two “Bobs” — Labour Secretary Robert Reich and Treasury Secretary Robert Rubin — is still being won by the latter.

Both Dole’s victory and Clinton’s speech should evoke a collective sigh of relief from the boardrooms of major corporations which last week appeared panicked by what was the most serious outbreak of anti-corporate populism in memory.

Led by Buchanan, and fuelled by recent mass lay-offs at some of the country’s largest corporations, the “backlash” against business dominated media attention since Buchanan upset Dole in the New Hampshire primary last month.

The media suddenly focused on the trials and travails of the so- called “anxious class” — a term coined by the Labour Secretary three years ago to describe those in the middle class who were increasingly the victims of stagnant wages and corporate “downsizing.”

Dole appears to have slowed down Buchanan, what with his victory in the South Carolina Republican primary election Saturday and his anticipated sweep of half-a-dozen more polls this week.

Reich himself praised Buchanan for bringing the wage issue to the fore. “He is the first Republican to acknowledge that is the central economic question now facing the country,” he told the Christian Science Monitor.

In the last 20 years, the median wage in the United States has fallen about three percent. What increases in household income were realised over the period flowed primarily to the wealthiest 20 percent, making the gap between the rich and poor in this country the widest in the industrialised world.

Why this is happening remains the subject of considerable debate. Buchanan backers and some Democrats blame free trade agreements that force U.S. workers to compete with their counterparts in countries where wages are much lower. Others, such as Reich, put primary responsibility on changes in technology that have made millions of jobs obsolete.

Whatever the causes, “the result is the most acute job insecurity since the Depression,” as the New York Times reported in a series of stories this week. That insecurity has translated into widespread political discontent and an unprecedented and increasingly pervasive belief by U.S. parents that their children will not live as well as they do.

At the same time, however, Wall Street has been booming, and salaries for executives have skyrocketed. Even Dole, who has tried to run more on his character and legislative experience than on his economic views, was forced to publicly acknowledge the seeming conundrum that was fuelling Buchanan’s campaign: “Corporate profits are setting records, and so are corporate layoffs.”

Some Democrats rallied quickly to what they saw as an opening to push for measures they had long supported. Senators Ted Kennedy and Jeff Bingaman and House of Representatives Minority Leader Richard Gephardt came out in favour of a concept of “most favoured companies”.

So long as these companies created new jobs, avoided layoffs, and provided training and a range of services and protections for their employees and their families and communities, they could receive tax breaks and preference for government contracts.

These ideas, which have now been formally introduced into Congress, were to a great extent based on suggestions made by Reich even before he became Labour Secretary.

Backed by some of Clinton’s political advisers, Reich had been arguing recently in favour of requiring corporations “to upgrade skills (of their workers), to share more of the profits with them, and to remain in their communities.” If these could not be made legal requirements of incorporation, he said, then incentives should be used to prod them in the same direction.

Such government constraints on corporate freedom and the marketplace were anathema to the prevailing neo-liberal philosophy of both Clinton’s Treasury Department and a good part of the Republican establishment.

But Clinton made clear Monday that he was not ready to go anywhere that far. Aside from his call to increase the minimum wage — currently at a 40-year low in terms of purchasing power, he fell back on his 1992 platform of more comprehensive health care and greater government investment in education.

“We need increased day care,” he said. “We need more flexible working hours. And we need people to really think about whether it’s the fair and right thing to do, when you see these downsizings.”

White House officials say that Clinton has opted for moral suasion and plans a series of visits to corporations which devote substantial resources to employee training and provide benefits, including stock ownership, to their workers.

A more hardline tack, according to these officials, risks alienating the political centre and driving away corporate money, which, with Buchanan set back, is expected to flood into Dole’s campaign coffers.