You are currently browsing the tag archive for the ‘profits’ tag.
The Royal Bank of Canada (RBC) is in a bit of trouble at the moment. It infuriated the country days ago by announcing dozens of layoffs along with the contracting of iGATE to provide temporary foreign workers as replacements (who the laid-off workers were to train). People quickly connected the dots and after a look at the bank’s record-breaking earnings announcement last year, the internet was soon awash with talk of boycotts. RBC responded, denying allegations and claiming they found new jobs for everybody terminated, but reporters have had little problem refuting this with further (ex)employee interviews and Federal permits.
The idea of losing jobs to cheaper foreign workers is rarely popular with either the left or right. While conservatives appeal to nationalism and xenophobia (“they took our jobs”), labour (quite rightly) points out that it’s really just a wage cut in disguise. Beneath the heated political rhetoric, though, exists a far more personal and viceral reason people are frightened and outraged by this kind of news. The sad fact is, we’re all replaceable, and if even bankers are at risk of this, then so is everybody else.
Let me be clear, I have absolutely no problem with “foreigners”. I’m all for opening every border, or better yet, abolishing the damned things altogether. We must always be wary of racist and xenophobic motives when it comes to these issues, even from apparent “allies”. I couldn’t care less whether my services were provided by Canadians, Mexicans or Turks – what does concern me is the conditions under which the work was done. In that respect, the notion of “temporary foreign workers” scares me because it’s a very precarious legal status typically used to enforce wages and conditions “Canadian” workers would never tolerate. I know, as I’m constantly told, that many Canadians do not “want” these jobs (and why’s that?), and that they’re often much better than people could get in Mexico or Jamaica (again, why?). While that may be true for (some) agricultural jobs, it clearly doesn’t apply here. If there were really no Canadians willing/able to do this work, there wouldn’t be anybody to lay off or stick around and train their replacements. Legally, this isn’t supposed to happen, but as many radio call-in shows have discovered over the last few days, there’s no shortage of major Canadian firms wo do it.
In any case, the fact that one of the country’s leading financial institutions is setting this kind of example is both shameful and telling. It’s a frightening reminder of how precarious all our positions have become, and not likely to be the last time we hear about something like this.
Why focus on the RBC? Aside from my long-term distaste for capitalism, it also brings up an interesting and notable political situation. Banks have been on the receiving end of a lot of protests over the past few years, with the RBC often taking the brunt of it. Most recently, they’ve become the focus of national efforts against the Tar Sands and related pipelines for their colossal investments in companies like Enbridge. Locally, marches and rallies have popped up outside the RBC’s head branch on more than one occasion.
As someone with a job that often takes me into banks, this can get a little complicated. While I detest the concept of banks, I genuinely like most of their employees (that I know). Contrary to common myth, most bankers aren’t “rich” (or even white, or men). Sure, there’s a few guys in suits with cushy offices, but most bank employees enjoy a (customer service) job that can be described as “decent” at best. I could say much of the same for government offices, real estate and property management/development firms. It’s an important lesson to keep in mind for any institution you oppose – the front line workers are rarely “the enemy”.
Which is exactly why I’m so glad that people are getting good and angry on behalf of laid-off bank employees. To my friends who work in banks, those angry protesters outside aren’t your enemies either. We might even have your back someday.
Our fight is with the bank as an institution and the role it plays in larger systems of control. That includes it’s role in financing the Tar Sands, just as it includes dodgy employment practices and general profiteering. RBC is one of the most powerful corporations in Canada, so it isn’t going to escape that kind of focus.
As far as these 45 layoffs are concerned, they raise a lot of bigger questions about RBC’s feelings toward these kinds of labour practices. Banks play a crucial role providing operating capital to businesses, and so have enormous influence over business practices. How would my chances of getting or keeping a business loan with RBC be affected if I told them I was looking to lay off, or bring in a bunch of temporary foreign workers? How about if I state objections to outsourcing or hiring temps?
The (north) American Dream of a life-long “career” that supports one’s home and family is rapidly disappearing. Precarious work is on the rise as traditional careers vanish. Each time this happens it only increases the pressure on companies, industries and even countries which still offer living wages and benefits to become more “competitive”. Whether this happens through outsourcing, temps, migrant workers (“legal” or otherwise), “contract workers” or simply never letting anybody reach “full time” hours, it takes a tremendous toll on working families.
If these strategies bring in more money (and they do), it’s not because more wealth is being created – only that less is being distributed. While this might look good for “the economy” on paper, it also excludes a growing number of people from those gains. In spite of a record corporate profits across the board in recent years, the general population still suffers from the recession. Our ability to spend and to repay loans never saw the same recovery, and the more it dwindles, the more ‘top heavy’ the economy becomes. With more money, investors are able to bid up each other’s share and bond prices, fostering “bubbles” and speculation. Without consumers to buy their products, these bubbles quickly go “bust”, as we saw with the last couple large market meltdowns. Anybody familiar with markets knows you don’t see those kinds of returns without a lot of associated risk.
This public uproar was long overdue. This trend and others like it have gone without attention for far too long. It’s a timely reminder that this kind of “efficiency” has serious personal consequences and that a “strong economy” is worth little if only a few see the benefits. The ire that RBC is now witnessing comes not just from these layoffs, but from the high position they hold in the Canadian economy and the horrible example they’re setting. It’s high time people took notice of what’s actually been happening in our workplaces for decades now, and where it’s heading if we don’t soon find an effective way to oppose it.
In case you’ve been wondering about your paycheque lately, no, it isn’t your imagination.
According to the latest data from the St. Louis Fed., two important (and related) trends are continuing to set records. As a percentage of the total economy (GDP), corporate profits just hit an all-time high while wages, again, sunk to new lows.
These two facts paint a very different picture of our “struggling economy” than we are usually shown. Some people, obviously, are doing pretty well right now, despite the ongoing effects of the worst economic collapse since the Great Depression. Now, just as in the 30s, those who’ve managed to stay rich are doing pretty well for themselves. With competitors failing and plenty of bailouts, many actually gained from the market meltdown. The rest of us, obviously, haven’t fared so well.
Recessions, like most calamities, tend to be felt most at the bottom of social hierarchies, among those who are already most vulnerable. Poor, racialized communities will be hit harder than wealthier white ones, and in those communities, women, children and the elderly will likely suffer the most. Those who are “higher ups” can easily pass on costs to those “below” them, while the opposite rarely has a chance to happen. The same happens in times of war, natural disasters and “prosperity” – that’s the nature of life in a ranked society.
What the growing distance between profits and wages tells us, much like other rapidly growing forms of inequality over the last 40 years, is that wealth is a poor measure of general “prosperity”. Contrary to the myths of “trickle-down economics”, the rich can get much richer without any direct benefit to those around them. Decades of policies which attempted to fix the economy by stimulating businesses only widened the gap between them and everybody else. The role of “Reaganomics”, in the end, was more rhetorical than anything else, drawing attention away from the obvious source of these corporations’ new wealth.
This statistic in particular is important because of the terms it uses: wages vs. profits. While discussion of the “1%” focus on individuals, it tends to draw attention away from the systems which allow one percent of the population to amass so much wealth. While CEO bonuses are indeed outrageous, they’re still only a very tiny fraction of the money involved. Much larger sums are spent on the corporation itself – on bureaucracy, advertising, marketing, financing and investment. The cost of such bureaucracy has exploded in the past few decades, also afflicting the public and non-profit sectors. Often the corporations themselves are owned by large groups of shareholders who, in turn, own many others, so it makes little sense to look at any CEO or corporation in isolation. Capital, in general, is the issue here. It can just as easily move between investors as it can between companies or nations, but as a share of the total economy it’s been growing both in size and influence, to the point where many find it indistinguishable from the economy itself.
Ignoring the distinction between capital and the rest of the economy was the mistake that allowed nearly all mainstream economists and business writers to miss the obvious signs of an impending economic collapse in the last decade. Because they measured success in stock prices, everything seemed to be booming. In reality, as investment revenues grew wildly out of proportion with the rest of society, they inflated prices for any and every investment, creating a massive bubble which couldn’t help but burst. All the major solutions (bailouts, austerity, tax cuts etc) have followed the same logic – giving trillions to banks and large corporations and inflicting harsh cuts on everybody else.
Pumping more of what little money we have available to us into investment capital will not revive our economy – at best it will put off the inevitable. Bailouts, tax cuts, “quantitative easing” and other forms of stimulus and subsidy all have their costs, which of course fall on the rest of us. These infusions of money can drive up speculation for a while, but if the underlying economy is losing funding, that will catch up with markets soon enough. In the long run, these kinds of imbalances are never sustainable.
This growing inequality isn’t just a nasty-side effect of the problems we’re facing, it is the issue. These catastrophic “bubbles” wouldn’t have been possible had investors not had enough cash on hand to drive markets all over the planet into delirium. People would not have needed sub-prime mortgages if they hadn’t been excluded from normal housing markets (by income, race and geography) and of course, we wouldn’t have trouble spending money or making loan payments if we could earn a decent wage. Capitalism, by definition, is rule of the economy by investors – a form of control ultimately based on inequality and disparity. Poverty and recession aren’t the result of mistakes or failures – they’re the product of this system functioning exactly the way it’s supposed to. Until we acknowledge that, we’ll continue to be mystified by this process and the results, but once we do, it all starts to make a frightening sort of sense.
