It’s no secret that many of the international trade deals made by the United States have hurt workers both here and abroad. Several political leaders have targeted deals like NAFTA, and identified them as the source of many labor issues, including diminished safety and environmental regulations, and a horrific race to the bottom for wages.
There is more to this story, however, and trade deals which enable international mobility for corporations are only a symptom of a much more sinister problem. In an article originally published on the Huffington Post, Les Leopold, author of Runaway Inequality, investigated the root cause of declining wages, lax labor regulations and fleeing jobs.
After an SEC rule change in 1982, hedge fund and private equity investors were incentivized to siphon as much wealth from companies they invest in as possible, so that they could then buy back its stock. This artificially inflates the value of shares and gives hedge managers and private equity managers an instant windfall.
“In 1970, before stock buybacks became the norm, the pay gap between the top CEOs and the average worker was $45 to $1. Today it is an incomprehensible $844 to $1. So there’s a co-dependency between the big hedge fund investors and the United Technologies CEO to move the Carrier facility, obtain more cash flow, and use it all to buy back more stock.”
While trade deals like NAFTA have made some of these unscrupulous practices easier, the real culprit is the financial deregulation our economy has undergone since 1982, and the Wall Street firms which have advocated for and benefited from that deregulation.
Will a President Trump have the integrity and strength to go after the real causes of runaway inequality and address corporate excesses and Wall Street greed? Or will he instead blame Mexico and China, and leave millions of workers in the dust, wondering why conditions haven’t improved?
If we really want to stop the financial strip mining of our economy and the destruction of American manufacturing, then we will have to build a broad based movement which addresses the root causes of our collective challenges.
Unless we come together, to understand who really benefits when jobs, communities, and lives are destroyed, and to fight back against it, we will continue to nibble around the edges. We continue to be told that the regulations which protect us, the wages that sustain us, and the taxes that provide a public safety net are too costly, but we reject that thinking.
