Globalization and Union Power


Carl Proper

April, 2013

Capital is global today, and not only wealthy, but politically powerful.  Organized labor, like most democratic organizations, is local or national, and at a disadvantage.  While corporate globalization hits manufacturing workers first, the resulting shift in wealth and power eventually affects service and government workers, and their unions, as well.

Capital, despite many heroic efforts by workers and their unions, appears to be winning the class war.  Unions need to change.

I believe that organized labor, like political democracy, will need to coordinate much better globally to contribute at a significant level, and the sooner, the better.  To be taken seriously, we must challenge the heart of corporate power – unchecked control over who works, who doesn’t, and on what terms.  Globalization is much harder for organizations like labor unions that rely on communication from the bottom up, than for top-down corporate command structures, but workers of the world, unite! is still the path to justice.

One reason global capital is winning is that our former political allies – liberals, the educated middle class – are also global in their travels, education and world view.  Where once liberals leaned politically toward labor as a force for justice, and for a better future, now they are on the sidelines as we fight and too often lose.  They see unions as well-meaning, but as resisting global progress and not representing the poorest.  (Of course, the pocket-book interests of upper middle class consumers also affect their world-view.  They are well served by low-cost imported goods and undocumented services.)

More fundamentally, the great economic and political power capital has gained through global operations means that general political opinion in particular countries – liberal, conservative, labor — is not terribly important.  This is because democracies speak mostly for particular populations, but everyone wants the jobs that global corporations control.

In the early stages of globalization, many manufacturing workers in developing countries were made redundant.  As their incomes fell, retail bottom-feeders like Walmart rose, and resentment rose as well, not only against the rich, but against more fortunate workers. Tax revenues declined, harming public employees.

Meanwhile, the vast corporate wealth derived from buying labor from the lowest-wage countries, and selling products to the most advanced, buys political influence wherever it goes.

In a 1981 article on bargaining, authors Samuel Bachrach and Edward Lawler[i]  defined power in a way that is useful for understanding our current situation.  Power in ongoing relationships, they argue, is a function of need.  Party A’s power depends entirely on Party B’s need for A or something A controls.  If B needs nothing from A, A has no power over B, regardless of any intrinsic strength.  If B needs A – or something A controls — more than A needs B, A dominates.  In general, the side that needs the other side less in a relationship has more power (whether for good or ill).

Let’s consider how this has played out in reality for one global corporation.

IntelChinaIn 2010, Paul Otellini, CEO of the nominally American microchip manufacturer, Intel, described to New York Times Op-Ed Columnist Thomas Friedman why he was locating his newest factory, and hundreds of jobs, in China, instead of the U.S. [ii] :

“The things that are not conducive to investments [in the U.S.] are [corporate] taxes and capital equipment credits,” he said. “A new semiconductor factory at world scale built from scratch is about $4.5 billion — in the United States. If I build that factory in almost any other country in the world… I could save $1 billion, because of all the tax breaks these governments throw in.”

 Otellini complains as well about lack of U.S. investment in technical higher education.

“Intel can thrive today — not just survive, but thrive,” Friedman notes, “and never hire another American.”

Asked if his company was being held back by weak science and math education in America’s K-12 schools, Otellini explained:

“As a citizen, I hate it. As a global employer, I have the luxury of hiring the best engineers anywhere on earth. If I can’t get them out of M.I.T., I’ll get them out of Tsing Hua” — Beijing’s M.I.T.


The irony of pleading for lower U.S. taxes while calling for increased investment in education escapes Otellini, and Friedman.  Yet increasing corporate tax immunity is a primary factor in layoffs and wage reductions for state employees and deficit spending at the Federal level.

In the months following opening of the plant in China, Intel spokespersons, through the media — and no doubt in conversations with public officials — consistently made the pitch for lower taxes.

And in fact, after the China plant went online, Intel in 2011 announced its next new plant, a $5 billion investment at an existing Intel “campus” in Chandler, Arizona.  The announcement followed a tour of the facilities by President Obama.[iii]  What were the terms for the new investment?

“To be honest, when we changed the sales-tax factor . . . that’s when Intel was making the decision to either divest from Arizona or stay in Arizona,” said Barry Broome, president/CEO of the Greater Phoenix Economic Council…This $5 billion, Intel is not going to pay taxes on that investment,” he said. “It is in a foreign-trade zone. The taxes are abated.”

Evidently, Arizona’s need for jobs was greater than Intel’s need for Arizona’s workers.  That is, Intel had more power (but still some need).  Arizona felt it had to be extra creative, if not extra-legal, in providing tax-free “foreign trade zone” status to a U.S. company in America.

It is important to understand that workers in all states and countries face the same dilemma.  I recall, for example, a conversation I had in the 1980s with a trade unionist from the Philippines.  An “American” company (really global) had just closed one of its two large unionized plants in his country, relocating them to China.  “Those were OUR jobs,” my friend said.  “How could they just take them away?”

Net results of the ability of corporations to locate, move or terminate jobs virtually at will around the globe include lower taxes and greater power for corporations, vis-à-vis workers, governments and citizens.  The shift of power from public to private interests over the past fifty or so years has led to growing class inequality in the U.S. and globally, and to the shrinking ability of many governments to provide public services.

How did this radical power shift come about?  One entertaining history of the early days of global outsourcing – and corporate empowering – is the 2009 HBO film “Schmatta:  Rags to Riches to Rags.”[iv]  This film depicts the New York heyday of the garment industry, where, as one garment executive notes, “everybody was union.”  Then follows the stunning discovery by employers, in the latter 1900s, that they were now free to lay off their American employees at will and contract assembly work to nations where wages were so low as to disappear as cost factors – and neither the union nor the government could stand in their way or follow.  As Russ Togs executive Irving Rousso puts it, describing an early pants subcontracting venture, with materials purchased in Italy and assembled in Johannesburg, South Africa:  “the work came in nice, and…forget it, at a price that you cannot believe!”

American readers of a certain age may recall being told by government and media spokespersons in the ‘60s, ‘70s and ‘80s that, of course, only “low-skill” jobs like garment assembly would be allowed to leave the country.  “Higher” skilled jobs like auto assembly – and certainly computers — would remain in America.  You may also remember Walmart metastasizing continuously in the same years, owing in part to its “Made in USA” image (soon jettisoned for all-third-world production); or patriotic Intel CEO Andy Grove, an immigrant, committed in his day to domestic employment.

Times changed.  Power shifted.  What was unthinkable in 1955 was unquestionable 50 years later.  U.S. workers needed jobs, but U.S. owners needed U.S. workers less and less.

Failure to follow

The response of my union, the International Ladies’ Garment Workers’ Union, then UNITE (later UNITE HERE) to this crisis was similar to that of most other unions:  we represented particular workers, and tried to defend their interests.  We demanded regulation and limitation of imports.  Our theme song, “Look for the Union Label” was a hit.  But the import tide was undeterred.

Though we had been fairly successful at following corporate runaways a5780PB40F19CP400G.union Labelnd contractors domestically – we were even able, domestically, to hold manufacturers financially responsible for their U.S. contractors’ employees[v] — we never found the way to follow when they contracted across national borders.[vi]  National cultures and national laws were different.  Nationalism and “us vs. them” were and are deeply embedded.

Other unions and industries followed the same pattern.  The shared power, the checks and balances formerly applied by non-corporate domestic stakeholders disappeared into history.  As GM spokesman Greg Martin told a Congressional committee in 2007, “We’re a global car company that happens to be based in the United States.”[vii]  In other words, the services of US industrial workers were helpful, but no longer needed.

Capital had found the magic key that freed them of responsibility to labor and to their country’s laws.  As for the consequent shift in wealth and power, still proceeding in our day: “forget it! You cannot believe!”

By the time Koch-funded Republican Scott Walker made his move against collective bargaining rights of public employees in 2011, the demolition by global outsourcing of manufacturing jobs and unions had been under way for five decades.  Corporate wealth and power had multiplied, while the solidarity – and disposable income — of a 93% non-union private sector was diminished.

“What happens if America loses its unions?”[viii] Washington Post columnist Harold Meyerson asked, and the question cannot be dismissed.

What can be done?  Contributors to this blog have made excellent proposals. To inspire great struggles, all agree, we need great dreams.

We need a revival of strikes that actually shut down production.  But shutting down production today may mean coordinating with the new global centers of production.

Racism and anti-communism, were used to divide the working class and block organizing in the South and Southwest in the 1930s and 1940s, and were key to reversing labor progress in the mid-20th century.  But authoritarian socialism, as applied by Stalin, Mao – and Castro – failed to deliver workers a better world, and should not now divide us again.

A national campaign to demand “just cause” for firings in ALL workplaces would help build a class movement, not just an interest group.

But one big dream that is already ON the agenda of workers and activists in many parts of the world is global democracy and global democratic unionism.

If not globally, how else can labor seriously address issues with Apple, Wal-Mart, Intel, Hyatt, Exxon, the World Trade Organization – or world health, world peace, the rights of women, the needs of the environment?  The challenges that stopped the unions from following capital as it took over the globe in the late 20th century still apply, to be sure, but at a less crippling level.  Nationalism, tribalism, vastly different political and labor structures and traditions will no doubt be with us in some form when the 22nd century arrives.  But as capital moves to consolidate its global monopoly, and as workers cross every border to find employment – worker organizing cannot freeze in a 20th century national template.

The Steelworkers, U.E., CWA and other unions, in fact, ARE already seriously building global capability. US LEAP has been incredibly courageous in taking on the assassins of Latin American trade unionists.  International Labor Rights Forum has served us all by identifying sweatshop violations and working toward global contracts for humane sourcing.

Many other farsighted workers, activists and organizations, operating both inside and outside organized labor, are taking the challenge on.  The late Tim Costello, the Teamster intellectual and modest revolutionary and Shanghai law Professor Liu Cheng who worked together to rewrite China’s labor legislation, are examples.  Many other Americans have coordinated with activists in China and elsewhere.

A global fight for democracy and unionism could broaden labor’s base – and also put working people and their organizations back in alliance with the liberal critics and victims of unrestrained capitalism in all countries — those who should be our allies, and can create majorities.  The fight against Coca-Cola capitalism and Exxon excess is our fight, but not ONLY our fight.

The brief collaboration a few months ago between east coast dockworkers, Bangladeshi labor activists and Walmart’s retail employees demonstrated the potential for change.  When a factory burned in Bangladesh last December, killing more than 100 garment workers, dock workers on the U.S. east coast briefly refused to unload the ship carrying goods from that factory to Walmart.[ix]  The Bangladeshi tragedy occurred at the same time as nationwide actions by Walmart’s retail employees here. This blog ran the photo on this page last December, showing Bangladeshi trade unionists holding a banner expressing solidarity with exploited U.S. Walmart employees

Global coordination of this kind needs to be a straw in the wind of global change. Workers’ communication networks are global, and actions can be.

Labor needs today to take many different steps to demonstrate to capital that we can organize on so large a scale that THEY NEED US once again.  They need to know they can run, but they can’t hide.

[i] Samuel B. Bacharach and Edward J. Lawler, in  “Bargaining:  Power, Tactics and Outcomes,” printed in “Bargaining,” Jossey-Bass Publishers, San Francisco, 1981.  My summary is a simplification of their theory.

[ii] “A Word From the Wise”, New York Times, March 3, 2010, Thomas L. Friedman

[iii] “New $5 billion Intel facility planned for Chandler,” The Arizona Republic, Feb. 19, 2011, Ryan Randazzo, Edythe Jensen and Mary Jo Pitzl

[iv] HBO Documentary Films, ©Home Box Office, Inc.

[v] Thanks in part to an exemption from Taft-Hartley and Landrum-Griffin bans on secondary boycott.

[vi] Jefferson Cowie tells a similar story about another industry in “Capital Moves:  RCA’s 70-Year Quest for Cheap Labor,” Cornell University Press, Ithaca, NY, 1999

[vii] Of course, two years later, GM sang a different song, as U.S. and Canadian taxpayers bailed them out.  The game is not over.

[viii] “What happens if America loses its unions”, Harold Meyerson, June 12, 2012, Washington post, and this blog

[ix] While it not generally known, the U.S. garment industry exemption from the Taft-Hartley ban on secondary boycotts (allowing the union to strike a garment contractor to organize the manufacturer, or vice versa) is still in effect and probably valid globally — if there was a strong union to use it, according to lawyers who have dealt with the issue.  If a fatal factory is not a striking issue, what is?

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