Corporations and Job Creation (revised article)

By Harry E. Berndt

 

Letters to the Editor

Re: Corporations and Job Creation –643 words

In almost any discussion about job creation, one hears the American mantra that corporations are job creators and that they should have to pay lower taxes, and have to abide by fewer regulations, in order to facilitate growth and create jobs. Some conservatives take the position that the government should step aside and let the private sector do what they do best – create jobs. Is job creation really the responsibility of corporations? The 1976 Nobel Prize winner in economics, Milton Friedman, in his book Capitalism and Freedom, called such an idea a "fundamentally subversive doctrine in a free society" and states, "there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."

General Motors in previewing a new plant proudly showed a plant full of robots. Will the maximum use of robots in manufacturing create jobs? The Ford Motor Company announced in January of 2006 the closing of fourteen manufacturing plants in North America and cutting between 25000 and 30000 manufacturing jobs and 4000 salaried positions by 2012. In May of 2008 Ford announced an investment of fifteen billion dollars in a new Mexican manufacturing plant. Is Ford is creating jobs in Mexico while cutting employment in the United States?

Cutting employment, not creating jobs, is a major on-going effort within corporations. Managers and industrial engineers are rewarded when they can produce the same production with fewer workers, or when they can increase production with the same number of workers, or best of all, when they can increase production with fewer workers. How does this create jobs? The proponents of corporate efficiency say that when corporations are more efficient profits improve and corporations can expand and create more jobs. Most Americans believe that to be true, but where is the proof that when profits increase more jobs are created? In the last few years the profits of American Corporations have significantly increased, while the country is experiencing very high rates of unemployment. These creators of jobs are sitting on financial surpluses and are not investing, presumably because they are unsure of the economy, even though profits for 2010, according to the Bureau of Economic Analysis, increased by 36.8 percent and were the highest since 1947.

The Supreme Court decided that corporations are persons, with all the rights and responsibilities that all persons have. It would follow then that corporations are citizens, and like all other citizens should strive to be good citizens. It is time for corporations to step up to the plate and do what we all know they are capable of doing, and what they and their supporters say they do --- create jobs. They could take advantage of the President's Jobs Act and receive tax credits for hiring new employees by, for example promoting job sharing, or in their manufacturing plants work four six hour shifts rather than three eight hour shifts. Both of these suggestions have been tried and proven successful for both the corporation and the employee. They have the expertise to be innovative in other ways that would require more employees, and with government assistance, would cost nothing or very little.

How is it that when the economy improves and unemployment is reduced, corporations get the credit for creating jobs and applause for being innovative, but when the economy is in distress and unemployment increases it's the government's, or more likely, the President's fault. Let's place blame where it belongs, squarely on the greed of American corporations and their managements.

Harry E. Berndt

150 Parsons Ave.

Webster Groves, Missouri 63119 ---

Phone 314-962-1749

The author is a retired St. Louis sociologist