FREE ESSAY ON HOW THE RICH BENEFIT FROM THE POOR

HOW THE RICH BENEFIT FROM THE POOR

How the Rich Benefit From the Poor The United States is the most developed capitalist
economy in the world. The markets within the economy provide profit-motivated companies
endless potential in the pursuance of pecuniary accumulation. Throughout the
twentieth-century competitive companies have implemented modernized managerial procedures
designed to raise profits by reducing unnecessary costs. These cost-saving procedures
have had a substantial effect on society and particularly members of the working class.
Managers and owners of these competitive and self-motivated companies have consistently
worked throughout this century to exploit the most controllable component of the
production process: the worker. The worker has been forced by the influence of powerful
and affluent business owners to work in conditions hazardous to their well being in
addition to preposterously menial compensation. It was the masterful manipulation of
society and legislation through strategic objectives that the low-wage workers were
coerced into this position of destitute. The strategies of the affluent fragment of
society were conceived for the selfish purpose of monetary gain. The campaigns to augment
the business position within the capitalist economy were designed to weaken organized
labor, reduce corporate costs, gain legislative control and reduce international
competition at the expense of the working class. The owners have gained and continue to
gain considerable wealth from these strategies. To understand why the owners of the
powerful companies operate in such a selfish manner, we must look at particular
fundamentals of both capitalism and corporation strategy. Once these rudiments are
understood, we will more clearly relate the perspective of the profit-seeking
corporations of America. Legal discussion will also be included to show how the capital
possessing elite operate through political parties to achieve their financial objectives.
It is the synergist effect of these numerous strategies that have lead to the widening
income gap in America, persistent attempts of contraction in worker's rights and
increased corporate political influence. These campaigns have come at an expense to
Americans and will only continue to benefit the affluent society. Creating Corporate
Value The United States is a capitalist economy. In a capitalist economy individuals who
wish to gain wealth can invest their capital into markets in hopes of future returns. If
this investment gains in value then the investor has earned a return, which can be
reinvested. This creates a cycle of investing and reinvesting for potential future
return. This wealth creating cycle is a fairly simple concept to understand, but wealthy
individuals have learned to fabricate this cycle into different situations. A common form
of investment is purchasing and selling of corporate stocks. The stock market works like
all markets on the fundamental theory of supply and demand. The more demand for a stock
the higher it is valued and conversely the less demand the less it is valued.
Corporations are legal entities which issue stock to investors who purchase them and
become shareholders of the company. The risk taken by investors is that when they buy
stocks it is possible that the individual company will not do well, or that stock prices
will generally weaken. At worst, it is possible to lose entire investments, but no more
then that. Therefor, shareholders of a corporation are not responsible for corporate
debts. So, a corporation would be a very attractive type of investment for potential
investors to consider. Corporations compete against each other in markets in the United
States and around the world. These corporations have employees who perform various
functions that contribute to successful strategic goal completion. Corporations often
will offer stock incentive plans strategically to employees in positions of importance.
The enticement to employees is to work in a manner that will increase the value of the
company and their shares of stock. These incentive plans were strategically developed by
major shareholders because the corporate executives felt that people would be motivated
to increase their own wealth. Most employees are motivated by money and will work harder
when the chance is given for more money. The very nature of this strategy consolidates
all the employees to act as one self-motivated entity in the pursuit of monetary
accumulation. In Piven and Cloward's Regulating the Poor, this point is illustrated:
"Capitalism, however, relies primarily upon the mechanisms of a market-the promise of
financial rewards or penalties-to motivate men and women to work and to hold them to
their occupational tasks" (4). The increased motivation of important members of the
workforce by the enticing tactics of greed for wealth is a result of strategic planning
by the major shareholders of the firm. The cost to these primary shareholders is the
stock incentive plans needed additional stock to fulfill, which reduced the valuation of
all stocks. The major shareholders know this devaluation is only temporary because
self-motivated employees will act in a manner that will increase the value. The primary
concept for discussion purposes is that self-motivated major shareholders have utilized
the capitalist theory and thus, created a business compact with employees that will make
self-motivated decisions on all levels. The strategy worked and throughout the country
employees are busy increasing the value of their stock, but most importantly, they are
increasing the value of the major shareholders. We will see this investing concept
throughout most this paper because the wealthy resist adverse conditions with money. The
Grand Old Party The Republican Party remained dominant throughout the 1920's, remaining
unaffected by factionalism that plagued the Democratic Party. The party continued to
align its platforms with the southern whites, and owners and managers businesses. Even in
extraordinary economic times of prosperity for the wealthy, the Republican Party
continued to advocate industrial economic values. The primary dilemma to republican
business interests was the labor problem. "The Republicans finally concentrated their
discussion on four broad approaches to labor problems: the progressive approach, the open
shop approach, the efficiency-engineering approach, and the political approach" (Zeiger
11). Most businessmen resolved harshly to end labor activism and to quietly continue
their profitable business interests. This behavior of this standpoint took the pattern of
employer resistance to labor unions, but originally the open shop crusades proved to be
the most fruitful in the short-run. The open shop crusade, now illegal because it gave
employers the ability to hire prospective employees on the basis if they belonged or
support trade union activities. This restricted the employee's ability to strike on a
particular issue because they lack the power of numbers that a union possesses and could
be replaced. Open shop enthusiasts were a major and vocal part of the Republican Party
because of the financial resources they possess. Many republicans determined them
intemperate and adherent, and their perspectives were damaging and extreme. "These open
shop enthusiasts constituted a vocal and influential segment of the party. They often
proved quite effective in their efforts to chastise organized labor, for many Americans
shared their concern. Still, many Republicans considered them extreme and doctrinaire,
and their views harmful and inexpedient" (Zieger 74). It was these Republicans that
lamented these controversial assaults on labor problems, such as Herbert C. Hoover who
wished to devise a whole new style of labor relations based on the philosophies of
efficiency and cooperation. By 1921 industrial engineers and other experts had developed
the Taylor Society, the Federated American Engineering Societies. The Taylor Society was
designed to improve the efficiency of a job-place in hopes of reducing severe factory
working conditions. This in theory would increase aggregate production, which would lead
to more available jobs and lower-unemployment. The main points to be established is that
the Republican Party was support by wealthy business owners. The worst opponent of the
worker is the wealthy business owner within the Republican Party. These are the
characters that advocate extreme hostile tactics such as the open shop crusades.
Regardless, they support the Republican Party financially and therefor the Republican
Party acts as their voice politically. The Industrial Revolution One component of the
production process that can be controlled by management is automation. Regardless, the
employee still performs a necessary function in the production process. The taylorization
theory states employers have an incentive to make a job function more efficient. The
increased efficiency results in lower production costs, lower aggregate unemployment
rates and higher company profit returns. The industrial revolution was characterized by
the widespread replacement of manual labor by machines that could perform the job
functions quicker and or at lower costs. The industrial revolution was the result of
interrelated fundamental changes that transform smaller market economies into an
industrialized economy. Many products that were made at home or in small work units were
transferred to large factories. Since the factories could produce at lower costs the
product could be sold at a lower cost. This competitive advantage drove the smaller
competition out of business. The people who profited from this effect were the owners of
the mechanisms of production. This marks the beginning of an era where these wealthy
owners would prosper over the working class. The aggregate effect of the increase
production efficiency lead to the development of massive industrial parks. These parks
expanded the scale of production dramatically and became concentrated in cities and large
towns. Since traditional production relied heavily in the needs of local subsistence it
gave way to the more market orientated production devices. This economically forced large
numbers of the rural poor who moved to towns and cities to become the wage seeking labor
force necessary to run rapidly expanding industries. This extensive movement of
communities had a considerable result on labor prices and ultimately constrained these
people to become the urban poor. The effect of the Industrial Revolution on American
society was substantial. Income following workers increased the population of large towns
and cities severely. From 1860 to 1900 the number of urban areas in the United States
expanded fivefold. Even more striking was the explosion in the growth of big cities. In
1860 there were only 9 American cities with more than 100,000 inhabitants; by 1900 there
were 38. Labor markets were flooded with eligible workers seeking employment and through
pure labor competition they were willing to work in any environment for any wage. The
environments factory laborers were forced to work in were considered by many Americans to
be despicable. Regardless of the factory working conditions, many people were obligated
to take the employment. Employment was necessary to generate income to support oneself
and family. As a result, the Exploited workers received no power to contract with the
owners of production. Instinctively managers and owners of capital have contrasting labor
interests then those perspectives of employees. Wages and profits incomes divide the
value that production adds, so by definition, labor and capital interests often are on
opposing sides of social policy that affects the price level of the real wage. "The real
wage can be regarded as the price that equates the supply of and demand for labor",
(Foley and Michl 70). Owners and mangers of capital seek a flexible labor force, which is
counter for the worker's desire for stability and security in their employment and
conditions of life. At this point in history, the affluent society of the United States
was generating immense wealth by capitalizing on the poorer worker's needs for minimal
financial requirements. The wealthy invested their capital into factory production
devises, which drove out smaller competing business from the market place. This profit
seeking strategy worked because it economically forced resource deficient workers into
the cities. The supply for labor increased, which coerced many employees to work for the
affluent owners at a corresponding cut-rate real wage rate. These events began to
illustrate a scenario that would set the scene for modifications in worker's rights. The
laborers had to develop a strategy to counteract the poverty-stricken working conditions
imposed upon them by the owners of the factories. The Labor Market The labor market
surplus further developed the worker's dependency upon the self-motivated employer. Trade
unions were formed to advocate alleviation of some dependency and support the worker's
efforts by gaining a quantifiable measure of power over their economic standing.
Initially, the trade unions had limited success until they exercised the real true power
worker's have over employers: The strike. The strike in labor relations is a completely
organized halt of work and production carried out by a large group of employees. The
purpose of the strike is either enforcing worker's demands that relate to unfair labor
practices and or to employment conditions created by the self-motivated owner. The
response to labor unions by business owners was the use of open shop tactics. "Employers'
organizations and business groups commenced a vigorous campaign for the open shop. Armed
with the then-legal yellow-dog contract, by which an employer could require a prospective
employee to agree not to join or support a union" (Zeiger 20). The wealthy opposed the
trade union's use of the concept of collective bargaining because it advocated the
subject of worker's rights. Collective bargaining is where individuals with interest in
the matter negotiate their stipulations until a compromise is found. The wealthy
industrialists despise that their interests would are in constant danger by collective
bargaining. In response, "America's industrialist launched a well-financed general attack
on the very concept of collective bargaining" (Zeiger 20). The use of collective
bargaining proved to be an effective tool in bargaining with owners and managers. This
meant that worker's have finally developed a technique through labor unions that
competently combats the proprietor's regimen. The Strike During the 1920's and 1930's,
strikes occurred as a natural feature of nationwide unions of the American Federation of
Labor and other groups soon to be recognized as the Congress of Industrial Organizations.
Striking had become a major weapon in the labor movement and was threatening the
profitability of the production owners. "The strikes and threatened strikes, the radical
agitation, the sharp industrial depression, and the whole atmosphere of discord and
unrest that pervaded the country endangered the Republic and demanded action" (Zeiger
74). The wealthy republicans had to promote an offensive campaign to end this threat. So
as previously stated, they adopted well-financed strategies aimed at the courts to obtain
injunctions, which would legally prevented strikes in specific circumstances. The success
of these strategies is confirmed in Zeiger's Republicans and Labor 1919-1929, "The 1920's
marked the climax of antilabor judicial activities". (260) The basis the owner persuaded
the courts with was that their property was either damaged or threatened and that they
were powerless without legal solutions. It was the possession of financial resources that
allowed the wealthy to recruit and employ powerful and persuasive lawyers. Legally
persuading the courts of law with expensive lawyers was the sole purpose of the use of
financial power to authoritatively force workers back into the production factories and
produce profit for the owners. From the perspective of the wealthy, the application of
financial resources to generate future income is honorable capitalism regardless of the
situations' context. The power of wealth even can influence courts of law through lawyers
and thereby, give the wealthy extreme power in legislation during this period in history.
The Rise of the Labor Party The Democratic Party during this era was experiencing
outbursts of factionalism. The convention in 1924 was racial divided by southern whites
and the northern urban blacks. The future success of the party was depended on the need
for a change. The strategy developed by the leaders was to begin the alteration of the
Democratic Party appeal. The leaders of the Democratic Party realized that poor people
could be a powerful voting coalition. The great depression of 1929 forced millions of
people into unemployment and poverty. These unemployed workers practiced approaches of
protest through disruption demonstrations. These massive demonstrations help encouraged
the working class voter's hostility and defection of the Republican Party. The Democratic
Party thus capitalizing on this realigned their platform to advocate the needs of poor
people with the intent to gain votes. This re-alignment of party policy angered the
southern democrats whose views were becoming more Republican. Having lost the southern
support, the Democratic Party became the primary political instrument of vocalization and
evolution of labor class politics. "During the electoral realignment of the 1930's, the
Democrats gained the overwhelming allegiance of most manual workers and their unions",
(Piven and Cloward 421). The alignment of the working class with the Democratic Party
coalition developed two powerful strategies to combat the wealthy and business leaders.
As stated previously, the workers held extreme striking power over the means of
production in factories. Now they had power in the organization of the working class
population and could coordinate their votes to consolidate political force for their
perspectives. The concept is similar to how the employees of a corporation have
incentives to pursue company goals as a team. "The main political project of labor
parties became the use of state power to develop the welfare state" (Piven and Cloward
21). Therefor, in the 1930's the democrats became a party of vigorous government
intervention in the economy and thus the social realm. The goals of the party were to
regulate, redistribute economic wealth and to protect people who are in need of
assistance in an increasingly competitive society. The depression of 1929 and the coming
of Franklin D. Roosevelt into the presidency with the New Deal help syndicate and enlarge
the commitment to governmental expansions of assistance programs and industry regulation.
Due to the economic conditions of the era, the advocators of economic assistance proved
to be attractive to society and The Democratic Party flourished. The result of these
campaigns was increased worker's rights and a seemingly practical welfare state. Worker's
Rights Massive unemployment during the Great Depression created a socially dysfunctional
society. Without the ability to create income through employment, basic physiological
necessities were not being met. "When large numbers of people are suddenly barred from
their traditional occupations, the entire structure of social control is weakened and may
even collapse" (Piven and Cloward 7). During the depression, society experienced this
symptom, which resulted in massive protests. The Democratic Party under the direction of
Roosevelt recognized the need for government intervention. The party aligned itself with
the working class and began to advocate worker's rights legislation. Under Democratic
Party control, federal funds were used to establish the Works Progress Administration,
now known as the Work Project Administration, which distributed assistance to citizens in
need of subsistence. In 1935, Roosevelt again used federal funds to create public works
programs, which gave employment opportunities to the unemployed. As a result of declining
republican political power, these and other initiatives were introduced to help increase
worker's rights. These worker's rights that the Democratic Party supported were the same
rights that the Republican Party had worked so hard to repress from regulation. In
addition to passing labor rights laws, legislative action was taken against the wealthy
industrialist's use of legal injunctions. These lawful injunctions were used as an
intimidating scheme to suppress union membership and ultimately strikes. In 1932 the U.S.
congress enacted the Norris-La Guardia Anti-Injunction Act. This legislation severely
limited the self-motivated employer's use of injunctions as a standard operating
procedure against strikes. Another tactic of wealthy employers to combat unions was the
use of the open shop strategy. Abolishment of the open shop regime was usually one of the
primary demands by labor unions in collective bargaining. The National Labor Relations
Act of 1935, known as the Wagner act, because of its sponsor Robert Wagner was adopted
and help end the open shop crusades. This act federally guaranteed workers the right to
organize through trade unions, use of collective bargaining and firmly incorporated a set
of employment standards. It also restricted employers from practicing pre-employment
tactics such as the open shop strategy. This reduced the power that republican business
representatives could exert over the prospective and employed worker. In addition, the
federal mandated right of collective bargaining guaranteed workers negotiation hearings
in which employers had to listen to the worker's needs. Congress also established the
Social Security Act, which is a form of social welfare. In 1938, the United States
Congress implemented the Fair Labor Standards Act. This primary functions of this act was
to eliminate labor conditions that are dangerous to work's health and productivity, it
also established a minimum wage to eliminate the disastrous effects of high labor
supplies, overtime wages were developed to eliminate excessive work weeks, and finally it
eliminate oppressive child labor. The result of the Democratic Party effect on
legislation during the labor movement is essential a bill of rights granted to the
working class of America. No longer would the wealthy elite of America victimize the low
wage working class in such inhumane techniques. Instead, these legislative acts marked
the beginning of a new challenge to the Republican Party. Now the party had to reclaim
lost legal ground by slowly returning to power of the United States Government. Political
Phenomena The legislative mandates of the Roosevelt era helped establish what is now
known as the labor movement. Society was suffering adverse conditions and the Democratic
Party mobilized the people into a political voice. The Republican Party was essentially
powerless, regardless of their financial position because government officials were
responding to public outcries. This historically proves that when conditions are unfair,
a political party can mobilize society and gain control. Roosevelt also initiated
measures that resulted in higher taxes on the rich and restricted private utility
companies. Although these combinations did not stop the wealthy republicans from
continuing to gain additional wealth, it only slowed their progress. History when again
prove that the Republican Party would come back into power and restrict the rights of
workers. This occurred when a Republican majority Congress passed the Labor-Management
Relations Act of 1947, known as the Taft-Hartley Act evidencing this reoccurring
political phenomenon. This act retracted some of the rights that were implemented during
the labor movement. These provisions included restricting supervisory employee's
protection from the NLRA and emphasized the right of employees not to join a labor union.
These restrictions of labor rights were in the interest of the Republican Party and were
created to reduce the power previous legislation granted labor unions. The successful
creation of this statute reinforces the evidence that wealthy Republicans continually
attempt to swindle the blue-collar labor class. Their motives are based within selfish
financial greed and capitalist economy theory. This congressional act illustrates the
phenomenon that bipartisan control and power is cyclical. The Democrats did regained
majority of congress and implemented numerous anti-business and social interest acts in
the 1960's. Due to the political cycle, The Republican Party inevitable would gain
control of congress once again, but the question was when? Globalization During the
economic crisis of the seventies, particularly the great recession of 1973-1975
businesses began to understand their role in the world's economy. America was importing
more then it was exporting, which was creating an unfamiliar and enormous trade deficit.
"In 1971, for the first time since the 1890's, the U.S. imported more then it exported",
(Cohen and Rogers 36) Increased competition from foreign firms posed a substantial threat
to American corporations. The result of this threat forced American corporations to
compete with globalization. Corporations could no longer produce simple marketing
campaigns to develop brand loyal consumers. Global competition forced these companies to
produce the highest quality, lowest price and distribute through efficient channels. The
international competition however, operating in countries were labor is cheaper, taxes
are lower, there is fewer industry regulations and an absence of unions. In addition to
these competitive forces, managers of the corporations must also answer to the wealthy
shareholders of the corporation. Many business leaders formed think tanks to devise
strategies to compete with this new threat. "American business leaders set about
developing a political program to shore up profits by slashing taxes and business
regulation, lowering wages and welfare spending, and building up American military power
abroad", (Piven and Cloward 443). The sources of all of these objectives were rooted
within government policies. These policies would inevitable have to change for these
goals to be achieved. So, the corporate elite implemented a political strategy that would
slowly form over decades to achieve. Corporate Politicians Even in modern times the
wealthy elitist of society still could influence political matters through the power
massive financial resources. During the 1980's business elite continued to align
themselves with the Republican Party for it conservative ideals. The methods the wealthy
corporation shareholders influence legislation during modern times has extremely
advanced. The development of political action committees has encouraged corporations to
channel financial contributions into political campaigns. Corporations will develop a
PAC, establish a set of issues that it promotes politically. If a politician is
campaigning for an election with corresponding views, then it is in the best interest of
the PAC to contribute to the campaign. More importantly, corporations are to contribute
to groups and individuals not directly affiliated with a candidate, such as the GOP.
These groups or individuals can register, persuade voters, endorse a platform, advocate a
candidate and oppose another. The Supreme Court ruled that the First Amendment of the
Constitution protected this type of spending as a form of free speech in its 1976
decision, Buckley vs. Valeo. These donations are referred to as "soft money" because they
are not directly related to a campaign. The absence of regulation on soft money donations
results in the option for corporations to contribute millions of dollars to further their
political interest. This advantage has a profound effect in the corporate political
strategy. "[Corporations] can simply treat politics as a business expense, a budget item
like advertising, research and development, or public relations" (Clawson, Neustadl, and
Weller 109). Through the strategy of the use of campaign contributing "soft money",
corporations have vastly increased their influence on political issues. This new
corporate political influence has succeeded in their campaign to minimize threats to
profitability. These threats were reduced most noted during the Reagan years when the
Republican Party dominated the government. "The administration has made significant cuts
in social spending, particularly in low income programs, and made plain its desire for
deeper cuts; achieved a massive, and massively regressive, revision of the Federal tax
system in 1981; dramatically scaled back the enforcement of regulations that posed any
significant limits to business power", (Cohen and Rogers 38). This success demonstrates
the influential power that wealth has over the United States government. The government
by definition should act in the best interest of the population and not the elite.
Instead the influx of soft money continues to be unregulated and as proven by the Supreme
Court decisions in 1976. This decision closely resembles how the courts protected the
rights of employers in the labor disputes of the 1920's. Why the Poor? The reasons why
the rich corporations target the government are because the government holds the supreme
lawful power over the entire population. History has proven to these elitists that with
well financed operations targeting campaigning officials over time favorable legislation
will be passed. The legislation usually reduces some sort of cost or regulation in that
firms industry. This increases the profitability of the company, which is directly
related to the owner's wealth. These incremental increases in profits have lead to more
investments to further heighten the value of the wealthy. This is apparent by the vast
and increasing gap between the rich and the poor in America. The poor are relatively easy
targets in comparison to the costs of soft money contributions. In America, it is very
difficult for the poor to change their financial status. So, once a person is poor they
are generally poor for the rest of their lives. They will continue to spend their lives
spending the little money on the products these corporations provide. In short, the
corporations are developing an enlarging consumer base that is dependent upon their
products. The middle class is slowly disappearing because of the loss of blue-collar
jobs. The loss of blue-collar jobs is a symptom of the increasing presence of
globalization. Globalization has privileged companies to outsource their production needs
to other countries with lower regulation and labor costs. This resembles much of the
labor practices of companies in the 1920's were the labor rights were essentially
ignored. Another easy solution to minimize the firms operating costs is by eliminating
valuable jobs. These sometimes massive downsizing satisfied the wealthy stockholders
because the firm had lower production costs and higher profitability. "Investors often
applaud the news of a layoff as a sign of corporate turn-around. The payroll is a large,
ongoing liability to the balance sheet, and investors are titillated by anything that
reduces it", (Downs 14). History repeats itself as we see that wealthy investors and
managers again behave in manners regardless of people's needs. The forces unleashed by
corporate executions and globalization have brought into the labor market thousands of
unskilled job seekers with little or no income. A new underclass has of previously
employed individuals has become a nationwide trend in our social and economic condition.
These people are forced to take jobs within the service sector and these jobs typical pay
wages that are lower then those of manufacturing jobs. These trends have formed a
synergetic effect on the growing wealth gap between the rich and the poor. Conclusion In
today's modern economy companies do not have to worry about the United States government
regulating the labor industries in other countries because of jurisdiction. The use of
soft money in the United States government has proven that even at home corporations can
freely advocate legislation that is favorable to their terms. This has had a profound
effect on the income gap in American society. The wealthy possess financial resources
that provide enormous opportunities to create more wealth. This need for excessive wealth
is deeply rooted into the personalities of these individuals. In America, society
considers the pursuit of wealth has a fundamental right of capitalism. The ethical
boundary was crossed by the use of financial resources to victimize portions of society
for hopes of future gains in wealth. Since the industrial revolution, the production
owning wealthy has continually endeavored systems to reduce labor costs at the expense of
the worker. . The labor movement was a result of government intervention in the 1930's.
The resulting legislation of this intervention produced several benefits to the working
class, in particular the ability to form a labor union. Regardless, the republican
elitist developed strategies to undermine the strength of labor unions. Unfortunately,
history has proven time and time again that the cost of labor is all too easy to reduce.
Today's global economy requires the use of an educated workforce in technology related
jobs. This has left unskilled workers to seek low wage employment in the service
industry. Closely resembling the falling labor costs that characterized the Great
Depression. Once again government action is required to limit the power of the wealthy
elite. The masses of society's working class must again be reunited and organized to act
as political class if the power is to return to the people. 
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