A Wealthy Few Pick Up The Cash, We Pay The Costs

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
A few weeks back I wrote about Whirlpool closing their Evansville, Indiana plant and moving the work to Mexico. I wrote about the lunacy of an economic system that encourages companies to destroy lives, communities and the very economy that the Whirlpools depend on. This company was taking stimulus dollars with one hand and laying people off with the other.
Whirlpool did this because they could do it, making a wealthy few a bit more wealthy, and because you and I – not Whirlpool – have to pick up all the costs. This is called externalizing costs. It means you and I pick up the costs and an already-wealthy, connected few pick up the cash. It’s the way our system currently is designed.
A step toward a solution to this problem would be to require companies to start estimating the externalized effects of their actions. What is the cost of cleaning up all the discarded cigarette butts? What is the cost of cleaning up the trash near a McDonald’s? What are the costs from the health effects of added salt or sugar? So how about requiring companies to just estimate externalized costs so that We, the People can start getting a handle on this problem. Just start Is that too much to ask?
Now there is a study of the ripple effects of the Evansville plant closing. The full study, Layoff at Whirlpool: Costs to the Evansville Metro Area and Indiana Taxpayers, written by Greg LeRoy, executive director of Good Jobs First, concludes that direct costs to the community (us) will include:

– An additional 1,536 “ripple effect” jobs, for a total loss of 2,502 jobs;
– The loss of $138 million in income, including about 90 cents in additional income lost for every dollar lost by a Whirlpool employee; and
– A decline in tax revenues of $17.7 million, especially property, sales and both personal and corporate income taxes.

But that’s not all.

This taxpayer-cost estimate… does not include substantial lost federal revenues… Nor does it include social safety-net programs to assist the dislocated workers. However, for one such program alone we conservatively estimate that:
– Unemployment Insurance Benefits for the dislocated Indiana Whirlpool workers will cost more than $4.15 million….
Combining tax losses with Unemployment Insurance costs generates a conservative taxpayer-cost estimate of more than $21.8 million—or $22,588 per worker dislocated in Indiana.

WE pick up those costs. A wealthy few get a bit wealthier. Welcome to the system.
But that’s not all.
The surrounding retail stores, gas stations, and all other places these workers spend will see a drop in sales. Teachers, police, etc. will be under pressure as the local economy dries up. Homes will be foreclosed and property values for all will drop. The costs of those foreclosures will fall on others. Etc. All so a few already-wealthy will get a bit wealthier.
At least skim through the study to see all the ways the rest of us will be affected.
WE pick up those costs. A wealthy few get a bit wealthier. WE CAN CHANGE THE SYSTEM.
Past posts on Whirlpool’s Evansville plant closing:
Whirlpool: Mexican Workers Paid $70/Week Can’t Buy Refrigerators
Whirlpool Tells Callers: Call Congress. They’re Right!
Whirlpool Exec Responds: The System Made Us Do It
Whirlpool Bites Hands Of American Taxpayers That Feed It
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Whirlpool Tells Callers: Call Congress. They’re Right!

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
In the middle of this terrible jobs crisis Whirlpool is closing a factory in the US and sending the jobs to Mexico. Their Mexican workers will be paid $70 a week. As I wrote the other day,

Our system is broken when “the market” encourages companies like Whirlpool to close factories, destroy the lives of American workers, devastate the surrounding communities and ultimately destroy the very economy that the Whirlpools depend on.
No one getting $70 per week is going to buy any refrigerators from Whirlpool. That is the bigger picture here. When American companies close down a factory and lay off workers they are also eliminating customers. Ultimately, as we are seeing, the economy breaks down.

So I received this email today:

One of my coworkers just got off the phone with Whirlpool. She called the number that the AFL or ARAW is providing for folks to complain to the company.
Her call was shuffled around till she ended up talking with someone at HR who identified herself as “Security”. The woman at Whirlpool told her “My boss told me to tell you guys to contact congress about it and not call us”
Wow. Can you believe it? I guess Whirlpool wants us to change trade policy so they aren’t allowed to close their plant and move it to mexico?!?! Yeah right.
I love how they take NO responsibility for the situation.

Here’s the thing: I think Whirlpool is right — we need to call Congress.
It isn’t entirely Whirlpool’s fault that “the market” and “the system” is forcing companies like Whirlpool to destroy workers’ lives, the surrounding communities and the economy. The system itself is broken and Congress must address the core issues here.
It has become crystal clear that “free markets” don’t exist, “free trade” doesn’t work, and deregulation doesn’t lead to positive results. Because of the failed “free market” and “free trade” and “deregulation” nonsense all we are doing is sending our manufacturing capacity and our jobs out of the country, killing our economy and borrowing more and more to make up for the losses. (And with no national economic/industrial strategy in a world of countries that do have strategies, it just keeps getting worse.)
Things Companies Do These Days
Whirlpool is closing factories, even while receiving millions of dollars from our Federal Government stimulus dollars. And they get government contracts. And when they lay people off our government steps in and provides unemployment, etc. And our local governments also are put on the spot with lost taxes, while providing local services. And, of course, Whirlpool pits states against each other for tax breaks and subsidies just to keep a few jobs, like what they are doing with Indiana vs Iowa. This is called socializing the costs and privatizing the profits.
This is what companies today do. It is just the way the game is played, the way the system works, the way the incentives are structured, the way the ball bounces, the way the cookie crumbles…(someone stop me, please)… There aren’t “good” or “bad” companies; ANY company will do these things because if they don’t they lose out to the companies that do. BECAUSE WE LET THEM. In fact, by letting this happen we make it happen because, as I just wrote, if one company doesn’t the next will, and the company that doesn’t loses out. The system.
So here is what we have to do. We have to change the rules to stop these jobs from leaving the country.
We have to write into Federal contracts that companies that get these contracts can’t close factories here and move the jobs there.
We have to write into Federal tax breaks that companies receiving the break can’t close factories here and move the jobs there.
We have to write into Federal stimulus bills that companies receiving the stimulus money can’t close factories here and move the jobs there.
We have to write trade treaties that respect pay and benefits and workers’ rights and communities and the environment. We have to set up a tariff structure that respects our own workers’ democratically-obtained pay and benefits, and the environmental protections that we fought for.
These are just a few of the things we have to start doing.
Whirlpool asked us to call Congress, not them. This is partly right. Call Congress and demand that they stop companies — ALL companies — from closing factories in the US and moving the jobs out of the country. AND keep the pressure on Whirlpool.
I have more coming about this.

Whirlpool Exec Responds: The System Made Us Do It

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.
In last week’s post, Whirlpool Bites Hands Of American Taxpayers That Feed It, I wrote about Whirlpool closing a factory in Evansville, Indiana. In summary,

    • Whirlpool closes a plant in Evansville
    • Taxpayers will shoulder the unemployment and other costs.
    • All the local supplier, transportation and other third-party jobs are destroyed.
    • Even more home foreclosures in the area as a result.
    • Local businesses are stressed or have to go out of business.
    • They are playing nearby Iowa against Indiana for tax breaks and subsidies to keep just a few of the jobs.
    • Whirlpool is profiting from making all this someone else’s problem.
    • And, of course, Wall Street celebrates the move.

This would be just one more “dog bites man” story – a company closes a plant and moves production out of the country, destroys workers’ lives, devastates communities and small businesses, sets states against each other, increases their profit margin, and Wall Street cheers. We read the same story over and over again for decades now, and the economy and the country of course have reached a limit of what can be lost. So what? What else is new?
But at Huffington Post a Whirlpool spokesperson responded, saying the post is “based on misinformation that’s floating around the Internet.” He wrote that their decision was based on “competitive factors.” In other words, Whirlpool says that the system made us do it. (The response in full is at the end of this post)
The spokesperson for Whirlpool is exactly right. It is the system that makes them do this. They are only following the market’s orders.
Set aside for a minute the lack of humanity in Whirlpool’s response, the lack of patriotism, the placing of market values (privatize the profits, socialize the costs) above human values, and the lack of concern for the destructive effect of their moves on the larger American economy. The system – the market – lets Whirlpool plead that those things are not Whirlpool’s job or concern. They are only trapped in the rules of the playing field and it is the job of We, the People to set those rules. It’s OUR fault, not theirs…
So to the extent that we are upset that Whirlpool moves jobs to Mexico, devastates surrounding communities, sets Indiana and Iowa bidding against each other for a few scraps and killing off the supplier and other businesses it isn’t Whirlpool’s fault, “WE” have fallen down on the job. WE have allowed a few large monopolistic corporate giants to take over the job of defining national policy. And of course those monopolist giants set the rules to their own advantage and against the interests of the rest of us, including all of the Whirlpools (unless Whirlpool becomes lucky enough to be the biggest, then THEY get to set the rules.) A few monopolistic giants benefit greatly from keeping this system the way it is, so their lobbying power keeps the country from changing the rules to benefit anyone else.
The rules are what they are. Yes, that’s a huge part of the problem.
BUT while Whirlpool pleads a “competitive factors” case, let’s look at Whirlpool’s competitor GE. GE isn’t perfect, but they are finding ways to move jobs BACK to the US. For example, look at this recent news report,
General Electric announces new product coming to Appliance Park

GE announced Appliance Park will get a new product – a “hybrid” or energy efficient water heater. The product line will arrive in 2011 and bring with it 400 new jobs.

How was GE was able to make Louisville work for producing durable goods, when Whirlpool is not able to make Evansville work? Is it a lack of corporate imagination on Whirlpool’s part? Why isn’t Whirlpool inspired to go the extra mile to find ways to keep jobs here, to help the communities that surround them and to help the workers who build their products for so many years? Are Whirlpool’s executives just happy enough with their profit margins, and this is all that matters? Will Whirlpool work to change the system that makes them do the things they do?
And more importantly in the big picture, I conclude this post with the same question as the previous post concluded: Will Congress listen?
Here is the Whirlpool spokesperson’s response:

Dear Dave Johnson and readers of the Huffington Post:
In reviewing your blog post, I noticed it appears to be based on misinformation that’s floating around the Internet. I’d like to contribute the following facts for the sake of context and clarity.
• Whirlpool has approximately 17,000 U.S.-based manufacturing employees – more than any of our competitors.
• We produce the majority of our major appliances in the U.S., while some of our competitors do not produce any of their major appliances in the U.S.
• The economic downturn and other factors lead us to expect lower demand for the refrigerators produced by our plants in Evansville, Indiana and Apodaca, Mexico, and we therefore decided to consolidate their manufacturing in one location.
• We based our decision to consolidate in Apodaca on a full analysis of all the competitive factors between the two plants.
• We worked with Indiana state and local officials to keep the company’s Product Development Center of 300 design engineers in Evansville.
• As a recipient of $19 million in stimulus funds from the Department of Energy’s (DOE) Smart Grid Investment Grant program, we are required to match that amount with an investment of equal value in the development of new smart products. The grant and related investment are completely unrelated to the manufacturing of existing product lines such as these refrigerators.
• We have honored the Union and others’ requests for meetings to discuss the decision, but given the competitive nature of the industry and the state of the markets, no combination of changes proposed at those meetings could make the plant competitive.
We appreciate the support shown for our Evansville employees, and hope that this message helps clarify the facts.
Thank you,
Christopher Wyse
Corporate Director
Communications and Public Affairs
Whirlpool Corporation