Study: Modern managers mimic slave owners

A Harvard historian discovered what many of us suspected: Today's corporations use many of the same management techniques plantation owners used on their slaves.

The legacy of slavery can be seen in aloof corporate managers (McKesson's CEO John Hammergren, for example.) They see workers as interchangeable units of production instead of human beings. They collect data on their work force, move workers around, demand speed-ups and liberally mete out punishment.

That, at least, is what Prof. Caitlin C. Rosenthal discovered, according to a story, titled "The Messy Link Between Slave Owners And Modern Management," in a pro-business magazine Forbes. Forbes' take on the historian's research was that it could be seen as a justification for slavery. Leave it to a business magazine to miss the point that it's an indictment of modern corporate management.

Here's what Rosenthal found when she set out to investigate the history of modern business practices:

Slave owners were able to collect data on their workforce in ways that other business owners couldn’t because they had complete control over their workers. They didn’t have to worry about turnover or recruiting new workers, and they could experiment with different tactics—moving workers around and demanding higher levels of output, even monitoring what they ate and how long new mothers breastfed their babies. And the slaves had no recourse... 

Tracking this information allowed planters to determine how far they could push their workers to get the most profit. Using the account books, slave owners could see how many pounds of cotton each slave picked and compare it to their output from previous years—and then create minimum picking requirements based on these calculations. 

This led owners to experiment with ways of increasing the pace of labor, Rosenthal explains, such as holding contests with small cash prizes for those who picked the most cotton, and then requiring the winners to pick that much cotton from there on out. Slave narratives describe how others used the data to calculate punishment, meting out whippings according to how many pounds each picker fell short. 

Similar incentive plans reappeared in early twentieth-century factories, with managers dangling the promise of cash rewards if their workers reached certain production levels. 

Planters also used group incentives to encourage honesty, doling out a barrel of corn to each hand with the caveat that if anything was stolen from the farm and no one turned in the thief, double the value of that corn would be deducted from each of their Christmas awards. Collective penalties would later be adopted by salesmen and companies like Singer Sewing Company to encourage workers to police one another.

Weove noted in the past that technology is allowing corporations to bring employee surveillance to a new level. At the British grocery chain Tesco, warehouse workers have to wear armbands so their bosses can monitor how hard they're working.

Rosenthal said her research led to a question:

If today we are using management techniques that were also used on slave plantations, how much more careful do we need to be? How much more do we need to think about our responsibility to people?

One commenter put it more succinctly:

Slavery never ended, it just shifted to a different form.

Actually, it hasn't shifted to a different form in a lot of places. There are 30 million slaves in the world. Click here to see where they are.

How CEOs are getting richer at your expense

Americans are recording the largest drop in wages ever while the average CEO received $14.1 million in combined pay and stock options last year.  At the same time, three-quarters of Americans didn’t have enough money for a basic emergency fund.  The Economic Policy Institute reports:

From 1978 to 2012, CEO compensation measured with options realized increased about 875 percent, arise more than double stock market growth and substantially greater than the painfully slow 5.4 percent growth in a typical worker’s compensation over the same period.

These findings support what we’ve known all along: trickle-down economics are a cruel joke. A third of Americans, over 10 percent more than in 2008, say they are lower-middle and lower class. Income inequality is rapidly increasing and the chances of your kids ending up better off than you are rapidly decreasing, no matter how hard they work.  

The fact that CEO pay is more than 270 times more than the average worker isn’t a shock. 

Turns out, even for one-percenters, CEOs are being paid ridiculous amounts:

Over the last three decades, CEO compensation grew far faster than that of other highly paid workers, those earning more than 99.9 percent of other wage earners.  CEO compensation in 2010 was 4.70 times greater than that of the top 0.1 percent of wage earners, a ratio 1.62 higher (a wage gain roughly equivalent to that of 1.6 high wage earners) than the 3.08 ratio that prevailed over the 1947-1979 period.

That’s right.  CEOs still make more money comparatively than even other really, really rich people.   Too bad their nice bonuses doesn’t extend to your paycheck.

Does the 0.1% finally realize how badly they screwed up?

Ooops.

Does the super-elite finally realize that lowering living standards for working families was a huge mistake?

The Naked Capitalist thinks maybe they do. Linking to a Guardian piece titled "Denial, panic and doubt in Davos," she writes,

The 0.1% may be recognizing how badly they’ve screwed up.

The Guardian was reporting on the grim mood at the annual gathering of the global power elite during the World Economic Forum in Davos, Switzerland. There is a "nagging concern" that business conditions won't improve any time soon, according to a survey of the attendees by the PWC consulting firm. The Guardian notes that austerity is killing jobs and commerce in Europe, India struggles with inflation, U.S. radicals are trying to cut Social Security and Medicare and Japan may trigger a currency war.

The Guardian notes the prospect of a double-dip global recession:

This also comes as no surprise. Businesses will only invest if they perceive growing demand for their goods and services. But the dilemma for the CEOs gathered in Davos is that the policies they have championed in the past – fiscal austerity, weaker trade unions, aggressive cost cutting – have hammered consumer spending. In the past, spending could be supported by rising household debt, but the banks don't want to lend and consumers don't want to borrow. 

This is a recipe for continued economic torpor. Three things would help: fixing the banks, a reining back of austerity and a new social compact to ensure that productivity gains are once again shared by capital and labour.

Fixing the banks was actually raised at Davos by hedge fund manager Paul Singer.

We just hate, hate, hate to side with him, but he was right to chastise JPMorgan Chase CEO Jamie Dimon. Singer complained big banks like JPMorgan don't come clean about their risky investments.

(We don't like Singer for a lot of reasons. One, his hedge fund got $12.9 billion from U.S. taxpayers to keep alive a company it owned, Delphi, as part of the auto bailout. Then he moved the company to China. Plus he funds the vast right-wing conspiracy.)

The Financial Times reports on the Singer-Dimon exchange:

Jamie Dimon, chief executive of JPMorgan Chase, clashed with a leading hedge fund investor over whether big banks are too opaque during the opening session of the World Economic Forum in Switzerland. 

Unbowed after a year in which severe problems of risk management at JPMorgan were revealed, Mr Dimon rebuffed criticism from Paul Singer, head of Elliott Capital Management, that banks made “completely opaque” disclosures. 

Mr Singer said the unfathomable nature of banks’ public accounts made it impossible to know which were “actually risky or sound”.

Singer is right. It's especially outrageous for Dimon of all people to defend current risk-management practices. His bank is being investigated for its failure to control risk in a deal (called "London Whale") that went spectacularly awry. JPMorgan originally reported it would lose $2 billion from the transaction, but the final size of the loss is expected to be much, much bigger. From the beginning, Dimon misrepresented the size of the loss as soon as the press got wind of it.

The global elite has more than a few reasons to be worried.

Today's Teamster News 12.17.12

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