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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