While the “leaders” of the International Trade Union Confederation (See the post below) are sipping tea in the Great Hall of the People with the Butchers of Beijing, the real Chinese labor movement is emerging on the ground. As Han Dong Fang, the leader of the independent Chinese Labour Bulletin based in Hong Kong, notes, there are protests by thousands of workers every day in coastal China’s industrial zone.
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Mon dieu: French rally behind rogue trader
What can one say about this? I am as big a critic of global capitalism as you can find, but this left me speechless….
Strange bedfellows
The leading global umbrella body, the International Trade Union Confederation, has decided to begin a “dialogue” with the Chinese government labor organization, the All China Federation of Trade Unions, or ACFTU. This is strange indeed. The ACFTU, as readers of this blog are well aware, is not a union but a government/party arm of the communist regime in China. It does not strike, it does not bargain for workers, it does not represent workers. Its explicit task is to prevent conflict rather than represent workers when they have issues with employers.
What possible gain could there be for global labor in such a relationship? Perhaps the gain will be free trips to China for union officials? But at what price for the credibility of the global union movement? If global unions view the ACFTU as a role model, then it sends a terrible signal about the independence and democracy of all unions.
There is one other aspect of this announcement that is deeply troubling: the American labor federation, the AFL-CIO, apparently abstained from the ITUC vote on the “dialogue” with China. This is a shift in their longstanding opposition to such a relationship. It is an unfortunate development.
Both the ITUC decision and the AFL-CIO abstention come just as a new labor movement is emerging in China: a genuine labor movement of Chinese workers themselves, rural and urban, who are gaining the strength and courage to challenge the authoritarian Chinese regime. This is the moment when unions everywhere – especially those in countries like the US where there are at least minimal democratic rights – should come out foursquare in support of this real labor movement. Instead global labor is moving to shake hands with the very oppressors of that labor movement.
Private Equity v. Labor: Debate Breaks Out at Davos
A fascinating debate over the concerns of labor about private equity funds took center stage at Davos this week. The link to the webcast is here: Labor v. PE
The debate between PE fund reps and a Swiss union leader is pretty fierce and interesting. The timing was perfect for the World Economic Forum because they issued today a report led by Harvard Business School professor Josh Lerner on the impact of PE funds.
The report can be found here: WEF PE Study
It is quite long so you can find an executive summary here: WEF PE Summary
The basic finding, after a study of 27,000 deals over thirty years, is perhaps not surprising: PE funds are better for everyone more or less. But the devil is in the details. The study does admit that jobs get cut when PE funds take over companies but argues that they get replaced by new so-called greenfield jobs. Sure, but at what wage rate?? That is the key.
My own view on this is set forth in the pages of latest Dissent Magazine. The online version is not yet available but you can order an issue here: Dissent
An earlier version of the article is available on line at PE and the new capitalist order
I argue that PE firms represent an evolution in the means by which capitalism extracts value from the labor force. It does not do this by financial manipulation but by much more intense pressure on the workforce and discipline of management. PE buyouts of public companies solve the agency problem that plagues the public company. This is not good news of course for labor and so it will be important for them to respond to the Lerner/WEF study.
China’s financial fragility is a political issue
I have predicted in the last year that China will face either a social or a financial crisis that threatens the regime sometime in the next few years. This piece by the prescient Minxin Pei and a colleague from the Carnegie Endowment for International Peace (where I spent a semester working on terrorism issues a while back) makes the important point that a financial crisis could trigger a political crisis.
They write:
...when it comes, a Chinese stock market crash will produce serious political consequences. Official figures show that more than 100m people have invested in equities, mostly during the recent bull market run. A massive sell-off will hit their household net worth. Because the Chinese government has been perceived as an active promoter of the country’s stock market, tens of millions of individual investors, members of the privileged urban middle-class, will direct their ire at the government. To make matters worse, most publicly listed companies are state-owned, so investors assume that the state is liable for the collapse of their share prices.
Of course their suggestion that reform from above can lead to a stronger capital market regime in China is misguided: the regime does not have that kind of dynamic built within it – it cannot allow a genuinely independent western-style capitalist class to emerge.
To regulate or not? That is THE question
Our friends over at naked capitalism brought this opinion piece from the FT to our attention. It is by the best known securities law professor in the country, John Coffee at Columbia Law School. He argues persuasively that despite all the post Sarbanes-Oxley panic, the US capital markets remain the most attractive around the globe. My view of this is pretty simple: in no other country do investors stand as good a chance at enforcing their legal rights than in the US. And investors continue to be willing to pay a “Rule of Law” premium to buy stocks here. That suggests the deregulation mantra sung by so many in the last few years ought to be softened considerably. With several seats open on the SEC perhaps it is time to elevate someone to that critical body who actually believes in what the SEC does!
The Perils of Private Equity
My article on private equity has been published by Dissent Magazine. You can order a copy here at dissentmagazine.org
The Perils of Private Equity
My article on private equity has been published by Dissent Magazine. You can order a copy here at dissentmagazine.org
Perils of Private Equity
My paper on Private Equity has now been published by Dissent Magazine as “Private Equity and Public Good.” Online copies are not available yet but you can order a copy (or subscribe) here: Dissent
Road Bump or Earth Quake in Digital Distribution?
In late 1999, I worked closely with the AFL-CIO to defend German workers targeted by Vodafone in their takeover bid for Mannesmann’s cell phone business. Vodafone argued that so-called 3G technology would make the billions they proposed to spend on the deal worth it. Seven years later, 3G is still largely unavailable and Vodafone lost tens of billions in shareholder value on the deal. Oh, and their CEO is history. The AFL-CIO predicted all this with pretty impressive accuracy.
Fast forward to today’s digital distribution environment for the entertainment industry and we have news of another flameout as Google announces that its video download service has failed. Now Google hopes that it can make a go of the billion or two its spent to buy You Tube (plagued by its own intellectual property rights concerns as it faces lawsuits from content providers). RIght now, the DVD biz is looking pretty good.