Profits Before People


In a recent commentary, Michael Moore noted that General Motors, having been rescued by the American people via tax dollars, are once again making huge profits - $2.2 billion during the first half of 2010.  However, they have only added 2,000 jobs.  So it goes with the rest of corporate America, as the Fortune 500 took in $391 billion in profits in 2009, an increase of 335% from 2008.  Not many average citizens saw their pay increase at all – of those lucky enough to have a job.


This is nothing new in America.  Conservatives always seem to be complaining that liberals want to redistribute the wealth by increasing the tax burden of the super rich and corporations.  Cut taxes, they always say, so that businesses can create jobs.  Yea right, just like they did during the Bush years. Just look around your house and note all the products made in some foreign country.  Call an 800 number to purchase something on line and chances are you will be talking to someone in India.  We don’t make much in American anymore – except maybe things like guns and bombs.


Wealth has already been redistributed – upward that is.  Between 2001 and 2008 the richest 1% of the population got a nice gift from the American taxpayers: $491 billion. The most recent economic report shows that corporate profits continue to increase and “corporations have sharply stepped up their capital spending, but they have invested relatively little in job creation.”


More and more U.S. corporations are finding it very profitable to move most of their manufacturing to Third World countries, where labor is cheap, there are no unions, and there are no restrictions on child labor (and most of this labor is reminiscent of “sweatshops” in the nineteenth century) or on worker safety. At the end of the 20th century there were only about 1,100 American factories in Mexico.  As of 2006 there were more than 2,700 Maquiladoras (“export-oriented factories”) in Mexican border states.


Meanwhile, millions of people suffer; foreclosures remain at an all-time high, poverty has increased, the “official” unemployment rate continues to hover at around 10% and it is twice as high for African-Americans (around 50% in the inner-cities). 


Inequality continues to grow, and the social conditions of the most disadvantaged sectors of society have worsened in recent years. As of 2008, the poverty rate for African-Americans was 25% and for those under 18 it was 34%; in contrast, the rates for whites was 11 and 16 respectively. According to the most recent report from the Children’s Defense Fund more than one in six children (13.3 million) live in poverty and one out of thirteen lives in “extreme poverty.” Obviously these rates will fluctuate a great deal depending upon where people live (e.g., urban vs. rural areas) and even within certain areas of the country there is wide variation.  For instance, in the South the rates for black children are well above the national average (Nebraska has the highest at 52.5%).


Predictably, the current economic crisis has already had an impact on the crime problem.  Cases of reported runaway youth have been rising, stemming directly from the current crisis.  Many states have been releasing prisoners by the hundreds, if not thousands, in order to save money.  For the first time since 1972 we saw a reduction in the overall prison population in 2009. A survey of 233 police departments by the Police Executive Research Forum in early 2009 found that 43 percent of the departments “reported rising levels of what they felt were recession-related crimes.”  The report also noted that there was a general expectation that as the recession worsens, crime is likely to continue going up, as predicted by previous recessions in U.S. history.


Several reports have noted that children will be negatively affected by the recession as it will increase the likelihood that they will be living under the poverty level, which in turn may increase the likelihood of doing poorly in school and dropping out, which in turn often leads to crime. One report found that about 1 out of 7 children are living with an unemployed parent. This report noted that: “Children whose parents are unemployed are at increased risk for experiencing poverty, homelessness and child abuse.” Also, children who enter poverty during a recession are very likely to drop out of school. Further, child poverty has reached 22% and one recent report notes that: “Half of the poor are now classified as in ‘extreme poverty’ – described as living in families earning below 50 percent of the poverty line.  The percent of children who are food insecure also increased to 18 percent in 2010.  This growth translates into an additional 750,000 children nationwide who are malnourished. Reliance on food stamps increased by 24 percent between August 2008 and August 2009, with the number of children benefitting them growing from nearly 30 million to 37 million.”  The 2010 Child and Youth Well-Being Index (CWI) created by the Foundation for Child Development (FCD) predicted that the effects of the recession will likely include: (1) a decline in Pre-Kindergarten enrollment; (2) an increase in the rate of those between the ages of 16 and 19 who are “detached” from mainstream institutions because they are not in school and do not have a job; and (3) an increase in “risky behavior” (violence, drugs, etc.). The report also predicted that the proportion of children living in poverty will rise to 21% in 2010 and that more than one-fourth of all children will be living with a parent that is unemployed.  The key finding here is the decline in pre-kindergarten enrollment as this is a leading predictor of child development in the early years, including delinquent behavior.


Our solutions to the crime problem seem to always center around improving police procedures or methods of identifying where the next crime will occur and by whom, as noted by a recent development called “predictive policing.” From this point of view, crime is a “technical” problem, to be approached like we approach the weather (predictive policing borrows from methods used to predict earthquakes).  For more than 100 years social science research has told us all about the social and psychological sources of crime, so it is not merely a “technical” problem.  Will we ever learn?


© 2010, Randall G. Shelden. All rights reserved. No part of this may be reproduced without permission from the author.