The Mystery Of Twenty-First Century Capitalism

Bewildered by what I was hearing this morning on CNBC, which covers bidness and financial happenings, I thought I must be missing something. Surely, I didn’t just hear John Chambers, Chairman of the Board and CEO of networking equipment giant Cisco Systems, say that despite his company’s robust profitability and despite his rosy outlook for the future, that he nevertheless finds it necessary to cut 5% of Cisco’s workforce, some 4,000 jobs?

Yes, I must be missing something. Or capitalism, as practiced by today’s multinational corporations, is an impenetrable mystery. It has been weird enough that throughout this slow-motion economic recovery corporate profits have been soaring, even as job growth has been relatively stagnant. Now it appears that profits don’t just lead to stagnant job growth, but to job cuts!

At least I wasn’t the only one who couldn’t understand John Chambers reasoning this morning. He was asked twice to explain why he was planning on eliminating jobs in the face of good news about his company. I confess that I did not understand either explanation and I suspect the panelists on CNBC didn’t either.

Here, watch below and see if you can figure it out and then explain to me the finer points of twenty-first century capitalism, in which a company can earn $2.27 billion (versus $1.92 billion last year), project long-term revenue growth of 5 to 7 percent, and still find it necessary to eliminate thousands of jobs. Please, I await some enlightenment:

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Corporate Patriotism

ThinkProgress has posted a very revealing chart from a Wall Street Journal article.  Here is the entire set of graphics from WSJ:

As you can see, a dramatic increase in job exporting—outsourcing—coincided with the Bush II presidency.  ThinkProgress on the WSJ article:

The paper notes that this is actually a sharp reversal from trends in the late 1990s, when these major companies were creating more jobs in the United States than overseas. Yet by 2001, things took a turn for the worse, and these corporations have been adding more jobs abroad than at home…

ThinkProgress also posted a pie chart of the results of a survey of “many of the nation’s most powerful corporations” that attended an outsourcing conference in 2009:

 

Not much patriotism there, ThinkProgress notes, and ends with this:

Unfortunately, for some of these companies, sending American jobs overseas isn’t enough. They also want to bring the profits back into the United States with as little tax liability as possible. Cisco Systems, which had 26 percent of its workforce abroad at the start of the decade but 46 percent of its workforce abroad by the end, is currently involved in a lobbying campaign titled “Win America” calling for a tax repatriation holiday that would let big corporations “bring money they have stashed overseas back to the U.S. at a dramatically lower tax rate.” A similar tax break in 2004 actually increased the amount of money companies store overseas.

It continues to amaze me, as our patriotic military men and women fight overseas, that corporations doing business in America persist in this domestic sin, and should we ever decide to bring our military folks home, we might have to send them back overseas looking for jobs.