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Intro: "Its leading companies are investing in the US because they can do things here they would never think of doing at home."

A Deutsche Bank property in South Los Angeles. (photo: Francine Orr/LAT)
A Deutsche Bank property in South Los Angeles. (photo: Francine Orr/LAT)

The US: Where Europe Comes to Slum

By Los Angeles Times | Editorial

15 May 11


Its leading companies are investing in the US because they can do things here they would never think of doing at home.

he newest slumlord in Los Angeles is a pillar of German capitalism. Earlier this month, the city attorney's office filed suit against Deutsche Bank, the world's fourth-largest bank, for letting many of the more than 2,000 L.A. homes it has foreclosed on descend into squalor and decay.

A yearlong city investigation of the properties on which Deutsche Bank foreclosed turned up tenants compelled to live in crumbling apartments the bank would not fix, houses taken over by gangs, faucets from which water either wouldn't flow or wouldn't stop, and the occasional unidentified dead body. Nothing, in other words, that would be allowed to happen to bank holdings in Frankfurt, the neat-as-a-pin German city that is home to Deutsche Bank and much of the rest of German finance.

Deutsche Bank responded to the suit by blaming the loan servicers that were supposed to have maintained the bank's properties. But City Atty. Carmen Trutanich insisted the blame belonged with the owner. "We are not going to allow them to play the shell and nut game," he said.

But slumming in America is fast becoming a business model for some of Europe's leading companies, and they often do things here they would never think of doing at home. These companies - not banks, primarily, but such gold-plated European manufacturers as BMW, Daimler, Volkswagen and Siemens, and retailers such as IKEA - increasingly come to America (the South particularly) because labor is cheap and workers have no rights. In their eyes, we're becoming the new China. Our labor costs may be a little higher, but we offer stronger intellectual property protections and far fewer strikes than our unruly Chinese comrades.

Don't take my word for it. Check out the study released this month by the Boston Consulting Group, which concludes that when you compare China's soaring wages and still-low levels of productivity with our stagnating wages and rising levels of productivity, the price advantage of manufacturing in China instead of the US will shrink to insignificance by 2015. Investment in the US, says the group, "will accelerate as it becomes one of the cheapest locations for manufacturing in the developed world."

Those investments are well underway. The auto companies of Europe and Japan have opened factories in the nonunion South over the last couple of decades. Not one of them has agreed to refrain from waging a union-busting campaign should their workers wish to organize. Their stance could not be more different from their attitude toward workers and unions in their home countries.

As a report released by Human Rights Watch late last year documents, companies that routinely welcome unions, pay middle-class wages and have workers' representatives on their corporate boards in Germany and Scandinavia have threatened their US-based employees with permanent replacement by other workers as the penalty for protesting wage cuts (that was the German manufacturer Robert Bosch), ordered workers to report on fellow workers' pro-union activities (that was T-Mobile, a subsidiary of Deutsche Telekom) and disciplined workers who couldn't show up for unscheduled weekend shifts announced on Friday night (that was IKEA, according to an L.A. Times story).

In Germany, Robert Bosch, according to Human Rights Watch, has never threatened a single worker with losing his job for protesting wage cuts, and Deutsche Telekom repeatedly touts its "social partnership" with its union. In Sweden, IKEA, like the vast majority of Swedish companies, is unionized and affords its workers a range of rights and benefits that are all but unimaginable to American retail workers.

German manufacturing workers, making the world's most sophisticated products and machinery, earn on average $1.50 for every dollar that American manufacturing workers make. (Despite that, because it's German policy to foster high-end manufacturing and highly skilled labor, Germany also has a huge trade surplus, while we have a mammoth trade deficit). In the new global pecking order, the decline of American unions and the steady downward mobility of American workers are making us the destination of choice when European companies want to get the job done on the cheap.

America as the beacon for the workers of the world? No more. If anything, our relationship with Europe has become a latter-day version of the one that characterized the years leading up to the Civil War, when our Southern states provided cheap, slave-produced cotton to the mills of Manchester. (That's why British and French business favored the Confederacy.) Once again, we're where Europe comes to slum - in the low-wage factories of the South and the run-down houses of South Los Angeles.

Harold Meyerson is editor at large of the American Prospect and an op-ed columnist for The Washington Post. your social media marketing partner


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+47 # Rick Levy 2011-05-15 22:05
I guess these European believe when in America, do what the Americans do.
+7 # je proteste 2011-05-16 00:40
As the Germans say:
"Mit den Wölfen, muß man heulen."
With wolves, one must howl.
+22 # Shaboom 2011-05-15 23:22
They also come here to grow grapes for wine because they can take as much water as they want, which they can't do in Europe where water is at a premiume and vineyards are required to use dry farming techniques for growing grapes to conserve water. This practice is draining our rivers dry and causing river life to become extinct.
+23 # Texas Aggie 2011-05-15 23:37
Now tell me again how the unions are so bad for the workers.
+14 # Homer Peters 2011-05-16 06:43
Hello Wisconsin, anybody listening up there?
+28 # tonenotvolume 2011-05-16 00:48
A perfect example of what union-busting guarantees. The US,Europe,and Japan need their feet held to the fire by union organizers and active employees. All the anti-unionists should see this and understand how they're destroying middle class America. Become active!
+29 # Ralph Averill 2011-05-16 03:01
No need to get one's knickers in a twist. Deutche Bank is only doing what many other banks and corporations have been doing in third world countries for a couple of centuries. It's just that now they have a new third world country to do it in.
-3 # rom120 2011-05-16 07:31
Great, we found a scape goat! Who's busting unions in Wisconsin etc.? Europeans? Give me a break. Who sold the mortgages to Deutsche Bank?
+15 # MickSteers 2011-05-16 08:31
The race to the bottom knows no borders. Current European governments cannot destroy decades of social progress (at the behest of trans-national companies) overnight. That will take time. Just look at the "austerity" being foist on many Eurozone nations for the crime of letting bankers do whatever they wanted.

Globalization as it is being pursued today is a Faustian bargain between the wealthy and powerful in government and wealthy and powerful corporate elite (increasingly they are interchangeable ). Rather than building on the strengths and resources of each country, for the benefit of all, globalization is just a buzz-word for endless arbitrage.

The more power and influence companies wrest from governments in the name of competitiveness , the less it matters what citizens want.

Isn't it ironic that the IMF Chief was finally arrested for doing to a chambermaid what the IMF has been doing to the poor all over the world for decades.
+8 # BradFromSalem 2011-05-16 08:46
So now we have proof that the Right Wing actually has a plan to increase employment. See, they lookeed back into history, because they are great believers in learning from history. Through careful analysis they determined that America was at its economic peak during the robber baron days. They then set upon bringing back that same environment; for workers and owners.

This article merely points out that once again, if we return to the days of low wages, long hours, child labor, and company owned housing; prosperity will return. But that is just the start. We also need no taxes and a minimal education that is enforces conformity above learning.

What? The library's budget has been slashed and all the reference books are from before 1915? It's still history ain't it? It is still the time of America's greatest economic achievements, right?
+16 # granny 2011-05-16 12:49
European countries also know that they can avoid health care and other benefits for their workers if they slum over to the US. And, of course, elected idiots like Scot Walker will welcome them with open arms and piles of incentive dollars stolen from the schools and the infrastructure in Wisconsin.
+4 # giraffee2012 2011-05-17 13:01
We have the best govt $ can buy - thanks tothe Stupremes 2010 unconstutional decision to give 1st amendment rights to BOG (multi-national ) corp.

But we still have the VOTE --- until they take that away -- you are obligated (I believe) to cast your ballet. But, be care NOT to vote for anyone supported by the Koch brothers, GE, BANKS, OIL, OIL (repeating myself), and those we know are voting to "take away" Medicare, Social Security, (etc) to lower Taxes --

If you vote GOP based on abortion, guns, gay (etc) then you are not looking at the big picture. Those issues are NOT going to "feed your children or grandchildren" -- Do you really want another 4+ years of "W" with his silly wars (that are really bankrupting us)---
Vote on fiscal issues and "get what you pay for (like social security)"

BUT VOTE -- do not sit home and cry! And this is my opinion.

GO Wisconsin -- I am so proud of you!

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