Tech Workers vs. Google

Left Voice author Rose Lemlich pens a piece entitled Tech Layoffs Are About Punishing Workers and Driving Down Wages that is a breath of fresh air compared to what the magazine usually covers. It's actually about the real economy, as opposed to the mostly inconsequential travails of academics, or the generally irrelevant concerns of the 0.1% of the population that is legitimately trans. Beyond which Ms. Lemlich is a talented writer--a trait she shares with many of her colleagues.

That said, her understanding of how capitalism really works is abysmal. She really does need to learn some basic economics--even if it's only the Marxist sort. The very title of her article represents a misconception--that tech firms are all in cahoots to drive down wages and "punish" workers. The former is impossible. The firms are in competition with each other to hire the best workers, and thus compete to offer the highest wages possible. That's why Silicon Valley tech workers typically earn well into the six figures. The latter is ridiculous. Why would any firm want to "punish" its own employees? That's hardly a strategy to improve morale or increase productivity.

Ms. Lemlich quotes a Twitter person (@CubicleApril):

Pretty incredible that Google is trying to get away with blaming macroeconomic conditions for their layoffs, when over the last year they’ve spend 57.36B on stock buybacks.

That’s enough to support the 12,000 laid off engineers at their median engineer compensation for 23 years.

It is Ms. Lemlich's opinion that the $57.36B would be better invested in featherbedding Google's workforce rather than "wasted" on stock buybacks. She's wrong on several counts.

To begin, she misunderstands who the owners of Google are. She writes,

This is because capitalism is not altruistic: major shareholders don’t buy shares because they want to invest in these companies’ visions or provide startup capital for them to become more productive. They buy shares because they believe those shares will be worth more money in the future; this is their only pursuit as capitalists; it is the only way they make money.

Of course this is true--capitalists want to make money. But so do workers--otherwise why go out on the picket line demanding more wages and bennies. And how many workers will remain long at a particular job when a neighboring employer is offering a 10% higher salary? Like workers, capitalists are people, too.

But then her image of the capitalist is wrong--she obviously imagines some Monopoly game banker in a top hat who uses money for nothing more than wallowing around in a pool of gold coins. But that's wrong. According to Investopedia

The top individual insider shareholders of Google are Larry Page, Sergey Brin, and Sundar Pichai, and the top institutional shareholders are Vanguard Group Inc., BlackRock Inc. (BLK), T. Rowe Price Associates Inc., and FMR LLC.

Misters Page and Brin each own about 3% of the company. Mr. Pichai owns 0.1% of outstanding shares. Ownership by the institutional owners (Vanguard, Blackrock, & T. Rowe Price) is more complicated, but looks to be between 4% to 7% each. Total institutional ownership of Google stands at 78.4%.

The point here is institutions serve mostly pension funds and individual savers like you and me. Anybody who owns either a mutual fund or an ETF likely has money invested in one or more of those institutions. Pension funds obviously need to maximize returns on their investments--they're greedy like everybody else. But they're not the greedy capitalists of Ms. Lemlich's overheated imagination.

More, Ms. Lemlich apparently believes stock buybacks are just an exercise in frivolity--merely used for buying fancy yachts or custom lattes. 

Stock buybacks reduce the number of shares in circulation, making them rarer and more valuable. Buying back stock does nothing to boost the productivity of a company, and it does nothing for the social good. The cost of these stock buybacks alone would’ve paid the salaries of every laid-off worker for decades. The executives are just using rising inflation and expectations of a recession as a propaganda tool to justify their greed.

She is correct that Google buying back stock does nothing to boost the productivity of Google. Stock buybacks are instead a way of returning money to shareholders. It is an admission that Google is no longer worth the investment. Indeed, Ms. Lemlich quotes an article in Business Insider that claims as much (links omitted).

But while Pichai, who made $280 million in compensation in 2019, said he took "full responsibility for the decisions that led us here," he failed to elucidate those choices. He didn't mention that during his time at the helm Google has been hit with billions of dollars' worth of antitrust fines, been left in the dust by OpenAI's ChatGPT despite "pivoting the company to be AI-first," and seen its core search product get steadily worse.

If Mr. Pichai really is that bad a CEO, then reallocating money away from Google is indeed a good strategy. It's an argument for more stock buybacks rather than fewer.

I can't judge the quality of Mr. Pichai's leadership. But I will say that Google has cornered the online advertising market and is unlikely to increase its market share. It is, therefore, no longer a growth company in the way it has been over the past few decades. So hiring on the expectations of future growth such as before the pandemic were likely not warranted. It is much better that the extra capital be reinvested elsewhere.

There are two ways that capital can be reinvested. One is that Google itself reinvest the capital in its own businesses--this is what Ms. Lemlich suggests should happen. Or the money can be returned to shareholders so they can individually decide where to reinvest it. The first option suggests that Mr. Pichai knows best where to reinvest all capital and never makes mistakes. The second option suggests that shareholders will, on average, make better investment decisions than Mr. Pichai.

Of course "reinvesting capital" is a rather bloodless way of saying that social resources generally should be reinvested. In particular, if Google is maxed out, then not only capital, but also labor should be reallocated to where it provides the most social utility. And that's what is happening: if talented people are being laid off from Google, they will in short order be hired by other companies that need both the investment and labor from talented employees. This is to the benefit of all concerned, especially including consumers.

Here is Ms. Lemlich's closing sentence:

Tech workers — because of their high wages, key place in the economy, and (until now slightly more certain) job security — are in a unique position to organize with workers in other sectors and coordinate actions in solidarity around issues facing the entire class in the face of a recession.

I'm not so certain. The whole tech industry--labor and capital alike--is now threatened by so-called artificial intelligence (AI), such as ChatGPT and its successors. These tools can now write programs better than most human beings, and do so a whole lot cheaper with a whole lot less capital. Tech jobs the world over are now at risk, the current holders of which will likely have to seek out new careers rather than just new jobs.

Further Reading:

• The Harm Reduction Team
• Labor Notes 2022: Starbucks
• Lost in the Amazon

Book Review: The Low Point of Labor Resistance is Behind Us

Authored by Jack Barnes, Mary-Alice Waters and Steve Clark, The low point of labor resistance is behind us is the political report adopted by the 49th Constitutional Convention of the Socialist Workers Party (SWP), held on December 12th, 2022. The authors (whom I've dubbed the "Troika") are the long-time (going on five decades now) leaders of the Party. Comrades Barnes and Waters are over 80, while comrade Clark is about 70.

The premise is that the union movement has reached bottom, and because of economic misery workers are becoming more militant and more likely to organize and rebel. This, if true, will reverse a decades long trend that began in the 1970s.

Except I don't think it's true. Just today, in an editorial, the WSJ writes

Union members made up only 10.1% of the workforce last year, down from 10.3% in 2021, according to data released recently by the Labor Department. For a long time the prototypical union shop hasn’t been a private steel plant but a public school, yet the unionized share of government employees also fell.

Though the annual changes look small, they add up: The workforce in 2012 was 11.3% unionized, and in 2002 it was 13.3%. Organized labor hasn’t been able to stop the trend, despite frantic unionization drives, including many aimed at nontraditional members, such as the university graduate students who march under the United Auto Workers banner. Private workers are 6% unionized, down from 8.6% two decades ago. For public workers, it’s 33.1%, down from 37.3%.

Last week ZeroHedge reported similar statistics, along with this rather depressing gem:

The most unionized occupations are public safety (34.6%) and education (33.7%). The lowest are sales (3.0%) and computer and math jobs (3.3%). 

Bad news for Trotskyists, who don't consider cops to be part of the working class.

The Troika might concede that union membership hasn't yet recovered, but they'd insist that the trajectory has changed. Unions, they'd claim, are becoming more militant and better organized, which will be reflected in the overall statistics soon enough. They provide no data for that belief, but are concentrating their efforts in two unions: the bakery workers (BCTGM) and the rail workers. Among the bakery workers, 160 of them have gone on strike in recent months (120 at Ingredion, 40 at Corn Nuts). Both strikes have been settled. This does not auger a surge in labor activism.

The fact is that unions are increasingly irrelevant. There is a serious labor shortage for workers in blue collar professions, and those employees are getting raises. For example, Walmart recently raised starting salaries across the board from $12 to $14 per hour. That's a near 17% raise, for which no strike was required. They're doing this because they need the workers.

The Report consists of 27 sections, ranging in length from a paragraph to a page or two, organized within four chapters. The whole document (not counting prefatory material or illustrations) is about 60 pages long, or approximately 15,000 words. I read it in about three hours.

The first chapter is entitled Opposing US rulers' assaults on freedoms protected by the Constitution and their use of the political police. It describes in detail the unconstitutional persecution of Donald Trump and so-called "MAGA Republicans" by "the government's political police, first and foremost the FBI." It must be noted that the Party has had its own run-ins with the FBI before, notably the COINTELPRO lawsuit in which the Party won $264,000 in damages. Opposing the FBI is consistent with Party history, as the Report discusses at some length.

More, the Party notes that a majority of blue collar workers voted for Trump in 2016 and in 2020. Trump earned the vote of record numbers of Hispanics and Blacks (though the latter was still a small percentage). Therefore supporting civil rights in this case is in solidarity with the people whom they hope to represent. They cast themselves as being on the side of the "deplorables" and the "bitter clingers."

In their defense, the Report cites Leon Trotsky himself:

"Under conditions of the bourgeois regime, all suppressions of political rights and freedom, no matter whom they are directed against in the beginning, in the end inevitably bear down upon the working class, particularly its most advanced elements."

They are also very clear about who their opponents are.

Democrats, liberals, the "left," and "woke," so-called social justice warriors--not rightist or other reactionary forces--have led the assault against constitutional protections and freedoms in recent decades.

Trotskyists have always opposed the Democratic Party and all it stands for. The Report strongly reiterates that position.

While standing up for civil rights, the Report does not explicitly make clear their opposition to Trump and the Republican Party as agents of the bourgeoisie. Trump's name is mentioned in the Report only in passing, and the Republicans are not mentioned at all. This may lead to some confusion as to whether the Party still is part of the Left. I think they unambiguously are, but the Report would be better if they made that case explicitly.

The second chapter is entitled Capitalism's erosion of the family and the working-class road to women's emancipation. This includes some standard boilerplate:

Central to any communist program is a union-led fight for employment, with wage rates, work schedules, and job conditions necessary for families to live. ...

Jobs, not dependence on welfare programs, open a road forward. ...

Class-conscious workers call for a shorter workweek with no cut in pay, with regular hours.

So they're in favor of full employment, but then, after all that, they come out in favor of a comprehensive welfare program: "What is needed is a floor for all families--an income that's sufficient for workers..." to pay for all the bennies. The standard label for such a policy is universal basic income, and was championed by Andrew Yang in 2020.

The weirdest part of the Report concerns abortion. They claim that (boldface mine)

...we fight for women's right to reproductive and maternal health care, sex education (not gender indoctrination), as well as access to the safest and most reliable contraceptive methods and safe and legal abortion.

There is then a long section on how they supported Roe v Wade back in the 1970s, but have now come to regret that choice. The argument isn't entirely convincing. Summarizing in my own words, Roe v Wade short-circuited a national debate on abortion, depriving the working class of an opportunity to come to a decision on their own.

What the current Supreme Court has done, in the Dobbs v Jackson ruling, is simply return decisions about abortion to people in the individual states. They didn't rule on abortion one way or the other. The Party supports this move, and assumes that abortion will eventually be legal everywhere.

But now comes the truly mysterious part (in section 15; boldface mine):

The Socialist Workers Party unconditionally supports the decriminalization of abortion and joins others in fighting for it.

Decriminalization? Why that instead of legalization, as suggested in the prior quote? There is a difference, I suppose, but we're never told what it is.

A hint might be this:

...our communist program has nothing in common with bourgeois and middle-class forces--whether feminists, or campaigners for population control--who in fact advocate abortion as a means of contraception. We reject the pseudoscientific views of those who deny that the issue of human life, a profound moral question for all working people, is always involved in abortion decisions and procedures.

That second sentence is a bit hard to follow because of the double negative (...reject...deny...). It could be more simply written, but I think the mealy-mouthedness is on purpose.

I interpret the Party's position as pro-natalist, i.e., they want workers to have more babies. I think they're right--I describe myself using that word (and not just for workers). It's hard to square pro-natalism with unequivocal support for birth control and abortion. Therefore they equivocate.

The third chapter is entitled The Cuban socialist revolution and our communist continuity. It's much shorter than the first two, and in my opinion is completely wrong. Indeed, I think the Party's whole international analysis is wrong--I'll refer readers to books by Peter Zeihan for a clearer understanding. I'm going to skip over that here.

The fourth chapter--shortest of all--is Forging a proletarian party and educating its cadre. They claim, with no evidence whatsoever, that

The SWP is forging a proletarian party in the United States--a revolutionary political instrument of the working class, whose purpose, as our constitution asserts...is "to educate and organize the working class in order to establish a workers and farmers government, which will abolish capitalism in the United States and join in the worldwide struggle for socialism."

That's a tall order for a Party of about a hundred souls, with an average age in the 60s. The majority of comrades are at or nearing retirement age. Their current leading spokeswoman is Ilona Gersh, who is in her mid-seventies. The leaders are a pair of octogenarians.

What I am most disappointed with is that the Party has not brought in new, younger leadership. While I don't support the Party's goal of revolution and socialism, I have no fear of that ever happening even in my grandchildren's lifetime. But I'm sentimentally attached to my former comrades, and I want the Party to continue to exist. Having the same leadership for 50 years is not healthy. Presuming that the organization will have a meaningful voice when lead by octogenarians is fanciful.

I don't think Jack Barnes, Mary-Alice Waters, or Steve Clark are serious about the World Revolution. They're just concerned for their own sinecures--and what happens after that let the devil take the hindmost.

I enjoyed reading the Report. It's well written, entertaining, and not too long. The illustrations are silly--they're mostly pictures of people standing around holding placards, such as shown on the front cover. But the book is professionally produced. I didn't find any typos--if there are some in what I've quoted here, they are mine. Apologies in advance.

Further Reading:

• Oberlin, 2017 (about the 48th Convention)
• Labor Notes 2022: Starbucks
• Has the SWP Moved Right? Or the Republicans Left?