Labor Day

Labor Day has come and gone, so I thought this would be a good time to remind readers of how this country treats unions and the working class. Given the disingenuous way unions are usually portrayed it the media, along with the incessant harangue from Republicans, many Americans have been convinced that unions are an unmitigated horror. The message has been so relentless for so long, millions of Americans have grown up hearing no other narrative except that unions are a blight. In turn, they have accepted the corporatist argument that slashing the pay, benefits, and job security of the working class is the way for America to move forward. That and another round of tax cuts for the wealthy.

Right-wing analysts, who have an agenda, talk endlessly of costs, corrupt union bosses, and how corporations' profits are hurt. Mainstream journalists, many of whom are feckless if not especially conservative, will parrot right-wing talking points uncritically. What they often leave out is what it means to families and neighborhood where workers have somewhat higher paychecks than they would otherwise. Small businesses, which Republicans claim to support, are happy for the extra business their neighbors' larger paychecks allow. Local and state tax revenues rise as well because workers have more disposable income, and thus put more back into the local economy. In other words, employees with cash to spend make good customers; those with minimal discretionary income make poor customers. And every employee is someone else's customer.

Closely related is the greater job security that unions have historically provided. Many Americans have been told inability to shed workers has been a costly burden, ignoring the fact that the American economy has consistently been among the most competitive and productive; our corporations are among the most profitable. We are now learning what citizens in less developed countries have always known: When you are underpaid and don't have job security, you hunker down. You focus on the most elemental needs and try to save money. There is, of course, little to save, whether it be for emergencies or retirement--and millions no longer have a pension like their fathers did. If you are scared of losing your job because your boss is a prick, and is constantly threatening you, just remember that non-unionized Americans, and that is most of us, now have little legal protection. Americans have some of the lowest job security in the OECD, a development that was entirely intended.

As for those retirement plans, especially the public sector ones that turn Republicans apoplectic, one should ask, even if few in the media do, why there is so much willingness to scaremonger the costs and so little effort to account for the ways people benefit because someone in the household has a retirement check; a check that contributes to the family and the neighborhood.

I recall some sneering comments made on Face Book a while back by a man who supported Tea Party policies. I recall that he was incensed over California's state employee retirement obligations. The figure he threw out I no longer recall. He may have been correct; it certainly seemed like a lot of money. But what I do recall is there was no context; it was just assumed to be an outrageous amount. All cost and no benefit.

It should be obvious, but apparently isn't, that the dollar amount means little if the number of retirees, and their dependents, are not accounted for. Or the number of years the total obligation is spread over. Or how many other family members benefit from the relatively large retirement checks. Or how many are able to stay off welfare as a result. Multiplier effect, anyone? Dollars spent by unionized civil servants, active or retired, go back into local economies where they act as a far better economic stimulus than austerity or tax cuts, both conservative favorites.

California state retirees, who are mostly middle-class, also pay taxes on that income, which the state and the feds are very good at collecting, unlike that of the very wealthiest, who are very good at avoiding taxes, even if it means putting their extra billions, or even trillions, in offshore tax havens. When is the last time you read, not some polemic from the Left, but a fair analysis in your favorite news source, of how the very wealthiest duck taxes and what it means for the rest of us?

These are simple economic principles; low wages are a drag on any economy, but especially one dependent on consumer spending. What do you honestly think will happen if, for decades on end, wages are suppressed for most of the working and middle classes, pensions are eliminated, job security and benefits are reduced, and millions have become compliant, overworked, and scared because they cannot risk losing their shitty jobs?

Silly me, you blame the victims, of course.

Insecure By Design

Question: What has been a defining feature of American socio-economic life for nearly all of its history, faded substantially for roughly two generations, and now has come back with a vengeance in the last two or three decades?

An insecure and vulnerable workforce. One that is compliant, scared, and with few workplace rights.

It is no accident that employee insecurity, those subject to dismissal without cause, has coincided with flat wage growth, a decline in union membership, the gradual disappearance of pensions, and the rise of the cynically-named "right-to-work" legislation.

Some will tell you that it is the inevitable result of globalization; it's a tough, competitive world out there, and hey, China. OECD data on worker protections in member countries belies this assertion. According to recent OECD publications, the United States has become unusually hostile to workers. As Les Leopold reports:

The Organization for Economic Cooperation and Development (OECD) ranks 43 nations by the degree of employee protection provided by government. The 21 indicators used include such items as laws and regulations governing unfair dismissals, notifications and protections during mass layoffs, the use and abuse of temporary workers, and the provision of severance based on seniority. Countries are ranked on a scale of 0 to 6 with 6 going to those who provide the most legal protections for employees and 0 for those with the least. We're ranked #42 out of 43, meaning that we have among the fewest regulations to protect employees -- union, non-union, management, full-time and temporary workers alike.

The low level of worker security has always been the objective of most of those on the Right, whether they espouse neo-liberalism, laissez faire policies, or free trade. Enthusiastic support from the corporate world for cheap, compliant labor has varied over the generations, but has been especially strong in recent decades.

Through it all are those who may not be rich themselves, or may not run a corporation, or have well-developed views on economic doctrine, but still show a remarkable hostility to the "other": those not in the same tribe, religion, or race; those who are unacceptably different in thought, world view, and sexuality. A hostility that is directed against those who do not know their place and thus threaten the hierarchy.

This has been with us since colonial days. Both David Hackett Fischer, in Albion's Seed, and Colin Woodard, in American Nations, vividly reveal the brutal treatment that for centuries was meted out to the powerless; slaves, immigrants, indigenous Americans, indentured servants, sharecroppers, women, political subversives, the lower class in general.

The nature of employment, and of insecurity, have changed over the generations, though the working class remains the object of contempt. Workers are increasingly compelled to pursue jobs that not only offer low pay and no benefits, but are further away from home, are at odd hours, or, and this is the big one, are seasonal, temporary, or part-time. The result is a dystopian nightmare for millions of workers, some of them highly educated, who spend an inordinate amount of time, money and gas, to get to one part-time job, then must hustle off to another one. And you better not complain, because the boss does not need a good reason to fire you.

For a modern analysis of how the wealthy are currently reshaping the lives of the working poor and, increasingly, the middle class, read Jeff Faux's The Servant Economy, or Robert Reich's analysis of "the sharing economy," Faux focuses on how so many of the jobs now appearing are designed to serve the wealthy; day care--for the very young and the very old--dog walking, auto detailing, pool and lawn care, and many more. The pay is low, the benefits mostly non-existent.  No unions, no protection; you serve at the pleasure of the rich. Reich describes an economy where "human beings do the work that’s unpredictable – odd jobs, on-call projects, fetching and fixing, driving and delivering, tiny tasks needed at any and all hours – and patch together barely enough to live on."

No slavery, not technically, but highly constrained conditions, along with wages that are no longer coupled with productivity, mean that America, a country that once had high social mobility compared to other industrialized economies, now has among the worst. We are returning to the rigid, stultifying hierarchy of class, low wages, and pervasive, and often aggressive, religiosity that has long characterized the American South.

We are becoming Dixie.

Innovation is Secondary

Ever notice how little time politicians spend debating the core issues that concern the politically literate? And how easily our media chases after, or creates, secondary issues? It was painful enough to watch the tepid and interminable process known as the presidential election campaigns. And now with mid-terms approaching, we are reminded just how shallow American elections, and the media that feeds off them, have become. What really is killing us is the abject inability or unwillingness to understand and confront our rigged and dysfunctional system. Our overclass has no intention of letting public discourse ever become constructive and insightful. Our corporate media is only too happy to fixate on the trivial, or otherwise shine its investigative spotlight on important but secondary issues, including education, the federal debt, and other seemingly constructive topics such as innovation.

As America continues to struggle, many continue to tout the value of innovation-- in technology and commerce, mostly-- but also in education and government. President Obama himself has often stressed the importance of innovation; how we once had it in abundance, how it now is eroding, and what we must do to get it back. The value of innovation would seem to be something that progressives and conservatives could mostly agree on, and that helps explain why the President talks about it. It seems, on its face, to be non-partisan.

However, when President Obama talks about the importance of innovation, he has often, inadvertently or not, folded it in with other conservative talking points. We need to "work harder," "stay in school," --or go back to school-- and get that degree or those credentials. It's a competitive world out there; if you can't get the job you want, it's because you are not properly trained and credentialed. And, of course, you cannot blame corporate America if you don't have the proper skills. We must not let down them down; work harder and prove your value to the job creators. This is the central tenant of individualism.

It's all quite clever, really, for the constant adulation of individualism tends to shut down debate and analysis of US political economy. It is all up to you. The rich earned all they have, and if you don't like your lot in life, it is your fault and only you can change it. This mantra allows the overclass to largely avoid honest media examination or a concerted pushback from a mostly insouciant population that is chockablock with low-information voters, has a short attention span, allows itself to be constantly distracted by inanity, and takes solace in religion. Corporate media operates within this milieu, invariably giving voice to conservative operatives who lecture and berate as class warfare any attempt to lay bare our breath-taking inequality. The ideology of individualism allows our overclass to pin society's ills on our growing underclass.

Obviously, there is much to be said for staying is school, seeking additional training, or more broadly, the role of innovation. American commerce still provides sundry example of where hard work and innovation can take you; they are the twin edges we must sharpen if we are to meet future challenges.

However, every speech devoted to either of these takes the focus away from the underlying causes of US difficulty; jobs, to be sure, but also wage levels for the jobs we still have. Most people are in fact employed, and most jobs have not been outsourced or lost to foreign competition. What is not being acknowledged is that a disproportionate number of the jobs Americans now have face little foreign competition. That's the good part; the bad part is modest wages, benefits, and skill requirements for so many of these jobs. You don't need a degree to work fast food, retailing, and the like. And what about that other more technical job you went to back to school for, got a degree in, and now are heavily in debt for? Sorry, that job has been filled.

The problem of our sluggish economic growth is not a lack of innovation. We have bought into an economic doctrine that sanctifies free trade, financial deregulation, including unfettered flow of capital, and an obsession with credit and debt. It is a system designed by and for banks and the investor class, with little regard for main street or the middle class. The result is an indifference to massive trade deficits, dangerously leveraged banks, and an increasingly ability of the wealthy to avoid taxation and accountability. Employees are seen as a mere input in this profit model. Low wages are good since they improve the bottom line. If workers are recalcitrant and actually want a living wage, management should be free to outsource production to low wage countries. To hear some tell it, management is virtually obligated to fire its American workers and seek cheap unregulated workers abroad for improving the bottom line is management's only real responsibility. It's what the investors want, you know.

And the people who work for the company? That's labor, an input. Lower input costs mean higher profits. Why pay more? Any manager who does not seek to maximize profits is doing a disservice to investors, just like they were all taught in American business schools. It's all very rational and efficient, don't you see?

Innovation does not directly address any of this. We have innovated like crazy and what are the results? Entire industries have been shipped overseas. Because we have allowed our industrial base and concomitant skills to erode, seeking out overseas producers has become the default position. A generation has grown up assuming that American reliance on foreign manufacturers is the natural order of things.

Nor do the calls for greater innovation say who will benefit from the results. Asia is a huge beneficiary of US economic policy. For generations our tax dollars have poured into basic R&D, much of it going to public universities. It has been a great success story, and it has played a key role in America's development. As with the recent rounds of stimulus spending, many of those tax dollars end up in Asia. Working harder, as both Republicans and Obama have exhorted, does nothing to change the imbalances. US corporations already have what they always want; cheap labor, huge profits, and a compliant, cheer-leader government. The investor class took a hit in 2008, but they have recovered nicely, and have fat dividends and lightly-taxed capital gains to show for it.

So the middle class needs to work harder? Because corporate America's profits are not high enough? Because the job creators need help? Americans are already working harder than elsewhere in the OECD; we also have, in recent decades, relatively little to show for it. Wages have been suppressed, union membership has plummeted, and pensions and benefits have become even more rarefied, not because of foreign competition, or globalization, but by design. It is the direct result of illegitimate policies made in response to legitimate economic challenges.

Innovation will help; it always has. But the role of innovation has been undermined for the same reason our middle class and techno-industrial base have. A little history shows that nations that support each of these have thrived. Those that let their financial sector dominate have crumbled. America will not be an exception.

Enrichment for the Few

Former AT&T Broadband CEO Leo Hindery recently acknowledged that executive pay in America has gotten completely out of control, and that it has caused a "structural breakdown of the meritocracy of our nation."

Hindery says it is "born out of cronyism." Well, yes, shameless cronyism is certainly a defining feature of American corporate culture, but who are the cronies and how do they get that way? Cronyism is an American way to avoid the obvious Marxian reality that corporatism in America is and always has been class-based and is intended to be an enrichment mechanism for the well-placed and the wealthy. It is all about enriching the upper class and not Americans in general.

All the same, Hindery's disgust is fully merited. In a recent interview;

Hindery observed that, even as CEO pay has skyrocketed in recent decades, it has not "trickled down" to workers, who must increasingly borrow money to finance their spending. That dynamic helped set the stage for the most recent recession and helps explain today's sluggish recovery.

That's exactly it; rich CEOs are not directly the problem, but more of a symptom. The real problem is how little of the country's growth in the last 30+ years has gone to the middle and working class and instead has gone to those at the very top, the 1/10th of 1%, a class of individuals who were already rich when inequality was merely significant instead of obscene. 

The problem is that too many of us must hunker down just to pay the basics. There is nothing left in a growing number of paychecks for families to buy groceries, pay the rent, pay or save for education, and put away some for retirement. So at the end of the week, something must go. A low-wage economy, which America now is, means increasing numbers of us have nothing left for an occasional splurge on just the products corporations want so much to sell us. Neoliberal politicians, some Democrats, mostly Republicans, have forgotten that one company's employee is another company's customer.
  
As Hindery states; "The only time the U.S. economy and any of the developed economies prosper is when there's a vibrant middle class that grows from the bottom up...We've trashed that whole principle."

To make matters much worse, the figures on inequality generally do not include assets CEOs and their investor class enablers are able to shield from taxation. And that means many billions of dollars leave the US and end up in foreign banks accounts. That does nothing for the US economy, though it is quite beneficial for places such as Bermuda, the Cayman Islands, and Switzerland. It isn't the middle class that sends these huge sums offshore. It is the very wealthy, who quite literally have more money than they know what to do with. While some of that wealth continues to be productively employed, an increasing amount is pumped into the political process--overtly creating a plutocracy--or is frittered away on ostentatious displays; the hyperwealthy's version of crass consumption.

Recent evidence of the astronomical sums the super-wealthy hide or send abroad, you know, people like Mitt Romney, demonstrates we have been seriously underestimating the amount of wealth that has left the United States. 

In a recent article in Slate, Jordan Weissmann shares the findings:

Economists Emmanuel Saez, of the University of California–Berkeley, and Gabriel Zucman, of the London School of Economics, are out with a new set of findings on American wealth inequality, and their numbers are startling. Wealth, for reference, is the value of what you own—assets like housing, stocks, and bonds, minus your debts. And while it certainly comes up from time to time, it has tended to play second fiddle to income in conversations about America’s widening class divide. In part, that’s because it’s a trickier conversation subject. Wealth has always been far more concentrated than income in the United States. Plus, research suggested that the top 1 percent of households had actually lost some of its share since the 1980s. 

That might not really have been the case. 

Forget the 1 percent. The winners of this race, according to Zucman and Saez, have been the 0.1 percent. Since the 1960s, the richest one-thousandth of U.S. households, with a minimum net worth today above $20 million, have more than doubled their share of U.S. wealth, from around 10 percent to more than 20 percent. Take a moment to process that. One-thousandth of the country owns one-fifth of the wealth. By comparison, the entire top 1 percent of households takes in about 22 percent of U.S. income, counting capital gains.

This is hideous, not because a few people are hyperwealthy, but because they helped create the deeply unfair and unsustainable economy that allowed them to attain that wealth. Now they dominate society, law, commerce, media, banking, and the democratic process to ensure their interests are protected and a Dixified, socioeconomic heirarchy is ever more institutionalized.

Say good bye to democracy. 

Dixification

I am pleased, if that is the right word, to see a growing chorus of criticism about not just the direction this country is headed, but the very specific reasons why. Some point to the eroding infrastructure, and characterize it, too vaguely I believe, as "economic decline." It is, but without detailing why such decline is happening, such assertions have limited utility.

Others are closer to the point when they talk of the US becoming "third world." They don't mean a lack of technology or development, but instead point to economic inequality and a political economy dominated by a well-entrenched landed-gentry-cum-oligarchs; e.g., an aristocratic overclass. 

Those who know their American history, the history we did not learn in high school, are well aware this country was built on cultural fault lines from the very beginning. Talk of secession was in the air, and has remained there, from the earliest days of the Republic. If you didn't hear much about secession growing up, and thought it was just that one flare-up called the Civil War, it's probably because you were not born in the south, or in Texas.

But this is not about secession; it's about southern economics, or Dixiefication.  A recent article by Nicholas Kristof in the New York Times takes an important leap in fleshing out what has gone wrong in the US in the last 30+ years.

Kristof writes of the last 30+ years of conservative influence as a "failed experiment."

...In upper-middle-class suburbs on the East Coast, the newest must-have isn’t a $7,500 Sub-Zero refrigerator. It’s a standby generator that automatically flips on backup power to an entire house when the electrical grid goes out.

In part, that’s a legacy of Hurricane Sandy. Such a system can cost well over $10,000, but many families are fed up with losing power again and again...

...the lust for generators is a reflection of our antiquated electrical grid and failure to address climate change. The American Society of Civil Engineers gave our grid , prone to bottlenecks and blackouts, a grade of D+ in 2009.

Kristof notes that demand for household generators has surged. Most of them are being scooped up by upper-middle class families that can afford the generator and the gas that goes with it. 

That’s how things often work in America. Half-a-century of tax cuts focused on the wealthiest Americans leave us with third-rate public services, leading the wealthy to develop inefficient private workarounds.

But our political system is dysfunctional: in addressing income inequality, in confronting climate change and in maintaining national infrastructure.

Indeed it it dysfunctional. But government is not a mess because people do not know what to do. We are being purposefully pushed in one direction because of deeply held ideological beliefs and the policies that reflect that ideology. That belief system is familiar to those raised in the deep south. It is based on class, race, hierarchy, tribalism, and an obsequious allegiance to authority. The result is that the plantation mentality of the colonial south, where cruel slave masters from Barbados established themselves far from the prying eyes of Yankee do-gooders, and created a feudal society dominated by a privileged few. In other words, a society much like the old one they left behind in Europe, one structured on wealth, privilege, and class. Democracy and equality before the law had nothing to do with it. Mouth breather Ted Nugent, who appears increasingly unstable these days, epitomizes this brutally undemocratic attitude when he says that poor people and those on welfare should be denied the right to vote.

Slavery may be gone, but much of the rest of Dixie model not only has remained, it has spread to other states, mostly in the Midwest and Appalachia. A sense of where I am coming from on this can be found in Democracy Heading South: National Politics in the Shadow of Dixie, (2001) and Dixie Rising: How the South is Shaping American Values, Politics, and Culture, (1996) by Peter Applebome. A study I have mentioned before, Colin Woodward's American Nations, provides an invaluable historical backdrop to explain how we got this way.

A sense of that Southern model, what I am calling Dixification, can be seen in a litany of examples. Kristof provides a few:

So time and again, we see the decline of public services accompanied by the rise of private workarounds for the wealthy.

Is crime a problem? Well, rather than pay for better policing, move to a gated community with private security guards! 

   
Are public schools failing? Well, superb private schools have spaces for a mere $40,000 per child per year.

Public libraries closing branches and cutting hours? Well, buy your own books and magazines!

Are public parks — even our awesome national parks, dubbed “America’s best idea” and the quintessential “public good” — suffering from budget cuts? Don’t whine. Just buy a weekend home in the country!

Public playgrounds and tennis courts decrepit? Never mind — just join a private tennis club!

I’m used to seeing this mind-set in developing countries like Chad or Pakistan, where the feudal rich make do behind high walls topped with shards of glass; increasingly, I see it in our country. The disregard for public goods was epitomized by Mitt Romney’s call to end financing of public broadcasting.

You got it, Kristof. At its core, Dixification means disdain for the public sector, but also low wages, low regulations, and low taxes.  It calls for a dominant class run by corporations, the modern version of the plantation's boss man; land owners and sharecroppers, feudal overlords and a peasantry.

Recent data shows just how badly the middle class has been squeezed. As CNNMoney just reported (my emphasis):

Corporate profits hit their highest percentage of GDP on record in the third quarter.

Just four years after the worst shock to the economy since the Great Depression, U.S. corporate profits are stronger than ever.

In the third quarter, corporate earnings were $1.75 trillion, up 18.6% from a year ago, according to last week's gross domestic product report. That took after-tax profits to their greatest percentage of GDP in history.

But the record profits come at the same time that workers' wages have fallen to their lowest-ever share of GDP.

Welcome to Dixie.

American Justice II

A Merry Christmas for one guy, a lump of coal for the other.
 
This is from the Dec 21, 2011 edition of Midweek, in a syndicated column called Weird News, by Chuck Shepherd. I have reproduced it verbatim.

Criminal Justice?: Daniel Vilca, 26, was ordered to prison for the rest of his life (without possibility of parole) following his conviction in Naples, Fla., for having pornographic photos of children on his computer. He had no previous criminal record nor was there any evidence of contact with children. The judge computed the sentence by multiplying a five-year term by 545 photos police found...A week earlier, a judge in Dayton, Ohio, sentenced former CEO Michael Peppel, 44, for defrauding his shareholders by overstating revenue in a company that went on to lose $298 million and cost 1,300 employees their jobs. Sentencing guidelines recommended an eight- to 10-year term, but federal judge Sandra Beckwith ordered Peppel to jail for seven days.

Peppel also received a $5 million fine, the levying of which seems to be the preferred approach when the wealthy are convicted. More on his story here.

The United States has an overtly class-based system of justice. It is the poor, the powerless, and the disadvantaged who are prosecuted in the first place, face high conviction rates, and serve disproportionately long jail sentences.