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.

Come Together?

Ralph Nader has a new book out, called Unstoppable: The Emerging Left-Right Alliance to Dismantle the Corporate State. In it, Nader argues that some elements of the Right and Left are beginning to come together as they slowly realize they have a common enemy, Wall Street in particular, corporatism in general.

Progressives, including Nader, had much of this figured out long ago; whether it be the corrupting influence of wealth and privilege, the contradictions of neoliberal economics, the laughable asininity of supply-side economics, the  illogical and self-serving gospel of free trade and more: It was the Left, the true Left, not the Clintons and their Democratic Leadership Council, nor the New Democrats, nor other Republican Lites, including President Obama, that long ago saw the corporate train wreck heading our way.

Only now, with so much evidence that even Fox cannot spin it all away, we see at least some working and middle class conservatives, including those who identify with the Tea Party, are finally realizing they have been played by the Republican establishment, those at the very top of the conservative wealth and power structure. 

The Left, broadly defined, has long wondered how the reactionary Right, especially working class rank and file Republicans, could so blindly and aggressively support Republican politicians who so clearly violate what teabaggers claim they stand for, or what they consider to be morally sound.

Nader is not alone on this. I myself have argued there is a substantial ideological and policy opening that could allow the two otherwise disparate forces to work together. Issues such as an abusive financial sector, corruption, inequality before the law, the bill of goods called free trade, secret offshore bank accounts -- an issue that hurt Romney with working class Republicans --are issues that animate both the Left and more than a few Tea Party adherents.

Mike Konczal argues that the Tea Party and Wall Street actually get along just fine. He makes some good points, but it is important to note that Konczal's focus is on elected politicians, those whose elections are financed by Wall Street, and not rank and file teabaggers. It is this latter group's interests which diverge most strongly with the plutocracy, even if they often seem doggedly unaware of it.

And ultimately, this is why Nader's belief that liberals and teabaggers will work against a common enemy may be wishful thinking, at least until even more pain is felt. Few conservatives, and especially tea partiers, even now, will listen to arguments made by progressives. Or to put it differently, many teabaggers will be open to an idea or policy until they realize it is a progressive one, or on those occasions when President Obama supports it. As an aside, I might add they also don't realize how often President Obama sides with the center-right, such as through his enforcement of domestic spying programs initiated by Bush, his unwillingness to prosecute Wall Street banks, or the continued care and feeding of a bloated military.

Their common sense is overwhelmed by a condition that Fox News has worked hard to develop. Fox News Channel President Roger Ailes once said he was less interested in giving viewers the news than in how they felt about it. Blame it on cable TV and the Internet, but fewer of us are willing to listen to, and think through, viewpoints we don't like and may not want to hear. Authoritarians, which populate the Tea Party, are especially impervious to uncomfortable facts and are especially rigid, often contradictory, in their views, but we are all susceptible. Add to this a visceral hatred for liberals that runs deep in America, even though conservatives support liberal policies far more than they realize, that ensures that many on the right will reject policies and programs they would otherwise support if psychology played less of a role and evidence-based economics played more. It does not help that progressive views are relatively complex and do not lend themselves to easy bromides, slogans, or bumper stickers.

It would undoubtedly gall many teabaggers, were they suddenly to acquire a more rounded education, that Marx was right; class defines everything. Those at the very top have always used the state for their own ends. The enduring challenge for the rest of us, one we are currently failing, is to keep in check the predatory nature of the neoliberal overclass.   

Cheaper Still

Low wages are the prime reason the US economy continues to be sluggish for most of us. Suppressed income, of course, is not to be found on Wall Street, Corporate America, and the rentier class, but it has come to define much of the middle class even as the number of working poor continues to rise.

The US economy depends on consumer spending as the core of economic activity: if there is enough spending, it spurs GDP growth, if not, growth stagnates or even declines. We are, for better or worse, a consumption-driven economy. All economies are, to one extent or another, but the US is especially dependent on it.

For most of the post-war period, Japan, to give one comparison, has depended far less on consumer spending to fuel its own GDP growth. The difference was that Japan emphasized capital investment over consumption. Citizens there consumed less and saved more. All that capital investment created massive over production. That's where exports, disproportionately to America, came in. We consume, Japan saves and exports excess capacity. China and Korea have adopted this model.

Accordingly, some economists argue against policies that encourage savings. A dollar saved means a dollar not spent. While the argument is still made that Americans should save more, the counter argument says that doing so will only slow down the economy: Corporate America, small companies, and the employees that work for them all want everyone to buy their products and services. No customers means no sales, so no profits. It also means no employee paychecks and no tax revenues either.

All of which brings us to low wages; not jobs, not investment, not savings, not manufacturing capacity, but the wages Corporate America pays to the millions of jobs that already exist--it is those low wages are the at the heart of our national decay. Low wages are killing the American dream for many. Wages not only have not kept up with productivity for literally decades, but for many of us, wage declines are accelerating.

As compelling as it is, the specifics of America's evolution into a low-wage nation, complete with an overclass and mandated inequality, seem of little concern to many of us, even as we sense we have been victimized by a rigged system. It has taken years, decades actually, but the cumulative effects of neo-liberal, trickle-down policies, and their southern variation, what I call Dixification, have come home to roost.

Cheap Labor Only, Please

Manufacturing and trade news do not get much coverage in our mainstream press. Japanese obsess over trade data, as do the Chinese, Koreans, and most others who take manufacturing seriously. This is obvious from reading any of the mainstream and  business-oriented newspapers overseas.

Ours? The focus is more on Wall Street, corporate profits, and finance. Our corporate media does not want to spend much time on the implications of large, chronic, and structural trade deficits, except for the predictable paeans to free trade, how much we benefit, and how boorishly stupid you are if you are not a committed free trader. Honest analyses of how we arrived at our current condition are rare; most commentary is ideologically driven tripe that contends workers are overpaid and investors need more profits. 

To be sure, we have all read of the decline of American manufacturing. And for those who are determined to know, many websites and blogs, especially those hosted by academics, cover these subjects very well. But while complaints about Chinese currency manipulation and the hazards of doing business in China do get coverage, little is said in the mainstream media about the role of American corporations and how they turned over technology and manufacturing to China and other trade competitors, all in an effort to tap cheap labor, ignore the challenges and capital requirements of advanced manufacturing, boost short-term profits, and please the investor class.

As Chinese wages continue to climb, we are now seeing some evidence of a pick-up in US manufacturing. But a central conundrum remains: Should it be a matter of policy to promote the return of manufacturing to the US? Or is the market going to resolve domestic manufacturing, and perhaps give a boost to exports, without policy intervention?

It is hard to get enthusiastic about an improving manufacturing sector, especially in the face of new data. I once would have welcomed it more openly, but it is becoming increasingly clear that a global economy or neo-mercantilist trading partners are only secondary reasons. In other words, less blame should be attributed to cheap labor in China and more to the desire for cheap labor in the US. The current condition of the US, complete with massive trade and current account deficits, is the direct result of wealthy and well-connected purveyors of neo-liberal free markets. It is they who have hobbled government's essential regulatory role (derivatives anyone?) and facilitated the dominance of finance and the rentier class.

So there is little reason to think that newly created manufacturing jobs are going to pay very well. Neo-liberal policy wonks, along with right-wing politicians, have had a 30+ year run promoting ideas, policies, and legislation that has weakened labor unions, kept minimum wages low, undermined workers' rights and put into place an elaborate tax code that ensures that corporations will largely avoid taxes. All of that in addition to the glories of free and unfettered international trade.

All of which was always the goal. To the extent that corporations locate or relocate manufacturing in the US, it will only be in response to low wages, obscene tax giveaways from states, the absence of unions, and elaborate agreements with government officials that ensure corporations will continue to privatize the benefits and socialize that costs. If manufacturing does meaningfully increase in the US, it will only be because wages have been driven down. If wages go up, even in accordance with productivity gains, corporations will threaten to off-shore production once again.

The Road to Plutocracy

The United States once generally adhered to economic policies that were pretty common sense on their face: We believed in economic democracy, not oligarchy, we believed that severe maldistribution of wealth was not just fundamentally unfair, but unsustainable and dangerous. For generations we properly regulated banks and we had few banking issues as a result.

When the US fought wars, we paid for them in part with steeply progressive--and temporary--tax rates. It was obvious to us and to our trading partners that manufacturing and a modern infrastructure were the bases of economic strength; banks should only play a supportive role. Moreover the US generously supported public universities, which returned the favor by providing us with scientific and technological preeminence. Economic doctrine and history both informed mainstream policies.

We once understood that a strong middle class was essential to overall prosperity as well as the foundation of democracy and free elections. As part of the social contract, industry generally worked with labor, offering wages that were in line with ever-rising productivity. There was little vilification of labor unions at a time when membership was far higher. Corporate dividends and government interest were paid overwhelmingly to Americans and not to neo-mercantilists in Asia and shadowy investors in the Cayman Islands. While the wealthy have always benefited the most, dividends and interest payments in the past were mostly pumped back into local communities. In other words, debt and equities were held almost entirely by Americans. Recipients spent this unearned income within the US, largely in their own communities. That which they saved went into a local banks and credit unions, not Wall Street. This whole process helped grow the economy and stabilize neighborhoods.

We would have been aghast at the idea that massive, intractable trade deficits would arrive and be accepted with surprisingly alacrity. That banks would be allowed to once again trade in securities, take wild, highly-leveraged bets with other people's money, dominate the political process, and virtually insulate themselves from legal accountability. Because of compliant politicians who now have all the money they need to stay in office, the big banks and other stars of Wall Street have been able to maximize gains to themselves, and spread losses onto others, primarily tax payers. This includes companies that have been propped up by taxpayers. It's a sweet deal for the investor class; get the middle class to foot the bill, while dividends and capital gains go overwhelmingly to the investor class. It is, at its simplest, a rigged financial system that has privatized the gains and socialized the costs.

It is all coming undone, though not by the middle class, not by local banks, not by unions, and certainly not by gays, secularists, feminists, immigrants, or Democrats trying to rein in a bloated defense budget. But we have been assured repeatedly that minimal regulations are good because unfettered financial markets will make the best decisions, that they allocate capital most efficiently. Neo-liberalism fetishizes minimal regulations, free and unmonitored movement of capital, low taxes, and free trade.That same neo-liberalism has been a cheerleader for policies that have hollowed out our industrial base, turned the economy over to a rapacious financial system, have put us into deep debt to Japan, China, and elsewhere. In the process, dividends and interest payments that used to stimulate the American economy now stimulate theirs.

Now we are told to spend freely, with few admonishments to save more. Our economic system is now deeply dependent on middle class consumers willing to endlessly consume, a process that is far less beneficial than in decades past because so much of what we buy is imported. Part of the massive earnings enjoyed by our trading partners is now used to finance US debt. The Reagan administration set us on this course of indebtedness because it knew foreign governments had piles of US dollars, and because conservatives in our own government refused to allow a level of taxation that would pay the bills. The 1% are now able to avoid taxation on income that would have been taxed in the past; taxes that would have helped to pay for the Iraq war, which has gone unpaid, and such things as maintaining a modern infrastructure.

Most of the middle class is in serious debt. Families will not and should not spend freely if their job security is in question. Many have experienced wage reductions as they move from one employer to another. An ever-growing proportion of American families realize they cannot simultaneously save enough for retirement, pay for basics, including health care, rising food and energy prices--especially in the face of no commensurate wage increases-- and also set aside for their children's needs, including college tuition. This is not a sudden condition; it has been building for decades.

The right wing and other intellectual thugs want you to believe that it started with President Obama. They hope you don't notice the policies they are espousing are the same ones that have been largely in place for most of the last 30 plus years.

It is, in any event, a laughably ignorant concept to argue that Obama is even in a position to have anything more than a modest effect, for good or bad. The conditions that most people and the government are now in are far larger and intractable for any president to handle. It has taken America 30+ years to get here, it cannot be turned around in four years, not when Bush handed Obama a shit storm and two unpaid wars, not when Republicans oppose him on every substantive point, and not when those same Republicans are able to exploit what we now see are serious shortcomings in the structure of our system of government.

It has taken the US decades to drift into the present condition. During this time the wealthy have garnered ever more of the wealth, paid ever decreasing taxes for it, run corporations that have earned more, paid lower wages, have been taxed less, and have more freedom to move capital around the world, and fewer obligations to middle class families. This is as the wealthy have always wanted it, and it is what today's Republican Party wants. Their biggest concern is that President Obama would do something to stop this inexorable trend towards plutocracy.