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.

Jeb Says to Work Harder

It should come as no surprise that Jeb Bush, after saying he would not run, and was not interested in being President, has decided that he is going to run, because he is interested after all. Sure Jeb, you really had me fooled.

This post is only about his most recent foot-in-mouth moment, though he has had a number of missteps from the very beginning: Not good for the brother who was supposed to be the smart one. You can get the gist of it from the picture below.

Here is the interview with New Hampshire's The Union Leader, complete with a video, in which he said the following:

“My aspiration for the country and I believe we can achieve it, is 4 percent growth as far as the eye can see. Which means we have to be a lot more productive, workforce participation has to rise from its all-time modern lows. It means that people need to work longer hours” and, through their productivity, gain more income for their families. That's the only way we're going to get out of this rut that we're in.”

Most critics jumped on the "need to work longer hours" aspect, and with good reason. We, Americans, already work the longest hours in the industrialized world.

Bush claimed what he meant was that too many workers juggle part-time jobs, when they would prefer a single full-time job. That much is true; part-time work takes an even greater toll because of the additional logistic challenges, a point I have touched on before.

Jeb did not clarify how he would rectify that, nor, for that matter, was there a hint of recognition as to why Americans are forced to work such long hours at so many jobs just to get by. Republicans won't mention that the US has among the lowest minimum wage, the fewest paid vacations, relatively few national holidays, inadequate pensions, low job protection, and no paid maternity leave. But Jeb Bush thinks we just need to work harder.
                               
But note also that Jeb said we need to raise productivity, and then maybe people will earn more. It is this observation that reveals how misinformed he is. Does he not realize the US is already among the most productive countries in the world, if not the most? A search taking all of 20 seconds showed the US as the most productive G7 member (2013 data). By all means, see the charts. The productivity has been there for decades, but the gains have been entirely garnered by those at the top. This is a fundamental reality of modern America.

JB just cannot bring himself to accept that growing inequality and rising hardships in this country are the result of policies and legislation promoted by his Party. They are the ones that have wanted cheap labor, the ability to outsource jobs, low minimum wages, weak unions, low employee benefits, low marginal tax rates, numerous tax advantages for the wealthy, massive defense spending, and generous subsidies to profitable companies.

America's overclass has created a blatantly rigged system, but Jeb thinks the solution is for the rest of us to work harder. And he is the smart one?

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. 

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.

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.

Avoiding the Real Issues

As America continues to struggle, many have reminded us of 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. There is, of course, less agreement on just how innovation should be enhanced, and what the proper role of government should be.

When President Obama talks about the importance of innovation, he has often, inadvertently or not, draped it in 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 storyline is not so wrong as it is incomplete. 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.

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 a 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. And like the recent round of stimulus spending, much of those tax dollars ends up in Asia. Working harder, as even Obama has exhorted, does nothing to change the imbalances. US corporations already have what they always want; cheap labor, huge profits. 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? For them? 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. All of this is the direct result of flawed 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 techno-industrial base has. Economic history is very clear on this: Nations that vigorously promote and defend their industrial and technical base have thrived. Those that didn't, and let their financial sector dominate, have crumbled.

America will not be an exception.

Low Wages are Crippling Us

Since posting on the problem of suppressed wages on April 25, I've noticed others have posted on the subject and the problems the US* has created for itself by squeezing the incomes of the middle and working class. Nice to know they got my memo. The paste-up below is from Morgan Housel at Motley Fool. Nice write up, Morgan.

Nearly every recent survey asking Americans about their most pressing concern points to the same answer: a job. People are upset about taxes, politics, deficits, and wars, but until you can clock in five days a week and get a paycheck every other Friday, almost nothing else matters.

The good news: Jobs are starting to come back. About 3.3 million more Americans are working today than were just two years ago. That's great from a social perspective. People are going back to work and regaining dignity. Let's hope it lasts. 

But even if it does, it might not be enough to fuel a strong recovery. What drives the economy isn't necessarily jobs -- it's people's ability to save and spend money. And even though jobs are coming back, average weekly hours and wages, by and large, are not. More people have jobs than did a year or two ago, but we're working fewer hours, for barely more money, than before the recession began.

The average private-sector employee worked 34.3 hours per week this year, according to the Bureau of Labor Statistics. Five years ago, the average workweek was 34.7 hours long. That might sound like a small difference, but it adds up fast. Working more hours means bigger paychecks, which means more saving and spending, which drives economic growth -- just like adding new jobs would. According to UBS economist Sam Coffin, every one-tenth of an hour increase in an average private-sector workweek is the equivalent of adding 320,000 jobs. So if employees were working the same number of hours today as they were five years ago, the increase in spending would be like having an additional 1.3 million people employed -- enough to push the unemployment rate well under 8%. 

Then there are wages. From the end of World War II through the late 1990s, average real (after inflation) hourly earnings increased 1.8% a year, and growth coming out of recessions was usually stronger than that. Not this time. Average real hourly earnings have been essentially flat over the last several years. If wage growth followed its historic growth rate from 2009 through today, the average worker would be earning almost $1 an hour more than they are now. The additional spending that would generate is the equivalent of some 2 million new jobs in today's economy. 

All of this underlines something important about today's jobs market: A disproportionate number of jobs being created are for low-wage, part-time work. According to a recent Bloomberg Briefing, 41% of jobs created since 2010 are from "low-wage" sectors like retail and hospitality, even though such sectors only make up 29% of the total labor force. When government job losses are factored in, 70% of all job gains in the last six months came from low-wage sectors. In March, the notoriously low-wage restaurant and food-service industry added 37,000 of the 120,000 total jobs created for the month. "Administrative and waste services" made up another 15,000 of the total (though month-to-month figures can be murky). 

Measured by the number of jobs alone, our employment recovery has been extraordinarily weak. But, when you factor in the quality and pay of the jobs that are bouncing back, it's been downright abysmal. When it comes to spending and stimulating the economy, creating 3.3 million new jobs today might be the equivalent of several hundred thousand jobs in years past. That's a dark thought when thinking about our future.....

*Actually, it can be problematic to use "country" or "nation" as the unit of analysis; the United States is an abstract concept.The decision to promote policies that benefit the rich is not done by a country, or even a government, but by certain specific individuals within the government and others who support them. Using expressions such as "the US believes" or "the American people demand" are clumsy but often effective simplifications. People who conflate the two parties and claim that "politicians" got us in this mess have a perverse devotion to symmetry and are intellectually lazy.   

Our Low-Wage Recovery

There has been lots of talk in the air about what this country needs. Republican presidential candidates have been almost unanimous about the value of cutting taxes, by which they mean the top tax rate, the one that affects the wealthy. And we must get the corporate tax rate down as well; it tops out at 35% and that must surely be why American corporations are having trouble competing, except that they aren't. The premise for lowering the top corporate tax rate is that corporations actually pay the current rate. They don't. What they do pay are the most obscene compensation packages in the world.

And let's not forget to cut spending, lots of it. Please tell me you find it odd --in a simple math that doesn't add up kind of odd-- that proponents of spending cuts, meaning nearly every conservative member of congress, simultaneously insist on budget-destroying tax cuts for the wealthy, those who have already enjoyed a generation of such largess, even as they yelp about the deficits those tax cuts created. The national debt is so horrible that we must gut spending on society's most vulnerable to save the republic, but apparently not so horrible that we can't give more tax breaks for our most privileged.

So why has our recession lasted so long? It isn't because taxes are too high, or because we have a large budget deficit.

The reason is that we are turning into a low-wage country. Look at chart below. It shows the share of employees in low-wage work. Hey, we are number one. Yes, I know, having a crappy job is better than no job at all. But this is a long ways from the can-do spirit that this country once had, back when it was an unambiguous economic superpower, back when its tax rates were much higher and wages grew along with productivity. I've discussed the wage-productivity divergence here and here.  



As Tavis Smiley and Cornel West have shown, many of the newly created jobs are "...in the restaurant, retail, temporary service, social assistance and hospitality sectors. In other words, low-wage jobs, most without health benefits or paid sick leave."  Additional analysis of the significance of the chart above, including America's growing wage polarization, is at "Economist's View."

In other words, low wages means marginalized families with low consumption. Not only can they not save, provide for their children's education, and pay for health care simultaneously, they simply cannot buy much of the products that both corporations and merchants need them to buy. The inability to consume more, regardless of how one feels about materialism, prolongs the weak recovery because everything is predicated on sales, not low taxes. Businesses, especially the smaller ones on Main Street America that do not have foreign sales, do not want lower taxes or cheaper workers. They want more customers.

“It is to the real advantage of every producer, every manufacturer and every merchant to cooperate in the improvement of working conditions, because the best customer of American industry is the well-paid worker.” FDR

Lying: An Unregulated Industry

We keep hearing the same theme on the Republican campaign trail, the same tired bromide about how government weighs heavily on the private sector, the onerous regulations that sap our energy, and the ruinous taxes that undermine private initiative. And of course, all of this is what President Obama wants, because liberals, especially the foreign-born dark ones, want bureaucrats to take over the economy. That's why there are fewer civil servants now than when Obama assumed office. He wanted to destroy the big banks, which is why he rescued them. And his anti-corporate mentality explains not only that GM is turning profits and cutting paychecks, but that corporate profits are way up, as is the stock market. Private sector job creation has steadily climbed, despite Obama's confiscatory socialism. And he wants to drive up oil prices, which is why domestic oil production-and domestic drilling permits-- have increased every year since Bush left office, the same year Wall Street triggered the recession.

For some people, in other words, facts don't matter. Not even to presidential candidates. We have been subjected to a barrage of rhetoric that says essentially two things: 1) taxes are too high, and that is half the reason why the economy is sluggish, and 2) regulations are too numerous and burdensome, which is the other half. The solution? It's simple. In the Manichean mind of Republicanism, all policy prescriptions are simple; cut taxes and regulations. 

Never mind that we already have the lowest taxes in the OECD; no where else are the very wealthy able to protect so much of their money. And that nonsense about corporate taxes at a ruinous 35%? I addressed that here. Union death-grip on the economy? The United States has the lowest union membership in the entire OECD. And it has been steadily declining, exactly what conservatives have always wanted. And we have the cheapest gasoline in the OECD as well.

But that campaign theme, the one about unleashing the private sector by gutting taxes and government? None of the four Republicans left standing (OK, Paul and Gingrich are on their knees) ever misses a chance to tell voters that fewer corporate regulations means freedom for us all. We are left with a truism that Republicans have understood better than Democrats: you can get enough people, not all, but enough of them, to believe outrageous and nonsensical tripe if you just repeat it enough, preferably with confidence and conviction, if not outright rage.

Now for some reality. According to Ifo Institute for Economic Research at the University of Munich, in a study that compiled World Bank data, and entitled Business Regulation in International Comparison (available here), the United States is a mighty fine place to do business. The US is suffering, and fares poorly when broad demographic data are compared to similar OECD members, but when it comes to business getting what it wants, the US scored higher than any other large country. It was third overall (among a total of 30 OECD and non-OECD countries), bested marginally by smallish New Zealand and Singapore.

The US scored highest in category 5 -protecting investors- confirming the charge that government prioritizes the interests of the investor class. And we were fourth-best, right up there with the two authoritarian states, Hong Kong and Singapore, when it came to the relative ease of starting a business. The real kicker is that the US was also ranked fourth-best when it came to hiring and firing workers, where nations scored high if business was able to fire workers easily and avoid costly penalties and benefits.

Republicans like Romney and Santorum have been telling us that they will unleash the private sector from that horrid Obama, and they will do it by ever more tax cuts, ever fewer regulations.

They are full of shit. The reality is almost the complete opposite of their fact-free narrative. If suppressing working-class wages and unions, enabling and subsidizing the welfare queens on Wall Street, cutting taxes for the investor class, and letting management compensation run wild were the appropriate policy tools, Wall Street would not have crashed and we would not have had the recession in the first place.

If you know anything about economic history, you know that we have been on this path for decades. And all the Republican candidates can do is call for more of it.

Redistributing Wealth

Les Leopold recently posted an article at Alternet called How Can the World's Richest Country Let Children Go Hungry? 6 Tricks Corporate Elites Use to Hoard All the Wealth. Not only is he spot on in his analysis, the evidence supporting his contentions is massive and unmistakable. I want to examine just one of them in this post. The others I will return to in time.

His first, and now mine, addresses increased economic productivity and how the benefits have become poorly distributed. His contention is thus:

Productivity continues to rise but the 99 percent doesn’t share in the benefits. The key to the material wealth of any nation is productivity – how much we produce per worker hour. Productivity is a crude measure of our overall level of knowledge, technique, organization, skill and cooperative work practices that produce the sum total of our goods and services. Lo and behold, there’s nothing at all wrong with productivity in America. It continues to rise and rise just like it did during our post-WWII boom years. What’s changed is that the average American wage has stalled since the mid-1970s -- which is precisely the time that we started to deregulate Wall Street and cut taxes on the rich. During the 1950s and '60s boom years, almost all Americans shared in the fruits of productivity leading to rising real wages (after inflation). But now the productivity lines and wage lines have pulled apart. The gap between the two lines represents trillions of dollars that once went to the average American but are now going almost entirely to the super-rich.

Here's what Leopold is saying, in graphic form:

As should be apparent, throughout most of the post-war period, labor productivity steadily increased, and workers' compensation largely kept up. This was close to ideal and helps explain why the US economy was the envy of the world. The trend came to an end, rather abruptly, in roughly 1980.

It isn't getting any better. A recent study from Northwestern University reveals that 88 percent of income growth since 2009 was in the form of corporate profits, and only one percent went to wages. A recent investor report from JP Morgan notes approvingly that corporate profit margins increased by about 1.3 percent from 2000 to 2007, adding not only that profit margins are now at levels "not seen in decades," but that the primary reason for the fattened margins is a reduction in wages and benefits.

This is sick.  I remind the reader that reducing taxes on the wealthy and on corporations is at the heart of the Republican platform. And increasing wages and benefits for middle America is not.

What Have Unions Done For Us?

I don't imagine that many have seen this video, but it should at least give pause for thought about this country's ridiculous and staggeringly ill-informed assault on American labor. It started with Republicans, of course; they have hated working Americans for generations. But the real problem is that too few Democrats seem prepared to fight for what made this country great.

Nor can we depend on our feckless media to remind us of what we once had and why we had it. Without a more vigorous media, voters remain confused, uninterested, and susceptable to manipulative framing that has reached absurd levels. 

Ignorant shits who can't tell you what GDP stands for, or how many Senators are in their state have convinced themselves they know what this country needs. They have lapped up right wing crap about how "big labor" is strangling the economy. They don't hear, and don't bother to read about, how high union membership coincided and contributed to middle class stability, at a time when we had a much greater manufacturing sector as well as a trade surplus.

All of this happened while the US was a creditor nation, consumers had far less debt, did not rely on two or more jobs to make ends meet, and were able to save far more. Nor did our government depend on our trading partners' dollar surpluses to buy our debt. And it all happened when marginal tax rates were far higher than today.



Now look at the graphs below. You can see that most of America has not done well economically in the last 30+ years, not considering overall growth. This is why we have a stagnant economy; wages are too low, which has led to weak demand. Does it look like the tax burden, regulations, or labor unions have held back the rich? Does it look like they need more tax breaks?

FDR's New Deal created the middle class. Son, if you don't know that, you need to set about reading some American economic history. You do know what FDR stands for, yes?

US as Third World

On August 25 I had a post on Wall Street and how it bought and captured the institutions originally meant to ensure the public was served. I wrote then, and I say here again, the outsized role of the financial sector and the obscene, short-sighted, and shameless priorities of a reckless investor class, complete with unprecedented lack of accountability and legal liability, are at the heart of America's economic difficulties.

Corporate America's dominance of media and public discourse gloss over the fact that said financial dominance was what conservatives wanted; it was they that pushed through legislation favorable to the wealthy, investors (wealthy or not), and corporations. Conservatives, especially the wealthy variety, have gotten most of what they have wanted; lower taxes, fewer regulations, free movement of capital, lucrative defense contracts, and more.

Crap about how progressive agendas have hurt America are the imaginary domain of the ignorant. Union membership is now at negligible levels, far below similar countries. Labor unions have been weak for the last 30-odd years and getting weaker, just what  conservatives wanted.

New Deal legislation had made banking relatively safe and stable for generations. It was conservatives who said barriers between banking and finance were dated and holding us back. So Republicans in Congress overturned Glass-Steagall. Conservatives got what they wanted. Casino capitalism almost immediately ensued; financial meltdown soon followed. They wanted taxpayers to bail out the banks, and without any meaningful reform to prevent further catastrophes or undeserved enrichment. They got that too.

Wages for most workers have been flat for decades, precisely what conservatives have wanted. The US was a wage leader before Reagan; since then, wages for most have been flat. Conservative policy has been to suppress wages however possible. Conservatives got what they wanted.

The list goes on and on; our nation's richest and most powerful get what they want; favorable legislation, weak regulation, accommodating regulators, court rulings, and a compliant press. This should all be obvious to anyone who pays attention and doesn't walk on their knuckles. But reality struggles for attention in the face of a conservative noise machine that continually distracts voters.

Conservatives have also favored free trade, the mantra, the religion, the chiseled-in-stone gospel of laissez faire economics. It is front and center in the pantheon of conservative political economy, right up there with free markets. And here again, conservatives get what they want.

Conservatives, including Republican party operatives, rarely miss a chance to pimp free trade doctrine. American media usually goes along with Republican talking points. Even if one does find articles that dutifully report massive deficits, and even outsourcing, there are few coherent and visible efforts that explain the ramifications in detail and dare to analyze free trade as class warfare or why a lack of industrial policy is destroying us.

To get just an inkling of how international trade is playing out for the US, have a look at the figures below (Data are from Alan Tonelson's America's Increasingly Third World Trade Profile).

Below are the top ten US trade SURPLUS manufacturing categories for Jan.-June, 2011
(billions of current U.S. dollars)

Waste & scrap materials:  +$15.53
Spacial classification provisions:  +$11.44
Plastics & resins:  +$10.19
Soybeans:  +$8.81
Non-anthracite coal and petroleum gases:  +$7.18
Corn:  +$6.67
Wheat:  +$6.45
Cotton:  +$6.39
Misc. basic organic chemicals:  +$3.87
Non-poultry meat:  +$3.85

Next are the top ten US trade DEFICIT manufacturing categories for Jan.-June, 2011
(billions of current U.S. dollars)

Crude oil & gas:  --$121.13
Autos & light trucks:  --$37.82
Petroleum refinery products:  --$27.62
Computers:  --$22.50
Broadcast & wireless communication. equip.:  --$22.35
Goods returned to Canada & reimported:  --$21.47
Audio & video equipment:  --$15.80
Pharmaceuticals:  --$13.38
Telecommunications hardware:  --$12.72
Computer parts:  --$12.67

Notice a pattern? The US has become a big supplier of scrap and raw materials. Although the data do not show it, this is a substantial reversal of a few decades ago, when the US had a trade surplus in a variety of manufactures, especially high-end, high-tech goods.

Now look at the sectors with the biggest trade deficits. Except for oil, they are all manufactured goods that not long ago were among America's biggest contributors to what we once had, a trade surplus.

There is much to address here. My intention in future posts is to further explore issues in international trade and to demonstrate that America's free-trade ideology and the policies and practices that have resulted, are primarily in the interests of the overclass, have shaped corporate America to serve the interests of that overclass, but are damaging for the country as a whole.

Don't let conservatives tell you the US has a trade deficit because our taxes are too high, wages are too high, unions are too powerful, or regulations are too onerous.

They are wrong on every point.

Texas Miracle, My Ass

So what is it with Republican voters and swaggering Texan Governors? The last one should have been a warning. Rick Perry is said to be considering a run for President. His supporters seem to think his record as TX Governor is something to run on.

Here's Rachel Maddow taking down Perry (starts at about the 8:30 mark). Among the highlights:
   --Wages have been nearly flat since 12/07, lagging behind NY, CA, and the national average.
  --TX has a higher percentage of workers earning minimum wages than any other state.
  --The median hourly wage in TX is $11.20. Yikes! Even if one assumes a year-long, full-time workweek, that is barely $23,000. And that is the median: many are earning significantly less.
  --TX has the highest percentage of citizens without healthcare in the country, currently over 25%.

Near the end of the clip, Maddow reviews Perry's amazing hypocrisy when he railed against Washington's irresponsible stimulus, but quietly took $billions that shored up 97% of the TX budget shortfall.

She might have added an item that Perry's cheerleaders, and most of us, ignore. Texas has a huge advantage over most states, it has nothing to do with Perry, and it can be stated in three words: oil and gas. That advantage is a fortuitous accident of nature.

Joshua Holland also provides a withering analysis of the so-called "Texas Miracle." Highly recommended.

US Corporate Model is Dysfunctional

Below is a video interview of political columnist Harold Meyerson. He addresses a topic that should be front page news everywhere, but isn't. He talks of America's dysfunctional corporate model and its negative impact on the economy.

In my view, and it is a subject I want to discuss more later, Meyerson correctly describes the US economic model as an obsession about the microeconomic needs and interests of corporations and shareholders, and not to the needs of communities, workers, or the broader interests of the nation.

Note Meyerson's references to Germany, which has a huge trade surplus, based on manufactures, and substantially higher wages and benefits than in America. Though he did not say it, Germany's per capita exports are about four times higher than America's. This in an a country where union membership is much higher and manufacturers are not given free rein to offshore production to cheap labor havens. This is a recipe for disaster, according to the Neo-Cons, Neo-Liberals, Wall Street, the right wing, virtually all Republicans, ideologues, and the endless stream of bloviating media shills.

I give them credit; they know how to protect their interests and get voters to care more about somebody's home makeover, scary brown people, or Wiener's wiener.  



It's a shame, really. Our politicians fight fiercely to protect US corporate interests, the corporate model, and the overclass that feeds off it. They talk to us of liberty, freedom to choose, and the horrors of industrial policy and government interference, even as they bail out Wall Street and subsidize Big Oil.

In return, their pockets are filled with cash to buy the next election.

Why the Rich Vote Republican

On March 23, I posted an article on the results of wage suppression and the shift in wealth from Main Street to Wall Street. Here is another revealing graph. Not sure you can see it well, but the vertical green line indicates the beginning of the Reagan Presidency. The blue line represents the average income in real terms, of the bottom 99% of all Americans; the pink line indicates the top 1%.

The effects of FDR's New Deal, beginning in 1935, vividly show how the American middle class was created.  The graph also shows how that same middle class has been squeezed in recent decades as conservative policies, such as outsourcing, hostility to unions, financial deregulation, an indifference to deindustrialization and other feckless trade policies, have dramatically stunted average income for the bottom 99% (a trend that began before Reagan) and have boosted average incomes for the top 1%, primarily through tax cuts, just as dramatically.

If you are the least bit willing to give your brain a chance, you must surely realize that Republicans are pushing policies to further undermine the middle class and shift ever more wealth to the very top.

The Results of Wage Suppression

Negligible wage growth for most Americans has been an underreported feature of our political economy for an entire generation. This is as corporate America has wanted it, not because they don't want Americans in general to have higher incomes, but because they care first and foremost about their bottom line. That may seem normal to Americans who grew up in a post-Reagan society, but the result is that corporations have come to dominate policy, and economic ideology, as never before. What is best for citizens, families, and communities need not concern the corporation or the investor class.

We are now seeing the results of 30+ years of wage suppression and the gigantic growth in inequality that was inevitable. In a very recent study by The Economic Policy Institute, Lawrence Mishel reveals just how little workers have benefited from decades of substantial productivity growth:

Over the last 30 years there has been very modest wage growth for the typical worker. This is not because the economy was weak and employers were strapped for cash or profits. The economy enjoyed soaring productivity between 1980 and 2009. The Figure compares median wage growth over that period to average gross domestic product growth per worker, a measure of what each individual worker, on average, contributed to the overall economy. This is equivalent to the growth of income per worker as well. While average income per worker grew 59.0%, median wages grew by just 11.2%. Over this same period the amount of wealth (household assets less liabilities) per worker grew by 63.7%. 

What we usually hear and read is the ignorant and asinine contention that unions and public sector workers are to blame for deficits, poor productivity, and slow growth.  This is a nauseatingly stupid position, and it figures that teabaggers would get behind it. In reality, wage growth has never been a policy goal for most politicians. As Mishel writes, "The focus instead has been on policies that claimed to make consumers better off through lower prices: deregulation of industries, privatization of public services, the weakening of labor standards such as the minimum wage, erosion of the social safety net, expanding globalization, and the move toward fewer and weaker unions."

Below is a graph taken from Mishel's paper. It shows as much as any single graph could as to why so Americans are hurting, despite working longer hours even as they fall into debt. The benefits of all that toil, investment, education, and innovation are not accruing to the middle class, but to upper management and the investor class. (Interestingly enough, the graph shows a distinct, recent uptick in both private and public sectors, even as productivity continues to climb. When was that? After Obama took office. No wonder Republicans hate facts).

In a nutshell, the gap in recent decades means that working- and middle-class incomes have not kept up with corporate America's ability to pay them. Workers' incomes would be significantly higher, but our overclass is pocketing the difference. 

Those outsized bonuses gotta come from somewhere. 

Corporate Communism

Dylan Ratigan has a good rant in the video below. Free market pain and adjustment for most of us; socialism, subsidies, and protection for those at the top. 

It should be so blatantly obvious that financial interests have captured our economy and government. I hold special contempt for teabaggers who had ample opportunity to see who the real perpetrators have been. Just to be clear on this; the evidence is pretty freakin obvious that the Republican establishment created the teabagger movement. The money, and there was lots of it, came from various sources, but mostly from Wall Street. And the teabaggers themselves have been too stupid, too misinformed, and so ideologically blind that they not only offer completely incoherent, contradictory, and intellectually infantile demands, they have also completely missed the overwhelming role that Wall Street, conservative economic doctrine, and Republican politicians have played.

Yet teabaggers and other shallow voters have become angry with America's difficulties only since Obama took office. Tip to the clueless; it ain't the unions, the public sector, teachers, Muslims, or Obama's black friends that have put the US and the middle class in the current bind.  Do your brain a favor and read some economic history.

Take a look at the chart below the video. If I had to choose one data set to show what has happened to the US in recent decades, this would be it.




This chart indirectly reveals how nearly all growth since about 1980 has gone to corporations. The data directly show that for a generation, corporate America has had the ability to pay much higher wages, but instead has pocketed nearly all productivity gains. Corporate profits are at record levels, but the American middle class is hurting not because taxes are too high, but because our wages are too low.