And Then The Slow Decline
Now let's take a look at the consequences of this policy and who actually benefited.
There is good news despite everything. According to The Atlantic Monthly,
As Change.org notes:
At one time, when the main challenge to capitalism was Communism, leaders of the free world touted rising consumption afforded by rising wages as a measure of its success.
Starting around the 1980s, however, real wages and productivity, which once went hand in hand, decoupled. No longer did harder work mean higher wages. Productivity continued to rise- adding to the wealth of corporations- while wages remained steady. This trend has continued to the present day.
At that point, personal savings began dropping hitting an all-time low of just .09% in 2000 and it stayed low until the last few years. After hitting depression-era lows, it has been slowly rising again since 2008.
The PBS Frontline report, "The Secret History of the Credit Card" lays out the case quite well:
Why Marx was Wrong and Right
Unions were there to protect the workers from capitalist excesses and exploitation.This allowed the growth of a middle class which stabilized society and contributed to the unprecedented growth we saw in the middle of the last century.
Additionally, access to easy credit has allowed the American citizen to shop and shop, giving, at least, the illusion of prosperity. But buying a lifestyle built on credit is a gamble because credit assumes that tomorrow will be as good or better than today. Life could be pretty good with a high credit limit. Especially with the flood of cheaply-priced merchandise on offer, all of it made possible by non-unionized workers in Asia and elsewhere.
Consider these facts.
Before credit became so widely available, personal savings rates were rising steadily each year. In 1960, Americans were saving 5.4% of their total income, It reached a high of 14.6% in 1975, and by 1982, it leveled off at 10.9%. But all that changed in the mid-1980s under Reagan when consumer credit became more commonplace.
At that point, personal savings began dropping hitting an all-time low of just .09% in 2000 and it stayed low until the last few years. After hitting depression-era lows, it has been slowly rising again since 2008.
During the Depression, Franklin Roosevelt encouraged Americans to buy US savings bonds then called “baby bonds.” These bonds provided a safe investment option for investors- not a get rich quick scheme- and helped finance government operations and initiatives. It was true, as my mother told me, “a means of investing in the country.”
Essentially, with the purchase of savings bonds you were lending the government money. Today, our government must borrow vast sums of money from China. Today we are told that the only way the economy will be on the rebound is by consumer spending, not consumer saving. Saving money for a rainy day is frowned upon. Spending like there’s no tomorrow is the answer. Even when that spending is on credit.
The PBS Frontline report, "The Secret History of the Credit Card" lays out the case quite well:
As the deregulation of interest rates enabled more people to get credit cards, the industry began to expand and became the most profitable sector of banking, with $30 billion in profits last year...Today, nearly 144 million Americans have credit cards, and they are using their cards like never before, charging $1.5 trillion last year alone. Credit cards have become an essential part of the American economy.
With all that convenience, it is easy to ignore the potential danger to the consumer. As Professor Elizabeth Warren points out:
And what families are discovering, even with Mom and Dad in the workplace, is they often can't make it to the end of the month, and so they often use credit cards to bridge the gap. They borrow to make ends meet. And then what happens is something goes wrong. Somebody loses a job, somebody gets sick, family breaks apart through death or divorce...The main things that triggers a bankruptcy filing are job loss, a medical problem or a family break-up. Without these things, most American families can deal with their credit card debt. But high credit card debt puts them at much great risk, so that if they stumble, if they get hit by one of the other blows, they get their feet tangled up in those high interest rates, and they just get sunk.
All of these dramatic changes brought about the wholesale deregulation of various industries have caused people to question the entire capitalist system- as it has been allowed to evolve in the last thirty years. Most importantly, they ask where it is going and whether it is a sustainable model. Should self-respecting people tolerate a system such as this? But, of course, all this corruption was predicted well over a century ago- by a man named Karl Marx.
Why Marx was Wrong and Right
I hear what you are saying. Oh no! Karl Marx and the Marxist theory were proven wrong. The workers did not spring up and overthrow their masters. Communism, or at least the perversion of it that emerged in the Soviet Empire, was proof that Marx got it wrong.
Professor of Political Science from Rutgers, Dr. Michael Curtis, writing back in 1965, would have agreed. In his book “Great Political Theories” he writes:
“..(M)any of Marx’s predictions about the course of history have not been fulfilled. The condition of the working class in industrial countries has grown steadily better, not worse. class struggles have been reduced rather than intensified; the middle class and other classes between the capitalists and the proletariat have not been eliminated; state power has not withered away in communists countries, but has increased in scope and intensity; the supposed international solidarity of the working class has retreated before bellicose nationalism. Perhaps the greatest irony is that the social revolutions that have occurred have been, not in the most highly industrialized countries when “the conditions were ripe” as the theory predicted but in the less developed or undeveloped countries.”
End of story. Or is it? That was written back in 1965 and the battle of ideologies was still unfinished. It is probably even now not quite complete.
In any case, perhaps it’s important to ask why was Marx wrong? Capitalism has proven, at least, until recent years, to have been a smashing success and eventually triumphed over Communism.
So where did Karl go wrong and what can we learn from it? The world that Marx saw and commented on was not the same world that evolved afterward. Many of the intolerable conditions that he witnessed were reversed or kept in check by four main factors:
- the growth of organized labor,
- a strong government with effective regulating authorities,
- a court that acted as a fair arbitrator and deliverer of the appropriate punishments.
- a free press which served the public interest by being the indifferent observer, separate from corporate influence and from political bias.
With these institutions in place, capitalism, tamed but dynamic, could be a world-changing force for good. Without them, life could be hell on Earth.
Admittedly it was never a perfect system but it was good enough to allow a tolerable sense of democracy. It might not have been free from corruption but at least, it allowed each of us to cherish some precious bit of self-respect and individualism. While often as not, equality was more of an ideal to attain than a reality, there was a sense of constant improvement. Things would get better, if not for me, then for my children.
When one sees the failure of Marxism in this light, it begins to make much more sense. It is only natural that Marx’s warnings were more appropriate to less developed countries (that were unable to use these capitalist-taming tools) than to the industrialized nations, which had managed to restrain the excesses of capitalism. Wherever these tools did not exist, one could see the same conditions that Marx described repeating themselves time and time again.
And sadly, during the Cold War, whenever the impulse to rise up occurred in a developing nation, it would be attributed, in the West, to the Communists and it had to be fought with all of the weapons of war that a capitalist society could produce.
China and America: A Search for Solutions
All this is important because the four factors I have mentioned are now being eroded by the unprecedented corruption by corporations like Koch Industries. Our dependence on oil- as well as an empire's taste for luxury has created monstrously powerful corporate entities who would stop at nothing short of treason itself to have their way.
We see more and more every day of this kind of slide toward decline and desperation. The infiltration of the Supreme Court, the mutation of the free press into a propaganda machine for special interests, the purchase of politicians from both parties to make legislative reform impossible.
The slow demolition of organized labor has not brought about better conditions. It has not improved the living standards of the middle class. It has not made America any more competitive. If anything, it has achieved quite the opposite.
But how can America be competitive with nations like China which have an unlimited supply of cheap labor? There's only one way and it's a solution you aren't likely to hear from corporate owned mainstream media.
First of all, we have to remember that the situation in China is not a static one and China is not our enemy. In time, the Chinese worker will soon reach critical mass and make the same demands as the American worker once did. And this seems already to be happening, much to the chagrin of Western companies doing business there.
When workers at a Honda transmission plant in China went on strike for higher wages last month (May 2010), they touched off a domino effect of high-profile labor disputes.
As the strikes, many of them at foreign-owned plants, rippled through China's southern manufacturing heartland, the government — usually quick to crush mass protests of any kind — did not step in, but allowed them to spread.
That's because it views the strikes less as a political threat these days than as an economic tool — a way to help restructure China's current export-driven economy to a more self-sustaining one, driven by ordinary people with more cash to spend.
Unionizing China
There are other signs of hope from across the Pacific, but they are rarely mentioned in the mainstream media.
In September 2010, the Teamsters, including Joint Council 25 President John T. Coli, welcomed five delegates from the Shangdong Provincial Federation of Trade Unions of China (SPFTU) to Chicago. The groups signed an official memorandum of exchange and cooperation. As part of the agreement, “the delegations will share views and common concerns on a variety of labor issues, including the benefits of collective bargaining and protection for workers’ rights. The unions expect to share information on organizing and management techniques, and will be looking for new opportunities to support and communicate with workers.” This advancement in labor rights in China is supported, rather surprisingly, by the Chinese government.
The American Chamber of Commerce (along with other groups) did all it could to water-down the new labor reform laws last year, but their efforts were fairly unsuccessful. Corporations complained that China might not be such a great place to do business, but have since, begrudgingly accepted the situation. There was very little they could do.
In line with its provisions(of the recent Chinese labor law), the ACFTU (All China Federation of Trade Unions) that serves as a government endorsed umbrella for the world’s largest trade union organization, is currently implementing a mass unionization initiative. Thus, the unions’ significance is likely to grow in the coming years, which should be taken into account by any company doing business in China.
So, competition with China need not mean a race to the bottom. Chinese workers- as well as the Chinese government- must be allowed to see the success of the American system, as a model to imitate. Not the other way around. Perhaps the key, the solution, is the encouragement, by union groups, by the Left, of worker rights in China in order that Western corporations would have to chose the high productivity of the American worker compared to the low cost of the Chinese worker. That is a fair competition.
It is a marvelous irony to have American unions calling on a former Communist country to reform and empower its own unions to control unbridled Capitalism.
China’s present policy to allow union labor with collective bargaining is a wise move, especially when added to a court system ready and willing to hand down punishment for abuse. Imagine how much more timid white collar criminals would in the US if they were punished like they are in China.
The Man who Sold the Rope
Despite what Mitt Romney might think, corporations are not people.To quote Edward Thurlow, 1st Baron Thurlow:
Corporations have neither bodies to be punished, nor souls to be condemned; they therefore do as they like.
They don’t fall in love, they don’t get hungry in the middle of the night and they especially don’t feel patriotism. Corporation’s interests are actually quite narrow. The search for greater profits, ever-cheaper labor, and new markets may be all-important to corporations, but it is also a blinding one.
So relying on politicians who have been bribed- isn’t this the word?- by corporations is extremely foolish. The allegiance of politicians of this ilk is not to the tax-paying citizen but to the hedge fund managers, religious fanatics with the money of their followers to spend, the anxious CEOs and the corporate board of directors.
Ultimately it is the corporations themselves that are being foolish. In their zealous abuse of the capitalist system, they are destroying its very foundations. As Karl Marx reportedly said, “The last capitalist we hang shall be the one who sold us the rope.”
Therefore, when you hear the Republican candidates call for “de-regulation” and for “less Big Government” it is important to consider what exactly that means in practice. The definition of “to govern” is “to restrain” “to control” and “to direct.” Who is government supposed to restrain, control and direct? Only its citizens but not its corporations? Only the law-abiding, the weak and the defenseless or the powerful, the wealthy, the selfish and the corrupt?
So in effect, when conservative politicians speak of de-regulation they are speaking of a land without rules, with no checks and balances, in a word, lawlessness. When they demand “less government interference” they actually mean anarchy, disorder and accepted injustice. It is a vision of America as a third world nation, without class mobility, without representation, and in most respects, intolerable for Americans. It is, therefore, an act of patriotism to send a clear message in the next election. This is not an acceptable future for the nation.
The Right wing vision isn’t even a system that offers stability- the very lowest standard for any political system. Whenever market-oriented economies are de-regulated, that is, allowed to manage themselves without government interference, inevitably the economy goes into overdrive, a few become incredibly rich while the rest are stripped of all they own.
The astonishing part of all of this is that anybody should have to be reminded of what happens they corporations go “free-range.” People only need to look around and see the misery caused by deregulation of the last decade. Yet, this is the only vision the Republicans have to offer for the next election, it would seem.
What we are seeing and experiencing is a slow decay of America led by foolish policies from the Far Right. The trickle down theory redux. The Bush tax breaks for the super wealthy (continued), and the progress of the corporate corruption of democracy’s most valuable institutions.
Business as Usual
In this upcoming election, the same illegitimate slogans and wrongheaded solutions are trotted out to the American public. Once again, the spokesmen for the party of the 1% will attempt to mislead an easily fooled electorate into voting against their own best interests. Rest assured they are planning to use every dirty trick, every negative ad, every divisive tactic and all fear-mongering they can think of in order to return to power. Clearly they are not finished with destroying the country.
Although support for government regulation of business hasn't risen, 50 percent of Americans think it is necessary to protect the public interest, compared with 38 percent who say that regulation usually does more harm than good. In fact, not only do more Americans worry that businesses are snooping into their personal lives (74 percent), than think government is doing so (58 percent), fully six-in-ten think that business makes too much profit, and an overwhelming 78 percent think there is too much power in the hands of large companies.
According to Pew Research Center, the majority of American appear to know where to place the blame.
Although fully 80% of Americans attribute at least some of the blame for the current financial crisis to weak government regulation of financial institutions, public support for regulation more generally has not shifted upward.
One doesn’t need to be an atheist Marxist or some wild-eyed revolutionary to understand the obvious. Back in 1891, Pope Leo XIII- who probably had very little in common with Karl Marx- stated things pretty clearly:
The richer class have many ways of shielding themselves, and stand less in need of help from the State; whereas the mass of the poor have no resources of their own to fall back upon, and must chiefly depend upon the assistance of the State. And it is for this reason that wage-earners, since they mostly belong in the mass of the needy, should be specially cared for and protected by the government.Between Those Who Have Much and Those Who have Too Little
This ray of enlightenment simply has not reached many in the Republican party. What can you say when you still have people like Representative Spencer Swalm from Colorado, arguing that families can stay out of poverty by avoiding having kids outside of marriage. It certainly hasn’t hurt Bristol Palin.
Or when a South Carolina Lt. Gov. Andre Bauer compared poor people to stray animals by saying, "You're facilitating the problem if you give an animal or a person ample food supply"? And yet, this is a man who doubtless goes to church every Sunday.
As Change.org notes:
When Rush Limbaugh says that food stamps enable people to "buy Twinkies, Milk Duds, potato chips, six-packs of Bud, then head home to watch the NFL on one of two color TVs," he encourages his millions of listeners to engage in low-grade class warfare, whether by voting for candidates who similarly oppose helping those in need, failing to donate to organizations doing their best to help, or engaging in even more rants against people struggling to survive in the wealthiest country in the world. Words like Limbaugh's, Bauer's and Swalm's are a self-perpetuating cycle that serves only to keep those who need help even further down.
And it isn’t merely small-time politicians or bloated radio talk show hosts speaking such nonsense. It is even more disgraceful when you have a candidate for president, Herman Cain, saying things like “Don’t blame Wall Street, don’t blame the big banks, if you don’t have a job and you’re not rich, blame yourself! […] It is not a person’s fault because they succeeded, it is a person’s fault if they failed.”
To that, I would quote to Mr. Cain the words of Franklin Roosevelt- a man whose reforms proved Marx wrong.
“The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.”
Presidential candidate Michele Bachmann can say things like "Literally if we took away the minimum wage —if conceivably it was gone—we could potentially virtually wipe out unemployment completely because we would be able to offer jobs at whatever level."
To that, I would again quote Franklin Roosevelt- a man she might have heard of.
“No business which depends for existence on paying less than living wages to its workers has any right to continue in this country.”
Americans are indeed fortunate to have a heritage of intelligent and compassion leaders from the past to recall and take courage from and remind us who were are whenever we need a touchstone. Their words offer a shelter from the day to day bluster from the Far Right.
We can only hope that voters across the nation are as equally intelligent and understand where all of these “bright” Republican ideas will lead. When they hear a Republican candidate tell his audience that he wants to take this nation back, they should inquire how far back they plan to go and at what cost to the average citizen.
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I welcome any comments or questions so don't hesitate to drop me a line to let me know what you thought.
I welcome any comments or questions so don't hesitate to drop me a line to let me know what you thought.
