Both the rich and ordinary Americans misunderstand their economic interests
by Linda Beale
Both the rich and ordinary Americans misunderstand their economic interests
There is class warfare going on, right now, all across this country. It’s highlighted by the election gimmicks and gambits of those on the right who claim to be supporting ordinary Americans but whose real intentions show in the results. And it is ultimately a sad statement about Americans’ understanding of what is required for a sustainable economy that supports decent lifestyles for all.
Let’s start by looking at the maps resulting from studies of well-being that identify the states where people are not at all well-off, such as the 2013 survey done by Gallup Healthways, available here. Those poor states are the reddest of the red belt in Mississippi, Tennessee, Florida and elsewhere across the Deep South–places where I grew up in a decidedly Republican household that bought the GOP economic fallacies hook, line and sinker, and places where today’s populations are worse off in terms of the various measures of economic well-being and happiness than the more progressive northeast and west.
Isn’t it likely that the anti-government, low-tax and pro-wealthy/pro-big business policies of the GOP politicos that have run these states for several decades have something to do with these negative results, and that the more progressive policies in the northeast and northwest are reflected in the much more positive results in those areas?
Yet rural, southern populations continue to proudly proclaim their allegiance, against their own economic interest, to ill-fated Reaganomics that favors tax cuts (for the wealthy and big business) coupled with use of old-time, regressive consumption taxes (toll roads, sales taxes and property taxes), privatization of public functions (e.g., charter schools managed by for-profit, nontransparent corporations), socialization of losses, militarization, and de-regulation.
The results are harmful at national and state levels, as those same right-leaning voters suffer from poor K-12 education, low-quality public services including neglected roadways, nonexistent or outdated public transportation systems, inferior safety nets, inferior health results, lower literacy rates, higher teenage birth rates, less access to universities, and, yes, fewer and lower-paying jobs.
Of course, those in the top 5% like to think of themselves as suffering, and therefore see any demands for increased minimum wages (that they consider cutting into their ability to capture more and more (rentier) profits beyond their already unreasonable percentages) as “class warfare.” See, for instance, this Wall Street Journal video “Do You Make $400,000 a Year But Feel Broke?” from September 5, 2014 depicting the purported hard times for a couple in Chicago making $400,000 a year, buying a $60,000 car every four years, paying a mortgage on a $1.2 million house along with $25,000 a year in maintenance and , entertainment ($10,000 a year) going on vacations ($25,000 a year), club dues ($12,000 a year), and paying for their children’s sports ventures ($10,000 a year). These and other “necessities” and (purportedly reasonable) discretionary expenditures take all of their after-tax money.
Given that perspective, no wonder those in the top have so little consideration and sympathy for ordinary Americans who have incomes in the $50,000 to $60,000 range, much less for the poor who struggle to put food on the table and heat in the furnace! They can’t even imagine such limited lives. With the growing inequality in this country, the gap between the upper class and the rest of us is increasingly wider.
The broad trend is clear from a diverse set of data. Median household income growth has badly lagged per capita GDP growth, corporate profits as a share of national income have risen, and stock markets have reached record highs.
Outside the sphere of political debate, you also see the real world impact of inequality. Merrill Lynch recommends an investment strategy to its clients based on the growing economic clout of plutocrats, Singapore Airlines is now selling $18,400 first class cabin tickets, and observers think Apple is going to start selling a $10,000 watch. Conversely, Walmart is now primarily worried about competition from dollar stores. The executives at these companies are not hysterical liberals trying to drum up paranoia about inequality, they are trying to respond to real economic conditions — conditions that have entailed very poor wage growth paired with decent returns for those proserous enough to own lots of shares of stock.
Matt Iglesias, Vox.
The ability to care about those so distant from the well-heeled in-group appears to be diminishing as the gap between the well-heeled and the rest of us widens. Those super-wealthy corporate managers and CEOs and super-rich shareholders are not likely to recognize in themselves the greed and exploitation of others that their excess returns on capital represent. As Mitt Romney made so clear, rich folks (i) think of themselves as “meriting” their outsized incomes, in spite of the fact that they often start out with silver spoons and garner greater returns than ordinary folks simply because they have larger capital portfolios to start with and can’t possible achieve a level of productivity of 100s times that of ordinary workers, as current CEO pay-levels claim under “free market” theory; and (ii) find it much easier to blame the misfortune of ordinary Americans on their purported laziness and “lack of personal responsibility.” (See earlier Taxing Matter posts on Romney’s self-justifying 47% remarks during his presidential campaign.)
But that means the rich (and the GOP most closely aligned with big business and big capital) often support policies that can only lead to greater income and wealth inequality, fewer and fewer Americans able to enjoy a decent, sustainable lifestyle, and the growth of a very small oligarchic elite. Those policies include making it harder for poor people to vote (justified on the basis of non-existent voter fraud), making it harder for middle class and poor people to go to college (less state monies to universities, less grants and more (profitable-for-big-banks) loans), making it harder to support a family (less public transportation, lower wages, more jobs outsourced, refusal to fund Medicaid expansion, yammering for the repeal of the Affordable Care Act even though the US’s market-based health care system is less efficient, more costly, and lower quality than single-payer systems in most other advanced countries), etc. The long-run result of these pro-elite pro-corporate policies may well be social chaos, as the rich oligarchy faces off against a suffering and shrinking middle class and a grievously disadvantaged lower class. That may not be so far away as many of us once thought, given the rapidly growing wealth inequality and the more radical right-wing policies that have moved into the GOP mainstream in the form of Rand Paul and other free-marketarian extremists who denigrate government and want to remove the social-economic safety nets put in place under the New Deal.
They denigrate government, that is, except when they recognize that they need it, such as when the ebola crisis erupted. Suddenly, they want a Center for Disease Control that really functions well, even though they have pushed government spending down. And they want a TSA that can screen arriving passengers, even though they hated the TSA before. And they wanted the President to appoint an “Ebola Czar”, even though they scoffed at the idea of administrative officials appointed to oversee important areas before. They want a vaccine for ebola, but they have made it much harder to accomplish because of their constant push for “reducing government” and cutting research funding (making one of their pet projects to seek out what they think are silly projects that have been funded by the federal agencies).
The free market, in other words, is claimed to be the be all and end all — until push comes to shove and it is obvious that market forces require government intervention.
Consider the compaign for governor here in Michigan. In his ads, current GOP governor Rick Snyder claims to be a hands-on non-partisan fiscally responsible type who cares about everybody in Michigan. Those ads brag about how Snyder cares about senior citizens and education –using the (meager) increases in “meals on wheels” to claim that Snyder has made life better for senior citizens, and the state’s increase in support for purportedly public charter schools. Behind that facade of political PR is a deeply partisan governor who has consistently supported the elite rich capitalists over the majority of Michiganders who are ordinary salary earners working hard (or working hard to find work).
- Snyder signed a “free rider/right to freeload” bill permitting non-union workers in a unionized environment to free-ride on union contracts without paying their share of the costs of the contracts they benefit from and prohibiting unions from using paycheck deductions to collect union dues. That kind of legislation, sought by the elite owners of capital who benefit from paying lower non-union wages, is (mis)labelled by the pro-wealthy right as “right to work”. It is really a “right to freeload” law since the union rules it replaces never required anyone to join a union and always allowed workers who benefitted from a collective bargaining agreement to pay only the ‘fair share’ payment of the considerable costs of negotiating an agreement and supporting workers in grievances rather than support all union activities. As a result, workers can now pay nothing yet call on the union whenever they have a grievance against their employer. The goal of such laws is to eliminate union support for workers and thereby increase the power of capital owners, so it is particularly sad to see how many workers are fooled into supporting these “right to freeload” laws.
- Snyder supported Michigan legislation that gave big businesses a huge tax cut, while supporting another bill that gave seniors a huge tax increase by taxing their (often meager) pensions. No wonder the wealthy who own most of the financial assets in the country and benefit from the decades of lobbying by right-wing propaganda tanks against buinsess and capital taxation think he’s a good friend.
- And of course, much of Snyder’s ‘support’ for education has been cuts to state funding for Michigan universities (especially Wayne State, which serves the predominately Democratic southeastern region of the state) that has affected the state’s economy in real ways, as students have to pay more of the cost and universities have less funding for research that directly impacts economic development. Snyder has also supported an unprecedented increase in charter schools in a system that provides no accountability, doesn’t provide improved educational results, and siphons off public dollars for private profits, through the mechanism of private charter management corporations that run the purportedly “public” charter schools.
- Snyder doesn’t think we need increases in the minimum wage, and his administration has generally shown little interest in figuing out how to help minimum wage workers revive from the Great Recession. For example, his administration has done nothing to deal with the myriad fly-by-night companies that cheat workers coming and going on wages.
ASIDE: Here’s one real-life tale illustrating the problem. I know personally of a man in Michigan hired by a Michigan-registered cleaning corporation that had contracts with at least two major national corporations to clean stores in southeast Michigan. The cleaning company claimed that the man was “in training” and therefore not required to be compensated after two weeks of full-time working for the company, including being locked inside a cavernous store overnight to do a major cleaning job. The company refused to pay for the next two weeks, claiming that “corporate headquarters” had made an error and would straighten it out in the next paycheck a month later.
The man ultimately was paid only a couple of hundred dollars for that entire month, because the company produced a purported check stub showing a paycheck even when the man representing the company acknowledge that paycheck had never been issued to the man. The company paid the man on a “piecework” basis for cleaning stores, claiming that a 30,000 square foot store with public restrooms could and should be cleaned for $25(that’s mopping, vacuuming, and cleaning toilets) and that the work could be done in one hour! The company required the man to pick up cleaning equipment and the company van at the “corporate headquarters” (many miles from his home and many miles from each of the stores to be cleaned) but claimed that it did not have to pay the man for the 3-4 hours per day that he had to spend to drive the company van and equipment to and from various worksites. The man quit, but has never gotten the company to issue the paycheck that he never received and has never received pay for the many hours spent working for the company moving its van and equipment.
cross posted with ataxingmatter
Welcome back Linda:
This caught my eye:
It is really a “right to freeload” law since the union rules it replaces never required anyone to join a union and always allowed workers who benefitted from a collective bargaining agreement to pay only the ‘fair share’ payment of the considerable costs of negotiating an agreement and supporting workers in grievances rather than support all union activities.
There was never a need for this law in Michigan as Federal Law allows workers to opt out of joining unions. Workers did have to pay the portion of the dues necessary to negotiate the contract under which they and the union worked. It is a Right to Freeload Law which Snyder passed and it is deliberate in its intent to weaken Labor over time.
At the same time, Citizens United did not remove the restrictions unions have in contributing to political candidates. Unions still must get the backing of their members and report to the NLRB. Corporations do not have to seek approval from shareholders. Neither is the amount of contributions to political candidates by unions the same as corporations. For example, the Koch Brothers in 2012 contributes more the twice what the top ten unions did. The flailing about by some on union political contributions is just nonsense.
Michigan loves to lord it over Ohio. Ohio is more friendly to Labor in its unemployment benefits. The maximum a worker can receive in Ohio is 38% more than in Michigan. This to is the result of Snyder manipulation with the support of a Republican legislature gerrymandered into office by packing districts. This shows up more readily in the numbers of congressional reps in Congress. The political affiliation of them in the House should be reversed and favoring Democrats.
Michigan was second only to Texas in being radical on issues.
Linda – welcome back, and sorry for your loss.
http://www.takepart.com/article/2014/09/20/these-are-poorest-big-cities-america
“Here are the 10 poorest large metropolitan areas in the U.S.:
Riverside–San Bernardino–Ontario, Calif.
Miami–Fort Lauderdale–West Palm Beach, Fla.
Los Angeles–Long Beach–Anaheim, Calif.
Phoenix-Mesa-Scottsdale, Ariz.
Detroit-Warren-Dearborn, Mich.
Houston–the Woodlands–Sugar Land, Texas
San Antonio–New Braunfels, Texas
Atlanta–Sandy Springs–Roswell, Ga.
Tampa–St. Petersburg–Clearwater, Fla.
San Diego–Carlsbad, Calif.”
Isn’t it likely that the pro-government, high-tax and anti-wealthy/anti-big business policies of the left politicos that have run these metropolitan areas for several decades have something to do with these negative results?
M. Jed,
They may be poor cities but compared to what? By this map , the hardest places to live are in the south.
This is based on: The Upshot came to this conclusion by looking at six data points for each county in the United States: education (percentage of residents with at least a bachelor’s degree), median household income, unemployment rate, disability rate, life expectancy and obesity.
If that is not enough for you there is this study: That’s what data from a new report by the Organization for Economic Cooperation and Development (OECD) appears to suggest. The report ranked all 50 states (plus the District) according to nine different measures of well-being: health, safety, housing, access to broadband, civic engagement, education, jobs, environment, and income.
It concluded: The South, which performed the worst of any region in the country, is home to eight of the poorest performing states. Only Virginia was in the top 25. And just barely — it placed 22nd.
The rest of your writing is just nonsense in light of the catering to business to the point corporations having rights of human-hood by our government.
Linda, Run, M.jed, David Cay Johnston, Dean Baker,
You can all bat the air with your wonderful delineations of all the troubles we’ve seen … but you wont ever be able to do a single thing about any of it until America is unionized by law with centralized bargaining the centerpiece like Germany and so many others.
This can (that’s can, not can’t; lest there be any misreading) be done overnight. Centralized bargaining, legally mandated is the automatic way to restore full bargaining power to labor — and — restore the political balance at the same time with equal financing and lobbying to go with out 99% of the votes!
Yesterday I was reading “The Seeds of a New Labor Movement” by Harold Meyerson in the American Prospect Magazine. Meyerson portrays David Rolf as the top (I would call it) “ground gainer” (Patton style) leader of today’s American labor movement.
He writes: “More than most union leaders, Rolf is a student of labor history.” Yet Rolf thinks collective bargaining is dying — just waiting to be dead: “Every condition and factor that underpinned unions’ power from the 1930s through the 1960s was gone: immobile capital, government assistance, the Cold War defense establishment, even organized crime, which propped up some unions so it could loot them. Not to mention losing two generations of workers by not organizing in the private sector after the 1940s. In the ’80s and ’90s, Andy’s [Stern’s] generation rediscovered organizing, but it was too little, too late.”
http://prospect.org/article/seeds-new-labor-movement
Top American labor leader sees the history of America and thinks labor is dead. Ever hear of the history of Germany and continental Europe, David? Or of French Canada or even Argentina or even of Indonesia? Wake up and smell the opportunity.
Ever read a very recent tome by whom many think to be America’s top labor lawyer: Thomas Geoghegan, Were You Born on the Wrong Continent?: How the European Model Can Help You Get a Life?
To my mind (which must be similar to the minds of a hundred million plus of American workers (starving workers) nothing could be easier to go out and vote for than centralized bargaining — if someone would just mention the issue out loud!
My personal reaction on reading of centralized bargaining a decade ago was: “Why didn’t I think of that?” After wondering for a decade what possible modality could reverse American labors tailspin, the answer seemed so perfectly obvious once you heard it.
It’s sort of like I wondered for two decades why energy increases with the square of the speed. Then, some kid on a science-fiction newsgroup explained to me that: you go twice as far when you go twice as fast; ergo, four times the energy. (If you are doing the two cars hitting head on at 50 miles an hour versus one car hitting a still care at 100, remember to double the weight when two cars are moving — figured that out myself :-))
So when are progressives going to stop pointlessly batting the breeze and start talking up the issue to end all issues?
Forgot to link Geoghegan’s book:
Daniel,
So per Linda and per your link, Mississippi, Tennessee, Florida, and other parts of the Deep South are places where “people are not well off” and are the “hardest places to live”.
As Linda states – and thank you for pointing out the writing is nonsense – this can be attributed to: “anti-government, low-tax and pro-wealthy/pro-big business policies of the GOP politicos that have run these states for several decades have something to do with these negative results, and that the more progressive policies in the northeast and northwest are reflected in the much more positive results in those areas?”
“Compared to what” is a relevant question indeed. In order for these conditions to be attributed to policies, starting points matter. And what’s relevant isn’t where they are in an absolute sense right now, but how things have changed over time.
http://www.bea.gov/iTable/index_regional.cfm
The average rank of all of MS metropolitan statistical areas per capita income improved from 324 in 1970 to 264 in 2012. In TN, the rank improved from 329 to 247. In FL, the rank improved from 190 to 182. Let’s compare that to some of the more progressive paces Linda referenced. CA declined from 85 to 183. WA fell from 124 to 177. OR declined from 249 to 268. NJ fell from 71 to 97. PA fell from 177 to 190.
Jed:
Absolutely, amazing, awesome in “The Bachelor” verbalization except you are full of crap the same as you were on Maggie’s thread. Median Household Income; Washington State went from #20 to #13. Oregon went from #21 to #17, New Jersey went from #6 to #8 (terrible, absolutely terrible), Pennsylvania went from #23 to #23. And what about those Southern states? Mississippi went from #45 to #48 (still sitting at the bottom like any cat fish or carp would), Tennessee went from #46 to #43 (one of the few grit-states to change), Florida went from #34 to #36, Kentucky went from #41 to #44, Louisiana went from #49 to dead last, Georgia went from #24 to #37, South Carolina went from #38 to #42, North Carolina went from #36 to #47, Florida went from #34 to #36, Razorbacks stayed at #50 (now that is progress), Alabama went from #43 to #46, West Virginia went from #51 to #49 (astounding), Texas went from #35 to #26, and Virginia went from #11 to #3 (the Best of Show winner).
From Doug Short (dshort.com): “First, some context. The median US income in 2013 was $51,939, up from $22,415 in 1984 — a 131.7% rise over the 29-year timeframe. However, if we adjust for inflation chained in 2013 dollars, the 1984 median is $47,866, and the increase drops to 8.5%.
The next table sorts the data by the 2013 median income column. A quick look at this table shows the huge spread between the $71.3K median in New Hampshire and the $39.6K in Louisiana. Of course, the cost of living is a critical factor in comparisons of the raw data, a topic I’ll address in a separate commentary.” I left the link for you to look this one up.
Jed are you a grit and why do you hate women? This is the second time I have seen you go after a woman with a vengeance.
Why Labor Organizing Should be a Civil Right: Rebuilding a Middle-Class Democracy by Enhancing Worker Voice by Kahlenberg and Marvit
Why is it that when capital congregates in the construction called a corporation we shower all kinds of benefits and privileges but when workers and labor exercise the same rights of association we place all kinds of limits and restrictions in the way?
Median Household Income by State: A Look at the Latest Data, September 19, 2014