Guest Opinion by Matt Reedy*
September 7, 2014
“…on its own, without a social compact, raw capitalism is destined to serve the few at the expense of the many.” –David Simon, creator of the The Wire.
America is no longer a democracy. You could argue it’s an oligarchy, a plutocracy, a polyarchy, a corporatcracy, an aristocracy, kleptocracy, or that it is well on its way to fascism, but you can’t argue that it’s a democracy. We all yearn for those glorious days when democracy and America thrived. We romanticize the days after World War II when America was at the height of its glory. Dad put in an honest day’s work and came home to his loving wife. Mom kept the house and carried the emotional weight of the family. The children played ball in the sandlots and respected their elders. There were paper boys, milk men, apple pies, hopscotch and Main Streets. To put it simply, we all want a return to the good old days. So how can we accomplish that?
First we have to find out when and how it all went wrong. Conservatives seem to place the blame at the feet of atheists, the lazy food stamp recipients, meddlesome intellectuals, undocumented workers, Muslims and the progressive policies of liberals. After all, wasn’t America much more conservative in the fifties when everything was perfect and we were at the height of our economic strength as a nation? And if it hadn’t been for those dirty hippies and their counter-culture “revolution” none of this would have happened, right? Everything was great until they came along, wasn’t it? It makes sense to me on the surface. But let’s dig just a tiny bit deeper.
While the sixties saw radical progress in social reform, they saw regressive fiscal reforms that have continued and accelerated right up to today. As popular movements forced the power-elite to make concessions to women, minorities and workers in social terms, the powerful began to launch a class war intended to rob the poor and middle class. This looting of America has been going on since the seventies and reached fever pitch in 2007. From 1820 to 1978 wages rose as worker productivity rose, which meant if you worked harder you were paid more. Then in the late 70’s and early 80’s worker productivity began to soar with the help of new technologies such as the computer. But, for the first time in 150 years the wage of the average worker stagnated and then eventually declined[i].
How were power-elite able to lower wages? Didn’t the unions that fought tenaciously for their rights help ensure a living wage for the majority of Americans? They certainly did. According to the Bureau of Labor Statistics, in 1955 33.2% of workers were part of a union. In 2013 only 11.3% of Americans are members of organized labor[ii]. The violent struggles of the labor movement in the late 19th early 20th centuries lead to collective bargaining which led to a strong and vibrant working class which led to the best economy the nation has ever seen. High wages for union workers helped provide living wages for “unskilled” workers. Everyone was making money and that money went back into the economy and everyone made more money. And on and on it went, until 1978.
Once wages ceased to correlate with productivity and the ever rising cost of living, the middle class began to suffer while the ruling class began to see “dazzling” returns. Because the owners were making astronomical sums of capital and the worker’s wages were stagnating, the worker could no longer sustain his standard of living. So what did they do? The first thing they did was to work more hours. Today the average America worker puts in more hours per year than the Japanese. The second thing they did was send mom into the work force. She got a part-time or full-time job. But this didn’t help the family or the economy. In fact, it hurt both. To maintain a second income the woman had to buy a car to get to work. She had to buy new clothes. She was too tired to cook after a hard day’s work so she bought prepared food. And worst of all she was no longer able to hold together the emotional fabric of the family. In the 1970’s the divorce rate skyrocketed. This also had the unintended consequence of flooding the workforce with applicants that it accelerated wage reduction for the average worker.
So when that failed, how did the family attempt to bridge the ever increasing gap between the rising cost of living and the decline in wages? They borrowed. Who did they borrow from? They borrowed from the very people that stopped raising their wages. Do you understand? Since corporations were making record profits by not paying their employees more, the money went to the richest people in the country (while wages for average Americans have been declining C.E.0. compensation has risen 937% since 1977)[iii]. The rich, not being anyone’s fool, decided to make the most of this new capital. Instead of giving their workers a wage increase as the workers worked harder and better for them, they didn’t. Instead, they gave them loans, which the workers then had to pay back them with interest. (This concept is beautifully and articulately detailed in economist Richard Wolff’s book Capitalism Hits the Fan).
In the 1950’s, the largest employer of Americans was G.M. Adjusted for inflation the average wage of a G.M. employee in 1955 was over 20 dollars an hour[iv]. Today, Wal-Mart is American’s largest employer and their sales associates make an average of $8.81 an hour[v]. In 1968 the minimum wage was $1.60 an hour. Adjusted for inflation and keeping with the rising worker productivity, the minimum should be $21.16[vi]. However, today it stands at $7.25 and due to the decline of the dollar the actual purchasing power of that wage is even less. In the 1950’s the average C.E.O. made 30 times that of his average employee. Today he makes over 500 times more[vii]. I’m not saying the people who work harder and smarter shouldn’t make more, but how is it possible to work 500 times harder than someone else?
In the 1950’s, under Republican Dwight D. Eisenhower the top marginal tax rate was 91%. Today under Democrat Barack Obama it is 39.6%. But the rich don’t even pay that thanks to carried interest, municipal bonds (which aren’t taxed at all) and capital gains (something even Reagan was against and didn’t allow). But some don’t even pay that thanks to offshore accounts. As if that is not bad enough in 2013 General Electric made 19.6 billion in profit and paid an effective tax rate of negative 18.9%[viii]. Yes, that’s right; they made 19.6 billion and actually received tax payer money on top of it. And if you’re not mad enough remember they’re only one of twenty-six corporations to receive that treatment last year.
But the power-elite didn’t stop there. They went on to gut the heart of American industry by shipping factories overseas in favor of cheaper labor. I grew up in Lebanon, PA a once renowned steel town. My wife grew up in Wilkes-Barre, PA a once prosperous coal mining town. Those industries were heavily subsidized by the government and instead of reinvesting in the plants or towns; the owners exploited the resources and communities, then packed up their profits and moved, leaving what author, activist and former war correspondent Chris Hedges calls “Sacrifice Zones”. My town and my wife’s town, once the heart of American industry are now pockets of poverty and despair, ghettos without cities. Thanks in large part to N.A.F.T.A., courtesy of Bill Clinton and a majority of congressional republicans, corporations no longer have to pay tariffs on imported goods which forces American workers to compete with global slave labor, which again, raises the supply of the work force and lowers its demand. And who benefits from all this? The rich do because they are able to pay workers lower wages and reduce benefits.
Yet, I hear a kind of forgiveness for corporations who have overseas factories and tax havens. After all, they’re just trying to make money, right? And while it sort of stinks, what do you expect? They’re going to do everything they can maximize profits. Well, if that’s the case, why do you hate the unemployed and welfare recipients so much? Aren’t they gaming the system the same as corporations? Why is it okay for a billionaire to scam the system but not a disabled widow with three children?
Giving money to the rich doesn’t stimulate the economy because they hoard their wealth. Meanwhile, giving money to someone below the poverty does because they’re not saving it; they’re putting in right back in the economy. The amount of money the poor receive from tax payers is a pea next the mountain given to the rich. If its theft you despise, why don’t you condemn the rich? They do it on a much grander scale. According to the 2012 government tax receipt if you made 50,000 dollars $36.82 went to food stamps, $22.88 went to unemployment, $6.96 went to welfare while $247.75 went to defense and over $4,000 went to corporate subsidies[ix]. That’s 2 cents a day for welfare and 11 dollars a day for corporate welfare. Who are the welfare queens again?
You probably weren’t familiar with those figures because the media, which is owned by major corporations, deflects blame onto weak scapegoats. Notice how no one in the media ever talks about the corporate theft and the obscene amount of welfare for the rich, but the stories about poor black families, illegal immigrants and Muslims getting any type of government assistance, no matter how little, are always front and center. It’s sort of like there’s a well-funded, highly-organized heist happening where all the rich people are taking TV’s out the back door and loading them into a truck, as the guard they paid off looks the other way, while we argue over what to do about the poor kid from the ghetto who stole a stick of gum. It’s a neat little trick.
In January of 2014 congress voted to cut food stamps by 8 billion dollars and gave 83 billion more in tax payer subsidies to the banking industry[x]. Food stamps are not handouts. They’re a last resort for the poor, many of whom are children, elderly and veterans. Unemployment benefits are not handouts. They’re a last resort to people who are struggling because billionaires sent jobs overseas and Wall St. speculators robbed the country. Giving the rich and corporations billions of dollars in tax payer subsidies and allowing them to manufacture goods in other nations and hide their profits in the Cayman Islands is goddamned handout!
Over the last 35 years, virtually every policy has favored the rich at the expense of the poor and working class. Since the recent crash, 93% of all newly generated income has gone to the top 1%[xi]. In 2007, before the crash, the top 1% controlled 34.6% of the wealth while the bottom 80% controlled 15.1%. Today the top 1% control 43% of the wealth while the bottom 80% now only controls 7%[xii]. Go back to the top of this paragraph and re-read it because these numbers are a little baffling at first. The point is the rich didn’t earn this money. It was given to them, first by Bush with his tax cuts and bailout, then by Obama and his stimulus package which gave 253 billion to private enterprise who, instead of investing it to jump start the economy, kept it by giving themselves record bonuses[xiii].
Giving money away to private business instead of investing it in the public interest is the ultimate failure of the Obama administration. During the Great Depression the unemployment rate was double what it is today. Yet, that generation built the Hoover Damn, The Golden Gate Bridge, brought electricity to rural America and invested in all kinds of public infrastructure. Today we have a high unemployment rate and a crumbling infrastructure that desperately needs to be rebuilt. Does anyone else see the obvious solution? How the government is unable to solve these two problems in one swift motion should be baffling, but it’s not. This solution would benefit the poor and working class. Not the power-elite. Therefore, it is not pursued. Instead, in 2010 we spent millions subsidizing the privately owned Target Field in Minneapolis which opened the same year one of the city’s major bridges collapsed killing thirteen people and injuring one hundred forty-five. Why? Because a tiny percent of the population has such power and wealth that the rest of us no longer matter. What they say goes.
The power-elite are a vampire class. They produce nothing. Instead they feed off the work of others and suck the nation dry. Jason Read, a professor at The University of Southern Maine stated, “People who dismiss the unemployed and depended as parasites fail to understand economics and parasitism. A successful parasite is one that is not recognized by its host, one that can make its host work for it without appearing as a burden. Such is the ruling class in a capitalist society.” Economist Dean Baker specifically outlines the power-elite’s parasitism in his book The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer. But the power-elite would have you believe everyone except them is milking the system. Here’s a perfect example. In the 1990’s Newt Gingrich, the leader of the republican revolution condemned all who depend on government assistance. Yet, Cobb Country Georgia, the district he represented, received the third highest amount of federal subsidies next Washington D.C. (obviously) and Brevard County Fl. which is home to N.A.S.A[xiv].
The rich like to see themselves as job creators. But I think venture capitalist and multi-millionaire Nick Hanauer (who, in the film Inequality for All openly admitted the U.S. tax code only required him to pay 11.9% in taxes in 2012) best debunked the idea when he said, “Corporate profits are at a fifty year high while unemployment is also at a fifty year high. If it was true that rich were job creators, we’d be drowning in jobs today.” Yet conservatives insist that we shouldn’t raise the minimum wage but we should give the rich tax breaks. This is what I don’t understand. Their thought process seems to be that the wealthiest among us, who have never been richer, need more money to stay motivated while the most venerable among us who have never been poorer, need less money to be fully motivated.
The last time money was this highly concentrated was right before The Stock Market Crash and preceding the Great Depression. With this dense wealth-consolidation comes power. And with that power comes privilege. Those who have and continue to acquire the perks of extreme wealth, while the rest of us suffer, use it to further their cause. They use their money to lobby congress to write legislation that ensures they will receive more money and they use that new money to lobby congress again and on and on it goes. This cycle will continue until government serves only the interests of the rich (which it nearly already does) and the voices of the citizens become completely mute.
As our once great country quickly adopts the attributes of a third world nation, political and family dynasties are beginning to develop as their wealth becomes entrenched. If the trend continues we will no doubt see our anemic democracy reconfigured into a type of corporate neo-feudalism where a few wealthy families will retreat to their gated communities and enjoy resources and services that will be denied to America’s new peasants. The Supreme Court’s 2010 Citizen’s United decision (coupled with the McCutcheon ruling) which essentially ruled that money is speech, have pulled the proverbial plug of our democratic life support. Citizen’s United helped ensure that one person does not equal one vote. Instead, money equals votes. The will of the people can now fully submit to the will of opulent minority, the power-elite, the deep state, the 1% or whatever name you wish to call them. America is no longer a democracy. They are now officially our supreme overlords.
Do you want to take our country back, restore our democracy and transform America’s dismal present back to the glory days? I do. In order to achieve that lets reinstate the policies from the 1950’s that made this nation great. Tax the rich, raise the minimum wage, strengthen unions, reinstate trade tariffs, put an end to tax havens, repeal Citizen’s United, close the wealth gap, enforce regulations, pass campaign finance reforms, expand social programs, end corporate welfare and put a cap on C.E.O. pay (or at least tie to worker income). After all, those were all things we did in America’s good old days.
*Author’s Bio: Matt Reedy grew up in central Pennsylvania where he attended college at Penn State University. In 2005 he moved to New York City and began working in the film & television industry where he joined the D.G.A. (Directors Guild of America). Matt is a member of the Unitarian Church whose community and congregation are actively dedicated to matters of social justice. He currently lives in North Jersey with his wife, their daughter and their two dogs.