Wednesday, February 09, 2011

Better Oratory, But The Same Road


The gradual decline of the middle class has been chronicled in statistics, both in narrative and pictorially. Following is one graph from The Nation> (which, I regret, I was unable to post larger):




The description in the top half reads:

The greater the gap between the rich and everyone else, the more dangerously unstable economies become. In 1928, a year before the U.S. economy nose-dived into depression,the top one-hundredth of 1 percent of U.S. families averaged 892 times more income than families in the bottom 90 percent.

In 1980, the last pre-Reagan year, families in the bottom 90 percent averaged $30,446 in income, after adjusting for inflation, $72 more than the $30,374 comparable families earned in 2006. The top 0.01 percent in 1980 took home an average $54 million, less than one-fifth the $29.6 million average income of the super-rich in 2006.

In 2006 the top 0.01 percent averaged 976 times more income than America's bottom 9 percent.

It is tempting to blame it all on Ronald Reagan, and the gradual descent of the middle class did begin in his Administration. As Eugene Zarecki, who wrote "Reagan," which appeared Monday night on HBO, told Chris Matthews

And so, the heartbreaking part about him and it is in the film a little bit, in part of the whole bigger picture that we showed about him, is that Ronald Reagan, in many ways, presented himself as a friend to main street America. He`d come from the heartland. He`d come from a small town. And yet, at the end of the day, that "Reader`s Digest" America, that`s the very America his policies did the most to hurt.

But if Ronald Reagan was the first President to put his foot down on the middle class, he wasn't the last. In his State of the Union message (transcript and video from The Huffington Post) last month, President Obama maintained

That world has changed. And for many, the change has been painful. I've seen it in the shuttered windows of once booming factories, and the vacant storefronts on once busy Main Streets. I've heard it in the frustrations of Americans who've seen their paychecks dwindle or their jobs disappear — proud men and women who feel like the rules have been changed in the middle of the game.

They're right. The rules have changed. In a single generation, revolutions in technology have transformed the way we live, work and do business. Steel mills that once needed 1,000 workers can now do the same work with 100. Today, just about any company can set up shop, hire workers, and sell their products wherever there's an Internet connection.

Meanwhile, nations like China and India realized that with some changes of their own, they could compete in this new world. And so they started educating their children earlier and longer, with greater emphasis on math and science. They're investing in research and new technologies. Just recently, China became the home to the world's largest private solar research facility, and the world's fastest computer.

So, yes, the world has changed. The competition for jobs is real. But this shouldn't discourage us. It should challenge us.

After noting condescendingly "and for many, the change has been painful" (like, maybe unemployment), the President approvingly adds

The rules have changed. In a single generation, revolutions in technology have transformed the way we live, work and do business. Steel mills that once needed 1,000 workers can now do the same work with 100. Today, just about any company can set up shop, hire workers, and sell their products wherever there's an Internet connection.

That's a hearty endorsement; it's surely encouraging that "any company can set up shop, hire workers, and sell their products wherever there's an Internet connection." Better yet, according to Obama- "steel mills that once needed 1,000 workers can now do the same work with 100." Pop the champagne- good-paying jobs with benefits are now lost.

President Obama repeated himself Monday in his message(transcript here) to the U.S. Chamber of Commerce, stating

But we also know that with the march of technology over the last few decades, the competition for jobs and businesses has grown fierce. The globalization of our economy means that businesses can now open up shop, employ workers and produce their goods wherever there is internet connection. Tasks that were once done by 1,000 workers can now be done by 100, or even 10.

He then added

And the truth is, as countries like China and India grow and develop larger middle classes, it's profitable for global companies to aggressively pursue these markets and, at times, to set up facilities in these countries.

If you believe that presidential candidate Barack Obama, who had promised to re-consider the NAFTA, would re-emerge in the speech, you were overly optimistic. This Barack Obama would go on to promise

As a government, we will help lay the foundation for you to grow and innovate. We will upgrade our transportation and communications networks so you can move goods and information more quickly and cheaply. We will invest in education so that you can hire the most skilled, talented workers in the world. And we'll knock down barriers that make it harder for you to compete, from the tax code to the regulatory system.

Deregulation of the financial industry, highlighted by the Commodity Futures Modernization Act of 2000, the Financial Services Modernization Act (revoking Glass-Steagall in 2000) and the 2005 Bankruptcy Abuse and Consumer Protection Act, flourished during the administrations of the last three presidents. For most Republicans- and President Obama- that was not enough, with the President now assuring the U.S. Chamber of Commerce that further "barriers" (i.e., safeguards) will be "knocked down." In return, the President already has demanded that those businesses accept lower taxes.

That was only one element in the corporate-friendly, labor-unfriendly message of the President. Invoking the neo-liberal religion of job training, he asserted "we will invest in education so that you can hire the most skilled, talented workers in the world."

These eager Americans will be trained for jobs which don't exist. Corporate profits reached a record high in the third quarter of 2010, the seventh consecutive quarter in which they grew. The Wall Street Journal reported in December that companies have on hand "$1.93 trillion in cash and other liquid assets at the end of September, up from $1.8 trillion at the end of June, the Federal Reserve said Thursday. Cash accounted for 7.4% of the companies' total assets—the largest share since 1959." Meanwhile, there are an estimated 4.7 workers for every job available.

Facing a deep recession (threatening to turn into a depression) when he took office, President Obama punted on the opportunity to upgrade those "transportation and communications networks" with extensive stimulus funding. Now vowing to help business "move goods and information more quickly and cheaply." Obama seems quite comfortable that, as The New York Times has noted, "More so than in the past, many American-based corporations earn a great portion of their profits overseas. And thanks to porous tax laws, these companies return fewer of those profits to American shores than in the past."

Not coincidentally, the President addressed these remarks to the nation's largest lobbying outfit, which has successfully derailed congressional efforts to discourage outsourcing, and whose president has been an avid, vocal supporter of the practice.

So, too, did President Obama repeat in his address to the Chamber his mantra "win the future." But he wants to "win the future" with innovation, education, and corporate de-regulation. Sound familiar? It's the formula the U.S. government adopted during the Reagan presidency and which has been carried forth through the current administration. It has left us with a declining number of good-paying jobs with reduced benefits, and a disintegrating middle class. And that appears to be a concern neither of the U.S. Chamber of Commerce, whose members legitimately are focused on their own profits, nor of President Obama.





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