Week In Review
A Weekly Column by Bill Onasch
December 31, 2007
A Rough Year For Us–and Them
In our final WIR of 2007 we’ll step back from our usual look at the latest labor related news to assess the balance of forces between the classes at year’s end.
Much of this column over the past year has been devoted to defeats and setbacks for working people–especially in the USA. This emphasis is not by choice. We actually prefer victories, and there were some.
The California Nurses Association won some impressive organizing and contract settlement victories over the past year and are in the midst of fights for more. UE led the way in mobilizing the ranks at General Electric to block concessions and at least hold their own. UNITE-HERE hotel workers in San Francisco resisted take-back demands and at the end of the day won significant economic and working condition improvements. After a long fight on many fronts OSHA finally caved in and directed employers to furnish personal protective equipment required by workers on the job.
But such wins for our side are very much the exception to the rule. Some losses were deadly–such as the Crandall Canyon disaster, with six miner and three rescue team fatalities, sacrificed to greedy unsafe practices now commonplace in nonunion mines. Others were bravely fought lost strikes such as the recently vanquished nurses at Appalachian Regional Healthcare. But most were capitulations under the guise of “partnership”–above all the historic surrender of core principles by the UAW to the Big Three automakers.
These setbacks related to the weaknesses of today’s unions greatly exacerbated the economic beating most workers have been taking in our day to day lives–escalating prices in food, fuel, education and healthcare costs have essentially doubled the inflation rate over this time last year; the mortgage crisis ultimately threatens perhaps millions with loss of homes; out of control credit card debt saddles graduating students and those attempting to maintain middle class life style while real wages fall.
Lonely At the Top
The ruling rich on the other hand would seem to have much to gloat about. They have surpassed their wildest dreams in transferring wealth from our pockets to theirs. At the end of the Nixon-Ford administrations the top one percent of society owned about 19 percent of American wealth. This group did better under Reagan, moving up to 32 percent. Today the share of this super-rich stratum is nudging forty percent–twice the rate under Gerald Ford. That’s the greatest concentration since 1929–a year of some historical significance for American capitalism.
There’s a layer just below the supers that have benefited from trickle down–managers, professionals, some smaller business owners. Collectively the top twenty percent have about 85 percent of the wealth.
That leaves about 15 percent for the working class, family farmers, nominal independent contractors, and mom-and-pop businesses–eighty percent of the population of our “ownership” society.
Much of this expropriation of working class wealth resulted from grand global strategies, first implemented on a major scale in the Clinton administration. That includes the all too familiar offshoring of manufacturing and back office work to low wage areas abroad, simultaneously using the threat of more as a ram to batter down wages, benefits, and conditions of remaining American jobs.
Attention To Detail
But they didn’t neglect the small stuff either. From out of nowhere came the FICO score as a measure of human worth. If the cat knocks your cable TV bill out of sight on the floor and you’re late mailing it in, this could set off a cascade of rising interest rates on all your accounts. A cottage industry developed just to keep you constantly updated on the fluctuations of your FICO scores as reported by three different outfits.
And if your unsecured credit card debt swells ominously, perhaps because of that damn cat, there are plenty of offers of secured loans on your home equity so you can pay your cards off–and worry later about losing your home.
A couple of years ago a bipartisan effort succeeded in “reforming” the bankruptcy law allowing even more blood to be squeezed from already anemic debtors.
So the ruling class is sitting pretty, right? Not quite. For one thing, they seldom just sit. Capital has to keep flowing, aggressively seeking the best possible returns, for the system to prosper for its owners.
Sorting Fact From Fiction
In recent years about half of America’s economic growth has been in the financial sector, primarily fueled by skyrocketing real estate prices and record breaking performances on the stock markets. This is what a prominent nineteenth century German economist called “fictitious capital,” largely based on speculation rather than production of new, tangible wealth.
As long as the real estate and stock market bubbles kept expanding everything was copasetic. Millions of low income renters were convinced by slick sellers that rising house values would allow them to pay usurious interest rates in their adjustable rate mortgage loans for a home they could call their own. Yuppies saw big windfall opportunities in flipping old houses. Even many established middle class home owners borrowed on their surging equity to pay college tuition for their kids or to buy a new car. Tens of millions of workers started pumping their modest life savings in to the stock market through 401(k) plans or IRAs.
But the expansion limit of any bubble is signified only when it bursts. There’s no question that’s already happened in real estate and the stock markets are likely not far behind. Much of the fictitious capital is simply vaporizing in to uncollectible debt–by some estimates perhaps eventually as much as a trillion dollars in mortgages alone.
Of course, the working class is hit the hardest by these collapsing bubbles. Not only will many suffer foreclosure and eviction. Even workers with mortgage-free home ownership will see the value of their homes, which figures greatly in college and retirement plans, drop dramatically–collectively maybe as much as two trillion dollars.
If They’re So Rich How Come
They’re Not Smart?
But many of the smartest capitalists in the room were also taken in by their own hype, believing expansion had a long way to go. The illusion could no longer be maintained after the world’s largest bank, Citigroup, suddenly found itself thirty billion dollars short in October. After giving their CEO a very golden parachute, America’s top financial institution had to go to the super-rich equivalent of a pay day loan office in Dubai for a short term loan to carry them over.
Citigroup is not alone. Just about every major financial corporation, with the possible exception of Goldman Sachs, is taking a bath because of the mortgage scams. Some will not survive.
Nor is the real estate crisis the only alarming sign.
Sound As the Dollar
Globalization cuts both ways and the balance of payments deficit is nearing a trillion dollars while the U.S. dollar has been losing ground in exchange rates with the Euro and Canadian dollar.
Fueled by the wars without end in Iraq and Afghanistan, along with tax-cuts for the rich and super-rich, the national debt run up by the “free marketers” in Washington is approaching a once unthinkable ten trillion dollars. Federal deficit spending just this year will be nearly a trillion dollars. A trillion here, a trillion there, pretty soon you’re talking about real money.
Of course, debt and deficit spending is not limited to corporations and government. Most workers are in the same or worse straits. When Bill Clinton came to power America had a modest savings rate of about 1.5 percent of income. Today the savings rate has completely vanished. Currently the average worker spends 2.4 percent more than they earn. Between the bosses doing such a good job in keeping wages stagnant or even falling, while their financial counterparts charge interest rates often as high as 29 percent, they have just about squeezed the last drop. The current credit situation is unsustainable over the long haul. Since consumer spending makes up some seventy percent of all economic activity, this means bad news indeed ahead for workers and capital alike.
These astronomical sized statistics are not the only signs of a profoundly sick system. For example, the gutting of labor costs, and absolute contempt for passengers, has made unregulated air travel in this country a dysfunctional nightmare. The only solace we can take is that managers, sales reps and politicians are the biggest group of frequent flyers from hell, getting giant servings of what they have dished out to others.
A Truth Still Not Convenient
But worst of all, the internal dynamics of American Free Enterprise are pulling all of us along a course that leads not only to the disintegration of their system but human civilization as well. Fresh scientific revelations over this past year have made it clear beyond any doubt that the economic activity driven by the ruling rich in this country is responsible for a climate change crisis–along with a host of other environmental disasters. Without urgent, drastic measures global warming will adversely alter forever the way human beings live and work. FICO scores will not be a part of future life on this planet.
Political and economic responses by our ruling elite demonstrate that, while as individuals they may intellectually comprehend what the scientists are telling us, they are not prepared to break with their practices that are doing irreversible damage to our atmosphere. Some try to find market niches claiming to be “green,” such as the ethanol boondoggle. Others see big prospects for brokerage fees in a next generation of stock markets trading carbon credits. But absolutely none–not even Al Gore–are willing to contemplate the scientifically and socially planned restructuring of industry, agriculture, and transportation needed to tackle the crisis. They’re not going to do it on their watch.
Do I then conclude this less than cheerful New Year message by advising to abandon all hope? If we rely on the Establishment running America to do the right thing, there is no hope. If we do nothing, there is no hope.
But we’re the working class–we have the power to do more than hope. Nothing gets done without us–just about anything can be done by us. The greedy, and increasingly incompetent masters in our workplaces and government dominate only because we have not effectively challenged them as a class.
Only about ten percent of us are in unions–and most of those unions are presently dedicated to trying to be partners with our class enemy. We have no political party. Most of our battles are isolated, defensive skirmishes provoked by the other side.
It goes without saying we should continue to fight those skirmishes, organize the unorganized, energize and democratize our unions. But it needs saying that in the not so long run these efforts will mean little if we don’t also build a mass working class social and political movement aiming to take power away from those wrecking so many lives and our very planet.
Labor Notes is organizing a Detroit conference in April with a theme of Rebuilding Labor’s Power. I plan to attend and urge you to as well. This could be an important venue for beginning to include attention to building the needed broader movement as well as the usual discussion of trade union tactics and democracy.
Time is running short. 2008 needs to be the year we start turning things around. On that note let me wish you a Happy New Year!
That’s all for this year.
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