July
2006
Independence Day Lament: The Lost Language of Economic Democracy
Just how patriotic is the war of America’s overclass against the rest of us? That’s a question few pundits will be asking on this Glorious Fourth. My question is why such a crucial question still isn’t on the public agenda in any significant way.
Thanks to the Wall Street Journal’s ever-alert Ellen Schultz we now know that the declining health of this nation’s system of private pensions isn’t just a factor of demographics or global market woes. It turns out that a major part is played by siphoning off worker pension plans to pay for lavish executive retirement benefits. Because of these abuses, the total pension tab owed to a handful of the big cheeses at many companies matches company obligations to tens of thousands of the firms’ ordinary workers.
In other words, take the 430:1 ratio of current CEO:worker pay and ratchet that ratio up by several factors as the cheese and his wage slaves enter their sunset years. It makes for a pretty picture, doesn’t it? Note as well that the executives normally get pension payouts at a rate of 60 to 100 percent of their pre-retirement compensation; the drones lower down get 20 to 30 percent of pre-retirement pay. This is all going on while companies move as one toward what they call “cash balance” plans for their peons: such plans have the effect of slowing the growth of older workers’ pensions or stopping it altogether.
There is a theme here that the corporate media choose to miss even when they manage to report grim realities, such as a first-quarter aggregate economic growth number of 4.8 percent that masks average wage growth of 0.7 percent—a “growth” that obviously failed to keep up with surging costs in housing, health care, and gasoline. On the other hand, profits as a share of the overall economic pie have rarely been higher. Inflation-adjusted profits since the last quarter of 2001 shot up more than 50 percent, yet real wage income rose less than seven percent over the same period. What’s even worse, economic insecurity for regular workers—the likelihood of experiencing sudden drastic drops in household income—has been as bad during these years of “recovery” as it was during the 1990-91 recession. In short, the yachts at the top of a rising tide have been bobbing along merrily, but all around them millions of tiny boats have been sinking while millions of other boats are still beached where they were five years ago.
It’s important to make such numbers brutally specific. The Labor Department says that seven of the ten occupations expected to grow most rapidly between now and 2012 currently pay less than $13.25 per hour, or $27,600 per year for a full-time worker. In 2004 nearly half of America’s workers earned less than $13.25 per hour. This wage compression has not come about because American workers lack skills and education; that is one of the most pernicious myths around. Rather, our workers are hurting because they are being pushed down below their actual skill and productivity level; their compensation (pay plus benefits) has been driven down by greed at the top, by rampant outsourcing, and by the shocking effect of Wal-Mart’s “monopsony” throughout the economy, i.e., the ability of this giant retailer to ruin suppliers and their workforces.
Barry C. Lynn brilliantly describes the Wal-Mart effect in this month’s Harper’s. Suffice it to say that “Always Low Prices!” masks unspeakable destruction below the surface.
Lynn’s piece also has the patriotic merit of reminding us that our ancestors didn’t take kindly to class war from above. Yes, we might well wish that the Founders and Framers had been less entranced by John Locke’s notion of the sanctity of private property and contract law. But they also recognized the latent despotism in too much property in the hands of monopolists. Madison, for example, denounced any concentration of economic power that could deny Americans “the free use of their faculties, and the free choice of their occupations, which not only constitute their property in the general sense of the word, but are the means of acquiring property strictly so called.”
Throughout the 19th century and all the way up to the Reagan Revolution in the 20th, anti-monopoly and antitrust sentiment drove a significant part of our politics and our democratic discourse. Justice Brandeis spoke for a whole nation (minus its plutocrats) when he wrote that “we can have a democracy or we can have great wealth concentrated in the hands of the few. We cannot have both.”
Reagan and his corporate sponsors moved immediately to dismantle antitrust law and did so with barely a murmur of Congressional or press protest. Japan was eating our lunch back then, remember: nothing could stand in the way of efforts by “our” corporations to fight back. Never mind that completely surrendering to the global competitiveness mantra would unleash a brutal reign of terror on small businesses, on unions, and on ordinary working families.
That reign of terror has been intensifying ever since. So again, my patriotic question: How long will we tolerate such violence and such gross usurpations of our American liberties and birthright by those whom trust-buster Teddy Roosevelt called “malefactors of great wealth”?
One final patriotic note: “America the Beautiful” was written for Independence Day. What many don’t know is that the song’s original third verse (“…may God thy gold refine, till all success be nobleness and every gain divine!”) was aimed directly by writer Katherine Lee Bates at the monopolists and plutocrats of her era. Bates first penned the hymn in 1893; in her last version (1913) she made her complaint even more specific in an additional verse:
America! America!
God shed his grace on thee
Till selfish gain no longer stain
The banner of the free!
Perhaps it’s not too late to attack Katherine Lee Bates on the grounds that she lived openly as a lesbian for 25 years. I wouldn’t put it past today’s conservatives. They’ll talk about anything “immoral” and “dirty” just as long as we don’t talk about the truly dirty secret of ever-more-violent class warfare from above.
Well written essay! I’d like to access a few of the sources so I can integrate it into my teaching and preaching at our church.
I like the connection between CEO salary grossity and the raid on pension funds. One rarely sees that obvious connection made.
One other connection that can be made: protecting the stock value vs. paying a living wage. We’re sorry, but we can’t afford to pay our workers a living wage because we have to keep buffing up our profit margin to keep our investors happy with their stock price. Where else but in a plutocracy would investors have a prior call on the profits of an enterprise which the workers have the first and most important hand in creating? In a genuine democracy, management would pay a lower dividend so that workers would get a living wage, and that would be the bottom line that the enterprise can afford.
It seems so obvious, but that, too, is a connection that I never see raised in the living wage discussion.