Search This Blog

Thursday, July 23, 2009

The Pace of Exploitation Quickens...

Folks on the political left mock The Wall Street Journal. True, the editorial pages contain some of the most scurrilous, ugly commentary imaginable. The papers editorial stance would win praise from Benito Mussolini, if not Josef Goebbels.

Yet the economic data, analysis, and reportage is unmatched by any other English language mainstream news source, including The Financial Times and The New York Times. A friend once offered the explanation that “the ruling class needs hard facts to make informed decisions while propaganda is left to The New York Times and the other mainstream news outlets”. Perhaps that is so, but I can attest that I’ve found no better source for pertinent economic information even under its ownership by Rupert Murdoch. Part of the answer lies in their staff of 700 researchers, reduced under Murdoch, but surprisingly unfettered by editorial imperatives. Of course a reader must dig through or behind many of the articles to grasp the meaning of the proffered analyses, but its there to be mined by the diligent Marxist.

A case in point is a recent article by Ellen E. Schultz carrying the title “Top Earners’ Pay Is Seen Eroding Social Security” published on July 21, 2009 ( This remarkable article is based upon a clever examination of Social Security data on payroll taxes. Generally, salary and wage data are not distinguished by class when collected by our capitalist-friendly government fact-collectors. Consequently, separating income by class becomes a somewhat speculative and contentious issue among commentators. But the Social Security Administration, in its wisdom, excuses the wealthy from paying SS taxes on income above a certain level, arguing that this would be an onerous burden on the high income class. WSJ researchers take this divide as a credible break between “executives and other highly compensated employees” and the rest of us. They then sort the SSA salary and wage data using this divide, an unspoken, but most suggestive cleavage between the working class and the ownership class. They draw the following conclusions:

● Over one-third of all wages go to the “executive and other highly paid employee” class – the top 6%. The other 94% of employees share the remaining two-thirds.

●The portion going to the top 6% grew from 28% in 2002 to 33% in 2007, a share increase of almost 18% in only 5 years!

●The pay of the top 6% increased by 78% over the past decade while the rest of us saw a pay increase of 61%.

● In the 5 years from 2002 to 2007 – “recovery” years of strong growth – the “executive and other highly compensated employee” class enjoyed a 48% gain while the working class employees’ wages grew by only 24%, half the growth of the wealthy.

●The data on the top 6% vastly underestimates the growth in income of the ownership class by excluding unvested employer contributions, unvested interest credited to deferred-pay accounts, unexercised stock options, unvested restricted stock, incentive stock options, “carried interest” income, income categorized as benefits, and undoubtedly many other actuarial categories of hidden income.

●Elimination of the SS tax ceiling would guarantee, by the most conservative actuarial projections, the Social Security trust funds’ solvency for the next 75 years.

After digesting the shock of the extreme inequality of wage differences, special note should be taken of the trends in inequality demonstrated by the SSA numbers. Inequality has actually accelerated over the last decade, with the widely hailed “recovery” from the dot-com recession generating an even greater disparity of wages. Note, also, that SSA data does not reflect the economic crisis of 2008/2009, though the previous trend would suggest strongly that an even greater increase in inequality is in store for the lower 94% of employees in any coming recovery.

The trajectory of the incomes tracked in The Wall Street Journal study demonstrates a decided and growing partition of the fruits of labor in favor of the ownership class and its minions. In Marxist terms, this indisputable fact signals a parallel increase in the rate of exploitation. For workers, the only remedy will be found in determined, class-conscious militancy. Based upon the accelerating rate of exploitation, one is forced to conclude that the leadership of organized labor has failed to abate this class offensive against labor. The approaches of the past will fall far short of what is needed to win social justice for working people.

Attention must be paid to The Journal’s final point about Social Security which suggests a simple, painless solution to the contrived, exaggerated crisis of Social Security: eliminate the cap on the Social Security tax. I am reminded every day – as I glance at an old button circulated by the inestimable, late labor activist, Fred Gaboury – of the demand for an elimination of the cut-off on the flat tax funding the Social Security trust fund. Fred’s button read: Scrap the Cap. When the button was produced the tax was voided for incomes above $72,600. Today that limit has reached $106,800. Years have passed and we still can’t generate the political will to take this small step for justice and fairness. Shame on our corporately-owned politicians…

Zoltan Zigedy

Sunday, July 5, 2009

Clinton’s Ghost

The US was among the last industrialized nations to offer citizens a basic income guarantee – welfare – and among the first to dispose of it. When the Clinton administration succeeded in “ending welfare as we know it” in 1996, nearly 5 million families were receiving relief under the Aid to Dependent Children program. As of September 2008, welfare recipients were pared down to 1.6 million families under the Temporary Relief for Needy Families program created to replace welfare.

Historically, government stances toward the poor have been shaped by several approaches: neglect, punishment, charity, forced employment (public and private), the labor market, human rights and social duty, depending upon the class nature of government and the prevailing societal notion of the nature of poverty.

With the rise of capitalism, much attention was paid to the effects of poverty upon labor markets: the necessity of employment as opposed to idleness and self-worth defined by productive effort. For the capitalist system to advance, able-bodied persons were necessarily herded into the work force and away from independent, though perhaps sustainable activities. A new template was created: the citizen defined by his or her place in the work force.

As government became dominated by the capitalist class, the posture towards the poor took on a punitive face, branding those outside of the work force as lazy and undeserving of any compassion. Neglect and forced labor (vagrancy laws and the poor house) were prescribed for the able-bodied and charity for those unable to work. Both effectively deepened the work ethic and labor discipline among the population.

Socialists, on the other hand, advocated an income minimum for everyone as a human right or collective, social duty.

The mass misery of the Great Depression and the determined struggle of millions of working people forced a modest welfare program upon the capitalist class with the passage of the Social Security Act of 1935. Aid to Dependent Children (ADC) – later, Aid to Families and Dependent Children (AFDC) – offered the poor a modest guaranteed income base, though allowing little more than a subsistence life. Nonetheless, this constituted the US welfare system until 1996.

Several factors contributed to the destruction of this system, including the active, often violent attack upon welfare rights organizations (they were largely destroyed by 1976) and the rise to dominance of the neo-liberal doctrines beginning in the late 1970’s and capped with the winning of political power by Thatcher in the UK and Reagan in the US. The crude rhetoric of “welfare queens” and “welfare fraud” and the wide-spread racist edge was amplified with the public through media megaphones who dutifully restored the stigmas attached to the poor, stigmas that well serve capitalism.

When competition with the Socialist world receded after 1991, the US ruling class lost any incentive to present a human face to the rest of the world. Despite costing annually only $24 billion at its peak (roughly the program cost of 20 Stealth Bombers), welfare was doomed and President Clinton and Congress eagerly killed AFDC in 1996.

The TANF program, which replaced AFDC, limits income relief to a maximum totaling five years and gives the states a fixed amount to be mixed between job training and cash payments. Immigrants were largely excluded. Today, the average monthly cash payout to a family is an indecent $372.

When adopted, states scurried to force recipients into low-paying jobs while placing strict job-seeking requirements on assistance applicants. With a reasonably buoyant economy and an expanding low-wage service sector, supporters pronounced the changes a success.

But now, with jobs disappearing and unemployment exploding, the TANF program is failing to keep up with the needs of an increasing jobless work force. In June alone, 358,000 people exhausted unemployment benefits and essentially departed from the labor force. Public assistance is the only recourse for these people and millions like them.

According to The Wall Street Journal (6-22-09), 23 of the 30 largest states, accounting for 88% of the US population have seen increases in cases from a year ago. Unfortunately, observers have noted an ominous sign: welfare case increases frequently lag far behind the unemployment rate and the increases in food stamp usage. Many believe this lag reflects the draconian barriers placed in front of applicants, barriers designed to force job-seeking in a labor market where there are no jobs. For some it is a mystery: “…how can there be such a rapid increase in unemployment and long-term unemployment and not show up in the welfare [system]?” asks Mark H. Greenberg, director of Georgetown University’s Center on Poverty, Inequality and Public Policy (WSJ, 06-22-09). For others, it is an early sign of the collapse of Clinton’s final solution to welfare, a measure that will now leave an indelible stain on his accommodation of neo-liberalism.

Michigan is a case in point. With the dubious distinction of having the highest unemployment rate in the US (14.1 by the most conservative government tally), welfare caseloads were actually down 4.8% in April from a year earlier! Since food stamps are relatively easy to secure, recipients were up 13% in April, totaling 1.4 million people (There are only 70,000 families on welfare). But to receive assistance, an applicant must often look for work for a month before seeing a caseworker. The threshold for eligibility has remained the same for the last twenty years and benefits can only be received for two years in a lifetime. Should one qualify, the assistance is a mere $492 a month for a family of four. This forebodes a real human catastrophe in the not too distant future, a disaster only too avoidable.

The emerging welfare crisis shamefully has received little attention from the media (with the exception of The Wall Street Journal – giving credit where credit is due!) or politicians. At a time of escalating human suffering, it is outrageous that neglect and a medieval punitive posture continue to dominate the US approach to relief for the needy. Labor should be reminded that forcing the poor into competition for dwindling, low paying jobs only weakens the struggle for a fair days pay. We urgently need to raise the call for a minimum guaranteed income for all citizens including immigrants, along with a full employment bill similar to the Employment Act of 1946, but with a federal mandate to achieve a target, low rate of unemployment, a rate secured by federal hiring on socially useful public projects. If the money was there for bank bailouts, the money should be there for human needs.

Rapacious banks or human lives? The choice should be easy…

Zoltan Zigedy