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David Sirota is a political journalist and nationally syndicated newspaper columnist at Creators Syndicate. David writes about political corruption, globalization and working-class economic issues often ignored by both of America's political parties.
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August 22, 2007 9:12 AM
White House: Wealth Inequality "Is Not A Very Interesting Story"
The New York Times reports that according to new government data, "Americans earned a smaller average income in 2005 than in 2000, the fifth consecutive year that they had to make ends meet with less money than at the peak of the last economic expansion." As most workers' wages stagnate, however, the folks in the top two tenths of one percent of income earners are doing quite well. According to the White House's official statement, in fact, this divergence between the vast majority of Americans and the wealthiest two tenths of one percent "is not a very interesting story." To them, it is just an annoying distraction from their bigger goal of manipulating the labor market through immigration and globalization policies specifically designed to drive wages down even further.
Here is the excerpt:
"Growth in total incomes was concentrated among those making more than $1 million. The number of such taxpayers grew by more than 26 percent...These individuals, who constitute less than a quarter of 1 percent of all taxpayers, reaped almost 47 percent of the total income gains in 2005, compared with 2000. People with incomes of more than a million dollars also received 62 percent of the savings from the reduced tax rates on long-term capital gains and dividends that President Bush signed into law in 2003... The nearly 90 percent of Americans who make less than $100,000 a year saved on average $318 each on their investments. They collected 5.3 percent of the total savings from reduced tax rates on investment income...Tony Fratto, a White House spokesman, said the fact that nearly all of the growth in incomes was among those in the upper reaches of the income ladder and that the majority of investment tax breaks went to those making more than $1 million 'is not a very interesting story.'" (emphasis added)
What's particularly nauseating about the White House's class warfare is that it is being waged at the very same time the Bush administration is claiming a supposed shortage of workers means it's AOK to ignore how the H-1B program is being abused to drive down wages. They are also using this labor shortage claim to justify a push to enact a so-called "guest worker" program that deliberately creates a subclass of easily exploitable indentured servants with no basic labor or human rights (notice that the White House isn't pushing for more legal immigration because legal immigration would give new workers minimum economic rights). Supposedly, our country needs to ignore H-1B abuses and create this "guest worker" subclass because we just don't have enough workers to do the jobs that need to be done in this country. Except, as none other than Businessweek confirms, that narrative is what I've previously termed The Great Labor Shortage Lie - and a lie directly connected to the problem of stagnating wages.
Here's the analysis - again, it's from Businessweek quoting Merril Lynch, not exactly two pillars of radical leftist thinking:
"A North American economist at Merrill Lynch, he is one of a number of economists who say the concerns about too few workers are vastly overblown. Rosenberg recently studied the issue and put out a report entitled Is There a Labor Shortage? If employers are having trouble filling jobs, "perhaps they're not looking hard enough," he says. The issue may not be the number of workers, but rather the level of pay. Economists like Rosenberg argue that in a market economy, there's really no such thing as a true shortage. If you want more of something, you can pay more and have it. When employers say that there's a worker shortage, what they really mean is they can't get enough workers at the price they want to pay, the argument goes. 'While it makes for nice cocktail conversation, the data aren't saying there is an acute labor shortage in this country," Rosenberg says...According to the basic laws of economics, the tighter the supply of labor, the more it should cost. So if the economy were operating with full or near-full employment, we would be seeing an 'explosion in labor compensation,' he says. The price of labor, however, is hardly surging. In fact, key indicators of employee costs show they are tracking or trailing inflation."
You may recall that in a speech to the AFL-CIO last year, Sen. John McCain (R-AZ) tried to deny these basic rules of the labor market by implying that American workers are lazy. Specifically, he claimed that even if corporations raised wages, Americans wouldn't want agricultural work because Americans "can’t do it, my friends."
The White House may say that this economic persecution of America's middle class "is not a very interesting story" but most Americans find it more than just interesting - they find it a cause for outrage. The booing at that AFL-CIO meeting is a good example. It came because American workers understand that what we are now getting from politicians of both parties on on immigration and globalization is shenanigans - shenanigans aimed at making sure the laws of supply and demand work not to address the inequalities laid out in today's New York Times, but only to help Big Money interests that buy public policy in Washington.
Just consider the bait-and-switch quality to all this. We are told that when there is a short supply of a good or service that is in demand, the market dictates that the price for that good or service rises (as just one example, we hear this justification all the time when it comes to the supply of oil and the price of gas). This results in higher profits for the corporations producing the good or service. But we are simultaneously told that if there is a short supply of labor that is in demand, the market should not raise the price (aka. wages) for that labor (which would, of course, lessen the wealth disparity in America). No, instead we are told that we should rig the labor market by flooding it with a supply of workers who will exist under a legal framework that makes them more easily exploitable than other workers (ie. they can't form unions to demand better wages/working conditions without fearing their employer will deport them).
This is the governing ethos of economic/globalization policymaking in Washington. Couple it with tax policies that target most of their rewards to the handful of Gordon Gekkos who run Wall Street, and what you have is a pretty open, pretty vicious economic war being waged on America's middle class.
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About David Sirota
David Sirota is a political journalist and nationally syndicated newspaper columnist at Creators Syndicate. He is the New York Times bestselling author of Hostile Takeover. He lives in Denver, Colorado. His daily blog can be found at CREDO Action. He contributes regularly to the Denver Post's Web site, is a senior editor at In These Times magazine and is working on his second book. He has been profiled in Newsweek and the Rocky Mountain News and is widely known for his reporting on political corruption, globalization and working-class economic issues often ignored by both of America's political parties. Sirota serves as co-chair of the Progressive States Network, a 501(c)3 organization that supports state legislators and that is a partner of CREDO.
You can subscribe to Sirota's e-mail newsletter by going to davidsirota.com and signing up in the lefthand corner. To find out more about Sirota, download his official biography or see his recent media appearances. You can e-mail him at sirota@credoaction.com.
The views expressed on this blog are his own, and do not necessarily represent the views of Working Assets (publisher of CREDO Action) or the institutions Sirota works for.
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Discussion
Just wait that's what The SPP is all about reducing the average American income and standard of living by 30-33%..!
Ask Barbara Bush she'll tell you "Well they are under privileged so this is not so bad for them..!"
That's the mentality that and Grandpa's plan for a true fascist corporate Dictatorship..!
Remember:
"The acorn doesn't fall to far from the tree..!"
Hell I've seen the gutting of our workforce and the slashing of wages first hand. And thanks to a castrated OSHA and EPA I've seen companies regularly violate HAZMAT rules when it comes to dangerous solvents like Trichloroetheleyne(sp?), Xelene, Acetone, etc. Seen workers use Acetone to clean metal plates barehanded and with no respirators. And Acetone is very, very damaging to the human nervous system and major organs. Trico just gives you stomach and liver cancer.
20 years ago OSHA would have shut companies that did this down. Today they ok it.
And the Democrats are once again silent. Congress is a obscene joke and none of the Democratic candidates except for Kucinich even care what happens to working class Americans. You can't even get the liberal blogosphere interested in whats happening to the American worker. They seem to be in cahoots with the GOP or just view ordinary Americans with contempt. Personally I think liberals despise ordinary Americans and enjoy seeing them kicked into the gutter.
Among my friends, relatives and acquaintances, I can count on the fingers of one thumb the number of people I know who have not been hurt by wage erosion.
If the "news" finally got through to Merrill Lynch, than it's probably worse than we thought.
If you want to know the real reason most Americans don't want to go into agricultural labor, go to the United Farm Workers web site: www.ufw.org and read some of the stories about what is going on with those people who are working with our food supply.
Things haven't gotten better since the days of Cesar Chavez.
"Some men will rob you with a gun, some with a fountain pen..." -- from Woody Guthrie's "Pretty Boy Floyd."
The Imposter and his corporate crony thieves are fountain pen crooks. And we working people are the victims.
The buying power of wages has dropped steadily since the 70's. Reagan, Bush I, Clinton, and Bush II have royally screwed workers.
This is typical GOP arrogance. They rule by power that does not represent working people, so what can anyone expect in your face arrogance? The only hope for the working class is another major depression and another FDR who will pick up the pieces, I wish someone would tell me when its going to be so I can securely scrounge some money on the stock market. I barely escaped with some profits and my nervous system intact this time. Depression will happen for the same reason it did before. Impoverishment of the working class who won't be able to support those higher quarterly profits corporate investors demand. Signs of this in retail are there right now. The same thing will recycle infinitum as long as the present corporate fascism dominates. This system must be drastically changed if there is ever to be economic democracy in America. This means a new bill of rights. Otherwise we liberals will spend our life grousing about how we're being sold out by our leaders. No one has much respect for the working class because instead of doing the right thing when they have the chance they do the stupid thing. Defined as try to exploit the capitalist instead of change the basic economic deal for every one. The result of this has been the death of the unions. I'm all for grousing and talking about making things better by supporting the best people, but I have no illusions that we are going to succeed in changing this system of checks and balances that prevent success. The conservative courts will see to this. So what do we do gentle persons. Elect another confessed in your face swindler like Clinton or OJT greenhorn like Obama to lead us or should we demand better? I implore someone to tell me. I haven't got a clue.
The budget for my state of CA was just signed this week..the budget for the elderly, poor and sick was gutted by 700 million bucks..
Oh, they aren't done. Ahnold has the line-item veto and has pledged to cut another $500-700 mil from the budget, yet they also want to give tax breaks to the corporations!
This crap is all upside down and we have to vote these fools out of office to affect change.
A former boss of mine who used to claim that he was a "liberal" would all of a sudden show disinterest when at a political discussion during breaktime, a coworker would ask him about his economic stands. Sure, he's hate Bush and his tax cuts and the war or at least pretend to. However, when asked about stuff such as wealth inequality such as the McMansions in VA Beach versus "cheap" apartments and small homes in the rest of the city and he wouldn't want to hear about it. Worse, ask him about Big Music/Entertainment/Media slapping frivolous lawsuits against P2P which had NOTHING to do with declining sales due to crappy quality and he'd say "Those poor bastards who downloaded from P2P should be forced to pay millions of dollars !" Of course, only a few weeks later did he brag about his children working in Hollywood which then explained his LATTE LIMOUSINE LIB ARROGANCE. The truth is extreme social libs/cons who make a show out of nothing stand to benefit from the inequality so that might explain their desperate moves to make the issue somehow unimportant.
The loss of well paying jobs due to "free" trade, off-shoring, H1-B visas is the reason why CA taxbase has imploded over the last decade. And that of the nation as well.
If Democrats were to fight to keep well paying jobs here in the U.S. as hard as they do other special interests we wouldn't have to worry about a taxbase that can't pay for social programs that Democrats need to stay in power.
The problem as I see Democrats never figured out that a declining job base of blue collars and middle-class would affect social program spending.
At lot of this may stem from the fact that activists in the party come from wealthy and upper middle-class household where money isn't a issue and work is something that yobs do. People who work just don't exist for most Democrats.
A very sensible and probably correct analysis Mr. waltc. I would have a big picture exception to this, however. I don't think except for H1-B that much could be accomplished by fighting the job drain. It is a natural concomitant of natural globalization. You would have to shut down the global economy and the internet which ain't going to happen. The only way this country can keep its share of the world job market is to adopt a new world economic system similar to Parity Economics, as outlined in my book Parity Democracy. It is a system based on reverse tariffs that purports to level the economic playing field the only fair way it can be done. Check it out. It is distributed worldwide at amazon.com and other major book dealers.
Cheaper immigrant labor is cheaper because the low price offered for their labor is a relatively high price in the countries they COME FROM.
The come for the "higher" wages (higher than nothing, certainly). Unfortunately, they have to live in THIS country when they work in this country. Americans want more money for the same work because we already know how expensive it is to live here, and we know we can't get by on less. Not without turning into the virtual slaves that migrant workers are.
The workers come and work for pennies, and send even those pennies home to people who are even poorer than they are. They are able to do that by staying poor (which, sadly, they are well used to), and by having extended-family support systems that we Americans have been conditioned to disdain, as not reflective of the "independence" we think we have.
That independence myth will kill us yet. Note that rank and file Republicans are far less ideologically independent than are progressives; and that intra-party support is the source of their sometime policy strength.
Unbridled capitalism and democracy are natural enemies.
The original article from the New York Times talks of declining average incomes. If average incomes are declining, what's happening to median incomes, which more accurately represent the actual decline? If average incomes are declining, and if upper level incomes are increasing big time, and if as the article implies, bottom level incomes are increasing (although I don't trust this item to be accurate), then incomes for the middle class must be in free fall.
Or did the New York Times have it wrong and did they really mean to say median incomes are declining? Or do they think the public is too dumb to know the difference? Where is the intelligent conversation? Does anyone care?
Funny how we ignore the role of welfare "reform" in all of this. States have been provided with "incentives" to place welfare recipients into bottom-wage workfare labor, to "prove" that these policies work. Businesses have eagerly hired workfare labor. Why? Not hard to figure out.We'll read about a company putting a chunk of its workforce on "indefinite layoff". Check back a couple weeks later, and you'll see that those workers were replaced with workfare labor, at a fraction of the wages paid to the former employee.
It's a self-perpetuating economic policy, as a portion of the laid off workers will eventually become super-cheap workfare labor, replacing other workers at a fraction of the wage. Everyone loses except the corporate powers.
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