Thursday, December 20, 2012

John Nichols On the Vicious Attack on Labor Unions in Michigan by the Koch Brothers and the Republican Right Via Governor Snyder

A union steel worker holds up a sign during a rally outside the Capitol in Lansing, Michigan, Thursday, December 6, 2012, as Senate Republicans introduced “right to work” legislation in the waning days of the legislative session. (AP Photo/Carlos Osorio)

All,

Please read and pass the word.  We've got a LOT of work to do to change this society and we should never forget that the brutal, extremely wealthy, and well organized forces aligned against us (e.g. the national political rightwing, corporations, banks, billionaire developers, Wall Street, governmental and economic elites in both national political parties etc.) are absolutely determined to destroy us in both the short and long run and if we don't collectively wake up and fight back on a massive national scale these forces and their deadly agenda will succeed and only we will be the utterly defeated victims of their withering assault...Stay tuned...

Kofi


GOP, Koch Brothers Sneak Attack Guts Labor Rights in Michigan
by John Nichols
December 6, 2012
The Nation



In the state where workers sat down in Flint General Motors plants seventy-five years ago and emboldened the industrial labor movement that would give birth to the American middle class, Republican legislators on Thursday voted to gut basic labor rights.

Union leaders warned that, if organized labor can be so battered in the union heartland of Michigan, it can—and may—be attacked anywhere. And the national significance of the move was highlighted by a statement from the Obama White House, which said:

President Obama has long opposed so-called “right-to-work” laws and he continues to oppose them now. The President believes our economy is stronger when workers get good wages and good benefits, and he opposes attempts to roll back their rights. Michigan—and its workers’ role in the revival of the US automobile industry—is a prime example of how unions have helped build a strong middle class and a strong American economy.

But, while the president carried Michigan by a 54-44 margin on November 6, neither he nor his fellow Democrats were calling the shots Thursday.

After Republican leaders announced Thursday morning that they intended to enact so-called “right to work” legislation—which is always better described as “no rights at work” legislation—the Michigan state House voted Thursday afternoon to eliminate basic union organizing and workplace protections that generations of American workers fought to establish. Several hours later, the Michigan state Senate did the same thing, as part of a bold anti-labor initiative launched in coordination with a Koch Brothers–funded Americans for Prosperity project to “pave the way for right to work in states across our nation.”

As the Republicans launched the attack on unions and their members, Americans for Prosperity—a group developed and funded by right-wing industrialists and billionaire campaign donors Charles and David Koch—was in the thick of things. AFP recruited conservatives to show up at the state Capitol in Lansing to counter union protests and prepared materials supporting the Michigan initiative, including a fifteen-page booklet titled “Unions: The Good, the Bad and the Ugly: How forced unionization has harmed workers and Michigan.” Within minutes of the announcement by Michigan Governor Rick Snyder that Republicans would ram through the “right to work” legislation, AFP was hailing the move in formal statements “as the shot heard around the world for workplace freedom.”

Snyder, a Republican, has indicated that he will sign the measure that was passed during a lame-duck session of the legislature.

Employing slick messaging and a timeline clearly developed to thwart opposition, Snyder and his legislative allies claimed that they were enacting anti-labor legislation to create “Freedom to Choose” in the workplace. But the Orwellian turn of phrase did not fool the working people of Michigan, thousands of whom surrounded and occupied the Capitol during a day of emotional protest. “Right-to-work would set all Michigan workers back in terms of wages, benefits and safety on the job,” declared Mike Polkki, a mine worker from Ishpeming who joined furious last-minute efforts to lobby members of the Republican-controlled legislative chambers. “Instead of attacking the middle class, our lawmakers should work to build it back up.”

This was theme or protests throughout the day, as Michigan unions made the point that undermining labor rights undermines the living standards of all working people—not just union members.

“There are some basic economic facts that should inform any thoughtful discussion of Right to Work legislation. Workers, union or nonunion, make an average of $1,500 less per year in Right to Work states. They are also less likely to have pension or health care benefits,” explained Michigan State AFL-CIO President Karla Swift. “The growth rate for Right to Work states before they adopted such policies is actually higher than the growth rate for these states after they adopted these laws.”

The statements were true.

But they were not taken seriously by the Republicans who—though they suffered setbacks in the November 6 election—control both chambers of the Michigan legislature. Swift and UAW president Bob King were among hundreds of workers who were locked out of the Michigan Capitol Thursday, as protesters inside were pepper-sprayed and arrested by State Police.

The Republican legislators evidenced no intention to listen to logic, or to entertain honest debate. GOP legislative leaders had plotted behind closed doors with Governor Snyder, to have Michigan join the traditionally lower-wage states that decades ago enacted “right to work” laws to thwart the rise of a labor movement that promoted civil rights, women’s rights and economic justice.

The Michigan legislation goes much further than proposals advanced last year by Republican governors in Wisconsin and Ohio, which targeted public employees. Under the Michigan legislation, basic labor rights are stripped away from both public and private-sector workers.

That’s not the only difference between Michigan Governor Snyder and Wisconsin Governor Scott Walker, whose name became synonymous with aggressive anti-labor initiatives when in February 2011, he moved to strip collective bargaining rights from teachers and public employees.

“At least Scott Walker had the backbone to barge through the front door” and propose his legislation, argued Senate Minority Leader Gretchen Whitmer, a pro-labor Democrat from East Lansing. Michigan’s Snyder, who suggested for months that he was not interested in advancing “right to work” legislation, suddenly shifted position at the eleventh hour, when he sided with the most rigidly anti-labor of his party’s legislators.

“They’re cowards,” declared Whitmer, who bluntly declared: “They are taking away our rights.”

Whitmer got that right. But the cowards were in charge Thursday.

As in Wisconsin, where crucial elements of Walker’s anti-labor law have been ruled unconstitutional by the courts, the Michigan legislators bent the rules of their chambers to rush the law to Snyder’s desk.


Ultimately, those abuses could end up preventing implementation of the law—although that’s a hope rather than a certainty.

There is also the hope that voters in a state that voted overwhelmingly for President Obama and Democratic Senator Debbie Stabenow on November 6 will eventually elect a new pro-labor governor and legislature.

The determination to fight for labor rights runs deep in Michigan. It’s a part of the state’s history, and UAW President King says it is far from finished.

Referring to anti-labor billionaire Dick DeVos, a Michigan Republican who has worked closely with fellow billionaires Charles and David Koch to fund anti-labor initiatives, King said: “This is a short-term victory for Dick DeVos and the radical right wing. In the long-term there will be a victory for working families in Michigan.”


http://www.nytimes.com/2012/12/11/opinion/taking-aim-at-michigans-middle-class.html


EDITORIAL

Taking Aim at Michigan’s Middle Class 
December 10, 2012
New York Times

The decline of the middle class in this country has paralleled that of the labor movement, which has been battered by the relentless efforts of business groups and Republicans to drive down wages, boost corporate profits and inflate executive salaries and bonuses. Now that campaign is on the verge of a devastating victory in Michigan, home of the modern labor movement, which could transform the state’s economy for the worse.
 
On Tuesday, the Republican-controlled Legislature is expected to pass a law that would allow workers to avoid paying dues to a union that represents their shop. Gov. Rick Snyder, a Republican, has reversed an earlier position and said he would sign the law. Democratic officials, labor leaders and workers are urging him to reconsider, knowing that a business victory in Michigan, of all places, would encourage other states to make the same mistake.

These measures are misleadingly known as “right to work” laws, and their purpose is no less deceptive. Business leaders say workers should not be forced to join a union against their will, but, in fact, workers in Michigan can already opt out of a union. If they benefit from the better wages and benefits negotiated by a union, however, they are required to pay dues or fees, preventing the free riders that would inevitably leave unions without resources.

Concern for the rights of individual workers, of course, is not the real reason business is pushing so hard for these laws. Gutting unions is the fastest way to achieve lower wages and higher profits. Last year, in support of an Indiana antidues laws that later passed, the Indiana Chamber of Commerce said the law would draw businesses to the state for lower labor costs. A study by the University of Notre Dame in January found that the average wages and benefits for nonfarm workers in right-to-work states was $57,732, while in states without the law it was $65,567. States with antidues laws have higher rates of poverty and lower rates of health coverage.


Republican officials also know that depriving unions of dues will hurt Democratic candidates, who usually win the support of labor. As President Obama said at a diesel plant in Redford, Mich., on Monday, “These so-called ‘right-to-work’ laws, they don’t have to do with economics, they have everything to do with politics. What they’re really talking about is giving you the right to work for less money.”

Mr. Snyder’s turnabout shocked workers in his state, and Democratic officials have spent the last few days urging him to reconsider and prevent a needless drive to the bottom. By withholding his signature, he can ensure that Michigan remains both the birthplace and the economic foundation of middle-class security.


12 December 2012

By Dave Johnson, Campaign for America's Future | Op-Ed


Pay attention to what is happening in Michigan, because it will add downward even more pressure to your wages and benefits, wherever you live and work.

(Photo: Peoples World / Flickr)


Pay attention to what is happening in Michigan, because it will add downward even more pressure to your wages and benefits, wherever you live and work. Republicans in the Michigan legislature have rammed through anti-union “right-to-work” laws making union dues voluntary even as unions a required by law to provide services to members and non-members. They say this will make Michigan more “business-friendly” by driving down wages and benefits, thereby stealing jobs from states where working people have rights. The actual intent is to get rid of the unions altogether, and their ability to fight for the 99% in the ongoing class war with the 1%.

What Are So-Called “Right-To-Work” Laws?

“Right-to-work” means the right to work in a unionized business that has a negotiated contract without paying dues to the union.

The 1947 Taft-Hartley Act allows states to prohibit unions from collecting fees from non-members or making union membership mandatory, and states that do this are called “right-to-work” states. So-called “right-to-work” laws prohibit labor contracts from requiring employees who are covered by the contract to pay dues to the union that won the contract. But the unions are still required to represent every worker who is covered by a contract — even workers who are not members of the union and do not pay union dues. This costs money, so the union is drained of funds and power, thereby weakening their ability and incentive to fight for better wages and benefits.

Stealing From Other States, Lowering Wages And Tax Revenue

The appeal of these so-called “right-to-work” laws is that by weakening the ability of workers to band together and fight for better wages and conditions, they result in lower wages, benefits and safety standards. This is supposed to make these states more attractive to employers, which then brings jobs to the lower-wages states as employers leave states where worker have rights.

This affects wages across the larger economy. Any jobs that do move to these states come from other states. So in the larger economy of the country the effect of these laws is to shift wages, benefits and safety standards downward. This brings pressure that forces all wages for all employees down, which further lowers the country’s tax base, reducing the entire country’s ability to educate, maintain and modernize infrastructure, etc.

As jobs shift to lower-wage states, pressure to lower all wages increases, and the collection of income tax revenue decreases. The ability of consumers to make purchases decreases as well. Infrastructure investment declines. Education declines. Over time the country falls behind the rest of the world and it become more expensive and more difficult to catch up.

Or, in other words, exactly what we are seeing all around us now.

Studies Of The Effects

A May, 2011 Bureau of Labor Statistics study found that “right-to-work” states have lower wages (examples: 9.4% lower for all occupations, 11.4% lower for teachers) than states with union rights.

A January, 2012 study by American Rights at Work, New Research Counters Arguments for “Right-To-Work” Laws, examined a number of studies and found that “recent studies rebut claims of economic growth and instead find that laws suppress wages.”

In Nonunion Wage Rates and the Threat of Unionization Henry Farber, Professor of Economics at Princeton University found that after Idaho passed a RTW law in 1985, there was a statistically-significant drop in nonunion wages relative to other states.

Feb, 2011, Economic Policy Institute (EPI), Does ‘right-to-work’ create jobs? Answers from Oklahoma,

Despite ambitious claims by proponents, the evidence is overwhelming that:

• Right-to-work laws have not succeeded in boosting employment growth in the states that have adopted them.

• The case of Oklahoma – closest in time to the conditions facing those states now considering such legislation – is particularly discouraging regarding the law’s ability to spur job growth. Since the law passed in 2001, manufacturing employment and relocations into the state reversed their climb and began to fall, precisely the opposite of what right-to-work advocates promised.

• For those states looking beyond traditional or low wage manufacturing jobs – whether to higher-tech manufacturing, to “knowledge” sector jobs, or to service industries dependent on consumer spending in the local economy – there is reason to believe that right-to-work laws may actually harm a state’s economic prospects.
Sept, 2011, EPI, ‘Right to work,’ The wrong answer for Michigan’s economy, findings included,
• Right-to-work laws lower wages—for both union and nonunion workers alike—by an average of $1,500 per year, after accounting for the cost of living in each state.

• Right-to-work laws also decrease the likelihood that employees get either health insurance or pensions through their jobs—again, for both union and nonunion workers.

• By cutting wages, right-to-work laws threaten to undermine job growth by reducing the discretionary income people have to spend in the local retail, real estate, construction, and service industries. Every $1 million in wage cuts translates into an additional six jobs lost in the economy. With 85 percent of Michigan’s economy concentrated in health care, retail, education, and other non-manufacturing industries, widespread wage and benefit cuts could translate into significant negative spillover effects for the state’s economy.

Labor’s Reaction

On CNN this morning UAW President Bob King explained that this bill threatens worker rights. “It demonstrates to workers and really a broad spectrum of the populous that we have to work hard, we have to fight hard to protect our rights.” Explaining that workers already have the choice to join a union, King said,“You don’t have to be a union member. But you have to pay your fair share. Just like if you live in a community, you pay for your fair share of the road cleaning, of the police, of the fire,” King argued. People who benefit by [the union's] collective bargaining benefit by this procedure. They pay a fair share of the cost of representation.”

Steelworkers leader Leo Gerard called on Michigan governor Snyder to veto the law, (click through for the entire statement)

“The USW active and retired members join other unions and allies in Michigan and across the nation to call on Gov. Snyder to support the proposal of the state’s Democratic congressional delegation. We ask the Governor to use his veto power to stop this unnecessary and divisive right-to-work bill.

“If the Governor feels this bill will move Michigan forward, he should delay the final legislative votes and allow an amendment that would put this issue before the public as a state ballot initiative. We urge Governor Snyder to delay his signing of the bill. Let the people of Michigan debate and vote on a consequential matter that will affect all working families.

“We know the newly-elected Michigan state legislature convening early next year has added Democrats that would reject a right-to-work-for-less bill. Right-to-work is only supported by millionaires and billionaires who profit by taking more money out of the workers’ pockets.

Demonstrations and Disruptions

In a sign of things to come, 12-15,000 people demonstrated today at Michigan’s capitol building. There were confrontations, including mounted police charging into the crowd. Former Congressman Mark Schauer was pepper-sprayed. Ned Resnikoff, writing in, Michigan passes ‘Right-to-Work’ but fight isn’t over at the Ed Schultz website.

Shortly after noon on Tuesday, Michigan’s Republican-controlled House of Representatives gave its final approval to the state’s hotly contested “right-to-work” legislation, as thousands of the bill’s opponents rallied outside. But labor activists and their allies say that the fight isn’t over yet, and they’re already plotting their strategy for keeping Michigan a union stronghold.

“This fight is not over by a long shot, regardless of what happens today,” said Zack Pohl, the executive director of Progress Michigan.

See Also

Mary Bottari at PRWatch: Michigan Passes “Right to Work” Containing Verbatim Language from ALEC Model Bill
AFL-CIO ‘Right to Work’ for Less fact sheet.


Economic Policy Institute, Unions and Labor Standards, a collection of articles, posts and studies of the effects labor and anti-labor policies.

Nicole Pasulka at Mother Jones, Right-to-Work Laws, Explained

Josh Eidelson at Salon, Koch brothers, Tea Party cash drives Michigan right-to-work bill

Amanda Terkel at Huffington Post, Big 3 Automakers Reportedly Worried About Michigan Right To Work Legislation

Teamster Nation: RTW passes in #MI as thousands try to enter Capitol

OurFuture post on being “business-friendly, China Is Very “Business-Friendly”,


China is very, very “business-friendly.” Corporate conservatives lecture us that we should be more “business-friendly,” in order to “compete” with China. They say we need to cut wages and benefits, work longer hours, get rid of overtime and sick pay — even lunch breaks. They say we should shed unions, get rid of environmental and safety regulations, gut government services, and especially, especially, especially we should cut taxes. But America can never be “business-friendly” enough to compete with China, and here is why.

This piece was reprinted by Truthout with permission or license. It may not be reproduced in any form without permission or license from the source.



ABOUT THE AUTHOR

Dave Johnson (Redwood City, CA) is a Fellow at Campaign for America's Future, writing about American manufacturing, trade and economic/industrial policy. He is also a Senior Fellow with Renew California.
 Dave has more than 20 years of technology industry experience including positions as CEO and VP of marketing. His earlier career included technical positions, including video game design at Atari and Imagic. And he was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.

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For more on the assault on American worker rights, check out Steve Fraser’s “The Hollowing Out of America” below:

Steve Fraser on the Corporate Destruction of U.S. Cities, the Structural Dangers of Economic Austerity, and the Coordinated Political and Economic Attack on American Labor

http://www.thenation.com/article/171563/hollowing-out-america

All,

Please read and pass the word.  We've got a LOT of work to do to change this society and defeat the brutal, extremely wealthy, and well organized forces aligned against us (e.g. the national rightwing, corporations, banks, billionaire developers, Wall Street, governmental and economic elites in BOTH national political parties etc.) who are absolutely determined to destroy us in both the short and long run and if we don't collectively wake up and fight back on a massive national scale these forces and their deadly agenda will succeed and only we will be the utterly defeated victims of their withering assault...Stay tuned...

Kofi

The Hollowing Out of America
by Steve Fraser
December 3, 2012
The Nation 


This article originally appeared at TomDispatch.com. To stay on top of important articles like these, sign up to receive the latest updates from TomDispatch.com.

“Debtpocalypse” looms. Depending on who wins out in Washington, we’re told, we will either free fall over the fiscal cliff or take a terrifying slide to the pit at the bottom. Grim as these scenarios might seem, there is something confected about the mise-en-scène, like an un-fun Playland.


After all, there is no fiscal cliff, or at least there was none—until the two parties built it.    And yet the pit exists. It goes by the name of “austerity.” However, it didn’t just appear in time for the last election season or the lame-duck session of Congress to follow. It was dug more than a generation ago, and has been getting wider and deeper ever since. Millions of people have long made it their home. “Debtpocalypse” is merely the latest installment in a tragic, forty-year story of the dispossession of American working people.
 
Think of it as the archeology of decline, or a tale of two worlds. As a long generation of austerity politics hollowed out the heartland, the quants and traders and financial wizards of Wall Street gobbled up ever more of the nation's resources. It was another Great Migration—instead of people, though, trillions of dollars were being sucked out of industrial America and turned into “financial instruments” and new, exotic forms of wealth. If blue-collar Americans were the particular victims here, then high finance is what consumed them. Now, it promises to consume the rest of us.

Scenes from the Museum

In the mid-1970s, Hugh Carey, then governor of New York, was already noting the hollowing out of his part of America. New York City, after all, was threatening to go bankrupt. Plenty of other cities and states across what was then known as the “Frost Belt” were in similar shape. Yankeedom, in Carey’s words, was turning into “a great national museum” where tourists could visit “the great railroad stations where the trains used to run.”

As it happened, the tourists weren’t interested. Abandoned railroad stations might be fetching in an eerie sort of way, but the rest of the museum was filled with artifacts of recent ruination that were too depressing to be entertaining. True, a century earlier, during the first Gilded Age, the upper crust used to amuse itself by taking guided tours of the urban demi-monde, thrilling to sites of exotic depravity or ethnic strangeness. They traipsed around “rag-pickers alley” on New York’s Lower East Side or the opium dens of Chinatown, or ghoulishly watched poor children salivate over toys in store window displays they could never hope to touch.

Times have changed. The preference now is to entirely remove the unsightly. Nonetheless, the national museum of industrial homicide has, city by city, decade by decade, grown more grotesque.

Camden, New Jersey, for example, had long been a robust, diversified small industrial city. By the early 1970s, however, its reform mayor Angelo Errichetti was describing it this way:

"It looked like the Vietcong had bombed us to get even. The pride of Camden…was now a rat-infested skeleton of yesterday, a visible obscenity of urban decay. The years of neglect, slumlord exploitation, tenant abuse, government bungling, indecisive and short-sighted policy had transformed the city’s housing, business, and industrial stock into a ravaged, rat-infested cancer on a sick, old industrial city."

That was forty years ago and yet, today, news stories are still being written about Camden’s never-ending decline into some bottomless abyss. Consider that a measure of how long it takes to shut down a way of life.

Once upon a time, Youngstown, Ohio, was a typical smokestack city, part of the steel belt running through Pennsylvania and Ohio. As with Camden, things there started turning south in the 1970s. From 1977 to 1987, the city lost 50,000 jobs in steel and related industries. By the late 1980s, the years of Ronald Reagan’s presidency when it was “morning again in America,” it was midnight in Youngstown: foreclosures, an epidemic of business bankruptcies, and everywhere collapsing community institutions including churches, unions, families and the municipal government itself.

Burglaries, robberies and assaults doubled after the steel plants closed. In two years, child abuse rose by 21 percent, suicides by 70 percent. One-eighth of Mahoning County went on welfare. Streets were filled with dead storefronts and the detritus of abandoned homes: scrap metal and wood shingles, shattered glass, stripped-away home siding, canning jars and rusted swing sets. Each week, 1,500 people visited the Salvation Army’s soup line.

The Wall Street Journal called Youngstown “a necropolis,” noting miles of “silent, empty steel mills” and a pervasive sense of fear and loss. Bruce Springsteen would soon memorialize that loss in “The Ghost of Tom Joad.”

If you were unfortunate enough to live in the small industrial city of Mansfield, Ohio, for the last forty years, you would have witnessed in microcosm the dystopia of destruction unfolding in similar places everywhere. For a century, workshops there had made a kaleidoscope of goods: stoves, tires, steel, machinery, refrigerators and cars. Then Mansfield’s rust belt started narrowing as one plant after another went shut down: Dominion Electric in 1971, Mansfield Tire and Rubber in 1978, Hoover Plastics in 1980, National Seating in 1985, Tappan Stoves in 1986, a Westinghouse plant and Ohio Brass in 1990, Wickes Lumber in 1997, Crane Plumbing in 2003, Neer Manufacturing in 2007 and Smurfit-Stone Container in 2009. In 2010, General Motors closed its largest, most modern US stamping factory, and thanks to the Great Recession, Con-way Freight, Value City and Card Camera also shut down.

“Good times” or bad, it didn’t matter. Mansfield shrank relentlessly, becoming the urban equivalent of skin and bones. Its poverty rate is now at 28 percent, its median income $11,000 below the national average of $41,994. What manufacturing remains is non-union and $10 an hour is considered a good wage.

Midway through this industrial auto-da-fé, a journalist watching the Campbell Works of Youngstown Sheet and Tube go dark, mused that “the dead steel mills stand as pathetic mausoleums to the decline of American industrial might that was once the envy of the world.” This dismal record is particularly impressive because it encompasses the “boom times” presided over by Presidents Reagan and Clinton.

The “Pit” Deepens

In 1988, in the iciest part of the Frost Belt, a Wall Street Journal reporter noted, “There are two Americas now, and they grow further apart each day.” He was referring to Eastport, Maine. Although the deepest port on the East Coast, it hosted few ships, abandoned sardine factories lined its shore, and its bars were filled with the under- and unemployed. The reporter pointed out that he had seen similar scenes from a collapsing rural economy “coast to coast, border to border”: shuttered saw mills, abandoned mines, closed schools, rutted roads, ghost airports.

Closing up, shutting down, going out of business: last one to leave please turn out the lights!

Such was the case in cities and towns around the country. Essential public services—garbage collection, policing, fire protection, schools, street maintenance, healthcare—were atrophying. So were the people who lived in those places. High blood pressure, cardiac and digestive problems, and mortality rates were generally rising, as was doubt, self-blame, guilt, anxiety and depression. The drying up of social supports, even among those who once had been friends and workmates, haunted the inhabitants of these places as much as the industrial skeletons around them.

In the 1980s, when Jack Welch, soon to be known as “Neutron Jack” for his ruthlessness, became CEO of General Electric, he set out to raise the company’s stock price by gutting the workforce. It only took him six years, but imagine what it was like in Schenectady, New York, which lost 22,000 jobs; Louisville, Kentucky, where 13,000 fewer people made appliances; Evendale, Ohio, where 12,000 no longer made lights and light fixtures; Pittsfield, Massachusetts, where 8,000 plastics makers lost their jobs; and Erie, Pennsylvania, where 6,000 locomotive workers got green slips.

Life as it had been lived in GE’s or other one-company towns ground to a halt. Two travelling observers, Dale Maharidge and Michael Williamson, making their way through the wasteland of middle America in 1984 spoke of “medieval cities of rusting iron” and a largely invisible landscape filling up with an army of transients, moving from place to place at any hint of work. They were camped out under bridges, riding freight cars, living in makeshift tents in fetid swamps, often armed, trusting no one, selling their blood, eating out of dumpsters.

Nor was the calamity limited to the northern Rust Belt. The South and Southwest did not prove immune from this wasting disease either. Empty textile mills, often originally runaways from the North, dotted the Carolinas, Georgia and elsewhere. Half the jobs lost due to plant closings or relocations occurred in the Sunbelt.

In 2008, in the Sunbelt town of Colorado Springs, Colorado, one-third of the city’s street lights were extinguished, police helicopters were sold, watering and fertilizing in the parks was eliminated from the budget, and surrounding suburbs closed down the public bus system. During the recent Great Recession one-industry towns like Dalton, Georgia (“the carpet capital of the world”), or Blakely, Georgia (“the peanut capital of the world”), or Elkhart, Indiana (“the RV capital of the world”), were closing libraries, firing police chiefs and taking other desperate measures to survive.

And no one can forget Detroit. Once, it had been a world-class city, the country’s fourth largest, full of architectural gems. In the 1950s, Detroit had a population with the highest median income and highest rate of home ownership in urban America. Now, the “motor city” haunts the national imagination as a ghost town. Home to 2 million a quarter-century ago, its decrepit hulk is now “home” to 900,000. Between 2000 and 2010 alone, the population hemorrhaged by 25 percent, nearly a quarter of a million people, almost as many as live in post-Katrina New Orleans. There and in other core industrial centers like Baltimore, “death zones” have emerged where whole neighborhoods verge on medical collapse.


One-third of Detroit, an area the size of San Francisco, is now little more than empty houses, empty factories and fields gone feral. A whole industry of demolition, waste-disposal and scrap-metal companies arose to tear down what once had been. With a jobless rate of 29 percent, some of its citizens are so poor they can’t pay for funerals, so bodies pile up at mortuaries. Plans are even afoot to let the grasslands and forests take over, or to give the city to private enterprise.

Even the public zoo has been privatized. With staff and animals reduced to the barest of minimums and living wages endangered by its new owner, an associate curator working with elephants and rhinos went in search of another job. He found it with the city—chasing down feral dogs whose population had skyrocketed as the cityscape returned to wilderness. History had, it seemed, abandoned dogs along with their human compatriots.

Looking Backward

But could this just be the familiar story of capitalism’s penchant for “creative destruction”? The usual tale of old ways disappearing, sometimes painfully, as part of the story of progress as new wonders appear in their place?

Imagine for a moment the time traveler from Looking Backward, Edward Bellamy’s best-selling utopian novel of 1888 waking up in present-day America. Instead of the prosperous land filled with technological wonders and egalitarian harmony Bellamy envisioned, his protagonist would find an unnervingly familiar world of decaying cities, people growing ever poorer and sicker, bridges and roads crumpling, sweatshops a commonplace, the largest prison population on the planet, workers afraid to stand up to their bosses, schools failing, debts growing more onerous and inequalities starker than ever.

A recent grim statistic suggests just how Bellamy’s utopian hopes have given way to an increasingly dystopian reality. For the first time in American history, the life expectancy of white people, men and women, has actually dropped. Life spans for the least educated, in particular, have fallen by about four years since 1990. The steepest decline: white women lacking a high school diploma. They, on average, lost five years of life, while white men lacking a diploma lost three years.

Unprecedented for the United States, these numbers come close to the catastrophic decline Russian men experienced in the desperate years following the collapse of the Soviet Union. Similarly, between 1985 and 2010, American women fell from fourteenth to forty-first place in the United Nation’s ranking of international life expectancy. (Among developed countries, American women now rank last.) Whatever combination of factors produced this social statistic, it may be the rawest measure of a society in the throes of economic anorexia.

One other marker of this eerie story of a developed nation undergoing underdevelopment and a striking reproach to a cherished national faith: for the first time since the Great Depression, the social mobility of Americans is moving in reverse. In every decade from the 1970s on, fewer people have been able to move up the income ladder than in the previous ten years. Now Americans in their thirties earn 12 percent less on average than their parents’ generation at the same age. Danes, Norwegians, Finns, Canadians, Swedes, Germans and the French now all enjoy higher rates of upward mobility than Americans. Remarkably, 42 percent of American men raised in the bottom one-fifth income cohort remain there for life, as compared to 25 percent in Denmark and 30 percent in notoriously class-stratified Great Britain.

Eating Our Own

Laments about “the vanishing middle class” have become commonplace, and little wonder. Except for those in the top 10 percent of the income pyramid, everyone is on the down escalator. The United States now has the highest percentage of low-wage workers—those who earn less than two-thirds of the median wage—of any developed nation. George Carlin once mordantly quipped, “It’s called the American Dream because you have to be asleep to believe it.” Now, that joke has become our waking reality.

During the “long nineteenth century,” wealth and poverty existed side by side. So they do again. In the first instance, when industrial capitalism was being born, it came of age by ingesting what was valuable embedded in pre-capitalist forms of life and labor, including land, animals, human muscle power, tools and talents, know-how and the ways of organizing and distributing what got produced. Wealth accumulated in the new economy by extinguishing wealth in the older ones.

“Progress” was the result of this economic metabolism. Whatever its stark human and ecological costs, its achievements were also highly visible. America’s capacity to sustain a larger and larger population at rising levels of material well-being, education and health was its global boast for a century and half.

Shocking statistics about life expectancy and social mobility suggest that those days are over. Wealth, great piles of it, is still being generated, and sometimes displayed so ostentatiously that no one could miss it. Technological marvels still amaze. Prosperity exists, though for an ever-shrinking cast of characters. But a new economic metabolism is visibly at work.

For the last forty years, prosperity, wealth, and “progress” have rested, at least in part, on a grotesque process of auto-cannibalism—it has also been called “dis-accumulation” by David Harvey—of a society that is devouring its own.

Traditional forms of primitive accumulation still exist abroad. Hundreds of millions of former peasants, fisherman, craftspeople, scavengers, herdsmen, tradesmen, ranchers and peddlers provide the labor power and cheap products that buoy the bottom lines of global manufacturing and retail corporations, as well as banks and agribusinesses. But here in “the homeland,” the very profitability and prosperity of privileged sectors of the economy, especially the bloated financial arena, continue to depend on slicing, dicing and stripping away what was built up over generations.

Once again a new world has been born. This time, it depends on liquidating the assets of the old one or shipping them abroad to reward speculation in “fictitious capital.” Rates of US investment in new plants, technology, and research and development began declining during the 1970s, a fall-off that only accelerated in the gilded 1980s. Manufacturing, which accounted for nearly 30 percent of the economy after the Second World War, had dropped to just over 10 percent by 2011. Since the turn of the millennium alone, 3.5 million more manufacturing jobs have vanished and 42,000 manufacturing plants were shuttered.

Nor are we simply witnessing the passing away of relics of the nineteenth century. Today, only one American company is among the top ten in the solar power industry and the United States accounts for a mere 5.6 percent of world production of photovoltaic cells. Only GE is among the top ten companies in wind energy. In 2007, a mere 8 percent of all new semi-conductor plants under construction globally were located in the United States. Of the 1.2 billion cell phones sold in 2009, none were made in the United States. The share of semi-conductors, steel, cars and machine tools made in America has declined precipitously just in the last decade. Much high-end engineering design and R&D work has been offshored. Now, there are more people dealing cards in casinos than running lathes, and almost three times as many security guards as machinists.

The FIRE Next Time

Meanwhile, for more than a quarter of a century the fastest growing part of the economy has been the finance, insurance and real estate (FIRE) sector. Between 1980 and 2005, profits in the financial sector increased by 800 percent, more than three times the growth in non-financial sectors.

In those years, new creations of financial ingenuity, rare or never seen before, bred like rabbits. In the early 1990s, for example, there were a couple of hundred hedge funds; by 2007, 10,000 of them. A whole new species of mortgage broker roamed the land, supplanting old-style savings and loan or regional banks. Fifty thousand mortgage brokerages employed 400,000 brokers, more than the whole US textile industry. A hedge fund manager put it bluntly, “The money that’s made from manufacturing stuff is a pittance in comparison to the amount of money made from shuffling money around.”

For too long, these two phenomena—the eviscerating of industry and the supersizing of high finance—have been treated as if they had nothing much to do with each other, but were simply occurring coincidentally.
Here, instead, is the fable we’ve been offered: Sad as it might be for some workers, towns, cities, and regions, the end of industry is the unfortunate, yet necessary, prelude to a happier future pioneered by “financial engineers.” Equipped with the mathematical and technological know-how that can turn money into more money (while bypassing the messiness of producing anything), they are our new wizards of prosperity!

Unfortunately, this uplifting tale rests on a categorical misapprehension. The ascendancy of high finance didn’t just replace an industrial heartland in the process of being gutted; it initiated that gutting and then lived off it, particularly during its formative decades. The FIRE sector, that is, not only supplanted industry, but grew at its expense—and at the expense of the high wages it used to pay and the capital that used to flow into it.

Think back to the days of junk bonds, leveraged buy-outs, megamergers and acquisitions, and asset stripping in the 1980s and 1990s. (Think, in fact, of Bain Capital.) What was getting bought and stripped and closed up supported windfall profits in high-interest-paying junk bonds. The stupendous fees and commissions that went to those “engineering” such transactions were being picked from the carcass of a century and a half of American productive capacity. The hollowing out of the United States was well under way long before anyone dreamed up the “fiscal cliff.”
For some long time now, our political economy has been driven by investment banks, hedge funds, private equity firms, real estate developers, insurance goliaths and a whole menagerie of ancillary enterprises that service them. But high times in FIRE land have depended on the downward mobility of working people and the poor, cut adrift from more secure industrial havens and increasingly from the lifelines of public support. They have been living instead in the “pit of austerity.” Soon many more of us will join them.

 
For more on the corporate interests pushing us into the "pit of austerity," check out George Zornick on "What the CEOs Lobbying on the Fiscal Cliff Really Want."



About the Author
Steve Fraser is a visiting professor at New York University,co-founder of the American Empire Project, and the author, most recently, of Wall Street: America's Dream Palace. He is working on a book about America's two Gilded Ages.