Summary: Generations of unceasing work – carefully planned, lavishly funded – by the 1% to roll back the New Deal have succeeded on an epic scale. Their greatest success has been crushing labor unions, which were one of the strongest forces building a large middle class in America. But greed is a dangerous master. Now comes the results. It is not pretty.
The story of America’s decline, in pictures
“What Unions No Longer Do”
By Justin Fox in the Harvard Business Review, Sept 2014.
“Forty years ago, about quarter of American workers belonged to unions, and those unions were a major economic and political force. Now union membership is down to 11.2% of the U.S. workforce, and it’s increasingly concentrated in the public sector – only 6.7% of private-sector workers were union members in 2013. …
“Income inequality has, for example, become a hot topic. You might think that the dwindling away of an institution that devoted much of its energy to equalizing incomes would be a big part of that discussion. It hasn’t been. …”
“50 Years Of Shrinking Union Membership, In One Map”
By Quoctrung Bui at NPR, February 2015.
The result: rising inequality
Businesses have gained more power over workers by many means. Increased concentration in many industries. Pushing wages down via massive immigration and H-1B visas. Illegal wage fixing, such as that among the big Silicon Valley corporations. They shifted their workers into part-time and contract arrangements (temp agencies, independent contractors, and overseas outsourcers). They used their rising political power to remove the protections unions gained during the New Deal.
Now comes the next phase, the pursuit of a broken foe. On Friday, Trump weakened the role of unions for Federal workers and weakened their civil service protections (details). Soon the Supreme Court will rule against mandatory fees to unions for non-members covered by collective bargaining agreements (details).
The result: high corporate profits and income inequality back to pre-New Deal levels. It is happening across the developed world. See this Credit Suisse graph of union membership vs. income share of the bottom 90% of workers in the OECD. Union member falls – and 90% of workers’ income share follows.
The result: slowing economic growth
We have a consumer-driven economy. Channeling more of America’s income to corporate profits (channeled into stock buy-backs) and incomes of the 1% boosts savings – explaining our low interest rates (the Fed is not doing it). The economy cannot grow much faster than the growth of workers’ wages.
So where is the money going? Into buying things. Stocks are at near-record valuations. Home prices are soaring in hot areas. And art! An untitled 1982 painting by Jean-Michel Basquia sold for $110.5 million in May 2017. Leonardo da Vinci’s “Salvator Mundi” sold for $450 million in November 2017.
Meanwhile, since 1982 the American middle class has used debt to maintain its lifestyle, with consumer debt rising faster than Gross Domestic Income (many things went wrong beginning in the Reagan years). But that is only a short-term solution.
How do businesses boost profits when consumers’ income stagnates?
- They use their political power to have the GOP cut their taxes — sending the deficit soaring.
- Defense contractors use their political power to boost military spending to over a trillion dollars – so the spending of America and our allies dwarfs that of our foes combined.
- Drug and medical device corporations use their political power to get premium payments from the government (who pays about half of all medical spending), without the discounts other nations gets.
- Elon Musk has perfected State Capitalism, perhaps the next phase of corporate profits. Local governments shower his companies with benefits. Government regulations transfer tax credits to his company. He provides cars for the rich and services to the government (that the government once provided).
We are repeating our experiences during 1870 – 1930. That did not end well. I doubt that this will end well. Failure to learn is not a survivable flaw.
Conclusions
This is America today. On the Right we have those who use the government to exploit us, to whom we are marks to be exploited. On the Left we have those who use the government to restructure our society, treating us as lab rats. This is our lot in life in a world where the meek inherit nothing.
But the political machinery bequeathed us by the Founders remains idle but potentially powerful. It needs only our energy to power it. See these posts for ideas how to begin.
For More Information
Recommended: “The rise and fall of US labor unions, and why they still matter” by Jake Rosenfeld (Assoc Prof of Sociology, U of Washington) at The Conversation. See his book below.
If you liked this post, like us on Facebook and follow us on Twitter. See all posts about increasing income inequality and falling social mobility, about corporate profits, about unions, especially these…
- Important: Remember the union workers who bled to create America.
- An essential explanation of our politics: A modern conservative dresses up Mr. Potter to suit our libertarian fashions.
- Why Americans should love Tolkien’s Lord of the Rings – we live there,
- Complaints about air travel are the cries of a dying middle class.
- See America’s income inequality grow during 1979-2011, a driver of Campaign 2016.
- Liz Bennett couldn’t marry Darcy. Nor can your daughter.
- More proof of rising inequality, perhaps our greatest threat.
Books about the death of unions
Against Labor: How U.S. Employers Organized to Defeat Union Activism
What Unions No Longer Do
