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Class warfare and the attack on living standards

September 10, 2010

If I had to identify just one problem as the most fundamental in our society, I would have to choose wealth inequality because it crosses so many areas.  On a pure economic basis, it prevents money from adequately circulating; from a self reliance standpoint, it’s harmful since concentrated ownership makes it ever more difficult for an individual to live independent of employment; from a social justice standpoint, it’s impossible to believe any individual can be worth hundreds, thousands, millions, or billions that of someone else; and from a political standpoint, it corrupts the entire system.

Mort Zuckerman has written an article today in the Financial Times in which he addresses the two Americas.  The two Americas Mr. Zuckerman is concerned about, though, are not that “captured by the standard class warfare speeches that dramatize the gulf between the rich and the poor” but rather the apparently more important gap between public employees and private.  “Public workers have become a privileged class – an elite who live better than their private-sector counterparts. Public servants have become the public’s masters.”

This is an incredible bit of sophistry when we consider that Zuckerman, a billionaire real estate magnate and editor-in-chief of US News & World Report, sits at the pinnacle of a society of feudal-like inequality.  He also, it must be noted, has close connections to the democratic party establishment.  His class utterly dominates national politics and the media but he has the chutzpah to claim we should be worried about the elite power of public employees!  This is nothing but class warfare that serves two purposes.  First, it seeks to misdirect worker anger from the owners of society to other struggling workers – classic divide and rule.  Second, it’s another step in the grand plan to lower the wages of American workers in order to compete in the rigged game known as the 21st century global economy.  He proposes to do this through yet another unelected commission.

He notes that private workers are substantially worse off than their public counterparts in that  unemployment is much higher, pay is lower, and only 18% have pensions.  But his argument is not that the private worker should rise and demand better living standards.  Far from it.  His goal is to reduce the pay and benefits of public workers to that of private and to misdirect anger away from the elites.

Zuckerman correctly observes that “political tension is bound to grow when jobs disappear faster in the private than the public sector, just as compensation in the former is squeezed more”.  In light of Zuckerman’s status in US society and his close connections to the democratic party establishment, this is a highly revealing statement on the direction we’re headed.

Americans need to see Zuckerman for who he is and utterly reject his vision of society.  These are powerful people who live as royalty.  They control the political process, the media, and much of the economics profession.  If we keep to the rules of globalization as written by American elites over the past decades, our future is necessarily grim.

I can’t help but close with yet another dig on economics – the principle academic justification for this system.  Economists can’t totally ignore inequality but they can trivialize it and pose unrelated reasons for it.  Here’s a sad example, for instance, of an economist fascinated by beautiful fractal pictures of inequality as if they posed some insight beyond the obvious fact that capitalism hierarchically concentrates power.

Writing about this stuff every day really gets depressing sometimes.  Time to visit the mountains!

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12 Comments
  1. If I had to choose one problem, it would be the incorrect, debt hawk belief the federal deficit is too high. That belief has prevented a full and rapid recovery.

    Rodger Malcolm Mitchell

  2. Figured you’d say after seeing your posts! :)

    I can’t agree more that the debt hawk view is a huge problem. If we could overcome this one issue and get people to see that we can control the level of purchasing power, the door would open to very radical change. I’ve devoted a lot of time writing about it and so have you.

    But I would argue it’s the very powerful interests that benefit from controlling money that’s keeping the issue from reaching either the public or probably more importantly, the realm of acceptable economics. And that kind of power can only arise in an unequal society. So I would say the deeper root issue is inequality.

    Jim

  3. Jim, you may be right. I’m not much into conspiracy theories, because I never see data to back them up. I seldom understand exactly who the conspirators are (other than “powerful interests”) and I seldom understand exactly how they are running the conspiracy.

    So, yes, you may be right.

    Rodger Malcolm Mitchell

  4. I hate that term because it sounds so science fiction. I think the better way to think of it is that every human society throughout history has been ruled by a small number of elites. From the Romans, throughout the middle ages, and up to now. We do have formal democracy but the distribution of wealth today is almost exactly the same as it was in the earlier times. Those with the money control almost totally the political process, own the media, pay for the foundations and think tanks that the media reports about, and greatly influence the economics profession – the crucial academic support for the system.

    The monetary theory that you and I argue for would radically threaten the power of this group. It would change our society in a radically democratic way. If we could get someone with the name recognition of Krugman or Stiglitz to publicly and actively support the theory, it would be a major advance. The problem though is it would likely ruin their career. Did you see the hatchet job Fox News did on Jamie Galbraith? And does anyone outside the radical left take him seriously? Power…. What we need is a modern day Keynes willing to take on the system.

    I think you’re doing a great service pushing this important insight.

    Cheers,

    Jim

  5. Patricia permalink

    Jim, sorry to be ignorant, but where can I read your ideas on how to wrest control of money and purchasing power back to the people? And how would it look–set up and running?

    • Patricia,

      See my posts under the Monetary / Fiscal tab. Particularly Deficits Don’t Matter.

      Jim

      • Patricia permalink

        Thanks, Jim. This will take me a while because it is counter-intuitive in that narrow day-to-day way in which I’m familiar. Do you know of any successful nation states that printed money (or equivalency) and only used restraints such as taxes/borrowing for stabilization?

  6. Patricia,

    It’s counter-intuitive but fully sound.

    No major capitalist country has tried this to date. Prior to the depression and WW2, every country was on the gold standard which prohibited such a policy. After WW2, the world was on the $ standard up till 1970 or so – which also effectively limited options.

    It’s all a matter of power – democratizing money would be a huge and radical devolution of power from those who ‘own’ to those who don’t.

    Jim

  7. Patricia permalink

    And what would happen if a community simply started it’s own money production, using it for local business and government?

  8. A few towns have tried it. Ithaca, NY is probably best known. It hasn’t been that successful as the currency needs to be widely accepted. The true benefits would come with a national program.

  9. Actually, the U.S. was monetarily sovereign just before and during most of WWII, which is what allowed us to spend massively, rapidly go from depression to prosperity and built up that federal “debt.”

    In 1944, we and 43 other nations made the terrible mistake of signing the Bretton Woods agreement, thus voluntarily surrendering our monetary sovereignty.. Thankfully, President Nixon, in the second best act of his presidency (the first being to resign) brought us back to monetary sovereignty in 1971.

    Having learned nothing from the straight jacket of Bretton Woods, the European nations voluntarily gave up their monetary sovereignty in 1993, with the establishment of the European Union. The current system requires that each nation have a positive balance of payments in order to remain solvent, which is why the PIIGS have had, and will continue to have, financial difficulties.

    Any standard, whether it be the gold standard, the euro standard, or in the case of the U.S. states, counties and cities, the dollar standard, is long-term doomed.

    Rodger Malcolm Mitchell

    • It’s technically true we are monetarily sovereign but the orthodoxy of ‘sound finance’ keeps us just as chained as if we were still on the gold standard. We’re sovereign but we act like some 17th century monarch desperate for coin.

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