Introduction / The Brief

excerpted from the book

Class War in America

by Charles M. Kelly

Fithian Press, 2000, paperback

p19
Given the Fed's chronic preoccupation with the fear that wages might be about to go up-and its publicly stated commitment to make sure that won't happen-the only condition that can't be explained away is why American workers continue to vote for the conservative politicians who deliberately created their wage stagnation.

p20
America's financial elite set common goals, coordinate activities, and morally rationalize their callous behaviors by constantly referring to their new testament and chanting its gospel:

* High incomes and tax cuts for the wealthy are good because they create jobs. Wage increases for workers are always bad because they cause inflation.

* Corporate profits are good. Legislative protections of working conditions are expensive, benefit primarily workers, and are therefore bad.

* Economic growth is good, as long as it increases corporate profits. Economic growth is excessive-and bad, if wages start to go up.

* The Chamber of Commerce and the National Association of Manufacturers are good for American workers. Labor unions are bad for them.

***

The Brief

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Financial conservatives have been waging class warfare against working Americans for more than 20 years. Actually, they've been doing it for the entire century but they've been especially successful in the past 20 years, so that's a convenient and relevant period for discussion. This is how they've been doing it, and why they've been so successful:

1. Traditionally, conservative economists and politicians kept wages down by manipulating the prime interest rate. Whenever the economy grew to the point where unemployment went down and workers had the power to negotiate for more money, the Federal Reserve simply raised the interest rate.

This made it more expensive for businesses to borrow, the economy would cool down, unemployment would go up, and wages would stagnate or go down-just as the economists and politicians intended.

2. Conservative economists and politicians explained that the reason for their actions is that rising wages cause inflation, which hurts everyone. Therefore, they should keep workers' wages from going up. In fact, whenever they refer to inflation, they make it a point to call it "wage inflation."

They totally ignored, however, the inflationary effects of the rising incomes of business owners, corporate executives, investors, etc. They also chose to ignore the fact that businesses could share more of their outlandish profits with workers without increasing prices. Indeed, for the past 20 years, it hasn't been wage inflation; it's been profit inflation.

3. Now there is a great debate going on. Some still feel that the economic growth of the past 20 years should be slowed by raising the prime interest rate. After all, unemployment is at record low levels. Others feel it's no longer necessary to raise the prime, because wages can be kept down in other ways that are less detrimental to profits such as exporting jobs overseas, destroying unions, using temporary or contract workers, and so on.

What's striking about this public debate is that all parties are arguing about the best way to ensure that investors, business owners, and executives get wealthier. Virtually no one is concerned about the welfare of the working-class Americans who are most directly and personally harmed by either of these strategies. Under either approach, workers make all the sacrifices, and investors and the rich reap most of the benefits.

4. Among many of the empty promises made to workers is that their wages will go up if the economy grows. This is probably the most pernicious lie foisted onto the American voter when it comes time to cut taxes on the wealthy. Their propaganda spin goes like this: Cutting taxes will cause the economy to grow; added growth will lower unemployment; lower unemployment makes workers scarcer; and when workers are scarce, wages will go up.

Problem is, as the past 20 years have demonstrated, economic growth has little to do with higher wages. It's all about power and who has it. Right now, investors and the wealthy have all the power and workers have none.

5. The biggest single reason economic growth hasn't increased wages is that conservatives have deliberately pitted American workers against brutalized workers in Third World countries, to drive down all wages in the U.S. Whenever unemployment goes down and workers start demanding more money, all a corporation has to do is threaten to close down operations and move overseas.

That usually stops any embarrassing discussion about higher wages-at a time of record corporate profits. And obviously, if employees refuse to be intimidated, companies actually carry out their threats to leave the country. Then, the workers who lose their jobs enter the marketplace and exert downward pressures on the wages of other workers, even in the jobs that can't be exported to other countries.

6. The "worker" classification is getting bigger. Jobs of engineers, Ph.D. scientists, computer specialists, etc. are now being sent overseas to people who make one-third as much. Today, it's more accurate to refer to investors and workers, instead of management and workers, professionals and workers, or even "skilled workers" and workers. Those who control the money can, and do, control everyone else-as low-level managers, doctors, engineers, architects, and other professionals are belatedly finding out. As political power shifts to investors, so does economic power.

And as their power increases, the economic system becomes increasingly biased in favor of those with money and against those who develop and produce the actual wealth of our country: land, buildings, products, and services.

7. Consenatives proclaim in their talk shows and editorials that unions are bad for workers. On the other hand, in their news articles they cite the declining power of unions as a major reason for wage stagnation and poor working conditions. In fact, the declining power of unions is one of their most frequently used arguments for not having to raise the prime interest rate.

It's especially interesting to note that skilled professionals, such as doctors, dentists, and college professors, are beginning to discover the benefits, and the necessity, of collective bargaining. In the economy of today, power is everything. Justice and fairness, and even the long-term economic health of our society, count for absolutely nothing.

8. After decades of economic growth, increasing worker productivity, technological development, and higher incomes for the wealthy, wages and working conditions have degenerated for the bottom half of Americans. Instead of getting better with all these advancements, as promised, the opposite has happened.

In fact, the United States has joined the Third World in victimizing workers. Many workplaces have become more dangerous, more likely to cause chronic disabilities and more dulling to the senses. For many workers, our country has regressed to the pre-1930 era.

9. There is no mystery about why corporations and businesses have all the power today. The coalition from workers' hell Republicans and conservative Democrats, made it happen. They destroyed much of the power of workers to organize by passing the Taft-Hartley Act in 1947. More recently-with the passage of NAFTA and GATT, and a host of anti-worker actions-they gave workers the coup de grace by making them compete with brutalized Third World workers.

As Newt Gingrich once claimed in The Wall Street Journal, the price of labor is now set in South China. It matters not to conservatives that American workers live in this country, with our standard of living, and our cost of living.

10. If there is any confusion left about our present economy, it's why American working-class citizens have been so thoroughly conned into voting for the conservative politicians who made it all happen. The most plausible explanation is that there has been a proliferation of "think tanks" that are funded by wealthy right-wing zealots. With almost unlimited money, they are able to staff their organizations with people who are willing to intentionally distort the implications of financial data and economic events. Their most effective lies are those that use accurate data to lead to inappropriate and false conclusions.

11. The 1993 Deficit Reduction legislation is a classic example of the kinds of factual distortions that enable conservatives to con voters into making false conclusions that are injurious to their own interests. Even The Wall Street Journal described how Republicans misled the public about whom the 1993 legislation would affect and how. Contrary to common belief, only the top 1.2% of Americans got any significant tax increases. And, as most people now know-and the Journal pointed out-raising taxes on the wealthy in 1993 is a major reason for the lower deficits of the late 1990s.

12. There isn't the remotest similarity between those who the Republicans claim will benefit from their tax cuts and those who actually benefit. In fact, they deliberately deceive the public about the regressive nature of their specific tax changes on working-class Americans. They also ignore the loss of necessary government services-which benefit mostly middle- and low-income workers- when tax cuts for the wealthy reduce government revenues.

13. The privatization of Social Security is another conservative strategy that will benefit the wealthy at the expense of working Americans. Social Security was intended to ensure a safe retirement, financed by current workers making decent incomes. Despite articles describing stock fraud, "boiler rooms," insider trading-and how hard it is for anyone with less than $1,000,000 to get good investment advice-Republicans want workers to compete with the Wall Street sharks when they invest their retirement funds.

The sure winners in privatizing Social Security will be stock brokers, experienced investors, and the entire banking and investment industry. For workers who are unsophisticated in the economics of Wall Street, the future does not look good. The best we can hope for is that when they answer a cold call-during dinner, from a broker- the broker will be a conscientious representative with a reputable firm who is not under pressure from his boss to generate high commissions.

14. Another major propaganda effort of conservatives is aimed at destroying Americans' belief in their own government. Central to this strategy is their incessant criticism of governmental officials, while claiming that private businesspersons would serve the public's interests much better. A review of the behaviors of American executives and businesspersons suggests that the opposite is true.

When you read about the antics of these people-in their own conservative publications-you have to ask the question: Can these corporate bureaucrats actually manage our economy and society better than "government bureaucrats"? The number of articles describing corporate greed, mismanagement, incompetence, and outright fraud-of huge proportions-is massive.

15. Freedom is central to the success of our country. Problem is, which are the freedoms that really count? And who best protects the freedoms that really count? Corporations? Or democratically elected representatives? The number of examples of bad corporate behaviors in the absence of sensible regulations is overwhelming. Well-financed conservatives use their money to buy the necessary politicians, judges and legislators to ensure that corporations and businesses have the freedom to take ruthless advantage of workers and the general public.

16. Glorifying greed and materialism-and minimizing fairness and justice-has become a staple in the conservative arsenal for taking control of America's political base. Think about it. Many voters seem more concerned about the private sex life of politicians than about whether or not they lie to the public about economic and social issues.

For example, Bill Bennett's Book of Virtues is a great book, but he left out fairness and justice. He chose virtues that emphasize hard work and charity, but not fair treatment of workers. It's typical of the subtle conservative propaganda effort to equate wealth with virtue, and to relegate the concepts of fairness and justice into the dustbin of values.

17. There is a growing new American royal class. Can working Americans afford to support all these people who are getting locked into an extravagant life-style? A style that can be maintained only if workers' wages remain low and taxes remain regressive. By cashing in the wealth that workers created from the 1940s to the 1980s, conservatives produced 20 years of prosperity for those who knew how to take unprincipled advantage of our new economic system. But we can't afford to continue this fire sale of wealth much longer before the bills come due.

18. Time is getting short. The income and wealth disparity between the top 20% of Americans and everyone else is growing into a vast chasm. Having been conned by conservatives that "wealth is not a zero-sum game," voters assume that this growing problem will eventually be to their own benefit, since "wealth trickles down."

Big mistake. Wealth is a zero-sum game, at both the front end-in the allocation of income, and the back end-the spending of income. In effect, the more wealth other people have, the less you have. This becomes important in an economic downturn, especially for those who have not built up substantial savings.

And there are danger signs on the horizon: wages are starting to creep up, which, in this "new economy" that conservatives have created, threatens corporate profits, the stock market, and the economic and social health of our country.

19. Workers of America, Unite!-Because Financial Conservatives Already Have, and They Own Congress and the Presidency. Never vote for a Republican. In the primaries, pick a liberal Democrat over a conservative Democrat. Always vote for a progressive populist-preferably one who is not having an affair with his secretary (but if that's your only choice, he's better than a Republican or conservative Democrat).

Progressive populists actually believe that we need government to protect the freedoms that count. An effective government-with honest, not-paid-for politicians-is our only defense against corporate executives who have no moral standards for the treatment of workers or the general public.

Class War in America

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