Friday January 21st Terrence McNally hosts
LEFT, RIGHT, and CENTER
with
ARIANNA HUFFINGTON, ROBERT SCHEER,
and TONY BLANKLEY
2:30pm PT (5:30pm ET)
repeated 7pm PT (10pm ET)
KCRW 89.9fm Los Angeles
(syndicated nationally)
----------------------
FREE FORUM with TERRENCE McNALLY
Sunday Jan 23rd
1-2pm PT (4-5pm ET)
MARK HERTSGAARD
Environment Correspondent, The Nation,
author, Earth Odyssey; On Bended Knee
and his newest,
HOT: Living Through the Next 50 Years on Earth
90.7fm in LA, 98.7fm in Santa Barbara
WBAI 99.5fm in NY Wednesday 9am
streaming at kpfk.org and wbai.org
***
http://www.guardian.co.uk/commentisfree/cifamerica/2011/jan/17/economics-globalrecession
The myth of 'American exceptionalism' implodes
Until the 1970s, US capitalism shared its spoils with American workers. But
since 2008, it has made them pay for its failures.
by Richard Wolff
Guardian/UK: January 17, 2011
One aspect of "American exceptionalism" was always economic. US workers, so
the story went, enjoyed a rising level of real wages that afforded their
families a rising standard of living. Ever harder work paid off in rising
consumption. The rich got richer faster than the middle and poor, but almost
no one got poorer. Nearly all citizens felt "middle class". A profitable US
capitalism kept running ahead of labour supply. So, it kept raising wages to
attract waves of immigration and to retain employees, across the 19th
century until the 1970s.
Then everything changed. Real wages stopped rising, as US capitalists
redirected their investments to produce and employ abroad, while replacing
millions of workers in the US with computers. The US women's liberation
moved millions of US adult women to seek paid employment. US capitalism no
longer faced a shortage of labour.
US employers took advantage of the changed situation: they stopped raising
wages. When basic labour scarcity became labour excess, not only real wages,
but eventually benefits, too, would stop rising. Over the last 30 years, the
vast majority of US workers have, in fact, gotten poorer, when you sum up
flat real wages, reduced benefits (pensions, medical insurance, etc),
reduced public services and raised tax burdens. In economic terms, American
"exceptionalism" began to die in the 1970s.
The rich, however, have got much richer since the 1970s, as every measure of
US income and wealth inequality attests. The explanation is simple: while
workers' average real wages stayed flat, their productivity rose (the goods
and services that an average hour's labour provided to employers). More and
better machines (including computers), better education, and harder and
faster labour effort raised productivity since the 1970s. While workers
delivered more and more value to employers, those employers paid workers no
more. The employers reaped all the benefits of rising productivity: rising
profits, rising salaries and bonuses to managers, rising dividends to
shareholders, and rising payments to the professionals who serve employers
(lawyers, architects, consultants, etc).
Since the 1970s, most US workers postponed facing up to what capitalism had
come to mean for them. They sent more family members to do more hours of
paid labour, and they borrowed huge amounts. By exhausting themselves,
stressing family life to the breaking point in many households, and by
taking on unsustainable levels of debt, the US working class delayed the end
of American exceptionalism - until the global crisis hit in 2007. By then,
their buying power could no longer grow: rising unemployment kept wages
flat, no more hours of work, nor more borrowing, were possible. Reckoning
time had arrived. A US capitalism built on expanding mass consumption lost
its foundation.
The richest 10-15% - those cashing in on employers' good fortune from no
longer-rising wages - helped bring on the crisis by speculating wildly and
unsuccessfully in all sorts of new financial instruments (asset-backed
securities, credit default swaps, etc). The richest also contributed to the
crisis by using their money to shift US politics to the right, rendering
government regulation and oversight inadequate to anticipate or moderate the
crisis or even to react properly once it hit.
Indeed, the rich have so far been able to use the crisis to widen still
further the gulf separating themselves from the rest, to finally bury
American exceptionalism. First, they utilised both parties' dependence on
their financial support to make sure there would be no mass federal hiring
programme for the unemployed (as FDR used between 1934 and 1940). The
absence of such a programme guaranteed that real wages would not rise and,
with job benefits, would likely fall - as they indeed have done. Second, the
rich made sure that the prime focus of government response to the crisis
would benefit banks, large corporations and the stock markets. These have
more or less "recovered".
Third, the current drive for government budget austerity - especially
focused on the 50 states and the thousands of municipalities - forces the
mass of people to pick up the costs for the government's unjustly imbalanced
response to the crisis. The trillions spent to save the banks and selected
other corporations (AIG, GM, Fannie Mae, Freddie Mac, etc) were mostly
borrowed because the government dared not tax the corporations and the
richest citizens to raise the needed rescue funds. Indeed, a good part of
what the government borrowed came precisely from those funds left in the
hands of corporations and the rich, because they had not been taxed to
overcome the crisis. With sharply enlarged debts, all levels of government
face the pressure of needing to take too much from current tax revenues to
pay interest on debts, leaving too little to sustain public services. So,
they demand the people pay more taxes and suffer reduced public services, so
that government can reduce its debt burden.
For example, California's new governor proposes to continue for five more
years the massive, broad-based tax increases begun during the crisis and
also to cut state services for the poor (reduced Medicaid funding) and the
middle class(reduced budgets for community colleges, state colleges, and the
university system). The governor admits that California's budget faces
sky-high interest costs and reduced federal government assistance just when
the crisis increases demands for public services. The governor does not
admit his fear to tax the state's huge corporate and private individual
wealth. So, he announces an "austerity programme", as if no alternative
existed. Indeed, a major support for austerity comes from the large
corporations and wealthiest Californians, who hold the state's bonds and
want reassurances that the interest on those bonds will be paid.
California's austerity programme parallels similar programmes in many other
states, in thousands of municipalities, and at the federal level (for
example, social security). Together, they reinforce falling real wages,
falling benefits, falling government services and rising taxes. In the US,
capitalism has stopped "delivering the goods", as it so long boasted. The
reality of ever-deeper economic division clashes with expectations built up
when wages rose over the century before the 1970s. US capitalism now brings
long-term painful decline for its working class, the end of "American
exceptionalism" and rising social, cultural and political tensions.
. Richard Wolff gives his monthly talk on global capitalism at the Brecht
Forum in New York on 18 January; for more information about Professor
Wolff's lectures, podcasts and media appearance, visit his website
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