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Video: Anti-Globalization in the Era of Trump: Joseph Stiglitz on Shared Prosperity Without Protectionism
RINF, Countercurrents, Global Research
“India is on fast track to bring agriculture under corporate control... Amending the existing laws on land acquisition, water resources, seed, fertilizer, pesticides and food processing, the government is in overdrive to usher in contract farming and encourage organized retail. This is exactly as per the advice of the World Bank and the International Monetary Fund as well as the international financial institutes.”
“Agriculture has been systematically killed over the last few decades… the World Bank and big business have given the message that this is the only way to grow economically… Sixty percent of the population lives in the villages or in the rural areas and is involved in agriculture, and less than two percent of the annual budget goes to agriculture… When you are not investing in agriculture, you think it is... not performing. You are not wanting it to perform... Leave it to the vagaries or the tyranny of the markets… agriculture has disappeared from the economic radar screen of the country… 70 percent of the population is being completely ignored…”
“In the last 10 years, we had 36 lakh crore going to the corporates by way of tax exemptions... They just created 1.5 crore jobs in the last ten years. Where are the exports? … The only sector that has performed very well in this country is agriculture... Why do you want to move the population... Why can’t India have its own thinking? Why do we have to go with Harvard or Oxford economists who tell us this?” (36 lakh crore is 36 trillion; 1.5 crore is 15 million)
Against the backdrop of his damning critique of economic disparity, many can agree that the images of Pope Francis embracing the disfigured and washing the feet of convicts radiate the kind of humility that has been undermined by the singular dominance of capitalism and its self-centered value system.
Regardless of what faith or philosophy one subscribes to, the relevance of the Pope’s message – that capitalism has grown unmanageably reckless and tyrannical – cannot be shied away from.
The pontiff’s concept of the ‘idolatry of money’ has touched every facet of modern society. It is present in neoliberal leaders who slash social services and practice an unrestrained brand of capitalism. It’s in lobby groups and the corporate CEOs, bankers, and hedge fund managers that pull the strings of‘democracy’ from behind the scenes. It’s in environmental degradation stemming from the mass production of consumer goods under the wasteful planned obsolescence model.
It’s also in the immoral hegemony of the military-industrial-complex; in the drive to patent organisms, plants, and animals; and in the pop-culture circus that incentivizes the unchecked dominance of consumerism, self-absorption and narcissism.
Former leaders of the Catholic Church have made similar criticisms, but it is Francis’ ability to communicate to laymen and his willingness to embrace those on the margins of society that set him apart from the gold, scandal and pomp that the Vatican has become known for.
The Pope’s reformist activism, his frugality, and his economic and political views can shape the thinking of world’s billion-strong community of Catholics, but can also create social rifts generated by those opposed to his populist philosophy.
by Jeff Lincoln
A report released in early February by the Open Society Justice Initiative titled “Globalizing Torture: CIA Secret Detention and Extraordinary Rendition” establishes that the Central Intelligence Agency, acting under the direction of the highest levels of the US government, has utilized a global network of secret prisons, foreign intelligence agents, and interrogation and torture centers to send detainees to without any legal protections.
This arrangement is worldwide and includes the involvement of at least 54 different countries touching almost every continent.
There is enormous diversity among the countries involved. They include Middle Eastern countries such as Egypt, Pakistan, Syria and Jordan, which carried out the torture on suspects that the CIA rendered to them. Poland, Lithuania, Romania and Thailand hosted secret prisons operated by the CIA where detainees could be held clandestinely and have interrogations or torture conducted directly by American intelligence operatives.
European nations such as Macedonia, Georgia, and Sweden detained and delivered suspects to the CIA to be tortured. Larger countries such as Britain or Germany conducted some of the interrogations themselves while smaller countries such as Iceland, Denmark, Belgium, or Greece provided intelligence, logistical support, use of airspace, etc.
On the whole, the report stands as an indictment against all of Washington’s allies and client states in its self-proclaimed “war on terror.”
The Australian government stands implicated in the rendition of Mamdouh Habib, an Australian national, to Egypt where he was tortured and then later transferred to Guantanamo Bay where he was detained until he was released without charge in 2005.
Egypt stands as the country that has interrogated, tortured and abused the most people subject to extraordinary rendition. The relationship between the US and Egypt dates back to the Clinton administration that used the country almost exclusively for its rendition program, which was dramatically ramped up after September 11, 2001.
Italy’s secret services played a role in the abduction of Abu Omar, an Egyptian cleric who was previously given asylum in Italy but was abducted in Milan in 2003; he was then placed on a flight to Egypt. Italian authorities authorized some 46 stopovers by CIA operated aircraft at Italian airports.
The United Kingdom, the country that enjoys the closest relationship with US imperialism, has extensive involvement with America’s rendition program. In addition to providing airspace, MI6 and other British intelligence worked hand in glove with the CIA to abduct and interrogate suspects. Omar Deghayes, a Libyan national but a British resident was arrested in 2002 and transported by US and British intelligence agents to Bagram, where he was subjected to abuse. After interrogation by MI5 agents, he was sent to Guantanamo where he underwent further physical abuse, suffering a broken finger, a broken nose, and damage to his right eye.
In 2004, the British government arranged to have a former member of the Libyan Islamic Fighting Group, Sami al-Saadi, rendered into Libyan custody by approaching him in China and convincing him to fly to the British embassy in Hong Kong where he would be allowed to return to the UK. Instead, his whole family was taken into custody in Hong Kong and flown over to Libya where Mr. al-Saadi remained for six years and was subjected to torture by physical beatings and electric shocks.
While the report sheds some light on what countries are involved, the numbers of individuals subjected to rendition remains unknown. By 2005, it is estimated that about 150 persons were rendered to foreign countries according to admissions made by then-president George W. Bush. The real number is likely much higher, as Egypt alone has had to acknowledge that it received sixty to seventy terror suspects since September 11, 2001. Human Rights Watch has attempted to compile a list of persons who have been held in CIA prisons, and they have identified almost forty people who have either gone missing or whose whereabouts are unknown.
There are dozens more countries detailed in the report than just the ones mentioned above. Still, the report is extremely limited in scope in that it does not document transfers or detentions by any agency other than the CIA. It does not include the detention practices of the Defense Department, for example, and its notorious facilities in Guantanamo Bay or Afghanistan. Moreover, what is known is only based on the experiences of 139 individuals who have been released from custody. Nevertheless, it is now clear that the US government has been running a detention and “enhanced interrogation” operation with tentacles that span the globe.
It appears likely that the United States intentionally sought out the widespread involvement of so many countries to ensure that those who might later nominally reject these practices would themselves be so implicated that they would be unwilling to publicly expose the details of Washington’s dirty deeds.
Indeed, none of the countries mentioned in the report, save one, has even admitted any culpability for their participation in gross human rights violations. The lone exception is Canada, which assisted in the rendition of Canadian citizen Maher Arar in 2002 to Syria where he was tortured. A hastily conducted commission placed blame on the Royal Mounted Police but absolved those higher up in government of any responsibility. Other nations, such as Britain, Sweden and Australia have quietly settled lawsuits alleging their participation but have made no admission of liability.
As a matter of fact, far from acknowledging their complicity in abduction, rendition, and torture, many of the countries in the report were publicly denouncing these practices by the US government at the same time they were secretly abetting them.
A number of liberal and human rights organizations have reacted to the revelations in the Open Society Justice Initiative report by calling for and supporting the efforts of international tribunals to hear cases brought against officials of some of the countries complicit in assisting in the rendition of persons by the US Government.
While there are some actions pending in the European Court of Human Rights and other high courts against some of the countries named in the report for their role in assisting in rendition, the cases will have no impact on the operations of the CIA.
Setting aside the obvious fact that cases can only be brought by individuals whom the CIA has already decided to release, the outcome of these actions hinge on the narrow issue of the extent to which the participating countries knew or should have known torture was likely to occur. This glosses over the more fundamental issue that, unlike extradition, extraordinary rendition is, by definition, a transfer without legal process. In fact, the whole CIA program is designed to place detainee interrogations completely beyond the reach of law. Moreover, the US government has refused to recognize the jurisdiction of international courts of human rights.
President Barack Obama for his part, despite making claims of reversing the Bush-era CIA policies, has further escalated the crimes committed by his predecessor.
In January 2009, Obama issued a series of executive orders that purported to close down then existing CIA detention facilities and also created a task force to examine rendition practices and make recommendations to ensure humane treatment. These orders were nothing more than a sham to conceal the fact that, rather than restricting the ability of the CIA to conduct extraordinary renditions, the orders were purposely crafted to preserve it.
While Obama has ordered the CIA to shut down certain detention facilities, the directive specifically exempts facilities designed to hold people on a temporary or transitory basis. In other words, the executive order essentially codifies the CIA’s authority to detain suspects and then to render them to other countries to face interrogation, trial, or worse. Furthermore, if the CIA wanted the detainees to remain in the custody of the United States, they could be sent to a facility operated by the Department of Defense or kept offshore on a Navy vessel.
The task force created by Obama’s order functions merely as a fig leaf for the continuation of Bush-era policies. The report, which was completed in 2009, has not been made public and is not binding on any agency. However, as an example of its toothlessness, a Justice Department press release disclosed that one of the recommended safeguards was relying on assurances from the receiving country that the detainees would be treated humanely.
The Justice Department under Obama appointee Eric Holder has closed inquiries into the treatment of over 100 detainees who were in CIA custody overseas, including several who died while in custody, stating that no criminal charges would be pursued.
The Above image of the McDonald label, Copyright McDonald’s 2011
This article was first published in The Ecologist
In the first of a major new series following on from the ground breaking Behind the Label, Peter Salisbury takes a look at one of the biggest brands in the world – McDonald’s – and asks: has the burger giant done enough to clean-up its act?
Chances are that you have had a McDonald’s meal in the past or if not, you certainly know a lot of people who have. It’s the biggest fast food chain in the world, with 32,000 outlets in 117 countries. The clown-fronted burger outfit employs a staggering 1.7 million people, and in the first three months of 2011 alone it made $1.2bn in profits on the back of revenues of $6.1bn. The company has come in for huge amounts of criticism over the past 20 years, for the impact it has on the diets of people worldwide, its labour practices and the impact its business has had on the environment. From Fast Food Nation to Supersize Me by the way of the McLibel trials of the 1990s, plenty has been written and broadcast to tarnish the golden arches’ shine.
Declining sales in the early 2000s, which saw franchises being shut for the first time in the company’s history, caused a major rethink of the way McDonald’s operates, and its recent rhetoric has been that of a firm with a newly discovered zeal for ethical end eco-friendly practices, garnering praise from champions as unlikely as Greenpeace and the Carbon Trust. But is this just marketing hype or has McDonald’s had a genuine change of heart?
The answer is yes and no. First of all, because of the way the company is run, it’s hard to generalise. Around 80 per cent of McDonald’s outlets are run by franchisees who have to meet standards set by the company, but who can – and do – go above and beyond them. Further, McDonald’s branches are run by country and regional offices, each of which are subject to domestic standards. The production of much of the raw products which go into McDonald’s meals, from burger patties to sauces, is subcontracted to different suppliers, making it impossible to assess the company in terms of a single golden standard. Its sole global supplier (for soft drinks) is Coca-Cola.
The UK branch of the company has certainly made great strides since the 1990s, when it became embroiled in the 1997 McLibel court case, in which McDonald’s Corporation and McDonald’s Restaurants Limited sued Helen Steel and Dave Morris, a former gardener and a postman, for libel after they published a series of leaflets denouncing the company.
The judge overseeing the case decided that, although the pair could not prove some of their accusations – that McDonald’s destroyed rainforests, caused starvation in the third world or disease and cancer in developed countries – it could be agreed that the company exploited children, falsely advertised their food as nutritious, indirectly sponsored cruelty to animals and paid their workers low wages: a major blow to the brand in an age of increasing consumer-consciousness.
Since then, the UK branch has committed to a number of initiatives to improve its image, running an aggressive marketing campaign at the same time to portray itself as an ethical employer which is both farmer and eco-friendly. It has also moved to become more transparent, putting ingredients lists for all of its products on its website and setting up another website, Make Up Your Own Mind, inviting customers to voice concerns and publishing accounts of critics’ visits to its production sites.
All of this should be taken with a grain of salt however. It’s not surprising that a multibillion-dollar corporation, which has been hurt in the past by concerns over its practices, will do its utmost to sell itself as a reformed character. And it’s suspicious that any web search of the company brings up a hit list of sites almost exclusively maintained by the company.
Yet research conducted by the Ecologist shows that in many areas the company has improved its record of ethical and environmental awareness over the last decade. The company’s burgers, for example, are now 100 per cent beef, and contain no preservatives or added flavours whatsoever. All of McDonald’s UK’s burgers are provided by Germany’s Esca Food Solutions, which claims to maintain rigorous standards at its abattoirs and production plants, and which works closely with 16,000 independent farmers in the UK and Ireland to maintain high standards.
Since the early 2000s, McDonald’s UK has maintained that none of its beef, bacon or chicken is fed genetically modified grain. Farmers working for McDonald’s have independently confirmed to the Ecologist and Esca that they have a ‘decent’ working relationship with the company.
In 2007, Esca won the UK Food Manufacturing Excellence Awards for its burgers, and in 2010 McDonald’s announced that it was launching a three-year study into reducing the carbon emissions caused by the cattle used in its burgers (cattle account for four per cent of the UK’s emissions). Meanwhile, all of the fish used in Filet-O-Fish and Fish Finger meals in Europe are sourced from sustainable fisheries certified by the Marine Stewardship Council. Fries are largely sourced from McCain’s, the world’s biggest potato supplier, and McDonald’s claims that the vast majority are produced in the UK, again by independent farmers. The fries are prepared in-store and are cooked in vegetable oil containing no hydrogenated fats. At the beginning of the potato-growing season, dextrose – a form of glucose – is added as a sweetener, and salt is added after cooking (the company claims to have reduced the amount of salt used by 23 per cent since 2008).
The bread for McDonald’s buns and muffins is sourced from a single unnamed supplier based in Heywood, Manchester, and Banbury, Oxfordshire. McDonald’s would not comment on where it sources the grain for the bakeries but says once more that it does not buy genetically modified crops. Meanwhile, the company has been working with its suppliers and franchise-holders to make sure that they are as energy efficient as possible. In 2010, The Carbon Trust awarded McDonald’s its Carbon Trust Standard for reducing its overall carbon emissions by 4.5 per cent between 2007 and 2009. The company is currently experimenting with a series of energy initiatives based around turning its waste, from packaging – which is 80 per cent recycled – to vegetable oil into energy.
Since 2007, the company – which is one of the world’s biggest coffee retailers – has committed to selling only Rainforest Alliance certified coffee. Although the certification body has certainly been responsible for improving conditions and practices in many farming operations worldwide, it has been the subject of controversy – most recently after an undercover investigation by the Ecologist revealed allegations of sexual harassment and poor conditions for some workers at its certified Kericho tea plantation in Kenya which supplies the PG Tips brand.
Certification issues aside, McDonald’s has undoubtedly become considerably better at taking criticism. In 2006, Greenpeace activists stormed McDonald’s restaurants across the world dressed in chicken suits in protest at the destruction of the Amazon rainforest, which they attributed to greedy soy producers – who in turn were selling their produce to chicken farms, of whom McDonald’s was a major customer. They subsequently praised the fast food chain for leading a unified response among soy buyers, pressuring producers to adopt a ‘zero destruction’ approach to growing their crops. Despite praise from Greenpeace, the Carbon Trust and personalities such as Jamie Oliver who have praised the company for its ethical stance on meat and buying its produce locally, the firm is by no means perfect.
One of the biggest incongruencies in its newly discovered zeal for ethical practices comes from its seemingly differing approaches to the conditions chickens live in depending on whether they produce eggs or are used as meat in Chicken McNuggets and similar meals. The firm proudly trumpets that its UK branch only buys eggs from Lion-certified free-range producers, a laudable effort from a huge buyer of eggs, and that the meat in each nugget is 100 per cent chicken breast (the final product is around 65:35 meat and batter).
Yet by the same token, the company buys most of its chicken from two suppliers, Sun Valley in the UK and Moy Park in Northern Ireland, who are in turn owned by the controversial American firm, Cargill, and Brazil’s Marfrig. Sun Valley has been accused of using intensive chicken farming methods to produce their meat, which campaigners say can typically involve birds being cooped up in giant warehouses for much of their natural lives with barely any space to move. Sun Valley was embroiled in a scandal in 2008 when the activist group Compassion in World Farming secretly filmed poor conditions at its supplier Uphampton Farm near Leominster.
Furthermore, although McDonald’s is happy to advertise the provenance of its beef, dairy products and eggs, it is more circumspect about chicken meat. This may be because up to 90 per cent of the meat it uses in the UK is sourced from Cargill and Marfrag facilities in Thailand and Brazil, where regulations in the farming sector are perhaps less stringent than in the UK.
Meanwhile, the fact remains that despite attempts in recent years to cultivate a more healthy image, McDonald’s primary sales come from fast food in a time when there is increasing recognition that obesity has reached epidemic proportions in the UK and the US. Although the European, and in particular the UK arm of the company, have become increasingly ethically aware, the same cannot be said for the US arm, which uses livestock farmed using intensive methods and fed in some cases on GM crops. And by buying McDonald’s in the UK, you are still buying from the same clown.
Compassion in World Farming: www.ciwf.org.uk
The Carbon Trust: www.carbontrust.co.uk
Posted on Feb 1, 2013
Milt Priggee, Cagle Cartoons, http://www.miltpriggee.com
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- toppling Iran's government;
- replacing it pro-Western stooges subservient to US and Israeli interests;
- giving America another client state;
- eliminating Israel's main regional rival;
- controlling Iran's vast oil and gas resources;
- exploiting its people; and
- marginalizing and weakening Iran - defying it the right to self-defense.
It amounts to little more than the start of the US colonisation of Ukraine’s seed and agriculture sector. This corporate power grab will be assisted by local banks. Oriental Review says they will only offer favourable credit terms to those farmers who agree to use certified herbicides: those that are manufactured by Monsanto.
"We are here at the [US-Canadian] border to demonstrate the global solidarity of farmers in the face of globalization. The corporate takeover of agriculture has impoverished farmers, starved communities and force-fed us genetically-engineered crops, only to line the pockets of a handful of multinational corporations like Monsanto at the expense of farmers who are struggling for land and livelihood around the world."
The Syriza coalition emerged from various offshoots of the Greek radical left, which set itself apart from the political mainstream by taking an anti-capitalist position emphasizing wealth redistribution and class struggle, while allying itself with alter-globalization movements and trade unions. The ascension of Syriza represents the most leftward shift in European politics in decades.
Once a negligible force at the ballot box, Syriza has gradually succeeded in commanding support among the wage-earning class and the urban unemployed, who view the coalition as the only political force capable of pulling the country off the trajectory of austerity, imposed by Greece’s creditors – primarily Germany.
“In the morning, you make porridge from maize and send the kids to school. For lunch, boiled maize and a few green beans. In the evening, ugali, [a staple dough-like maize dish, served with meat]… [today] it’s a monoculture diet, being driven by the food system – it’s an injustice.”
“If we grow millets and pulses, we will have more nutrition per capita. If we grow food by using chemicals, we are growing monocultures — this means that we will have less nutrition per acre, per capita… The agrarian crisis, the food crisis and the nutrition and health crisis are intimately connected. They need to be addressed together. The objective of agriculture policy cannot be based on promoting industrial processing of food. The chemicalisation of agriculture and food are recipes for “denutrification”… The Green Revolution displaced pulses, an important source of proteins, as well as oilseeds, thus reducing nutrition per acre. Monocultures do not produce more food and nutrition. They take up more chemicals and fossil fuels, and hence are profitable for agrochemical companies and oil companies. They produce higher yields of individual commodities but a lower output of food and nutrition.” (See here, ‘The Real Hunger Games’)
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Some inequality of income and wealth is inevitable, if not necessary. If an economy is to function well, people need incentives to work hard and innovate.
The pertinent question is not whether income and wealth inequality is good or bad. It is at what point do these inequalities become so great as to pose a serious threat to our economy, our ideal of equal opportunity and our democracy.
We are near or have already reached that tipping point. As French economist Thomas Piketty shows beyond doubt in his “Capital in the Twenty-First Century,” we are heading back to levels of inequality not seen since the Gilded Age of the late 19th century. The dysfunctions of our economy and politics are not self-correcting when it comes to inequality.
But a return to the Gilded Age is not inevitable. It is incumbent on us to dedicate ourselves to reversing this diabolical trend. But in order to reform the system, we need a political movement for shared prosperity.
Herewith a short summary of what has happened, how it threatens the foundations of our society, why it has happened, and what we must do to reverse it.
What has Happened
The data on widening inequality are remarkably and disturbingly clear. The Congressional Budget Office has found that between 1979 and 2007, the onset of the Great Recession, the gap in income—after federal taxes and transfer payments—more than tripled between the top 1 percent of the population and everyone else. The after-tax, after-transfer income of the top 1 percent increased by 275 percent, while it increased less than 40 percent for the middle three quintiles of the population and only 18 percent for the bottom quintile.
The gap has continued to widen in the recovery. According to the Census Bureau, median family and median household incomes have been falling, adjusted for inflation; while according to the data gathered by my colleague Emmanuel Saez, the income of the wealthiest 1 percent has soared by 31 percent. In fact, Saez has calculated that 95 percent of all economic gains since the recovery began have gone to the top 1 percent.
Wealth has become even more concentrated than income. An April 2013 Pew Research Center report found that from 2009 to 2011, “the mean net worth of households in the upper 7 percent of wealth distribution rose by an estimated 28 percent, while the mean net worth of households in the lower 93 percent dropped by 4 percent.”
Why It Threatens Our Society
This trend is now threatening the three foundation stones of our society: our economy, our ideal of equal opportunity and our democracy.
The economy. In the United States, consumer spending accounts for approximately 70 percent of economic activity. If consumers don’t have adequate purchasing power, businesses have no incentive to expand or hire additional workers. Because the rich spend a smaller proportion of their incomes than the middle class and the poor, it stands to reason that as a larger and larger share of the nation’s total income goes to the top, consumer demand is dampened. If the middle class is forced to borrow in order to maintain its standard of living, that dampening may come suddenly—when debt bubbles burst.
Consider that the two peak years of inequality over the past century—when the top 1 percent garnered more than 23 percent of total income—were 1928 and 2007. Each of these periods was preceded by substantial increases in borrowing, which ended notoriously in the Great Crash of 1929 and the near-meltdown of 2008.
The anemic recovery we are now experiencing is directly related to the decline in median household incomes after 2009, coupled with the inability or unwillingness of consumers to take on additional debt and of banks to finance that debt—wisely, given the damage wrought by the bursting debt bubble. We cannot have a growing economy without a growing and buoyant middle class. We cannot have a growing middle class if almost all of the economic gains go to the top 1 percent.
Equal opportunity. Widening inequality also challenges the nation’s core ideal of equal opportunity, because it hampers upward mobility. High inequality correlates with low upward mobility. Studies are not conclusive because the speed of upward mobility is difficult to measure.
But even under the unrealistic assumption that its velocity is no different today than it was thirty years ago—that someone born into a poor or lower-middle-class family today can move upward at the same rate as three decades ago—widening inequality still hampers upward mobility. That’s simply because the ladder is far longer now. The distance between its bottom and top rungs, and between every rung along the way, is far greater. Anyone ascending it at the same speed as before will necessarily make less progress upward.
In addition, when the middle class is in decline and median household incomes are dropping, there are fewer possibilities for upward mobility. A stressed middle class is also less willing to share the ladder of opportunity with those below it. For this reason, the issue of widening inequality cannot be separated from the problems of poverty and diminishing opportunities for those near the bottom. They are one and the same.
Democracy. The connection between widening inequality and the undermining of democracy has long been understood. As former Supreme Court Justice Louis Brandeis is famously alleged to have said in the early years of the last century, an era when robber barons dumped sacks of money on legislators’ desks, “We may have a democracy, or we may have great wealth concentrated in the hands of a few, but we cannot have both.”
As income and wealth flow upward, political power follows. Money flowing to political campaigns, lobbyists, think tanks, “expert” witnesses and media campaigns buys disproportionate influence. With all that money, no legislative bulwark can be high enough or strong enough to protect the democratic process.
The threat to our democracy also comes from the polarization that accompanies high levels of inequality. Partisanship—measured by some political scientists as the distance between median Republican and Democratic roll-call votes on key economic issues—almost directly tracks with the level of inequality. It reached high levels in the first decades of the twentieth century when inequality soared, and has reached similar levels in recent years.
When large numbers of Americans are working harder than ever but getting nowhere, and see most of the economic gains going to a small group at the top, they suspect the game is rigged. Some of these people can be persuaded that the culprit is big government; others, that the blame falls on the wealthy and big corporations. The result is fierce partisanship, fueled by anti-establishment populism on both the right and the left of the political spectrum.
Why It Has Happened
Between the end of World War II and the early 1970s, the median wage grew in tandem with productivity. Both roughly doubled in those years, adjusted for inflation. But after the 1970s, productivity continued to rise at roughly the same pace as before, while wages began to flatten. In part, this was due to the twin forces of globalization and labor-replacing technologies that began to hit the American workforce like strong winds—accelerating into massive storms in the 1980s and ’90s, and hurricanes since then.
Containers, satellite communication technologies, and cargo ships and planes radically reduced the cost of producing goods anywhere around the globe, thereby eliminating many manufacturing jobs or putting downward pressure on other wages. Automation, followed by computers, software, robotics, computer-controlled machine tools and widespread digitization, further eroded jobs and wages. These forces simultaneously undermined organized labor. Unionized companies faced increasing competitive pressures to outsource, automate or move to nonunion states.
These forces didn’t erode all incomes, however. In fact, they added to the value of complex work done by those who were well educated, well connected and fortunate enough to have chosen the right professions. Those lucky few who were perceived to be the most valuable saw their pay skyrocket.
But that’s only part of the story. Instead of responding to these gale-force winds with policies designed to upgrade the skills of Americans, modernize our infrastructure, strengthen our safety net and adapt the workforce—and pay for much of this with higher taxes on the wealthy—we did the reverse. We began disinvesting in education, job training and infrastructure. We began shredding our safety net. We made it harder for many Americans to join unions. (The decline in unionization directly correlates with the decline of the portion of income going to the middle class.) And we reduced taxes on the wealthy.
We also deregulated. Financial deregulation in particular made finance the most lucrative industry in America, as it had been in the 1920s. Here again, the parallels between the 1920s and recent years are striking, reflecting the same pattern of inequality.
Other advanced economies have faced the same gale-force winds but have not suffered the same inequalities as we have because they have helped their workforces adapt to the new economic realities—leaving the United States the most unequal of all advanced nations by far.
What We Must Do
There is no single solution for reversing widening inequality. Thomas Piketty’s monumental book “Capital in the Twenty-First Century” paints a troubling picture of societies dominated by a comparative few, whose cumulative wealth and unearned income overshadow the majority who rely on jobs and earned income. But our future is not set in stone, and Piketty’s description of past and current trends need not determine our path in the future. Here are ten initiatives that could reverse the trends described above:
1) Make work pay. The fastest-growing categories of work are retail, restaurant (including fast food), hospital (especially orderlies and staff), hotel, childcare and eldercare. But these jobs tend to pay very little. A first step toward making work pay is to raise the federal minimum wage to $15 an hour, pegging it to inflation; abolish the tipped minimum wage; and expand the Earned Income Tax Credit. No American who works full time should be in poverty.
2) Unionize low-wage workers. The rise and fall of the American middle class correlates almost exactly with the rise and fall of private-sector unions, because unions gave the middle class the bargaining power it needed to secure a fair share of the gains from economic growth. We need to reinvigorate unions, beginning with low-wage service occupations that are sheltered from global competition and from labor-replacing technologies. Lower-wage Americans deserve more bargaining power.
3) Invest in education. This investment should extend from early childhood through world-class primary and secondary schools, affordable public higher education, good technical education and lifelong learning. Education should not be thought of as a private investment; it is a public good that helps both individuals and the economy. Yet for too many Americans, high-quality education is unaffordable and unattainable. Every American should have an equal opportunity to make the most of herself or himself. High-quality education should be freely available to all, starting at the age of 3 and extending through four years of university or technical education.
4) Invest in infrastructure. Many working Americans—especially those on the lower rungs of the income ladder—are hobbled by an obsolete infrastructure that generates long commutes to work, excessively high home and rental prices, inadequate Internet access, insufficient power and water sources, and unnecessary environmental degradation. Every American should have access to an infrastructure suitable to the richest nation in the world.
5) Pay for these investments with higher taxes on the wealthy. Between the end of World War II and 1981 (when the wealthiest were getting paid a far lower share of total national income), the highest marginal federal income tax rate never fell below 70 percent, and the effective rate (including tax deductions and credits) hovered around 50 percent. But with Ronald Reagan’s tax cut of 1981, followed by George W. Bush’s tax cuts of 2001 and 2003, the taxes on top incomes were slashed, and tax loopholes favoring the wealthy were widened. The implicit promise—sometimes made explicit—was that the benefits from such cuts would trickle down to the broad middle class and even to the poor. As I’ve shown, however, nothing trickled down. At a time in American history when the after-tax incomes of the wealthy continue to soar, while median household incomes are falling, and when we must invest far more in education and infrastructure, it seems appropriate to raise the top marginal tax rate and close tax loopholes that disproportionately favor the wealthy.
6) Make the payroll tax progressive. Payroll taxes account for 40 percent of government revenues, yet they are not nearly as progressive as income taxes. One way to make the payroll tax more progressive would be to exempt the first $15,000 of wages and make up the difference by removing the cap on the portion of income subject to Social Security payroll taxes.
7) Raise the estate tax and eliminate the “stepped-up basis” for determining capital gains at death. As Piketty warns, the United States, like other rich nations, could be moving toward an oligarchy of inherited wealth and away from a meritocracy based on labor income. The most direct way to reduce the dominance of inherited wealth is to raise the estate tax by triggering it at $1 million of wealth per person rather than its current $5.34 million (and thereafter peg those levels to inflation). We should also eliminate the “stepped-up basis” rule that lets heirs avoid capital gains taxes on the appreciation of assets that occurred before the death of their benefactors.
8) Constrain Wall Street. The financial sector has added to the burdens of the middle class and the poor through excesses that were the proximate cause of an economic crisis in 2008, similar to the crisis of 1929. Even though capital requirements have been tightened and oversight strengthened, the biggest banks are still too big to fail, jail or curtail—and therefore capable of generating another crisis. The Glass-Steagall Act, which separated commercial- and investment-banking functions, should be resurrected in full, and the size of the nation’s biggest banks should be capped.
9) Give all Americans a share in future economic gains. The richest 10 percent of Americans own roughly 80 percent of the value of the nation’s capital stock; the richest 1 percent own about 35 percent. As the returns to capital continue to outpace the returns to labor, this allocation of ownership further aggravates inequality. Ownership should be broadened through a plan that would give every newborn American an “opportunity share” worth, say, $5,000 in a diversified index of stocks and bonds—which, compounded over time, would be worth considerably more. The share could be cashed in gradually starting at the age of 18.
10) Get big money out of politics. Last, but certainly not least, we must limit the political influence of the great accumulations of wealth that are threatening our democracy and drowning out the voices of average Americans. The Supreme Court’s 2010 Citizens United decision must be reversed—either by the Court itself, or by constitutional amendment. In the meantime, we must move toward the public financing of elections—for example, with the federal government giving presidential candidates, as well as House and Senate candidates in general elections, $2 for every $1 raised from small donors.
Building a Movement
It’s doubtful that these and other measures designed to reverse widening inequality will be enacted anytime soon. Having served in Washington, I know how difficult it is to get anything done unless the broad public understands what’s at stake and actively pushes for reform.
That’s why we need a movement for shared prosperity—a movement on a scale similar to the Progressive movement at the turn of the last century, which fueled the first progressive income tax and antitrust laws; the suffrage movement, which won women the vote; the labor movement, which helped animate the New Deal and fueled the great prosperity of the first three decades after World War II; the civil rights movement, which achieved the landmark Civil Rights and Voting Rights acts; and the environmental movement, which spawned the National Environmental Policy Act and other critical legislation.
Time and again, when the situation demands it, America has saved capitalism from its own excesses. We put ideology aside and do what’s necessary. No other nation is as fundamentally pragmatic. We will reverse the trend toward widening inequality eventually. We have no choice. But we must organize and mobilize in order that it be done.
[This essay appears in the current edition of “The Nation.”]
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Do you recall a time in America when the income of a single school teacher or baker or salesman or mechanic was enough to buy a home, have two cars, and raise a family?
I remember. My father (who just celebrated his 100th birthday) earned enough for the rest of us to live comfortably. We weren’t rich but never felt poor, and our standard of living rose steadily through the 1950s and 1960s.
That used to be the norm. For three decades after World War II, America created the largest middle class the world had ever seen. During those years the earnings of the typical American worker doubled, just as the size of the American economy doubled. (Over the last thirty years, by contrast, the size of the economy doubled again but the earnings of the typical American went nowhere.)
In that earlier period, more than a third of all workers belonged to a trade union — giving average workers the bargaining power necessary to get a large and growing share of the large and growing economic pie. (Now, fewer than 7 percent of private-sector workers are unionized.)
Then, CEO pay then averaged about 20 times the pay of their typical worker (now it’s over 200 times).
In those years, the richest 1 percent took home 9 to 10 percent of total income (today the top 1 percent gets more than 20 percent).
Then, the tax rate on highest-income Americans never fell below 70 percent; under Dwight Eisenhower, a Republican, it was 91 percent. (Today the top tax rate is 39.6 percent.)
In those decades, tax revenues from the wealthy and the growing middle class were used to build the largest infrastructure project in our history, the Interstate Highway system. And to build the world’s largest and best system of free public education, and dramatically expand public higher education. (Since then, our infrastructure has been collapsing from deferred maintenance, our public schools have deteriorated, and higher education has become unaffordable to many.)
We didn’t stop there. We enacted the Civil Rights Act and Voting Rights Act to extend prosperity and participation to African-Americans; Medicare and Medicaid to provide health care to the poor and reduce poverty among America’s seniors; and the Environmental Protection Act to help save our planet.
And we made sure banking was boring.
It was a virtuous cycle. As the economy grew, we prospered together. And that broad-based prosperity enabled us to invest in our future, creating more and better jobs and a higher standard of living.
Then came the great U-turn, and for the last thirty years we’ve been heading in the opposite direction.
Some blame globalization and the loss of America’s manufacturing core. Others point to new technologies that replaced routine jobs with automated machinery, software, and robotics.
But if these were the culprits, they only raise a deeper question: Why didn’t we share the gains from globalization and technological advances more broadly? Why didn’t we invest them in superb schools, higher skills, a world-class infrastructure?
Others blame Ronald Reagan’s worship of the so-called “free market,” supply-side economics, and deregulation. But if these were responsible, why did we cling to these ideas for so long? Why are so many people still clinging to them?
Some others believe Americans became greedier and more selfish. But if that’s the explanation, why did our national character change so dramatically?
Perhaps the real problem is we forgot what we once achieved together.
The collective erasure of the memory of that prior system of broad-based prosperity is due partly to the failure of my generation to retain and pass on the values on which that system was based. It can also be understood as the greatest propaganda victory radical conservatism ever won.
We must restore our recollection. In seeking to repair what is broken, we don’t have to emulate another nation. We have only to emulate what we once had.
That we once achieved broad-based prosperity means we can achieve it again — not exactly the same way, of course, but in a new way fit for the twenty-first century and for future generations of Americans.
America’s great U-turn can be reversed. It is worth the fight.
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British Chancellor George Osborne this week announced massive cuts of £25 billion after 2015. This included further welfare cuts of £12bn. Osbourne said that 2014 would be a year of hard truths. He claimed that his economic policies were working, but admitted that the bad news is there's still a long way to go.
"We understood the Conservative government's determination to use the state machine against us. In order to dismember the welfare state, they had to break the trade union movement and they needed to break the miners first."
"Osborne is busy lining the pockets of the people at the top of the pile."
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|Photo by Arjan Richter|