Saturday, March 22, 2014
Harvard Prof Misses the Boat on Inequality Arguments
The forlorn wage slave depicted in the graphic is the ultimate "beneficiary" of Neoliberal globalism and the "New World Order". That is, he is the embodiment of the marginalized U.S. worker - whether corporate temp forced to work overtime for his daily bread, minimum wage burger flipper, or the adjunct prof who has to forage for food stamps and throw away tins of Spam in dumpsters - while putting together a base income by teaching 20 hours a weeks at 5 community colleges.
Welcome to the Neoliberal realm, the realm of constant and growing income inequality. Where citizen security is a myth and all denizens are expected to be beholden to the Market god. How did it come about that Mr. Worker's salary has barely budged in 25 years, and that he's falling ever farther behind? Well, one can look at the changes introduced from the time the Neoliberal order was imposed, including:
1) The re-definition of productivity: that is, productivity is now defined by "cutting jobs and finding ways of making the same products with fewer people". As pointed out by one Neolib mouthpiece (F. Zakaria): "At many major companies profits have returned to 2007 levels but with many thousands fewer workers".
2)The force of globalization: making a single market for many goods and services which don't require American workers for production, OR American consumers to buy them. This single market amounts to more than 400 million having entered the global labor force, from China, India, South Africa, Indonesia and elsewhere. All now with money to spend, and all willing to work at one third or less the pay of an American, and for NO benefits!
Unmentioned is that the sole remaining "life raft" for the stressed worker: his Social Security and Medicare, is now also under threat by the Neolibs, thanks to their rat warren known as "Fix the Debt" and its instigators such as Peter G. Peterson. Nor do the purveyors of the New World Order bother to mention how their yen for more military excursions and interferences, conflicts, increased defense budgets are designed to bleed the public purse ever lower - to justify cuts to "entitlements".
Into this miasma of economic despair we have the recent essay ('A Top Heavy Focus on Income Inequality', Sunday Review, NY Times) by Sendhil Mullainathan, an Econ Prof at Harvard. He basically asserts in his piece that we are focusing excessively on the "one percent" and that this focus on the wealthiest "has a cost".
He does name the usual suspects, i.e. the contributory factors: "hourly workers face an increasingly volatile working life, not knowing how many hours you will have or when you will work them. Or how you will jiggle your work or your family, or how you will make a rent payment that takes no account of the fact you may be working fewer hours."
All of these, he insists, are left off our radar when we only focus attention on the 1 percent, because we "aren't talking about the problems". However, he misses the point - or maybe it eludes him- that these same 1 percent (or 0.1 or 001 percent) are totally responsible for many of the working conditions imposed, including: refusing to pay a living wage, providing benefits - especially healthcare or merely allowing time off for pressing family issues.
In other words, the inequality in income and conditions sown are directly traced to the Neoliberal mindset of the business owners who have adopted that model. Moreover, as Chrystia Freeland noted in her book, 'Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else', these elites no longer feel a social compact with their workers, i.e. to pay higher taxes to support an increase in their life style, enabling greater spending power and more security. While in decades past, the massively wealthy acknowledged on some level the need to contribute to the welfare of the whole society via just taxation, they no longer believe so - they have now signed onto the Neoliberal imperative that all workers are expendable.
So no surprise now they would rather keep the minimum wage universally low despite the fact that last year American taxpayers shelled out more than $250 billion on welfare programs for the working poor. (Nearly 40 percent of food stamps are paid out to households with at least one wage earner.)
But, of course, the reason is obvious: these business elites aren't exposed to these taxes themselves, so they don't care! They are allowed so many corporate tax loopholes that the burden falls on the average middle income taxpayer, or pensioner, already subject to enormous outlays in other areas. Thus, the richest, the wealthiest can afford to sustain their laissez faire attitude while their workers sink beneath ever increasing debt.
None of this is processed or registered by Mullainathan. To his credit, however, he does observe that:
"We should try to observe that everyone has a fair opportunity to find a great life. It's a quest that will require political will and ingenious policies. President Obama's proposed expansion of the earned income tax credit (ETIC) goes in this direction, but more is needed."
Indeed! But I argue the policies needed aren't that "ingenious" and they ought not be that controversial. Before I go on, let me point out that while the ETIC referenced by the Harvard prof does help - lifting millions out of poverty - the low minimum wage creates a perverse incentive for businesses to drive wages lower - below the poverty line. The net effect is more than one-third of the ETIC is pocketed by employers through low artificially low labor costs, according to a Princeton University economic analysis. This bring us to the first point of what must change:
1) Raising the minimum wage, to $10.10 /hour which would put it at about the level the minimum wage was in 1968, corrected for inflation. According to the Economic Policy Institute an increase in the minimum wage to $10.10/ hr. would boost the incomes of 27.8 million workers. Contrary to the trope that the main beneficiary is a 20-something burger flipper at 'Jack in the Box', Rolling Stone ('The Minumum Wage War', March 13, p. 34) notes it:
"is a full time working woman in her thirties, responsible for half her family's income"
This is something to really think about and implement, but its execution depends on those top 1 percent (or 0.01%) business owners agreeing to it, as opposed to hiring lobbyists to fight it. This is also why we can't take our eyes off the 1 percent as the Prof suggests we do.
2) Integrate into working conditions a paid family leave AND paid sick leave! Both of these would be significant in enabling hard pressed workers to harmonize the demands of work with family life. In the case of sick leave, it would also be a boon to the economy overall. For example, the spread of norovirus outbreaks nearly every year claim up to 900,000 workers - who then suffer from time lost, even as they spread the disease to others by being forced to report for work, or lose pay. Allowing at least 3-5 sick days per year, like most civilized nations, would eliminate these enormous costs to the economy.
3) Obamacare's full implementation - separating health care from work will be an enormous boon to millions who otherwise would have to keep noses to the grindstone. Now, they will be able to retire or pursue entrepreneurial goals, and enable younger workers to have their jobs.
All of these can be done. and should be done, but their acceptance and implementation will depend on the cooperation of the one percent.
Which is why fixing the problem of income inequality in this country must include them!