Killing the Middle Class; How the Corporatocracy Sets the Rules of the "Game" To Create Peons

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By Thom Hartmann (about the author) Page 1 of 3 page(s)

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Excerpted from Thom Hartmann's newest book, Screwed; The Undeclared War Against the Middle Class -- And What We Can Do About It

One of the most pernicious claims the corporatocracy makes is that business flourishes best in a perfectly "free" market. And when business flourishes, they say, all of society does better. It's the old trickle-down philosophy that inevitably produces a nation of peons.

Always get suspicious when you see the words free market. Let's go back to the story of Mrs. Flores, whom you met in chapter 2-- the woman who lost her job at Levi Strauss when that venerable American company closed all of its factories here in the USA and moved them overseas.

Cons argue that "productivity" is responsible for the loss of American jobs. They love to quote nineteenth-century economist David Ricardo (1772-"1823) as saying in his 1817 work On Wages, "Labour, like all other things which are purchased and sold, and which may be increased or diminished in quantity, has its natural and its market price."

Thus, they say, it's natural that American wages should have been in a free fall ever since Bill Clinton signed NAFTA and GATT: America's roughly 100 million workers now have to compete "on a level playing field" with 5 billion impoverished people around the world. Offshoring is simply the normal extension, they say, of Ricardo's classic view of economics.

What they conveniently forget is that Ricardo didn't say the market price was the natural price. On the contrary, he wrote, "The natural price of labour is that price which is necessary to enable the labourers, one with another, to subsist and to perpetuate their race, without either increase or diminution."

In other words labor is part of the game of business, and one of the first goals of the game of business is to "perpetuate" the existence of the laborers themselves. That's the natural price. If businesses want to keep their workers, according to Ricardo, they must make sure that the market price of labor is at least as much as the natural price of labor. And the natural price is the "subsistence" price-- just enough to survive-- which brings us back to Dickens's world.

On the other hand, when in 1914 Henry Ford raised his workers' pay to $5 per day (about double what other manufacturers were paying), he said he was doing so in part because he wanted his employees to be able to buy his cars. If the American workforce can't make a decent living, they'll stop buying products made in America, which will lead to fewer people making a decent living-- this death spiral for an economy and a nation's middle class that we are now seeing as a result of Reagan/Clinton/Bush trade and economic policies.

Everybody knows that games played without rules won't work. Boxers are divided into weight categories to ensure relative fairness in fights; baseball rules define the type of bats that can be used; football players are limited in how they can use their hands so they don't injure opponents or gain unfair advantage.

What's lost on many Americans is that business is a game, too. And We the People define its rules through our elected representatives. The goal of the game is to provide for the life, liberty, and pursuit of happiness of American citizens.

Gaming the System
If government can create conditions that cause a middle class to emerge, by implementing fair rules for business, progressive taxation, and free public education, the opposite is also true: government can create a corporatocracy by deregulating business, by cutting taxes on extreme wealth, and by privatizing as much of the commons as possible. Cons call this "starving the beast."

Here's how you starve the beast: you put through tax cuts for the rich, which cuts back the revenues of the federal government to the point that, if you got rid of all the social programs, you'd have a balanced budget. No more Social Security, no more spending for education, no more spending for Medicare and Medicaid; have the government simply keep the armies, prisons, and police. Let's shrink government-- that's their philosophy.

When you cut all those social programs, you lose the middle class and in its place create a very small, very wealthy elite and a large underclass of starvation-wage workers. You lose democracy and instead create corporatocracy. You change the rules of the game; We the People lose, and the feudal lords win.

Cons have been winning this particular game of "starve the beast" since Reagan first started seriously playing it in 1981. They've done it in large part by lying to the American people; and they've had to do that because if they told the truth the majority of Americans would throw them out of office.

This is, after all, still a democracy. If the majority of us agree to get rid of Social Security so that only the wealthy can have retirement benefits and the old are left to fend for themselves, so be it. If a guy breaks his back and can't work and the majority of us decide not to help people who are disabled, and as a result he has to beg on the street, well, we can democratically decide to screw him and ourselves.

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Thom Hartmann is a Project Censored Award-winning New York Times best-selling author, and host of a nationally syndicated daily progressive talk program on the Air America Radio Network, live noon-3 PM ET. more...)

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