Class war and drinking the Kool-Aid at Dow Jones

We all remember the worst job we ever had. Mine was as a re-write person on the lead financial wire service of Dow Jones in the mid-1990s. But it did give me a chance to see the workings of finance capital up close, and learn that my ideas on how it functioned really were true.

Those two unfortunate years at Dow Jones also gave me a better perspective when Rupert Murdoch swooped in a few years later to buy the company, not so much for its wire services rather for the cachet of owning The Wall Street Journal. An episode that nicely served as a humorous reminder of just what is meant by “integrity” by the idle rich — receiving the highest price.

It was difficult not to suppress a smile as the idle rich, absentee majority owners of the Journal, the Bancroft family, publicly wrestled with their bullet-proof “integrity” in the face of barbarian Murdoch. The newspapers published by Murdoch are distinguished by their mad-dog, mouth-frothing ultra-right diatribes. Not to be confused by the editorial pages of the Journal, distinguished by their mad-dog, mouth-frothing ultra-right diatribes.

There is one difference, and that is that the Journal’s mouth-frothing is done on behalf of Corporate America and is not shy about telling corporate readers what is good for them, such as its bizarre years-long campaign to return the dollar to the gold standard. The paper’s many readers who make a fortune by trading world currencies might beg to differ, but no matter. Murdoch’s papers, however, never challenge their readers’ biases and if those readers want several pages daily of celebrity gossip mixed in with the right-wing propaganda, then that is what the people will get.

You don't want to work here. (Photo by Stefan Schulze)

You don’t want to work here. (Photo by Stefan Schulze)

The Bancroft family’s celebrated “integrity,” arrayed against this hideous assault by a vulgarian, ended resoundingly when Murdoch arranged to sweeten the pot. Selling your integrity for maximum dollar — what could be more like Corporate America? And so the Journal provides us with another sound lesson in capitalist economics. The hidden Achilles heel in all this is that Murdoch paid much more for the Journal’s parent company, Dow Jones, than anybody else would, and that is for a simple reason — Dow Jones was a company remarkable for its inept management.

I know this from my personal experiences there. Just how many wire services Dow Jones actually published was not known, as nobody actually knew when I casually attempted to find out at one point, symptomatic of the place. Two spectacular failings during my two years nicely provide illustration. One of these two was the acquisition of a financial data company, Telerate, which was seen as very well run and profitable. Part of the Dow Jones egoism is that its managers are super-geniuses, and so Dow Jones replaced Telerate’s successful management with its own managers, who ran it into the ground so quickly that Dow Jones sold it seven years later for more than $1 billion less than what was paid for it. Many workers lost their jobs as well.

More adventures in management

A concurrent episode was the short-lived Dow Jones television station in New York City. The city government owned a public television station that the then mayor, Rudolph Giuliani, decided to give away at fire-sale prices. Dow Jones won it, intending to turn it into an all-business news television station, never mind that cable television already carried more than one of these. (One of which, CNBC, was blared continually in the wire service’s workplace; the horrible theme music gave me nightmares for a long time afterward although a female anchor’s on-camera tendencies to nearly break down in tears when a company’s profits went down and almost reach orgasm when profits went up did provide comic relief.)

Dow Jones management, however, wasn’t prepared for its new toy, and so upon taking over the television station, at first aired nothing but videotapes of “classic” sports games from 10 and 20 years earlier. Dow Jones hired television personnel from around the country; new hires sold their houses and moved thousands of miles to work in the new venture. Once started, it lasted four months before Dow Jones announced it was selling the station, putting all those new hires, who had so disrupted their lives, into the street. The magic of the market at work!

Episodes like this led to one of the Bancroft heirs, a thoroughly spoiled rich kid, to complain in public that her inheritance, worth tens of millions of dollars, might decline in value because the Dow Jones stock price was stuck in mud despite the 1990s stock-market bubble that was then in progress. This development, in turn, prompted that most unusual of actions at Dow Jones — a member of upper management would deign to talk to the lowly workers! Surely this was a sign of crisis.

One afternoon, we were pulled from our usual duty toiling on the electronic sweatshop to hear a pep talk in the cafeteria from none other than Chairman and Chief Executive Peter Kann. Kann would have needed an injection of personality to qualify as an empty suit, but in his own way is a sad story. Kann, at one time, was a reporter for the Journal famous for covering a war between Pakistan and India, during which he defied an order by his editor to leave the area by falsely saying there was too much static on the line for him to understand what the editor had just told him.

For him they feel sorry?

That Peter Kann was long gone. Dow Jones was distinguished by its remarkable rigidity — only those who fit an extremely narrow mold and are willing to drink the Kool-Aid if so ordered take so much as one step on the career ladder, never mind ascend to the executive ranks. And that’s in addition to the political lock-step required to survive the place. The sweatshop floor workers assembled, Kann preceded to deliver a rambling speech full of business cliches about the glorious future, but lacking any discussion of the company’s turmoil, the very reason for this unusual pep talk, as even the right-wing yuppie zombies, Dow Jones true believers who comprised most of the wire service’s workforce, understood.

None had the courage to ask a question on the topic, as I expected. It was up to me to say something — I was the shop steward for the union, disliked by management, and already trying to escape the place by becoming a freelance editor, so I had nothing to lose. Besides, I knew that most of my co-workers would be quietly counting on me to say something — virtually all conformed to the Dow Jones corporate culture of snapping your heels and running, not walking, to carry out your assignment, never allowing the slightest doubt to enter your innermost thoughts.

When Kann’s assistant asked for questions, I asked Kann what the company’s plan for stability was in light of the recent problems it had been having. I didn’t explicitly detail the serious gaffes Dow Jones had committed, but he and everyone in the room knew to what I was referring. To my genuine amazement, Kann, after a long pause, proceed to give a disjointed answer that touched on none of the issues; he was obviously seriously rattled, unable to speak coherently. After perhaps a minute of this, Kann’s assistant gently interrupted, deftly took the microphone and thanked all of us for attending, ending the meeting.

The odd coda to this was that some of the Dow Jones true believers then felt sorry for Kann, because there was pressure by shareholders to push him out of his posts due to the mismanagement. “Aw, he’ll be out soon, anyway,” one told me, genuinely feeling sorry for the dear leader. The joke was on the workforce, however, as Kann lasted another decade as head of Dow Jones, leaving it to Murdoch to satisfy his ego by overpaying for the company. The idle rich had already prospered because tens of millions of dollars per year had been funneled to them via family-only dividends and now they would cash out, by still doing nothing. Many jobs will be lost to pay for those payoffs.

A wonderful lesson in capitalist economics, and, see, there is nothing to fear from Murdoch when it comes to capitalist ethics. See you on the yacht, darling.

High-tech exploitation is still exploitation

In the so-called “sharing economy,” it isn’t the profits that are being shared. What is being shared are ways of putting old models of weakening labor protections in new “high tech” wrapping.

“Sharing economy” enterprises designating employees as “independent contractors” so that workers are left without legal protections, and undercutting competition through insisting that laws and regulations don’t apply to them, really aren’t new or “innovative.” But it’s Silicon Valley companies that are doing this — so, hurray!, it’s now exciting and, oh yes, disruptive! Quaint, archaic standards such as minimum wages and labor- and consumer-law protections are so old-fashioned that Silicon Valley billionaires are doing us all a favor by disrupting our ability to keep them.

That “sharing economy” enterprises are focal points of a new technology-stock bubble is another reason to question the hype surrounding them. While waiting for the right moment for an initial public offering, the poster child for the “sharing economy,” Uber Technologies Inc., has had no trouble attracting investors, and is now valued at US$51 billion. Not bad for a company that claims to be nothing but an app — except for when it claims to be hiring drivers when its interests dictate. (More on that below.) To put that valuation in perspective, it is higher than 80 percent of S&P 500 companies — an index selected from among the largest companies listed on U.S. stock exchanges. This for a company founded in 2009.

"Nothing is nothing" photo by Darwin Bell, San Francisco

“Nothing is nothing” photo by Darwin Bell, San Francisco

How Uber’s valuation matches up with its income is impossible to say as the company does not reveal its financial results. A report in TechCrunch says that Uber may be pulling in more than $1 billion in gross receipts per year, and estimates Uber’s cut of that revenue to be about $213 million. (Uber takes a 20 percent cut from its drivers, but some drivers say it takes an additional cut for “fees”) Between its revenue and the $5 billion in funding it has received, the company could afford to hire its drivers as employees, but instead spends its money on attack advertising.

The company launched a multi-media fusillade of attack ads last month when New York City Mayor Bill de Blasio dared suggest regulations observed by others might apply to it, including a bombardment of television ads and robo-calls. (I received two. They didn’t work.) True to form, Mayor de Blasio, the Obama of New York City who is carrying out former billionaire Mayor Michael Bloomberg’s fourth term, backed down.

Uber vehemently opposed a proposed one-year cap of one percent growth in its drivers (which would have applied to all companies) despite already having more registered cars than all of the city’s yellow-cab companies combined, and in contrast to the hard cap that exists on the number of yellow-cab permits. When not attacking the mayor, Uber’s attacks were concentrated on yellow-cab companies and drivers.

Driving down wages for low-wage taxi drivers

Who are the taxi drivers whom Uber wishes you to believe are privileged and should be subjected to more competition? A New York City yellow cab driver pays the company that owns the cab $100 or more at the start of a 12-hour shift, pays for gas and is subject to consumer regulations. The driver spends the first hours of his or her shift covering these daily expenses. The New York Taxi Workers Alliance summarizes the situation for taxi drivers this way:

“Drivers are earning less and working longer, some days earning below the minimum wage. Right now, after 12-hour shifts, with no overtime pay, taxi drivers make $10-12 an hour in take home pay. More traffic and more cars competing for the same fares will drive incomes deeper into poverty levels. … In its ‘disruption’ playbook, meanwhile, Uber tells drivers to pick up illegally as a way to overwhelm local enforcement and break down regulators, and promises to pay the fines. Drivers desperate for work risk time in jail and for immigrants, loss of naturalized citizenship, while brand Uber claims innovation. Drivers are used and discarded. …

Uber seeks to decimate the regulated taxi industry and replace it with a transportation monopoly of no consumer protections and no full-time work for drivers. For Uber, drivers aren’t just Independent Contractors, they, quite frankly, are not workers at all. Why tip, or require commercial insurance or registration, or comply under federal or state transportation or labor laws when this is ‘just a side thing.’ Low Uber fares — when they are not price surging — are aimed at out-competing taxis and justified by calling the income supplemental. Taxis aren’t the only target, as they also aim their sights on dismantling public transportation, by proclaiming to be cheaper than buses in Chicago and LA and faster than an ambulance. If they gain a monopoly, the purpose of low fares will have been served and price surging will be the norm.”

The “disruption” or “innovation” that this promises is the Wal-Martization of transportation. In fact, the corporate law firm that Wal-Mart Stores Inc. used to successfully defeat a discrimination class action (Wal-Mart v. Dukes) by women employees, Gibson, Dunn & Crutcher, has been hired by Uber to fight its California drivers who say they are improperly classified as independent contractors instead of as employees. Not exactly the defender of working-class drivers Uber claims to be in its propaganda.

A San Francisco federal judge and the California Labor Commission separately ruled earlier this year that Uber drivers are employees, rulings the company continues to contest. But when it was sued for alleged text spamming, Uber claimed the messages were legal because they were hiring solicitations. But how can Uber “recruit” if it is nothing more than a software provider as it claims?

The degradation of working conditions through the “sharing economy” is of course not limited to one company. A provider of home-cleaning services, Homejoy, has closed itself rather than contest lawsuits seeking to have its “independent contractors” be re-classified as employees. Grocery-delivery service Instacart and courier Shyp have reclassified some of their workers as employees in the face of lawsuits.

A lottery economy facilitates inequality

The founders of these companies and the speculators who sink millions into them hope to be the winners in what has become a lottery economy. Only a minuscule percentage of inventions become commercially successful — a director of public affairs for the U.S. Patent & Trademark Office said a decade ago that 99.8 percent of issued patents are not commercially viable. A small number of those commercially viable ideas are worth millions or billions to its creators. This is similar to the art world, where a minuscule number of artists sell works for millions while the overwhelming majority of artists earn little or nothing.

But are the entrepreneurs who win the lottery really worth so much more than everybody else? None of these corporate lottery winners created their successful company on their own. There are engineers who design the product’s physical form, assembly-line workers who assemble the product and advertising agencies that create the demand for the product. Then there is the social structure that enabled the millionaire to become wealthy through an invention or the creation of a popular product or through rising to the top of a large corporation or simply through being a popular entertainer or athlete (although most inherited their money through luck of birth).

The mythology of the solo genius justifies massive inequality because the “solo genius” single-handedly created a popular product and thus single-handedly brought prosperity upon the land. For such selfless services, the solo genius must be compensated with fantastic wealth. But why should Facebook founder Mark Zuckerberg amass $18 billion and so many others get nothing? Why should Apple Inc. accumulate unprecedented wealth while conditions in the sweatshops that produce its gadgets are sufficiently grim to cause a wave of suicides?

Why should those who stand to make gigantic fortunes from whatever “sharing economy” enterprise is the one that wins the lottery make fortunes on the backs of working people struggling to survive?

At the end of the day, what computers and apps do is shift consumer spending from one merchant to another. The rider who uses an Uber black car is substituting that service for a taxi; the shopper who buys online is substituting for a local store. Just as Wal-Mart seeks to monopolize low-end retail, thereby sending money into the bulging wallets of the multi-billionaire Walton family instead of re-circulating the money through local spending, “sharing economy” enterprises are seeking to vacuum up as much money as possible, with speculators salivating over the potential profits.

Billionaire Silicon Valley libertarians are attempting to become wealthier at the expense of working people. That’s not disruption, that’s capitalism as usual.

Building workplace organizations anew

Workplace solidarity in the face of the neoliberal onslaught is as crucial as ever, yet present-day unions become ever more fearful. How do we build solidarity in an era when the tools of the past have lost their effectiveness?

New types of organizations are not only necessary, it is essential to look at past upsurges in union activity, particularly those of the 1930s, with clear eyes rather than romanticization, argues Staughton Lynd in Solidarity Unionism: Rebuilding the Labor Movement from Below.* A new re-issue and updating of a classic work, the book has lost none of its timeliness. Critical to understanding how unions lost their way, becoming too cozy with the corporate managements they are supposed to challenge, is the stifling of rank-and-file activity, particularly of militant tactics, by Congress of Industrial Organization (CIO) unions in the 1930s.

Self-activity from below in the mid-1930s catalyzed a big upsurge in union membership; solidarity through striking was a critical component. When the National Labor Relations Act, also known as the Wagner Act, was moving toward enactment in the 1930s, the American Civil Liberties Union and the Industrial Workers of the World (IWW) opposed it because they foresaw the National Labor Relations Board that would be formed to arbitrate disputes would hinder the right to strike. The board would inevitably aid capital, not labor, they believed.

Solidarity Unionism coverThe Wagner Act was passed, the board came to be, and although specific decisions have favored one side or the other at different times, those fears have come to pass. Mr. Lynd argues that the CIO opposed and suppressed rank-and-file and independent activity, opposed an independent labor political party and agreed to no-strike clauses that would be in force the entirely of contracts, thereby handing all power to company management. And although Mr. Lynd doesn’t discuss it, many of the gains that were achieved in the Wagner Act were taken back a decade later with the passage of the Taft-Hartley Act, which further restricted union activity, including prohibiting sympathy strikes, a serious blow to solidarity.

In U.S. labor mythology, the CIO is the “radical” union umbrella organization, infusing new life into Great Depression organizing after the slow pace of unionization under the guidance of American Federation of Labor (AFL) unions. But CIO contracts ceded decision-making to management in all aspects of operations from the start, while union leaders promoted themselves as guarantors of labor peace. Going back to the CIO of 1936 or 1945 is useless, Mr. Lynd argues, because it set out to suppress independent activity from the start.

Democracy is the essential ingredient

Interestingly, he also argues that the dues-checkoff system is another factor contributing to the undemocratic and collaborationist tendencies of unions, because it makes union leaderships unaccountable to the rank-and-file. New worker organizations must be democratic to have any chance of being effective. Building new labor organizations of a different kind, that demonstrate their usefulness in responding to problems, is the way forward. Mr. Lynd writes that democracy is the starting point:

“Trade unions are among the most undemocratic institutions in the United States. Far from prefiguring a new society, they are institutional dinosaurs, resembling nothing so much as the corporations we are striving to replace. … Democracy means, at a minimum, the freedom to criticize frankly and fully. Union bureaucrats have a tendency to view criticism as treason. But rank-and-file members must be able to criticize, not just the policies of incumbent union officers, but the structural shortcomings of the labor movement. For instance, CIO contracts have always contained no-strike and management-prerogative clauses, but if we think (as I do) that these clauses are wrong and should be abolished, we should be free to say so.” [page 21]

From such democracy arise the conditions to begin moving toward a better world, instead of the defensive retreats of recent decades.

“Working people believe in solidarity, not because they are better than other people, but because the power of the boss forces workers to reach out to each other for help. Because of the vision and practice of solidarity, the labor movement with all its shortcomings does prefigure a new kind of society within the shell of the old. And by building organizations based on solidarity, rather than on bureaucratic chain-of-command, we build organizations that by their very existence help to bring a new kind of society into being.” [page 24]

The author gives three local examples from the area around Youngstown, Ohio. One was a solidarity club consisting of workers from several unions that organized united actions in defense of strikers and other workers facing layoffs or other unfair labor practices; one was a group of retirees that defended pension benefits, especially since, as retirees, they were not allowed to vote on contract changes; and the third organized in defense of workers suffering health problems due to working with toxic chemicals.

Solidarity, not bureaucracy

Although each of these three groups won victories, the author acknowledges that they did not have far-reaching impacts. They did, however, demonstrate what is possible with different kinds of labor organizations that are democratic and based on direct action. Mr. Lynd writes:

“I want to suggest that trade unions as they now exist in the United States are structurally incapable of changing the corporate economy, so that simply electing new officers to head these organizations will not solve our problems. I argue that the internationalization of capital, far from proving that such centralized unions are needed more than ever, has, on the contrary, demonstrated their impotence and the need for something qualitatively new.” [page 47]

Putting life into the concept of “an injury to one is an injury to all” by striking on behalf of workers in other enterprises in one form of this necessary solidarity. Shop-floor committees that organize around grievances and problems rather than negotiating contracts and that use direct action, even in opposition to their union leaders, and “parallel central labor bodies” that organize workers in a geographic region, across industries, are two alternative forms the author advocates. As an example, he recounts a 1916 incident where the 2,000 workers of a factory walked out when an organizer was dismissed; within a couple of days, 36,000 workers across the region walked out in an organized show of strength.

Militancy is what is needed:

“The critical analytical error … of established unions about their current crisis is the assumption that labor and management have the same or mutually consistent interests. … It is the assumption that underlies business unionism, because it induces trade unions to leave investment decisions to management while directing their own attention to wages, hours, and working conditions, and to surrender the right to strike (for the duration of the collective bargaining agreements) in the belief that workers no longer need the strike to protect their day-to-day interests.” [page 78]

By ceding all decision-making to capitalists, negotiating over wages, hours and working conditions will always be defensive because unions are bargaining the extent of their members’ exploitation and can do nothing more. Staughton Lynd has given us a concise guide to thinking about workplace organization differently. (At barely a hundred pages in compact form, I was able to read Solidarity Unionism in a single evening.)

And once we realize we don’t need capitalists to make decisions for us, and learn to organize collective self-defense, getting rid of bosses and running enterprises ourselves enters our imagination.

* Staughton Lynd, Solidarity Unionism: Rebuilding the Labor Movement from Below [PM Press, Oakland, California, USA 2015]

Real unemployment is double the ‘official’ unemployment rate

How many people are really out of work? The answer is surprisingly difficult to ascertain. For reasons that are likely ideological at least in part, official unemployment figures greatly under-report the true number of people lacking necessary full-time work.

That the “reserve army of labor” is quite large goes a long way toward explaining the persistence of stagnant wages in an era of increasing productivity.

How large? Across North America, Europe and Australia, the real unemployment rate is approximately double the “official” unemployment rate.

The “official” unemployment rate in the United States, for example, was 5.5 percent for February 2015. That is the figure that is widely reported. But the U.S. Bureau of Labor Statistics keeps track of various other unemployment rates, the most pertinent being its “U-6” figure. The U-6 unemployment rate includes all who are counted as unemployed in the “official” rate, plus discouraged workers, the total of those employed part time but not able to secure full-time work and all persons marginally attached to the labor force (those who wish to work but have given up). The actual U.S. unemployment rate for February 2015, therefore, is 11 percent.

Share of wages, 1950-2014Canada makes it much more difficult to know its real unemployment rate. The official Canadian unemployment rate for February was 6.8 percent, a slight increase from January that Statistics Canada attributes to “more people search[ing] for work.” The official measurement in Canada, as in the U.S., European Union and Australia, mirrors the official standard for measuring employment defined by the International Labour Organization — those not working at all and who are “actively looking for work.” (The ILO is an agency of the United Nations.)

Statistics Canada’s closest measure toward counting full unemployment is its R8 statistic, but the R8 counts people in part-time work, including those wanting full-time work, as “full-time equivalents,” thus underestimating the number of under-employed by hundreds of thousands, according to an analysis by The Globe and Mail. There are further hundreds of thousands not counted because they do not meet the criteria for “looking for work.” Thus The Globe and Mail analysis estimates Canada’s real unemployment rate for 2012 was 14.2 percent rather than the official 7.2 percent. Thus Canada’s true current unemployment rate today is likely about 14 percent.

Everywhere you look, more are out of work

The gap is nearly as large in Europe as in North America. The official European Union unemployment rate was 9.8 percent in January 2015. The European Union’s Eurostat service requires some digging to find out the actual unemployment rate, requiring adding up different parameters. Under-employed workers and discouraged workers comprise four percent of the E.U. workforce each, and if we add the one percent of those seeking work but not immediately available, that pushes the actual unemployment rate to about 19 percent.

The same pattern holds for Australia. The Australia Bureau of Statistics revealed that its measure of “extended labour force under-utilisation” — this includes “discouraged” jobseekers, the “underemployed” and those who want to start work within a month, but cannot begin immediately — was 13.1 percent in August 2012 (the latest for which I can find), in contrast to the “official,” and far more widely reported, unemployment rate of five percent at the time.

Concomitant with these sobering statistics is the length of time people are out of work. In the European Union, for example, the long-term unemployment rate — defined as the number of people out of work for at least 12 months — doubled from 2008 to 2013. The number of U.S. workers unemployed for six months or longer more than tripled from 2007 to 2013.

Thanks to the specter of chronic high unemployment, and capitalists’ ability to transfer jobs overseas as “free trade” rules become more draconian, it comes as little surprise that the share of gross domestic income going to wages has declined steadily. In the U.S., the share has declined from 51.5 percent in 1970 to about 42 percent. But even that decline likely understates the amount of compensation going to working people because almost all gains in recent decades has gone to the top one percent.

Around the world, worker productivity has risen over the past four decades while wages have been nearly flat. Simply put, we’d all be making much more money if wages had merely kept pace with increased productivity.

Insecure work is the global norm

The increased ability of capital to move at will around the world has done much to exacerbate these trends. The desire of capitalists to depress wages to buoy profitability is a driving force behind their push for governments to adopt “free trade” deals that accelerate the movement of production to low-wage, regulation-free countries. On a global basis, those with steady employment are actually a minority of the world’s workers.

Using International Labour Organization figures as a starting point, professors John Bellamy Foster and Robert McChesney calculate that the “global reserve army of labor” — workers who are underemployed, unemployed or “vulnerably employed” (including informal workers) — totals 2.4 billion. In contrast, the world’s wage workers total 1.4 billion — far less! Writing in their book The Endless Crisis: How Monopoly-Finance Capital Produces Stagnation and Upheaval from the USA to China, they write:

“It is the existence of a reserve army that in its maximum extent is more than 70 percent larger than the active labor army that serves to restrain wages globally, and particularly in poorer countries. Indeed, most of this reserve army is located in the underdeveloped countries of the world, though its growth can be seen today in the rich countries as well.” [page 145]

The earliest countries that adopted capitalism could “export” their “excess” population though mass emigration. From 1820 to 1915, Professors Foster and McChesney write, more than 50 million people left Europe for the “new world.” But there are no longer such places for developing countries to send the people for whom capitalism at home can not supply employment. Not even a seven percent growth rate for 50 years across the entire global South could absorb more than a third of the peasantry leaving the countryside for cities, they write. Such a sustained growth rate is extremely unlikely.

As with the growing environmental crisis, these mounting economic problems are functions of the need for ceaseless growth. Once again, infinite growth is not possible on a finite planet, especially one that is approaching its limits. Worse, to keep the system functioning at all, the planned obsolescence of consumer products necessary to continually stimulate household spending accelerates the exploitation of natural resources at unsustainable rates and all this unnecessary consumption produces pollution increasingly stressing the environment.

Humanity is currently consuming the equivalent of one and a half earths, according to the non-profit group Global Footprint Network. A separate report by WWF–World Wide Fund For Nature in collaboration with the Zoological Society of London and Global Footprint Network, calculates that the Middle East/Central Asia, Asia-Pacific, North America and European Union regions are each consuming about double their regional biocapacity.

We have only one Earth. And that one Earth is in the grips of a system that takes at a pace that, unless reversed, will leave it a wrecked hulk while throwing ever more people into poverty and immiseration. That this can go on indefinitely is the biggest fantasy.

Higher taxes lead to more jobs

Make it harder for people to retain a job, and fewer people will. Adequate pay that makes a job worthwhile is one factor, but frequently overlooked are support structures that facilitate employment.

Contrary to orthodox economic ideology, punishing people does not increase employment.

Countries that provide more subsidies toward services that are complementary to work — such as child care, elder care and transportation — have higher workforce participation rates. This shouldn’t be surprising as we don’t leave the rest of our lives behind when we go to our jobs, however much bosses insist we should. Such a finding can only be controversial in a world dominated by ideologies that insist that conditions be made as harsh as possible to “force” people to work.

Alas, such a world is the one most of us live in, particularly in the English-speaking advanced capitalist countries. I have often noticed that the thinking of middle-class conservatives often boils down to “I had to suffer, so everybody else should have to suffer.” I’ve heard words to this effect from many conservatives. Although people who have enunciated that to me often are people who did indeed work hard to rise from modest circumstances, the reductionist hyper-individualism it reflects is blind to the social solidarity necessary for society to function.

Moving up the vertical scale represents higher rates of employment; moving left on the scale represents higher effective tax rates. (Graphic by Henrik Jacobsen Kleven)

Moving up the vertical scale represents higher rates of employment; moving left on the scale represents higher effective tax rates. (Graphic by Henrik Jacobsen Kleven)

More subsidies lead to a higher percentage of working-age people holding regular employment, and these subsidies are possible through higher taxation. Contrary to orthodox economics, higher rates of taxation lead to more employment. This is the conclusion of a study by Henrik Jacobsen Kleven, “How Can Scandinavians Tax So Much?” Professor Kleven, a professor at the London School of Economics, compared Denmark, Norway and Sweden with other OECD (Organisation for Economic Co-operation and Development) countries (a club of the world’s advanced capitalist and some of the largest developing countries) and found strong correlations between taxation rates and workforce participation.

More social services, more employment

Plotted on a graph, there is a steady progression of countries with higher “participation tax rates” having greater percentages of their population employed. This pattern, not surprisingly, is even stronger for women than men. The author defines a country’s “participation tax rate” as the average effective tax rate when including all income and consumption taxes, and public benefits. This rate is far higher in Denmark, Norway and Sweden than it is in, inter alia, the United States, Japan or Britain. Professor Kleven writes:

“[T]he Scandinavian countries spend relatively large amounts on means-tested transfer programs that create implicit taxes on working and therefore reinforce the distortions coming from the tax system. On the other hand, these countries also spend relatively large amounts on the public provision and subsidization of goods that are complementary to working, including child care, elderly care, and transportation. Such policies represent subsidies to the costs of market work, which encourage labor supply and make taxes less distortionary. Furthermore, Scandinavian countries spend heavily on education, which is complementary to long-run labor supply.” [page 7, citations omitted]

Denmark, Norway and Sweden also have unusually low rates of tax avoidance. Professor Kleven writes that systematic third-party reporting is “crucial” to minimizing tax avoidance. (If your income is reported, it is very difficult to avoid paying taxes on it.) The three countries also have a broad tax base and Denmark in particular allows very few deductions and exceptions.

The United States, in contrast, has a complicated tax system riddled with loopholes. U.S. tax policy for low-income workers centers on the Earned Income Tax Credit (EITC), yet the Scandinavian countries have higher rates of workplace participation without such tax deductions. Because child care subsidies act as a subsidy to labor participation, Professor Kleven argues, those countries have no need for a U.S.-style income tax credit.

Although the author recoils somewhat from his own conclusions at the end of his paper, he does earlier write:

“[E]empirical and theoretical arguments above suggest that public spending on work complements such as child care, preschool, and elder care allows for a more efficient provision of low-income support and at the same time weakens the argument for low participation tax rates at the bottom of the distribution through an EITC. In this sense, it is conceivable that Scandinavian countries (with their large subsidies to work complements and no EITC) got it right, while the US (with its small subsidies to work complements and a large EITC) got it wrong.”

More health care earlier, better jobs later

Perhaps imposing ever harsher conditions on working people makes for a weaker economy? It would seem that several years of punishing austerity has not exactly brought prosperity to the world. Another study daring to offer heterodox economic ideas, just released by the National Bureau of Economic Research, calculates that spending by the U.S. government on child health care through the Medicaid insurance program likely will pay for itself by the end of a recipient’s adult working career.

Providing health care ought to be a human right; it is something that should be provided as a matter of basic humanity to enable better lives. In the U.S., of course, such is not the case; health care there is a privilege reserved for those with full-time employment that provides benefits or for those who can afford it. But, in raw economic terms, Medicaid for children may be cost-free over the long term.

This study, “Medicaid as an Investment in Children: What is the Long-Term Impact on Tax Receipts?,” prepared by Amanda E. Kowalski of Yale University and two economists with the U.S. Treasury Department, David W. Brown and Ithai Z. Lurie, found that children who were Medicaid recipients as adults earn more money on average and thus pay more in taxes than those who did not receive that benefit. These cohorts were followed until age 28, but, projecting the results over a full working career, the authors estimate that the extra taxes accruing to the federal government will amount to 56 cents for every Medicaid dollar. That is virtually identical to the 57 cents that the federal government pays out of every Medicaid dollar.

Professor Kowalski, in summarizing the study, said:

“Although it will take years to know the long-term impact of current expansions of Medicaid undertaken as part of the Affordable Care Act, this study shows that the investments that the government made in Medicaid in the 1980s and 1990s are paying off in the form of higher tax payments now.”

The study did not take into account the extra tax money paid to state and local governments, nor benefits from decreases in mortality and increases in college attendance. If all factors could be calculated over a lifetime, it is conceivable that Medicaid for children will actually be a direct financial benefit. Such a crass calculation shouldn’t be necessary, but the U.S. health care system exists to provide corporate profits rather than provide health care, which is why U.S. spends much more on health care than other countries while achieving inferior results.

A society that provides the infrastructure for a productive, balanced life, as opposed to one that imposes grim struggles to survive, is a healthy society. We are, after all, a social species, something that the ever more propagandized individualist ideology of capitalism seeks to erase.

Labor rights respected nowhere on Earth

If labor rights were a test, the entire world would flunk. Basic labor rights are under sustained assault, but just how badly is quantified in a just released report by the International Trade Union Confederation in which every country scored below 50 percent.

To better summarize these results, the ITUC grouped the world’s countries into five rankings, with a ranking of one signifying the countries with the (relatively) best conditions for working people and a ranking of five signifying those with the most repressive conditions. Most of those countries with a ranking of one were in the European Union, but this group also included Togo and Uruguay. Those with a ranking of five include some of the world’s most repressive countries, including China and Saudi Arabia, but also Greece, Turkey and South Korea. The United States has a ranking of four. So much for the home of the free.

The ITUC describes itself as “a confederation of national trade union centres” that includes 325 affiliated organizations in 161 countries and territories. Its Global Rights Index summarizes data on the abuse of trade union rights around the world. The report’s introduction states:

“The increase in precarious employment relationships has further deepened the vulnerability of workers to discrimination at the workplace. Governments in the vast majority of countries have been convinced to alter their labour legislation to encourage various forms of precarious work. In virtually all countries, temporary work, agency work, subcontracting and other types of informal work are expanding rapidly. Given their unstable employment situation and the high risk of dismissal, precarious workers are discouraged from joining unions and being covered by collective bargaining. This means that workers in precarious forms of employment do not have the necessary support to improve their work situation.”

The report collects information on each country for 97 indicators derived from International Labour Organization standards. These indicators relate to one of five categories: Fundamental civil liberties; the right to establish or join unions; trade union activities; the right to collective bargaining; and the right to strike. It assigns a simple yes or no to each of the 97 questions rather than a more gradated system to eliminate any potential bias and because each is a “universally binding obligation” that all countries should respect.

Therefore, 97 is the highest possible score for any country. The highest score attained, however, was 43. The lowest was zero. Therefore, the study grouped the world’s countries into the five rankings, with each ranking containing roughly one-fifth of the total. The ITUC’s map of workers’ rights is below, with the brightest yellow those countries with a ranking of one (those with the most respect for rights) and the deepest orange and red those with a ranking of five (those with the least respect for rights).

ITUC map of workers' rights

ITUC map of workers’ rights

Countries with a ranking of four, such as the United States, Honduras, Indonesia and Kuwait, “have reported systematic violations. The government and/or companies are engaged in serious efforts to crush the collective voice of workers putting fundamental rights under continuous threat.” Only somewhat better are those with a ranking of three, such as Australia, Canada, Singapore and the United Kingdom, where “Government and/or companies are regularly interfering in collective labour rights or are failing to fully guarantee important aspects of these rights. There are deficiencies in laws and/or certain practices which make frequent violations possible.”

Those conditions are reflected in the dwindling number of strikes. During the 1970s, an average of During the 1970s, an average of 289 work stoppages involving 1,000 or more workers took place annually in the United States. In 2009, there were no more than five. Lockouts, in which management bars employees from working, have become more common, reaching record levels this decade.

That is a worldwide phenomenon, of course, in no way limited to any one country, including the one imposes its will on the rest of the world through a misguided ideology of “exceptionalism.” The ITUC notes in its report:

“[W]orkers are struggling everywhere for their right to collective representation and decent work deficits exist in varying degrees in most countries. Abuses of rights are getting worse not better and too many countries take no responsibility for protecting workers rights in a national context or through corporate supply chains. Based on reports from affiliates, workers in at least 53 countries have either been dismissed or suspended from their jobs for attempting to negotiate better working conditions. In the vast majority of these cases the national legislation offered either no protection or did not provide dissuasive sanctions in order to hold abusive employers accountable. Indeed, employers and governments are complicit in silencing workers’ voices against exploitation.”

A continuing race to the bottom is all that is on offer. Capitalists are well organized, across borders. Working people had better do the same.

Scapegoating the unemployed for being at the mercy of a global phenomenon

People are out of work longer and the jobs that become available pay less. These developments of the past several years of economic downturn are not your imagination, no matter how many times individualist ideology is invoked to falsely point fingers at the “downsized.”

A flurry of studies and papers demonstrate these patterns are found across the mature capitalist economies. The latest of these, “The Low-Wage Recovery” issued by the National Employment Law Project, found that nearly half of the jobs created in the United States since unemployment peaked in February 2010 are low-wage jobs.

March against inflation and unemployment, Chicago 1973 (Photo by John H. White)

March against inflation and unemployment, Chicago 1973 (Photo by John H. White)

Two million more low-wage jobs, defined as those paying $13.33 per hour or less, have been created in the past four years than were lost between January 2008 and February 2010. By contrast, the deficit in jobs paying more is about two million. Although the number of jobs in the U.S. has rebounded to what it was at the end of 2007, that means more people are unemployed since the population has grown. The Employment Project’s breakdown:

• Lower-wage industries ($9.48 per hour to $13.33) constituted 22 percent of the 2008-2010 losses, but 44 percent of jobs gained since then.
• Mid-wage industries ($13.73 to $20.00) constituted 37 percent of the 2008-2010 losses, but 26 percent of jobs gained since then.
• Higher-wage industries ($20.03 to $32.62) constituted 41 percent of the 2008-2010 losses, but 30 percent of jobs gained since then.

The National Employment Law Project notes that:

“Job growth is still heavily concentrated in lower-wage industries. As a result of unbalanced employment growth, the types of jobs available to unemployed workers, new labor market entrants, and individuals looking to move up the career ladder are distinctly different today than they were prior to the recession.”

More people are out of work for longer periods

At the same time, the Economic Policy Institute reports, the number of long-term unemployed in the United States has risen sharply. This is true for all age, education, occupation, industry, gender, and racial and ethnic groups. The author of the EPI report, Heidi Shierholz, wrote:

“Today’s long-term unemployment crisis is not at all confined to unlucky or inflexible workers who happen to be looking for work in specific occupations or industries where jobs aren’t available. Long-term unemployment is elevated in every group, in every occupation, in every industry, at all levels of education.”

The overall rate of those who were unemployed for six months or longer in 2013 was 3.4 times the rate in 2007. There is little variation in this ratio based on educational attainment. In fact, the two categories of “some college” and holders of four-year college degrees showed the highest increases in long-term unemployment. That pattern has been persistent, rendering nonsense the frequent claims of right-wing economists and those intellectually dependent on them that higher or longer-term unemployment is a result of a supposed “mismatch” between worker skills and job requirements.

The picture is not different when we look at other countries. In Canada, the number of people who have been unemployed for 27 to 51 weeks, although down from its peak, is nonetheless close to double what it was in 2008. The number of Canadians who today have been out of work for at least one year is more than double those in the same position in 2008.

In the European Union, where total unemployment has barely declined from its 2013 peak, the number of long-term unemployed has yet to retreat. The long-term unemployment rate, defined by the European Commission as those out of work 12 months or longer, was about two-thirds higher in the third quarter of 2013 than it was in the first quarter of 2009. (The third quarter of 2013 is the latest for which figures are available.) The commission reports that:

“[O]ver the last five years, full-time employment has decreased dramatically — by 9.8 million (–5.4%). On the other hand, at EU aggregate level, the number of employees working part-time has grown by 1.2% (or 480,000 part-timers) in the year to 2013 Q3. There has been steady growth in this type of work in recent years, with 2.9 million more part-time jobs since the third quarter of 2008, a rise of 7.8%. Consequently, the share of part-time workers (of total EU employees) has risen consistently in recent years, reaching 19.3% in the third quarter of 2013.”

Less work, and less of it for those who do have it. The E.U.’s unemployment rate of 10.8 percent climbs to almost 20 percent when the underemployed and discouraged are added to the officially unemployed.

So it is elsewhere. The percentage of Australians unemployed for more than 52 weeks constituted 21 percent of the country’s unemployed in February 2014, in comparison to 13 percent in February 2009. Similarly, New Zealand’s long-term unemployed have more than doubled since 2009.

The race to the bottom

What we have here is something much bigger than any individual or single country. Market forces are at work, which undergirds the “race to the bottom” capitalism has foisted on the world. It is demand that creates jobs and if wages are declining and more are unemployed, demand will naturally decline, leaving less incentive to hire. Eventually, corporate profit margins will be squeezed, with the result that production is moved to locations with ever lower wage, safety and environmental standards.

(Graphic by the Economic Policy Institute)

(Graphic by the Economic Policy Institute)

Although the future will see occasional periods of growth, with temporary rises in employment and wages, the trend toward more austerity, lower wages and more inequality — concomitant with increasing concentration of power in corporate hands as more money leads to more coercive power over governments — is not only firmly in place but accelerating. This is the inevitable result of allowing “market forces” to make ever more social decisions.

Market forces are nothing more than the aggregate interests of the most powerful industrialists and financiers. Blaming sacked employees for being caught in this flow as lacking adequate personal characteristics is not simply an abuse of individualist ideology but is scapegoating.

Capitalism is a system that produces for the private profit of a few by paying employees far less than the value of what they produce. Meeting human need, when it does occur, is an accident of this system. The only long-term escape is the imposition of a different system designed to meet human needs that provides work for all who need it under democratic control.

Ask yourself: Why is is that massive numbers of people are unemployed at the same time that factories and offices sit empty in large numbers? Is it really true that a system that produces such results is the best the world can do?