Still Free

Yeah, Mr. Smiley. Made it through the entire Trump presidency without being enslaved. Imagine that.

Sunday, December 04, 2011

The Decline of the American Middle Class

Back in August of this year I discussed the economic reality that is facing the US middle class:

Well right across the Pacific is this country with a middle class population that is as large as the entire population of the United States. Let me say that again: There is a country with a middle class population as large as the entire population of the United States. Oh, and that population is growing. There's another country on the Indian sub-continent with a huge population of bright people who are like this other country is growing it's middle class at a fast rate. If you are a company looking to grow and profit would you be looking to America or looking to these places? Don't think too hard now.


Furthermore:

As discussed earlier the race to the bottom is creeping into the middle class as occupations that require expensive college educations that commanded high 5 and 6 figure salaries can be (and are being) sent to anyone with a fast internet connection and a PC. They will gladly do for $20k, if that much, what you ask $100k for. You do the math.


You'll note from the original entry that I did not quote any primary sources. I had simply looked at the facts on the ground and wrote my analysis. Now let us look at what Alan NasserProfessor Emeritus of Political Economy at The Evergreen State College in Olympia, Washington. has to say on the very same subject.

Here he is quoting one of Obama's advisors Jeffrey Immelt:

“Today we go to Brazil, we go to China, we go to India, because that’s where the customers are.” My goodness, this looks like the Leninist thing about the insufficiency of domestic markets to absorb the economy’s output. The US worker is not only becoming decreasingly important as an input to production, (s)he is no longer seen by big capital as the most promising customer, the most robust source of sales revenue.


Here he is quoting a Wall Street [type] executive:

A US-based CEO of one of the world’s largest hedge funds told a writer for The Atlantic that “the hollowing out of the American middle class didn’t really matter.” The CEO described the subject of an executive discussion earlier this year: “… if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade.”


Some more from a CEO in the internet business, you know, the ones who trade "free social networking" websites and programs for access to your private information to sell to his (or her) actual customers:

The Chief Financial Officer of a US internet company expresses the same sentiment: “We demand a higher paycheck than the rest of the world. So if you’re going to demand 10 times the paycheck, you need to deliver 10 times the value. It sounds harsh, but maybe people in the middle class need to decide to take a pay cut.”


There it is in black and white people. You, the 99% are overpaid for the work that you do. Remember that these are the type of people who are bankrolling the major candidates for President of the United States as well as those members in congress. Do you think they are backing and paying for candidates who think you are "underpaid"?

And do note that they are not of the opinion that somehow the retail prices for goods and services ought to drop in tandem with the drop in salaries.

Let's look at some more:

Thomas Wilson, CEO of Allstate, is unabashedly frank about the way in which globalization generates an opposition between working-class and business interests: “I can get [workers] anywhere in the world. It is a problem for America, but it is not necessarily a problem for American business… American businesses will adapt.”


So all the big execs know that the American middle class is screwed and they are planning on who they can sell to instead. Of importance, this statement shows that the exec is of the opinion that the US ought to resemble the markets of current "developing" nations where there are wide disparities in income and wealth. Where if you have the connections and money to sell overseas you do so and you exploit your home labour force as much as possible to maximize profits. This is noted in our next quote:

We can call this the Third-Worldization of the Rest, or, if we focus on the wage-earners of the developed countries, the creeping obsolescence of the working class. Workers can of course never be rendered entirely obsolete. What is happening is that we are approaching that condition asymptotically. One might object that there are clear limits to how impoverished working people can be made – after all, workers have to be maintained as work-ready. Upward redistribution can only go so far. But ever-widening inequality is perceived by elites as feasible by virtue of the limitless possibilities of greater indebtedness. Workers can make ends meet by indefinitely mortgaging their future income.


This reminds me of an observation I made about I, Robot:

Specifically I was struck by the displacement of humans in many jobs. I, robot takes place in 2035, when yours truly will be in his 60's. at that time it appears that robots are rubbish collectors, babysitters, cooks, janitors even bartenders. My question was, what happened to the people who usually do these jobs?.


Workers are expendable and certain workers will become more and more expendable. I also wrote:

But I think that the movie presents a very very real spectacle as to how the elite in the US view the masses. People without "ends" are expendable and replaceable and hopefully we can make them just disappear.


Is this not what the executives are saying?

This subject of mortgaging the future is also the theme of the recent movie"In Time". There, instead of paying actual wages which people spend in order to live, they are paid in literal time to live. While a worker in our reality may decide not to work because he doesn't feel like it, he is unlikely to decide not to work if his life literally depended on it. In this dystopia, time is literally money. Why waste time with negotiating wages when you can cut the chase. Sounds extreme and scientifically impossible but the point is clear: How much work will we get out of you for as little as we can get away with? Let's go back to the article:


Non-union workers contracted by Ford to do inspection and repairs at the Dearborn truck plant make $10 an hour without benefits, which is projected to be less than the Chinese average by 2015.


So 2015, a scant four years from now, US autoworkers may well face having the same salary prospects as the Chinese, though with nowhere near the same cost of living. I bet they'll still be voting Republican though.

In the end though there will be an equalization among workers around the world as the ultra rich and those who own resources (usually one and the same) will force down the wages and living standards of those in the so called "developed world" while doing all they can to moderate the rise of income in the developing world. They will do this by moving production to wherever the customers and the cheapest labour is to be found. This is why many states in the US do all they can to give "incentives" for businesses to stay or relocate in said states. And oft times these incentives come right out of the tax revenue needed for cities and towns to run their public works. Many don't see the problem until the companies up and leave and leave a huge hole in the state and or city budget and a whole lot of unemployed people. Welcome to the new America. Not too much unlike the old one. Just that white folks are no longer being protected by their richer counterparts.