The War On The Working Class

For years, America has been treated to a steady attack on poor people. When bad things happened over hill and dell, you could bet that poor people were the cause. White poor people in Appalachia, brown poor people in the Southwest, and black poor people everywhere; where there was crime, despair, or peeling picket fences, there was poor people. Poor people, it seemed, were poor because they didn’t like work. Poor people were poor because they were lazy. As with many arguments, there were, and are, nuggets of truth to the claims. Some percentage of the poor, perhaps even a significant percentage, were and are lazy. But much of the focus on the poor was of a political nature.

Democrats, starting in the 1960’s, began to specialize in getting the poor vote. Republicans, beginning with the Reagan Democrats in 1980, started drafting working class Americans to vote against programs perceived as catering to the poor. Class division, after all, is such a wonderful tool for creating electoral momentum. But we have moved past the poor in today’s America. Much of the architecture set up to ensure help for the poor has fallen by the wayside; even our education system is being pushed out of relevance. Nowadays, the political powers that be have picked out a new target; the working class.

During the fall of 2008 and the implosion of General Motors, Wall Street interests were eager to point to unions as the reason for the firm’s failure. The $15 billion owed to GM unions was propped up and shot at; with no mention of the $28 billion in bonds coming due (all the result of horrendous management decisions). Unions, and union wages have become the targets du jour of the media and politicians from both parties. From my own experience, I can concur that many unions protect workers who are lazy from action that most employers could take unilaterally. But unions, on a generalized basis, get the work done, and done well. They are nothing more or less than a market force that businesses should have to deal with. In a world, however, where doctors and lawyers command six figure salaries just for finishing school, a $50,000 union job with a pension and health care is looked on with derision.

Why is that? Why have we come to a point where a good salary, health benefits, and retirement security are a negative? GM employees were slammed by Fox News because, as they said, someone could be 50 and paid a full wage not to work. When did an employee, starting work at 18, working for a full 30 years, and receiving a pension become an evil? It used to be the American Dream. The common justification for these assaults is that jobs are moving overseas. But the fact is that non-union jobs are leaving just as fast as the union jobs. We live in a world were global supply chain strategies have made it cheaper to ship from countries were the average wage is  less than 1% of that found in non-union American jobs. Busting unions and attacking high wage labor jobs will not change that economic reality.

Our nation’s median household income is about $52,000 per year. More than 56 million households make do on less than $52,000 per year, and those households are now under attack from fools who think that votes should be tied to tax contributions. Those households are under attack from people pushing for a flat tax (or sales tax) that would destroy their discretionary income. Those households are under attack from the same people who spent years attacking the poor. Complaints about Obama’s tax proposals began before he took office, and they were focused on his definition of a middle-class tax cut (affecting households under $250,000). Only 20% of American households bring in at least $100,000 per year. The notion that a household making between $100,000 and $250,000 per year is middle class is an insult to some, and certainly not supportable by the statistics.

The myth of today’s politics, a myth supported by both Republicans and Democrats, is that wealth is created by business, and in particular, Wall Street. Hogwash! Wealth is created by consumers and producers acting together in a marketplace. This current focus on the supply side alone is just as counterproductive as any focus on the demand side alone would be. Normal working folks must be able to exercise their voices in the marketplace to push for wages. Normal working people need to have  tax rates that allow for discretionary spending (that drives the economy) and retirement savings (that preserves the economy).

We have spent 30 years driving down the tax rate for business and high-income households; is our economy better now than it was in 1980? We have spent thirty years busting unions, dropping trade barriers, and thrashing regulation; is our industrial economy better off now? During the eight years of the Bush Administration, the Republicans rolled back tax enforcement, forced the largest tax cut in history through the Congress via reconciliation, and trashed the regulatory structures of the federal government. But if you are the owner of a business doing less than $1,000,000 in annual revenues, you would be hard pressed to notice a difference in your operation. Where was the focus on small business? A supply side focus on smaller business makes some economic sense in a globalized world, because those businesses are likely to keep their operations local. The corporate tax savings of the first decade went into corporate coffers; there was no trickle-down to American workers whose inflation-adjusted wage stayed flat.

I make no call, in this space, for a war on big business or high wage individuals. Many elements of the left’s attacks, such as those on CEO pay or proposals to limit trade are ridiculous. But the composition of tax policy must account for discretionary totals, not simply the gross. The infrastructure of our nation must be considered in considerations of spending. The education of American children must not fall to the back of the line. Elements under attack in today’s America like The New Deal, unions, and the progressive income tax are inextricably linked to America’s dominance of the 20th Century. It seems dubious to now abandon them for policies that favor an elite few at the top of a crumbling structure.

The Rational Middle is listening…

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