All part of the plan

Leo Panitch, Interview with The Real News (14 Dec. 2010):

Capitalist globalization has essentially been about capital moving around the globe to land on the backs of newly created working classes around the world–in China, in India, in Brazil, in Ireland. And they’ve been able to get those workers at lower rates of pay. It’s inevitable that the effect of this will be to bring down the rates of pay in the advanced capitalist countries, where through a century of struggles and trade unionization and all the advantages of just being where the strongest capital was located originally, workers were able to raise their standard of living using democratic rights of trade unionism and the right to vote and working-class parties etc. to win higher wages. The effect of what’s going on through globalization now is to drive down, equalize wages everywhere. Now, it’s going to take a very long time (it won’t be easy to do–these are very different cultures) before the wages of a worker in Massachusetts is going to be equal to the wages of workers in Bangladesh. That ain’t about to happen tomorrow. But the trends and the pressures in that direction are there. And what–when you hear that the solution ought to be that China increasingly sells its products, or that GM sells its products to Chinese workers, involves an assumption that Chinese wage workers will be able to lift their wages up and engage in the same kind of race for a standard of living as we’ve had in North America, as if that was ecologically possible, while Canadian and American wages correspondingly fall. That’s the logic of the situation we’re in. And unless we get out of this, we’re in a competitive race to a much, much lower standard of living

Michael Hudson, Interview with The Real News (16 Dec. 2010):

When the government runs into debt, it has to borrow off the banks. They want to scale down government debt in order to scale down government taxes. So it’s part of a one-two punch against the economy, basically. To the deficit commission, a depression is the solution to the problem, not a problem. That’s what they’re trying to bring about, because you need a depression if you’re going to lower wages by 20 percent.
They have the illusion that if you pay labor less, somehow you’re going to make the economy more competitive, and the economy can earn its way out of debts–meaning their employers, the banks and the companies–and make more profits and pay more bonuses and stock options, and somehow their constituency, Wall Street and the corporate economy, will become richer if they can only impoverish the economy.

Joshua Holland, AlterNet (28 Mar. 2011):

Earlier this month, House Republicans laid out a perverse plan to lower working Americans’ wages, supposedly in a bid to get employers to hire more of them (PDF). One would be hard-pressed to find a better example of the “race to the bottom.”as Tim Fernholz and Jim Tankersley wrote in the National Journal, the GOP report “makes the party’s … case that fiscal consolidation (read: spending cuts) can spur immediate economic growth and reduce unemployment.”The paper calls for cuts that are “large, credible, and politically difficult to reverse once made,” and offers a typical conservative fantasy about shuttering entire federal agencies. But topping the list of what should be on the Republicans’ chopping block is “decreasing the number and compensation of government workers,” which the staffers say will spur job creation because “a smaller government workforce increases the available supply of educated, skilled workers for private firms, thus lowering labor costs.”

“Labor costs,” of course mean “wages” – Americans’ paychecks. So, a central plank in the GOP’s economic recovery plan is to flood the market with yet more unemployed people in order to drive wages (which have stagnated for an extended period) further down.

Investors Business Daily (2 Jun. 2011):

Over the past decade, real private-sector wage growth has scraped bottom at 4%, just below the 5% increase from 1929 to 1939, government data show.

To put that in perspective, since the Great Depression, 10-year gains in real private wages had always exceeded 25% with one exception: the period ended in 1982-83, when the jobless rate spiked above 10% and wage gains briefly decelerated to 16%.

Northeastern University Center for Labor Market Studies (May 2011):

Between the second quarter of 2009 and the fourth quarter of 2010, real national income in the U.S. increased by $528 billion. Pre-tax corporate profits by themselves had increased by $464 billion while aggregate real wages and salaries rose by only $7 billion or only .1%. Over this six quarter period, corporate profits captured 88% of the growth in real national income while aggregate wages and salaries accounted for only slightly more than 1% of the growth in real national income. The extraordinarily high share of national income (88%) received by corporate profits was by far the highest in the past five recoveries from national recessions.

This may not be a news flash to most people reading this, but I’ll state it anyway: the US business and financial establishment has everything to gain by inflicting poverty and destitution on the American populace. Higher unemployment means less bargaining power for workers. Less bargaining power for workers means lower wages. Lower wages means higher profits.

Some people have wondered why more business establishment figures are not clamoring for more stimulus and public works projects since they would have much to benefit from the increase in demand and the infrastructural improvements. The fact of matter is the Owners see much more opportunity for profit created by the pauperization of American workers and the plundering of public assets. A stimulus would improve our infrastructure and decrease unemployment. A well-maintained infrastructure is less likely to be privatized and utilized for profit instead of the public good. An adequately employed and taken care of workforce is less likely to be underpaid, exploited and abused. All of this would mean a smaller piece of the pie for both Wall Street and the big industrialists.

The current system has enabled a small, elite class that literally thrives off of human misery to create human misery. That’s really all there is to it.


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