Why Wall Street Socialism Will Fail

Socialism, we are told, is the naiveté of youth, and a fallacious economics the United States has luckily spurned. The late Seymour Lipset, an well-known academician, penned a book in 2001 entitled It Didn't Happen Here: Why Socialism Failed in the United States.

Alas, nobody ever told the leaders of American finance. Whereas the old style of socialism elected no more than a handful of mayors and congressmen, Washington has now embraced a new variety that could not be more different in its class consciousness and privileged sponsorship.

I am talking, of course, about the collectivization of financial risk being promulgated by the Federal Reserve Board and the U.S. Treasury Department and applauded in pin-striped precincts from Park Avenue to Pacific Heights. Described as Wall Street Socialism by the gauche and more precisely identified as the "socialization of risk" by sophisticates, the new fashion leaves the profits of finance in private hands as of yore. It is only the "risk" -- of collapsed currencies, flawed speculation, busted hedge funds or the greedy misjudgments of large banks or brokerage firms -- that is quietly taken up by government entities and all too often shifted to taxpayers who do not understand the pompous phraseology but know full well that Washington will never bail out their hardware store or the widget plant where their son works.

This has been going on for decades -- a major reason why finance has grown and prospered so much compared with most other industries. But it's only been so boldly and shamelessly embraced in the last few weeks. The Federal Reserve insists that "inter-connections" require rescuing large institutions that might knock down other entangled financial dominoes. However, these would not have been so cocky or so inter-connected in their web-spinning if the Fed had not allowed so much greed and gamesmanship for so long. Ex-Fed Chairman Alan Greenspan is often singled out as a culprit, but most of what he did was what most of the financial sector wanted. They, too, loved making 4th of July speeches about the glories of free enterprise and free -- market profits while counting on the government to collectivize the perils of risk. Big, fat and dumb financial institutions could count on being big, fat and bailed-out.

There was a time in the annals of American finance when this kind of practice would have been unacceptable -- indeed, serious economists like Joseph Schumpeter recognized that "creative destruction" was part of a vital capitalism. Painful as the depression of the early 1930s was, its creative destruction so revitalized U.S. finance and enterprise that by 1950, the U.S. economy was the kingpin of the post-World War Two world, vital and vibrant.

Even the sharp 30% Wall Street correction in 1969-1970 turned out to be a financial purge that refreshed. In the period between 1969 and 1970, the twenty-eight largest hedge funds saw 70 percent of their assets disappear, and roughly one hundred brokerage firms were acquired or disappeared. Then came the 1980-82 period, when Federal Reserve Board chairman Paul Volcker broke the back of runaway inflation by putting the stock market and the U.S. financial system through the wringer with interest rates that hit a brutal 18 percent. Adjusted for inflation, the Dow-Jones Industrial Average lost some nearly half of its value between 1978 and its bottom in the summer of 1982. Business Week even ran a famous cover story on "the death of equities." However, far from falling into a grave, equities rose for two decades in what became the biggest bull market in American history.

But this is where Risk Socialism began to rear its head. The dangers of creative destruction in the marketplace were rejected. Bail-outs and government intervention became the norm. Big investors were upheld through everything from foreign currency bail-outs to the rescue of major banks. In 1998, the Federal Reserve arranged a bail-out of a well-connected hedge fund and now in 2008 it's katy-bar-the-door in Washington aid for the financially undeserving. And hardly anyone stops to figure out that the quarter-century suspension of anything resembling creative destruction or traditional market forces is the culprit. The inevitable chimera of economic collectivization is coming undone.

Will ordinary Americans pay much of the price? Almost certainly. Should they blame what happens on marketplace forces? No, because the historical operation of such forces has been stymied and suspended. Should they blame the political and financial proponents of Risk Socialism? Yes, because the longtime genius of American capitalism may be on its 21st century deathbed.

Kevin Phillips's new book, Bad Money: Reckless Finance, Failed Politics and the Global Crisis of American Capitalism, was just published by Viking.

Comments

[thegulliblecitizen]

I believe that the kind of government and economic system we have now actually emulates communism in that the government lately has consisted of criminals seeking to steal the assets of the people and employ them for their friends such as exxon and chevron and enron or to use the nation's resources for their purposes. We had a major bubble under both Clinton and Bush.

How many of those square automobiles do you see running around? That's about the same percentage of people who are enjoying the present economy!

[plutorage]

The state subsidized home equity loans and a bubble formed in the value of homes - no surprise there.

Now we are told that we have to hold these prices up at an artificial level or doomsday will arrive. Actually, it is more likely that doomsday, of sorts, willl arrive if the socialist policies of George Bush and
Wall street win out and home prices are maintained at artificially high levels.

It's kind of odd. You can't get an apartment in Manhattan, where Wall Street is, under $1 Million but we are told the sky is falling.

Something doesn't square.

[ProveMeWrong]

If socialism is so great, why don't you folks give all your wealth to the state, and just rely on welfare payments and work-projects to direct your life? Surely you'd be much happier with a central planner making your decisions?

Oh that's right, we all assume that under socialism, we'd still have freedom of choice. But socialism hates property, and without property, what rights do you have? You and your things are owned by the state, so they can search you. They can tell you to go to war and fight and die for something you might not agree with, if you even understand the reasons you're being forced to risk your life. But its not just war. Progress requires risk. Lives will have to be sacrificed. In a free market, someone might take the risk, if the potential reward is enough. But what can you offer a socialist to risk his life? Why, the continuation of their life, of course, which means you'll have to coerce some people to be good socialists. Well, as long as I'm the one holding the gun, I guess socialism might be ok.

So...?

[ChristianEcon.com]

So...try to generate some thought of your own rather than parroting from an Ayn Rand website. You don't have to internalize everything you read/hear. We can actually think freely, and for ourselves--make our own connections.

Ask yourself why promoting your ideology requires straw-man versions of "socialism," for starters.

[mcartri]

"Prove Me Wrong", you have already proven yourself wrong by showing you do NOT have the slightest clue what socialism is. Hope you stay away from the military, public schools and Social Security. We wouldn't want that evil "socialism" to infect you.

[dadw5boys]

THE POOR DO GIVE ALL THEIR WEALTH TO THE STATE AND THE CORPORATIONS JUST TO LIVE.

GUNS ONLY SCARE PEOPLE WHO HAVE SOMETHING TO PROTECT. WHAT IS A LIFE IF YOUR ALWAYS POOR AND HUNGERY. GUNS DON'T SCARE POOR PEOPLE. GETTING SICK SCARES POOR PEOPLE .

AYN RAND WAS KNOW AS THE HOUSEQUEST WHO WOULD NEVER LEAVE. SHE LOVED TO LEACH OFF THE WEALTHY WHO USED HER BOOKS AS A REASON TO SCREW THEIR FELLOW AMERICANS.
IT IS JUST A BOOK DUDE.

[aceholiday]

why do we still demonize the idea of socialism? it seems even something as horrid as, say, a monarchy seems to get more sympathy

[ProveMeWrong]

Socialism is demonic, that's why. What other system robs from the productive, and gives the product of their theft not even to the poor, but to themselves, in return for their services as redistributors of wealth?

At least in a monarchy, the ruler would like to please his people long enough to increase prosperity, and of course, to avoid assassination. But really, few monarchs have as much control over their population as democratic socialists.

In America's version, a socialist can get elected, steal millions from the poor, give it to the rich, and leave office for an even better paying job for the company he gave welfare to.

Not that I would like either socialism or a monarch to replace the fascism America now enjoys. I would prefer anarchic liberty, or less radically, constitutional liberty.

[who38]

What other system robs from the productive, and gives the product of their theft not even to the poor, but to themselves, in return for their services as redistributors of wealth? I would say capitalism, as we know it today, does just that. Look at the number of CEOs who are raking in billions while the companies (and shareholders) they lead, are losing money. If the financial market is being supported in the manner the current one is, business is really on welfare. Guess they learned from agribusiness.

[LeftRight]

Socialism is not demonic. Socialism is not thought all the way through. Just like most other theories about economy.

However, what you are complaining about here is not socialism, what you are complaining about is an oligarchy.

[ChristianEcon.com]

"Socialism is demonic, that's why."

lol..........

"What other system robs from the productive, and gives the product of their theft not even to the poor, but to themselves, in return for their services as redistributors of wealth?"

The fact capitalism is a system based on coercive theft of workers' product is the whole reason socialism began, as a reaction.

[marijam]

...It stands not on the supposition that kings are the favourites of heaven; that their power is more divine than the power of the people, and unlimited but by their own will and discretion. It is not built on the doctrine that a few nobles or rich commons have a right to inherit the earth, and all the blessings and pleasures of it: and that the multitude, the million, the populace, the vulgar, the mob, the herd and the rabble, as the great always delight to call them, have no rights at all, and were made only for their use, to be robbed and butchered at their pleasure. No, it stands upon this principle, that the meanest and lowest of the people, are, by the unalterable indefeasible laws of God and nature, as well intitled to the benefit of the air to breathe, light to see, food to eat, and clothes to wear, as the nobles or the king.

It was probably completely unthinkable to John Adams that the American public would become such willing sheep as to continually be shorn by the "ar aristocratic classes". John Adams had nothing but contempt for speculators and even renounced his own son for indulging in it.

[antirepublocrat]

This is nothing new. My dad died in 1997 at the age of 80. He used to refer to it as "socialism for the rich, free enterprise for the poor."

[LewisWalsh]

Your dad was absolutely correct, but there is a 21st century twist to his wisdom. We now have socialism for the five percent at the top and, we have free enterprise (the on your own system) for everyone else. Again, Mr. Phillips is quite good at analyzing a problem, but he does not ever offer solutions.

Mr. Phillips touches very lightly on the fact that this elite socialism is born out of ordinary corruption. The fundamental problem in the US is the concentration of political power brought about by the concentration of wealth. The concentration of wealth is brought about by the rigging and manipulation of the system in collusion with the permanent political class.

Mr. Phillips knows well that democracies do not survive when the national wealth is so outrageously distributed as it is here in the US. To continue the present system, the ruling class will need to continue

[LeftRight]

Actually, it looks to me like he HAS proposed a solution. He came out and said let Bear Sterans and others collapse. I may not agree with everything that Mr. Philips as said (I'm more of a socialist than he is, as well as more of a regulator) but he is right about this one. We need to allow the economy to correct itself. Unfortunately, this has been put off for so long by bad fed policies, as well as by bad governmental policies, that it will LOOK like a crash, and will feel like a crash!

[LewisWalsh]

Continued: its repressive tactics

[dadw5boys]

FREE ENTERPRIZE AS LONG AS THE POOR STAY POOR.

[who38]

Love your dad!

[memphispaul]

Isn't it; "Wall Street National Socialism"?

[neoprimordial]

Ooh. You're brutal!

[who38]

Wall Street National Socialism with Earmarks.

[THINKB4USPEAK]

Having thought,now I will "speak". Any economic system which pays a go-between to go from the producer to the consumer (a "brocker"), is pretty much destined to eventually fail, due to the slow drain on resources from those middlemen. Not saying that there is anything wrong with being an agent or a representative, just opinining that this should not be your primary function in society, but rather something you contribrute from the heart to the benefit of MAN . If this concept escapes you, don't bother ressponding.

[LBKN]

... too much paper... not enough fruit.

[ProveMeWrong]

Read 'I, Pencil' (http://www.econlib.org/LIBRARY/Essays/rdPncl1.html) and tell me we don't need middlemen. Surely someone's contribution is to bring some of the different contributions of the creative folks of the world together into more useful, higher-order creations? How else would a pencil, expertly made of materials from around the world, on expertly made machinery, in a plant large enough to do it to scale, ever get into your hands?

If your calling is to make the best pencil you can, and you manage to make a better one than can be bought now, on your land with your own resources, for less than you can now buy a pencil for, but there were no middleman system, no one but you and your immediate neighbors would likely ever even know about your wonderful creation, because there would be no middleman - he would be off somewhere creating his own awkward pencil. Or milking his chickens. Or something. Anything but taking your better pencil to the people who need it most.

So whose world is better for having no middlemen?

[mlambert890]

Anyone who thinks Bear Stearns was a "bailout" or wasn't absolutely necessary might as well just post "I don't understand economics".

All of the communists and radical socialists are coming out of the woodwork here (which is ironic since the blog entry was ANTI-socialist), but that doesn't really have any connection to reality.

It's not actually worth discussing. Either you have a grasp of extremely complex economic concepts or you don't. I'm not letting the investment banking community off the hook. The derivatives market was ridiculous, criminally inflated, and deliberately misvalued and there *should* be criminal prosecutions, but none of that makes the Bear issue "cronyism" or a "bailout" or "wealthy elites protecting each other".

If they hadnt moved aggressively and done what they did, we would be in a whole different world of hurt. An order of magnitude beyond where we are now. These are complex concepts and the interelations are tangled and run deep though. To understand it, you have to WANT to understand the underlying complexity.

HP is the land of radical ideological soundbites though. Those interested in deep understanding need not apply. For that crowd, this piece is perfect even if it does play on the hot buttons of those it would claim to reject (die-hard radical socialists)

[memphispaul]

Absolutely necessary because those with the power to regulate failed to do so.
further more, the idea that self regulating markets are more effecient as been debunked. Whenever there is money on the table there is no such thing as enlightened self regulation.
Bear Stearns and the whole CDS market needed to fail. If you were stupid enough to place a wager in an unregulated market you deserve your just rewards.

[ProveMeWrong]

In a self-regulating market, the money is never on the table, its in someone's pocket, and if you want it, you have to offer something of value in return, not just be the best crook or liar or storyteller or politician.

When your money comes from theft (taxation), there is much greater question about how to divide it, because no one has a moral claim to the funds - no one created the wealth, or knows how to, because if they did, they wouldn't have had to steal it.

Trusting these folks to use such funds wisely has been debunked.

[LeftRight]

First, Bear Stearns collapsed because they weren't being regulated like they were supposed to have been! Second, it wasn't necessary, because the economy is STILL going to collapse, no matter what bushco(tm) tries to do, and he knows it, this is just a rear guard action to keep it alive long enough to blame it on whoever is next!

[ronspri]

Wow 890, you are so much smarter than everybody else! Many people have differing theorys of economic and have for the ages. That doesn't mean they are dumb or uneducated in economics. The best word I could find to discribe your post is....ELITIST!!

[LBKN]

HuffPost's Pick

How many right wing economists does it take to screw-in a light bulb?

None. If it needed changed, the market forces would have already done it.

[dadw5boys]

MARKET FORCES ARE NOT PUTTING THESE LOSERS INTO BANKRUPTIZE!!!!!!!

MARKET FORCES ARE REWARDING EVEN NEW HIRES AT BEARS AND STERN WITH $50,000.00 SIGNING BONUSES THEY GET TO KEEP EVEN THOUGH THE NEVER WORKED ONE DAY!

[ibsteve2u]

I don't know why people insist on/persist in calling Bernanke's and the Fed's actions of late "socialism".

It isn't; it is merely a subset of the wealthy elite taking care of their own with your money.

"Socialism" is when the government is paternalistic to EVERYBODY.

[goodspeed]

You may be correct. "Corporate welfare" or "welfare for the elite" may be more appropriate.

[Stoyver]

I don't think Helicopter Ben's bailout of bank-like agencies is called socialism in a strict sense, but rather as a means to contrast the treatment of monied interests with working class peeps. Surely you can see that!

[who38]

Thanks for pointing that out.

[ChristianEcon.com]

"Socialism" is when the government is paternalistic to EVERYBODY."

Where do you people come up with this stuff?

[elbzee]

When I was younger, I recall something about "Anti Trust Laws" and the evil of monopolies. And over the years, I've wondered what happened to them? We"ve just now learned that "inter-connections" require rescuing large institutions that might knock down other entangled financial dominoes." Somebody decided these large institutions were great and the feeding frenzy began. In addition to finance, how bout media, pharma, agriculture¦. What a shock... we've created whole shit pot full of monsters! Too bad we didn"t anticipate this fun domino game!

[kuhioboy]

Anti Trust Laws? Merely a contrivance to put the populace to rest. The Fed is a private company. It isn't worth anything. It is merely a brokerage. Big Banks pay for the printing and tell the Fed to circulate the bills and charge the people interest to have it as Big Banks get interest on top of interest in return. It's not like the Fed goes to the Treasury and requests more money to be circulated.

Not anticipated? Sure it was. The fix has been in for over 200 years. This is American finance as usual. So now a new "wonderboy" wants to take Chase beyond Bear Sterns and conquer Citibank. No worries. There'll always be a bailout at the taxpayers' expense in case something goes awry. Remember this wunderkind was fired by his now major competitor.

The fractionalized banking system that has been installed into US finance by the greed monsters (Big Banks) can take that 100 dollar purchase on your revolving credit card and put it in the asset column even regardless of the customer's balance on that card and lend money nine times the marked asset amount. Now that's a shell game. The ordinary citizen would go to jail for that and hopefully the heads of Countrywide and others will join Bush and his Admin. and a bunch of bankers in prison for high crimes and felonies and treason against the true will of hard working Americans.

[woodchips]

You must be confusing this with the real world. The President and the CEO of Countrywide were awarded nine and ten million dollars in "performance based bonuses". Some performance...let's hope there's no encore.

[goodspeed]

Kodos kuhioboy

Someone once said that, "For the love of money is a root of ALL sorts of injurious things..."

So much for those genius bankers, money changers and market manipulators !

[chewmin68]

I agree with your post, but not your closing optimism. None of the culprits, the very wealthy and connected, will ever pay. They have the income earners to pay for their mistakes.

It is sickening to me that people who make under 50k a year pay tax, and in the amounts of many thousands, to support these few of the financial "elite". It sickens me that this has been going on for years, and we have not paid attention, and by "we" I mean the working class. I do not want Bear Stearns or Savings & Loan or anything else bailed out by my tax dollars. Not when those who risked most, recklessly, got big bonuses and hefty salaries.

For many decades the laws have been changed not to benefit the citizen, but to benefit the very few who hold much of the wealth. Both parties are complicit.

We are seeing the destruction of the middle class. I hope people wake up soon and demand a fairer playing field, but I do doubt that will happen.

[Chukchi1]

The Ronnie RayGun administration gutted the Federal Trade Commission shortly after taking power. And what RayGun and Bush the first didn't deregulate and privatize, Bill Clinton did when he was in office. And still Fokkks news refers to Clinton as liberal.

[EdwardUlyssesCate]

We all try to come up with answers about what went wrong, pointing fingers and denying our own participation in the fiasco. We simply neglected our gardens (communities) and let the weeds grow wild. If only we'd pulled them early, they would have never gotten so out of hand. Now we have to buckle down and rebuild the garden, slashing and cutting until the weeds are gone, then start again. The sooner we understand that, the sooner things will get better.

Wish we didn't have to go through it, but the old shirtsleeves-to-shirtsleeves in three generations seems upon us once again. Grandfather built it, dad ran it, and junior squandered it. Grandfather tried, and dad tried, but junior just wouldn't listen. It's different this time, so thought Junior.

Now junior's kids have to start over, if they want to have anything at all. Will they learn from this? I doubt it.

[Loeb]

Kevin P: "an well-known academician" should be "a well-known academician".
PLEASE !!!

To the point: The market-centered wreckage (aided by mainstream
media propaganda---See: "Necessary Illusions" by Noam Chomsky)
as obscured and obliterated the fact that to obtain the domestic programs
needed by a civilized society and ADEQUATELY FINANCED requires
that the wealthy be taxed. Read: "The Squandering of America"
by Robert Kuttner. Health care (to take one example of many)
is expensive. Kuttner (and others) have put forth many methods
of obtaining needed funds. Most of these are beyond possibility
of enactment and implementation. No one has the guts (I changed
that from alternate verbiage) to oppose financial powers.
Elections depend on billions of dollars. Other developed nations
have imperfect health care programs but they are PAID for.

Americans have been trained to expect everything for nothing.
The wealthy with whom I mix perceive taxes on hedge funds,
equity funds, and other forms of "economic engineering"
as next to treason. Therefore, it is dishonorable .

It is nice to see that Kevin Phillips perceives that SOMETHING
is wrong. Many somethings, in fact. No one has the nerve
to act. Agression against defenseless nations is a good
"sell" (to use a market term). You get glory etc. And you win or
can make it seem (in the US) like victory (it doesn't seem that
way in the nations we demolish).

[thegulliblecitizen]

Kevin Philips has been a major voice in American political and economic issues for forty years! Where have you been?

[bruce9432]

You people would think differently if you actually knew or experienced the thrill of making as little as $400 per day or the absolute euphoria of having a great day and making upwards of $12,000 in as little as 3 hours trading commodoties. This happens to a select bunch of sit in front of the puter people that have found the true meaning of life, we do it day after day after day and go on these blogs as a diversion. Imagine a job where the phone rings maybe once a month, you "work" about 2 hours a day and your main goal is to figure out the lead in Zappa's Muffin Man. Thank You God!

[Nooneyouknow]

"The true meaning of life" is speculating in commodoties? That's sad. But even if I were a greedhead I'd think this kind of socialism for elites is wrong. It's the rich taking care of the rich and damn the rest of us.

[LeftRight]

It's not even that, it's the POOR taking care of the rich, involuntarily!!

[chewmin68]

I must admit, I am not motivated to be thrilled by commodities trading. I am also not greedy. Heck, for years I was satisfied just paying the bills and getting out of the house once in a while. Local concerts and my public library were my best friends. Just a little peace and security. I am not in your league, nor would I want to be.

[Margalo]

This article is idiotic, and Phillips knows better. What we have is not "Wall Street socialism." It is FASCISM--the harnessing of the state for the benefit of business/corporations. Is he worried that due to the corruption and abuses, the people might finally adopt a Scandinavian-style socialism and provide benefits for families having children, real unemployment benefits and (horror of horrors) single-payor national health insurance, like the excellent bill Rep. Kucinich introduced to put everyone under Medicare and also require preventive care and support alternative forms of care?

[biglover]

There is nothing idiotic about Kevin Phillips. He is right, there is Wall Street Socialism.

[Nooneyouknow]

I seem to recall that Nazi stands for the German equivalent of "national socialism." I suspect Hitler would have bailed out the banks too; after all, they were funding him.

[USisLiberal]

Kevin Phillips is a moron.

We are on the fast track to feudalism and he brags about how lucky we are to have spurned socialism.

Yes indeed, more "free market" deregulation please so that those with the most money and power have an easier time kicking the crap out of the rest of us with out it.

They own the White House (for now) and have completely corrupted the legislative process to favor themselves and are working desperately to have control over the Judicial branch. We, the middle-class people are screwed because the rich, powerful, corporate elites have managed to convince a majority of the working class that socialistic policies would somehow be bad for us.

Maybe I should correct myself, Phillips is no moron, he's one of them pushing "the socialism is bad" mantra. The real morons are those sinking into poverty and voting Republican.

[USisLiberal]

And let me clearify:

It isn't Wall Street Socialism, it's Wall Street Welfare. Welfare for white collar millionaires/billionaires.

But hell, let's mock the single mom getting $400 a month to feed and clothe her kid.

[vlebje]

You are right, Margalo. In fact, the one world government that the Bible-thumping fundamentalists keep harping about has already been realized, but they are so dumb as to not see it. It is the American Empire, a financial hedgenomy established by immoral means by dominating entire countries using everything from World Bank loans, to the American intelligence agencies to outright murder, as in the cases of Omar Torrijos, Panama, Jaime Roldos, and Hugo Spadafora. This is a sinister cabal headed up by such criminal minds as Rudolph Shultz out in San Francisco, Bechtel Corp, Bush Sr. is part of the same network. Cheney is instrumental in using the powers of our government to enrich his corporate friends and the American Empire. What Eisenhower warned us about is not future; it is here now. They are in the business of dominating countries around the world for the direct benefit of their corporate interests, and the American people are scoffed at and mocked. We will soon hear Karl Rove and William Kristol begin their onslaught against Obama, for they are the spokespersons for American Empire and see Obama just as they saw Omar Torrijos. And they are not at all reluctant to use the same strategies to do away with him, too. All this is outlined in the book by John Perkins, "Confessions of an Economic Hit Man." Every patriotic American ought to read that book and prepare themselves for warfare against this evil world rule.

[Dansden]

The real problem is our American proclivity to misnomer the truth, such as,
the Bush administration's creative prevaricating misnomer of 'The Clean Skies Act' that allowed more pollution into our America skies than we have allowed in 4 decades.

What Republicans call 'Socialism' is actually 'Fair and Equitable Wages for the Working Americans'!

What we now call ' FREE TRADE' is 'FASCISM for Corporate Elite confirmed by political cronies and corrupt politicians!

[Overd0g]

A "fair wage" is a wage that is agreed to by the employer and employee.

[ErinDanger]

Your definition is only correct if we assume the employee has had the same privileges that the employer have had, especially in terms of education. If the employer and the employee are on the same skill, knowledge, and educational level when it comes to negotiations, then yes, an agreed-upon wage could be considered fair.

But in a world where corporations will do anything to manipulate and exploit their workers, no agreement between the two can be considered fair.

[scubafox]

Wrong. Turns out that demand for workers in the US economy is manipulated to assure supply always exceeds demand (by at least 12%). Google "There's no 'free market' for Labor" for an explanation and other links on that page.

[USisLiberal]

Yeah, sure.

"fair wage" is determined by an employer looking and usually finding the person willing to do the work for as little as possible and often finding those from the most desperate environment.

For instance, I don't know what you do for a living, but as times get more economically desperate, who ever employs/pays you will most likely find someone to do it for less. Your agreement with them will be worth squat.