When I read the headline "American Wages out of Balance" on page 2 of the New York Times business section, I figured it would be a well-reasoned piece about our obscene distribution of income. It would be good for the Times to describe how Wall Street profits and bonuses, derived from our bailout funds, will further exacerbate problematic wealth disparities.
No such luck. The Breakingviews.com column was all about how the American worker is overpaid! I kid you not. Edward Hadas, Martin Huchinson and Antony Currie inform us that:
American manufacturing workers should take average real wage cuts of as much as 20 percent to get into global balance.
They don't mention that the average non-supervisory worker has already taken an 18 percent cut in real wages between 1973 and 2007. What's worse, they claim that if workers don't take these additional cuts, these "overpaid" working stiffs will be the cause of another Great Depression, and I'm not overstating their claim. They write"
But if American wages get stuck above global market-clearing levels, as in the 1930s, the result could well be something approaching Depression-era levels of unemployment.
They are preparing us for the horrific rise in the unemployment rate that is still to come. But, like accidental time travelers from the go-go '90s who haven't learned that the current crash was manufactured by the financial sector, they predict the cause of any worsening in the situation will be those greedy workers.
In this they are recycling a theory that economists like Fed Chairman Ben Bernanke believe to be true: that the Great Depression got much, much worse because workers resisted wage cuts as deflation increased the buying power of their wages.
But blaming workers for their own unemployment is only possible if you adopt the deep logic of the Billionaire Bailout Society. In that world, financiers can do no wrong. In that world they deserve what they earn, because they earn it. In that world, wealth equals value, value equals wealth. By definition the super-rich are the most valuable among us. If their fantasy finance games eventually crash the entire system, we bail them out. Sure, they may have sent tens of millions to the unemployment lines, but that can't be helped. Wall Street must be free to innovate and to earn its rapacious profits and bonuses. So under this logic, when unemployment skyrockets, like now, you blame workers for being overpaid. You see, the markets will resume job creation if they are free to adjust. We don't want downwardly sticky wages caused by worker resistance to wage cuts. After all, wage cuts are for their own good and for the good of the unemployed. They must sacrifice for the good of their country.
Of course, even in this billionaire alternative reality, it's very hard to get workers to cut their wages, especially while Wall Street is gorging itself at the bonus trough filled with workers' tax receipts. So the authors suggest that "a moderate inflation to cut real wages and a further drop in the dollar's real trade-weighted value might be acceptable." In other words, we'll cut their wages by devaluing them and maybe they won't notice.
If these authors want to write about worker wages, then they owe it to their readers to at least mention the enormous gap that emerged between productivity and real wages. From WWII until the mid-1970s U.S. productivity rose year after year as did real wages. The two seemed forever linked. The steady rise of manufacturing real wages created the new middle class. It was the heart and soul of the post-WWII boom. But, starting in the mid-1970s, the two trends decoupled as we deregulated finance and changed the tax code to allow money to flow upwards the the top income groups. Productivity continued its rise, but real wages stagnated and then declined. (See Chapter 2, The Looting of America.)
The gap between these two trends lines represents real money -- more than three trillion dollars a year by 2007. Where did it go?
It went to create the new billionaire class. It went to the uber-rich on Wall Street. It was the fuel for the fantasy finance boom and bust. The gap in incomes and wealth grew and grew to proportions not seen since 1928-29. There is no evidence that suggests that rising real wages for the average person causes a depression. But there is a great deal of evidence to suggest that an extreme distribution of wealth creates tremendous financial instability.
The very last thing we need right now is to cut workers' wages and turn over more booty to the billionaire bailout class. That should be clear to all by now unless you have succumbed to billionaire bailout logic.
Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It, Chelsea Green Publishing, June 2009.
Follow Les Leopold on Twitter: www.twitter.com/les_leopold
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-- Matt Taibbi
Roll out the tumbrils.
Anyone have plans on how to build a guillotine
Sharpen your knitting needles Madame Defarge.
are standing for. And it does a good job in taking away all possible wrong assumption
might have about the NYT for instance.
Apart from coming along with opinions like that, the newspapers in general, including the NYT,
are pulling off the wailing and Darfur -stunt every so often concerning their own revenue, income
and the like. ("Got a penny, a buck, a fiver, for the poor media?") Such wailing and whining stunts
can indeed have some impact for some time.
In that case, with that article, the truth is out and such mentioned stunts are offset. And passion
and charitable feelings re-directe
Michael Wolff wrote an impressive article not so long ago:
Why the media is taking so long to die
http://www
NYT claims American workers are overpaid.
Lots of responses. People are increasing
Many times I've suggested that the offshoring of our best industrial jobs, the encouragem
Well, it looks like they are so certain of the success of their plan, put in place since the 1980's--th
We are being made slaves in our own Country, and if you are waiting for Obama--or, and pay attention here: Any other President-
American Workers have always been among the best paid. The country was strong, proud, vibrant! Any thing to the contrary is just Corporate propaganda
Trusted a businessma
Trusted conservati
Own a credit card? Your fault.
Contracted a debilitati
And so on. Clearly, if we're to buy into what conservati
Making the people who saved these guys' keysters with taxpayer-p
We will be blamed for bailing them out, no doubt.
Damned if we do. Damned if we don't.
We'll take our share, but there is far more to the WHOLE than what is being said. And we are not scapegoats
http://www
(the national debt is our fault too. We didn't vote in people who would not listen to the corporatio
Even SOME of the media - corporatio
They're blind to their own double-sta
We lose jobs and livelihood
If we don't have a job that pays well enough - always our fault.
If we can't pay cash for the high cost of education to get the well paying job that's being offshored for a lower cost because "'good enough is good enough'" - always our fault too.
If we have the best grades but don't have the experience - our fault. (And doing a church database is not quite the same league as being a DBA in a large corporatio
Corporatio
to be continued
how can the American worker drive consumptio
ah, yes, she borrows it. credit and mortgages.
the banks and the 'markets' are decoupled from productivi
The only people affected are the 99% who are not the super rich and the 'new billionair
I hear ya and I agree, government paid-for plans would help a LOT. But another lobby is trying to fleece the system and us with it, what a shock.
http://www
Yes we can! Why can't it be? This is so much more effective (and less costly!) than even trying to de-tangle the mess our current system has become.
If bankers can whine "If you cap my wage I'll lose interest", how dare they not think of the American worker, whose wages are being capped or eliminated
The way of life so laboriousl
Supposedly to benefit all of society and not just those at the top?
understand their logic, is to go back to a 19th Century model. Excuse me,
70 % of GDP= Consumers.
(or maybe not; blind greed is the more likely explanatio
In some ways the workers are to blame, but not because of being 'overpaid'
Remember George Allen - senator from Georgia if I recall. He spat on the middle class and loved to vote for offshoring projects (offshorin
oh, then he calls the people he helped offshored those jobs to "macaca". Lovely representa