THE BLOG
01/12/2013 05:22 pm ET Updated Mar 14, 2013

Self-Employed Are Canaries in the Mine

Even if you haven't read The Two Trillion Dollar Meltdown and aren't my age or older, you've probably wondered whether the 50s and 60s were a "golden age" for the American middle class and poor.

Looking back, it's clear that problems we are seeing now stem directly from the demise of the American blue chip corporation as a power in the world. By the end of the 1970s large companies could no longer afford to support the luxury of a prosperous middle class.

Thus began trends such as price-fixing; diversification, conglomeration, mergers and takeovers; attacks on labor; and most importantly, demands for smaller government.

"OK, Nancy, so what does this have to do with self-employment?"

"Absolutely everything!"

Government's role in making wealth transfers

During the Great Depression of the 1930s a British economist named Keynes came up with the idea of saving the economy through wealth transfer from the private sector to the government sector and then back again into the private sector. Government boosted corporate and military spending during and after the 1940s. That sent this country into a long period of prosperity after World War II.

1950s and 1960s prosperity enabled the federal government to impose Social Security, and later Medicare taxes, on workers. Corporations flush with cash could afford to toss in half of the FICA taxes for their employees. Corporations could also afford wage and salary increases for all, pensions, health and life insurance benefits, and other perks for labor.

Then came the recession and stagflation of the 1970s. Like losing gamblers and rogue traders, large American corporations grew adverse to taking more losses. They began unloading the costs of American labor onto the backs of labor itself and started pursuing "easy money" instead of productivity.

We've suffered through corporate buyouts by hedge funds, foreign-owned conglomerates, and sovereign wealth funds. We've lived through one corporate bankruptcy after another. These bankruptcies engineered a steady decline in wages, layoffs of hundreds of thousands of workers, and erasure of corporate pensions.

The battle against wealth transfers to workers

Health care is the current main event. As corporations sloughed off more and more health benefits along with many workers who once received those benefits, government finally stepped in to pick up the tab, against the wishes of those who favor corporate control of this country's wealth.

Along with fighting health care in the forms of Obamacare, Medicare, and Medicaid, there is the beginning of a protracted battle against Social Security, even though the Social Security program works for lower-income workers, and can be tweaked to last forever.

Government itself is being attacked with the goal of laying off government employees and destroying public pensions. One famed failure of a corporation even considered suing the federal government.

What makes this so painful is that there's a nasty ideology behind these changes. Rather than see what's happening as a short-run struggle for corporate survival in the 21st century, we're being brainwashed into blaming everything on the moral inferiority and economic failings of the majority of American workers and the poor. Or else we blame the "greedy" rich.

The promise broken

Truth is, American blue chip corporations failed to keep their promise to the American people. In the late 1950s General Electric sent a representative to my junior high. A young man in suit and tie with a new toy, a gigantic shiny silver gyroscope spinning on the auditorium stage, promised we would grow up to so many new technological marvels, none of us would ever have to work again.

Now, many of us are still working. We can't afford to retire. Unthinkably back then, most of us who came of age in the 1960s have lost our parents' lifestyle. We wonder how the next generations will survive in the decades ahead. Yet, over 50 years later, GE is promising the world the same dream in a slick TV commercial. And corporations are trying to suck government revenues dry.

A solution

It's time to stop pretending moral failure rather than economics is what's causing America's woes. Economics isn't about morality. It's about conflicts of interest between actors in the economic sphere. The economic sphere is at the bottom of Maslow's hierarchy of human needs. Economics is chiefly concerned with human physical survival. That's what's at stake for all of us.

It's time to stop kidding ourselves that while corporate productivity, along with wages and other labor benefits shrink, corporations, workers, and the poor can flourish. Giant American corporations are dying as we watch. It's time to stop blaming government too. The biggest initiator of wealth transfers in the U.S. is the corporation.

As the plight of self-employed people indicates, sending everyone off on their own to survive the coming economic holocaust will not be workable - especially not while self-employed people are bearing the biggest tax rate burden in the US.

These "feral workers" are canaries in the mine, forecasting the future for employees everywhere on the planet. If blue chip corporations continue to be unable or unwilling to function as productive members of society, the Keynesian solution will not work.

It's time to look at and beyond the corporate model for solutions for human survival.