"In a time of universal deceit telling the truth is a revolutionary act." -George Orwell

Posts Tagged ‘Jobs’

World Of Work 2013 Report: U.S. Inequality Now Literally Off The Chart And Rising

In Uncategorized on June 9, 2013 at 7:30 pm

This new chart from the ILO's latest World of Work report doesn't have enough room to visually portray the full extent of inequality in the United States.

Oldspeak: “This new chart from the ILO’s latest World of Work report doesn’t have enough room to visually portray the full extent of inequality in the United States.”

Among the world’s major nations, documents the UN agency dedicated to labor matters, only one currently has a level of inequality both high and rising” –Salvatore Babones

The controllers seem to have done quite well for themselves in this alleged “recovery”. The People have fared significantly worse with less to come as the full effects of U.S. austerity measures are felt. The stealth depression will continue and it’s getting worse.. The People in Cyprus, Greece, Spain, Portugal, Italy, and The U.K. have made their displeasure with the current state of affairs know loudly, repeatedly and en masse, where inequality is far less severe than in the U.S. Yet there’s a far smaller and more disjointed protest movement here in the “Greatest Nation On Earth”. Why? Why in a nation founded by protestors and civil disobeyers, are there so few to be found today? Was COINTELPRO, that effective? Perhaps it never really stopped?

By Salvatore Babones @ Inequality.org:

It is well known that the level of income inequality stretches much higher in the United States than in the other developed countries of Europe and North America. Now a report from the International Labour Organization shows that U.S. inequality has literally gone off the chart.

Income inequality in the United States is soaring so high, in fact, that the authors of the ILO’s new 2013 World of Work report couldn’t even place the United States on the same graph with the other 25 developed countries their new study examines.

Income inequality reflects the sum total of all the differences between the incomes enjoyed by different households in a country. Differences between rich and poor households, rich and middle-income households, middle-income and poor households all enter into total income inequality.

Researchers usually measure income inequality using a statistic called the Gini coefficient. The Gini coefficient runs from a minimum of 0 (perfect equality in incomes across all households) to 100 (one rich household gets all the income for an entire country).

The ILO report places the US Gini coefficient at 47.7, or almost half way toward the extreme where one rich household gets everything and everyone else gets nothing.

By comparison, the levels of inequality in the other 25 developed countries studied all fall in a band between 20 and 35.

The share of U.S. adults living in middle-income households dropped from 61 to 51 percent between 1970 and 2010.

Even worse, in America inequality is not only high but rising. The Unites States is one of only three developed countries where income inequality rose during the recession of 2008-2009, then continued rising through the lackluster recovery of 2010-2011.

The other two: Denmark and France. Both these countries had much lower levels of inequality to start with. By 2011, Denmark’s inequality had risen into the high 20s and France’s inequality into the low 30s.

In the United States inequality sat at 46.3 before the recession, moved to 47.0 in 2010, and rose further to 47.7 in 2011.

Rising inequality has hit the American middle class particularly hard. But America’s middle class decline began well before the recession hit in 2008. Every year fewer and fewer Americans qualify as middle class, and those who do have lower and lower incomes.

The share of U.S. adults living in middle-income households, the new ILO report notes,  dropped from 61 to 51 percent between 1970 and 2010, and the median incomes of these  households fell 5 percent.

Where has the middle class held its own in recent decades? Well, in Denmark and France, among other countries. The country with the largest middle class according to the ILO’s calculations is Norway, where about 70 percent of the population rate as middle class.

In Norway, about 70 percent of the nation rates as middle class. In the United States, only 52 percent.

In the United States today only about 52 percent of the population can claim middle class status.

The World of Work report concludes that the middle class in the United States and around the world is suffering from “long-term unemployment, weakening job quality, and workers dropping out of the labour market altogether.” Things have been bad for a long time, but the recession has made them far worse.

The ILO, founded in 1946, now operates a specialist agency of the United Nations. The world’s employers and workers are equally represented on its governing board, alongside the representatives of 28 governments, including the United States government.

Different international organizations use different data sources for comparing inequality levels across countries. The ILO World of Work report uses raw data from the Census Bureau for the United States and from Eurostat for European countries.

All these sources agree that income inequality has widened more in the United States than in other developed countries. The ILO report finds a much larger difference than other organizations, such as the OECD. One reason for the difference: As a UN organization, the ILO is committed to using data from official sources like the U.S. Bureau of the Census and published, peer-reviewed scientific journal articles.

Other organizations like the OECD and private think tanks make their own estimates of national inequality levels using data that may not be publicly available and methodologies that may not be transparent or audited.

Rising inequality is not inevitable. The rich are not winning everywhere.

According to the official data compiled by the ILO and documented in the World of Work report, only South Africa and about a dozen Latin American countries have higher levels of inequality than the United States.

In nearly all of these countries inequality appears to be either stable or falling. Out of a total of 57 countries studied by the ILO, 31 developing and 26 developed, only one — the United States — has a level of income inequality both high and rising.

This simple fact — that only one nation has inequality both “high and rising” — shows that high and rising inequality is not inevitable. The rich are not winning everywhere, just as the rich have not always won in the United States.

We can have sensible policies that reduce inequality and bolster the middle class. The ILO suggests that we prioritize employment growth over budget cuts, increase public investment to make up for a lack of private investment, and raise taxes on unearned income from financial transactions.

The folks at the ILO are smart enough to understand that the reasons our governments don’t give us good, pro-people policies are not technical or economic, but political and ideological.

“Against mounting evidence,” the ILO concludes, “a fundamental belief persists in some quarters that less regulation and limited government will boost business confidence, improve access to international financial markets, and increase investment, although these results have not been evident.”

The empirical evidence says that we can reduce inequality and bolster the middle class by putting people back to work. But that will take government action. And government action is the one thing we don’t seem to have.

 

Salvatore Babones is a senior lecturer in sociology and social policy at the University of Sydney and an associate fellow at the Institute for Policy Studies.

 

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Obama’s Faux Populism Sounds Like Bill Clinton’s Faux Populism

In Uncategorized on January 26, 2012 at 2:07 pm

Oldspeak:” ‘I’ll admit it: Listening to Barack Obama, I am ready to enlist in his campaign against the feed-the-rich Republicans … until I recall that I once responded in the same way to Bill Clinton’s faux populism. And then I get angry because betrayal by the “good guys” for whom I have ended up voting has become the norm.’ A Corporatist Democrat recycling the same high-flown but ultimately hollow rhetoric of corporate democrat of the past. A brilliant deconstruction of Obama’s faux populist oratory. Obama has mastered the essential political skill of words not matching deeds to devastating effect for many of us. America’s decline began under a Republican, and is currently being shepherded along by a Democrat. Party ‘in power’ changes periodically but the status quo never does. When will people wake up to the reality that their political class has been co-opted via a financial coup d’etat engineered by agents of the transnational corporate network? How many well-paying jobs have to be replaced with poverty wage jobs? How many inalienable rights have to be abrogated? How many small businesses have to be driven out of business? How many people have to be rendered homeless?  How much of our environment has to be destroyed before we see that our social and economic systems are unsustainable and on the brink of collapse?

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Staring At Empty Pages

By Robert Sheer @ Truthdig:

I’ll admit it: Listening to Barack Obama, I am ready to enlist in his campaign against the feed-the-rich Republicans … until I recall that I once responded in the same way to Bill Clinton’s faux populism. And then I get angry because betrayal by the “good guys” for whom I have ended up voting has become the norm.

Yes, betrayal, because if Obama meant what he said in Tuesday’s State of the Union address about holding the financial industry responsible for its scams, why did he appoint the old Clinton crowd that had legalized those scams to the top economic posts in his administration? Why did he hire Timothy Geithner, who has turned the Treasury Department into a concierge service for Wall Street tycoons?

Why hasn’t he pushed for a restoration of the Glass-Steagall Act, which Clinton’s deregulation reversed? Does the president really believe that the Dodd-Frank slap-on-the-wrist sellout represents “new rules to hold Wall Street accountable, so a crisis like this never happens again”? Can he name one single too-big-to-fail banking monstrosity that has been reduced in size on his watch instead of encouraged to grow ever larger by Treasury and Fed bailouts and interest-free money?

When Obama declared Tuesday evening “no American company should be able to avoid paying its fair share of taxes by moving jobs and profits overseas,” wasn’t he aware that Jeffrey Immelt, the man he appointed to head his jobs council, is the most egregious offender? Immelt, the CEO of GE, heads a company with most of its workers employed in foreign countries, a corporation that makes 82 percent of its profit abroad and has paid no U.S. taxes in the past three years.

It was also a bit bizarre for Obama to celebrate Steve Jobs as a model entrepreneur when the manufacturing jobs that the late Apple CEO created are in the same China that elsewhere in his speech the president sought to scapegoat for America’s problems. Apple, in its latest report on the subject, takes pride in attempting to limit the company’s overseas suppliers to a maximum workweek of 60 hours for their horribly exploited employees. Isn’t it weird to be chauvinistically China baiting when that country carries much of our debt?

 

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I’m also getting tired of the exhortations to improve the nation’s schools, certainly a worthy endeavor, but this economic crisis is the result not of high school dropouts as Obama suggested, but rather the corruption of the best and brightest graduates of our elite academies. As Obama well knows from his own trajectory in the meritocracy, which took him from one of the most privileged schools in otherwise educationally depressed Hawaii to Harvard Law, the folks who concocted the mathematical formulas and wrote the laws justifying fraudulent collateralized debt obligations and credit default swaps were his overachieving professors and classmates.

If he doesn’t know that, he should check out the record of Lawrence Summers, the man he picked to guide his economic program and who had been rewarded with the presidency of Harvard after having engineered Clinton’s deregulatory deal with Wall Street.

That is the real legacy of the Clinton years, and it is no surprise that GOP presidential contender Newt Gingrich has been campaigning on his rightful share of it. The international trade agreements that exported good U.S. jobs, the radical financial deregulation that unleashed Wall Street greed, and the free market zealotry of then-Fed Chairman Alan Greenspan, who was reappointed by Clinton, were all part of a deal Clinton made with Gingrich, House speaker at that time.

As Gingrich put it in the first Republican debate in South Carolina: “As speaker … working with President Bill Clinton, we passed a very Reagan-like program, less regulation, lower taxes.” Even the 15 percent tax break that Mitt Romney exploited for his carryover private equity income was a result of the unholy Clinton-Gingrich alliance. Both principals of that alliance were pimps for the financial industry, and that includes Freddie Mac, the for-profit stock-traded housing agency that Clinton coddled while it stoked the Ponzi scheme in housing and that rewarded the former speaker with $1.6 million to $1.8 million in consulting fees.

There were, finally, some bold words in Obama’s speech about helping beleaguered homeowners, but they ring hollow given this administration’s efforts to broker a sweetheart deal between the leading banks and the state attorneys general that would see the banks fined only a pittance for their responsibility in the mortgage meltdown. Obama could have had success demanding mortgage relief if he had made that a condition for bailing out the banks. Now the banksters know he’s firing blanks, and they are placing their bets on their more reliable Republican allies to prevent any significant demand for helping homeowners with their underwater mortgages.

Of course, Romney, Obama’s most likely opponent in the general election, will never challenge the Wall Street hold on Washington, since he is the personification of the vulture capitalism that is the true cause of America’s decline. Obama should shine in comparison with his Republican challenger, but there is little in his State of the Union speech to suggest he will chart a much-needed new course in his second term.

 

Obama’s “American Jobs Act”: Why Less Is More Of The Same

In Uncategorized on September 15, 2011 at 11:51 am

President Barack Obama holds a copy of the American Jobs Act while announcing he is sending the $447 billion jobs package, his plan to create job growth, to Congress. (Photo: Philip Scott Andrews/The New York Times)

Oldspeak: “Look beyond the rhetorical wizardry.  What we got from Obama was a 2009 “Stimulus Light” proposal. This so-called “American Jobs Act” is 60% tax cuts (which don’t create jobs), half the size of the 2009 stimulus (that already wasn’t big enough to create jobs and had the NET EFFECT OF CUTTING JOBS), is too light on shovel-ready jobs (Construction and infrastructure jobs are long term. What is needed today is IMMEDIATE job creation.) Is too heavily weighted in favor of subsidies to the states (Local government laid off hundreds of thousands of workers since June 2009 despite the $263 billion in subsidies received) and does not go far enough in taxing the rich. Why is this man touring the country passionately selling a proposal that won’t work for the vast majority of the American people, and is basically another massive giveaway to the rich? Nevermind the fact that it doesn’t compel the banking cartels to lend the trillions they’re hoarding to small business owners which would create the conditions for job creation. Nor does it compel large multinational corporations to stop hoarding the trillions in tax savings they have stashed offshore to create jobs in the U.S. Obama has already bestowed the Corporatocracy with 1 TRILLION in tax cuts the past 2 years, why is he trying to give them more? Look no further than his list of campaign contributors. While the fact that legions of ordinary americans have contributed to him has been played up in corporate media, his biggest and most influential donors are wall street banks, hedge fund managers, media conglomerates, dirty energy conglomerates, big business interests, all denziens of the Corporatocracy. And what have the American people received in return? Toothless financial reform, expanded support for dirty energy policy, Business friendly health care reform, media and communications consolidation, weaker regulation, utterly ignored poor and working poor. Oh and 6 wars. Quid pro quo par excellence. More change I can’t believe in.”

By Jack Rasmus @ Truthout

On Thursday, September 8, President Obama proposed a $474 billion “Jobs Act.” What we got from Obama was a 2009 “Stimulus Light” proposal, with all the problems of the prior 2009 stimulus package in the form of inadequate magnitude of spending, wrong composition and targets and bad timing.

First, on the matter of the magnitude of spending in the proposal, some think it was bold. But put it in context; $447 billion just won’t achieve the job creation it claims. It’s once again too little for an economy the size of the US, for an economy in as deep an economic hole as it is and in an economy facing growing downward momentum at home in the context of a global economy also rapidly slipping.

In February 2009, President Obama proposed $787 billion in economic stimulus. Unemployment was about 25 million. More than two years later, after the $787 billion has been spent, unemployment (measured by the Labor Department’s U-6 rate) is still around 25 million. Why, therefore, should Obama’s latest proposals to create jobs, consisting about half the size of the 2009 stimulus, expect to create jobs when the larger stimulus did not?

Even more important than Obama’s Jobs Act’s insufficient magnitude, the composition is also seriously deficient – just as was the 2009 stimulus. Like the stimulus in 2009, it is once again overloaded in tax cuts. In fact, a greater percentage (60 percent) of the total Jobs Act is composed of tax cuts than was the 2009 stimulus (38 percent). Then and now, tax cuts simply cannot and will not create jobs, given the kind of “epic” recession in which the US economy now finds itself entrapped.

The 38 percent tax cut mix in 2009 amounted to about $300 billion in total tax reduction. That $300 billion followed a $90 billion tax cut less than nine months before in spring 2008. Another $50 billion in tax cuts was further added later in 2009-2010 in various bills and administrative actions. That’s a total of $440 billion in tax cuts. There’s more. Add to that $440 billion another $270 billion in Bush tax cut extensions in late 2010 for 2011, plus another $100 billion in this year’s payroll tax cut. Now, add the Job Act’s tax-heavy $270 additional billion. Now, we’re well over $1 trillion in tax cuts in just the past two years. And what’s been the result in jobs? Still 25 million unemployed today as in June 2009.

If someone needs still further evidence that tax cuts don’t create jobs in today’s environment, just step back a decade. In 2001-2004 George W. Bush passed another $3 trillion in tax cuts, overwhelmingly biased again toward the rich and their corporations in the form of capital gains, dividends, inheritance, business depreciation, and other corporate largesse. Over 80 percent of the $3 trillion went to the wealthiest 20 percent households and most of that to the wealthiest 5 percent and 1 percent. And what kind of job creation resulted? We had the longest jobless recession in US history up to that point. It took 46 months just to recover to the level of jobs we had before the first Bush recession in 2001.

Furthermore, most of the jobs that were created under Bush were in the finance and housing sectors of the economy at the time, which were both undergoing a boom due to speculative excesses before an eventual bust. The jobs mostly created in finance and housing had little to do with Bush’s tax cuts of 2001-2004, however. Instead, millions of jobs were being lost in manufacturing while the tax cuts were taking effect last decade.

In 2004, Bush also pushed through a bill to allow multinational corporations to repatriate their then $700 billion hoard of cash they were keeping offshore in their subsidiaries in order to avoid paying the US 35 percent corporate tax rate. The multinationals blackmailed Congress to let them pay only 5.25 percent instead of 35 percent. In exchange, they said they’d bring back the money (saving 29.75 percent for themselves) and use it to create jobs. Did they? No. They money brought back was used to buy back their stock, payout more dividends and to use for mergers and acquisitions that, in fact, resulted in fewer jobs. Now the same “game” is being proposed in Congress, except this time their offshore cash hoard is $1.2 trillion.

The historical record of the past decade is clear: tax cuts simply don’t create jobs, especially tax cuts for the rich and corporations. So, why has Obama given them $1 trillion in tax cuts the past two years and now proposes more?

But Obama’s once again tax-heavy proposal is not the only problem with his “Jobs Act.” The Jobs Act shares another deficiency with the president’s prior 2009 stimulus. It’s too heavily weighted in favor of subsidies to the states as well. The 2009 stimulus provided $264 billion in subsidies to the states. It was supposed to create jobs. It didn’t. Local government laid off hundreds of thousands of workers since June 2009 despite the $263 billion. What guarantees are there that this won’t be repeated when they’re given the added subsidies? Will they get the subsidy only if they first prove they’ve added the jobs? Don’t count on it.

Another problem with the “composition” of the Jobs Act announcement by the president is it once again repeats the promise of the 2009 stimulus that infrastructure spending will quickly create jobs. In 2009, about $100 billion was allocated to infrastructure-related spending that was supposed to create four million jobs. That didn’t happen. There were 6.4 million construction workers employed in June 2009. There are 5.5 million today. Nearly a million fewer construction jobs was the result. There just weren’t as many “shovel-ready” jobs as was claimed. Construction and infrastructure jobs are long term. What is needed today is immediate job creation. Infrastructure programs just won’t cut it, especially when they are of the minimal magnitude in Obama’s recent proposal.

Obama promised his proposals would focus on small business by subsidizing their hiring of workers for each job they create. But for small businesses to create jobs, it needs more than a partial hiring subsidy. It needs funds in addition to cover all the other costs of production. For that, small businesses need bank loans. And for two years now, they just can’t get the loans from the big banks. Bank lending to small businesses declined for 15 consecutive months after June 2009, and it’s not much better today. Obama and the Federal Reserve bailed out the big banks to the tune of $9 trillion in recent years, in the expectation they would start lending. They didn’t. They still aren’t. Like the big corporations hoarding their $2 trillion and not creating jobs, the big banks are hoarding their cash reserves as well and not lending to small businesses that might create jobs if they could get the loans. Obama would have done better to propose the federal government bypass the banks and directly loan to small businesses at 0.25 percent. After all, that’s the interest rate at which the Fed today “loans” to the big banks. No, I take that back. Actually it’s only 0.1 percent and then the Fed pays the banks 3 percent to temporarily park the free money with the Fed in the interim. What a deal: the Fed pays the big banks to take its free money.

In summary, what we got from Obama’s “Jobs Act” was more of the same in terms of poor composition (i.e. excessively tax cut heavy), poor timing (long-term infrastructure projects) and too little magnitude of spending in any event.

There’s no reason to believe that the Obama jobs package that repeats the problems of poor composition and bad timing of the 2009 stimulus – which didn’t create, although it may have saved some jobs – is going to do any better when it’s also half the size of the stimulus.

Of course, the proposed Jobs Act won’t pass anyway because the Teapublicans will oppose it. At best, they might try to cherry-pick out the business tax cuts proposed by Obama and then add even more tax cuts to the “Jobs Act” – a proposal which anyway should be appropriately renamed “The Business Tax Cut Expansion Act of 2011.”

Just a day before the president’s address, the Teapublican candidates gathered to hold their latest debate. They stumbled all over each other to see who could promise corporate America even greater tax cuts. Rick Perry even promised to end all corporate taxes. Rick Santorum promised to lower capital gains and dividends taxes to zero. Others proposed no income taxes whatsoever for earners of $200,000 income a year. Grovel for those campaign contributions, fellas. These same candidates, after proposing cutting hundreds of billions a year in tax cuts for the rich and corporations, will turn around and cry about the budget deficits and demand equivalent cuts in Social Security, Medicare and Medicaid to make up for their ever generous handouts to the wealthy.

But this kind of mercenary, Robin-Hood-in-reverse policy of “No taxes whatsoever” for the rich and their corporations is expected from the radical right. Yet, it seems Obama is being drawn into their tax-cut-for-the-rich frenzy with his proposal for yet another $270 billion in cuts. He just agreed, less than nine months ago, to give them $270 billion by extending the Bush tax cuts last December. Now, he proposes hundreds of billions of dollars more. This past year witnessed the president’s adopting their central agenda demand to cut deficits. Could he now be tailing the Teapublicans once again down the “Cut more taxes for Corporate America” road as well?

A real jobs program today would be proposals and programs to recreate, in 21st century form, a Works Progress Administration – paid for not by giving the rich and their corporations still more tax cuts, but by taxing their $2 trillion cash hoard, their $1 trillion in excess free Fed money bank reserves, their $1.2 trillion held in offshore subsidiaries and by taxing the more than $6 trillion they’ve all stashed away in their tax havens around the globe from the Cayman islands to the Seychelles to Vanuatu and, of course, Switzerland.

Politics in America today, sadly, is not about what will ensure true economic recovery and give the 25 million Americans a job. It’s about how to extend tax cuts for corporate America and its shareholder beneficiaries; it’s about how to ensure the Great American Tax Shift of recent decades is never rescinded and instead further extended; and it’s about how to make everyone else in American pay for their bailouts so that the corporations and wealthiest themselves do not have to.

Chomsky: Public Education Under Massive Corporate Assault — What’s Next?

In Uncategorized on August 8, 2011 at 1:06 pm

Oldspeak: “Converting schools and universities into facilities that produce commodities for the job market, privatizing them, slashing their budgets — do we really want this future? People who are in a debt trap have very few options. That is true of social control generally. In a corporate-run culture, the traditional ideal of free and independent thought may be given lip service, but other values tend to rank higher. Defending authentic (academic) institutional freedom is no small task. However, it is not hopeless by any means.” –Noam Chomsky Unfortunately  “The era of affordable four-year public universities heavily subsidized by the state may be over.” When access to free, high quality, education is eliminated and is replaced with pay for the privilege corporate controlled education democracy dies. “Ignorance is Strength”

By Noam Chomsky @ Alter Net:

The following is a partial transcript of a recent speech delivered by Noam Chomsky at the University of Toronto at Scarborough on the rapid privatization process of public higher education in the United States.

A couple of months ago, I went to Mexico to give talks at the National University in Mexico, UNAM. It’s quite an impressive university — hundreds of thousands of students, high-quality and engaged students, excellent faculty. It’s free. And the city — Mexico City — actually, the government ten years ago did try to add a little tuition, but there was a national student strike, and the government backed off. And, in fact, there’s still an administrative building on campus that is still occupied by students and used as a center for activism throughout the city. There’s also, in the city itself, another university, which is not only free but has open admissions. It has compensatory options for those who need them. I was there, too; it’s also quite an impressive level, students, faculty, and so on. That’s Mexico, a poor country.

Right after that I happened to go to California, maybe the richest place in the world. I was giving talks at the universities there. In California, the main universities — Berkeley and UCLA — they’re essentially Ivy League private universities — colossal tuition, tens of thousands of dollars, huge endowment. General assumption is they are pretty soon going to be privatized, and the rest of the system will be, which was a very good system — best public system in the world — that’s probably going to be reduced to technical training or something like that. The privatization, of course, means privatization for the rich [and a] lower level of mostly technical training for the rest. And that is happening across the country. Next year, for the first time ever, the California system, which was a really great system, best anywhere, is getting more funding from tuition than from the state of California. And that is happening across the country. In most states, tuition covers more than half of the college budget. It’s also most of the public research universities. Pretty soon only the community colleges — you know, the lowest level of the system — will be state-financed in any serious sense. And even they’re under attack. And analysts generally agree, I’m quoting, “The era of affordable four-year public universities heavily subsidized by the state may be over.”

Now that’s one important way to implement the policy of indoctrination of the young. People who are in a debt trap have very few options. Now that is true of social control generally; that is also a regular feature of international policy — those of you who study the IMF and the World Bank and others are well aware. As the Mexico-California example illustrates, the reasons for conscious destruction of the greatest public education system in the world are not economic. Economist Doug Henwood points out that it would be quite easy to make higher education completely free. In the U.S., it accounts for less than 2 percent of gross domestic product. The personal share of about 1 percent of gross domestic product is a third of the income of the richest 10,000 households. That’s the same as three months of Pentagon spending. It’s less than four months of wasted administrative costs of the privatized healthcare system, which is an international scandal.

It’s about twice the per capita cost of comparable countries, has some of the worst outcomes, and in fact it’s the basis for the famous deficit. If the U.S. had the same kind of healthcare system as other industrial countries, not only would there be no deficit, but there would be a surplus. However, to introduce these facts into an electoral campaign would be suicidally insane, Henwood points out. Now he’s correct. In a democracy where elections are essentially bought by concentrations of private capital, it doesn’t matter what the public wants. The public has actually been in favor of that for a long of time, but they are irrelevant in a properly run democracy.

We should recall that the great growth period in the economy — the U.S. economy — was in the several decades after WWII, commonly called the “Golden Age” by economists. It was substantially fueled by affordable public education and by university research. Affordable public education includes the GI Bill, which provided free education for veterans — and remember, that was a much poorer country than today. Extremely low tuition was found even at private colleges. Actually, I went to an Ivy League college, and it cost $100 a year; that’s more now, but it’s not that high, it’s not 30 or 40,000, you know?

What about university-based research? Well, as I mentioned, that is the core of the modern high-tech economy. That includes computers, the Internet — in fact, the whole IT revolution — and a whole lot more. The dismantling of this system since the 1970s is among the many moves toward a very sharply two-tiered society, a very narrow concentration of wealth and stagnation for most everyone else. It also has direct economic consequences. Take, say, California. What they are doing to the public education system is going to undermine the economy that relies on a skilled work force and creative innovation, Silicon Valley and so on. Well, apart from the enormous human cost of depriving most people of decent educational opportunities, these policies undermine the U.S. competitive capacity. That’s very harmful to the mass of the population, but it doesn’t matter to the tiny percent of concentrated wealth and power. In fact, in the years since the Pell Memorandum, we’ve entered into a new stage in state capitalism in which the future just doesn’t amount to much. Profit comes increasingly from financial manipulations. The corporate policies are geared toward the short-term profit, and that reduces the concern for loyalty to a firm over a longer stretch. We’ll talk about this more tomorrow, but right now let me talk about the consequences for education, which are quite significant.

Suppose, as is increasingly happening not only in the United States, incidentally, that universities are not funded by the state, meaning the general community. So how are the universities going to survive? Universities are parasitic institutions; they don’t produce commodities for profit, thankfully. They may one of these days. The funding issue raises many troubling questions, which would not arise if fostering independent thought and inquiry were regarded as a public good, having intrinsic value. That’s the traditional ideal of the universities, although there are major efforts to change that. Take Britain. According to the British press, the Arts and Humanities Research Council was just ordered to spend a significant amount of funding on the prime minister’s vision for the country. His so-called “Big Society,” which means big corporate profits, and the rest look out for themselves. The government produced what they call a clarification of the famous Haldane Principle. That’s the century-old principle that barred such government intrusion into academic research. If this stands, which I think is kind of hard to believe, but if it stands, the hand of Big Brother will rest quite heavily on inquiry and innovation in the arts and humanities as the masters of mankind follow the advice of the Pell Memorandum. Of course, defending academic freedom in ways that would receive nods of approval from Those-Who-Must-Not-Be-Named, borrowing my grandchildren’s rhetoric. Cameron’s Britain is seeking to take the lead on the assault on public education. The rest of the Western world is not very far behind. In some ways the U.S. is ahead.

More generally, in a corporate-run culture, the traditional ideal of free and independent thought may be given lip service, but other values tend to rank higher. Defending authentic institutional freedom is no small task. However, it is not hopeless by any means. I’ll talk about the case I know best, at my own university. It is a very striking case, because of the nature of its funding. Technically, it’s a private university, but it has vast state funding, overwhelming, particularly since the Second World War. When I adjoined the faculty over 55 years ago, there were military labs. Since then, they’ve been technically severed. The academic programs, too, at that time, the 1950s, were almost entirely funded by the Pentagon. Under student pressure in the time of troubles, the 1960s, there were protests about this and calls for investigation. A faculty-student commission was formed in 1969 to investigate the matter. I was a member, thanks to student pressure. The commission was interesting. It found that despite the funding source, the Pentagon, almost the entire academic program, there was no military-related work on campus, except in the sense that virtually anything can have some military application. Actually, there was an exception to this, the political science department, [which] was deeply engaged in the Vietnam War under the guise of peace research. Since that time, Pentagon funding has been declining, and funding from health-related state institutions — National Institute of Health and so on — that’s been increasing. There’s a reason for that. It’s reflecting changes in the economy.

In the 1950s and 1960s the cutting edge of the economy was electronics-based. The Pentagon was a natural way to steal money from the taxpayers, making them think they’re being protected from the Russians or somebody, and to direct it to eventual corporate profits. That was done very effectively. It includes computers, the Internet, the IT revolution. In fact most of the modern economy comes from that. In more recent years, the economy is becoming more biology based. Therefore state funding is shifting. Fifty years ago, if you looked around MIT, you found small electronics startups from the faculty. They were drawing on Pentagon funding for research, and if they were successful, they were bought up by major corporations. Those of you who know something about the high-tech economy will know that that’s the famous Route 128. That was 50 years ago. Now, if you go around the campus, the startups are biology based, and the same process continues. The genetic engineering, biotechnology, pharmaceuticals and the big buildings going up are Novartis and so on. That’s the way the so-called free enterprise economy works. There’s also been a shift to more short-term applied work. The Pentagon and the National Institutes of Health are concerned with the long-term future of the advanced economy. In contrast to a business firm, it typically wants something that it can use — it can use and not its competitors, and tomorrow. I don’t actually know of a careful study, but it seems pretty clear that the shift toward corporate funding is leading towards more short-term applied research and less exploration of what might turn out to be interesting and important down the road.

Another consequence of corporate funding is more secrecy. This surprises a lot of people, but during the period of Pentagon funding, there was no secrecy. There was also no security on campus. You may remember this. You walk into the Pentagon-funded labs 24 hours a day, and no cards to stick into things and so on. No secrecy; it was all entirely open. There is secrecy today. A corporation can’t compel secrecy, but they can make it very clear that you’re not going to get your contract renewed if your work leaks to others. That has happened. In fact, it’s lead to some scandals, some big enough to appear on the front page of the Wall Street Journal.

Outside funding has other effects on the university, unless it’s free and unconstrained, observing the Haldane Principle. Indeed, it has been true to a significant degree by funding from the Pentagon and the other national institutions. However, any kind of outside funding [has effects], even keeping to the Haldane Principle, supposing it establishes a teaching or research facility. That kind of automatically shifts the balance of academic activity, and that can threaten the independence and integrity of the institution. And in the case of corporate funding, quite severely.

Corporatization can have considerable influence in other ways. Corporate managers have a duty. They have to focus on profit making and seeking to convert as much of life as possible into commodities. It’s not because they’re bad people; it’s their task. Under Anglo-American law, it’s their legal obligation as well. There’s a lot to say about this topic, but one element of it concerns the universities and much else. One particular consequence is the focus on what’s called efficiency. It’s an interesting concept. It’s not strictly an economic concept. It has crucial ideological dimensions. If a business reduces personnel, it might become more efficient by standard measures with lower costs. Typically, that shifts the burden to the public, a very familiar phenomenon we see all the time. Costs to the public are not counted, and they’re colossal. That’s a choice that’s not based on economic theory. That’s based on an ideological decision, which applies directly to the “business models,” as they’re called, of the universities. Increasing class-size or employing cheap temporary labor, say graduate students instead of full-time faculty, may look good on a university budget, but there are significant costs. They’re transferred and not measured. They’re transferred to students and to the society generally as the quality of education, the quality of instruction is lowered.

There’s, furthermore, no way to measure the human and social costs of converting schools and universities into facilities that produce commodities for the job market, abandoning the traditional ideal of the universities. Creating creative and independent thought and inquiry, challenging perceived beliefs, exploring new horizons and forgetting external constraints. That’s an ideal that’s no doubt been flawed in practice, but to the extent that it’s realized is a good measure of the level of civilization achieved.

That idea is being challenged very openly by Adam Smith’s Principal Architects of Policy in the State Corporate Complex, the direct attack on the Haldane Principle in Britain. That’s an extreme case; in fact so extreme I assume it may be beaten back. There are less blatant examples. Many of them are just inherent in the reliance on outside funding, state or private. These are two sources that are not easy to distinguish given the control of the state by private interest. So what’s the right reaction to outside funding that threatens the ideal of a free university? Well one choice is just to reject it in principle, in which case the university would go down the tubes. It’s a parasitic institution. Another choice is just to recognize it as a fact of life that when I’m at work, I have to walk past the Lockheed Martin Lecture Hall, and I have to look out my office window at the Koch building, which is named after the multibillionaires who are the major funders of the Tea Party and a leading force in ongoing campaigns to wipe out the remnants of the labor movement and to institute a kind-of corporate tyranny.

Now, if that outside funding seeks to [influence] teaching, research and other activities, then there’s a strong argument that it should simply be resisted or rejected outright no matter what the costs. Such influences are not inevitable, and that’s worth bearing in mind.

American Workers Are Forced To Accept Pay/Benefit Cuts As U.S. Economy Deflates

In Uncategorized on August 4, 2010 at 3:08 pm

Lynn Fillinger at the Mott's plant in Williamson, N.Y. Workers went on strike on May 23 over demands to cut pay and benefits.

Oldspeak:“The relentless corporate assault on American workers continues at the same time as corporate profits rise. “They keep piling more and more work on us, but they want to pay us less and less,” said Michele Morgan, a Mott’s employee. “It’s a slap in the face.”,” Seems simple enough. If workers are paid less, they have reduced buying power to consume goods, which further hastens the contraction of the U.S. Economy.  The shit will really hit the fan when corporate profits inevitably begins to shrink as well…”

From Stephen Greenhouse @ The New York Times:

The furloughs that popped up during the recession are being replaced by a highly unusual tactic: actual cuts in pay.

Local and state governments, as well as some companies, are squeezing their employees to work the same amount for less money in cost-saving measures that are often described as a last-ditch effort to avoid layoffs.

A new report on Tuesday showed a slight dip in overall wages and salaries in June, caused partly by employees working fewer hours.

Though average hourly pay is still higher than when the recession began, the new wage rollbacks feed worries that the economy has weakened and could even be at risk of deflation. That is when the prices of goods and assets fall and people withhold spending as they wait for prices to drop further, a familiar idea to those following the recent housing market.

A period of such slack economic demand produced a lost decade in Japan, and while it is still seen as unlikely here, some policy-making officials at the Federal Reserve recently voiced concern about the possibility because the consequences could be so dire.

Pay cuts are appearing most frequently among state and local governments, which are under extraordinary budget pressures and have often already tried furloughs, i.e., docking pay in exchange for time off. Warning that they will have to lay off people otherwise, many governors and mayors are pressing public employee unions to accept a reduction in salary of a few percentage points, without getting days off in exchange.

At the University of Hawaii, professors have accepted a 6.7 percent cut. Albuquerque has trimmed pay for its 6,000 employees by 1.8 percent on average, and New York’s governor, David A. Paterson, has sought a 4 percent wage rollback for most state employees. State troopers in Vermont agreed to a 3 percent cut. In California, teachers in the Capistrano and Pacheco school districts have accepted salary cuts.

“We’ve seen pay freezes before in the public sector, but pay cuts are something very new to that sector,” said Gary N. Chaison, an industrial relations professor at Clark University. Outsize pension costs and balanced budget requirements are squeezing many states as tax revenue has come up short.

It is impossible to say how many employers have cut workers’ pay, because the government does not keep such statistics. Economists say a modest but growing number of employers have ordered wage cuts, especially in the public sector. In a 2010 survey by the National League of Cities, 51 percent of the cities that responded said they had either cut or frozen salaries of city employees, 22 percent said they had revised union contracts to reduce some pay and benefits, and 19 percent said they had instituted furloughs.

Some businesses are also cutting workers’ pay, often to help stay afloat or to eliminate their losses, although a few have seized on the slack labor market and workers’ weak bargaining power to cut pay and thereby increase their profits and competitiveness.

Economists note that wages continued to increase in 2008 after the recession began, even adjusted for inflation. But those wages have been flat for the last 18 months, according to the Bureau of Labor Statistics.

Mr. Chaison says the latest wave of private-sector pay cuts is reminiscent of those in the early 1980s, when many companies — especially those with unionized work forces — cut wages in response to a recession, intensified competition from imports and new low-cost competitors spawned by government-backed deregulation. Now, as then, companies frequently say that compensation for unionized workers, in both wages and benefits, is out of line. For instance, the Westin Hotel in Providence, R.I., after failing to reach a new contract with its main union, has sliced wages 20 percent, saying its previous pay levels were not competitive with those at the city’s many nonunion hotels.

Factory owners sometimes warn that they will close or move jobs to lower-cost locales unless workers agree to a pay cut. In its most recent union contract, General Motors is paying new employees $14 an hour, half the rate it pays its long-term workers.

Sub-Zero, which makes refrigerators, freezers and ovens, warned its workers last month that it might close one or more factories in Wisconsin and lay off 500 employees unless they accepted a 20 percent cut in wages and benefits. Management warned that it might transfer those operations to Kentucky or Arizona, saying it needed lower costs because sales were weaker than hoped.

The pain is felt across industries. At the Seattle Symphony, musicians have taken a 5 percent pay cut, while ABF Freight System, a major trucking company, has asked theTeamsters to agree to 15 percent less. The St. Louis Post-Dispatch has lowered pay 6 percent, while Newsday has gotten its staff to accept a 5 to 10 percent pay cut.

While most of the pay cuts seem to hit unionized workers, David Lewin, a professor of management at the University of California, Los Angeles, who has written extensively on employee compensation, says some cuts are also quietly taking place among nonunion employers.

Reed Smith, a firm with 1,500 lawyers, has cut salaries for first-year associates in major cities to $130,000 from $160,000. Warren Hospital, a nonunionized facility in Phillipsburg, N.J., ordered pay cuts of 2 to 4 percent because lower Medicaid reimbursements had squeezed the hospital’s finances.

Fast-rising pension and health costs are making benefit costs grow more rapidly than wages, some employers say, and cutting wages is often easier than other ways to pare labor costs. But some workers say these cuts are unfair at a time when corporate profits and employee productivity have risen strongly.

Sometimes unions and their workers cooperate with management on pay cuts, hoping to recoup some wage increases when conditions improve. In Madawaska, Me., 460 unionized workers accepted an 8.5 percent wage cut in May to help keep their paper mill in business.

“Workers, of course, do not like to have their pay cut, but I think that workers’ major concern now is, ‘Do I have a job?’ ” Professor Lewin said. “If the unemployment rate were lower, we’d see a lot more resentment toward pay cuts.”

But workers sometimes fight back — particularly if an employer doesn’t show signs of distress.

In Albuquerque, where the mayor pushed through pay cuts to bridge a $66 million budget deficit, the largest union of municipal workers is suing, arguing that the mayor’s plan should include furloughs.

The mayor, Richard J. Berry, rejected that idea. “You want to keep people employed. You want to preserve public services. And you don’t want to raise taxes,” he said. “When you’re trying to lower the cost of government while maintaining services, furloughs don’t do the trick.”

Albuquerque would have to trim at least 100 jobs without the cuts, he said, which top out at 3.5 percent for employees earning more than $90,000. Those earning under $30,000 will not be affected.

At the Mott’s apple juice and sauce plant in Williamson, N.Y., 30 miles east of Rochester, 300 unionized workers have been on strike since May 23 over management’s demands for a $1.50-an-hour wage cut, a reduction in company 401(k) contributions and higher employee contributions to health insurance. The strikers are seething over management’s demands because the plant has been profitable and Mott’s corporate parent, the Dr Pepper Snapple Group, reported record profits last year.

“They keep piling more and more work on us, but they want to pay us less and less,” said Michele Morgan, a Mott’s employee. “It’s a slap in the face.”

Chris Barnes, a company spokesman, said the Mott’s employees were overpaid, at $21 an hour, given that the average in the area for food manufacturing workers was $14 an hour. The union disputes those figures.

“Our only objective,” Mr. Barnes said, “was to continue to enhance the competitiveness and flexibility of our operations.”