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WHAT WE THINK
Corporate America's steals from workers and the poor
The class war economy

December 16, 2005 | Page 3

CALL IT the class war economy--a shocking transfer of wealth out of the pockets of working people and the poor and into the overstuffed bank accounts of the super-rich.

Rising profits and a smart 4.3 percent annual growth rate in third-quarter gross domestic product (GDP) are happening side-by-side with falling wages, sinking family income, evaporating pensions and a failing health-care system.

This is the face of the real "new economy" in Bush's America. It comes without the bubble of the late 1990s economic boom and Bill Clinton's political salesmanship in the White House. Back then, mainstream economists marveled at rapid growth and low unemployment as evidence of a technology-driven "miracle economy," with profit rates peaking at levels not seen since the 1960s.

In that long boom following the Second Word War, steady economic growth and rising productivity allowed for regular increases in real wages and a rising standard of living for most workers--giving rise to the belief in an "American Dream."

By contrast, the 1990s boom was very different for working people. The rise in family income came not from increases in wages, but mostly from growing numbers of women working--and more hours on the job for all wage earners.

Today, however, family income can't compensate for the decline in wages since the recession. According to an Economic Policy Institute (EPI) analysis of the latest available figures, pre-tax income for married-couple families with children fell by 3.1 percent between 2000 and 2003.

That's due in large part to the downdraft in wages. The Bureau of Labor Statistics reported in October that average weekly real earnings--in constant 1982 dollars--were $275.85, down from $279.94 in 2003 and way below the peak of $331.59 in 1973.

As Business Week's Michael Mandel points out, nonfarm business productivity increased at a 4.7 percent annual rate in the third quarter of 2005, "yet very little of the efficiency gains is being directly passed on to workers. Since the end of 2003, average real wages have fallen by 3.2 percent, while productivity is up by 5.1 percent."

Where is the money going? Profits. The share of profit in the national income reached 12 percent in the first quarter of 2005, higher than even the peak of the late 1990s boom.

As for jobs, while the 5 percent unemployment rate looks good in the abstract, the number is low because so many have abandoned their search for work. As a recent report from the Center on Budget and Policy Priorities showed, "employment has grown at an average annual rate of only 0.5 percent since November 2001, as compared with an average for previous comparable post-World War II periods of 2.6 percent" during economic recoveries.

The jobs that are being created in today's "new economy" are nonunion and low-wage, with few--if any--benefits.

Defined pensions--fixed monthly payments to retirees, one of the mainstays of the American Dream--are on their way to extinction. Just 20 percent of companies offer them today--down from 40 percent in 1980. And the federal corporation that's supposed to insure those pensions is $450 billion in the red.

Workers are also being forced to bear a share of the fast-rising increases in health care costs--and just 60 percent of employers offer coverage at all, down from 69 percent in 2000, according to the Kaiser Family Foundation.

The devastating impact of the one-sided class war can be seen in the auto industry, once the benchmark of the American Dream, thanks to a strong union, the United Auto Workers (UAW). These days, business headlines are dominated by talk of the "restructuring" in auto--a euphemism for job cuts of 30,000 each at General Motors and Ford, multibillion-dollar union concessions in retiree health care at both companies, plus management demands to cut wages by 60 percent at bankrupt auto parts maker Delphi.

Corporate America's ongoing smash-and-grab assault has been aided and abetted by the politicians in Washington.

The ever-widening gap between rich and poor has been consolidated--and opened further--by the Bush administration's twin priorities of tax cuts for the wealthy, and cuts in social spending. And the corporate gofers known as members of the House of Representatives are going for more--deeper tax cuts and further cuts in spending.

With Bush's approval rating so low, former House Majority Leader Tom Delay under indictment, and Senate Majority Leader Bill Frist under investigation, how can they still be getting away with it?

The Democrats have challenged some of Bush's policies--and the Republican members of Congress are always ready to screech "class war" at anyone who hints of opposing them. But the differences between the two parities are limited by their shared pro-business policy framework.

From passage of the NAFTA free trade deal to the abolition of welfare, the Clinton White House not only repackaged and advanced the corporate agenda, but gutted much of the New Deal welfare state as well.

The Democrats were the pro-business, pro-imperialist party of the Vietnam War during the prosperity of the 1960s, too. Then, at least, unions were sufficiently powerful and the social movements strong enough to compel Democratic and Republican administrations alike to make concessions--an expansion of social spending and passage of laws guaranteeing affirmative action and environmental protections.

If today's Republicans can get away with slashing and burning even as their political fortunes plunge, it's because the Democrats are putting up no real resistance. Instead, leading Democratic presidential candidates bail out Bush's foreign policy by talking about "winning" the war in Iraq--and carefully tend to corporate interests in Congress to keep campaign contributions rolling in.

When it comes to the class war, the Democrats and Republicans are on the same side. And it's not the side of the millions of people who are fed up with a discredited political system, steeped in sleaze and utterly dominated by big business.

What's missing is the confidence--and organization--to fight back. Building resistance to the attacks on working people means not waiting for next year's elections, but taking action now.

We have to prepare for a fight today--in unions where we have them, and organizing them where we don't. It means stepping up activism against the war, standing up for immigrant rights, and defending women's right to choose abortion--all with the aim of building a fighting left that's rooted in the struggles of working people.

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