In the 1950s, the American economy was marked by low unemployment (around 4%), fairly high union membership (over 30%), high tax rates for the wealthy (about 90%), and fairly high corporate tax rates (about 50% rate, 28% of federal revenue). Now the economy in 2013 is marked by high unemployment (near or over 8% for the past 4 years), lower union membership (about 11%), lower tax rates for the wealthy (about 40%), and lower corporate tax rates (around 25%, 10% of federal revenue).
I believe that most people expect a fair wage for a day's work, so the harder and better one works the more one should earn. Unions arose to raise worker wages and to shorten their long hours. The average manufacturing worker in the 1800s worked over 60 hours per week.
In a slave plantation, the workers are treated like consumable resources not human beings, so the concept of being compensated fairly for one's efforts was not applied. Slaves could not organize for better working conditions as they could be punished harshly for the dissension or else dispensed with and replaced (bought) with those who would remain submissive. As manufacturers became more profitable in the 1800s, those workers justly felt entitled to some portion of those profits since it is not fair that only those delegating the actual work should reap all the benefits of the goods and services generated by those doing the work. Workers on strike deprive those owners from their profits until they agree to share the earnings. Unions were a check on abuse of workers. Initially the strikers were dealt with harshly, even with government troops helping the factory owners, but eventually Americans agreed the workers justly deserved a better deal and so unions became more prevalent and typical long hours were reduced (to the standard 40 in 1938).
The 1950s had the multiple advantages of a diverse economy, with many unions (and their affect on nonunion workers wages remaining competitive with those in the unions) and high tax rates both for the rich and corporations, contributing to the development of a broad middle class as corporate profits were shared with those doing the actual work. I think of this economy as not being so efficient since, unlike today, a service station would actually have someone pump the gas and clean the windshield. There were jobs to be had at many levels, even with rather low numbers of unemployed, enabling just about anyone to begin employment and advance later to better paying jobs, though of course the cost of living was less at the time. There were many local businesses (like the infamous 'mom and pop' grocers) where there was more local control and presence, less invasion of distant companies. This was a time of a true 'free market' economy where many competitors offered their goods and services. However, on another level, this economy was more efficient because people would work together (which we can do very well as we are social creatures); that aspect is epitomized by the effort to put man on the moon in the 1960s.
The current economy has none of those advantages. Fewer unions, and lower tax rates on the wealthy or corporations, have enabled subsequent worker productivity gains and the higher profits to be passed directly to the wealthy, while the wages for workers have remained static for decades.
I find it ironic that one frequent criticism of contemporary union workers is that they do not work hard or they do not deserve the wages they get.
A company making nearly $5 billion in profits in one recent year has been complemented (in this article) on driving down their worker wages, with the justification that since those jobs could have been sent overseas, the workers should be glad they still have a job at those lower wages.
I cannot interpret this situation as anything other than blatant abuse of the workers. Either work for the company making billions for the owners or we (the company) will find someone else that will work for us to keep making those billions.
In such a work environment, how many of those workers will have the ambition to work hard, and not be the proverbial lazy union worker? The company has told them that even when their labors bring billions of profits to the owners, those workers will not be given any share of those additional earnings.
Because corporate mergers and buyouts can bury the transaction debt, power continues to concentrate further among fewer, leading to various entities that are now 'too big to fail' and so they behave as if totally unaccountable. Jobs continue to be lost as corporate entities are just not profitable enough for their owners, even if their goods and services contribute to society. These mergers get rid of competitors and concentrate the power into fewer people at the top of that corporate entity. There is no longer a state or federal economic policy but instead the political leaders are subject to the whims of the financial or corporate leaders; if wishes not granted then funds or jobs can be removed to other states or countries. There is no longer much of a 'free market' as communities are at the whim of the large corporations (even foreign) who can threaten the removal of jobs or funds unless given financial consideration (to the detriment of the workers and local citizens).
Unlike the 1950s when people worked together to achieve success, now the current efficiencies have arisen through the use of factory automation, electronics and high speed telecommunications. So even though team work (as social creatures) can bring together different complimentary individual skills to maximize a group's efficiency and effectiveness, companies attempt with various employee metrics to keep the workers competing for individual merit and less organized for a group's merit. As worker wages have become stagnant, rewarding employees for their initiative is much less important than just keeping them working at an effective rate to meet corporate goals.
The American economy has become burdened with the results of the financial industry's Ponzi scheme, where loans were piled on loans, as derivatives, to bring extravagant bonuses to those involved in those schemes but leaving the economy with excessive liabilities. The response by the government is to bail out those involved, with new funds at zero or very low interest, but this course the continuation of those payments toward the impossible debts can only lead to disaster (as seen in Greece and other countries in a similar predicament) where everyone must lower their standard of living for their government to pay. Instead of terminating these loans, a clear case of debt bondage (a debt that will span generations), and punishing those responsible for the situation (instead many of those financial institutions and their leaders have been rewarded) the country continues on a clear road to pending financial disaster.
There is no longer any accountability for those at the top of the financial ladder, nor is there a mechanism for a recovery for those at the bottom, the workers whose efforts contribute to the income of those at the top.
The frequently preferred national economic policy of trickle down (the concept of letting the rich have more wealth so their businesses will create more jobs) has not worked out so well, given the rich often stash their wealth rather than keeping it in the community. The article referenced above describes how a very profitable company does not raise wages to its workers. With these behaviors, the wealthy are more like parasites than contributors to society.
If unions are not to be allowed as the mechanism for a check on worker abuse by their employers, where there must be a mechanism to enable those doing the work to get their fair share of the benefits gained by their labor, then the current economic structure had better come up with some alternative. If not the system will surely collapse as there will be no one left at the bottom willing to be slaves to those at the top.
created - Feb. 2012
last change - 02/22/2013
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