Social Inequality

Posted: December 26, 2012
By: Clay Cerny

I was listening to Ed Schultz’s radio show today, which included an interview with the great union leader Leo Gerard, President of the United Steelworkers, who asked this question: Why do CEOs and executives get the security of contracts?  A small faction of unionized employees have such security, but that piece of the labor pie gets smaller every day.  The best paid employees – the executives – are also the most secure.

Corporations now specialize in transferring risk from the company and executives to workers.  I met with a client today who drives a small truck.  His company is being put out of business by competitors that require drivers to purchase their trucks and routes, which is a method FedEx uses for some of its vehicles.  When the company is no longer responsible for the vehicle, it can cut its price while increasing its profit.  The company wins, so does it customer.  Who loses?  The employee who now has to own the truck, maintain the vehicle, and eventually replace it.

This example is just one way that workers are carrying the burden of “productivity.”  The more a company can ask of its workers: own the vehicle, own your tools, pay for your entire pension, pay for most of your health care; the more it can take as profit.  Those who believe in the “free market” will argue that these business models would be impossible if workers did not accept the terms.  I think a more accurate way of describing this situation would be that desperate people will make bad choices.  Those bad choices will cause all of us to suffer.  First we will pay more to support social programs accessed by low wage workers.  The next step will be much worse.  What happens when wages fall so low that the shrinking middle class can’t subsidize the system that pushes money up?  Our lives will be very ugly.

We need a system that offers real security as well as the opportunity for reasonable profit.  Our current system is out of balance, asking the least of those who have the most, setting up a system where those who are most secure are getting even more security.

Posted: March 18, 2012
By: Clay Cerny

[On Sundays, this blog explores topics big and small in “Sabbath.”]

Work and the Social Contract

In 2002, former U.S. Secretary of Labor Robert Reich published a book entitled I’ll Be Short.  In one sense, the book is a pun on the author’s height.  It also indicates the length, 121 pages.  However, the most interest sense of the title might be conciseness – to the point, which Reich captured in these words: 

“Not since World War II have Americans felt so unified.  We’re fighting a war on terrorism, and we’re fighting to the get the economy moving again. And we’re all in this together.  Except when it comes to paying the bill.”

It’s been 10 years since Reich wrote those words.  What’s changed?  Well, we’re not so united.  The poor and middle class are still paying the bill, if not directly in taxes, indirectly through lost wages, unemployment, and foreclosure.  The result has not been a revolution against those benefiting most from the system, but an unfocused anger that most often gets directed at government and the poor. 

Reich sees this as a failure of a social contract based on three principals:  1.  Employees will profit as the companies they work for.  2.  Working people should be paid enough to support a family.  3. Publicly supported education should offer opportunity to all.  Reich clearly states that this contract did not promise equality, but it did offer a fair chance for the poor and middle class to rise.  It was supported by a safety net that helped people in times of trouble.  In 2012, this social contract seems broken beyond repair. 

I don’t blame the politicians.  We the citizens elect our political leaders, and we get the democracy we deserve.  However, I do blame the thinkers and pundits who have pushed a libertarian vision that favors the individual over society and freedom over security.  Milton Friedman’s famous book is entitled Free to Choose.  For most Americans, our economy has come to resemble a casino:  Free to lose.

A social contract implies that we share a responsibility to do what is best for the country (vote, pay taxes, serve in the military) and the country will do what is best for the people.  The American Revolution was driven by a belief that the King and his friends were sucking the colonies dry.  We seem to be reaching a new crisis.  People have no faith in government.  They are also beginning to see that corporations and the rich are writing the rules to benefit themselves.  Recently, I wrote a post about a study that found that 93% of new wealth produced in 2010 went to the top 1%.  How can a society continue to claim it provides opportunity when so few benefit?

The social contract says we owe things to each other.  We share a commons that we need to protect as a resource that benefits all.  More and more, both Republicans and Democrats reject such ideas.  They kneel before a market that is dominated by big banks and corporations that receive large government contracts and even larger tax breaks. Many large corporations pay no federal taxes despite a 34% tax rate.  Many billionaires pay a lower percentage of income taxes than the middle class.

If we don’t find some way to put together a new social contract that benefits most Americans, not just the elite, our economy and democracy will crumble.  It’s a nice-sounding myth to imagine a world where individuals are self-sufficient.  However, it’s not true.  We rely on each other.  We share basic needs and human rights.  It’s important to remember the story of Cain.  We can deny being our brother’s keeper, but that is a lie, a lie told by murderers and criminals, the kind of people that don’t believe in society.

Posted: November 21, 2011
By: Clay Cerny

In a speech at Harvard, Republican presidential candidate and former Speaker of the House Newt Gingrich suggested replacing union janitors at inner city school with the children who attend the school.  He called laws that prevent children from working before the age of 14-16 “totally stupid.”  He did not say what restrictions – if any – he would put on child labor.

What Gingrich doesn’t consider is how many adults his plan would throw on the street.  He claims to be doing what is best for the children.  Looked at more clearly, his real target seems to be public union employees who have been the targets of Republican governors across the U.S. 

This proposal is foul on two levels.  First, it seeks to make children workers rather than learners.  Second, it would increase unemployment and income inequality he claims to want to lower by putting adults, many of whom are supporting children, on the streets.  This solution would make the problem worse. 

Gingrich has long been one of the most cynical politicians in the U.S.  With this “modest” proposal, he has reached a new low.

Posted: July 4, 2010
By: Clay Cerny

As we celebrate a day that honors our political birth as a nation, it is useful to think about the promise of the American Dream.  Can any child grow up to be President?  Is this a country (or a world) of true opportunity?

 Common Dreams offers a speech by Canadian activist Maud Barlow, who considers the impact of social and economic inequality in a speech rebroadcast by Democracy NowToo often American want to ignore this subject.  We boil it down to an individual level and talk about what people deserve.  Barlow casts the debate in a different light.  Working people in America need to consider this message even if they are going to disagree with it.

Postscript:  Former Labor Secretary Robert Reich, writing in the Nation, considers how inequality is affecting the economy in the U.S.  He compares our current situation to similar dynamics that caused the great Depression.