The Betrayal of the American Dream (6 page)

The Kochs are masters of misinformation. David Koch’s Americans for Prosperity (AFP) virulently opposed the national health care reform bill and helped create the image that there was a vast groundswell of opposition to the measure by organizing town hall meetings to attack it. Speakers often made wild, sensational claims about the legislation: at one Colorado gathering sponsored by an AFP group, a speaker contended that the bill mandated physician-assisted suicide, charging that “Adolph Hitler issued six million end-of-life orders—he called his program ‘the final solution.’ I wonder what we’re going to call ours?”

After the Patient Protection and Affordable Care Act (PPACA) was passed in 2010, the AFP bought television time on the eve of the 2010 midterm elections to condemn the new law. One featured a Canadian woman who warned about the perils of government-run health care systems. Identified on Koch’s AFP website as Shona Holmes, she delivered an unsettling message: “Many Americans wonder what the new health care bill will do. Well, I know. I am a Canadian citizen. I had a brain tumor, but if I had waited for treatment in my government-run health care system, I’d be dead.” She said she traveled to the United States for “world-class care that saved my life.” An AFP official said that her case showed how “our health is too important to leave in the hands of a government bureaucrat.” It was later revealed in the Canadian press that Shona Holmes did not have a brain tumor—only a cyst on her pituitary gland. The U.S. doctors who removed the cyst later said that they did not consider her condition life-threatening.

Similarly, the Koch-supported Cato Institute spreads misinformation about the economy. Every year Cato and its partners compile and publish an annual index of the nations that have the most “economic freedom.” The most highly ranked have lower taxes, less government regulation, higher personal incomes, lower infant mortality rates, and fewer murders than those that supposedly restrict economic freedom. The survey is trotted out annually by Cato and other conservative think tanks with claims attesting to its scrupulous methodology, but its conclusions are based more on ideology than on science. Cato claims that nations that are “economically free out-perform non-free nations” but glosses over the fact that most of the so-called non-free nations, such as the Congo, have been poor for centuries and owe their lowly status more to ingrained poverty than current government policies.

Even more misleading is Cato’s measure of economic freedom among developed nations. The United States is always in the top ten, but Germany, which has a dynamic, job-creating economy, always ranks well down the list largely because it has higher taxes and more regulation than the United States. In 2010, for example, the United States was sixth, while Germany was ranked twenty-fourth.

But what is life like for people in each country? The infant mortality rate, cited by Cato as a mark of a nation’s prosperity, is much higher in the United States than in Germany—5.98 per 1,000 births compared to 3.51 in Germany. The murder rate, another Cato bellwether of economic freedom, is more than five times higher in the United States than in Germany at 4.6 homicides per 100,000 persons compared to 0.8 in Germany. German manufacturing workers earn 26 percent more in wages and benefits than their counterparts in the United States. Germany’s unemployment rate in 2010 was 7.2 percent; in the United States it was 9.6 percent. German CEOs, on the other hand, earn on average about half what their counterparts in the United States earn, and then pay higher taxes on those earnings.

By most every significant economic measure, Germany’s policies benefit the broader society. But in Cato’s view, those very policies—higher wages for working people, higher taxes on the wealthy, regulations on corporations—are constraints on economic freedom. But whose freedom? To Cato, “economic freedom” is measured largely by how much freedom members of the economic elite enjoy—not the freedom enjoyed by the society as a whole.

The vision of the Kochs and members of the economic elite for transforming America is by no means complete. The assault on the middle class that we detail in this chapter is just a prelude to actions that will further tighten the screws on working Americans if the privileged continue to set policy that favors only themselves.

To carry out their vision, the Kochs not only continue to pump money into politics and think tanks but are aggressively launching vehicles they directly control, such as the Americans for Prosperity Foundation, which was founded in 2004. Although the brothers’ combined net worth has risen over the last three decades from $532 million in 1982 to $50
billion,
they decided in 2007 that the American dream—their version of it anyway—was somehow under attack and needed defending. So they launched what would become a regular conference, the “Defending the American Dream Summit.”

This conference brings together hundreds of Koch supporters who pledge support for the goals the brothers deem essential to America’s future. At a conference at a hotel in suburban Washington in 2009, David Koch thanked followers and said their efforts were succeeding “beyond our wildest dreams.” Koch told them that meetings such as theirs were breathing life into the vision that he, his brother, and others have of creating a mass movement of Americans who will stand up and fight for the “freedoms that have made our nation the most prosperous society in history.”

As Koch spoke, the gap between the richest Americans and everyone else had never been greater. The jobless rate was rising to 10.2 percent, the highest in twenty-six years. The number of Americans without health insurance hit a record high of 48.9 million. One in every seven Americans was in poverty. That month workers at companies such as Kasco in Atlanta, which made band saws and grinder knives, watched helplessly as their jobs were shipped off to Mexico. Only days before Koch’s speech about the “most prosperous society,” Heather Newnam shot herself to death as sheriff’s deputies closed in to evict her from her foreclosed home in Tamarac, Florida. She was one of 332,292 Americans to lose their homes that month.

But those events taking place across America might as well have been happening on Mars for all those gathered in the conference room cared. David Koch told them that if they all worked together they’d preserve the principles that had made America great. “The American dream,” he said, “of free enterprise and capitalism is alive and well.”

What Koch didn’t say is that free enterprise doesn’t offer everyone the same opportunities if policies undercut members of what once was the world’s greatest middle class.

The year David Koch launched the “Defending the American Dream Summit,” Joy Whitehouse’s dreams came to an end. Barely able to afford minimal medical care and enough food to stay alive, she continued to maintain her independence by practicing free enterprise as best she could—collecting empty cans by the side of the road until her strength gave out and she died.

CHAPTER 2

THE COST OF FREE TRADE

J
une 1979 was like any other month at the Rubbermaid plant in Wooster, Ohio. Out on the factory floor, huge quantities of plastic were being fed into massive injection molding machines, where it was melted down and then pressed into dozens of familiar shapes. Like clockwork, the big machines belched out storage bins, kitchen containers, wastebaskets, and other household products. Twenty-four hours a day the machines hissed and clamored, making staples for American homes—just as machines had been doing there for nearly half a century.

All across America it was much the same story inside busy factories that month. Orders for machine tools, a reliable barometer of the nation’s industrial might, were up a robust 32 percent over the previous year, affirming the status of the United States as the world’s greatest manufacturing power, the country where more cars, steel, airplanes, cameras, stoves, refrigerators, farm implements, textiles, and glassware were made than in any other country in the world.

A few weeks later, statisticians at the Bureau of Labor Statistics in Washington began compiling June’s employment numbers from reports submitted by hundreds of thousands of workplaces across the nation. When all the numbers were in, BLS tabulated that manufacturing employment in the United States had reached 19,553,000 jobs in June—a new high. BLS took no special note. Employment fluctuates, and although the number of manufacturing jobs was expected to go up and down in the months to come, everyone assumed that in the long run the total would just continue to go up. It always had.

No one knew that June 1979 represented the zenith in manufacturing jobs, not a stepping-stone to greater things. Never again would so many Americans be employed in manufacturing.

National policies that had been undermining domestic manufacturing for years were finally catching up with workers on the factory floor. Years of low tariffs, unrestricted imports, and a refusal by a succession of administrations and Congresses to insist on reciprocal trade with our trading partners all began to take a harsh toll on the nation’s manufacturing base after June 1979. That toll also went largely unnoticed, except by those who were directly affected. Unlike wars and natural disasters that capture the public’s attention, the slow, steady erosion of the job base just wasn’t headline news. But for millions of working Americans, it would be a cataclysmic event that demolished their standard of living and irrevocably changed their way of life.

Workers at the Rubbermaid plant in Wooster would live this story.

It was here in the 1920s that Rubbermaid engineered its famed rubber dust pans, an eminently practical item that became the first of many products that made Rubbermaid a household name. The company opened plants elsewhere, but the big gray stone building on Akron Road remained its heart and soul. Together with the company’s nearby corporate staff, Rubbermaid’s 1,600 employees made it the largest employer in the northeastern Ohio town of 24,000.

A good corporate citizen, Rubbermaid contributed to the arts, led a drive to refurbish an old movie theater into a cultural center, and sparked a downtown renaissance by opening a retail store on Market Street. It was perennially named one of America’s finest companies and more than once snared
Fortune
magazine’s top honors as “America’s Most Admired Company.” No one who worked the factory floor was getting rich. But it was steady work, and it was not uncommon to find three generations of a family on the payroll. Judy Bowman, who worked there for thirty-two years, recalled, “It was like a big family.”

The forces eroding America’s industrial base did not hit Rubbermaid in full until the 1990s. One of the most severe tests came in 1995 when the company lost a contract to supply Walmart with dozens of household items. Walmart, famous for squeezing suppliers for the lowest possible price and pressuring them to go offshore to keep costs down, balked at a proposed price hike from Rubbermaid. Rubbermaid had opened plants in Mexico, Korea, and Poland, but the bulk of its manufacturing was still in the United States. When negotiations failed, Walmart severed the relationship and turned to other suppliers, delivering a body blow to the company’s U.S. manufacturing.

Later that year, Rubbermaid cut its workforce by 9 percent and closed nine facilities—the first significant retrenchment in its history. Four years later, the company was bought by Newell Corporation, a global consumer products giant known for cost-cutting and cutthroat management. Newell shifted work from Wooster’s rubber division to Mexico and relocated the corporate staff to Atlanta. The Rubbermaid workforce in Wooster was reduced to less than 1,000.

None of the Wooster workers had any illusions about their new bosses, but even so, they were in for a shock. On December 10, 2003, Newell announced that the Wooster plant would be shut down within months. Shock and disbelief swept through the Rubbermaid community. Many employees had never worked anywhere else. All of them wondered what they would do.

Over the next few months, the plant was a scene of almost unbearable sadness to those who were left. “Little by little they took the machines out, one after another,” Opal Drysdale, who worked in the plastics unit, told a local reporter. “All we could do was watch. It was really depressing; a big part of our lives was disappearing in front of us.”

After the doors finally closed, workers soon exhausted their meager severance packages, and they struggled to find new employment. Some did, often just temporary jobs without benefits that paid 30 to 40 percent less than they’d been earning.

Judy Bowman had landed a job at Rubbermaid right out of high school. In the thirty-two years since, she had worked every shift, every day of the week; she had also worked almost every job, but mostly on the production line that made the popular rubber bath mats, until that work was sent to Mexico.

“I liked my job and I liked the people,” Bowman said—so much so that the company called on her to lead guided tours of the plant for sales reps and visiting chamber of commerce types. She would show them how products were made by the big machines and then explain a little of the plant’s history.

She was earning $13 an hour as a custodian in the plastics department when the plant closed. She was offered a job loading Rubbermaid products at the adjoining distribution center, but with nagging injuries from her years in the production line, she knew she wouldn’t be able to do the heavy work required.

So for the first time in thirty-two years, she entered the job market. She answered an ad from the College of Wooster for a night custodian, but the college decided to use temps from a local agency. She applied to a new Hilton hotel to be a maid, but the job went to a woman with more experience. She applied for a custodian’s job at a local hospital, but nothing came of that either. Months later she got a part-time job as a janitor at a local school district, working one or two days a week, for $7.77 an hour. As a full-time job, that would have added up to about $16,200 a year, slightly above the poverty level for a family of four.

The city of Wooster was shaken by the loss of its anchor company, but after the initial trauma the town tried to put its best foot forward, as towns are wont to do after the loss of a vital institution. Local officials said that Rubbermaid wasn’t the only plant in town; there were others that could help pick up the slack. They pointed to other companies that could help ease the transition: LuK Inc., an auto parts supplier; Tekfor USA, an iron and steel forger; Bosch Rexroth, a hydraulic equipment maker; and Robin Industries, an auto components maker. But soon those plants would be shaken by the same forces that had destroyed Rubbermaid in Wooster: as companies began shipping work off to Mexico or relying on imports, workers were laid off.