Whose Freedom?: The Battle over America's Most Important Idea (19 page)

As Sean Hannity said, “That’s the thing about freedom. It doesn’t guarantee success … But let’s say you show a little self-discipline … you work really hard … you get out and hustle … I guarantee you. You’ll be on the road to success.”

The myth, of course, is false. As I have pointed out, forty-five million people cannot, all at once, pull themselves up by their bootstraps and become successful entrepreneurs or get better jobs. Those jobs are not there; the capital for starting that many businesses is not there. And anyway, who would do the necessary jobs that those forty-five million are performing now at low wages—picking fruit and vegetables, working in slaughterhouses, flipping burgers, waiting on tables, cleaning houses, caring for kids, doing day labor, cleaning buildings, pulling up weeds, washing cars—in short, doing the hundreds of jobs that pay very little but are absolutely necessary to our current lifestyles? A quarter of our working population is not even mentioned in the economic liberty myth. They hold up the lifestyles of the top three-quarters of our population, but they are caught in a cheap labor trap.

The trap is created via systemic causation by the structure of our economic system. Many factors come together to create it:

• The metaphor of labor as a resource whose costs are to be minimized
  

• Technology that allows the elimination of skilled jobs and the replacement of skilled by nonskilled workers
  

• The division of employees into assets that are valuable to the company and resources that are interchangeable and fungible
  

• The emphasis on short-term profits
  

• The outsourcing of resources to minimize their cost
  

• The offloading of labor onto customers—having customers put together furniture they buy, or bus their own
  tables, or wade through tedious dial-up menus instead of talking to a human service representative
  

• The flow of immigrants willing to do hard jobs for little pay
  

• The consolidation of companies, which allows for laying off “redundant” workers
  

• The redistribution of wealth to the already wealthy
  

These and other factors create and maintain the trap in a complex way. If one thinks only in terms of direct causation, the trap is invisible!

The cheap labor trap is the first of the progressive ideas needed to tell the truth about economic freedom and the lack of it in contemporary America. Even liberals who speak of the “two Americas” do not want to confront an economic reality. Even if the minimum wage were raised, the cheap labor trap would still exist. The cheap labor trap is built into our economy. The economy is structured around low-wage jobs, and it tends to produce more low-skill, low-wage jobs than high-skill, high-wage jobs. Economic pressures for greater short-term profits for investors have led to reorganizing the economy to reduce the skill level needed for jobs, and with it, the level of wages. And as the skill level is driven down, more of those jobs become exportable.

Given the lack of forty-five million higher-paying jobs at their skill level, those working people will continue to be trapped. Discipline is not bringing them opportunity. They have little or no economic freedom and would have no more even if the conservative agenda were fully realized.

Though these working Americans are not the heroes of the economic liberty myth, they are hidden in the story—as extras! Free
market economies have a “labor market,” structured by the metaphor that labor is a resource to be bought and sold. Indeed, in the days of slavery, slaves were actually bought and sold. Today, large corporations have departments of “human resources” to hire, fire, and lay off workers who are seen as fungible, largely interchangeable—commodities, like coal and other raw materials.

Large corporations mostly have two classes of employees: the assets and the resources. The assets are the highly skilled, creative people—managers, economists, scientists, technology experts. These are hired by head-hunting agencies and get high salaries, stock options, and good benefits. The resources are low-skilled and hired routinely. Efficiency requires using fewer resources per unit of production to produce higher profits. Resource use is to be minimized, and that includes labor. This is part of the economic pressure maintaining a cheap labor trap. For labor resources to be cheaply available, there must be sufficient unemployment to keep the price of labor low in the labor market.

What is hidden in the economic liberty myth is that the myth both entails and
requires
a cheap labor trap. The market is a form of competition. In competitions, there will always be winners and losers. The hero in the economic liberty myth is a winner. What is hidden are the losers required by the myth and the unemployment required by the need for cheap labor.

The labor as resource metaphor is virtually omnipresent in business. An individual looking for a job with a large company is at a considerable disadvantage in negotiating terms. The company has all the power on its side to hold down wages and benefits. That is why the economic liberty myth sees unions as a threat
to corporate profit and as a threat to corporate freedom in the market.

Unions attempt to level the playing field. They assume the metaphor that labor is a resource. Their objective is to corner the market on labor and drive up the price to the point where workers can get a fair shake in negotiations with management.

But what is crucial about unions is not the way they bargain for wages and benefits for their members, but what they contribute to society as a whole.

It is unions that have gotten us the five-day week and the eight-hour day, as well as safety regulations. In doing so, unions have contributed massively to our freedom.

The economic liberty myth takes free markets as a natural phenomenon. But markets are constructed—usually for the benefit of those constructing and maintaining them. The World Trade Organization, for example, is hardly natural. It has hundreds of pages of rules governing its operation. Free markets are supposed to maximize the profit of everyone who partakes of them. When they don’t do this, there is “market failure.”

Markets are anything but natural, and they fail regularly for those whose interests they were not constructed to serve. The moral is that they should be constructed to serve the common good.

It is hardly news that Americans have a work ethic. It is a traditional progressive work ethic. Here are the often-hidden principles behind that work ethic.

• If you work for a living, you should earn a living.
  

• Work is a contribution to society in general.
  

• Work deserves to be compensated according to its contribution to society.
  

• Workers provide profits to business owners.
  

• A healthy society should have useful, fairly compensated work for everyone.
  

Americans on the whole believe that whoever does useful work should be able to earn a living at it, that they should be able to afford adequate food, clothing, housing, health care, and education for themselves and their children at a reasonable American standard of living. In short, there should be no cheap labor trap. It’s simply un-American. In the world’s richest nation, people should get paid adequately for their work. To put it in slogan form: If you work for a living, you should earn a living.

Try to imagine what life would be like if all the people who could not afford health care suddenly went on strike. The lifestyles of the top three-quarters of the population could not be maintained. The American standard of living depends on the people in the cheap labor trap. This thought experiment gives us a good idea of just how very much those caught in the cheap labor trap contribute to American society as a whole—not just to the people who pay their wages.

Fairness is a central value to Americans, and part of that is fair compensation for work done. Correspondingly, there is outrage when compensation is seen as too high—like CEO pay hundreds of times the salary of an ordinary worker. There is a sense that what you make should be in proportion to your contribution to society. Correspondingly, nobody complains when a Nobel Prize–winning biologist gets a million-dollar award. If his work is world class and makes a major contribution, then he should be paid well. Similarly, those in the cheap labor trap whose labor is essential to society as a whole should be making a decent living. The labor market is failing the fairness test.

Part of the economic liberty myth is that employers “give jobs” to employees. The flip side of that is a deep truth: Working people provide profits to those who pay their wages, and it is the work by workers, even low-skilled workers, that provides profits to employers. In America over the past thirty years, wages have not risen much for the middle class, while efficiency and the corresponding profits and executive salaries have risen enormously. In short, the profits from productivity increases are not going to the workers who are being more productive. Instead they are going to owners and investors who are
not
doing the more productive work. That is unfair and un-American. Middle-class working people have been providing more and more profits to owners and investors without making higher and higher wages. An economy that works this way is immoral.

Classical economics views markets as natural and amoral. They are not. All markets are constructed, and they are constructed in accord with certain values. The question is, Whose values? Markets that fit the economic liberty myth are constructed to fit strict father morality. But markets should be constructed for the common good, so that everybody will be able to reap their benefits. Markets are moral instruments. The question is, Whose morality are they structured to fit?

Today, the top 2 percent of Americans own more assets than the bottom 80 percent. That is twice the assets they held thirty years
ago. Yet the top 2 percent have by no means worked twice as much or twice as hard as the bottom 80 percent. What has happened over that period is that there has been a huge transfer of wealth to the wealthiest Americans, without it being earned through work. This is an overwhelming violation of the principles of a moral economy. And it is a violation of the economic liberty myth.

Moreover, conservative economic policies regularly sanction transfers of wealth from ordinary taxpayers to the wealthy, again outside of compensation for work. These transfers come in various forms:

• Corporate subsidies ($160 billion in December 2004) are transfers of wealth from ordinary taxpayers to investors in those corporations.
  

• What are called “tax cuts” that favor the wealthy—demanded by the Bush administration—are actually transfers of wealth from ordinary taxpayers to the wealthy.
  

• No-bid contracts to corporations like Halliburton and Bechtel are transfers of wealth from ordinary taxpayers to investors in those corporations. Since bids introduce competition and hence lower the cost to the public, no-bid contracts cost more and the difference is just a transfer of wealth to corporate investors.
  

• Below-market rate contracts for water, grazing, and mining rights on public lands are transfers of wealth from ordinary taxpayers to wealthy investors.
  

Such transfers of wealth to the wealthy are sanctioned by the economic liberty myth, by the ideas that privatization is always good and that nature is a resource for private use. In a moral economy, governed by the American work ethic, these are all impediments to freedom.

Recall that wealth confers freedoms. Transfers of wealth are transfers of freedom. When wealth is transferred from large numbers of ordinary taxpayers to a relatively small number of the extremely wealthy, freedom is being transferred as well from the many to the few.

As we saw above, so-called private corporations, when they are large and powerful, act as governments over the general public. Their powers can extend to life and death, say, in the safety requirements of car manufacturers, drug companies, and food suppliers. HMOs govern what health care we can receive. Paper mills, agribusiness, and coal mining companies determine whether our drinking water is polluted. Communications companies decide what news we get and what entertainment is available. Most aspects of our lives are governed by the decisions made by large corporations. They are governments without accountability. We cannot elect new executives of such companies who will, on their own, improve our air and water quality; our automobile, drug, and food safety; and the range of news and opinion available to us.

We have traditionally relied on government regulation in such matters. But conservatives have gutted regulatory agencies, both by explicit deregulation or by de facto deregulation: taking away funding or shifting personnel away from regulation, as in the Environmental Protection Agency, the Food and Drug Administration, and the Justice Department. Deregulation does not produce less government. Deregulation simply transfers governing power from public forms of government, which are accountable to the public, to private forms of government, which lack accountability.

Corporations have the power to harm us, and harm interferes with our freedom. Government regulation, by being accountable
to the public, restricts that power and allows the public greater freedom.

None of these truths about freedom are in the economic liberty myth. The reason is clear. The economic liberty myth presupposes the metaphor that corporations are persons. This allows not only the investors and managers of the corporation but also the corporation itself to fit the protagonist role in the myth. It is the corporation itself whose freedom from government control is at stake. It is the corporation that stands to gain full freedom—governing power without accountability—when deregulation and tort reform occur. But members of the public, who stand to lose freedom to the corporation, are outside the myth.