Tuesday, October 11, 2005

Part 4: How they do it.

This is the final post in a series on why a capitalist society would establish a large class of working and non-working poor, and create conditions wherein those in that predicament face large barriers to advancement. Wealth is power, and the poor have neither. If you want to prevent someone from accumulating wealth, depress the rate at which they are paid. The cost of living in the US, the cost of food, shelter, clothing, transportation, insurance, health care, and taxation, is much higher than say, Mexico. This means that an “undocumented alien” that crossed the border in an “unorthodox manner” and is working “under the table” can support a family back home for less money than a person with a family in the US. Such a person can and does accept a lower wage than would be a considered a decent living wage for a domestic family breadwinner. This system is working out so well for some corporate interests, that wetback labor is being viewed as indispensable and is being decriminalized. The effects on the workforce and the economy at large are less desirable however.

Going back to the model comparing money to a liquid, imagine a savings account as a bucket to be filled with water. There are three ways to prevent the bucket from being filled: put a hole in the bottom, siphon off the liquid as fast or faster than it is being transferred in, or divert the flow entirely. Hiring illegal immigrants and/or cheap offshore labor does a bit of all three. Offshore labor diverts the flow of wages and allows employers to pay wages that are lower than would be legal here. The wages paid in the US that go to feed families in Mexico, India, and other places in the world help the economies of those countries, but do nothing for the US economy. The presence of these alternative work forces keeps the minimum wage depressed below the poverty line, and creates an opprtunity to keep a wider veriety of jobs at the minimum wage standard. The minimum wage has not kept up with inflation, and the excuse for many years has been that young adults working for McDonald’s, etc., are still living at home with their parents and don’t need to make as much as a family breadwinner. Unfortunately, this does not reflect the realities of the modern work force. As often as not, an unskilled breadwinner finds him/herself working two jobs to support a family and a home. If you do the math, this leaves no time for education, and this person will never qualify for a better paying job. Most of the time, these jobs offer no medical benefits, and workers in this category wind up with higher bills than a person making less money, but only working one job with benefits. This is a trap. Many people in this trap succumb to depression and self-destructive behaviors like drinking and smoking. Drinking and smoking puts money in the government’s pocket as well as large corporations, so it is not too vigorously discouraged. To see the names of some employers with a large work force receiving minimum wage, check out the list of Republican campaign contributors in part 1 of this essay.

Another myth that is repeatedly offered is that illegal immigrants take jobs that no one else wants. This is untrue. Immigrants take jobs that won’t work for US residents with higher expectations and needs for a return on the investment of their time. My ancestors worked in mines, and in textile mills and in shoe factories. Some of my friends worked in shoe factories until the 1970’s when the factories closed. Some of the people I went to High School with own and operate successful landscaping and tree businesses. Still others empty bedpans in nursing homes. Another works in the exhaust-filled tunnels that connect Manhattan to New Jersey. The problem with the jobs that wage earners shun is not the work, it is the wage. All of the excuses are gauged to keep a stratum of the workforce willing to work for less than a fair wage. The pure Capitalists and Libertarians and Objectivists can argue for a market free of regulation, but none of them ever had to live within the reality of a 1920’s West Virginia coal miner and his family. There is corruption on both sides of the labor equation, but collective bargaining is an economic necessity. The most recent developments of offshore labor and tolerated illegal immigration is an attempt to shift the balance of bargaining power back to the employer. Their motto might as well be, “Slavery is illegal unless it is in someone else’s country.”

There is much more that I could say on this topic, and much documentation that I could offer to back up my position. For now, I leave it at this, and open the floor to any debate that might ensue. I will just mention in passing one more trick used to keep the poor where they are: schools that don't teach.


At 9:18 AM, Blogger Delta said...

Dead on, having an educated and somewhat wealthy populace would result in higher taxes, better communication, and more collective bargaining. In the interests of profits, this will be fought against aggressively in a capitalist society, especially in a hyper-capitalist society like the US.

At 9:19 AM, Blogger Delta said...

With hyper-capitalist meaning more like welfare for the rich, not a laissez-faire philosophy. Just wanted to add that.

At 11:38 AM, Blogger Michael Bains said...

Immigrants take jobs that won’t work for US residents with higher expectations and needs for a return on the investment of their time.

This also has the effect of encouraging stagnation in the immigrants country of origin since those in charge don't have to worry about "appeasing" these people. Even if the wealth the illegal-migrant workers send back home isn't readily stolen via taxation or bribes (LOL! Like it isn't!) these people's families are still less likely to revolt against the current dismal state of affairs.


The pure Capitalists and Libertarians and Objectivists can argue for a market free of regulation, but none of them ever had to live within the reality of a 1920’s West Virginia coal miner and his family.

Actually, there are frequently members of profiteering classes whose families did indeed rise from such origins. The very brutality of their success lends emphasis to their Belief that this is just the way things must be. It is more fuel for their desire to be on their current side of the issue without their having to embrace their responsibility for reframing and fine-tuning the issue of poverty of scarce resources.

The indispensible virtue that is Human Pride becomes corrupted when it accepts that Nature's dictate that Survival of the Fittest amongst a species can not be moderated successfully.

Only the strong survive without the intervention of a clear and compassionate consciousness. Our Society claims to be against that maxim, even as it works to sustain it.

At 11:45 AM, Blogger Michael Bains said...

In the interests of profits, this will be fought against aggressively in a capitalist society, especially in a hyper-capitalist society like the US.

Right you are Delta.

The main problem is an overload of devotion to the Share Holders at the expense of both the product and the society which makes it all possible.

I am 100% against holding back those who would puch the frontiers of human ingenuity and exploration. That is why I think a Military Industrial Complex to be integral to our species survival because it makes off-planet travel possible, but compromise must be made to ensure a sustainable Medical Industrial Complex in order to make that survival worthwhile.

Tricky ol' Cultural Evolution at work!

At 12:30 PM, Blogger Francois Tremblay said...

You had me all the way until you started ranting against capitalism. I don't think you know what capitalism means and what corporatism means, and how the two are different. Educate yourself a bit before making such absurd assertions.

At 1:29 PM, Blogger Michael Bains said...

Hey now Francois

Just to be real clear: I thoroughly endorse Capitalism cuz it works when intelligently regulated and is well understood by the regulators. Even when it fails - as it is to some great extent right now in this country - it still trumps Command Economies because it has its basis in the Natural world. Regulating Capitalism is Exactly the same as regulating the Weather; except humans haven't developed the technologies to do the latter yet.

It's when Cap becomes dependent upon otherwise non-participating share-holders - those we provide the capital without much if any clue as to what they are supporting or with their sole intent being to manufacture Money regardless of HOW their investments do so - that it evolves into an irrational and most definitively UNnatural economic device which is doomed to failure.

Life is good and so is money. Both are hard-earned and bear responsibility for their payment though.

Who is John Galt? Both the investor of Capital AND the producer of wealth. He gets what he puts into Life AND he knows exactly what that entails.

At 9:46 AM, Blogger breakerslion said...

Thank you everyone, for your insightful comments.

mbains: You are correct in saying that ruthless people often rise from humble beginnings in a sort-of "do unto others as has been done to you" philosophy. My point was that there are few people alive today (in the US) that have experienced the crushing poverty and "company store" era that existed before the labor movement. There has been a trend back toward that model ever since the Regan administration. This is not necessarily unhealthy, like any imperfect system, there are bound to be oscillations. Oscillations need to be moderated or they can tend to an extreme, and sometimes the system flies apart, as in the French Revolution.

Delta: Interesting concept, "hyper-capitalism". This is indeed a good description of the artificial incentives aimed to benefit big business interests. In some ways, this is a response to welfare programs, the financing of which make US businesses less competitive on a global scale when compared to say, Indonesian "slave-labor" and similar economic models.

Franc: In case the "rant against capitalism" comment was addressed to me, please allow me to clarify my position. I am a capitalist, from a long line of capitalists. I invest in the stock market. I have a positive bank balance, and carry no debt on my credit cards. My ancestors were merchant sailors and financiers of timbering ventures in the New World. The present day corporate model (when it includes profit-sharing) is an outgrowth of the shareholder concept of a ship's crew, and its owner/investors. Everyone got paid a percentage out of the profits on the sale of the cargo, and nobody complained that they did not receive an equal percentage. The division was agreed-upon up front. Today's corporations cannot function this way; my salary remains constant regardless of profit. This puts an extreme pressure on the corporations of today to show not only profit, but also growth to entice investors. It also creates layoffs if profit will not cover all of the costs of doing business plus the investors' expectations. The investor's expectation part of that model means that layoffs happen sooner and deeper than a pure economic model would suggest they need to.

I am no big fan of labor unions. The one and only time in my life that I was a member of a union, I worked in a "closed shop" and had to pay union dues for the privilege of making minimum wage. I see labor unions as a necessary evil, a counterweight to the pressure to exploit the labor force, placed on a corporate structure by its investors. The need for labor unions can also be seen as a government failure to adequately protect the rights of its citizens against exploitation. The need for such a counterweight is best justified by its formation and continued existence. Even non-union shops benefit from the threat of unionization.

As with any social system, the addition of a new power/authority base brings with it new opportunities for abuse and corruption. This is true of labor unions, welfare recipients and administrators, Social Security, government itself, government contractors, bankers, accounting firms, and corporations. The more complex the system, the more erratic becomes the self-correcting mechanism, and the more adjustments are required. As socially-conscious humans, we tend to focus on the abuses, because these are the things requiring attention. We often fail to see the larger picture in which the mechanism is attempting to create the greatest good in terms of maximizing one's opportunity to succeed.

Monty Python's Flying Circus said this in a lot simpler language with their "Dennis Moore" sketch.

At 5:49 PM, Anonymous Anonymous said...

Well-written, if I may say so myself.

I've always said this... despite the propaganda and subliminal messages, the American Way is NOT unilateral prosperity (at least not financially). The US government and it's various arms (including Big Business) will ALWAYS keep things status-quo, to ensure that THEY have most of the money, and by association, most of the power.

Afterall, what good is money and prosperity if you can't hold power over other human beings? That's what drives this f***ing thing we call life and this f***ed-up species we call Homo Sapiens.

The only thing that MAY bring things into balance is outside interferance. I mean things like:

1. Meteor strike on a Planet-killer level (oh God PLEASE make this happen)

2. Contact with an alien species that FORCES justice and kindness upon us.

3. A mutated virus that only attacks rich people when they start making too much money,

and my personal favorite...

4. The Second Coming of Christ.

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