Monday, November 15, 2004

November 14

Slip, slipping Away
I was born on August 14, 1945 – VJ Day. What a great time to begin life!

As American GIs flooded home from war a grateful government lavished social and economic benefits upon them and their families. The GI Bill sent millions of kids through college and occupational training. And generous government-backed, low –interest home loans turned millions of working class Americans into homeowners, something once reserved only for a the rich.

My father had served in the Navy during the war. His parents were Sicilian immigrants. His father a hardworking stonemason. Before the war my father had worked for a house painting company. After the war he studied for and got a California contractor’s license. He got a low interest business loan, formed his own construction company. America was suddenly filled with hope and possibilities. He built his first spec home on a small lot in the vast, yet to be developed, southern suburbs of San Francisco.

All the pieces were in place for the historic economic growth that would follow. Thanks to generous CalVet and federal veteran home loan programs that house sold quickly, as did many other over the next 25 years. These new ranch style homes sold for around $32,500 and working class families snapped them up as fast as they could be built. The easy loans were only one reason for this. The men in these families returned to jobs that paid well.

During the 1950s, 1960’s into the 1970s life was about as good as it got for working Americans. Gone was the pre-war image of blue-collar workers as Ralph Kramden characters, barely getting by, forced by circumstances to live desperate lives in a cold-water flats. That was all gone, replaced by sleek new homes with neatly mowed green lawns in front, a patio in the back and at least one new car in the garage.

Back then the economy was as close to an economic perpetual motion machine as it gets. Workers suddenly had jobs that paid them more money than they needed to just get by. And, suddenly they had access to easy, affordable credit. They borrowed, spent, earned, invested, earned, spent, earned, and spent. Spending soared for durable goods, autos, furniture, boats, campers, and vacations. That demand in turn created more good-paying working class jobs -- which in turn created more consumers, which in turn… etc.

As social/economic conditions go, they don’t get any better. It was proof of what can happen when the economy gives everyone a fair piece of the action.

That period personified what became to be assumed was the default “American way of life,” – an American birthright for anyone willing to work for it. But, alas, it was not destined to last. I am not going to try to pinpoint just when we began going backwards. I’ll leave that to future economic historians. And, there are still a lot of Americans enjoying the residuals from those good days. They will surely wonder what the hell I’m talking about. And, there are those, who while struggling, still believe that, if they work hard and play by the rules, that 1960s American lifestyle is surely just around the next corner. You will find them largely in the “red states.”

But most of them, their children and grandchildren, are passengers on a slow freight back to times when workers must tread water furiously just to keep their heads above a rising tide of obligations and personal debt.

Yes, I know that home sales and home ownership remain are at record highs, thanks to record low interest rates. But, even here, the strains on average American pocketbooks are showing. Foreclosures are also at record highs. The American Dream did not appear overnight, and it will not disappear overnight. But, look at the numbers and you seen it, bit-by-bit, slipping away.
  • Nearly 10 million Americans are now unemployed.
  • Wages have eroded: In 1973, private-sector workers in the United States were paid on average $9.08 an hour. Today, in real wages, they are paid $8.33 per hour.
  • 11 million Americans are trying to make ends meet on the minimum wage of $5.15 an hour.
  • Working harder and longer for less: The average American last year worked 1,978 hours, up from 1,942 hours in 1990 -- an increase of almost a week of work. American workers are now putting more hours into our work than at any time since the 1920s -- 40 percent of Americans now work more than 50 hours a week.
  • 33 million Americans are now counted as living at the poverty level.
  • 45 million lack any form of health insurance.
  • 4 million Americans will experience homelessness sometime during the coming year, 1.3 million of them children.
  • Since March 2001 we have lost over 3 million jobs in the private sector to outsourcing.
  • Forrester Research predicts that at least 3.3 million white-collar, information technology jobs will be lost to low-wage countries by 2015.
Low-paying, low-skilled, non-union Wal*Mart jobs are rapidly replacing the old unionized manufacturing jobs that for three decades fueled America’s robust post-war economy. And with those jobs went the benefits that workers once took for granted, health insurance and secure retirement benefits. Adding insult to injury, companies are now flooding courts to sue – yes SUE --- their retired workers. The goal – to take away the very retirement benefits agreed to in labor contracts signed years ago. And, guess what, the companies are winning those suits. By freeing themselves of such obligations companies can immediately report higher earnings to shareholders without selling or producing a single product. All that money that would have provided secure retirements to millions of former loyal workers rattles right down to the bottom line. Bonuses all around for senior management too. Nice.

As I said above, I can’t tell you exactly when we began this slide back to Ralph Kramden’s America, though my instinct tells me it began with the advent of “Trickle Down economics,” – the idea that, if we let the already rich get even richer some of those excess funds will overflow their bank accounts and shower down on the rest of us.

Nice theory, except it doesn’t work. As it turns out the rich use some of that extra money to build huge dams that capture whatever flows in their direction, If any does trickle down it’s only if one of their dams springs a leak.

What we learned during those prosperous post-war was that Trickle-Up economics is what really works. Putting money in the hands of hard-working, hard-spending Americans is how to supercharge an economy. Under Trickle-Up economics the money corporations pay workers to produce goods and services trickles back up to them as those same workers spend it on products and services. Duh!

So far the erosion I speak of has been somewhat obscured as American consumers continued to consume, even as their real income has shrunk. They have fueled their consumption by either sapping equity from their homes, by running up record credit card debt – or both. Of course, there are natural limits to those sources -- limits that are already stretched beyond sustainability. Personal bankruptcies – an early indicator or trouble -- are at record highs.

So, what happens when workers can no longer afford the wide-screen TVs and all the other doodads now being furiously produced offshore by cheap labor? What then?

Let me end with an aside to all those God-fearing, hard working voters in the red states who marched to the polls Nov. 2, American flags pinned to their lapels, to cast their vote for four more years of George W. Bush: S u c k e r s.

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