From sea to shining sea, America is suffering.
She is, however, afflicted with an avoidable condition she brought on herself, like a hangover. Only this one’s interminable and internationally contagious.
She did it by choosing over the past 30 years to establish an economy that worshiped avarice. That decision has destroyed her financial system and taken down with it much of the world’s.
Now America must decide whether to be swayed by the greedy urging her to continue basing her economy on the destructive policies of deregulation, de-unionization, globalization and privatization or to construct a new financial system focused on industry and profit shared by the workers who produce it.
Over much of the 20th century, the nation created real wealth by manufacturing – taking raw materials from the ground, using machines, energy and labor to convert them into products and selling those here and overseas. That process, to make steel or tires or washing machines, was the engine of the economy. In 1947, 32 percent of the workforce engaged in it belonged to unions, which meant workers received good wages and benefits. This enabled them to churn real money throughout the economy by buying homes and cars and television sets and to sending their children to college. And it enabled them to save 7.5 percent of their earnings.
Then, in the 1980s, a new narrative for the economy emerged. In this story, greed was good. Self-interest was supposed to lead to the best outcomes for business. To accommodate this concept, Government de-regulated and, in fact, passed laws favoring big corporations and the nation’s wealthiest citizens. The idea was that some of the prosperity they created as a result of the abolished protections for workers and the environment would trickle down.
This was the new economy.
This was a scam to move wealth from the middle class to the affluent. And it worked. In 1976, the richest 10 percent in this country possessed 49 percent of the wealth. In 2007, it was 73 percent.
During this time of bowing to corporate demands, the government actually gave multinational corporations tax benefits to offshore their U.S. manufacturing facilities. Sometimes they shut down, throwing hundreds of Americans out of work, then packed the factory pieces into crates, numbered piece by numbered piece, and shipped them to China or Indonesia or whatever country would allow blatant violation of its own labor and environmental regulations. Sometimes they closed American factories and built brand new ones overseas with breaks from foreign governments. As U.S. companies closed, union membership dropped to below 12 percent. And America found herself importing toxic lead coated toys, paper made from trees illegally harvested in Indonesian national forests and untested pharmaceuticals.
Companies that remained here threatened to leave if workers didn’t accept wage and benefit concessions. American workers were vilified for seeking a living wage while CEOs pulled millions out of corporations in annual bonuses.
The American economy began to depend less on manufacturing and more on the “financial sector,” where profit was made moving money around, betting on stock trades, and participating in asset bubbles. Remember the tech bubble? That was manufactured value – not manufactured goods – and that’s why it disappeared when the bubble burst.
The same has now happened with the housing bubble. Those smart guys on Wall Street, among the brilliant ones who sold America on the idea that greed was good, bet on housing prices never falling. A decline in home values never entered their calculations.
Then they fell. And they took down with them a couple of Wall Street banks and the largest insurance company in the world and Fannie Mae and Freddie Mac, credit markets and then the economy of the nation and the world.
Now workers are really in trouble.
They were struggling before the crash as manufacturing jobs disappeared and wages stagnated. Personal savings declined so that the average family now owes $8,000 to credit card companies. Without sufficient wage increases to sustain their lifestyle, families borrowed against their major asset, their homes. Now, because the housing bubble burst, a quarter of mortgage holders owe more than their homes are worth and 2.5 million have lost theirs to foreclosure.
All of this is because America failed to give greed the wide berth warranted by one of the seven deadly sins.
Alan Greenspan, who served as steward over the rise of the culture of avarice for nearly two decades as chairman of the Federal Reserve, admitted to Congress in October that his opposition to federal regulation was a blunder:
“I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms.”
In the song, America the Beautiful,” from which the lines “from sea to shining sea, come, lyricist Katharine Lee Bates counseled in the second verse, “America! America! God mend thine every flaw.”
Clearly, this greed-based economy is a flaw. It was created by covetous humans. It must be mended by Americans of better grace, people Katharine Lee Bates described as those, “Who more than self their country loved.”
America’s workers must seize back control of their country and wrest back determination of its priorities. They must re-regulate the financial markets and remove the onerous restrictions placed on unions to prevent organization of new workplaces and bargaining of new contracts to raise worker salaries and benefits.
But, most immediately, America’s workers must insist Congress immediately pass an economic renewal package that will reinvigorate Main Streets across the nation. This is essential to prevent a prolonged and excessively painful deep recession resulting from the housing bubble collapsing.
This public investment has two purposes. It will stimulate the economy by providing jobs. In addition, it will strengthen America’s manufacturing competitiveness in the international marketplace.
The Institute for America’s Future has developed a plan called A Main Street Recovery Program calling for investment of $900 billion over two years.
The money would be targeted to areas that would create sustained, long-term, shared economic growth. This includes investing in green technologies to reduce the nation’s dependence on foreign oil and the threat of global warming. Another focus is repair and modernization of the country’s physical infrastructure, such as roads and bridges, and intellectual infrastructure – its education system. And finally, the third targeted area is assistance to workers most in need, which would include moves toward universal affordable health insurance, a middle class tax cut and expanded unemployment insurance.
More than 250 organizations and economists have endorsed this program. President-elect Barack Obama’s recovery plan outlined last weekend includes many of its aspects. Its passage would signal the beginning of conversion to an economy that values production and workers, something the self-interested greed-mongers will oppose.
But let’s work for realization of Katharine Lee Bates’ final verses:
God shed his grace on thee
Till selfish gain no longer stain
The banner of the free!”