The Raw Deal

“Corporate profits have rarely swept up a bigger share of the nation’s wealth, and workers have rarely shared a smaller one.” –The New York Times, July 14, 2018

MIAMI – That’s the reality of the American economy today. It belies the narrative Trump and the Republicans are trying to sell to the American people to win the 2018 mid-term election. The GOP says its tax cuts have led to a good economy, citing a soaring stock market, healthy job growth, and low unemployment.

The economy is racing along for some people: owners of huge blocks of corporate stock, CEO’s of large companies, some high-priced doctors and lawyers, and successful Wall Street money managers. For the vast majority of Americans, including blue collar workers, most of the middle class, and the totality of the poor, the economy is, at best, stuck in neutral or driving in reverse.

The Times reports that since the end of the recession in 2009, corporate profits have increased by 6 percent a year. In contrast, the annual growth in wages has been less than three percent, or less than half the increase in profits. Meanwhile, in the last twelve months, the Consumer Price Index has gone up by 2.9 percent. Higher prices have negated all of workers’ wage gains and then some. The result is that this year workers have less money to spend than last year.

While the real value of wages of those who work for their money has dipped, tax cuts have created a bonanza for those whose money works for them. The pie has grown, but some—those with capital and the top managers of big chunks of capital — are cutting a big portion of it for themselves while the rest have gotten a very thin slice, crumbs, or nothing.

This outcome is no accident and not the result of automation, foreign competition or the blind workings of the market, although these factors have played a minor role. It is mainly the result of government policies that have changed the relations of power in the economy. During the “affluent society” era, roughly between 1950 to 1980, labor and capital shared the fruits of economic growth, never equitably but close enough that most people felt that in the future their children would be better off economically than they had been.

But all that changed with the increasing dominance of an ideology of extreme individualism and the decline of capitalism with a human face. As a result, an accelerating change in the distribution of economic growth between labor and capital has been underway for a generation.

The Trump administration has been the culmination of a long top-down class war. The Ronald Reagan and George W. Bush administrations made giant strides in the march toward the two-tier society in which we now live. The formula is a simple one: big tax cuts for those who already are well off and large cuts in government spending that benefits those who are not.

This pincer movement has become a vise with Trump’s election and the right-wing takeover of all three branches of government. The realization of a long-held Republican aspiration, to reverse FDR’s New Deal and LBJ’s Great Society, seems within reach. Years of anti-union laws, decisions by the Supreme Court unfavorable to labor, and a plethora of other government actions friendly to corporate interests and hostile to labor at the state and federal levels have left labor with precious few members and nearly defenseless against the pro-business onslaught. The bargaining power of workers has been so drastically reduced that they are unable to obtain a decent piece of the pie even with a tight labor market. Today a rising tide does not lift all boats, only the yachts.

Franklin D. Roosevelt created the New Deal to make the American economy less unfair and to provide a reasonable standard of living and minimum level security for most of the people. The Republican top-down class war over the last generation is like a photographic negative of the New Deal, making the economy less fair, lowering the living standards of workers, of a big portion of the middle class and, especially, of the poor.

The New Deal, the principles of which stood until the 1970s, has been almost totally replaced by the Republican Raw Deal. The haves are now the have-more and the have-nots have become the have-even-less. That’s what Republicans call a good economy and they hope that in November voters will agree.

Anything short of a massive voter revolt against the Republicans in the next election will enable the GOP to set in stone their Raw Deal. That’s why it’s critical for progressives to vote.

This time, however, I am not making any predictions. The last election left me frankly disgusted with a large sector of the U.S. electorate. I totally reject all the usual excuses about the plight of white men and all the rest. After his performance in the campaign and his conduct during the rest of his life, Donald Trump should have gotten a vote in the single digits, confined to the lunatic fringe. For enough voters to pull the lever for Trump to result in victory in the Electoral College confirms the worst feelings I have about millions of my fellow Americans.