From his University of Delaware blog, Vice President Joe Biden (a guy I really, really like!) published: A PLAN TO PUT WORK – AND WORKERS – FIRST. In it he writes : First, we need to make sure hard-working Americans have the skills and opportunities to succeed in the jobs of the future. Second, we need to make sure people are paid fairly for their work. Those who work hard and do their part should share in the benefits, allowing them to earn a good living and get ahead. And third, we need policies that allow the middle class to maintain or improve their standard of living. (emphasis mine).
It should be of no surprise to anyone that our middle class (aka – the working class that can support itself on par with average society) is shrinking. This all began, according to most economist I have read, in 1973. To Democrats like Joe, this erosion of wealth has stemmed from the belief that the American working class citizen has slipped in areas of education, job skills, and productivity. I can assure you that since 1973, the education level of the working class along with its skill level and productivity has greatly increased. One only need look at the Dow or the rise in GDP to see that the USA’s wealth gains since the 1970’s has been significant.
From this day forward, I am going to press every Democrat who mentions skills and opportunities to succeed this simple question:
Since the 1970’s CEO compensation increased from $1.5 million 16.3 million recently, or 997 percent. Over the same time period, a typical worker’s wages grew rose from $48,000 to just $53,200 and increase of 10.9 percent. Due to this unequal growth, average top CEOs now make over 300 times what typical workers earn.
WHAT SKILLS AND OPPORTUNITIES do these CEO’s posses and HOW do we transfer them to the Working Class?
To be fair to Joe, the actual paper is awfully good. He seems to be endorsing a guaranteed jobs program centered around infrastructure and rightly calls out the job destroyers at Silicon Valley for embracing the panacea of basic income. I still support pilots to study basic income and honestly think it could be a more efficient and generous alternative to traditional safety net and anti-poverty programs, that said, I think many of the Americans who rightly fear the loss of dignity from unemployment and hallowed out communities will look at such a policy as a slap in the face.
I’ll have more thoughts in my own post, but we have to link the closed places to the open places if we want to solve these problems. Greater Boston is a good Petri dish to try this out. Focusing on creating good jobs with living wages is exactly the kind of bread and butter approach you should be in favor of.
With do deep a flaw, I don’t see how the paper can be “awfully good”. Actually, there is another flaw in it as well. He points to a statistic that about six in ten jobs will require more than a high school education but does not say anything about the wages for those jobs that do not require more than a high school diploma. That’s about 40% of the work force being ignored, left out, open to voting for guys like Trump.
WIth all due respect John, the paper endorses living wages, greater unionization, and vocational training through community college and certification programs as viable paths to the middle class for those without college degrees. Unionizing service workers is a great way to avoid some of the displacement from trade and automation. Rebuilding our infrastructure and creating a post-carbon energy grid are other great ways to put hard hats to work. I think we can have a vision that looks to things that worked in the past-high corporate taxes, strong workforce unionization, a government committed to full employment-and apply those solutions to the problems of today from trade to automation. Having the government jump into communities displaced by trade, as Biden proposes, is a lot different from the DLC playbook in the past which shrugs and says learn a new skill set.
The short version: I absolutely agree with you that the Democrats have to stop pretending higher education is a panacea to wage depression, deunionization, and trade/automation job displacement; which is why I am happy Vice President is NOT doing that in his white paper.
Thank you for posting this John. It’s time that Democrats realize that they are pursuing a false narrative which is leading them to propose false solutions.
Democratic response to economic issues has been “get more education or move”. Lose your job when you’re 50? We can fix that! Just go back to college and get another career! Or move to San Francisco! It’s ridiculous, especially when articles like this in Pro Publica explain how age discrimination is an unspoken yet rampant secret. The story is unnerving, filled with examples of bright capable people who IBM laid off for no other reason than they were in their 50s and made more money than people in their 20s. Jobless at a time in life when they were trying to send their own kids to college to get expensive degrees that are increasingly a huge but indispensable gamble. What do you think GE is doing by moving to Boston? Same strategy – move out of the suburbs to downtown Boston, and you will wind up with a perpetual workforce of “early professionals” without even having to age-discriminate.
Instead of blaming people’s economic trouble on the victims, how about taking a look at the way our economy is structured? We have come to accept the narrative that economic efficiency is the god to follow because “it’s good for consumers”. We completely ignore the fact that an economy is made up of both consumers and producers, and that wiping out opportunities for producers to please the consumers is an incredibly stupid strategy. We have given up even trying though. Now we just shrug and say “the jobs aren’t coming back”.
It is also a strategy that created Trump. Fat, happy, and employed racists with solid economic prospects are generally harmless, and don’t tend to get too riled up during elections. Take away those economic prospects injects fear into their lives and this causes a populist supercharge to their views which propels them into the voter booths.
It’s time that we acknowledge that our economy is consolidating and leaving various parts of this country, and that “cheaper prices” may not be a good trade off for the social upheaval this is causing. Sure, if you’re 25 years old, it’s probably not too hard to “follow the jobs” to the coastal global cities, and you’re still 10+ years away from realizing that raising a family in a high-rise apartment block (which is what housing will need to become if all the jobs in the region move to Boston) sucks. People aren’t 25 forever. We need a better plan.
That plan would be to focus on an economy for everyone. Not just young techies who love coffeehouses and the subway – but people who live in places that used to be viable until just recently. Stop writing off massive parts of the state which used to be economically viable. Recognize that the economic troubles in parts of the state need solutions.
Thanks for your support and input. As you may know, I was let go from my previous employer in a industry where I had over twenty five years experience, a college degree, several night classes over the years to “sharpen my skills” (the company is still using all the improvements that I initiated over the years) but at the age of 61 with four week’s vacation, the owner, no doubt, saw that they could improve their bottom line by hiring someone twenty five years younger and pay they twenty five grand less.
I now work in retail at a fraction of my previous wage and each month, meet another “new hire” who can tell the same story. The two most recent were terminated when Dell bought EMC. Both guys are highly skilled, years in the business….but one is 57 years old and the other is 62.
Still, to this day, far too many Democrats want to stick their head in the sand, or criticize those who call attention tho this (as three have done so far in BMG).
And they wonder why they are losing the votes of the Working Class….
In 7-10 years there will be another seismic shift in the economy which will need to be anticipated. Good techie jobs which require degrees and schooling will be replaced with artificial intelligence software.
Currently trading compliance regulators (good jobs) are being replaced on the NASDAQ trading exchange with artificial intelligence software.
I think scott12mass is right on the money with this.
“Software engineering”, as practiced today (developers writing code describing how to solve whatever the task is) will be replaced by automated code generators. A much smaller number of more highly trained and highly skilled workers will write directives proscribing WHAT the resulting code should do.
Today’s highly-paid programming jobs will go the way of steel workers of the 1970s.
Yup,
Even lawyers are being replaced by software that can read/write contracts. The person who owns that software will become far wealthier than any attorney.
A dear friend of mine is the last private practicing cardiologist in the state he practices in. All the rest are now employed by companies that are owned by the ownership class and it is they, not the doctors, who are making the big money.
When we lived in New York, my wife belonged to a cooperative nursing association. The nurses “owned” the association,employed a small staff to run things, and most of the hourly rate they charged patients went to the nurse. Today, she works for an private agency and receives a fraction of the rate being charged to the patient, The owners of the agency make the big buck.
And so it goes.
If you have the time, read Piketty’s Capital in the 21st Century. In short, under present conditions, there is absolutely no way for the working class to catch up to the ownership class and that gap will continue to widen until we take legislative action to ease it or wait until it becomes so overwhelming that violence becomes the solution. .
As I’ve written here several times before, I think the only workable answer is to sever the connection between “labor” (as in hours, days, or months worked) and wealth.
There may be service-sector jobs that will continue to require actual hands-on labor by service providers. Even if those jobs were to somehow pay living wages, there will not be enough of them to make a difference in the big picture.
We need an economic system that taxes created wealth and distributes the result among residents. There are variety of mechanisms to accomplish this, some very much more intrusive than others. The bottom line must be the same.
For example, one approach is a forced distribution of equity when market capitalization exceeds a certain threshold. Any company that becomes “too big to fail” is forced to distribute shares of its stock (or its equivalent for LLCs and LLPs) to the public following some formula.
If residents of a Western MA town that at one time was a thriving “company town” were stockholders in the conglomerate that shuttered the factories that at one time sustained the town, then those residents would directly benefit from the dividends and distributions that are today only available to the uber-wealthy.
America generates more than enough wealth today. It is the obscene and extreme concentration of that wealth that needs to be reversed. Making each and every American a member of the “ownership class” is one way to help.
There is is nothing wrong with wealth, wealth generation, and the technologies that drive it. It is the premise that such wealth is only available to a microscopic fraction of Americans that must change.
If governments can use eminent domain to seize real estate (and compensate its owners by paying them fair market value), then government can surely use a similar mechanism to seize and distribute equity in a business venture (and similarly compensate the current owners).
This problem can be solved if we demand a solution.
Loving the perspective you, No Politician, and John T May are brigning to this discussion. It is very ‘both/and’. Let us help todays workers while also doing all we can to prepare for a post-automation future. One of the major reasons I entered teaching and my wife entered nursing is that these are professions largely (though not entirely) immune to automation. The jobs I had after college at law firms as a paralegal, customer support specialist, and project manager respectively are all going to be automated. Today’s cloud technology could easily replace the job I had at my last law firm.
The jobs you mention in your penultimate sentence will always be done better by an actual person who can think, feel, and get creative in ways computers can never hope to.
You really need to figure out a way to make your case about assisting those for whom more training may not be a realistic option without coming across sounding like you are opposed to making such opportunities available or to people who can taking advantage of such opportunities.
We assist them by tearing down a rigged system. The entire “training” argument is as invalid as “trickle down” is with Republicans.
Your first sentence is accurate; the second not so much.
I actually think John agrees with Tom that we need to tax corporations a lot more and redistribute wealth. John and Tom are also talking about redistributing ownership and opportunity. Piketty is basically endorsing Tom’s tax proposal as a global tax to offset offshoring capital and labor alike. I think we agree on the solutions a lot more here than we pretend to.
The issue is those of us with degrees value our education, and resent arguments that degrees are a waste of time and money. Even my brother, a long prophet of that notiion who has made a lot more money than I have without a degree has hit a ceiling in his career that will require a bachelors. Fortunately, his company will pay for most of it. A lot of workers are not so lucky. On the flip side, we can’t casually dismiss people without college degrees as deserving of being in a lower tax bracket. We also have to acknowledge alternatives to degrees can lead to better outcomes.
As a first generation college graduate teaching students who will be following the same path, I think it is absolutely critical that students be given equal access to higher education. I also absolutely believe it is not a requirement for economic participation, and people can do well without them, it will just require that they learn other skills and get other kinds of training. The days of showing up to the factory and working on a line are over. Even the non-college careers that make a lot of money require constant retraining and adaptation.
I don’t see anyone dismissing people without college degrees and unfortunately my own circumstance is proof that credentials don’t guarantee success.
Here we go again. .. How is it that, on the one hand, Joe Biden is a guy you ‘really, really like’ and yet, on the entire other hand, don’t trust him enough or respect his judgement and experience to listen to what he has to say on the issues? Do you really think you know better than Joe?
Regardless of all that, the following three things are true. So true as to, very possibly, form axioms:
— Workers want to increase their skills regardless of whether or no anyone else wants them to….
— Democrats want workers to increase their skills and want to help and encourage them in these efforts…
— Skill increase can happen in a variety of settings, but probably most importantly and with greatest impact on the actual job. Therefore, the fundamental reason behind Democrats efforts to help workers increase their skills is recognition, and celebration, of actual, honest and earnest labor.
If these are axioms, that is to say foundational truths, how is it anything but false — mendacious even — to attempt to construct the proof that says “Democrats [] are pursuing a false narrative which is leading them to propose false solutions?” Or ” The entire “training” argument is as invalid as “trickle down” is with Republicans” Those are conclusions unsupported by the underlying truths. — or non sequiturs.
[A corollary to the first two axioms –that workers want to increase skills and Democrats want to provide workers with increased skills — will, itself outline a political axiom: politicians whose intent matches the voters desires will be ‘really, really, liked” Workers who want to increase their skills will be receptive to, and want to be represented by, politicians who want them to increase their skills.]
Let me explain. I am not an all or nothing sort of thinker. I like Joe on many issues but not this one. Yes, here we go again with my detractors putting words in my mouth and erecting more and more straw men.
Working class citizens have been increasing their education and skills and no one, certainly not me, is against that. However, this is NOT the solution to the ever widening wealth disparity we are experiencing and offering it as a solution is equally as misleading as Republican trickle down promises.
Working class citizens ought to improve their skills, continue their education, floss at least once a day, wear their seat belts, never text while driving, change the batteries in their smoke detectors once a year and I am NOT saying that any of the aforementioned is wrong, should be discouraged, or is of no benefit to working class citizens.
What I am saying and will continue to say is that education and job skills had NOTHING to do with the wealth/wage disparity that began in the 1970’s and continues today and will do NOTHING to alleviate this problem in the United States of America.
Demonstrably not true. That is, in fact, exactly what you are saying.
Point the First: Workers want work and the skills that go with them
Point the second: Democrats want to give them work and help them get better at that work.
Your conclusion to these two points is: “Democrats suck. They are lying. Democrats are fostering crap just as bad as ‘trickle down’.”
How is that anything other than “is wrong, should be discouraged and is of no benefit to the working class citizens?” There is simply no other interpretation possible.
How will
affect the growing wealth disparity between the working class and the ownership class? .
It won’t.
There will never be enough “work” to sustain our economy. No amount of training, skills, or preparation will change that.
Our wealth disparity can only be solved by capturing and distributing wealth.
Yes. The difficulty with this is the short memories of so many on the right who will cry out “but that’s socialism!” and think back to the failed policies of the USSR and present day Venezuela.
How do we get past that?
I actually think John is making that same argument when he cites Piketty and says the following:
You are both agreeing no amount of job training or skillset advancement will fix the problem of massive income inequality. Only redistribution can.
Stop trying to play matchmaker, James. Even if you were any good at it (you’re not) it’s not the right thing, here.
John has made the bald statement that politicians offering “job training and skillset advancement” are lying in service to the interests and actively doing harm against any and all problems. I don’t have to claim to speak for Tom to know that Tom agrees to no such thing. I only have to read what Tom writes.
Income inequality is a problem. It is a problem that will not be solved, primarily, by “job training and skillset advancement.” There are, however, entirely other problems that these solutions address handily. John would upend all that and turn it all around and attempt to make “job training and skillset advancement” merely lies that politicians tell that are either irrelevant at best or actively harmful. He is wrong. He is actively making harm to the cause. No Democrat worth his/her salt should stand for that sort of insult.
I, for one, will neither stand for it nor stand by while you attempt to make some bogus equivalence out of the the dispute.
Here’s what Joe Biden said: “First, we need to make sure hard-working Americans have the skills and opportunities to succeed in the jobs of the future. Second, we need to make sure people are paid fairly for their work. Those who work hard and do their part should share in the benefits, allowing them to earn a good living and get ahead. And third, we need policies that allow the middle class to maintain or improve their standard of living. .”
All of these are self-contained issues: the skills to do the jobs of the future; remuneration commensurate to skills and experience; maintenance and/or improvement of standards of living… They are real and important issues in and of themselves: That is to say, they exist wholly and completely apart from a reference to wealth inequality…
…And here’s what you are missing…
If and when we have perfect wealth equality we will still have these three issues that Joe Biden outlined. Ridding ourselves of wealth inequality, while a necessary thing to do, isn’t going to moot these issues. So your strident and belligerent denunciation of politicians who raise these issues is, at best, a distraction and, at worst, a self-inflicted wounding of the Democrats core principles. Regardless of any and all levels of wealth inequality, people will still want to work. They will still want to expand their skills. They will still want to further their own education. They will, also, continue to want their children to be educated to a far greater degree than they were… Democratic voters will continue to respond positively and enthusiastically to Democratic thinkers who espouse these CORE DEMOCRATIC PRINCIPLES. .
You, however, want to punish that positive and enthusiastic response and the politicians who evoke it because you’re mad at rich people. Rich people may deserve your anger, but working people don’t deserve having your scorn ricochet off them out of some misguided sense of entitlement…
Expanding skills and furthering education do nothing to alleviate the growing wealth disparity in the USA.
If the vice president or any other Democrat wants to address core Democratic principles, they need to take a bold stance, much like the students did yesterday, and call “BS” on our current economic system – even if doing so means pissing off their donors.
Duh. The point. The exact point. Expanding skills and furthering education will neither alleviate nor exacerbate the issue of wealth disparity. The two issues are entirely separate but you want to join them just so’s you can say something nasty against Democrats… and core Democratic values: which values you obviously disdain.
I’m more and more thinking your sock-puppetry concern troll act is less and less of an act..
Yes.
So why do so many Democrats cite expanding skills and furthering education in addressing the problems of low wage working class citizens – and a government run by and for the wealthy?
Issues are cited because they are real issues real people really care about.
Duh.
The issue that people really care about is economic insecurity and until we do something about the wealth disparity in this nation, that insecurity will continue to fester. Duh .
Finding a job, doing a job, and getting better at finding and doing work is the most tried, and most often used, methodology of alleviating anxiety. Most people spend 40 to 80 HOURS per week deciding how to do their own job better and THEN spend another 20 hours per week on educating themselves for the future. Most workers spend — maybe — 40 to 80 minutes a month deciding how they feel about somebody else’s paycheck.
Just because it’s your obsession, doesn’t mean it has to be mine.
More skills and education generally do lead to better paying jobs, thus narrowing the gap between you and further up the ladder.
But only relative to the ladder that is reserved for the working class. The other ladder, the one where the Trumps and Waltons and Mercer families are on, is still out of reach to us and still populated by those who run our government, make the rules, and buy our elected officials.
In other words, nothing changes.
I take a very bold stance on wealth distribution — bold enough that you yourself ask how we get past the attacks that my stance is “socialist”. It is. Virtually all of first-world Europe is socialist. So is most of America — socialist, fascist, or worse — we’re just not ready to admit it to ourselves.
I also loudly advocate for making education and training available to every American.
The two are independent. I agree with petr that your relentless effort to force them into an utterly false dichotomy destroys your arguments and hurts your credibility. Our economy has more than one issue and requires more than one policy.
Are you as ready to confront the “short memories of so many on the right” as you are the “ownership class”? You’ve labeled me a “wall street sellout” many times here — yet I advocate an approach that turns “wall street” values on their ear.
I invite you to join me in aggressively advocating for making every American a fully-vested member of the ownership class.
Now, as a thought exercise — how will Americans exercise their freedoms as owners if they lack the education and skills needed to understand their own portfolios?
When a minimum-wage cashier at Dunkin Donuts (or an ex-cashier, after being displaced by automation) has a portfolio that — when properly managed — is fully capable of supporting him or her and his or her family, how does society best ensure that our hypothetical minimum-wage cashier is able to manage that portfolio?
How many high school graduates today are able to understand (never mind optimize) a compound-interest equation? How many are able to read a loan document or margin agreement and understand the implications? How many understand what a “contract” is? How many have the literacy and numeracy required to balance the risk of their portfolio, to choose between real estate and stock investments, to tradeoff long term gain versus risk?
How many of your coffee-machine supporters of Donald Trump have the ability to do all this if given such a portfolio of assets? The classic arc of a lottery winner is that many of them end up in even worse financial straits than before they won — because they lack the skills, preparation, and discipline needed to manage a significant portfolio.
I enthusiastically join you (actually, I precede you here at BMG) in calling for the enforced sharing of America’s wealth with all Americans.
I equally enthusiastically reject your constant attacks on Democratic programs to make education and training available to every American.
America needs both forced wealth distribution and increased education and skills. Right. Now.
The United States ranks second, behind Norway, in the percentage of adults with bachelor’s degrees or better, according to the Center for Public Education.
We also have the world’s highest Gini coefficient.
The same holds true for the Commonwealth of Massachusetts relative to other states. We are the most educated and among the highest in Gini coefficient.
As such, I fail to see how “more education” is the solution to wealth inequality.
What am I missing?
Keep in mind I do not “hate the rich”. I do not try to discourage anyone from educating themselves or improving their skills and I deeply resent your and others assertion that I do such things,
I am passionate about my belief that the system is rigged and it has been rigged mostly by Republicans but at strategic times, enabling Democrats.
What you are missing is that there is no connection between addressing the wealth concentration issue and educating the population.
We must simultaneously walk and chew gum.
As you observe, we have a very high GINI coefficient — which, by the way, measures INCOME concentration and not WEALTH concentration and a high concentration of undergraduate degrees.
So far as I can tell, you are the only commentator here attempting to join these into a conflicting dichotomy.
We need to do both. We need to:
1. Address our wealth concentration
2. Provide education and skills training to our population
My main issue is with the wide and growing wealth disparity in this nation and efforts to stop it, reduce it, and bring political power back to the people.
Providing education and skills to the working class, as noble as they are, will not affect my main issue as noted above.
I agree. I’ve always agreed. I don’t think anybody on BMG has ever disagreed.
You did not say it was ‘noble’ earlier. You, in fact, compared it to a fraud on the right, ‘trickle down’ economics, and declared it invalid. You did not qualify it… I’m willing to chalk that up to hyperbole in the heat of argumentation, if you’ll A) admit it does little for your credibility to make such statements and 2) try to make an effort to be more respectful of some core Democratic values in the future…
John has been making this exact argument this entire thread. You two do not disagree! Get past the frackin primary already and actually respond to one anothers posts and you’ll see you are not as far apart as you think you are.
It is not what you are missing. It is what you are adding: and that is scorn for core Democratic principles.
Several people here have tried to tell you, again and again and again, that you are, in fact, correct when you say ‘education’ is not the solution to wealth inequality and we have been trying to tell you that you are WAY OFF BASE when you thereafter scornfully dismiss education as no solution to any problem, and — in your own words — a fraud on the left tantamount to ‘trickle down’ on the right.
Your argument is, in fact, the inverse of the hammer and nail problem: the old saying that ‘to a man with only a hammer for a tool, every problem looks like a nail…” Well, you’ve found a problem that isn’t a nail and have therefore decided that hammers are completely useless — dangerous even — in any and all circumstances.
So why do so many Democrats use “education and improved job skills” to fix the overall plight of the working class?
Are you for real? I’ve been countering this point all day. Can you even read? Or do you just choose not to…?
Have you not noticed that it is ONE component of how to improve lives? I don’t think anyone is suggesting that your solutions are not also needed.
Here is what a better Democratic response would look like:
Why Democrats Should Embrace a Federal Jobs Guarantee
In it, Kirsten Gillibrand says that we should stop tinkering around the edges and embrace a government-backed job guarantee program, which would effectively set wage floors. The jobs would be infrastructure-based, and therefore would be broadly spread around.
Such a strategy would take the edge off the economic upheaval that has occurred in our country over at least the past 18 years (if not longer).
It would be paid for by sharply increased taxes on both high wages and capital gains. This would stop the wealth from being sucked from average people and concentrated in a handful of billionaires.
I support this proposal. It is not nearly enough.
I think that transferring equity itself (stocks, partnerships, whatever) is the only path that really solves the issue.
What if every American had a portfolio of equity, so that each American benefited from the gains of that portfolio. It seems to me that this puts all of us on the same side of the table, rather than pitting the “ownership class” against the rest of us.
What if every American were part of the “ownership class”?
401ks (around since the 70’s) and Roth IRAs are available and way underutilized. It should be a class taught in high school (mortgages, credit cards, etc) and required for graduation.
Those might be a delivery/deployment model for the equity, so that each individual has the ability to manage her or her portfolio (or do nothing and let the issuing agent do the management).
The big difference, of course, is that 401ks and Roth IRAs both require actual cash to be invested (often matched by an employer or other party).
In what I’m contemplating, the securities themselves are provided by the government (after being acquired through a process similar to eminent domain). Also, I’m not sure that those instruments are suitable for money-market and bond investments.
My vision is for each American to have the ability to manage a portfolio of assets. As shareholders, I would expect Americans to have a voice about the directors of companies they hold.
All this definitely requires education and literacy.
Awfully close to the Alaska dividend-I love this proposal Tom. I would combine it with a jobs guarantee. Both are far more dignified than a universal basic income which amounts to paying Americans displaced by automation a living wage to do nothing. Over time, that will not lead to the outcomes we want. I think a basic income targeted towards making more people business owners, productive parents, and self educated citizens is a far better way to do that. Basically attach some strings. We need pilots to test this of course, but I like both of these ideas. We have enough wealth for a full employment economy and to make every American a shareholder in that community wealth-just like every Alaskan is a shareholder in their oil wealth.
The working class went for the bait with the 401Ks and in exchange, abandoned the concept of pensions. A bad deal for them but a great deal for the wealthy.
As usual, the truth is far more nuanced than this comment suggests.
Pensions only benefit workers when a worker remains with an employer long enough to accumulate a meaningful pension benefit. In an economy where such job security doesn’t exist, pensions are themselves just another ruse used to exploit naive workers.
The PBGC was created in 1974 because of widespread catastrophic failures of private employer-funded benefit plans. Workers paid into pensions for 20, 30, 40, or 50 years and found, as they neared retirement, that their employer sold or went bankrupt, destroying their pensions. The PBGC was created because so many pensioners lives were destroyed by events completely beyond their control.
The “working class” did not take any “bait”. The 401(k) was created for Kodak (hence the “K”) in order to benefit “high-earning individuals”. It was later (1980) expanded to include many more workers.
Since the mid-1970s, it has been rare for an employee to remain with a single employer more then a few years. In that context, traditional pensions (which were still offered by many) were a cruel hoax — everybody knew that they’d never be collected.
A 401(k) or Roth IRA, whatever its weaknesses, is far preferable to a fixed pension that a worker can never qualify for and never receive benefits from.
The collapse of the traditional patriarchal relationship between employer and employee is itself the source of much of what we struggle with. That model is fundamentally exploitative, and no amount of handwaving will make it any different.
At the end of the day, genuine economic security can only be provided by some mechanism that guarantees that the day-to-day expenses of living are not affected by day-to-day choices about where and what someone does.
It requires separating labor from wealth distribution.
The 401(k) was not designed or intended to be a financial vehicle for working class citizens to obtain a secure retirement.
We need either pensions or a Social Security system that works for us,
Again, we agree.
Our economy removed the opportunity for working-class Americans (not just citizens) to have workable pensions more than 40 years ago.
Instruments like a 401(k) and Roth IRA were created to allow some workers (middle-income and higher) to provide a fall-back, in the absence of traditional pensions.
Both pensions and social security are tied to work, labor, and employment. The pressure to reduce social security benefits will only intensify as the number of recipients increases and the number of workers simultaneously decreases. Both pensions and social security were designed for an industrial-age economy that has not existed in decades.
We need a mechanism for distributing wealth that does not depend on labor. The American economy creates more wealth than any economy in human history. It concentrates that wealth in the hands of very select few.
That concentration is what we must change.
The vocabulary we use here is significant and meaningful.
Until recently, most Americans described themselves as “middle class”. During the period when good jobs were more plentiful and while those jobs were accompanied by good pensions, most of those workers were “middle class”. Politicians of all persuasions courted and sought the “middle class” vote.
The primary effect of the policies put in place by Ronald Reagan and championed by the GOP since then has been to destroy the middle class. This can be seen in perspectives like this, that show income growth in inflation-adjusted dollars for the five income quintiles of the US economy since 1967:
The past 50 years have been very good for the top quintile and spectacular for the 5%.
The rest of us have been left in the dust.
Elizabeth Warren has done an excellent job of describing what this means for individuals and families. Words like “working class” and “middle class” are too often used to divide us.
– Most American families are one paycheck away from the federal poverty line.
– Our youngest Americans are more likely to be in poverty than our oldest Americans
– Our rate of household formation among young people (which drives the rest of the consumer economy) is the lowest its been history. Young people now typically live with their parents in their 20s, rather than forming their own households.
We need to distribute enough of the wealth that is being acquired by the top 1% among the rest of us so that all of us can live the American dream.
I can’t find the source, but someone did outline a system where all citizens would receive a stock portfolio at birth, or maybe at the age of 18, that put us all in the ownership class. I’ll see if I can find it later.
I hear what you’re saying. It’s an interesting approach. You’re basically saying that if the people owned corporations relatively equally (within some parameters), we would not have to worry about what the corporation do – because we would be the corporations.
It’s like a private version of socialism.
My initial reaction is tepid, primarily because the corporate structure is antithetical to democracy. Corporations are $1/vote instead of 1 person/vote, and voting within the corporation is very often heavily restricted.
I almost view this as a form of fascism because it has no democratic infrastructure to govern it. It has no requirements to be transparent, no requirements to be fair to the owners, and no requirements for the leaders of the corporation to represent the corporation. Your plan also seems to have different people holding the share of different companies, which would cause people to pit those corporations against each other.
It almost sounds like a good plot for a dystopian novel.
I agree with everything you’ve just written.
While it’s true that corporations are $1/vote instead of 1 person/vote, it’s also true that this arrangement provides surprisingly large leverage for small groups of shareholders. Consider a contentious proposal with just three camps. Camp A owns 49.9%, Camp B owns 49.9%, and Camp C owns the remaining 0.2%. The actual decision authority is held by Camp C.
The difference between this and fascism is that in this case ownership is transferred to private individuals. I think your phrase “private socialism” is, at least at first blush, not far wrong.
I agree that my proposal will at least tempt people to work against, rather than for each other. I think this is one aspect of empowerment. I propose to actually empower all of us. I offer no guarantee or even speculation about how wisely that power will be used.
We are already living a dystopian novel. I’m looking for ways to make things better.
“Skills and education” is like “Thought and prayers.”
I appreciate the zinger and almost uprated it for its humor.
Still, the plain fact remains that 22 year old men and women who cannot read or understand the car loan or lease that they’re about to sign are quite different from recipients of thoughts and prayers.
No amount of prayer is going teach a 19 year old how to perform a compound interest calculation.
Trump does not read and I highly doubt that he can perform a compound interest calculation. I think the same can be said for his entire family. And yet they are billionaires.
Betsy DeVos could not figure out how to pour water out of a boot if the instructions were written on the heel….and yet she is a billionaire.
Telling working class people that they have to play by different rules is a Republican concept and ought not be a Democratic one.
Donald Trump was born a billionaire. He was born on third base and thinks he hit a triple.
I’m not telling working class people that they have to do anything. I’m observing that a working class man or woman (by construction, he or she is NOT a billionaire like Donald Trump) who doesn’t know how to read a car lease is going to be taken to the cleaners.
That’s neither Republican nor Democrat, it’s reality. The sales person on the used car lot is going to get the most money he or she can get out of the poor sucker standing in front him. That’s got absolutely ZERO to with politics. Neither sales person nor mark are part of the ownership class.
I get that you are envious of Mr. Trump, Ms. DeVos, and people like them. That envy, no matter how passionately repeated, does not help the working-class kid trying to get their first car.
I think we ought to give that working-class kid the ability to not be literally sold a bill of goods. Your animus against education is incomprehensible to me.
That is a different argument Tom than the one John is making. You actually agreed with one another several times that increased access to education cannot solve for income inequality. I think we all agree on that! Which is why it is important for Democrats to stop campainging on that line. I do not think John ever said educating citizens to be responsible voters, financially responsible adults, and functionally literate is a bad thing.
What we should do is start proposing radical proposals like the kind you both seem to endorse.
Here is what I see agreement on
1) Taxing the wealthy
2) Guaranteed jobs at living wages
3) Giving everyone a share in our economy, perhaps a government sponsored savings account and an education to manage it
All good ideas. All dead on arrival with this President and Congress. All endorsed by every Democrat from Lamb to Biden to Sanders. So let’s take this argument to the people that are not yet convinced we are right and convince them to throw the corporate Republicans out and false populists out of power.
Just a clarification about my proposal — I’m not talking about a “government sponsored savings account” and the kind of “tax” that I’m talking about has never been done before.
I’m proposing that the government use its power of eminent domain to acquire an equity interest in companies whose market capitalization exceeds a certain threshold. I’m proposing that the government then distribute that equity interest among the rest of us.
That’s very different from a “tax”. A tax, as currently understood, is the forced transfer of specific amount of money. This proposal is, instead, the forced transfer of an equity interest. There is a world of difference between $10,000 in cash and umpty-ump shares of Morgan Stanley.
Similarly, I’m not talking about a “savings account”. I’m talking about a portfolio containing equity that each American is then able to manage.
A savings account is an amount of cash sitting in a bank and earning barely-measurable interest. I’m talking about a portfolio that, when properly managed, can kick out a few thousand dollars a week in gains.
So far as I know, no politician from either party has talked about what I’m proposing. I think item 2 is a fantasy that will never ever happen — we might as well say that the tooth fairy will come and place $300 of gold under every pillow every night.
We must do much more than “tax the wealthy”. We have to put all of us on the same side of the table, so that every American directly shares in the growth of our large corporations. That’s one way to make it possible for tomorrow’s large corporations to emerge from today’s lemonade stands.
You said “I’m talking about a portfolio containing equity that each American is then able to manage”.
Tom I am in total agreement with this. I worked in a large blue collar factory and at the cafeteria we were as likely to discuss the NASDAQ as the Patriots. Copies of the Wall Street Journal might sit next to a guys machine as often as a Playboy. Our 401ks did well. I know you’re talking about a larger program but we were a microcosm of how “working class” guys might handle their financial responsibility.
Some of us were willing to accept more risk and invested in Latin American growth stocks, some guys stayed in DOW tracking funds, or a mixture. All did well, some much better.
Will you equalize results somehow? Government seizures in Venezuala affected my bottom line. NAFTA hurt my weekly paycheck, but helped my 401k. It’s like most other things those who work at understanding their options do better than those who don’t.
A few years ago, the reality of a $15 minimum wage seemed a fantasy. Single payer certainly seemed a fantasy and then a few people started talking about it with a big platform and now it’s got like 60% public support and 121 Democratic cosponsors in the House. A public jobs guarantee was a goal of FDR and MLK and then largely forgotten until about the last year when more people starting talking about it.
I think the most effective way for things like this to remain a “fantasy” is for liberal people who would otherwise support them as good policy to dismiss them as “fantasy.” I guess that’s just being “serious” though.
I really think Democrats don’t want to win elections. You have a potentially active base who supports things you would agree are good and then tell them they can’t have it because the politics are too hard?
And do you truly believe a “forced transfer” of an equity interest in large corporations is any less a “fantasy” than a federal jobs guarantee?
My short answer to your question (“do you truly believe a “forced transfer” of an equity interest in large corporations is any less a “fantasy” than a federal jobs guarantee?”) is “Yes”.
Whatever we do (or do not do) about “Guaranteed jobs at living wages”, it’s irrelevant to the question of how we distribute wealth.
If we keep ownership of wealth creation as we do today, it is mathematically impossible to solve the wealth concentration issue. “Jobs” and “minimum wage” and the rest is just handwaving.
To solve the wealth concentration issue, we must take ownership of wealth creation away from the handful of people who hold it today and distribute it among the people.
There really IS no other alternative.
Are you opposed to a jobs guarantee then because you think it won’t solve inequality?
I agree that it wouldn’t by itself. It should have a huge impact on poverty, however, which I think is more pressing than inequality but also neither need to be or should be addressed separately.
I’m skeptical that taking money and power from the richest and most powerful Americans would be easier than making the lives of many Americans better through a variety of programs (none of which would actually require raising taxes, although they should for the redistributive effects we seek). I don’t think either thing is a fantasy, but I think one would be harder.
I don ‘t oppose a jobs guarantee.
I’m saying that I think it’s just more meaningless snake-oil.
I’m reminded of the high-profile Massachusetts legislation to raise the state minimum wage to $15/hour over a period of years.
Of course I support that effort as well. I think all the puffery and back-slapping about how it addresses our own wealth and income concentration issue is similarly meaningless snake-oil.
I’d maybe be with you if I thought reducing inequality was the main purpose of such programs. Those programs would reduce poverty and allow recipients to have other goods and services. Studies show that a higher minimum wage does impact inequality, although not to a huge degree in isolation. But, of course, we don’t need to isolate it. We can do more than one thing at a time – like redistributive tax policy that goes toward a jobs guarantee, perhaps.
Calling such programs “meaningless snake-oil,” however, seems to be worse than pointless.
I agree that we can do both.
I invite you to reread the context of the original list of three items offered jconway (we are discussing item 2). The context set in that comment was the following (emphasis mine):
I’ve said many times here that I enthusiastically support raising the minimum wage, both here in Massachusetts and nationally.
It is the extravagant and self-serving claims about this small step that I criticize. For example, shortly after the 2014 passage of the minimum wage increase, we heard this from Democratic representative Thomas Conroy (emphasis mine):
Describing this microscopic increase (yet still phased in over years!) as a “small step toward addressing income inequality” is like tossing a glass of water over the side of the Titanic and describing it as a small step towards saving the ship.
The original item was “guaranteed jobs at living wages”. My point is that even if enacted, it’s irrelevant to wealth concentration.
I completely disagree that those items are endorsed by every Democrat from Lamb to Biden to Sanders. Biden identified the issue properly by saying “What Americans want is a good job and a steady paycheck, not a government check or a consolation prize for missing out on the American dream.”. But he stopped there. His remedies were weak. He led with “get more education”. He followed with “build more skills”. He ended with “stop job discrimination”.
Nothing there spoke to taxing the wealthy, or guaranteed jobs at living wages, or wealth redistribution via government confiscating the wealth of current corporate owners.
Biden’s approach – which is the focus of this article – amounts to washing your car when you’re hurtling towards a brick wall with a stuck gas pedal and no brakes.
Six sixes for this comment.