From Henry Ford’s time until recently, there always has been a segment of the business community who was willing to grudgingly put up with the labor movement, Social Security, and other New Deal/Great Society programs because they knew they needed a broad, prosperous American middle class to buy their goods. The reason we are seeing such wrenching, brutal fights today is that the people with money and power who make and sell things know there is a worldwide market for their goods, and the most wealthy and powerful of all — the Big Six Wall Street banks who control assets equal to 64 percent of our economy — make their money mainly by financial manipulation and speculation. I mean if you can make money by securitizing subprime mortgages, selling them as AAA rated, and then take a short position so that when they blow up for your clients, you make billions, who needs a middle class?
During the New Deal, the wealthy and powerful didn’t like what was going on very much, but they were getting their asses kicked politically by FDR, so there wasn’t a lot they could do about it. In the post-World War II decades (1945-1975), a lot of the business community was making really good money because union workers, newly economically secure retirees, veterans who had college educations because of the GI Bill, and other working class people whose incomes were rising, were buying a lot of their products: homes, cars, TV sets, appliances, and all the other wonders of that era. Business leaders might try to tinker around the edges, but they also realized there were benefits to them in that strong, stable American middle class. With the globalization and financialization (deregulated bankers getting more and more reckless with other people’s money) of the economy, and the steady weakening of unions, it began to occur to a lot of the big money guys that made America didn’t need a financially strong middle class or retirees with money anymore. If they could make money selling to Europeans and Brazilians and Chinese and Indian folks, or just by taking other people’s money and place big bets that no one but them understood on the Wall Street casino, what good were workers with decent wages, an American safety net, or those annoying unions?
The result has been an ever-rising attack over the last three-plus decades on unions, middle-class wages, and the safety net. The examples are abundant: deregulation of transportation, energy prices, the financial sector, and other industries; rampant union busting and blatant violations of the National Labor Relations Act; trade deals with Mexico, China, and other low wage, no environmental rules countries; repeated attempts to privatize and/or defund Social Security, Medicare, and Medicaid; repeated cuts to all manner of domestic programs. Added to all this, especially in the last 10 years, has been skyrocketing inflation in the most essential items for middle-class families, while their incomes have been stagnant. As I wrote in a memo earlier this month:
“…over the last decade, income levels for middle class families have stayed essentially flat, while the cost of living for most basic household necessities have gone up considerably: average grocery costs for a family of four have gone up more than $200 a month in the last decade; the average American had to spend about $3,000 more on their health care per year than they did at the beginning of the decade; household energy costs have been climbing at about 8 percent a year; in early 2000, the average price per gallon of a tank of gas was $1.31, while in January 2010 it was $3.06; and for those families with kids in college, tuition and fees have gone up an average of almost 6 percent a year each of the last 10 years.
Now, with far-right Republicans having swept into power in important states across the country in the 2010 landslide, the Wall Street guys and right-wing ideologues have decided this is their moment. We will be seeing the most extreme proposals imaginable in the coming days to break unions, destroy the safety net, and wreck the middle class, which is why taking these guys on in full battle gear is so important.
Here is what is most important to remember about what the Republicans, extreme right, and Wall Street guys are trying to do: it goes against the entire political theory this country was founded on. Remember the Federalist Papers, those essays Madison, Hamilton, and John Jay wrote to distill the essence of the new Constitution to the American public? They focused on the fundamental idea of pluralism: that this new form of democratic republic could only survive if competing interests, constituencies, regions, industries all were represented, and all had enough power to keep any of the others from controlling the government. What the founders believed to their core was that if any one industry or region or powerful interest became too dominant, it would destroy a democratic form of government.
That fundamental danger is very much in front of us today. A small collection of stunningly wealthy and overwhelmingly powerful companies have become dominant in our government and our economy, and they are a very real threat to the American way. These companies and their allies — some who really share their ideology, some just being compensated for their service — are now trying to do what people with overwhelming power usually do: crush the last vestiges of opposition so they don’t have to worry about anyone challenging them again. Unions are one of the few pockets of strength left, and merely weakening them is no longer enough: they have to be crushed.
The American system of checks and balances can be frustrating to those who want to see big changes made, but it is as foundational to the American system as any other idea there is. A system where the last institutions with any ability to push back on the big banks and businesses who generally dominate our economy and politics are destroyed should be terrifying to every American.
The good news is that the people of Wisconsin are not buying the corporate right’s BS. Check out this great new poll from Wisconsin; the governor is getting totally hammered in public opinion. The other good news is that we can all join the people in Wisconsin who are fighting back. This Saturday, there will demonstrations at every state capitol and in every major city. Help fight for your democracy this weekend. Help fight for the American way, and a check on the power of big business.
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