8.22.2007

ehrenreich: the low, strangled, cry of pain of the american working class

Some terrific satire from Barbara Ehrenreich, on her blog, and in today's Globe and Mail.
Smashing Capitalism

Somewhere in the Hamptons a high-roller is cursing his cleaning lady and shaking his fists at the lawn guys. The American poor, who are usually tactful enough to remain invisible to the multi-millionaire class, suddenly leaped onto the scene and started smashing the global financial system. Incredibly enough, this may be the first case in history in which the downtrodden manage to bring down an unfair economic system without going to the trouble of a revolution.

First they stopped paying their mortgages, a move in which they were joined by many financially stretched middle class folks, though the poor definitely led the way. All right, these were trick mortgages, many of them designed to be unaffordable within two years of signing the contract. There were "NINJA" loans, for example, awarded to people with "no income, no job or assets." Conservative columnist Niall Fergusen laments the low levels of "economic literacy" that allowed people to be exploited by sub-prime loans. Why didn't these low-income folks get lawyers to go over the fine print? And don't they have personal financial advisors anyway?

Then, in a diabolically clever move, the poor – a category which now roughly coincides with the working class – stopped shopping. Both Wal-Mart and Home Depot announced disappointing second quarter performances, plunging the market into another Arctic-style meltdown. H. Lee Scott, CEO of the low-wage Wal-Mart empire, admitted with admirable sensitivity, that "it's no secret that many customers are running out of money at the end of the month."

I wish I could report that the current attack on capitalism represents a deliberate strategy on the part of the poor, that there have been secret meetings in break rooms and parking lots around the country, where cell leaders issued instructions like, "You, Vinny – don't make any mortgage payment this month. And Caroline, forget that back-to-school shopping, OK?" But all the evidence suggests that the current crisis is something the high-rollers brought down on themselves.

When, for example, the largest private employer in America, which is Wal-Mart, starts experiencing a shortage of customers, it needs to take a long, hard look in the mirror. About a century ago, Henry Ford realized that his company would only prosper if his own workers earned enough to buy Fords. Wal-Mart, on the other hand, never seemed to figure out that its cruelly low wages would eventually curtail its own growth, even at the company's famously discounted prices.

The sad truth is that people earning Wal-Mart-level wages tend to favor the fashions available at the Salvation Army. Nor do they have much use for Wal-Mart's other departments, such as Electronics, Lawn and Garden, and Pharmacy.

It gets worse though. While with one hand the high-rollers, H. Lee Scott among them, squeezed the American worker's wages, the other hand was reaching out with the tempting offer of credit. In fact, easy credit became the American substitute for decent wages. Once you worked for your money, but now you were supposed to pay for it. Once you could count on earning enough to save for a home. Now you'll never earn that much, but, as the lenders were saying – heh, heh—do we have a mortgage for you!

Pay day loans, rent-to-buy furniture and exorbitant credit card interest rates for the poor were just the beginning. In its May 21st cover story on "The Poverty Business," Business Week documented the stampede, in the just the last few years, to lend money to the people who could least afford to pay the interest: Buy your dream home! Refinance your house! Take on a car loan even if your credit rating sucks! Financiamos a Todos! Somehow, no one bothered to figure out where the poor were going to get the money to pay for all the money they were being offered.

Personally, I prefer my revolutions to be a little more pro-active. There should be marches and rallies, banners and sit-ins, possibly a nice color theme like red or orange. Certainly, there should be a vision of what you intend to replace the bad old system with—European-style social democracy, Latin American-style socialism, or how about just American capitalism with some regulation thrown in?

Global capitalism will survive the current credit crisis; already, the government has rushed in to soothe the feverish markets. But in the long term, a system that depends on extracting every last cent from the poor cannot hope for a healthy prognosis. Who would have thought that foreclosures in Stockton and Cleveland would roil the markets of London and Shanghai? The poor have risen up and spoken; only it sounds less like a shout of protest than a low, strangled, cry of pain.

7 comments:

James said...

This reminds me of a Tom Toles cartoon I saw a while ago: a tycoon looks at a 50s SF-style robot working on an assembly line, and says to himself, "You know, if I paid that thing, it could afford to buy our products..."

Rositta said...

Maybe the slowdown in consumer sales is good for the environment? If people stop consuming, especially goods made in China it's not such a bad thing. I do agree that low wages is something that needs to be addressed but rent to own furniture and payday loan outfits where around in the 50's to suck in unsuspecting immigrants. I know that from experience. Anybody out there remember Household Finance Company? There's lots of stuff I can't afford to buy, but I would never mortgage my house to do so. If I can't pay for it, I don't buy...ciao

L-girl said...

Strangling the poor and working class while the well-off by hi-def TVs, huge SUVs and ever-bigger houses is not a way to fix the economy. The slow-down in consumer sales, in this case, means people are doing without.

M. Yass said...

GBA! TGNOTFOTE!

M. Yass said...

the other hand was reaching out with the tempting offer of credit.

And then they made it more difficult to discharge the debt in bankruptcy.

Then they took away health insurance, or at least made it so you couldn't afford it. Even if you have insurance, it only covers 80 per cent. 20 per cent of the cost of open heart surgery is about $40,000. They'll want it all and now, let me tell you.

Oh, and you want to escape low-wage hell? The only hope you have, and a fairly slim one at that, is to go to college. Enter student loans. Since Pell grants have been cut , you'll have to borrow most of the cost of a college education.

The upshot is, even if you do escape low wage hell, the student loans and medical bills will still get you. And unless you're making upper management salary, the odds are you won't be able to afford to buy a home.

Guess you should just pick better parents, huh?

L-girl said...

The only hope you have, and a fairly slim one at that, is to go to college. Enter student loans. Since Pell grants have been cut , you'll have to borrow most of the cost of a college education.

So you join the military, to finance your education. You join the national guard, to be used for national emergencies. And you are sent to Iraq.

And if you are lucky enough to make it through your tour of duty in Iraq in one piece, and are discharged, to your great relief, you receive a letter - telling you you have been re-upped, involuntarily, for an additional 20 years.

M. Yass said...

So you join the military, to finance your education. You join the national guard, to be used for national emergencies.

That's what I did. Of course, you go through basic training where you march around, yell "sieg heil," become conditioned to fire your rifle at human-shaped targets and all of that other fun, conducive-to-freedom stuff.

And you are sent to Iraq.

I fortunately dodged the Vietraq bullet. I got in just in time for the for the post-Cold War drawdown. Back then, they were kicking people out left and right and deactivating units as fast as they could. My old unit is in Vietraq now, and they've had several casualties.

And if you are lucky enough to make it through your tour of duty in Iraq in one piece,

Long odds of that, especially psychologically. When you start to have PTSD issues, they'll tell you to "quit being a pussy" and to "suck it up and drive on."

and are discharged, to your great relief, you receive a letter - telling you you have been re-upped, involuntarily, for an additional 20 years.

You got it, sista.