The truth is right here
It is truly amazing to me how all the bright boys and girls who are paid high salaries to explain the markets and economy to us lesser folk couldn't explain why the financial markets seemed to be disconnected from the economy:
Well, there is a disconnect (between the stock markets and the economy), and there are people who fear that what happens to Wall Street will eventually ripple through and affect Main Street. But history proves otherwise. - Transcript: Neil Cavuto, Fox News Managing Editor for Business News, FOX News Sunday, July 21, 2002
Maybe the reason this question gave them so much trouble was because the answers, while obvious, were not the ones they wanted. Those being 9-11, rogue nations, war in the Middle East, mysterious market forces, the cancellation of Ally McBeal or bad breath in dogs. Anything but the truth: that stock prices rise and fall on the expectations of rank and file employees. The same people who recently witnessed their nest eggs fry on the blistering sidewalks of Wall Street while the corporate aristocrats continue to live high and fine on their outrageous fortunes.
The pearly white dental work gleaming on the happy sets of financial news may guffaw and insist individual investors are but a pinky toe in the vast river of money lapping on the banks of the financial fiefdoms. And they would be right. The markets are driven by institutional investors:
"Capital markets are dominated by institutional investors. They invest long-term funds with a short-term perspective on risk and performance." - Graeme Wheeler, Vice President and Treasurer of the World Bank, Capital Flows, Chairman's Introduction to the Global Borrowers and Investors Forum Hilton Park Lane Hotel, London, UK, June 18-20, 2002
Most of money churning through the murk of unsavory accounting practices is managed by institutional investors: Professionals who run retirement funds, college funds, 401(k) plans, mutual funds, real estate investment trusts and all the other pools of money. Their investment decisions dominate the markets. Collectively, they control a massive amount of the world's wealth. But where does that money come from? Who feeds the leviathans?
Sources include insurance companies, venture capitalists and the like. But beneath the glittering surface drifts another truth - that through various tributaries, such as retirement funds and 401(k) plans, much of the money has come either from the sucking tentacles of executive squid, or the working stiffs who, having been nibbled to the nub by managerial sharks intent on ripping every possible dime from their time, seek shelter and security in financial markets never meant for those who live only a few paychecks away from poverty.
Despite the risks, from mutual funds to employee stock purchase plans, the stock market is precisely where so many Americans have turned thanks to the corporate feeding frenzy that really began with Ronald Reagan's union busting and supply-side economics.
Don't get me wrong, I'm not some disgruntled democrat taking potshots at the Gipper; I voted for Reagan. But once he got into office, we saw what trickle down really meant as the torrent of wealth produced by the American economy started pooling in vast fortunes at the top as it slowed to a trickle down to the rest of us.
From torrent to trickle
The story is well-documented: during the past 20-odd years Americans saw their pay stagnate and decline as wages failed to keep up with inflation, increases in productivity and executive pay. To compensate, many Americans hocked their homes at a record rate:
"On the consumer side, household debt as a proportion of income has moved from 67 percent to 82 percent. Mortgage debt as a percent of income has moved from 38 percent to 62 percent." - Tom McDonnell, U.S. Economy Headed for Disaster?, Discerning the Times Digest and NewsBytes, December 1999
Consequently, most American workers are living on borrowed time. Moreover, their ability to pay that debt has decreased as inflation-adjusted wages have shriveled to such a paltry sum that the only apparent means of preserving their retirement was to put money they could ill-afford to lose into risky investments. Inflating bubbles such as real estate, collectibles and stocks that no longer pay dividends, they gambled their future on the hope prices would always rise.
But the nature of bubbles is that, sooner or later, they pop. Once investments have nothing to do with fundamental value and everything to do with hoping somebody else will be willing to pay more than we did, it becomes a con game. And when the shenanigans of corporate executives reached such excess that they could no longer be ignored, Americans began to lose confidence in the game.
So it should come as no surprise that, scant weeks after joyfully announcing America's economic recovery is at hand and the markets are poised to rebound, the pundits are now playing a different tune:
"What happened is the average investor dismissed upbeat stories from analysts and ignored Washington's claim of a disconnect between stocks and the economy. ... Indeed, small investors were correct in not accepting a turnaround in the economy." - Wall Street Cheerleaders Out of Sync, Fox News, August 31, 2002
In retrospect, it's now obvious there was no "disconnect" because the rest of us could feel what the gurus were afraid to concede: that the recovery is severely hampered by the still high number of layoffs, continuing conversion of regular full-time jobs to low-paid temporary jobs, and the ongoing exportation of wealth-creating jobs overseas.
Although layoffs in July 2002 were down about 10 percent over a year ago, according to the U.S. Department of Labor, Bureau of Labor Statistics the number was still almost 50 percent higher than it was in July 2000. But low-paying temp agencies have already seriously undermined regular jobs: According to calculations based on a November 1999 Federal Reserve report, The Evolution of the Demand for Temporary Help Supply Employment in the United States, between 1992 and 1997 more than half-a-million manufacturing jobs were outsourced. And American corporations have exported millions of jobs:
"Since 1998, we've lost more than two million manufacturing jobs because of failed government trade practices and the lack of a cohesive national industrial policy. Half that total has come in the last 12 months alone." - John J. Sweeney, AFL-CIO president, America needs industrial policy, Detroit News, August 30, 2002
As Paul Craig Roberts put it, "The U.S. has become a country that imports poor people and exports jobs that provide upward mobility." - townhall.com, June 18, 2002
Every sector under siege?
By and large, globalization has had the support of high tech workers, many of whom believed their position was secure within the new world order. That only manufacturing and relatively low-skilled jobs would be lost to less-developed nations. Recently, however, they, too, are losing their jobs to the international labor pool:
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"For those of us in the engineering business, just as for those folks working in the steel industry, the US-China trade imbalance translates directly into lost jobs. ... As production jobs go away, can engineering-level jobs be far behind?" - Alex Mendelsohn, Sr. Technical Editor, ChipCenter, Engineering, Lost Jobs, and The China Syndrome
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"As US companies find it expensive to have development work done in America, they seek to take advantage of India's English-speaking software professionals. Several call centers, consequently, have mushroomed in India, creating many jobs. The industry has witnessed a growth of nearly 70 per cent in business process outsourcing." - Nandita Mallik, Jobs lost, salaries cut, but India relatively unscathed
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"Examples of ingredients of globalisation will be: greater flows of investment to less developed countries, lightening speed of technological transmission, giant sounds of European and American jobs lost to emerging economies, global dominance of brands like Coca-Cola, CNN, Reebok, and Nescafe." - Mukesh Ambani, vice-chairman and managing director of Reliance Industries Limited, By 2020, India can be one of the five economic superpowers
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"The belief that we have only lost and are only losing our low-wage, low-skilled jobs to China is a completely fallacious one. The Chinese government is carefully and calculatedly building its own economic future by acquiring overtly and covertly, legitimately and illegally, our technology, our production, and our genius, the very blueprints of our economy." - Congresswoman Nancy Pelosi, Impact of MFN for China on U.S.-China Economic Relations, May 16, 1996
And so on, as one American industry after another succumbs to the politics of the multinational corporate empires.
Correction, Consolidation or Backlash?
This is the truth the grinning gadflies of capitalism are paid to ignore. And it has cost the American people dear. So what? Sales people always overstate their case, and the smirking peddlers are just selling corporate globalization. Clearly, things have gone too far. But some say this isn't truly a bad thing, because American capitalism has lifted more people up out of poverty than any other system, and proof ours is the best way lies in the fact we are witnessing its ability to self-correct right now.
Well, maybe. But tell that to the millions of Americans living in the shadow between poverty and middle class. Tell that to the working poor who have no health insurance. Tell the kids recently graduated from high school, whose aptitudes and education best enable them to work in a factory, if only they could find a factory job.
It may be true that American corporate capitalism is a self-correcting market system which, when viewed from a historical perspective, averages a happy medium. But the same could be said of a person with manic depression. They may experience magnificent highs and crippling, sometimes suicidal lows, but taken together they average out. So why bother to cure people with bipolar personality disorder? Some of them may kill themselves, but so what? That's just the price they pay for living in a society which allows them to experience the joyful highs.
We don't do that with people. We shouldn't do it with our economy:
"(T)he pendulum will swing back when excesses grow too harsh on the other side, as they will. Look around at the number of so-called private contractors being hired by big business today. As long as workers are called private contractors, companies are not obligated to provide paid vacations, health insurance or other benefits.
This will not last long, though - only as long as the economy prospers. Eventually, the pendulum will swing back, and workers who haven't felt the need to organize will organize." - David Hunter, Knoxville News-Sentinel, Labor day means much to those who understand the history of labor unions, August 28, 2001
So will our economy self-correct, or will the American worker backlash? Under the Bush presidency, we may have no say in the matter. He appears intent on consolidating corporate power, in part because multinationals are hungry for new enemies to replace the Soviet Union:
"Unfortunately, there is method behind the madness of Bush's rogue nation rhetoric. Ever since the Soviet Union collapsed over a decade ago, the U.S. military machine has been cracking and crumbling under its own massive weight. ... In Fortress America, William Greider demonstrates that the Pentagon and its industrial contractors ... desperately need another Soviet-like threat to counter." - Rogue Nations and Double Standards, The Email Activist
Fighting terrorists in "rogue nations" would funnel billions into the military-industrial complex:
"In his vow to fight terrorism - to 'win the first war of the 21st century' - President Bush has pledged 'whatever it takes, whatever it costs....' If the administration's projections are correct, in just a few years that cost will near a half-trillion dollars a year."
- Brad Knickerbocker, Return of the 'military-industrial complex'?, Christian Science Monitor, February 13, 2002
So what can we do about this? Can we do anything? And if so, should we? It is, after all, a little absurd to suggest the "war on terrorism" is about nothing more than corporate profits. Saddam Hussein, after all, poses a huge threat, not only to America but to all his neighbors. Or does he?
"There is 'no doubt,' said (Vice President Dick Cheney) ... that Saddam 'is amassing [weapons of mass destruction] to use against our friends, against our allies and against us.' ... Turks, Kurds, Iranians, Saudis, Kuwaitis, Jordanians, Israelis - none of these people appear as frightened of Saddam Hussein as the vice president of the most powerful nation on earth. Why?" - Patrick J. Buchanan, The Cheney Doctrine: War without end, WorldNetDaily, September 2, 2002
Just how much of a threat does Iraq pose? Very little. So how much of this war is real, and how much is rhetoric? How much is nothing more than political mayhem manufactured to justify the accelerating erosion of American rights at home and escalating enforcement of the American empire abroad? How much more are we willing to ignore before we take steps to defend our liberty?
Labor Unions: The last defense of liberty?
I'm not a big fan of conspiracy theories, and thousands of theories abound about a "new world order" and the emergence of sovereign corporations. But fantastic allegations aside, we might wonder what's going on with Americans when we watch complacently while the Bush Administration systematically dismantles our Constitutional rights:
"One of America's foremost newscasters, Dan Rather of CBS, says the US media has stopped asking tough questions of the Bush administration since 11 September. ... the CBS anchorman says that fear of offending the politicians 'keeps journalists from asking the toughest of the tough questions.'" - Madeleine Holt, Is truth a victim?, BBC News, May 16, 2002
Hogwash? Paranoia? Maybe, but Bush himself has said more than a little to encourage it:
"There ought to be limits to freedom." - George W. Bush, May 21, 1999
Washington Post, Monday, November 29, 1999
When asked if the President believes "and his advisors believe that the Constitution allows for an American citizen to be declared an enemy combatant and then held indefinitely without charge," Press Secretary Ari Fleischer said yes: "According to the lawyers, under the statute, this can last for the duration of the war." - Press Briefing by Ari Fleischer, June 12, 2002. Translation:
Under the Justice Department's new definition of "enemy combatant"-which won the enthusiastic approval of the president and Defense Secretary Donald Rumsfeld-anyone defined as an "enemy combatant," very much including American citizens, can be held indefinitely by the government, without charges, a hearing, or a lawyer. In short, incommunicado. - Nat Hentoff, General Ashcroft's Detention Camps, September 4 - September 10, 2002
Is the purpose of this Bush presidency to usher in a new world order? One in which nations are superceded or replaced by corporations? Probably not in so many words: For all its many virtues, democracy is also a powerful way to hoodwink people into thinking they are part of the process and, therefore, have a vested interest in supporting the outcome. But whether we retain the trappings of a democratic republic or emerge from this tumultuous time as citizens of some new empire, the only certainty is that our Constitution and Bill of Rights are under siege.
The question is, what do we do about it? Armed revolt? Don't even think about it. No militant group in the country could possibly possess sufficient firepower to withstand a fraction of the might of a single American military base. Political action, not revolution, is the answer. The only groups with the clout and ability to coordinate this on a national level are America's labor unions.
So maybe - just maybe - now would be a very good time to join a Union.
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