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BILL MOYERS: As we’ve been reporting in our series on winner-take-all politics, the Millennials grew up in the years when crony capitalists and powerful officials in Washington rewrote the rules of the economic game to favor the relative few at the top over everyone else. That collusion brought devastating results, from the financial crash four years ago, to the greatest inequality in America since the great depression of the 1930’s. Our economy stopped working for everyday Americans.
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Moyers's statement makes for a nice set of talking points, except that the "rules" of the "economic game" were not written to favor any relative few at the top while ignoring everyone else, and to just claim it was those policies that brought devastating results is really over-simplifying the issue. I would also completely disagree that we have "the greatest inequality in America since the Great Depression of the 1930's." Our economy worked just fine for everyday Americans. It had stopped working prior to the Reagan era. The areas where the economy has been bad for Americans are where there is a lot of excessive government involvement. The idea behind the Reagan polices was to free up the economy. Freeing it up is not rigging it to benefit special interests (large corporations utilize subsidies and regulations to rig the system). In fact, some of the large financial corporations at the time were very much even against the Reagan policies.
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HEATHER McGHEE: Most of my friends, who are not political and don't have an economics background, who are starting out their lives right now, having children, getting a house don’t even think about the fact that these are common problems that could have public solutions. They don't think there could be financial aid for childcare. They don't think that health care could be portable and go with them and be guaranteed.
They don't think that there could be a pension that is more solid and durable than a 401(k). That's actually been sort of the most pernicious effect of the Reagan revolution is to take the horizon of public policy solutions that could really help people sort of off the radar entirely.
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Where does she think the money for all of this stuff will come from? The Europeans have lackluster defense spending and high taxes and still can't afford it (well a few can, but generally they are very small and also lack defense spending). And their high taxes, such as the VAT tax, taxes the poor and the middle-income to pay for this kind of stuff, and raises the cost of living a good degree.
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HEATHER McGHEE: They know that they have the problems. They just don't know that there could be public solutions.
I think that's one of the major projects that we have to do is really to create a generational comparison. Where we say, for example, 'My generation-- my grandparents were able to go to college, go to higher education, have a middle class life, save for the future, retire comfortably because of public investments that were made, like the G.I. Bill, because of the federal highway system, because of the retirement system that labor and union jobs were able to provide.'
BILL MOYERS: Well, that's what can happen in the public sector. That the public sector over the last 50 years has created a very large middle class for people who would otherwise never have gotten into it. And now with the assault on public unions and public sector, that ladder's being taken down, right?
HEATHER McGHEE: Absolutely. It's been so shocking to see the demonization of public servants. It's really part of this 40-year attack on the public. And I think the fact that we're seeing right now that teachers, public janitors, school workers, bus drivers, cops, firefighters are the new welfare queens in our public life.
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Maybe because of the reputations some of these public-sector unions have for demanding excessive pay and benefits? For using the public treasury to essentially buy politicians who will do their bidding (i.e. pay them more money and further enlarge the govenrment in the name of strengthening the unions?). Not to mention the thuggish behavior many of these public-sector unions utilize in order to get their way.
I also disagree with Moyers's assertion that the public sector "created a middle-class that would never have gotten into it." Public-sector workers produce nothing. Whatever money they make is money that is either from debt or from tax revenues taken out of the private-sector.
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I mean, really they are. I mean, if you think about the stereotype that's being trafficked right now. They're talking about these lazy, you know, bloated pensions that are just, you know, cheating the system. I mean, that's the welfare queens of the 1980s. And what has been-- what's the same between the welfare queen and this image of the postal worker who doesn't really deserve the benefits they're getting? These old shop worn stereotypes of race and gender.
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As with so many leftists, it's again about racism or sexism for her.
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BILL MOYERS: Does it seem to you that inequality is sort of the bequest your generation has been handed.
HEATHER McGHEE: Absolutely. I mean, our generation is, you know, the most diverse generation in American history. Half of young people under 18 are children of color. But we are also the generation that is experiencing this record inequality, inequality in our economy and inequality in our democracy.
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Minus the current recession, which may well be being prolonged by the current administration, my opinion would be that her generation is experiencing record equality, not inequality. Just the job market right now stinks.
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BILL MOYERS: What do you mean inequality in democracy?
HEATHER McGHEE: Well, let's take, for example, the fact that since I was born, there's an entirely new industry that didn't used to exist. That of corporate lobbyists, for which there are now 24 for every member of congress.
I mean, if you think about who people in congress spend their time with, who they listen to, who they spend one out of every three minutes that they're in office fundraising around, it is people in the top one percent. It is their lobbyists. It is the corporate CEOs. And so much of the policy decisions, whether they are the decision to keep the minimum wage low.
I mean, if we-- the minimum wage was at its peak in 1968 and has lost nearly half of its purchasing power. I mean, just think of that one policy decision that is a number one target for the Chamber of Commerce, year after year, to make sure that the minimum wage stays low. That absolutely benefits people who are invested in big corporations and the executives of big corporations. But the American worker has seen their buying power erode and erode.
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Actually, big corporations such as Wal-Mart favor a minimum wage because it hurts smaller businesses:
LINK (although Wal-Mart claims its to help the customers
). Wal-Mart's latest move is to create new "Express" stores, small Wal-Marts which if successful are menat o take on dollar stores and mom-and-pops.
And raising the minimum wage is not going to change anyone's buying power. You can't subvert the laws of economics just because you don't like them. In addition, unions have traditionally favored the minimum wage to price cheaper-priced labor out of the market. She talks about youth being unemployed right now, what does she think is one of the main drivers of youth unemployment throughout the world? The first minimum wage, the Davis-Bacon Act, was for racist reasons, to price cheaper-priced black labor out of the market to protect white unionized labor (certain racist people throughout history have even advocated the minimum wage for this purpose).
The minimum wage is a price control, and as such, you artificially increase the price of something, you'll create a surplus. This in particular hits the youth, as the youth make up much of the minimum wage workers.
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HEATHER McGHEE: Yeah, it's been a really grand experiment that has-- in, sort of, neo-liberal economics, the trickle-down experiment. The experiment that said that, in fact, the best way that we can shape our economy is to make sure that the most gains are amassed and kept at the very top. And then that somehow those would trickle down.
That's been an experiment. It's been-- it was a theory that was tested. My generation were the guinea pigs. And that experiment has absolutely failed if the aim was to produce greater prosperity for America. That means American people. If the aim was to actually stop at the top and just create greater corporate profits and greater G.D.P. growth, then it's been a success. But I think most Americans would not have bought in to that kind of experiment.
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Except that this was never the experiment or policy. Neo-liberal economics is not about any "trickle-down" policy; no economist is. "Trickle-down" economics does not exist. The thinking behind the Reagan policy was that the economy was over-taxed and over-regulated, and that reducing taxes and regulations would unleash a lot of new investment and hence business creation and growth, and hence job creation. It would increase the number of goods and services in the economy (hence the term supply-side economics).
And it worked spectacularly well, producing tremendous prosperity. Along the way however, due to bad governmental policy and lax oversight in the financial system, we ended up with the financial system tying itself into the national housing market and a housing bubble developed which popped.
This woman is a textbook example of when Ronald Reagan said, "The trouble with our liberal friends isn't that they're wrong, it's that they know so much that isn't so."
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HEATHER McGHEE: Yeah. We need to fundamentally shift back to a system of grants, not loans. I mean, we cannot indenture a generation just to pay for the ticket to the middle-- to a middle class life. But we also need to do something for people who are not going to get bachelor's degrees, which are still-- it's not the majority of young people who have a college degree.
So I think we need to raise the wage floor. We absolutely have to get back to a place of embracing unions in this country. And we have--
BILL MOYERS: Why?
HEATHER McGHEE: Because unions created the middle class in this country. Because the jobs that were the steelworker jobs that so many of the people in my family had weren't good jobs. They were made into good jobs, because the people who were working those jobs had a voice on the shop floor, and had some power when it came to setting their wages. Which makes all of the sense in the world. That the people baking the pie should be the ones who get to have a decent slice of it.
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I think the solution to reducing the cost of a college education is to get the government out of subsidizing it in the first place. It shouldn't be a surprise to anyone that the cost of a college education has exponentially increased as the government has subsidized it. And unions did not create the middle-class in this country. Increasing productivity did that. Unions helped with getting good working conditions established however. As for the rest of her statement, she's a socialist. In a market, your skills are valued by what the market sets them at. You don't have a right to form a cartel and artificially jack up the cost of your skills/products/services, so no, it does not "make all the sense in the world" as she says. It's a sense of entitlement. The only reason why unions were able to get away with doing that as they did during that period of time was because America had no major economic competition at the time. But times are different now.
She believes that the workers of the company are actually entitled to the profits of the company. They're not. They're entitled to decent working conditions, but otherwise, in terms of pay, they're only "entitled" to what the market sets their pay at. The purpose of the business is to make money for the owner or owners (shareholders). The wealth belongs to them. It's basic economics: you provide something, a product, service, or skill, to trade on the market. Businesses sell products and services. They offer to trade money and benefits to workers for the workers trading their skills and labor. The market establishes the prices of everything. That's just how the world works. Workers forming a cartel to artificially increase the price of their skills and labor is engaging in robbery. The workers do not own the wealth of the company. They're ultimately just someone the company trades with. It trades with the workers to be able to produce its goods and services, which it then trades on the market for money.
Everyone, whether the workers or the businesses, are ultimately trading skills/goods/services on the market for money (the medium of exchange) which they then exchange for other skills/goods/services.
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BILL MOYERS: How do you have a new social contract if we don't have a sense of community?
HEATHER McGHEE: I think that is the great question of our time. Because if you look at this sort of hostility and anxiety around public solutions, at its root, it's anxiety around who the public is. And I think that that's happened, because of the real explosion in diversity.
But I think it's something that there is an answer to. It takes leadership. I mean, you have to think about the same system that allows people based on their physical appearance to be valued so differently, to create this hierarchy, is at its root, in terms of cognitively, the same system that allows, for example, the CEO of Walmart, who makes about $16,000 an hour. Whereas his coworker, the associate on the shop floor, makes about seven dollars an hour. And then the woman or man in Malaysia or India, who actually is making the product on the shelves makes pennies an hour.
And yet, they're all in the same enterprise. You have to think about what that says to us as people, when we value the labor of three people who are in the same enterprise, essentially, so differently. I mean, when you and I walk into a store and we see a phone on the shelves. And one is $30 and one is $300, what do we decide about the more expensive one? That it's better.
BILL MOYERS: Yeah, automatically, right?
HEATHER McGHEE: Automatically.
BILL MOYERS: Something about it.
HEATHER McGHEE: Exactly. If it's more expensive, it's better. And the logic of applying that same logic to human beings, which we do all the time in this free market with no fundamental values of human dignity is really dangerous. But it's the same kind of logic that leads us to have racial hierarchies and gender hierarchies, as well.
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This one just makes my head spin. Does she have no concept of how the real world works? I've got news for her, but that's not any "system" that does that, that's just reality. Human nature values people based differently on their skin color. And it is not the same thing that causes people working in a company to be valued differently as causes people to be valued differently based on skin color. People being valued on skin color is due to racism. Valuing the three people in the company differently is just the rules of the market, which looks at what does the person have to trade, and prices it accordingly. The CEO offers skills far more highly-valued than the shop-floor worker or the Malaysia person.
The only acception to the coldness of the free market is if the shopfloor person or the Malaysia person are being forced to work in horrible conditions or being worked 24/7 or something like that. Otherwise, of course they are paid differently. A shopfloor worker doesn't know how to run a multibillion-dollar, global corporation like Wal-Mart.
This one especially makes my head spin:
And yet, they're all in the same enterprise. You have to think about what that says to us as people, when we value the labor of three people who are in the same enterprise, essentially, so differently.
Because people aren't valued based on how someone like her thinks they should arbitrarily be valued, they're valued based on what they offer to trade. If they have something to trade that is of little value, then they don't get paid that much.
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And as the Dēmos report "The State of Young America" has shown, this generation, my generation is really feeling the brunt of the recession that capped off 30 years of widening economic inequality and insecurity. And so young people can't say that they're better off financially than they were four years ago. I really believe that given the levels of unemployment in the young adult generation, the president needs to call for-- and I understand it would be difficult to pass through Congress.
But on the campaign trail, he needs to call for a WPA style, generational jobs program all across this country. And it would be a transformational generational experience. It would be something that would expose people to different Americans from different walks of life. But it would also be something that would say, finally, for once and for all, 'Yes, your American Government is on your side, young people. We're not always going to leave you to the mercy of the banks and selfish employers and the vagaries of the so-called 'free market. We're going to say that your future matters to us as a country.'
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How will she pay for the jobs program? And who is saying to leave everyone to the vagaries of the free-market? No one is saying to eliminate the safety net, just that government is not the solution to society's problems.
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BILL MOYERS: You're calling for more and more government help. You just asked Obama to take a more aggressive position with using the government to put people to work. You're up against, of course, the predisposition of people out across the country that, 'I don't want to pay taxes to those folks who haven't been spending it well, fighting wars, passing the cost on. Extending benefits to Wall Street, bailing out the banks. I don't want to support government anymore.'
HEATHER McGHEE: Absolutely. I mean I think that in order for us as Americans, who want to see public solutions to our common problems, to really achieve what we want to achieve, we are going to have to clean up Washington first. It is absolutely important. For example, why would the American people trust Washington to do what's right when they know that so much of their energy is focused on rewarding the people who brought them to the party, which is the wealthiest people in the country and the organized corporate elite?
And so we've got to clean up the money in politics problem. And it's time to take that incredibly personal issue of your own personal finances and make them political.
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She needs to realize that creating the government bureaucracies and all these regulations is what leads to so much of this lobbying in the first place. It is also impossible to really clean up the money in politics. Trying to do so only limits freedom of speech.
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