Class Warfare

There is a neo-populist movement afoot in the US right how. No one is sure exactly what to call it. Analogies with the original Populist party break down over issues of tariffs and xenophobia. The later "Progressive" movement, which is credited with creating the first round of government regulatory agencies, doesn't fit well either. It didn't have the broad-based working class foundation that is meant when one talks about populism.

These days when critics accuse liberals of engaging in "class warfare" they mean the the working classes are looking to rein in the excesses of the super wealthy. Since this group is tiny, the appeal to defending the rights of Paris Hilton doesn't work well, so they try to include the top 20% as well.

I propose to separate the classes on a different basis than is usually the case. In my scheme there are only two classes: those who have to work for a living and those who don't. Those who work may have different levels of income and wealth, but if they lose their wages they will, eventually, starve.

The blue collar, white collar and professional sectors have more in common than they realize. That the wealthy can disguise this fact is one of the greatest triumphs of social misdirection of the modern age. In the middle of the 20th Century the local town doctor might live in a better home than his patients, but he was part of the community and adverse economic conditions affected him just as much. The same was true for the local banker.

Now we have large sectors of society who make money by dealing in intangibles. These may be financiers, or media people, or others engaged in marketing intellectual property. A dealer in derivatives does not have the same connection to his neighbors as did the town banker. He thus, mistakenly, thinks he has different interests.

What goals do the various strata of the working class have in common?

1. A clean environment
2. A safe local environment
3. Adequate health, education, and retirement services
4. A functioning democracy
5. A stable international political scene
6. The expectation that similar conditions will exist for their descendants

What does the non-working class want?

1. Adequate supplies of material goods of any sort
2. A stable and growing economic system
3. Permanent investment opportunities
4. Freedom to move capital internationally
5. Freedom to relocate when any locale becomes too risky
6. A political system designed to maintain their influence

Why do some in the working class fail to understand where their interests lie? There have been many attempts at formulating an explanation. All seem to have some partial insights. In no particular order: a belief that they will rise to the non-working class and thus they need to support those interests so that they will be in place when they "make it". A feeling of elitism or superiority. Distraction over "values" issues which blind them to the underlying real class concerns. Jingoism or xenophobia which fosters an "us versus them" mindset - another form of elitism. Insecurity or fear which leads to the aim of keeping those who might challenge their position from below being kept "in their place". This latter attitude may not be totally irrational. Many "populist" proposals these days aim at limiting the wealth accumulation of the upper segment of the working class.

The non-working class has every reason to oppose limits on their wealth accumulation since their continuing class membership depends upon the ability to make money from money and not labor. Anything which constrains this will lead to a permanent limit on future wealth growth. Unlike the working class there is nothing they can do to increase their income except have the rules altered. By definition they don't "work" so they can't increase their labor. (I realize that some of the non-working class "work", but they don't have to work to eat they do it for other reasons.)

Now why doesn't a stock trader earning $1 million a year see that his paying a higher fraction of his income is a "good thing"? Doesn't he want a clean and safe environment for himself and his family? Who does he think is going to pay for this? Why the tax resentment? Why does this segment exist only in those countries with a high level of wealth disparity?

As I stated above, I think the problem is one of a misunderstanding of where one's interests lie. In a country with a high degree of wealth disparity (like the US and UK) this imbalance allows too much power to reside in the hands of too few. This not only affects how elected representatives are selected, but also means that the information outlets are in the hands of the non-working classes. The misinformation barrage is thus unchallenged. Politicians who represent the working class don't get elected and voices from this class don't get heard in the press or on the air. With a continual program of class misidentification the working wealthy become blind to their real interests.

A member of the non-working class can leave his home country when things get too bad, but what happens to the financial analyst who thinks he is member of this same group. He is stuck in the muck just like his blue collar compatriots. As the problems of resource shortages spread even the options for relocation will diminish. Perhaps the 400 wealthy families in the US can relocate, but where will they go in 50 years when climate change affects the entire planet?

If you are making $1 million per year, be glad to pay 50 or 90% in taxes and realize that you are still ahead of 99.99% of the rest of the people on the planet. You can't eat gold and you can't buy protection during a revolution, just ask the French aristocracy of 1789. If you are among the most fortunate than you have an obligation to contribute more to society. When did greed replace community as one of the virtues?

The question is how to get people to understand where their interests lie in the face of a generation-long misinformation campaign. I don't have an answer, but perhaps the rise of alternate sources of information will provide the needed wedge. This needs to be defended as well. There are already steps being taken to limit the reach of dissident internet sites as well as to control access to the network itself. Don't expect the legal system to support the working classes. Judges and government workers suffer from the same misunderstanding about their class affiliation as do all the others.

Meta: 

Comments

Xenophobia?

That's a special interest claim to say anyone who wants a controlled immigration policy is a racist.

Name calling people who work for a living and know exactly what's going on in their home towns on jobs I thought wasn't going to happen over here.

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I gotta agree

Firstly please try to write detailed economics posts. We're trying to focus on policy and actual facts in the economic policy, statistical sphere.

Secondly I have to agree that claiming xenophobia is some reason that focus in the middle class, national interest, working America's interests is pure spin coming from the public relations campaign of those who have a vested interest in stopping any tightening of immigration law.

I write specifically on these issues, especially H-1B, global labor arbitrage, outsourcing and we really want to stick to the statistics, the facts, labor economics.

Hopefully people will focus their writings accordingly.

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Puzzled

I have no idea what either of you are talking about. If you have issues with immigration then what has that to do with my distinction between those who have to work and those who don't? Do you deny that some people are motivated by xenophobia? I listed that as only one of the ways people are kept from understanding where their class interests lie.

As for statistics, of what use are they without a framework to make sense of them?

If you want to discuss immigration (which I doubt will be rational with someone who calls himself LouDobbsDem) then here's my take on the subject, complete with lots of stats and graphs.

Immigration facts debunked

I also have a problem with people who are unwilling to put their name on their opinions.

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that's a serious problem

Considering your opinions. We go into immigration, wage arbitrage extensively because myself, I'm a H-1B activist and that is for American Professionals that I am an activist. Well versed in labor economics and illegal immigration does indeed repress wages, it's econ 101.

So does H-1B. This is a fundamental element in labor economics, immigration and migration. Not only that, one of the reasons I started this blog, beyond wanting to discuss more in depth overall economics is to get away from precisely the sort of spin you just linked to. Even Paul Krugman will tell you illegal immigration represses wages, any sudden influxes in a labor supply will do that.

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Immigration

I'll tell you what, you post an entry laying out your understanding of immigration and then we can all start from the same place.

As to the issue of immigration depressing wages, this is more complicated than you suggest. There is some evidence that low wage jobs (such as those in slaughter houses) are depressed by immigration, the issue with H1-B's is not as clear.

I don't know why you call my essay "spin", there is nothing in there that isn't based upon publicly available data.

Just today there is an article in the NY Times about tomato farmers in PA not planting this year because the heightened enforcement on undocumented workers means that the pickers won't be available. If the immigrants were really displacing native workers then this shortage would be made up from the ranks of the unemployed. Apparently there is more to this story then simple job displacement.

There is another article which shows that Social Security is getting as much as 15% of its revenue from undocumented workers who have to pay in, but will never collect benefits.

To put things in old-fashioned language: the various sectors of the working class are being set against each other by the capitalists who gain by keeping the workers from uniting. Immigration policy is just another of the areas used to split workers into subgroups.

I think that was my original point, which you seem to have failed to appreciate and have gone off on a tangent.

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articles are not economics

Yes, there are many studies at this point which prove H-1B is being used as a labor arbitrage vehicle. The GAO, Urban Institute, NACE, etc.

Then, a news article article is not real economics. George Borjas is real economist and overall the research shows at the lower skills illegal immigration is negatively affecting wages. Even at the high end, any sudden influxes in supply with wage repress. This is a fundamental law of economics, supply and demand.

I think I appreciated your point just fine and it's right in the about section of this site, the FAQ, user guide to not name call. It's an economics site and you're calling people xenophobes.

It is spin, do you honestly believe examining the notorious unemployment rate or the trade deficit is an accurate statistical method when examining labor markets and real wages per supply within a domestic economy?

Are you even aware that illegal labor was recruited in order to union bust and is a known method? It started with the Farm workers union in the 1980's and then with the meatpackers union.

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The Hard Truth Of Immigration, by Robert Samuelson of Newsweek

The Hard Truth Of Immigration: NO SOCIETY HAS A BOUNDLESS CAPACITY TO ACCEPT NEWCOMERS, ESPECIALLY WHEN MANY OF THEM ARE POOR OR UNSKILLED WORKERS
Newsweek, June, 2005 by Robert J. Samuelson
http://www.newsweek.com/id/50081

"The stakes are simple: will immigration continue to foster national pride and strength or will it cause more and more weakness and anger?"

My guess is that with robertdfeinman and others leading the charge on weakness and fomenting anger in others, who have been directly affected -- such as being displaced by a foreign worker on a visa for example, immigration will continue to be a hot button issue in the presidential campaigning. Samuelson's article, and this is by someone who favors immigration mind you, suggests that right now (the article was written in 2005 so it is WAY overdue) the country needs to take a breather from the levels of immigration we've had over the past decade or so.

We can't keep up this pace of unregulated immigration. Period.

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A Few Facts for Robertdfeinman to Chew On

Lumping many issues into "immigration" and then making the leap the leap to "xenophobia" is an easy trick used by the expansionists.

Let's focus on the H-1B/L-1:

  • H-1B jobs are not advertised to American workers- they are reserved for citizens of foreign countries.
  • The H-1B expansionists claim that U.S. citizens can't fill these jobs. Since the  jobs aren't advertised, how can they know this?
  • When the H-1B returns to his country of origin, he gets his social security back. An L-1 need not contribute anything to our economy since he can be paid in country of origin bypassing the U.S. Treasury altogether.
  • The majority of H-1B applications are for entry-level (check the LCAs).  Why can't we train American youth.
  • The H-1B/L-1 is a great enabler of gender and racial discrimination. 20 years ago, the tech industry had a growing number of women and African-Americans. Sadly, that trend has been reversed.

And please, spare us the aphorism that "globalization is inevitable". Globalization amounts to moving capital to where the labor is cheapest and, where possible, moving cheap labor to where the capital is. 

Mr. Feinman, I'm a populist and damn proud of it.

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A Few Facts for Robertdfeinman to Chew On

Technically H1-B jobs can only be filled if it can be demonstrated that there is no suitable candidate available in the US.

If you look in Computerworld, for example, you will see boilerplate ads from firms fulfilling the letter of the law by running these ads. I'm perfectly willing to concede that this is a sham, but then why does the situation exist?

The reason workers (whether technical or meat packers) get screwed is because they are not organized. If you read my essay (cited above) you will see that there is a high degree of correlation between the level of unionization and the degree of economic equality in a society. This is true over time (as the decline of unionization chart illustrates) as well as between countries.

For some reason technical and professional workers have been led to believe that they can fend for themselves and that organizing so that they can bargain collectively is only for blue collar jobs.

This is the type of class-based propaganda that the capitalists use to keep the labor force from becoming unified and working for the benefit of all. There are many highly skilled people who belong to unions, this ranges from nurses to college professors.

If the traditional industrial union model is not suitable for those who deal more in mind work then it is up to them to devise a new type of organization. I proposed such a possible arrangement a couple of years ago and I see that there are now several groups doing something similar.

Here's my original proposal:
A proposal for a worker's affinity group

For many skilled workers salary isn't their only concern, they also are interested in keeping their skills up-to-date, job transfer assistance and portable retirement and health plans.

I'm not aware that I said anything about globalization, inevitable or not, why does everyone keep putting words into my mouth?

I'll repeat my point again. If people spend all their time demonizing other workers then they are missing the real target, the class that has no allegiance to the country and can pickup and move themselves or their capital whenever they wish.

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false information

now you are posting false information on H-1B. No, they do not have to find or consider a US worker first.

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H1B

Somehow this got changed into a discussion on immigration and H1B, an area that I don't focus on.

If the rules have changed since I've retired then I'm not aware of all the new ones. There is a nice write-up on Wikipedia, I have no idea if it is accurate or not.

http://en.wikipedia.org/wiki/H1B_visa

I will now resume discussing issues that I'm interested in. If this doesn't fit your conception of what is suitable for your site, there are many other venues. Some even read what I write before criticizing.

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I did read it

and the wikipedia article is constantly being attacked by the corporate lobbyists so you cannot entirely trust it.
They put up warnings on inaccurate, disputed info for a reason on wikipedia.

Go to Insourcing studies (on left)
and NoSlaves.comblog for some background on my own writings as well as some links to studies. On this site I link to one recent study that's quite accurate (Urban institute). Sloan Foundation has also done some exceptional research work in this area.

You can discuss what you want, as long as it's on topic and has real data to back it up and that is statistically valid data.

But, the entire "racist xenophobe" is a well known media campaign. I was even in on some conference calls demanding all bloggers write posts in this flavor of spin
and as someone interested in objective policy based on real facts, we're keeping that sort of crap off of here.

Now if someone wants to try and post it, well, be prepared to deal with the fall out. As our corporate lobbyist tax writer got.

They want real answers, with accurate statistics and most assuredly no name calling or labeling. It's not a political site per say, it's an economics site that will promote certain policy periodically.

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Class Warfare...by increasing the ranks of the lower class

By increasing the population of the lower class, you are furthering class warfare via an immigration policy that allows in mostly poor and unskilled, and now with H1bs etc. is allowing for the 'insourcing' of jobs for lower pay to even middle class levels.

I'm waiting to see if the current batch of bank employees now to be laid off will be replaced by H1bs:

Analysts see 200,000 banking industry layoffs
http://www.msnbc.msn.com/id/23904759 /

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200,000 layoffs

That is really significant those layoff estimates from the banking industry.

What do you want to bet they use this crisis to offshore outsource entire divisions of financial services like tech companies did in 2000-2004?

It's astounding to me that corporations go for wage arbitrage when the overall costs often are more than just the wage savings. I believe the last statistic I read of outsourcing projects that failed was ??? 60%? (yet another blog post I guess, I don't know the fail rate current numbers, per project area that has been BPO'ed)

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