Interesting interview with economist Richard Wolff in The Sun magazine. His prescriptions are predictable, but his diagnosis is startling. Even if you do not favor direct government employment of the unemployed, or taxing the rich and corporations at 1960 rates, as Wolff seems to — ain’t gonna happen, so forget about it — he makes some strong points that are hard to answer about the particular ways wealth has been transferred upward.
He talks about how for the first time, after about 1970, there was no labor shortage (because of automation, offshoring, and women in the workplace), so employers no longer had to raise wages to retain workers, while workers had to work longer and harder—and yes, go deep into debt—to maintain or increase their standard of living. Result: productivity and profits increased, but the ones who were doing the producing didn’t share in the proceeds.
it’s been the best thirty years that employers in this country have ever had. More product was being produced, but employers didn’t have to pay workers more.
[The interviewer points out that we in the U.S. equate capitalism with freedom]
Yes, employers are free, in this system, to stop raising workers’ wages. But their exercise of that freedom has deprived the mass of Americans of a rising standard of living to accompany their rising productivity. Employers have kept all the benefits of the productivity increase in the form of profits [which were attributed to the genius of executives]. So one sector of our free economy has deprived another sector of its due.
This too was interesting, on deficits:
Then the government turns around and borrows money. It borrows from foreign governments, but also from banks, insurance companies, large corporations, and rich individuals who purchase Treasury bills, notes, bonds, and securities. In effect corporations and the rich can not only keep more tax dollars; they can then turn around and loan the money they kept to the government and earn interest on it. The interest that must be paid to them comes either from taxes levied upon the mass of Americans or from the savings the government achieves by cutting its payrolls and programs.
I’d love it if you would read and discuss this. I’d love it even more if you did not assume I’m endorsing most of what Wolff says. I don’t favor his prescription, but I did find these two points of diagnosis startling. You know I am economically naïve, and these points may have been obvious to most of you. But go ahead, try to explain them away.
You will say that entrepreneurs are rewarded with profit for risking capital and providing products, services, and work opportunities for others. I’m with you so far. But squeezing ever more work out of fewer employees for the same or less real pay, stressing workers and families to the breaking point? Mind you, Wolff is also critical of the overconsumption and overindebtedness of the average American family — yet that, too, has been one of the engines driving profits until recently. Moral disapproval of that behavior from those who’ve encouraged it and profited from it . . . well, it smells a little.
Can we conceive of a system that would encourage and reward productivity, not just extort and exploit it? And how could that come about (could it?) without empowering the government as enforcer?