Breaking the Chains of Debt Peonage
The corporate state uses debt to keep
workers—especially the working poor—frightened and disempowered. Only through a
campaign for a minimum wage of at least $11 an hour can Americans begin to
regain economic, social and political control.
Posted on Feb 3, 2013
The corporate state has made it clear there
will be no more Occupy encampments. The corporate state is seeking
through the persistent harassment of activists and the passage of
draconian laws such as Section 1021(b)(2) of the National Defense
Authorization Act—and we will be in court next Wednesday to fight the
Obama administration’s appeal of the Southern District Court of New
York’s ruling declaring Section 1021 unconstitutional—to shut down all
legitimate dissent. The corporate state is counting, most importantly,
on its system of debt peonage to keep citizens—especially the 30 million
people who make up the working poor—from joining our revolt.
Workers who are unable to meet their debts,
who are victimized by constantly rising interest rates that can climb
to as high as 30 percent on credit cards, are far more likely to remain
submissive and compliant. Debt peonage is and always has been a form of
political control. Native Americans, forced by the U.S. government onto
tribal agencies, were required to buy their goods, usually on credit, at
agency stores. Coal miners in southern West Virginia and Kentucky were
paid in scrip by the coal companies and kept in perpetual debt servitude
by the company store. African-Americans in the cotton fields in the
South were forced to borrow during the agricultural season from their
white landlords for their seed and farm equipment, creating a life of
perpetual debt. It soon becomes impossible to escape the mounting
interest rates that necessitate new borrowing.
Debt peonage is a familiar form of
political control. And today it is used by banks and corporate
financiers to enslave not only individuals but also cities,
municipalities, states and the federal government. As the economist Michael Hudson
points out, the steady rise in interest rates, coupled with declining
public revenues, has become a way to extract the last bits of capital
from citizens as well as government. Once individuals, or states or
federal agencies, cannot pay their bills—and for many Americans this
often means medical bills—assets are sold to corporations or seized.
Public land, property and infrastructure, along with pension plans, are
privatized. Individuals are pushed out of their homes and into financial
and personal distress.
Debt peonage is a fundamental tool for
control. This debt peonage must be broken if we are going to build a
mass movement to paralyze systems of corporate power. And the most
effective weapon we have to liberate ourselves as well as the 30 million
Americans who make up the working poor is a sustained movement to raise
the minimum wage nationally to at least $11 an hour. Most of these 30
million low-wage workers are women and people of color. They and their
families struggle at a subsistence level and play one lender off another
to survive. By raising their wages we raise not only the quality of
their lives but we increase their capacity for personal and political
power. We break one of the most important shackles used by the corporate
state to prevent organized resistance.
Ralph Nader, whom I spoke with on Thursday, has been pushing activists
to mobilize around raising the minimum wage. Nader, who knows more about
corporate power and has been fighting it longer than any other
American, has singled out, I believe, the key to building a broad-based
national movement. There is among these underpaid 30 million workers—and
some of them are with us tonight—a mounting despair at being unable to
meet even the basic requirements to maintain a family. Nader points out
that Walmart’s 1 million workers, like most of the 30 million low-wage
workers, are making less per hour, adjusted for inflation, than workers
made in 1968, although these Walmart workers do the work required of two
Walmart workers 40 years ago.
If the federal minimum wage from 1968 were
adjusted for inflation it would be $10.50. Instead, although costs and
prices have risen sharply, the federal minimum wage remains stuck at
$7.25 an hour. It is the lowest of the major industrial countries.
Meanwhile, Mike Duke,
the CEO of Walmart, makes $11,000 an hour. And he is not alone. These
corporate chiefs make this much money because they have been able to
keep in place a system by which workers are effectively disempowered,
forced to work for substandard wages and denied the possibility through
unions or the formal electoral systems of power to defend workers’
rights. This is why corporations lavish these CEOs with obscene
salaries. These CEOs are the masters of plantations. And the moment
workers rise up and demand justice is the moment the staggering
inequality of wealth begins to be reversed.
Being a member of the working poor, as Barbara Ehrenreich
chronicles in her important book “Nickel and Dimed,” is “a state of
emergency.” It is “acute distress.” It is a daily and weekly lurching
from crisis to crisis. The stress, the suffering, the humiliation and
the job insecurity means that workers are reduced to doing little more
than eating, sleeping—never enough—and working. And, most importantly,
they are kept in a constant state of fear. Ehrenreich writes:
When someone works for less pay
than she can live on—when, for example, she goes hungry so that you can
eat more cheaply and conveniently—then she has made a great sacrifice
for you, she has made you a gift of some part of her abilities, her
health, and her life. The “working poor,” as they are approvingly
termed, are in fact the major philanthropists of our society. They
neglect their own children so that the children of others will be cared
for; they live in substandard housing so that other homes will be shiny
and perfect; they endure privation so that inflation will be low and
stock prices high. To be a member of the working poor is to be an
anonymous donor, a nameless benefactor, to everyone else.
It is time to halt the sacrifice of the
working poor. It is time to empower the 30 million low-wage
workers—two-thirds of which are employed by large corporations such as
Walmart and McDonald’s—to fight back.
Joe Sacco and I spent the last two years in the poorest pockets of the United States, our nation’s sacrifice zones, for our book “Days of Destruction, Days of Revolt.”
We saw in Pine Ridge, S.D., Camden, N.J.—the poorest and the most
dangerous city in the nation—the coalfields of southern West Virginia
and the produce fields of Immokalee, Fla., how this brutal system of
corporate exploitation works. In these sacrifice zones no one has legal
protection. All institutions, from the press to the political class to
the judiciary, are wholly owned subsidiaries of the corporate state. And
what has been done to those in these sacrifice zones, those places
corporations devastated first, is now being done to all of us.
There are no impediments within the
electoral process or the formal structures of power to prevent predatory
capitalism. We are all being forced to kneel before the dictates of the
marketplace. The human cost, the attendant problems of drug and alcohol
abuse, the neglect of children, the early deaths—in Pine Ridge the
average life expectancy of a male is 48, the lowest in the Western
Hemisphere outside of Haiti—is justified by the need to make greater and
greater profit. And these costs are now being felt across the nation.
The phrase “the consent of the governed” has become a cruel joke. We use
a language to describe our systems of governance that no longer
correspond to reality. The disconnect between illusion and reality makes
us one of the most self-deluded populations on the planet.
The Weimarization of the American working
class, and increasingly the middle class, is by design. It is part of a
corporate reconfiguration of the national and global economy into a form
of neofeudalism. It is about creating a world of masters and serfs, of
empowered oligarchic elites and broken disempowered masses. And it is
not only our wealth that is taken from us. It is our liberty. The
so-called self-regulating market, as the economist Karl Polanyi
wrote in “The Great Transformation,” always ends with mafia capitalism
and a mafia political system. This system of self-regulation, Polanyi
wrote, always leads to “the demolition of society.”
And this is what is happening—the demolition of our society and the
demolition of the ecosystem that sustains the human species. In
theological terms these corporate forces, driven by the lust for
ceaseless expansion and exploitation, are systems of death. They know no
limits. They will not stop on their own. And unless we stop them we are
as a nation and finally as a species doomed. Polanyi understood the
destructive power of unregulated corporate capitalism unleashed upon
human society and the ecosystem. He wrote: “In disposing of a man’s
labor power the system would, incidentally, dispose of the physical,
psychological, and moral entity ‘man’ attached to the tag.”
Polanyi wrote of a society that surrendered
to the dictates of the market. “Robbed of the protective covering of
cultural institutions, human beings would perish from the effects of
social exposure; they would die as victims of acute social dislocation
through vice, perversion, crime, and starvation. Nature would be reduced
to its elements, neighborhoods and landscapes defiled, rivers polluted,
military safety jeopardized, the power to produce food and raw
materials destroyed. Finally, the market administration of purchasing
power would periodically liquidate business enterprise, for shortages
and surfeits of money would prove as disastrous to business as floods
and droughts in primitive society. Undoubtedly, labor, land, and money
markets are essential to a market economy. But no society could stand
the effects of such a system of crude fictions even for the shortest
stretch of time unless its human and natural substance as well as its
business organizations was protected against the ravages of this satanic
mill.”
The global and national economy because of
this “satanic mill” continues to deteriorate, and yet, curiously, stock
market levels are close to their highs in 2007 before the global
financial meltdown. This is because these corporations have been able to
suppress wages, slash social programs and bilk the government for
staggering sums of money. The Federal Reserve purchases about $85
billion worth of mortgage-backed securities and Treasury bills every
month. This means that the Fed is printing endless streams of money to
buy up government debt and toxic assets from the banks. The Federal
Reserve now owns assets, much of them worthless, of $3.01 trillion. This
is triple what it was in 2008.
And while corporations such as Citibank and
General Electric loot the Treasury they exact more pounds of flesh in
the name of austerity. General Electric, as Nader points out, is a net
job exporter. Over the past decade, as Citizens for Tax Justice
has documented, GE’s effective federal income tax rate on its $81.2
billion in pretax U.S. profits has been at most 1.8 percent. Because of
the way General Electric’s accountants play with tax liabilities the
company actually receives money from the Treasury. They have several
billion dollars paid to them from the federal government into company
bank accounts—and these are not tax refunds. The company, as Nader
argues, is a net drain on the Treasury and a net drain on jobs. It
violates a host of environmental and criminal laws. And yet Jeffery
Immelt, the CEO of General Electric, was appointed to be the chairman of
Obama’s Jobs Council. Immelt’s only major contribution to the jobs
initiative was to get rid of 37,000 of his employees since 2001. Jim
McNerney, president and CEO of Boeing, who also sat on the Jobs Council,
has cut over 14,000 jobs since 2008, according to Public Campaign. The only jobs the CEOs on the Jobs Council were concerned with were the ones these CEOs eradicated. The Jobs Council, which Obama disbanded
this week, is a microcosm of what is happening within the corridors of
power. Corporations increasingly terminate jobs here to hire grossly
underpaid workers in India or China while at the same time stealing as
much as fast as they can on the way out the door.
As Michael Hudson has pointed out,
financialization has created a new kind of class war. The old class
warfare took place between workers and bosses. Workers organized to
fight for fair wages, better work hours and safety conditions in the
workplace as well as adequate pensions and medical benefits. But with a
country of debtors and a government that must also borrow to continue
operating, Hudson says, we have changed the way class warfare works.
Finance, he points out, controls state and federal policy as well as the
lives of ordinary workers. It is able to dictate working conditions.
The financiers, who insist that cuts be made so governments can repay
loans, impose draconian austerity and long-term unemployment to, as Hudson told
a Greek newspaper, “drive down wages to a degree that could not occur
in the company-by-company clash between industrial employers and their
workers.”
The former Federal Reserve Chairman Alan
Greenspan, testifying before Congress, was quite open about the role of
debt peonage in keeping workers passive. Greenspan pointed out that
since 1980 labor productivity has increased by about 83 percent. Yet
real wages have stagnated. Greenspan said this was because workers were
too burdened with mortgage debts, college loans, auto payments and
credit-card debt to risk losing a job. Household debt in the United
States is around $13 trillion. This is only $2 trillion less than the
country’s total yearly economic output. Greenspan was right. Miss a
payment on your credit card and your interest rates jumps to 30 percent.
Fail to pay your mortgage and you lose your home. Miss your health
insurance payments, which have been spiraling upwards, and if you are
seriously ill you go into bankruptcy, as 1 million Americans who get
sick do every year. Trash your credit rating and your fragile financial
edifice, built on managing debt, collapses. Since most Americans feel,
on some level, as Hudson points out, that they are a step or two away
from being homeless, they are deeply averse to challenging corporate
power. It is not worth the risk. And the corporate state knows it.
Absolute power, the philosopher Thomas Hobbes wrote, depends on fear and passivity.
The only way to break this fear and
passivity is to organize workers to break the cycle of mounting debt.
And the first step to achieving independence from debt—the primary form
of political control by the corporate state—is to raise the minimum
wage. There are other solutions—forgiving mortgage and student debt,
instituting universal health care, establishing a nationwide jobs
program to rebuild the country’s Third World infrastructure, and green
energy—but none of this will happen until we are able to mount a
sustained mass movement that discredits the corporate state. This mass
movement will arise, as Nader says, when we mobilize around the minimum
wage.
The lowest-grade worker at the General
Electric plant that makes high-tech health care devices outside Paterson
in Totowa [New Jersey]—a pay grade known as the D 04—was just raised to
$14,555 a year. That is under $8 an hour. The plant’s highest-paid
hourly employee, known as D 16, earns $22,000. Immelt makes over $11
million a year. This vast disparity in income, and this wage abuse, is
played out in every corporation in the country. No one in Washington
intends to challenge it.
Only 11.3 percent of workers in this country belong to unions. This is
the lowest percentage in 80 years. And nearly all these unions, and
especially the AFL-CIO, have been emasculated by corporate power.
Finland
is consistently put at the very top of global educational rankings
despite, or perhaps because of, taking a very different approach:
teachers are highly trained and very well-paid, students aren't tested
until their teens, there's very little homework, and there are no
private schools.
