Class Warfare in Politics

FITE asks a simple question, but the answer is complicated.

Newsletter #33 Will Kerry Target the extremely rich?

Can the American public warm up to a campaign of “class warfare?” John Kerry evidently doesn’t think so. As of this writing, he has not uttered one word on the most egregious part of an ongoing class warfare being waged by the extremely rich, the corporate crime wave of the past 15 years that has robbed the rest of us of billions, if not trillions, from our savings.

Prominent liberals are warning him to avoid the issue. Well known columnist Robert Kuttner has publicly warned against a class warfare strategy. Kuttner claims that “this is not a country where most voters resent the rich as a class. It’s a land where nearly everyone would like to be rich.” Since all of us would like to get there some day, he reasons, they won’t support tax increases on the rich.

Kuttner and others are wrong. While Americans don’t want to tax the rich who earn several times their own income, they would be quite happy to tax to the hilt those making hundreds or even thousands of times more. These are the EXTREMELY rich. They may easily make in one HOUR what the rest of us work hard to make in one YEAR. In fact, it’s part of a 300 year political tradition of detesting the monied aristocracy for the way it always threatens democracy.

Kerry ignores this sentiment at his peril. The Democratic party lost many supporters during the middle 1990s when they stopped targeting the “lobbyists” and giant corporations in order to fill their party coffers with money from them. Winning these voters back with a serious program of taxing these embezzlers would, according to author Thomas Frank and others, bring them back. (His excellent book – “What’s the Matter with Kansas?”)

Kerry should remember that crime is a “values” issue. While Kerry could not compete with Bush on school prayer or abortion, he could gain support on the crime of embezzling the savings of hard working Americans.

But he would, of course, risk losing some significant campaign contributions. The presidential candidates with the most money have always won the election. And, by the way, Kerry himself has never spoken in favor of measures that would stop these criminals.

For a more detailed treatment of this, go to the John Kerry page on our website.

–Charles Palson

Kerry isn’t the problem, at least not by himself. The problem is the stranglehold of the right-leaning Democratic Leadership Council (DLC) which champions corporate interests in the Democratic Party and was the moving force behind Bill Clinton’s disavowal of welfare and Kerry’s extraordinary success in fund-raising since the primaries. It is also the group behind Dean’s loss; no, not the scream but the army of apparatchik they mobilized to defeat a rank outsider and the first serious threat to their power that they’ve ever faced. eRobin, in a post a few days ago after Barack Obama’s speech, put it this way:

I said in a previous post that Dean and Obama represent the future of the party. After last night, it’s clear that the party is not willing to tolerate a reform-minded Dean. He was effectively brought to heel despite the clamoring of the crowd to hear him say that he will continue to fight up and down ballot for the progressive candidates across the country. Dean was the party’s chance to reach out to Nader voters without using Nader and they crushed the idea with force. They don’t need to be reminded of who’s a Democrat around here.


The Party brooks no dissent even if it’s only showing up as memories.Obama’s speech, as brilliant as it was, is a good example of that. It toed the Party line completely. I’m afraid that in him we are seeing someone being groomed to be a figurehead for a phony new direction in the Party. They’ll get a lot of mileage out of him because he is beautiful to look at and to hear. And he’s a member of a minority group, which always is a good thing when you’re talking “new direction”. But I’m concerned that he isn’t the reformer that the Dems will need in order to do what Andy Rappaport, the progressive fundraiser featured in the NYT magazine story Wiring the Vast Left-Wing Conspiracy, is suggesting when he says:

”There is a growing realization among people who take very seriously the importance of progressive politics that the Democratic Party has kind of failed to create a vision for the country that is strongly resonant,” he said. ”And our numbers” — meaning Democrats as a whole — ”are decreasing. Our political power has been diminishing, and it’s become common knowledge that the conservative movement has established a very strong, long-term foundation, whereas we’ve basically allowed our foundation, if not to crumble, to at least fall into a state of disrepair.

The central question of the article is which groups are going to get the money that Rappaport and his associates believe is “floating out there” for progressive causes. Will it be 527’s like MoveOn.org that resonate with millions of people and energize them so much that they give their own time and money to the cause? Or will it be to the Democratic Party? Although everyone was putting on a happy face last night, it’s really a choice between what we know Dean represents but didn’t bring to the floor and the status quo that Obama stood for last night. For Obama, it’s a choice between being part of a machine that is happily trying to crush Dean’s reform efforts while it positions itself as the voice of all America, or part of the engine of real change.

It isn’t just Obama. There are other rising stars in the Demo party like Nancy Pelosi, who has become a real power in only a few years, who have the fate of the party in their hands. If these potential superstars buy the DLC line then Ralph Nader is right and most of the differences between the parties will slide into oblivion. We will find ourselves with the choice of voting for right-wing conservatives masquerading as liberals or for extremist right-wink nutjobs.

But if they instead choose to move toward Dean and the 527/populist wing, the party will have to go with them and real liberalism could be re-ignited. They have the power and the charisma to do it–let’s face it, Dean damn near pulled it off and he has neither–but it isn’t clear to me that they understand that the party is facing a choice. They think they can have it all.

They can’t. If they try, it will backfire on them as it did in ’02 and activists will abandon the party in droves. They’re only back now because Bush has united them with his greed, arrogance and incompetence. I think Chuck is right, though not necessarily about Kerry: the future of the Democratic party lies in one of two directions–as Republicans-lite or populists genuinely fighting for the little guy as they used to.

Microsoft Outsourcing High-Level Jobs

UNION: HIGH-LEVEL JOBS BEING SENT OVERSEAS

By Kristi Heim

San Jose Mercury News

Two years after Microsoft executives began urging managers to outsource software development work to India, a Washington state technology union says the company has sent increasingly high-level jobs overseas, including some related to Longhorn, the next version of Windows.

The Washington Alliance of Technology Workers says it obtained internal documents from a Microsoft worker that show dozens of Microsoft projects now being handled by companies in India, such as Satyam, Infosys and Wipro. Through such outside companies, Microsoft has hired 1,000 contractors for work ranging from software design to Web development, WashTech says.

A Microsoft spokeswoman declined to confirm the numbers or the authenticity of the documents, but said WashTech’s claims were off base.

“These accusations do not reflect an understanding of the global nature of our business,” said Microsoft spokeswoman Stacy Drake. “It’s part of our business model to work with thousands of companies around the world.”

‘The global nature of their business’, that’s a good one. Translation: ‘We can so we are.’ I think the fact that the richest corporation in the world is cutting minor corners by outsourcing to save a few dollars they’ll hadly even miss pretty much says it all about the standard corporate excuse that they’re only doing it because they can’t afford not to.

The fact that Microsoft or other technology companies hire workers overseas is no surprise, but the company’s aggressive outsourcing efforts are moving into more advanced work and into the latest products, argues WashTech President Marcus Courtney.

In July 2002, Microsoft Senior Vice President Brian Valentine gave a presentation urging managers to begin outsourcing software-development projects to contractors in India for “quality work at 50 to 60 percent of the cost.”

“There’s a shift taking place, and I don’t know if employees realize how serious it is,” Courtney said Wednesday. “They’re hiring developers and hardware engineers overseas, and it’s clearly duplicating a lot of the work that gets done in the U.S.”

Documents provided by WashTech list contracts with outside companies for projects such as the Longhorn Migration Guide, .NET Application Security, and deployment of the Windows Server 2003 update. A migration guide refers to software that helps customers move to Longhorn from a different operating system, and .NET is Microsoft’s technology for Web-based services.


“It’s going to happen more and more just because Microsoft products are more mature and so they require less intense design work,” he said. “So it becomes feasible to do it thousands of miles away.”MS code-geeks better start practicing their burger-flipping.

Higher Earnings Cut Support for Poor Families

I’ve spoken before of the tricks conservatives have embedded in the welfare regs to make the poor ineligible for help the instant they raise their heads above water. The National Center for Children in Poverty has released a study done in Pennsylvania that shows that those tricks, developed under Reagan, are still very much in use.

About 85 percent of low-income children have parents who work, and most have at least one parent working full-time, year-round. Nonetheless, many of these parents are unable to afford basic necessities for their families, such as food, housing, and stable child care. Even a full-time job is not always enough to make ends meet, and many parents cannot get ahead simply by working more. As earnings increase—particularly as they rise above the official poverty level—families begin to lose eligibility for work supports. At the same time, work-related expenses, such as child care and transportation, increase. This means that parents may earn more without a family experiencing more financial security. (1) In some cases, earning more actually leaves a family with fewer resources after the bills are paid.

The Family Resource Simulator, developed by the National Center for Children in Poverty, illustrates how this happens. This web-based tool allows users to chart a hypothetical family’s progress in the workforce and to see how public policies reward and encourage employment—and sometimes discourage parents from earning more.

Continue reading

More Jobs, Worse Work

I’ve been trying to get to this since Thursday but haven’t had either the time or the energy to do it justice. Steven Roach, chief economist for that bastion of radical Commie progressives, Morgan Stanley, wrote a long article in the NYT on ‘the state of the American labor market’ that makes sober reading.

The state of the American labor market remains the defining issue of the current economic debate. Through February, the United States was mired in the depths of the worst jobless recovery of the post-World War II era. Now, there are signs the magic may be back. More than a million jobs have been added to total nonfarm payrolls over the past four months, the sharpest increase since early 2000.

These gains certainly compare favorably with the net loss of 594,000 jobs in the first 27 months of this recovery. But there’s little cause for celebration: the increases barely make a dent in the weakest hiring cycle in modern history. From the trough of the last recession in November 2001 through last month, private sector payrolls have risen a paltry 0.2 percent. This stands in contrast to the nearly 7.5 percent increase recorded, on average, over the comparable 31-month interval of the six preceding recoveries.

Nor is there much reason to celebrate the type of jobs that have been created over the past four months. In general, they have been at the lower end of the economic spectrum.

By industry, the leading sources of hiring turn out to be restaurants, temporary hiring agencies and building services. These three categories, which make up only 9.7 percent of total nonfarm payrolls, accounted for 25 percent of the cumulative growth in overall hiring from March to June. Hiring has also accelerated at clothing stores, courier services, hotels, grocery stores, trucking businesses, hospitals, social work agencies, business support companies and providers of personal and laundry services. This group, which makes up 12 percent of the nonfarm work force, accounted for 19 percent of the total growth in business payrolls over the past four months.


An equally dramatic picture emerges from the survey of American households. According to the Bureau of Labor Statistics, the total count of persons at work part time – both for economic and non-economic reasons – increased by 495,000 from March to June. That amounts to an astonishing 97 percent of the cumulative increase of the total growth in employment measured by the household survey over this period. By this measure, as the hiring dynamic has shifted gears in recent months, the bulk of the benefits have all but escaped America’s full-time work force.Finally, the occupational breakdown of the American labor market, as also sampled by the survey of households, provides yet another facet of the character of the recent hiring upturn. It turns out that fully 81 percent of total job growth over the past year was concentrated in low-end occupations in transportation and material moving, sales and repair and maintenance services. At the upper end of the occupational hierarchy, increases in construction and professional jobs were partly offset by sharp declines in the numbers of production workers, who mainly toil in manufacturing plants.

That’s us, folks. The Bush economy which has been so good for corporate profits and CEO salaries has been deadly for everyone else, particularly those of us who count on production jobs. Cleveland alone has lost some 60.000 production jobs to robots and outsourcing. (AirAmerica News) Bush Commerce Secretary Don Evans told workers they should ‘quit whining’ about massive job offshoring, and went on to insist that globalization was ‘good for the economy’. What Roach is saying is that the ‘economy’ it’s good for is measured by corporate profits alone; the rest of us are sliding downhill and our attempt to stop the slide is making things worse.

Consequently, from three different vantage points – employment breakdowns by industry, by occupation and by degree of attachment – the same basic picture emerges: While there has been an increase in job creation over the past four months – an unusually belated and anemic spurt by historical standards – the bulk of the activity has been at the low end of the quality spectrum. The Great American Job Machine is not even close to generating the surge of the high-powered jobs that is typically the driving force behind greater incomes and consumer demand.

This puts households under enormous pressure. Desperate to maintain lifestyles, they have turned to far riskier sources of support. Reliance on tax cuts has led to record budget deficits, and borrowing against homes has led to record household debt. These trends are dangerous and unsustainable, and they pose a serious risk to economic recovery.

(emphasis added by me)

Roach’s question is very simple: ‘What are we going to do about it?’ The answer is: Bush plans to do NOTHING. That’s the way he wants it, that’s the economy he has been trying to bring about his whole first term, and now he has it. It’s an economy that is exclusively anti-worker and pro-corporate, and what Roach is seeing is the result of that deliberate skew.

But Roach clearly sees what the Bush Administration ignores: who’s going to buy all this shit when the job market finally collapses and the middle-class is wiped out? What happens after the radcons succeed in turning America into an Argentine-style third-world country steeply divided between the haves and the have-nots with all the money at the top? Do they even care what happens then?

The economic picture is a lot bleaker than it looks on the surface, especially for us, and so far nobody’s doing a damn thing to reverse this course.

Worker Wages and Health Insurance Should Be Center of Trade Debate

In an Op-Ed in today’s NYT, Wiiliam Gould, chairman of the National Labor Relations Board under Clinton, makes the case that no matter who is elected in November, national governments can have little impact on slowing globalization. They can, he argues, have a significant effect on the impact of those changes domestically.

Stanford, Calif. — Wages declined and unemployment held steady last month. So at this week’s convention and for the rest of the campaign, John Kerry is likely to make an issue of Americans’ anxiety about jobs – and his promised insistence upon labor standards as part of future trade agreements is an astute political stance.

But from a practical standpoint, it will have almost no effect. The adoption of labor and environmental standards, while symbolically significant, will not slow America’s job and income losses, and the prospect for significant international negotiations on such matters is remote.

One problem is that global wage disparities are enormous. No serious person argues that wages, economic benefits and other aspects of employment should be equal or even comparable in the industrialized and developing worlds. That is because such a policy would lead to economic devastation for the developing world, disrupting international trade and enhancing prospects for worldwide conflict.

An international minimum wage, for example, would also require that any trading partner with the United States have some form of acceptable wage. But what would the wage be, and how would it be enforced? If the United States determines such matters for itself, it risks international opprobrium for a unilateralist approach, a claim with which the Bush administration is familiar.

But while international standards for economic matters like wages are not practical, the same cannot be said for so-called core standards that have been adopted by the International Labor Organization, an agency of the United Nations. These standards, intended to promote fair treatment of workers, are not binding. But the president and Congress could include them in future trade agreements – and even insist upon their inclusion in Nafta itself and legislation promoting trade with China.


To improve the prospects of workers in the third world, the United States could provide more foreign aid, which could then be spent on education. Yet the United States now ranks dead last among developed nations in percentage of gross domestic product devoted to foreign aid, and the political wherewithal to increase foreign aid is thus far not forthcoming.In many ways international trade is a domestic issue: trade brings change, and change frequently means painful dislocation that can be assuaged only by social programs. In this context national health insurance makes sense, as does a wage insurance program like the one Bill Bradley advocated in 2000. What laid-off auto and steel workers need is the same as what their outsourced service and professional counterparts need: not a new trade war, but domestic legislation on health benefits and wages. That should be the focus of the trade debate in 2004.

Wal-Mars Invades Earth

I rarely do this except with short newspaper editorials, but I’m going to reprint this Barbara Ehrenreich piece in full. I don’t think Barbara will mind. The NYT might but fuck ’em. I can’t bring myself to cut a single word.

By BARBARA EHRENREICH

Published: July 25, 2004

It’s torn cities apart from Inglewood to Chicago and engulfed the entire state of Vermont. Now the conflict’s gone national as a presidential campaign issue, with John Kerry hammering the megaretailer for its abysmally low wages and Dick Cheney praising it for its “spirit of enterprise, fair dealing and integrity.” This could be the central battle of the 21st century: Earth people versus the Wal-Martians.

No one knows exactly when the pod landed on our planet, but it seemed normal enough during its early years of gentle expansion. Almost too normal, if you thought about it, with those smiley faces and red-white-and-blue bunting, like the space invaders in a 1950’s sci-fi flick when they put on their human suits.

Then it began to grow. By 2000, measures of mere size – bigger than General Motors! richer than Switzerland! – no longer told the whole story. It’s the velocity of growth that you need to measure now: two new stores opening and $1 billion worth of U.S. real estate bought up every week; almost 600,000 American employees churned through in a year (that’s at a 44 percent turnover rate). My thumbnail calculation suggests that by the year 4004, every square inch of the United States will be covered by supercenters, so that the only place for new supercenters will be on top of existing ones.

Wal-Mart will be in trouble long before that, of course, because with everyone on the planet working for the company or its suppliers, hardly anyone will be able to shop there. Wal-Mart is frequently lauded for bringing consumerism to the masses, but more than half of its own “associates,” as the employees are euphemistically termed, cannot afford the company’s health insurance, never mind its Faded Glory jeans. With hourly wages declining throughout the economy, Wal-Mart – the nation’s largest employer – is already seeing its sales go soft.

In my own brief stint at the company in 2000, I worked with a woman for whom a $7 Wal-Mart polo shirt, of the kind we had been ordered to wear, was an impossible dream: It took us an hour to earn that much. Some stores encourage their employees to apply for food stamps and welfare; many take second jobs. Critics point out that Wal-Mart has consumed $1 billion in public subsidies, but that doesn’t count the government expenditures required to keep its associates alive. Apparently the Wal-Martians, before landing, failed to check on the biological requirements for human life.

But a creature afflicted with the appetite of a starved hyena doesn’t have time for niceties. Wal-Mart is facing class-action suits for sex discrimination and nonpayment for overtime work (meaning no payment at all), as well as accusations that employees have been locked into stores overnight, unable to get help even in medical emergencies. These are the kinds of conditions we associate with third world sweatshops, and in fact Wal-Mart fails at least five out of 10 criteria set by the Worker Rights Consortium, which monitors universities’ sources of logoed apparel – making it the world’s largest sweatshop.

Confronted with its crimes, the folks at the Bentonville headquarters whimper that the company has gotten too “decentralized” – meaning out of control – which has to be interpreted as a cry for help. But who is prepared to step forward and show Wal-Mart how to coexist with the people of its chosen planet? Certainly not the enablers, like George Will and National Review’s Jay Nordlinger, who smear the company’s critics as a “liberal intelligentsia” that favors Williams-Sonoma. (Disclosure: I prefer Costco, which pays decent wages, insures 90 percent of its employees and is reputedly run by native-born humans.)

No, Wal-Mart’s only hope lies with its ostensible opponents, like Madeline Janis-Aparicio, who led the successful fight against a new superstore in Inglewood, Calif. “The point is not to destroy them,” she told me, “but to make them accountable.” Similarly Andy Stern, president of the Service Employees International Union, will soon begin a national effort to “bring Wal-Mart up to standards we can live with.” He envisions a nationwide movement bringing together the unions, churches, community organizations and environmentalists who are already standing up to the company’s recklessly metastatic growth.

Earth to Wal-Mars, or wherever you come from: Live with us or go back to the mother ship.

Republicans Close Corporate Loophole–No Kidding!

In a development that I must admit has me scratching my head in befuddlement, the Republican Senate, previously one of the best friends corporate America has ever had (except for Bush, Cheney, and the Republican House, but they’re not so much ‘friends’ as ’employees’), is about to vote to–and this is the part I don’t get–close a legal loophole that has saved some big corporations from paying $$Million$$$ in unemployment premiums. What this article describes is a scam well-known to a lot of people who have worked as temps over the last decade–including a couple of friends of mine–and got hooked in participating in it.)

Tougher Rules for Unemployment Premiums Clear Senate

By Albert B. Crenshaw
Washington Post Staff Writer
Saturday, July 24, 2004; Page E03

The Senate gave final congressional approval Thursday night to a bill that would require states to close loopholes in their unemployment insurance laws that have allowed unscrupulous employers to dodge millions of dollars in premiums.

The loopholes have allowed employers who lay off many workers to avoid the higher premiums that usually result, and they have cost state and federal unemployment insurance funds millions, possibly billions, of dollars, according to the Government Accountability Office and state officials. Other employers have been forced to pay higher premiums to offset these losses.

Carl T. Camden, president of Kelly Services Inc., the big temporary employee firm — and one that faces higher premiums — has been campaigning for tighter laws. He called the quick congressional action very gratifying.

Unemployment insurance premiums are based on experience, that is, whether a company has a history of layoffs, which cause workers to become eligible for benefits. The more layoffs a company has had, the higher its premiums.

But new companies are often given a clean slate, offering sharp operators an opening.

In a typical version of the strategy, a company that has had lots of layoffs forms a new subsidiary, which in many states is entitled to a low “new company” rating, and shifts most of its workers to it. State unemployment taxes are levied on a per-worker basis, so the shift results in big savings for the company, in many cases millions of dollars.

A GAO study last year found that laws in more than half the states do not clearly forbid such a shift.

The bill, passed by the House on July 14, requires states to close this loophole, and to develop methods for detecting violations. It imposes penalties on companies that engage in the practice and on promoters of the strategy.

Camden acknowledged yesterday that it may take states some time to comply, but in the meantime “it chills future action” by companies that might have been considering the move.

Companies will “know the legal heat has been turned up,” he said. “At least you could claim prior to this point [that the law] was ambiguous. It’s not ambiguous now.”

Backers say they expect President Bush to sign the bill.

The scam revolved around the corporation creating a dummy company which it then pretended was new in order to take advantage of a break that was meant for genuinely new companies struggling to get by, the kind of company that couldn’t be sure from one month to the next whether it would be able to meet its payroll or have to lay off workers. When the law was passed originally, the Congress was trying to encourage small companies to hire more workers earlier than they might have otherwise by lowering the unemployment premiums they would have to pay if their optimism didn’t pan out.

But rather than that, the corporations jumped all over the ‘loophole’ to avoid paying the $$$tens of millions$$$ they would otherwise have owed because of their ‘just in time’ hiring strategy.

Give these guys an inch, and they’ll drive a corporate jet through it.

What I don’t get is, why is the Republican Senate suddenly concerned about temporary workers and their unemployment checks? Why are they suddenly, after years of pandering to the very same corporations, biting the hand that feeds them? Don’t tell me that the deficit is so huge it’s scaring them into starting to re-claim some of the $$$TRILLIONS$$$ in taxes and penalities and premiums the corporations have ducked out of paying using technicalities and loopholes just like this one.

It can’t be that, can it?