By Harold Meyerson
Editor-at-Large, The American Prospect
Since the emergence of capitalism, workers seeking higher pay and safer workplaces have banded together in guilds and unions to pressure their employers for a better deal. That has been the approach of the American labor movement for the past 200 years.
That approach, however, has begun to change. It’s not because unions think collective bargaining is a bad idea but because workers can’t form unions any more — not in the private sector, not at this time. There are some exceptions: Organizing continues at airlines, for instance, which are governed by different organizing rules than most industries. But employer opposition to organizing has become pervasive in the larger economy, and the penalties for employers that violate workers’ rights as they attempt to unionize are so meager that such violations have become routine. For this and a multitude of other reasons, the share of unionized workers in the private sector dropped from roughly one-third in the mid-20th century to a scant 6.6 percent last year. In consequence, the share of the nation’s economy constituted by wages has sunk to its lowest level since World War II, and U.S. median household income continues to decline.
Unions face an existential problem: If they can’t represent more than a sliver of American workers on the job, what is their mission? Are there other ways they can advance workers’ interests even if those workers aren’t their members?
These questions are anything but easy. Unions have begun to experiment with answers, even if, as the unions readily admit, they’re a poor substitute for collective bargaining. The Service Employees International Union (SEIU) has detailed dozens of organizers to fast-food joints in a number of cities: There have been one-day strikes of fast-food workers in New York and Chicago, and such actions are likely to spread. The goal isn’t a national contract with companies such as McDonald’s but the eventual mobilization of enough such workers in sympathetic cities and states that city councils and legislatures will feel compelled to raise the local minimum wage or set a living wage in particular sectors. This means, however, that the SEIU is helping to build an organization that won’t produce anywhere near the level of dues-derived income that unions normally accrue from collective-bargaining agreements. This new approach may not pencil out, but neither does the slow decline in membership that labor will continue experiencing unless it changes course. (more…)
By Paul Buchheit
Author, editor, expert on income inequality
Unregulated capitalism is out of control. Like a cancer, it has become “something evil or malignant that spreads destructively,” with tumors growing in several once-healthy parts of the American body.
1. Attacking the Hungry
The uncontrolled growth of investment wealth is diverting resources away from vital programs, effectively smothering them. The average Supplemental Nutrition Assistance Program (SNAP) recipient received about $1,500 for food for the entire year. At least ten Americans each made that much in under ten seconds from their investment gains in 2012, about the time it took each one to fluff his pillow and roll over in bed.
Under capitalism, fortunes accrue to a few while 47 million Americans, or one out of seven, need food assistance. Almost half of the hungry are children. For every food bank we had in 1980, we now have 200.
Yet just 20 people made more from their investment income in one year than the entire 2011 food assistance budget. That’s $73 billion, taxed at the capital gains rate. Meanwhile, President Obama couldn’t get the $1 billion per year he needed to improve childhood nutritionin schools.
Most recently, the House proposed a farm bill that would cut another $2 billion a year from the food stamps account.
2. Suffocating the Students
The corporate style of capitalism allows young college graduates, the bright hope of the future, to work in minimum wage positions while carrying an average of $26,000 in student loans, which accumulated because tuition rose ten times faster than the cost of living, and which now come with interest rates many times higher than the banks pay.
The great majority of pre-recession jobs have been replaced, if they’ve come back at all, as low-wage jobs in food service and retail. The number of college grads working for minimum wage has doubled in five years. They may be the ‘fortunate’ ones. In 2011, about 360,000Americans holding advanced degrees were on food stamps or some other form of public assistance. Many of them are homeless.
Jobless and frustrated young Americans trusted the system, and it failed them. Yet free enterprise entrepreneurs hustle them for even more college, in order to extract federal loan money, which goes right to the schools to pay administrative salaries.
Defenders of capitalism say hard work will ensure success. At a recent jobs hearing in Washington, only one Congressman bothered to show up. (more…)
By Paul Buchheit
Author, editor, expert on income inequality
Too many Americans are unaware of the extreme disparities that have been caused by the unregulated profit incentive of capitalism. Our winner-take-all system is flailing away at once-healthy parts of society, leaving them like withered limbs on a trembling body, even as the relative few who benefit promote the illusion of opportunity and prosperity for all. Concerned citizens armed with facts are not fooled. Instead, the more they learn the angrier they get. And as in revolutions of the past, discontent leads to change.
Hacking Off the Poor Half of Society
Some wealthy and uninformed individuals have referred to the lowest-income 47% of Americans as the “takers,” who enjoy government benefits at the expense of the high-earning one percent. But their claim is meaningless. The total amount paid out in ‘welfare’ (Temporary Assistance for Needy Families) is less than the investment income of just three men in a single year.
The monthly TANF income for a family of four is less than what the average member of the Forbes Top 20 made in one second at the office.
The 47% don’t own stocks. They don’t own anything. The so-called ‘takers’ have ZERO wealth. The value of any assets owned by nearly half of the country is surpassed by their debt.
Slashing the Security of the Elderly
Recipients of ‘entitlements’ are accused by the uninformed of getting something for nothing. The opposite is true. According to the Urban Institute, the typical two-earner couple making average wages throughout their lifetimes will receive less in Social Security benefits than they paid in. Same for single males. Almost the same for single females.
Getting something for nothing? Yes, the rich are. Tax expenditures, which are deductions and exemptions that primarily benefit the highest-earning individuals, cost about 8% of the GDP, the same percentage that goes to Social Security and Medicare. (more…)
Co-Director Campaign for America's Future
As the Republican convention approaches, “Etch-a-Sketch” Mitt Romney continues to reshape himself. Overnight, he’s for allowing abortion in cases of rape and incest, after being against it. Now he’s the savior of Medicare after being the scourge of the entitlement society.
But for all the shapeshifting, Romney’s core worldview is clear, forged in the experience that made his fortune as head of Bain Capital. For this reason, the Campaign for America’s Future has created bainofourexistence.com to provide a constantly updated resource of reporting on and analysis of Bain and Romney. (This will be a constant work in progress. To contribute to the site, please use this contact page.)
The questions spawned by the various scandals surrounding Romney at Bain – Did he create jobs or destroy them? Did he actually quit in 1999 or later? Was he responsible for companies that went bankrupt after he left? – miss the point. Bain Capital, with Romney at its head, epitomizes the Gilded Age capitalism of the last decades, the casino finance that eventually brought the economy to its knees. And Romney, for all of his repositioning, is running as an advocate of that casino capitalism, a defender of the rigged rules and skewed policies that underpin it. Unlike Teddy and Franklin Roosevelt, who ran as “traitors to their class,” Romney is an unabashed tribune of the rich. The worldview forged at Bain is revealed in his personal life as well as his policy choices.
The Fixed Casino
As Charles Ferguson writes in Predator Nation, private equity companies like Bain Capital may be the “most efficient money-seeking organisms in the world.” As the head of Bain, Romney was a money guy, not a businessman. Bain people don’t know cars or steel; they aren’t part of building companies grounded in communities, with proud workforces. They aren’t entrepreneurs with an idea, seeking to build a business. They know numbers, money and tax codes.
Typically, Bain and private equity firms buy existing companies with other people’s money. Firm partners put little of their own capital in their deals. The money comes from their limited partner investors and from taking on debt. The companies they buy are forced to take on enormous debts. Bain would pay itself exorbitant fees and distribute special dividends to itself and its limited partners. The debt is attractive because interest can be written off.
Under Bain guidance, the new managers would then seek to lower operating costs to sustain profits. Not surprisingly, Bain was an early proponent of offshoring and outsourcing of jobs, and a brutal adversary of unions and worker contracts. After getting their money out in fees, Bain would take risks with companies laden with debt. If things worked out, the companies might expand. If they failed, as they often did, the companies went bankrupt, workers lost their jobs, communities were shattered, but Bain partners profited.
Thus, as Bloomberg reported, 10 of roughly 67 major deals by Bain Capital during Romney’s watch produced about 70 percent of the firm’s profits. Four of those 10 deals, as well as others, went bankrupt even as Bain cleaned up. Joe Soptic, the steelworker in the Obama ad who lost his job, his health care and his wife, was a victim. The workers at UniMac, K.B Toys, DDI and AmPad –in the famous Gingrich film, “When Mitt Romney Came to Town,” were collateral damage. As David Stockman, the former budget director for Ronald Reagan said, Bain wasn’t about creating jobs: “The LBO business is about how to strip cash out of old, long-in-the-tooth companies and how to make short-term profits.”
Romney similarly sought to limit his own personal risk in setting up Bain Capital. He got a guarantee that if the firm failed, he would be made whole financially, guaranteed a position in the parent investment company, and provided with a cover story to erase the failure from his record. He insisted there was, as Bill Bain put it, “no professional or financial risk.” (more…)
Levin begins with the story of Dana Blum, a widowed mother who sent her son Brendan — a 14-year-old boy with Asperger’s Syndrome — to Youth Care, a Salt Lake City residential program for troubled kids. Facility’s name — Youth Care — would become sadly ironic when Blum learned of the conditions and circumstances surrounding her son’s death at Youth Care.
Brendan, a 14-year-old boy with Asperger’s syndrome, had been extremely aggressive for years; he was even arrested a few times after attacking members of his family. Local therapists hadn’t helped, and six months after her husband died, Dana was frantically casting about for solutions. A consultation with UCLA’s neuropsychiatric unit convinced her that Youth Care’s therapeutic and educational program would finally make a difference.
Four months into his stay there, Brendan had earned a reputation as a temper-prone student who tried to shirk his obligations. So on the afternoon of June 27, when he complained to medical staff that he felt very sick, as if something were “crawling around” in his stomach, his concerns were dismissed. After 11 p.m., he woke up, complaining of stomach pain, and defecated in his pants. The on-duty monitors took him to the Purple Room, a makeshift isolation room used to segregate misbehaving students. There, he suffered a long night of agony, howling in pain and repeatedly vomiting and soiling himself. According to court transcripts and police reports, the two poorly paid monitors on duty did little more than offer him water, Sprite and Pepto-Bismol. They never telephoned the on-call nurse and waited until nearly 2 a.m. to contact the on-call supervisor, only to leave a voicemail. There was little else they felt they could do — Youth Care’s protocol on emergency services meant they were too low on the totem pole to call 911 themselves.
“They didn’t trust our judgment in emergency situations,” explains Josh Randall, a former Youth Care residential monitor, who wasn’t on duty that night. “If you’re working for $9.50 an hour on the graveyard shift, you don’t want to buck the system.” At any rate, the monitors had little expertise in how to respond — it was an entry-level job requiring only a GED, plus a CPR and safety course overseen by Youth Care itself.
When the morning staff arrived at 7 a.m., they discovered Brendan facedown on the floor of the Purple Room, his body already stiff with rigor mortis. The state’s chief medical examiner later determined that Blum had died of a twisted-bowel infarction, which requires emergency surgical intervention.
Blum —who paid $15,000 for her son’s care, with the help insurance and the school district — of filed a wrongful death suit against Youth Care and it’s parent company, Aspen Care.
It makes for disturbing reading, even without the private equity angle.
Levine writes that the failure at Youth Care wasn’t due to a few careless workers, and Salon’s investigation uncovered more allegations of abuse and negligence at 10 treatment centers for adult addicts and “troubled teens,” which largely escaped notice due to lax state regulations.The centers all had one thing in common. They were all owned by Aspen Care’s parent company, CRC.
Court documents and ex-staffers also allege that such incidents reflect, in part, a broader corporate culture at Aspen’s owner, CRC Health Group, a leading national chain of treatment centers. Lawsuits and critics have claimed that CRC prizes profits, and the avoidance of outside scrutiny, over the health and safety of its clients. (We sent specific questions on these basic allegations to CRC and owner Bain Capital. CRC would answer only general questions; Bain did not reply.)
And CRC’s corporate culture, in turn, reflects the attitudes and financial imperatives of Bain Capital, the private equity firm founded by Mitt Romney. (The Romney campaign also did not reply to written questions.) Bain is known for its relentless obsession with maximizing shareholder value and revenues. Indeed, this has become a talking point of late on the Romney campaign trail; he bragged to Fox in late May that “80 percent of them [Bain investments] grew their revenues.” CRC, a fast-growing company then in the lucrative field of drug treatment, was perhaps a natural fit when Bain acquired it for $720 million in 2006. In conversations with staff and patients who spent time at CRC facilities since the takeover, there are suggestions that the Bain approach has had its effects. “If you look at their daily profit numbers compared to what they charge,” Dana Blum said of CRC’s Aspen division in 2009, “it’s obscene.” That point, ironically enough, was underscored by the glowing reports in the trade press about its profitability.
Read the entire article for the full picture of the Bain Capital approach to health care, and what happened when “[t]he CRC acquisition immediately made Bain owner of the largest collection of addiction treatment facilities in the nation,” inspiring Bain to go a revenue-boosting binge, gobbling up treatment centers, raising fees, and expanding its client base while keeping staffing costs as low as possible.
By Richard (RJ) Eskow
Senior Fellow, Campaign for America’s Future
David Brooks says Obama’s attacks on Romney’s business record are “about capitalism.” That’s like saying an arrest for vehicular homicide is “about driving.”
Our economic “roads” are jammed with destructive drivers like Romney. They’re menacing motorists with their massive semis and monster dumptrucks while the traffic laws go unenforced. And whenever there’s a lethal pileup their friends say it proves we shouldn’t have traffic laws at all.
Brooks says that the President’s campaign rhetoric “challenges the entire logic of capitalism as it has existed over several decades.” That sounds like a subliminal suggestion from the liberals’ favorite conservative that Barack Obama’s a socialist. But if there’s anything that needs to be challenged at this point in history it’s “the entire logic of capitalism as it has existed over several decades.”
This decades-long wave of unchecked corporate greed was brought about by deregulation, along with other symptoms of a corrupting collusion between corporate and political leaders. That unholy marriage has been made manifest in the very being of Mitt Romney.
Brooks conflates the economic rampage this process has created with capitalism itself – or, in a phrase he uses no less than three times in an 800-word piece, “modern capitalism.” Those two words embrace behaviors that include both Wall Street lawlessness and the government largesse that inflates the wealth of people like Mitt Romney, whose firm’s first success was made possible by a Massachusetts tax deal and whose personal fortune has been padded by undeserved loopholes.
Today’s big-corporate czars are the worst case studies in unchecked greed since the Robber Barons. You’ll need a phrase like “Modern Capitalism” if you’re trying to defend their misdeeds. The words resonate with entrepreneurial spirit, which the American public loves. And who could be against the “modern” except a Luddite or a fool?
Co-founder and CEO, Progressive Strategies
When the Obama campaign started raising questions about the way Bain Capital operated when Romney was the CEO, some Democrats who are close to Wall Street immediately starting complaining. We shouldn’t be attacking “capitalism,” they said, or the financial industry. But those Democrats are looking pretty foolish after the stories that have come out over the past few days. It has never been capitalism or even the financial industry being attacked when Bain’s style of operating is the subject: it is the worst kind of vampire capitalism that the Obama campaign is going after.
The idea of questioning Bain has always been essential to this campaign, because Romney has made clear that his main qualification to be President is the work he did at Bain. As the New York Times put it in their story Saturday, “Companies’ Ills Did Not Harm Romney’s Firm”:
Mr. Romney’s experience at Bain is at the heart of his case for the presidency. He has repeatedly promoted his years working in the “real economy,” arguing that his success turning around troubled companies and helping to start new ones, producing jobs in the process, has prepared him to revive the country’s economy. He has fended off attacks about job losses at companies Bain owned, saying, “Sometimes investments don’t work and you’re not successful.” But an examination of what happened when companies Bain controlled wound up in bankruptcy highlights just how different Bain and other private equity firms are from typical denizens of the real economy, from mom-and-pop stores to bootstrapping entrepreneurial ventures. (more…)
Emeritus Professor of Humanities at Roosevelt University in Chicago
It’s one thing when one of the world’s wealthiest capitalists argues that he is not being taxed fairly because he is not being taxed enough, as Warren Buffett did last August. But it’s quite another when a wealthy capitalist explains why the kind of gross inequality of income the U.S. now has is actually bad for business. That’s what Nick Hanauer did in a TED University talk last month about “job creators”: “In a capitalist economy, the true job creators are consumers, the middle class. And taxing the rich to make investments that grow the middle class, is the single smartest thing we can do for the middle class, the poor and the rich [emphasis added].”
Hanauer is a super-wealthy venture capitalist who was an early investor in Amazon.com and founded a couple of internet start-ups that were bought by Overstock.com and Microsoft – the latter for a tidy $6.4 billion. In his TED talk he denied being a “job creator,” and with directness, humor, and plain-spoken common sense, he attacked the notion that folks like him create jobs. It’s only 6 minutes long, but it sparked an internet fury when TED refused to post the speech on its web site, as it ordinarily does. Time Magazine’s links-rich retrospective of the controversy that forced TED to post the speech can bring you up-to-date if you didn’t know about it.
Certifiably successful capitalists (and Buffett and Hanauer make Republican Presidential Nominee Mitt Romney’s $250-million net wealth look mediocre) arguing that they should be taxed more is the classic man-bites-dog story that is supposed to attract journalists. In both cases Buffett and Hanauer did eventually get a fair amount of attention, but only because they are savvy entrepreneurs who made extraordinary efforts to get that attention. Once attended to, however, they are treated as outliers, interesting personalities, eccentric curiosities – sort of like men who bite dogs – rather than initiating discussion about the issues they tried to raise.
Who or what creates jobs? How could our tax system be fairer – and simpler? And what is the connection between jobs and taxes? These are big issues that should be at the center of the political debate in this year’s election, as the two mainstream political parties have very different answers to them. (more…)
Labor Representative, Society for Professional Engineering Employees in Aerospace
An editorial in my local paper is a good example of how we trivialize our public discussion of globalization and trade policy.
The editorial follows this logic: Trade is good. All trade is good. More trade is better than less trade. Maximum possible trade! Anyone who disagrees is protectionist or resentful.
I can immediately correct one misunderstanding. Everyone I know is in favor of trade. I am 100 percent in favor of trade. The issue is not “trade.” The issue is good trade policy, which raises my standard of living, or bad trade policy, which lowers it.
Similarly, I am in favor of capitalism. Even so, we can have real, significant, meaningful, legitimate debates about good rules for capitalism and bad rules for capitalism.
I am in favor of banks. We deserve serious policy debates about banking. (more…)
Let’s face it: criticizing capitalism is taboo in the United States. It’s a sacred cow, a sort of god that everyone has to worship and appease. What you are allowed to do is distinguish between “good capitalism” and “bad capitalism” and criticize the bad variety. You can call it “vulture capitalism,” for example. Newt Gingrich, not exactly a militant socialist, slammed Mitt Romney during the height of the primaries for his ruthless brand of capitalism.
Now the nation’s attention is again focused on Romney’s history with Bain Capital and the question of whether he was a job creator or job destroyer. President Obama and his campaign have been targeting the presumptive GOP nominee’s Bain record in TV ads and speeches. Romney is crying foul – how dare anyone question his time at Bain? But certain key Democratic Party figures have also found the whole thing unsettling. For them, private equity should be off limits. This means that even the vulture variety favored by Bain is beyond criticism, which is exactly what Romney believes. What’s going on here?
We’re seeing a fundamental truth coming out of all this: that the distinction between good and bad capitalism is very blurry. As those Democrats realize, vulture capitalism is an inherent part of the system – and vulture capitalists have been big contributors to the Democratic Party for a long time. Sure, capitalism got much more vulturish starting in the Reagan years, but the principle of profit maximization at any cost, especially at the cost of working people, has been a constant of the system since day one – it’s the prime directive, to borrow a phrase from Star Trek. Things like leveraged buyouts that Bain specializes in are simply newer, more modern ways of acting on this principle. For capitalists, it’s never been a question of job creation or job destruction – whether jobs are created or destroyed is peripheral. Nick Hanauer, a wealthy Seattle-based venture capitalist, has rightly stated that capitalists like himself are not job creators – they’re in the business of making money for themselves, not of creating jobs.
The mantra that’s constantly repeated these days, with Democrats all too willingly joining the chanting, is that there’s nothing wrong with people amassing wealth (as long as they pay taxes and at higher rates than their secretaries). So, the fact that Romney earns more in a day – without working – than the average American family earns in a year is just fine. The only thing that might be questionable is the way his company, Bain, went about its business.
Sorry, but I have to blow the whistle here. There is definitely something wrong with a system that allows people to amass wealth through ways that are largely disconnected with any form of productive work. Rivers of wealth are flowing into the bank accounts of people who don’t deserve 90 percent of what they’re getting, while those who really create the wealth are struggling to keep their heads above water. Wealth is ending up in the pockets of people who are not investing in manufacturing, not creating decent, well-paying jobs, not helping to revitalize our cities. This is not vulture capitalism, folks. This is just capitalism. (more…)
Portions of this website are paid for by the United Steelworkers Political Action Fund, with voluntary contributions from union members and their families, and is not authorized by any candidate or candidate's committee.
USW Political Action Fund - Five Gateway Center - Pittsburgh, PA 15222