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There were two major articles on political economy last week and one today which, juxtaposed, reflect the moral impairment of mainstream economic thinking. Their juxtaposition also highlights why I harbor severe misgivings about claims that the economy is recovering under President Obama, as well as what I believe is the reason for the President's approval rating being mired near the fifty percent level. (Because, honestly, given the full bore disaster that is the Republican Party today, anyone who led the opposition to them and who was doing a decent job getting the economy to work for everyone, should have approval ratings of around 75 percent; that is, 100 percent minus the 25 percent that are hopeless conservative and Republican dead-enders.)

Barry Ritholtz pointed to Roger Lowenstein's article in The Atlantic on how U.S. Federal Reserve Chairman Ben Bernanke  saved the economy.

Lowenstein does not ask: "saved the economy, for whom?"

I think that's the key question, and my answer is, "the upper third only." Not just the one percent - the upper middle class is being squeezed, but have not been subjected to suffering and declines in living standards anything like the working class has.  While corporate profits are soaring, and banks are hoarding cash to repair their balance sheets, tens of milions of Americans are forced to accept jobs in which they take home $70 or less a day. In other countries, it is even worse: 200 million of the poorest people in the world have been forced to starve because speculators and traders like Goldman, Deutsche Bank, and the former Merrill Lynch have been able to game agricultural futures markets.

A fuller description of the evidence is under the jump.


You must enter an Intro for your Diary Entry between 300 and 1150 characters long (that's approximately 50-175 words without any html or formatting markup).

Mike Konczal pointed to an incredible article in Mother Jones by Mac McClelland, I Was a Warehouse Wage Slave. McClelland describes the horrifying working conditions in one of the online shipping warehouses  that makes possible the "free shipping" for our internet purchases. Unfortunately, McClelland does not name the company that owns and operates the particular feudal nightmare she infiltrated; it would be a great target for an Occupation, just to highlight how American capitalism today plunders the working class through brutal working conditions and repression of wages. But the really significant aspect of this house of horrors is what enables it: a national economy so awful for our fellow citizens at the bottom half of our national income that they have no real options to pursue alternatives to "voluntary enslavement" in these types of low-wage operations. It's so bad out there in "fly-over country" that there are, McClelland reports,

people who drive RVs around the country, from temporary job to temporary job, docking in trailer camps. "We're retired but we can't…" another explains to me about himself and his wife, shrugging, "make it. And there's no jobs, so we go where the jobs are."
McClelland describes the warehouse as being just outside "a run-down city, the kind where there are boarded-up businesses and broken windows downtown and billboards advertising things like "Foreclosure Fridays!" at a local law firm." I see lots of towns like this in as I drive through many Eastern states to ply my stumbling book trade, towns like Springfield, Massachusetts; Reading, Pennsylvania; Canton, Ohio; Hickory, North Carolina; Chillicothe, Ohio; Racine, Wisconsin. What strikes me about these towns and cities is the neighborhoods immediately surrounding industrial facilities that are still open and have cars in their parking lots. These are factories and assembly plants that are still going concerns. But their neighborhoods are shabby, the houses and stores in them dilapidated. There are no big box shopping malls teeming with cheap Chinese electronics, and independently owned restaurants are rare. Your best bet for a hot meal, if you want to avoid fast food, is a dinghy little local beer joint, where you can listen to grizzled old veterans of unemployment describe wave after wave of pink slips, rehiring at lower wages, pink slips, rehiring, pink slips, ad nauseum. In short, the neighborhoods around these facilities clearly are not sharing in the prosperity. Assuming the work force lives not that far away, it's screamingly obvious that work force lacks the money to repair the fence, shore up a sagging porch, replace some broken windows, and just maintain the decent working class life that was the norm in America before Ronald Reagan, Robert Rubin. Larry Summers, George Bush, Greg Mankiw, and the rest of the neo-liberal gangsters took power. Even the factories themselves look ill kept and poorly maintained.

McClelland writes that most of the workers at these internet order warehouses are not employees, but contractors, so they don't get full salaries, or even the protection of federal and state labor laws.

Temporary staffers aren't legally entitled to decent health care because they are just short-term "contractors" no matter how long they keep the same job. They aren't entitled to raises, either, and they don't get vacation and they'd have a hell of a time unionizing and they don't have the privilege of knowing if they'll have work on a particular day or for how long they'll have a job. And that is how you slash prices and deliver products superfast and offer free shipping and still post profits in the millions or billions.
Workers can be fired for the minutest infraction - McClelland describes one man, Brian, who was going through the employment process with her who had worked at the warehouse before. He was fired previously because he didn't work the day his wife was having their baby. The work day is ten and a half hours, with less than thirty minutes for lunch. Workers are given exactly 29 minutes and 59 seconds, after that, they're fired. And that includes the time running from wherever in the massive warehouse they happen to be when the break begins, waiting to shuffle through a security check to make sure they're not pilfering, going to the bathroom in the over-crowded bathrooms, gulping down their meal, and running back to where they were.
The place is immense. Cold, cavernous. Silent, despite thousands of people quietly doing their picking, or standing along the conveyors quietly packing or box-taping, nothing noisy but the occasional whir of a passing forklift. My scanner tells me in what exact section—there are nine merchandise sections, so sprawling that there's a map attached to my ID badge—of vast shelving systems the item I'm supposed to find resides. It also tells me how many seconds it thinks I should take to get there. Dallas sector, section yellow, row H34, bin 22, level D: wearable blanket. Battery-operated flour sifter. Twenty seconds. I count how many steps it takes me to speed-walk to my destination: 20. At 5-foot-9, I've got a decently long stride, and I only cover the 20 steps and locate the exact shelving unit in the allotted time if I don't hesitate for one second or get lost or take a drink of water before heading in the right direction as fast as I can walk or even occasionally jog. Olive-oil mister. Male libido enhancement pills. Rifle strap. Who the fuck buys their paper towels off the internet? Fairy calendar. Neoprene lunch bag. Often as not, I miss my time target.
Later, she decribes to a friend via Skype more of what it's like:
.... it hurts, oh, how my body hurts after failing to make my goals despite speed-walking or flat-out jogging and pausing every 20 or 30 seconds to reach on my tiptoes or bend or drop to the floor for 10.5 hours, and isn't it awful that they fired Brian because he had a baby, and, in fact, when I was hired I signed off on something acknowledging that anyone who leaves without at least a week's notice—whether because they're a journalist who will just walk off or because they miss a day for having a baby and are terminated—has their hours paid out not at their hired rate but at the legal minimum. Which in this state, like in lots of states, is about $7 an hour. Thank God that I (unlike Brian, probably) didn't need to pay for opting into Amalgamated's "limited" health insurance program. Because in my 10.5-hour day I'll make about $60 after taxes.
Yeah, think about that. I wonder how many DailyKos readers honestly think they could get by on three hundred bucks a week. Someday, people like Jeff Bezos have to be made to answer for these outrages. And honestly, at this point, I just cannot imagine Barack Obama or Eric Holder even entertaining such a thought as going after someone "successful" like Bezos.

Because they think more like Roger Lowenstein does: Look! We saved American capitalism! Aren't we something! Hey! Why aren't you singing our praises?

Lowenstein writes that

Over the past four and a half years, Bernanke, 58, has presided over the most sustained period of crisis of any civilian official in recent history, with the fate of millions of unemployed and underemployed Americans hanging in the balance. Only recently has the economy begun to show signs that the recovery is gaining steam. Since August 2007, Bernanke has deployed the Fed as the lender of last resort to the banking system and worked overtime to furnish an “elastic currency”—that is, to keep enough money in circulation for the economy to function.
Lowenstein goes on to describe the various critiques advanced against Bernanke and the Fed from both sides of the political spectrum - but only, and this is important, the political spectrum as defined and accepted by the power elites. Under this charade, we can get a furious national debate over whether the Fed is doing enough to fight unemployment (Paul Krugman) or if the Fed is about to ignite a firestorm of inflation (Ron Paul). Never discussed are such things as: "Why not take the power to issue money away from the Fed and the banking system, and give it to the Treasury; then we don't have to pay interest on it?" Or, "Shouldn't we be making plans, right now, to break up the six big banking behemoths that now control two of every three dollars on deposit in the banking system, and which are responsible for creating and trading more than nine of ever ten dollars in financial derivatives?"

Or this question: "How do we shut down the funny money games that allow the six big banking behemoths to make billions of dollars of "profits" by driving up and down the prices of basic food and energy commodities that the rest of us depend on for basic existence?" This is the question that you should eventually arrive at as you read Johann Hari's article today in the London Guardian (hat tip to Jon Larson at Real Economics for pointing to it), How Goldman gambled on starvation.

At the end of 2006, food prices across the world started to rise, suddenly and stratospherically. Within a year, the price of wheat had shot up by 80 per cent, maize by 90 per cent, rice by 320 per cent. In a global jolt of hunger, 200 million people – mostly children – couldn't afford to get food any more, and sank into malnutrition or starvation. There were riots in more than 30 countries, and at least one government was violently overthrown. Then, in spring 2008, prices just as mysteriously fell back to their previous level. Jean Ziegler, the UN Special Rapporteur on the Right to Food, calls it "a silent mass murder", entirely due to "man-made actions."

.... Until deregulation, the price for food was set by the forces of supply and demand for food itself. (This was already deeply imperfect: it left a billion people hungry.) But after deregulation, it was no longer just a market in food. It became, at the same time, a market in food contracts based on theoretical future crops – and the speculators drove the price through the roof.

Hari asked some of the big financial institutions for comment. A spokesperson for Goldman Sachs responded "serious analyses ... have concluded index funds did not cause a bubble in commodity futures prices." As Hari points out,
How do we know this is wrong? As Professor Ghosh points out, some vital crops are not traded on the futures markets, including millet, cassava, and potatoes. Their price rose a little during this period – but only a fraction as much as the ones affected by speculation. Her research shows that speculation was "the main cause" of the rise.

So it has come to this. The world's wealthiest speculators set up a casino where the chips were the stomachs of hundreds of millions of innocent people. They gambled on increasing starvation, and won.

We have a tough path to follow. We obviously need to support President Obama to some level, simply because, as so many drolly point out, the alternatives are so much worse. But the demand that we be happy and enthusiastic in supporting the President is, frankly, not only absurd, but insulting. It is also immoral. We need to be asking some hard questions about our system of political economy; questions which have astounding moral implications. Yes, Obama and Bernanke may have saved the economy from depression (I would argue against even that - I think the "automatic stabilizers" that are part of the legacy from the New Deal, such as unemployment insurance, Social Security, and food assistance programs, were much more important than elites - who want to cut these programs - are willing to admit), but is it an economy that was worth saving? I suspect that if you're taking home $60 a day, you will have a much different answer to that than someone taking home $200 a day.  
Extended (Optional)

Originally posted to NBBooks on Mon Mar 19, 2012 at 08:38 AM PDT.

Also republished by ClassWarfare Newsletter: WallStreet VS Working Class Global Occupy movement.

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