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The outsourcing of good jobs, the elimination of pensions, rampant home foreclosures; skyrocketing higher education costs and mounting debt: Given these stark realities, the American middle class seems to be sinking fast. The renowned reporting team of Donald Barlett and James Steele insists it is no accident.

Trade policy, tax cuts and other incentives that have been implemented in Washington since the Reagan era have allowed corporations to score record profits at the expense of the American workforce. Donald Barlett and James Steele, recipients of two Pulitzer Prizes and two National Magazine Awards, powerfully advanced this thesis in their 1992 bestseller, "America: What Went Wrong?"

Now, in a new book, "The Betrayal of the America Dream," they return to the same topic to examine what has happened in the two decades since. Having first come across Barlett and Steele's work in the early 1990s, when they were writing the Philadelphia Inquirer newspaper series that ultimately became "America: What Went Wrong?", I was excited to talk with the duo about the problems now facing our middle class - and about how we can pull ourselves from the abyss.

I started by mentioning their 1992 book and asking how things have changed for the middle class since then.

"Well, the easiest way to answer that question is it has been straight downhill," Barlett responded. "If we made one mistake in that book, it was that we underestimated the speed with which the country would unravel - thanks in large part to the ruling class, which is having its way." "When we wrote America: What Went Wrong?", a lot of it was very controversial at the time," Steele added. "We said wages were stagnating and going down, benefits were jeopardized or disappearing and our country was being divided into a nation of have-mores and have-lesses. We were accused of being alarmists. People just said, 'This is a recession. Everything is going to be fine after that.' We said, 'Don't believe it, because all of these forces are entrenched, and they're going to make things increasingly worse for the middle class.'"

I asked the authors if they have seen any other developments in recent years that they did not expect.

"Back in 'America: What Went Wrong?' we talked very heavily about manufacturing jobs - blue-collar jobs," Steele remarked. "Some of our critics at the time said, 'Well, that's okay. Those are dirty jobs. Let's save the brain jobs, the knowledge jobs, here for America.' One of the biggest findings in the new book is that the forces that eroded so many blue-collar jobs are now well into the service economy. A study by the Bureau of Labor Statistics a couple of years ago estimated that basically 25 percent of the entire service workforce, or roughly 30 million jobs, [are] in danger of being off-shored and outsourced. That's a huge number. And, if anything, the Labor Department has underestimated the impact of globalization on the American workforce over the years."

I noted that at the time that "America: What Went Wrong?" was published, I was working with the labor movement in Silicon Valley. From my vantage point as a labor leader in that setting, one of the book's points that most interested me was that not all high-wage, high-skill countries were losing their manufacturing jobs or running massive trade deficits. It wasn't simply wage structures that were won by unions that were driving jobs offshore and overseas. Instead, public policy in the US gave incentive to corporations to outsource and globalize. I asked Barlett and Steele to comment on this point from the perspective of today.

"You're absolutely right on this basic issue," Steele said. "One of the myths out there is that high wages paid to union workers are driving these jobs offshore. We make the point that in a whole series of key manufacturing sectors - like the auto industry - workers in places like Germany and Japan make more money through wages and benefits than autoworkers in this country. The idea that just high wages are the reason that companies are going offshore is complete malarkey. The main reason is the incentives provided by foreign governments; and then, when companies bring their product back to this country, there's essentially no tariff on it. So there's a tremendous incentive for big corporations to go abroad and not pay any penalty for it."

Barlett made an additional point: "An integral part of this is the success that the elite have had in focusing attention on the budget deficit," he said. "While it's important in the scheme of things, it should be at the bottom of the list, the absolute bottom. At the top should be ... and you never hear these two words uttered together ... the trade deficit, because it is the trade deficit that results in lost jobs. In the decade of the 90s, the trade deficit was close to 8 trillion dollars. Each year it gets bigger and bigger. We haven't had a trade surplus since the mid-1970s. Since then, it's been annual trade deficits. Every one of those annual deficits translates into lost jobs. Yet no one talks about ending the trade deficit."

In their writing, Barlett and Steele distinguish between global corporations and domestic corporations. I wanted to ask about this because I have seen many domestic companies that are still manufacturing in the United States. They rely on regional and national distribution. They produce jobs. They still remain unionized. Yet they barely stay in business. Government does nothing to help them. I asked what we can do to lift them up and emphasize the value they create for our country.

"You make a really good point here," Barlett said, "because sometimes we forget this, especially in interviews, and speak about corporations generically. There is no comparison between the big international companies and the domestic businesses that are based in the US and cater to the US market. These people are being absolutely hammered by the tax code, by regulatory policies that are really not necessary, and they have no one speaking for them. They almost need to have a separate voice saying, 'Look, we are really working for the best interest of American workers here, and we need some help.' You're absolutely right. They are being killed.

"Let me give you an example. We didn't get to it in time to get it into the book, but you have this World Trade Center tower going up. The original design called for a special kind of glass sheathing around the base, because it's really a bunker and the glass is to conceal the bunker. They issued a contract. A New Jersey glassmaker responded. New Jersey was one of those states with a major position in the glass industry for years. This was an old family company that dates back a hundred years. We went to see the factory floor. You could eat off of it. They're struggling like crazy to stay in business. It's third generation family ownership.

"They put in a bid and, naturally, they were beaten by the Chinese. It's a unionized workforce. They love their workforce. They're certainly not paid outrageously, but they couldn't beat the Chinese wages. They lost the contract. What happens in the next year? The Chinese send in the result of their work and the glass is unusable - absolutely unusable. They have to abandon that whole project and come up with a new glass that didn't require quite the same amount of work to refine it. The irony was that the New Jersey glass company has been making that glass, and has been using it, and was perfectly capable of delivering on the contract, but the United States is so hidebound in its trade policies and in its manufacturing that this company got no help. It's an absolute disgrace."

I wondered why these domestic manufacturers don't have their own business associations, as do other segments of the business community.

"Well, a lot of them do have associations," Steele said. "The problem is, you've got this mindset in Washington, in Congress and basically with almost every administration, that trade should be unrestricted."

Barlett took a slightly different tack on the question: "This a sophisticated process. It really is," he explained. "To get the kind of representation you need in Washington costs a ton of money. The domestic corporations just don't have access to the kind of money that the multinationals do. Many domestic companies pay corporate taxes at a rate five, six, seven, eight times higher than the international companies. Some of the internationals don't pay any taxes at all. The domestic companies get no comparable break whatsoever. That's just wrong. It's morally and ethically wrong. Congress takes care of the people who take care of them. It's as simple as that."

Playing devil's advocate, I asked how the authors responded to people who would characterize their position on trade as being a rehash of old-school isolationism. In a world of global interdependence, I suggested, isn't it unrealistic to think we're going to go back and insulate our borders again?

Steele jumped in: "Anytime you talk about something other than the trade policy the US has now, somebody says, 'Oh my goodness, you can't throw up walls around the country.' Well, we are not advocating that. We are simply saying that, from time to time, you need to tell our trading partners that they're going to have to play by the same rules as we do, or they're going to face some tariffs, taxes or barriers to some of their goods. "The best example of this is that every year or two the US Trade Representative's office publishes a manual that's called basically, 'Trade Barriers to US Products,'" Steele explained.

"If you read this manual, you find out that Japan has had the same trade barriers up for 20 to 30 years. We've been negotiating agreements to end them. But, in fact, they don't end, because the Japanese have figured out various ways to take care of their own industries.

"Unless at some point one of these trading partners knows that you're going to be willing to get a little tough, nothing will ever happen. We're the only country that runs these massive trade deficits, which impact jobs domestically. None of our other major trading partners do. The Japanese have a surplus, the Germans have a surplus, the French have only a small deficit. Nobody has this trade imbalance like we do, and that alone tells you there is something wrong with our trade policy."

Barlett added, "The definition of insanity is doing the same thing over and over and expecting a different outcome. After 37 consecutive years of trade deficits, all accompanied by lost jobs, I don't care what anybody says about throwing up walls. You don't have to throw up walls, but you do need to do something different. If something isn't done, this country is going to go down the tubes."

-- Amy B. Dean is a fellow at the Century Foundation and the principal of ABD Ventures, a firm that seeks to increase the organizational effectiveness of social change organizations. She co-authored, with David Reynolds, "A New New Deal: How Regional Activism Will Reshape the American Labor Movement." Deanhas worked for more than 20 years at the cross-section between labor and community-based organizations. You can follow Amy on Twitter at @amybdean, or she can be reached via the web site,www.abdventures.com.

Originally posted to amybdean on Wed Oct 03, 2012 at 06:34 PM PDT.

Also republished by In Support of Labor and Unions.

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Comment Preferences

  •  Started Under Carter; the Powell Memo Was 71 or 2 (2+ / 0-)
    Recommended by:
    terabytes, BusyinCA

    or so which helped start the thinktanks and set us on the path to where we are even before Reagan. I believe rich conservatives may have already begun mobilizing evangelicals back then, but it certainly wasn't long after.

    1992 was WAY late to release a book on this, a huge amount of damage had already been done by then, though I can't blame any particular author or pundit for not coming earlier to the problem.

    Once you have the elimination of compressive individual taxation on the rich, taxes so far above 50% at the top margin that they suppress the great compensation, gifts or investment gains that empower the rich, absolutely everything else follows.

    We got that in 1981, and in 1983 when Clinton came in it was clear the Democrats were equally conservative on compressive taxation.

    And that's the whole game, because the wealth piles up so fast at the top that the rich can buy the rest of what they need within a decade.

    The Clinton so-called boom was a multi bubble economy when the wealth of the top .01% shot up like a rocket, so by the time of W the unraveling was able to go from a trot to a gallop.

    BTW I manufacture and export, and I can confirm that all my destination countries have higher protection for my competitors there than my country gives me for protection. Yes even China.

    Thanks for the diary, I'll be sure to check out the book.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Wed Oct 03, 2012 at 07:28:05 PM PDT

  •  Excellent diary. (3+ / 0-)
    Recommended by:
    Illinibeatle, brae70, mskitty

    Hope this isn't buried by all the debate hoopla--and by the way, was ANY of the stuff in this diary talked about in the presidential debate?

  •  What went Wrong was Occupy Wall Street before (3+ / 0-)
    Recommended by:
    brae70, mskitty, BusyinCA

    its time.  Glad to see someone who uses resources pre-internet.  A big thumbs up.

    I would like to add the point, however, that it was the New Politics Democrats who started the "Blue Dog" tradition of throwing the progressive base under the bus and enacting neoliberal market fundamentalist economic policies that have decimated the middle class.

    We had Gary Hart running McGovern's campaign, and Hart never got past his antipathy toward organized labor.  Carter also disliked labor and effectively began union busting when  he deregulated the trucking industry and introduced supply side economics as a viable alternative to Keynesian economics and its emphasis on maintaining higher wages via a full employment economy.  Reagan busted PATCO.  Clinton triangulated from the liberals  and passed NAFTA without a single Congressional Democratic vote, and Obama is fulling committed to maintaining neoliberal policies.

    The middle class has been decimated.  Private sector unions have declined from approximately 35% during the 1950s to approximately 5% today.  Mother Jones had an excellent chart showing how wages have stagnated while productivity has soared the last forty years.  The money showing just how thoroughly the Political donor class has rigged the game for their own benefit is this:

    Productivity has surged, but income and wages have stagnated for most Americans. If the median household income had kept pace with the economy since 1970, it would now be nearly $92,000, not $50,000.
    I don't know about you, but my household's standard of living would be improved by an extra $42,000 a year.  That adds up over the course of a working lifetime.

    Not only wages, but look at how the corporation have reduced their "employee liability" by either not offering employer health plans or severely curtailing the benefits.

    Our retirements aren't safe either.  Instead of "defined benefit" pension plans which were he norm into the 1980s, we get the fun, and risk of the 401k, and they get to cut that deferred compensation.  And most of us are underfunded in those plans.

    Enough of the bad news.  The good news is that the "Very Serious People" in the Beltway are going to reform the "entitlements" we have already paid into, and we all get to eat cat food in our "Golden Years."

    This is an important diary on an important topic, and I hope it doesn't get buried in all the hullabaloo over the debate

    "The working class mind´╗┐ is strange and unpredictable" -- Ty Lookwell

    by Illinibeatle on Wed Oct 03, 2012 at 08:36:49 PM PDT

  •  My perspective leads me to think that this (0+ / 0-)

    has been well thought out.

    In the 80's, the powers that be profited handsomely from the Wall Street expansion. Leveraged buyouts, employee buy-outs (to remove you from payroll), and hostile take-overs became common phrases. And union busting on a Federal scale. And the Saving and Loan debacle (thanks McCain) was behind us. Who made out? The already rich.

    In the 90's, we were supposed to experience a 'peace dividend' from ending the cold war. Not. It was pumped into Wall Street again, although we had the supposed 'boom times' of the 90's. The economy as a whole did better, even as we had such high tax rates. Who made out? The rich guys, the players. The rest of us were suckered into playing their game.

    In the 00's, we were told we could double, or triple or more our money, if we rode the tidal wave of real estate speculation. Real Estate never goes down. Right. I think we all know how well that (didn't) play out. But the rich guys got bailed out, and handed out billion dollar bonuses. And the rest of us, the working stiffs, are left paying the tab. WTF?

    So now we're into the 10's, and we have Rmoney riding in on his white horse of prophecy to save us all. Not. He may be a sacrificial lamb, but the powers that be are never going to quit. They would rather render us all into glue and soylent green, than give up their tax advantages. And we are still bailing them out via tax money.

    It's time to sharpen tines and prepare the heated petroleum products.

    Mitt's full of it / Ryan's lyin' -- "Your money and your life."

    by BusyinCA on Thu Oct 04, 2012 at 07:01:50 PM PDT

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