Every social order depends on a social mystery. The conservative wants to preserve that mystery. The Marxist wants to expose it. The liberal, like me, wants to palpate it a bit.
There are two mysteries in the current social order. One mystery is rather obvious bunk. The mystery goes like this: although Western economies are getting wealthier and wealthier, in comparison to, say, the economies of the 1950s, we are told that we are too poor to maintain the social welfare programs that we once took for granted. We are, in other words, getting richer and richer only to be collectively poorer and poorer. Now, one doesn’t have to be an ardent Marxist to question this story. Instead, one might ponder how we expect to maintain a social system in which the multiple of greater wealth taken home by upper management versus the average worker has zoomed from 12 times to about 400 times in the U.S. The increase in collective poverty is, of course, relative. Since this mystery has a readily understandable social cause, we should expect that the apologists of the social order – those who would like to see the wealth differential increased – will do their traditional work. Their traditional work is to blame the natural order. In this way, one can keep an exploitative system going … to the dogs. So, it turns out that demographics are the thing to blame for liquidating private and public pension plans, for zooming medical entitlement costs that are locked into a for profit medical and drug system, and so on.
The other mystery is different, but relates to the whole economic system of the West. Why is it that economic power hasn’t transferred much more rapidly and much more completely to the Third World? We will write about that mystery, with reference to Mancur Olson, in tomorrow’s post.
The WSJ article about the looming default of Delphi’s pension plan is a sort of map to the way the chattering classes give cover to the investment class’s big lie: the lie of our increasing collective poverty. The beginning is classic bizspeak:
“Delphi Corp.'s Chapter 11 bankruptcy filing represents more than just another Midwest metal-bender facing harsh reality. It marks a true reckoning for the traditional auto industry and the end of a 75-year-old way of life in America: that of the highly paid but unskilled worker. It was a noble concept, established largely by the United Auto Workers union in the 1930s. But it cannot withstand a global economy that has ended the UAW's labor monopoly in the auto industry, and a consumer body that won't pay more to subsidize costly employee benefits that most consumers themselves don't have.”
This is almost too brazen. In a world in which we’ve gotten used to CEOs taking home hundreds of millions of dollars in stock options, we’ve also gotten use to most consumers operating without a safety net. What this means is: ta ta, more consumers should be operating without a safety net. The logic here is superb.
For the past thirty years, our social order – or at least the economic dimension – has depended on reversing the ductus of the zeitgeist. Where we once read from right to left, from new deal to the social welfare state, we now read from left to right, from the social welfare state to gilded age levels of inequality. In April, LI was saying that the Bush administration’s attempt to loot social security with bogus stats about a crisis in the fund was a diversion from the true pension crisis, which was private. Since then, United has completed its robbery of its workers, Delta is working on a similar plan, and the CEO of Delphi, R.S. "Steve" Miller, is getting huge amounts of love in the business press because he has made tons of money taking companies into bankruptcy and dumping their pension obligations. Every once in a while, the oracles speak, and they reveal the ugly little truth that capitalism is class warfare. Warfare, of course, doesn’t have to be total. In the Keynesian order that lasted until the eighties, the truce that obtained allowed the investment class to accrue an advantage, but a smaller advantage, in the economy. This truce has been destroyed piecemeal since, but the price of that destruction has been delayed. We are going to be seeing what it means at a narrower distance to our own flesh in the coming decade, since the devil’s deal of the Reagan era is essentially unworkable: you cannot make a system in which the top one percent of households own 38 percent of the wealth and expect to continue to provide services based on a time when that upper one percent owned around fifteen percent. Obviously, the upper class knows this, and so its heroes are the innovators who draw the logical conclusion: let the dead bury their own dead, or: we can dump the costs of pensions for the workers on the workers and get away with it, cause nobody is going to call for some kind of giveback of upper management’s compensation packages, circa 1970 – 2000. Miller is a hero among business journalists because he’s up front about his thievery. The job, now, is to translate that thievery into inevitability. That, after all, is why we have a business section in the newspaper.
If I were to pick one image that typifies the ethics of the order that came after Reagan, I think the photo op of Bush, in Parkersburg West Virginia at the Bureau of Public Debt would do. That was the photo op in which he pointed to the “IOU”s accumulated by the Government by borrowing against the Social Security fund and laughingly remarked that they were merely paper. Since this paper had been borrowed against to finance his entire economic policy for the last four years, and since that economic policy consisted of throwing money at Big Pharma, war profiteers, and oil companies, this was a remarkable moment. A moment of truth, even. It told us who made money, how the machinery was designed for them to make money, and how criminally irresponsible that governing class was. It was a deeply moving moment, actually, like a frat house prank in a veteran's graveyard. One must consider the historic resonance: after all, the designers of the Reagan order were all in at the origin of that pile of IOUs, present at the creation, so to speak: Alan Greenspan, Reagan himself, the supply siders, all of them signing off in 1983. But a mere trillion to two trillion dollar rip off is not indicative of the whole splendor of this reactionary era’s deeper sicknesses. One has to really sift among the news of the private pension rip off and the way it is being managed as a p.r. coup to see the deeply sick bent of this order.
Here is the WSJ, making with the saliva about those lucky ducky auto workers:
For starters, the UAW's very success at obtaining job security and healthy pay for its members has put both achievements in mortal danger. Consider the benefits package, now worth some $40 an hour on top of wages, for workers at Delphi, GM and other Detroit car companies.
“The gold-plated medical benefits provide free choice of treatment with virtually no co-pays or deductibles. Retirees also get defined, and generous, pension payments for as long as they live, instead of the 401(k) accounts more typical nowadays. And workers can collect full pensions after 30 years on the job. Thus they can retire around age 50 and collect medical and pension benefits for more years than they actually worked. The contract forbids factory closings, and requires that laid-off workers get close to full pay and benefits while waiting in the "jobs bank" for real work. Delphi is paying out $100 million per quarter to 4,000 idled workers, Mr. Miller says. No wonder it was good while it lasted.”
And here’s something that is still good, and will last as long as the Bush culture can support it. From Money magazine, in 2003 (meaning that the compensation figures are a little short – CEOs get more now):
“While many Americans are cashing their final unemployment checks and wondering how they’ll pay next month’s bills, the top brass at our nation’s biggest companies could hardly pick a better time to be laid off.
Chief executives leaving S&P 500 companies pocketed a cool $16.5 million on average in the past two years on the way out the door. And there's little sign yet that the going rate for executive departure has come down.
That $16.5 million doesn’t even count juicy perks like gold-plated pension plans, rich stock option grants, health benefits, or use of corporate jets and company secretaries. These goodies can bump up the value of the typical executive severance package by an additional 50%. “