Jared Bernstein has just joined UP’s board of directors. He is a senior economist at the Economic Policy Institute and author of just-released “Crunch: Why Do I Feel So Squeezed (And Other Unsolved Economic Mysteries)” Below is an excerpt from the TPM Cafe Book Club at http://tpmcafe.talkingpointsmemo.com/tpmcafe-book-club/ where Jared, Barbara Ehrenreich, and others discuss today’s economy in terms of real people.
First, I want to thank TPM’s Andrew Golis for setting up this book club. Second, I want to thank Brad DeLong, Barbara Ehrenreich, and Alan Viard for agreeing to post along with me on “Crunch” over the next few days (Tyler Cowan is a “maybe”—I’m hoping he will post some responses too).
A bunch of “Crunch” is me answering real people’s questions about the economy—not wonk’s questions, but actual questions gathered from folks who are interested in matters economic but not necessarily schooled in them. The questions range from the definitional: “What’s GDP; how’s unemployment defined,” and “What does the Federal Reserve do, anyway?” and the timely: “What are bubbles and what is a recession?” There are behavioral questions, like “Should I give money to a homeless person or hire an undocumented worker?” as well as policy questions and solutions, like “Do other countries really spend less than we do on health care with better results?” or “Are budget deficits really a problem?”
And, of course, “Why do I feel so squeezed?”
Please click on the link to view the entire discussion:
Until the beginning of this month, Americans seemed to have nothing to say about their ongoing economic ruin except, “Hit me! Please, hit me again!” You can take my house, but let me mow the lawn for you one more time before you repossess. Take my job and I’ll just slink off somewhere out of sight. Oh, and take my health insurance too; I can always fall back on Advil.
Then, on April 1, in a wave of defiance, truck drivers began taking the strongest form of action they can take – inaction. Faced with $4/gallon diesel fuel, they slowed down, shut down and started honking. On the New Jersey Turnpike, a convoy of trucks stretching “as far as the eye can see,” according to a turnpike spokesman, drove at a glacial 20 mph. Outside of Chicago, they slowed and drove three abreast, blocking traffic and taking arrests. They jammed into Harrisburg PA; they slowed down the Port of Tampa where 50 rigs sat idle in protest. Near Buffalo, one driver told the press he was taking the week off “to pray for the economy.”
The truckers who organized the protests – by CB radio and internet – have a specific goal: reducing the price of diesel fuel. They are owner-operators, meaning they are also businesspeople, and they can’t break even with current fuel costs. They want the government to release its fuel reserves. They want an investigation into oil company profits and government subsidies of the oil companies. Of the drivers I talked to, all were acutely aware that the government had found, in the course of a weekend, $30 billion to bail out Bear Stearns, while their own businesses are in a tailspin.
But the truckers’ protests have ramifications far beyond the owner-operators’ plight –first, because trucking is hardly a marginal business. You may imagine, here in the blogosphere, that everything important travels at the speed of pixels bouncing off of satellites, but 70 percent of the nation’s goods – from Cheerios to Chapstick –travel by truck. We were able to survive a writers’ strike, but a trucking strike would affect a lot more than your viewing options. As Donald Hayden, a Maine trucker put it to me: “If all the truckers decide to shut this country down, there’s going to be nothing they can do about it.”
More importantly, the activist truckers understand their protest to be part of a larger effort to “take back America,” as one put it to me. “We continue to maintain this is not just about us,” “JB”– which is his CB handle and stands for the “Jake Brake” on large rigs– told me from a rest stop in Virginia on his way to Florida. “It’s about everybody – the homeowners, the construction workers, the elderly people who can’t afford their heating bills… This is not the action of the truck drivers, but of the people.” Hayden mentions his parents, ages and 81 and 76, who’ve fought the Maine winter on a fixed income. Missouri-based driver Dan Little sees stores shutting down in his little town of Carrollton. “We’re Americans,” he tells me, “We built this country, and I’ll be damned if I’m going to lie down and take this.”
At least one of the truckers’ tactics may be translatable to the foreclosure crisis. On March 29, Hayden surrendered three rigs to be repossessed by Daimler-Chrysler – only he did it publicly, with flair, right in front of the statehouse in Augusta. “Repossession is something people don’t usually see,” he says, and he wanted the state legislature to take notice. As he took the keys, the representative of Daimler-Chrysler said, according to Hayden, “I don’t see why you couldn’t make the payments.” To which Hayden responded, “See, I have to pay for fuel and food, and I’ve eaten too many meals in my life to give that up.”
Suppose homeowners were to start making their foreclosures into public events– inviting the neighbors and the press, at least getting someone to camcord the children sitting disconsolately on the steps and the furniture spread out on the lawn. Maybe, for a nice dramatic touch, have the neighbors shower the bankers, when they arrive, with dollar bills and loose change, since those bankers never can seem to get enough.
But the larger message of the truckers’ protest is about pride or, more humbly put, self-respect, which these men channel from their roots. Dan Little tells me, “My granddad said, and he was the smartest man I ever knew, ‘If you don’t stand up for yourself ain’t nobody gonna stand up for you.’” Go to theamericandriver.com, run by JB and his brother in Texas, where you’re greeted by a giant American flag, and you’ll find – among the driving tips, weather info, and drivers’ favorite photos –the entire Constitution and Declaration of Independence. “The last time we faced something as impacting on us,” JB tells me, “There was a revolution.”
The actions of the first week in April were just the beginning. There’s talk of a protest in Indiana on the 18th, another in New York City, and a giant convergence of trucks on DC on the 28th. Who knows what it will all add up to? Already, according to JB, some of the big trucking companies are threatening to fire any of their employees who join the owner-operators’ protests.
But at least we have one shining example of defiance of the face of economic assault. There comes a point, sooner or later, when you stop scrambling around on all fours and, like JB and his fellow drivers all over the country, you finally stand up.
“LEWISBURG — Replete with humor and a tinge of acerbity, investigative journalist Barbara Ehrenreich called for an uprising of sorts against poverty-level wages and the disparity between the privileges of the wealthy and the working poor.
Imploring to an audience of college students, professors and community members, the noted author declared that the fact that millions of people subsist at or below the government’s definition of poverty is everyone’s plight. …”
How much lower can consumer spending go? The malls are like mausoleums, retail clerks are getting laid off, and AOL recently featured on its welcome page the story of man so cheap that he recycles his dental floss – hanging it from a nail in his garage until it dries out.
It could go a lot lower of course. This guy could start saving the little morsels he flosses out and boil them up to augment the children’s breakfast gruel. Already, as the recession or whatever it is closes in, people have stopped buying homes and cars and cut way back on restaurant meals. They don’t have the money; they don’t have the credit; and increasingly they’re finding that no one wants their money anyway. NPR reported on February 28 that more and more Manhattan stores are accepting Euros and at least one has gone Euros-only.
The Sharper Image has declared bankruptcy and is closing 96 U.S. stores. (To think I missed my chance to buy those headphones that treat you to forest sounds while massaging your temples!) Victoria’s Secret is so desperate that it’s adding fabric to its undergarments. Starbucks had no sooner taken time off to teach its baristas how to make coffee than it started laying them off.
While Americans search for interview outfits in consignment stores and switch from Whole Foods to Wal-Mart for sustenance, the world watches tremulously. The Australian Courier-Mail, for example, warns of an economic “pandemic” if Americans cut back any further, since we are responsible for $9 trillion a year in spending, compared to a puny $1 trillion for the one billion-strong Chinese. Yes, we have been the world’s designated shoppers, and, if we fall down on the job, we take the global economy with us.
“Shop till you drop,” was our motto, by which we didn’t mean to say we were more compassion-worthy than a woman fainting at her work station in some Honduran sweatshop. It was just our proper role in the scheme of things. Some people make stuff; other people have to buy it. And when we gave up making stuff, starting in the 1980s, we were left with the unique role of buying. Remember Bush telling us, shortly after 9/11, to get out there and shop? It may have seemed ludicrous at the time, but what he meant was get back to work.
We took pride in our role in the global economy. No doubt it takes some skill to make things, but what about all the craft that goes into buying them – finding a convenient parking space at the mall, navigating our way through department stores laid out for maximum consumer confusion, determining which of our credit cards still has a smidgeon of credit in it? Not everyone could do this, especially not people whose only experience was stitching, assembling, wiring, and packaging the stuff that we bought.
But if we thought we were special, they thought we were marks. They could make anything, and we would dutifully buy it. I once found, in a party store, a baseball cap with a plastic turd affixed to its top and the words “shit head” on the visor. The label said “made in the Philippines” and the makers must have been convulsed as they made it. If those dumb Yanks will buy this…
There’s talk already of emergency measures, like making Christmas a weekly holiday, although this would require a level of deforestation that could leave Cheney with no quail to hunt.
More likely, there’ll be a move to outsource shopping, just as we’ve already outsourced manufacturing, customer service, X-ray reading, and R & D. But to whom? The Indians are clever enough, but right now they only account for $600 million in consumer spending a year. And could they really be trusted to put a flat screen TV in every child’s room, distinguish Guess jeans from a knock-off, and replace their kitchen counters on an annual basis?
And what happens to us, the world’s erstwhile shoppers? The president recently observed, in one of his more sentient moments, that unemployment is “painful.” But if a pink slip hurts, what about a letter from Citicard announcing that you’ve been laid off as a shopper? Will we fill our vacant hours twisting recycled dental floss onto spools or will we decide that, if we can’t shop, we’re going to have to shoplift?
Because we’ve shopped till we dropped alright, face down on the floor.
Twenty years ago it was risky to point out the growing inequality in America. I did it in a New York Times essay and was quickly denounced, in the Washington Times, as a “Marxist.” If only. I’ve never been able to get through more than a couple of pages of Das Kapital, even in English, and the Grundrisse functions like Rozerem.
But it no longer takes a Marxist, real or alleged, to see that America is being polarized between the super-rich and the sub-rich everyone else. In Sunday’s New YorkTimes magazine we learn that Larry Summers, the centrist Democratic economist and former Harvard president, is now obsessed with the statistic that, since 1979, the share of pretax income going to the top 1 percent of American households has risen by 7 percentage points, to 16 percent. At the same time, the share of income going to the bottom 80 percent has fallen by 7 percentage points.
As the Times puts it: “It’s as if every household in that bottom 80 percent is writing a check for $7,000 every year and sending it to the top 1 percent.” Summers now admits that his former cheerleading for the corporate-dominated global economy feels like “pretty thin gruel.”
But the moderate-to-conservative economic thinkers who long refused to think about class polarization have a fallback position, sketched out by Roger Lowenstein in an essay in the same issue of the New York Times magazine that features Larry Summers’ sobered mood. Briefly put: As long as the middle class is still trudging along and the poor are not starving flamboyantly in the streets, what does it matter if the super-rich are absorbing an ever larger share of the national income?
In Lowenstein’s view: “…whether Roger Clemens, who will get something like $10,000 for every pitch he throws, earns 100 times or 200 times what I earn is kind of irrelevant. My kids still have health care, and they go to decent schools. It’s not the rich people who are pulling away at the top who are the problem…”
Well, there is a problem with the super-rich, several of them in fact. A bloated overclass can drag down a society as surely as a swelling underclass.
First, the Clemens example distracts from the reality that a great deal of the wealth at the top is built on the low-wage labor of the poor. Take Wal-Mart, our largest private employer and premiere exploiter of the working class: Every year, 4 or 5 of the people on Forbes magazine’s list of the ten richest Americans carry the surname Walton, meaning they are the children, nieces, and nephews of Wal-Mart’s founder. You think it’s a coincidence that this union-busting low-wage retail empire happens to have generated a $200 billion family fortune?
Second, though a lot of today’s wealth is being made in the financial industry, by means that are occult to the average citizen and do not seem to involve much labor of any kind, we all pay a price, somewhere down the line. All those late fees, puffed up interest rates and exorbitant charges for low-balance checking accounts do not, as far as I can determine, go to soup kitchens.
Third, the overclass bids up the price of goods that ordinary people also need – housing, for example. Gentrification is dispersing the urban poor into overcrowded suburban ranch houses, while billionaires’ horse farms displace the rural poor and middle class. Similarly, the rich can swallow tuitions of $40,000 and up, making a college education increasingly a privilege of the upper classes.
Finally, and perhaps most importantly, the huge concentration of wealth at the top is routinely used to tilt the political process in favor of the wealthy. Yes, we should acknowledge the philanthropic efforts of exceptional billionaires like George Soros and Bill Gates. But if we don’t end up with universal health insurance in the next few years, it won’t be because the average American isn’t pining for relief from escalating medical costs. It may well turn out to be because Hillary Clinton is, as The Nation reports, “the number-one Congressional recipient of donations from the healthcare industry.” And who do you think demanded those Bush tax cuts for the wealthy – the AFL-CIO?
Lowenstein notes, that “if the very upper crust were banished to a Caribbean island, the America that remained would be a lot more egalitarian.” Well, duh. The point is that it would also be more prosperous, at the individual level, and democratic. In fact, why give the upper crust an island in the Caribbean? After all they’ve done for us recently, I think the Aleutians should be more than adequate.
“This morning, my nine year old son and and his friends were engaged in a heated discussion. They were excitedly rehashing the plight of striking workers struggling for higher wages and more vacation time. In the end, one of the workers, emboldened by union organizing fever, (supporters of The Employee Free Choice Act beware!), destroyed the workplace and they got their jobs back but at lower rates and what amounted to a giveback of benefits. …”
I was reading the paper with interest over the last week and saw that the labor department has told us that job growth is up, however, as anyone living in the country today knows, so is our collective anxiety level about the jobs we are headed to or trying to hang onto.
As you know, I’ve been traveling around with my Fired project for over a year now and I feel very privileged that people share their stories with me. Okay, privileged and a little jet lagged.
Here are some stories from the road. It turns out that old adage that truth is funnier than fiction is really true as evidenced by some of these tales I have been told: here are a few of the truly inventive ways people have learned the news that their company was repositioning itself out of their position:
>From Orlando:
I worked in retail and my supervisor told me, “we’re promoting you to customer.”
A new euphemism from HR world,” We’re freeing you up for your future. “
>From Scottsdale:
“I was fired from a job in a cigar factory because I couldn’t stop crying the day John Lennon died.”
>From D.C.:
“Can you help me to get fired? I work for the IMF, we never fire anyone, that’s our problem!”
“I had given 30 days notice to my employer after securing a new position, thinking I had done the right thing. After about ten days went by, my supervisor called me in to say, “Your quitting just isn’t working out for us, we’re firing you!”
Countless people tell me that losing one job led them to a better job in a more appropriate workplace or provided the opportunity to start a new career even, and I am thrilled and impressed to hear how people take losing a job and turn it into an opportunity. I wasted much more time feeling sorry for myself when I was fired by Woody Allen than anyone I’ve met on the road. On the other hand, I can’t tell you how many people ask me to sign a book for their recently made redundant mom, dad, spouse, or for themselves as they feel they are about to be, as I heard recently, “unexpectedly leisured” and are quite frankly terrified. I just read Lou Uchitelle’s book “The Disposable American,” by the way, which chronicles the very devastating effects of being outsourced in riveting and disturbing detail — I couldn’t put it down — too bad it’s not fiction!
I hope people will enjoy my book, and it will give their spirits a lift — providing some humor and inspiration, but I also hope people will take my experience as a model and go out and talk to people about their experiences and take actions that can impact the lives of all of us. That is what the “getting fired” experience has done for me, for sure. This is one of the reasons I’m so excited about UP. For instance, I had heard about the legislation that the house passed to make it possible to form unions and not suffer punitive measures for doing so, and I wanted to read more about it, so last night I went to the site and an article was on the front page of the UP site — very useful. I know you have many goals for UP and I hope I can be a small part of this.
Okay, I have to tell you another story. I was speaking at the Bar Association Luncheon of Labor and Employment Attorneys in LA last week, and I was handed this story:
“ An employee of my law firm was fired after being promised a partner position. “Poor research skills” was the reason cited for his termination. He challenged this decision but the board found his presentation to them to good but “poorly researched.” Sometimes, you can’t win.
You know, as the mother of a child born with a severe birth defect, I share the worry that so many people I talk to share — that losing their job will mean losing their health care. After all, with his pre-existing condition, no one wants to insure my family except our union, so I hope we can build some momentum with UP that will ultimately lead to our country adopting a universal health plan.
Okay, I have to tell you one more story.
From D.C.:
Fired from job at Roy Roger’s restaurant for refusing to say “Howdy Partner” with enough enthusiasm.
You just can’t make that up!
