The U.S. as a Broken Society

American foreign policy intellectuals like to cite the threat posed by “failed states” and “broken societies” abroad as justification for America’s massive military empire and for Washington’s recurrent interventions in the internal affairs of other nations. This line of reasoning ought to evoke howls of ridicule at home and abroad. Never mind, the argument says (without actually saying so), that the U.S. itself is widely and understandably perceived by other nations and world citizens as the top military threat on Earth. Never mind that U.S. global economic and military policies are leading forces behind the collapse of societies and the failure of governments to serve human needs around the world. Never mind that the United States itself is a broken society and a failed state in its own right—a militantly business-ruled nation haunted at home by poverty and stark economic and related racial inequality, by a sprawling prison-industrial complex, and by the abject neglect of public needs and the common good on the part of a government and political culture captive to the rich and powerful.

In his Inaugural Address on January 20, 2009, Obama told the world the U.S. was “ready to lead once more.” Reflecting on rising misery across the “homeland,” however, the new avowedly-Christian president might have wanted to heed the Bible’s advice to “Set thine house in order” before talking about showing the way. The signs of societal breakage were already clear before the onset of the 2008-2010 “epic recession” (Jack Rasmus), fueled by the nation’s savage inequalities. They intensified under Obama thanks to the exigencies of capitalism, which (as the Marxist analyst David McNally notes) “goes through booms and slumps just as people inhale and exhale”:

The 2010 census revealed that a record-setting 1 in 15 Americans now lived in deep poverty (International Business Times, November 4, 2011), at less than half the federal government’s notoriously inadequate poverty measure (less than $11,157 for a family of 4).

• By 2010, the total number of Americans living in official poverty reached a historic high of 46.2 million. Over 15 percent of the nation’s population (1 in 7 U.S. citizens) live below the poverty line.
• By 2011, 1 in 6 Americans (50 million) had no health insurance and 14.5 percent of American households were defined as “food insecure.”
• A census report commissioned by the New York Times in the fall of 2011 showed that 1 in 3 Americans lived either in official poverty or in “near poverty,” either officially poor or at less than 150 percent of the poverty level (J. DeParle et al., “Older, Suburban, and Struggling,” NYT, November 18, 2011).
• CBS News reported last December that “a record number of Americans—nearly 1 in 2—have fallen into poverty or are scraping by on earnings that classify them as low income.” Half the population, 150 million, is either officially poor (50 million) or living at less than half the federal government’s notoriously inadequate poverty level (100 million). 

The nation’s wealth inequality, already and for many years the most extreme in the industrialized world, deepened after the crash thanks to the particular devastation wreaked on housing values, which make up a significantly larger part of total net worth in middle and working class families than they do among the rich. As usual, the crisis fell hardest on people of color:

• 4 of every 10 blacks experienced unemployment in 2008 and 2009
• In 35 of America’s biggest cities during the first half of 2010, the official black joblessness rate ranged from 30 to 35 percent—equal to the worst days of the Great Depression
• The combined unemployment rate for blacks and Latino workers (including workers who were involuntarily under-employed) in 2010 was 25 percent
• The black poverty rate rose to 26 percent, double that of white poverty
• The median household black/white net worth (wealth) gap rose to 7 black cents on the white dollar
• By 2010, more than half the black Americans who had purchased homes in 2006 had already been foreclosed
• Researchers reported in 2010 that half of all U.S. children and 90 percent of black U.S. children depended on Food Stamps at some point during their lives

Adding insult to injury, Washington scurried amidst this rising misery to bailout and otherwise protect the corporate and financial institutions that crashed the economy. A richly bipartisan affair, the epic transfer of trillions of taxpayer dollars to Wall Street started under Bush and proceeded to record-setting levels under Obama. As the venerable left-liberal author and commentator Bill Greider noted in 2009, “People everywhere [have] learned a blunt lesson about power, who has it and who doesn’t. They [have] watched Washington run to rescue the very financial interests that caused the catastrophe. They [have] learned that government has plenty of money to spend when the right people want it.”

Indeed, the Obama administration became a tutorial on who rules America and the underlying conflict between capitalism and democracy. With its monumental bailout of hyper-opulent financial overlords, its refusal to nationalize and cut down the parasitic financial institutions that had paralyzed the economy, its passage of a health reform bill that only the big insurance and drug companies could love, its cutting of an auto bailout deal that rewarded capital flight and raided union pension funds, its undermining of desperately needed global carbon emission reduction efforts at Copenhagen (2009) and Durban (2011), its refusal to advance serious public works programs (green or otherwise), its green-lighting of offshore drilling and numerous other environmentally disastrous practices, its roll-over of Bush’s regressive tax cuts for the rich, its freezing of federal wages and salaries, its cutting of a debt ceiling deal (in the summer of 2011) that was all about cutting social programs instead of tax increases on the rich, its disregarding of promises to labor and other popular constituencies, and other betrayals of its “progressive base” (the other side of the coin of promises kept to its Wall Street and corporate sponsors, who set new campaign finance records in backing Obama in 2008), the “change” and “hope” presidency of Barack Obama brilliantly demonstrated the reach of what Edward S. Herman and David Peterson call “the unelected dictatorship of money,” which vetoes any official who might seek “to change the foreign or domestic priorities of the imperial U.S. regime.” It richly validated Laurence Shoup’s judgment in early 2008 that in its presidential, as in its other elections, U.S. “democracy” is “at best a guided one; at its worst it is a corrupt farce, amounting to manipulation…. It is an illusion,” Shoup argued, “that real change can ever come from electing a different ruling class-sponsored candidate” (L. Shoup, “The Presidential Election 2008,” Z Magazine, February 2008).

The More Things Change…

A telling New York Times article at the height of last summer’s elite-manufactured debt-ceiling crisis suggested the limits of change in the still-capitalist Obama era. A front-page Times story, titled “Even Marked Up, Luxury Goods Fly Off Shelves,” described what some of the wealthy few were doing with the tax cuts for the rich Obama had agreed to pass on from Bush and with the Wall Street bonuses that had resumed after the gargantuan federal bailouts. They were resuming their ways of conspicuous luxury consumption even while overall consumer spending continued to languish amidst a “human recession” that lingered on despite the “statistical recovery” announced earlier that year: “Nordstrom has a waiting list for a Chanel sequined tweed coat with a $9,010 price. Neiman Marcus has sold out in almost every size of Christian Louboutin ‘Bianca’ platform pumps, at $775 a pair. Mercedes-Benz said it sold more cars last month in the United States than it had in any July in five years…. Even with the economy in a funk and many Americans pulling back on spending, the rich are again buying designer clothing, luxury cars and about anything that catches their fancy. Luxury goods stores…[have] posted 10 consecutive months of sales increases compared with the year earlier, even as overall consumer spending on categories like furniture and electronics has been tepid.”

Equally emblematic of the cold capitalist reality that lives on beneath the money-soaked charade that passes for “democracy” in Washington (and the 50 state capitals) was the story of Mike Borosky. In January 2011, while the media focused on democratic revolutions in Tunisia and Egypt, Borosky learned that the Coleman pop-up camper trailer factory—where he had been employed in Somerset, Pennsylvania for more than 30 years—was shutting its doors as his wife was being carried into an operating room for spinal surgery. “I was numb,” Borosky, 53, remembered. “My wife just went in for surgery and I didn’t even have a job. I wasn’t even thinking at that moment that I didn’t have health insurance.” Soon Borosky learned that FTCA Inc., which had taken over the Coleman plant years ago, had failed to pay health premiums, leaving him with more than $63,000 in medical bills. FTCA, which was owned by Blackstreet Capital, a private equity firm that managed hundreds of millions of dollars in investment capital, claimed there were no more funds left to pay the 150 Coleman employees any of the benefits owed to them under their union contract. FTCA abruptly closed the factory without issuing a 60-day plant closing notice required under federal law. It cancelled workers’ health insurance and refused to pay severance, accrued vacation time or to make good on its outstanding 401k retirement contributions.

“A Harsh Environment is a Good Thing”

Borosky’s story is told in the winter 2012 issue of the United Steelworkers’ (AFL-CIO) magazine. That same issue reported that the world’s leading appliance manufacturing corporation, Whirlpool, would soon close its large refrigerator plant in Fort Smith, Arkansas and send much of that plant’s production to Rampos Arizpe, Mexico. Whirlpool cited sluggish demand for appliances in its shutdown announcement—the same reason it gave in 2010 for closing a refrigerator plant in Evansville, Indiana and transferring that plant’s work to Mexico. That move cost the U.S. 1,000 jobs—a standard item in the bigger story of the investor class’s continuing global war on U.S. workers.

“American” capital gravitates towards the cheap and super-exploited status of labor in places like Foxconn’s Longhua factory campus in Shenzhen, China—where “a dutiful army of 300,000 employees eats, sleeps, and churns out iPhones, Sony PlayStations, and Dell computers” (Bloomberg Business Week). Employing more than 920,000 workers across 20 mainland Chinese factories, Foxconn “leverag[es] masses of cheap labor, mainly 18-to-25-year-olds from rural areas, to make products like the iPhone at seemingly impossible prices.” Foxconn does major business with leading “American” multinationals, including IBM, Cisco, Microsoft, Sony, Hewlett-Packard, and Apple. Foxconn factory workers receive $176 per month in return for performing specialized labor tasks under conditions so alienating that 11 of the company’s workers committed suicide in early 2010, most of them by leaping from Foxconn’s high-rise worker dormitories. The company subsequently strung “more than 3 million square meters of yellow-mesh netting around its buildings to catch jumpers and set up a 24-hour counseling center staffed by 100 trained workers.” The entrance to the Longhua campus “looks like a border crossing, with seven toll-booth-like lanes and uniformed guards.” The “drab and utilitarian” production complex includes “huge LED screens that flash public-service announcements and cartoons, and a bookstore that sells, among other things, the Chinese-language translation of the Harvard Business Review.” The bookstore prominently displays biographies of Foxconn CEO Terry Gou, the “Henry Ford of China” and the richest man in Taiwan, estimated by Forbes to have a personal fortune of $5.9 billion. One of the Gou biographies collects his many pithy aphorisms, including the following Dickensian maxims: “work itself is a type of joy”; “hungry people have especially clear minds”; and “a harsh environment is a good thing.”

The oppressive nature of working class life in Shenzen and across the super-exploited peripheries of the world economic system is a leading factor behind the fact that U.S. workers make a small portion of many of the consumer goods sold in the U.S.

Fiscal Martial Law in Benton Harbor

The Whirlpool Corporation’s sprawling and plush global headquarters is located on the margins of the 89 percent black town of Benton Harbor, Michigan. Its predominantly white managers and staff steer clear of the city proper. The site of a riot sparked by white police brutality in the summer of 2003 (the National Guard was called in), Benton Harbor has a poverty rate of more than 50 percent, a child poverty rate above 60 percent, a deep poverty rate of 26 percent, and a per capita income of around $10,000. It is plagued by the standard ills that accompany poverty: mass unemployment, failing and under-funded schools, crime, drugs, broken government, and endemic despair.

Over the last 35 years, the once thriving manufacturing town has been stripped: of industrial jobs (Whirlpool and other local manufacturers left for cheaper labor elsewhere); of retail stores; of environmental health (departing manufacturers left behind hundreds of acres of polluted brownfields and wetlands, including a Superfund site contaminated by radioactive paint); of a favorite local beach (recently appropriated by Whirlpool and pricey developers to create a fancy lakeside golf resort); and of its last remnants of formal democracy. Last year, Benton Harbor’s local government was handed over to an Emergency Fiscal Manager (EFM)—a de facto dictator appointed to run the city in accord with business principles under a chilling law passed by Michigan’s militantly pro-corporate governor and state legislature. In what was accurately described as “fiscal martial law,” the new czar of Benton Harbor can sell public assets, revoke labor contracts, dismiss pension boards, and take over pension funds. He simply issued an order removing all powers from the local city council of all powers. As the Reverend Jesse Jackson noted last May, “No money can be spent, no taxes raised or lowered, no bonds issued, no regulations changed without his approval.”

Jamie Wages: $57 K a Day

The suffering inflicted on discarded and exploited workers (and ex-workers) in places like Somerset, Pennsylvania, Fort Smith, Arkansas, Evansville, Indiana, Benton Harbor, Michigan, and Shenzhen, China, becomes more outrageous when it is compared with, and connected to, truly obscene fortunes. There are more than 3.1 million millionaires in the United States, home to 56,860 people (0.05 percent of the population), identified by the global wealth intelligence firm Wealth X as “Ultra High New Worth” (UHNW) individuals. A UHNW individual is defined as anyone with at least $30 million in worth, “including shares in companies, real estate, cash, art collections, private planes, and other investable assets.” The pinnacle is held by three men—Bill Gates (net worth of $59 billion), Warren Buffett ($33 billion) and Lawrence Ellison ($33 billion)—whose combined wealth exceeded the collective, recession-inducted budget-shortfalls of every U.S. state in 2011. The UHNW club also includes the CEO of J.P. Morgan (net worth $200 million).

According to the Wall Street Journal in April 2011: “$57,031. That’s about what the average U.S. archaeologist made last year. It’s also what J.P. Morgan CEO Jamie Dimon made every day of last year—$20.8 million total. The J.P. Morgan board also spent about $421,500 to sell Dimon’s Chicago home. And they brought back the big cash bonus, doling out $30.2 million in greenbacks to Dimon and his top six lieutenants” (Kile Stock, “Jobs Report: $57,000—Jamie Dimon’s Pay Per Day Last Year,” Wall Street Journal Blog, April 8, 2011).

Tasks Ahead

Long after its encampments have been torn down—often with brute force and (educationally enough) by predominantly Democratic mayors and city councils—the Occupy Movement deserves major credit for changing the nation’s political discourse with its emphasis on economic inequality and the unmatched democracy. It performed the remarkable service of calling out the names and addresses of the true masters: corporate-financial capital and Wall Street.

Three key tasks remain for the Occupy Movement: (i) to transfer its fighting and pre-figurative spirit of egalitarian direct action and grassroots movement politics from homelessness-plagued and police-plagued campsites in abandoned downtown financial centers to existing and/or newly created social and political organizations; (ii) to leave behind its original vagueness on policy issues and its exaggerated tastes for theatrical self-expression and elaborate deliberative processes to congeal around planned and strategic struggle for specific demands that reflect the real needs, experience, and aspirations of the working class majority it purports to represent; (iii) to more fully grasp and act on an understanding that “the 1%” it has identified as the greatest threats to justice, democracy, and livable ecology is itself a creature and agent of an endlessly rapacious system of economic exploitation and upward wealth- and power-concentration called capitalism.

The capitalist order is the taproot of economic collapse, social breakdown, imminent environmental collapse, and authoritarian state failure within and beyond the U.S. Reforms, while necessary, will not suffice. Fundamental social change leading us beyond the profit system is required if we are going to bring meaningful democracy to the United States. As the great Martin Luther King Jr. noted in a posthumously published essay titled “A Testament of Hope,” the “real issue to be faced” beyond “superficial” questions is “the radical reconstruction of society itself.”

Z

Paul Street (www.paulstreet.org) is the author of numerous books, including Empire and Inequality: America and the World Since 9/11; The Empire’s New Clothes: Barack Obama in the Real World of Power; and (co-authored with Anthony DiMaggio) Crashing the Tea Party: Mass Media and the Campaign to Remake American Politics.