WE DON'T MAKE ANYTHING HERE ANYMORE

Just after Christmas and the New Year, I stopped into my favorite liquor retailer . The proprietor, Mister Aga Agra is a tiny Indian man who hails from Bombay. He smiled a greeting from the dark corner where he sat quietly. His big smile transformed and illuminated his craggy face revealing a row of large white teeth and multiple gold fillings.

“How was your Christmas season?” I asked, as I placed a few bottles from the “Specials” selection on the neat counter.

He shuffled over . “For me? You know, I am a Hindu, so we don't...,” his voice trailed off and he smiled again.

“No no, not you, I mean, for the business. How did it go here in the store. Well or poorly?”

“Ah yes!” He muttered, as he smoothed out a sturdy brown paper bag and began tallying my purchases on the wrinkled surface with the stub of a pencil.

“Was it well enough, so you will not wish to return to India?” I asked, with a smile and a wink.

“Oh not to go back! No no no! I am a citizen here now. And of course, I have my family here. There is no return for me.”

“But I hear the economy is very good there,” I pressed on. I looked behind me. There was no one else in the store.

“Yes. That is true. They are doing much better in the economy there than we are here.”

“Why?”

“The Indians make most everything they need in India. They import very little.”

“Only food?” I suggested with a wink.

“Oh yes. Some food, some grains---yes,” he nodded his head as he turned serious, brushing aside my question. “But here in America we are not doing so well as we used to. It is simple. We don't make anything here anymore. We make nothing, and what we need we import from China. We must begin making things here too!”

As I turned to leave, I kept hearing that phrase over and over in my head. It's true: "here we don't make anything anymore."

I remember as a child back in the 1950s and 60s when we did make things here---in fact all our clothes, shoes, hardware, autos and just about everything else. They were manufactured right here in the USA. Some were made right there in my native Brooklyn, New York. Then too, in those days our parents all had good-paying jobs as well. “Made in the USA” was seen on most of the products we bought . But even then, on occasion, you might find some poorly-made, inexpensive item, perhaps a copy of some American product or original idea, perhaps a child’s toy, or a bit of low-cost hardware that would have the “Made in Japan” (not "Made in China") sticker on it. It was a sure indication that whatever it was--a pocket knife, a camera, ceramics or pottery, etc.,--- it was not up to US standards. And too, in those days there was very little unemployment. Workers had good jobs and paid their bills and their taxes. People were confident that their children would do even better than they did. And for a while we did. But sometime in the 1970s things changed for us.

I read with great enthusiasm and interest Prof Richard Wolff’s article “The myth of American exceptionalism implodes” in the guardian.co.uk (January 18, 2011). Prof. Richard Wolff (Economics, University of Massachusetts) clearly lays out the sources of the economic crisis we find ourselves in today. This is a great piece and Wolff and the Guardian should be commended. Unfortunately, we do not get this kind of candor in the US press. Its too bad, because perhaps our citizenry would better understand our present predicament and what has become of their jobs and their paychecks.

Wolff understands that the sad underlying problem of our democracy is that both parties unfortunately depend on the financial support of the same oligarchs, barons of Wall Street, and the large corporations for their political survival. Unlike the banks and big business, the working man has today no powerful advocates in Washington (with a few exceptions, such as our worthy Senate team from Vermont), Wolff also seems to know too, that the economic policy of basing the stimulus and sustenance of our wealth on unfettered domestic consumerism is over. As Mr. Agra, the man from Bombay says, ”We don’t make anything here anymore.” That is our problem.

According to Professor Wolff, conditions were fine up to the 1970s. Prior to that time, the rich were getting richer faster than everyone else, but we were not angry with that for the middle class was prospering too. According to Wolff at that time, “A profitable US capitalism kept running ahead of the labor supply. So, it kept raising wages to attract waves of immigration and to retain employees…….until the 1970s“. After that, things went down hill for the middle class and real wealth of the working men and women declined and continued to do so through the end of the 20th century and on into the early years of this century. But since 2008, rather then helping the working classes, the government has turned on them, making them pay for the cupidity, excess and carelessness of the Wall Street barons, and the timidity, self-serving and craven behavior of Congress. The government bailouts were necessary, but their enormous costs fell on the backs of the working and middle class in the form of higher taxes and eventual reduced services, rather than where it should have on the businessmen and corporations and wealthy investors which profited from the act.

How did we get to this point in an economic crisis that rivals the Great Depression? After 1970 real wages stopped rising, as US businesses found alternate means to satisfy their labor need. At about this time prosperous local companies found ways to become even more profitable. They began eliminating well-paying manufacturing jobs here and moving the production and assembly aspects of their businesses out of the country. They began “off-shoring jobs” and whole factories to Mexico, Taiwan, India, and elsewhere around the world. The thinking of a typical small-company owner became: why should a CEO maintain a high-paid 5000-person workforce here in the US, when he or she could minimize the labor costs (and eliminate worker’s jobs) by moving the production and manufacturing parts of a business offshore, maintaining only a skeleton administrative and executive office here in the US? Thus, a former, well-run functioning American enterprise which provided say--employment to 5050 workers and executives,--all of whom paid taxes, bought appliances, clothes, shoes and automobiles where they worked, and supported the schools, the public and religious organizations where they lived--and yes bought houses (on time payments) --overnight became a US company in name only. What remained was a 50-person executive cadre ensconced in fancy offices with a well-used telephone line to somewhere in Mexico, or elsewhere. The five-thousand workers were out of work and had to seek employment elsewhere--but in an increasingly tight job market the loss of those incomes had an enormous effect on the community.

To add to the effect, about this time as well, the US was undergoing a massive technological revolution in which computers and computerized machinery began to replace human labor. Fewer men and women were needed in these modern manufacturing facilities. About this time too, the women’s liberation movement provided business with even more cheap labor, as more and more women entered the work force. For business there was practically no end of cheap labor and no need to consider labor’s demands for a fair distribution of business profits.

Workers who rightly felt insecure in a weak marker for their labor responded by increasing their productivity, working longer hours--often for the same pay, if it would help to keep their uncertain jobs. To maintain their lifestyles in face of deceasing income, many families had to send others into the workforce (a wife or mother) becoming a “two-wage-earner” family. Often, in real dollars, the two-earner family was earning not very much more than the single worker's family of decades earlier. The two-wage-earner families were simply maintaining their lifestyle, but at a heavy cost to family health, happiness, and coherence. With no one home for the very young , children were left on their own more..or grandparents had to fill the gap and take over mother‘s duties (where such relatives were available) or additional expenses had to be incurred--and perhaps more debt--when the services of a child-care-center were needed. When the financial burden became too great, many families turned to increasing their indebtedness by leveraging cash from their home mortgage--which--due to decreased regulations and a great housing-price bubble-- they used as a "ready cash" machine. Thus, we as a nation proceeded into the 21st century into its first decade. Then when excesses reached a crescendo and a number of banks with weak portfolios defaulted, the system responded with the massive recession of 2007 when the housing bubble burst.

While all of this was happening, the rich and super-rich just got richer still. As Wolff explains it: while workers salaries were kept flat and their productivity was rising the result was increased profits for businesses. “While workers delivered more and more value to employers, those employers paid workers no more. The employers reaped all the benefits of rising productivity: rising profits, rising salaries and bonuses to managers, rising dividends to shareholders, and rising payments to the professionals who serve employers (lawyers, architects, consultants, etc. “

The result of the growth of wealth of the business class since the 1970s led to a top-heavy distribution of wealth in the US. Prior to the 1970s the top 1% of wage earners garnered annually about nine percent (9%) of the nation’s wealth, but in the next three decades the percent of the top one-percent increased nearly three-fold to a whopping 23% of the nation’s income. That figure is the highest in the industrialized western world--even monarchical England and Sweden who both support a royal family do not have such a distribution of wealth. In fact, those figures are more common in tin-pot dictatorships and banana republics where a corrupted elite hold all the assets. When the top 1% of earners glean nearly a quarter (23% )of all wealth--leaving the lower 99% to scramble and compete for a smaller and smaller portion (67%) of the nation’s wealth, not only is it unjust, it is unsound economically. The super-high wage earners spend their wealth very differently than middle income people do. It is the middle class who buy kitchen appliances, furniture, automobiles, shoes and clothes and pay school taxes and purchases local services, and support the mechanisms which generate a healthy economy from the bottom up. The very few super-high wage earners use their wealth very differently...they invest their money (often unwisely--see below) and purchase such products as massive yachts, over priced art, jet planes, etc. Yes all that spending is good for the economy, but it does not have the same impact that millions of workers have when they buy refrigerators, furniture, clothes, shoes or food.

As a result, of the income inequality more and more wealth has been concentrated in high places…and how was that wealth used during the last several decades?

According to Wolff, the rich cashed in on their windfall “by speculating wildly and unsuccessfully in all sorts of new financial instruments (asset-backed securities, credit default swaps, etc). The richest also contributed to the crisis by using their money to shift US politics to the right, rendering government regulation and oversight inadequate to anticipate or moderate the crisis or even to react properly once it hit. “ The result of these investments and financial skulduggery was the financial crisis we faced in 2007 and continue to suffer from today.

As Wolff puts it “First, they utilised both parties' dependence on their financial support to make sure there would be no mass federal hiring programme for the unemployed (as FDR used between 1934 and 1940). The absence of such a programme guaranteed that real wages would not rise and, with job benefits, would likely fall – as they indeed have done. Second, the rich made sure that the prime focus of government response to the crisis would benefit banks, large corporations and the stock markets. These have more or less "recovered".

In order to change the equation, we must put people to work here not in China or Mexico. As Mr Aga Agra said, "We must begin making things again, here in the USA".

Get the picture?

rjk