Moving Towards Social Disruption

The Washington Post had a great article about economic conditions in the US - namely that the new, globalized economy is causing social disruption and average American workers are finding themselves falling behind. What struck me, however, is that corporations are once again making their profits by pushing their costs onto their employees:

This new era requires that workers shoulder more responsibility and risk on the way to financial security, economists say. It also demands that they be nimble in an increasingly fluid job market. Those who don't obtain some combination of specialized skills, higher education and professional status that can be constantly adapted will be in danger of sliding down the economic ladder to low-paying service jobs, usually without benefits.

Meanwhile, those who secure the middle-class jobs of the 21st century will have to make $17 an hour stretch further than ever as they pay more for health care or risk doing without insurance and assume much or all of the burden for their retirement.

This disruption is justified as necessary:

In the lively debate about the future of U.S. jobs, many economists and scholars acknowledge that the changes wrought by technology and global economic forces will be painful at first. But they say the new structure ultimately will create many kinds of jobs as yet unimagined, in fields such as education, health care and science.

"You have to take the leap of faith that the economy will evolve and there will be this innovation economy that comes," said John C. McCarthy, a Forrester Research analyst who wrote a report on U.S. jobs going overseas.

If we're going to have a faith-based economy, then the Dubya religious revolution is complete. Truth be told, I was once a free-marketer who believed that the market would fix everything. The problem with the argument is that it is a total cop-out. It completely glosses over and ignores the transition period which is economically painful for society's most vulnerable and creates enormous risk that people will be left behind.

Corporations were created with the understanding that they would become wealth engines for society, not just for their owners. There is no reason to believe that this wealth generation would be in the form of the "trickle-down" effect so favored by Republicans. The enormous social inequity in wages, the pushing down of health and pension costs onto workers, reinforced by government is setting the stage for a market failure. Already companies like Wal-Mart have jacked their employees so badly that US taxpayers are subsidizing their workforce through social insurance programs to make up the deficit in their standard of living:

For a two-hundred-employee Wal-Mart store, the government is spending $108,000 a year for children's health care; $125,000 a year in tax credits and deductions for low-income families; and $42,000 a year in housing assistance. The report estimates that a two-hundred-employee Wal-Mart store costs federal taxpayers $420,000 a year, or about $2,103 per Wal-Mart employee. That translates into a total annual welfare bill of $2.5 billion for Wal-Mart's 1.2 million US employees.

If we continue to allow this level of social inequity - where the gap between rich and poor continues to rise - we could face the kind of social disruption that China is going through now:

Minor street quarrel provokes mass riot. The Communist Party, obsessed with enforcing social stability, has few worse fears. Yet the Wanzhou uprising, which occurred on Oct. 18, is one of nearly a dozen such incidents in the past three months, many touched off by government corruption, police abuse and the inequality of the riches accruing to the powerful and well connected.

"People can see how corrupt the government is while they barely have enough to eat," said Mr. Yu, reflecting on the uprising that made him an instant proletarian hero - and later forced him into seclusion. "Our society has a short fuse, just waiting for a spark."

Though it is experiencing one of the most spectacular economic expansions in history, China is having more trouble maintaining social order than at any time since the Tiananmen Square democracy movement in 1989.

This goes to show that the form of government and the level of the economy generally doesn't matter - it's the distribution of wealth that matters.

That's what surprises me about the Republican party's position - they seem to believe that wealth distribution is irrelevant and that social insurance programs are irrelevant and wasteful. The fact of the matter is that those social insurance programs are probably the only thing that keeps the wealthy in possession of their wealth.

Corruption, social inequity, and abuse of power are the cause of social instability - all things that this Administration has practiced at unparalleled levels. Ironically, the costs of giving up some of their wealth in order to ensure long-term sustainability is fairly small. This is the problem of never asking the question, "How much is enough?"

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[Quaker in a Basement]

That translates into a total annual welfare bill of $2.5 billion for Wal-Mart's 1.2 million US employees.

Well, not quite. Some of those "employees" do pretty well. Four of the ten richest people in America are named Walton.