2006.12.24: December 24, 2006: Headlines: COS - Dominican Republic: Economics: Speaking Out: The Harrisburg Patriot: Dominican Republic RPCV Mark Ridoff writes: Productivity doesn't aid middle class
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2006.12.24: December 24, 2006: Headlines: COS - Dominican Republic: Economics: Speaking Out: The Harrisburg Patriot: Dominican Republic RPCV Mark Ridoff writes: Productivity doesn't aid middle class
Dominican Republic RPCV Mark Ridoff writes: Productivity doesn't aid middle class
"Forty years ago, I began two years of service as a Peace Corps volunteer in Latin America. That experience left me with a great appreciation of the opportunities and advantages that I was given as a member of what was then a vibrant and growing American middle class. I have watched with increasing dismay the accelerating erosion of the American middle class. Indeed, I began to think that there was much about America of the late 20th century and the early 21st century that reminded of the highly class-stratified Latin America countries I saw as a Peace Corps volunteer. It is again time for broad debate on a fundamental question: Why should the workers whose productivity makes greater wealth possible not share in the benefits of that wealth? How can America be America without a strong and stable middle class?"
Dominican Republic RPCV Mark Ridoff writes: Productivity doesn't aid middle class
Productivity doesn't aid middle class
Dec 24, 2006
The Harrisburg Patriot
Forty years ago, I began two years of service as a Peace Corps volunteer in Latin America. That experience left me with a great appreciation of the opportunities and advantages that I was given as a member of what was then a vibrant and growing American middle class.
Although my parents were far from wealthy, our family lived in decent housing, had access to first-rate public education and adequate health care. My childhood, like that of millions of others of my generation, was stable and safe, and made me ready and eager to become a productive taxpayer and citizen.
I have watched with increasing dismay the accelerating erosion of the American middle class. Indeed, I began to think that there was much about America of the late 20th century and the early 21st century that reminded of the highly class-stratified Latin America countries I saw as a Peace Corps volunteer.
The insidious decline of our middle class has been documented in many studies and finally a lot of attention is being paid to the stratification of our society into the wealthy, the poor and a shrinking middle. Most Americans think this trend is not good for our country, and I am one of them.
Of the factors contributing to the decline of the middle class there is one that has not received the attention it deserves: the failure of American workers to benefit from increasing and near record productivity. In my youth, proactive government policy and the power of labor unions ensured that the benefits of productivity growth were broadly and fairly shared.
Today the policy of the Federal Reserve is to raise interest rates at the first hint of wage inflation and beat it down vigorously and rapidly.
Many have argued that this discipline on wage inflation should be matched by equal devotion to fighting other sources of inflation, such as out of control federal budget deficits, the trade deficit that drives down the value of the dollar and increases the cost of imports, dependence on foreign oil and runaway executive compensation.
There is, however, a corollary to the zero tolerance policy that almost never gets discussed: If wages consistently rise at a lower rate than the rate of increase in productivity, the result is a transfer of wealth from wage earners to corporate managers and corporate profits.
As shown by recent studies, including the Keystone Research Center's "State of Working Pennsylvania 2006," the benefits of the increase in national wealth created by productivity growth are flowing to a relatively small number of privileged people who are amassing great fortunes while wage earners' standard of living declines or at best stagnates.
As in Latin America, the concentration of income and economic power is bad for the middle class, for upward mobility and, ultimately, for American democracy. Witness the recent scandals associated with the unprecedented amount of money flowing though Washington lobbyists to secure legislation favorable to business interests, notably energy and pharmaceutical companies and the private firms managing the "reconstruction" of Iraq.
The inability of American labor unions to organize millions of workers in much of American business is one root cause of the skewed distribution of the benefits of increased productivity. In the absence of collective bargaining, American workers have less and less leverage to demand and receive fair wages from the employers who profit from their labor.
Unfortunately, our national government has shown nowhere near the interest in protecting American workers rights to organize as it has in squelching any possibility of wage inflation in the economy. This is an unbalanced and ultimately destructive national economic policy. It must be fought with great determination and vigor.
It is again time for broad debate on a fundamental question: Why should the workers whose productivity makes greater wealth possible not share in the benefits of that wealth? How can America be America without a strong and stable middle class?
MARK WIDOFF is president of the Keystone Research Center's board of directors and served as Pennsylvania's first consumer advocate.
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Headlines: December, 2006; Peace Corps Dominican Republic; Directory of Dominican Republic RPCVs; Messages and Announcements for Dominican Republic RPCVs; Economics; Speaking Out
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Story Source: The Harrisburg Patriot
This story has been posted in the following forums: : Headlines; COS - Dominican Republic; Economics; Speaking Out
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