posted January 5, 2005
Introductory Chapter to the War at Home

INTRODUCTORY CHAPTER to the book, THE WAR AT HOME

INTRODUCTION
Convergence, Crisis, & Corporate Restructuring in America
Copyright 2005 Jack Rasmus

America is fundamentally divided! Like no time since the 1850s, that ominous decade leading up to the Civil War a century and half ago. And like a political slipknot, the rope strands will continue to tighten before they loosen once more.

The vision that burned on TV screens across America on election night 2000 remains. Changed in essence neither by acts of terror or subsequent war. An electronic ghost, its shadow impixelated still on our silicon culture. The story of our time—the struggle between the remnants of the old Roosevelt tradition and the new Reagan-Bush coalition, the latter resurrecting in yet another form the 1920s Coolidge-Hoover vision of America.

A new physics has penetrated the molecular structure of America. A new political equation for the 21st century. A political E=MC2 Now P=CM3. M for Money, Media, and uncompromising religious Morality! C for chronic global economic crisis. P for Power. A dark energy ripping apart the quantum structure of civil society in America. A political entropy, growing in force as the various elements of the American social fabric accelerate ever faster in opposite directions.

THE DANGEROUS CONVERGENCE

At no time in the last century—not in the worst years of the 1930s Depression or the upheavals of the 1960s—has America faced a potentially more dangerous convergence of several fundamental forces.

Structural Economic Crisis

One such force is Economic. Economic crises are generally viewed from the perspective of cyclical events. But underlying the periodic cycles, known as recessions, are more fundamental longer term structural change. Its laws of movement not always as well understood. Today structural and cyclical forces interact in new, unforeseen or unanticipated ways. And with each passing month we enter new territory.

The twin phenomena of massive exportation of jobs and of jobless recovery under George W. Bush are not new, but have been developing in intensity and duration following each recession since1980. More than five million quality jobs were lost on George Bush’s watch between 2001-2004. Jobs that continue to disappear at an alarming rate, churning over, being replaced by part time, by temporary work, by the growing millions of marginally self-employed, the uncounted millions of hidden unemployed, by the discouraged and underemployed, and by lower paid service work at, or near, minimum wage. American workers have not shared in general productivity gains now for three decades. Real average hourly wages and earnings of the 100 million plus workers that constitute the core of the American working class have not risen at all for at least as long. Working class families have compensated by working more than 500 hundred additional hours per family per year, and by taking on historic levels of installment debt. More than forty five million Americans have no health coverage whatsoever, and tens of millions more barely any at all. Retirement income and security are fading for millions, while social services are cut, tax burdens shift from the rich to the rest, and education quality declines as costs rise.

Meanwhile the world moves inexorably toward more deeply synchronized economic cycles and intensifying global competition. New forces sweep the American corporate elite along in an endless search of new markets abroad. A search intensifying within the U.S. as well, as the very interstices of American society itself are scoured relentlessly for new possibilities for commodification—all corners of culture, all manner of personal relationships, and all variety of once available public goods and services. Education. Government services. Public security. The military. Even trafficking in human body parts. Nothing is allowed to remain outside the hungry maw of the market.

This is not the Great Depression of the 1930s. But neither is it the typical post World War II recession. U.S. monetary policy has prematurely begun to turn restrictive once again, paltry tax cuts for workers have been spent, the mortgage refinancing boom as a source of household asset income is over, jobs in the millions recycle from high paid to low, flow to east and south Asia at alarming rates, while chronic high oil and gas prices continue to decimate workers’ incomes—a short list of multiple factors that all but ensure another recession in the US economy within the next 24 months and a resumption of synchronized global downturn among the major industrial economies, a number of which have already turned the corner on the descending road to recession.

George W. Bush and Dick Cheney have both publicly declared we have entered a period of endless global warfare—with forces beyond our shores intent on destroying the American way of life from ‘without’. Meanwhile the undeclared, unmentioned but no less endless economic war continues being waged and intensified from ‘within’, no less effectively destroying the material foundations of that same American way of life.

Assault on Civil Liberties

A second fundamental force at play today is the current assault on Civil Liberties and the destruction of the most basic rights of American democracy. Skulking behind the screen of the War against Terrorism are those in key positions of power in Government and civil society who actually believe there is too much democracy today in America. Their attitude and viewpoint slips through public discourse periodically to revealing true intent.

Supreme Court Justice Antonin Scalia, darling of the Radical Right, in a speech in Ohio stated he believed that Americans now had more democracy than that guaranteed by the original U.S. Constitution. Some of it could therefore be taken back and still remain within the guarantees of that Constitution, in his view. More ominous still were the words of General Tommy Franks, commander of U.S. forces during the 2003 Iraq War, who declared in his retirement interview that the next major terrorist event in the U.S. would mean the imposition of martial law. According to Franks, there will always be a war between the Rich and Poor. It is the natural order of things. Under cover of section 213 of the Patriot Act government agents may secretly burglarize homes without notice, and do so; obtain library records; seize bank, telephone and internet accounts while issuing ‘gag’ orders on businesses preventing them from notifying customers of such acts; and employ roving wiretaps on citizens never accused of any crime. Meanwhile plans for expanding the Patriot Act quietly move forward, below the public radar, including draconian measures allowing the government to strip Americans of their very citizenship and deport them to foreign lands in the event of another terrorist attack.

At the same time and in violation of the 1876 Posse Comitatus Act passed more than a century ago to prohibit military involvement in U.S. domestic politics, the Army’s Special Forces are now engaged in preparing police departments across America in the use of urban warfare tactics. A new Northern (US) Command that never existed before in US history has been established to deal with potential conflicts within the continental U.S. For the first time in memory the regular Army was ordered to standby for possible intervention in social protests that occurred against the World Trade Organization (WTO) meetings in Seattle and Miami. And ‘What If’ reports circulate and are debated within American war colleges and among high levels of the planning staff in the US Army considering scenarios for a coup d’etat in the U.S. in 2012.

The still unfolding assault on liberties and rights is more serious than anytime in the last century—including compared to that of the Cointelpro program of the 1960s, McCarthyism of the 1950s, the illegal internments of American citizens without due process in the 1940s, the aborted military coup against Franklin Roosevelt in 1933, or the infamous Attorney General Palmer raids following world war I. These latter were not official policy entrenched across major government power bases in the Executive, Legislative and Judicial branches. In contrast, today efforts to rollback civil liberties and democracy are the institutionalized policy of the current Bush administration, its many radical friends in Congress, and its ultra-conservative supporters on the U.S. Supreme Court. Only the politically gullible and naïve can believe there are no plans, awaiting only the next provocative terrorist event almost certain to strike America’s power grid or a major port facility, to deny Americans even more of their basic civil liberties.

The growing threats to American democracy since September 11, 2001 have not taken place in an historical vacuum. Rather they are the latest in a chain of events that include the brazen, politically motivated impeachment of a President in 1998, the constitutionally questionable selection of George Bush as President in 2000 by the Supreme Court, and the passage of the most comprehensive legislative assault on the Bill of Rights in all of U.S. history. Like an undetected necrosis within the body politic, however, they spread and undermine the sense of legitimacy in the U.S. political system across large segments of the U.S. population.

Growing Cultural Divide

A third fundamental force converging with the above two is the gaping Cultural Divide in American today which grows ever wider with each new defining event. Fanning the flames of this divide has been the conscious policy of the Bush regime and the ascendant radical wing of the American corporate elite. At the heart of this cultural polarization in America has been the damp pall of religious morality descending upon the political landscape since the latter years of the 1970s. The right wing of the Republican party leadership has learned well, and has developed into a political art, the ability to distract the American populace with fabricated moral values and issues—as they pick everyone’s pockets while backs are turned.

As their checkbooks and wallets shrink, American workers from Kansas to California to the Carolinas are left debating and fighting over peripheral issues such as gay marriage instead of the economic destruction of the American family, abortion instead of the miscarriage of American democracy, prayer in schools instead of the wholesale failure and eventual privatization of the American education system, stem-cell research instead of the absence of health care coverage whatsoever for 45 million American citizens or the lack of adequate health care for another 50 million more.

The problem of religion in politics today, as ever in the past, is that religion is the enemy of democracy. Democracy is based upon compromise. But how do you compromise with the ‘Word of God’? Political compromise to the religious mind is synonymous with heresy. Sooner convince a devout racist that all men are created equal. Or a fascist that all men and women are born with the same inalienable rights. And we know where that all leads.

With the lid on the bottle of the religion genie now removed, cultural conflicts and divisions in America will continue to deepen. Much of the cultural polarization growing in America today has its ultimate roots in differences between secular vs. religious morality and values. At this very moment the Radical Right are financing and consciously promoting the splitting of traditional religious organizations in America, protestant and catholic alike, into conservative and liberal factions. Meanwhile George Bush provides their organizations tax cuts and ‘faith based’ handouts in payment for election assistance and political services rendered. The cultural and religious polarization will therefore continue to worsen, as the right wing of the Republican Party coalition continues, as it has since the late 1970s, to promote religion and religious morality as a domestic political weapon.

The Historic Confluence

The civil conflicts and disturbances of the 1960s were sporadically political and marginally cultural, but never fundamentally religious—and even less so economic. The conflicts of the 1930s were primarily economic but did not produce a corresponding institutional restriction of democratic rights. And the conflicts of those years were certainly were not religious or cultural in character. In contrast, our current period is, and will continue to be, characterized by growing civil conflict over basic economic interests, over democratic rights and civil liberties, and over secular vs. religious morality and values.

The coming conflicts in America will therefore be at one and the same time economic, political, and religious-cultural. Either one would be serious development in its own right. Their confluence therefore is of particular import. Furthermore, it is likely all three will be exacerbated by constant war, continuing in the middle east and possibly coming in the Caribbean basin as well.

THE CENTURY-LONG AMERICAN PERESTROIKA

American history shows that every few decades the corporate elite and their political representatives restructure the economy to exploit opportunities for expansion in a changing world. To assist the restructuring, the domestic ‘rules of the game’ between Business and Labor, the social relations between their respective associated groups and constituencies, are redefined and changed.

Over the past century the restructuring and redefining of ‘rules of the game’ have occurred on at least four separate occasions.

The First And Second Corporate Offensives

The first restructuring and change in the rules occurred at the turn of the 20th century, as the U.S. began to reposition itself as a newcomer and competitor on the global economic chessboard. The Spanish-American War, the first offshore colonies in the Caribbean and Philippines, the acquisition of the Panama Canal, the corresponding growth of corporate trusts, and the creation of the income tax and the Federal Reserve system to ensure revenues and to regulate the flow of financing for the new economic expansion were the most notable elements of this first restructuring.

A second restructuring and change in the rules of the game took place in the 1930s in the wake of the Great Depression. Unlike the first, now corporate interests found themselves on a definite defensive and the rules of the game were changed again in order to maximize the effectiveness of that defensive. Economic regulation of business was introduced to reduce volatility and instability in the economy, in particular in the critical sectors of Transport, Communications, Energy, and Power generation. The Banking System was overhauled, rules on foreign trade rewritten, and a new emphasis on fiscal policy tools introduced. This was the ‘business side’ of what was then called the ‘New Deal’ at the time. At its core, the New Deal of the 1930s was as much, if not more, about ensuring business stability as about containing labor conflicts.

On the ‘labor side’ of the New Deal changes in the rules of the game were also introduced to stabilize an increasingly volatile labor force by providing minimal retirement guarantees, by allowing workers and unions to collectively bargain, assuring minimal working conditions, temporarily permitting government employment as unofficial last resort, and a host of other measures—all ultimately necessary as well to support the new focus on assisting U.S. corporations dealing with cut-throat international capitalist competition and ensuring general business stability.

A third restructuring took place in the immediate post World War II period, as the American corporate elite repositioned itself for the Cold War and prepared for an unprecedented, several decades-long global economic expansion. At the heart of this third restructuring of the past century was the establishment of the U.S. dollar as the world’s currency, new rules and institutions governing world trade and monetary regulation, the creation of bodies like the International Monetary Fund, World Bank, and other U.S. dominated financial and trade institutions. Further hallmarks of the third restructuring were new innovations in the U.S. financial system, a thorough overhaul of corporate and investment provisions contained in the U.S. tax code, and the completion of the close integration of the U.S. government, industry, and military begun during the second world war.

On the labor side in the post-World War II restructuring, some of the rules of the game previously introduced in the 1930s were ‘re-adjusted’ in a manner decidedly favorable to business. New legislation in the form of the Taft-Hartley Act sharply shifted back the balance of power between workers and their unions in favor of companies and management. Rights to strike, organize and bargain were fundamentally curtailed. The income tax was now permanently extended deeply down into the working population—while guarantees of employment by the government, promises of national health care, and assurances of civil rights in education, housing, jobs made during the World War II period were effectively abandoned.

The Third Corporate Restructuring & Offensive, 1946-1959

Corporate America has never accepted President Franklin Roosevelt’s New Deal—that combination of policies and laws passed in the depths of the 1930s recession that were designed to check the growing militancy of American workers and unions while stabilizing the worst extremes of the capitalist business cycle by means of regulatory policies and other measures.

At the heart of the New Deal of the 1930s were laws that gave American workers the right to form unions and bargain collectively (National Labor Relations Act), that established the right to a minimal retirement guarantee (Social Security Act), created a minimum floor for chronically falling wages and hours (Fair Labor Standards Act), provided emergency Government last resort employment to the jobless (Works Progress Administration), while simultaneously providing regulation for the worst abuses by corporations in the utilities, energy, banking, Wall St., and other industries that were a major cause of the Depression itself.

Since the New Deal, Corporate America has continually probed, tested, and explored ways to neutralize and roll it back. At times it has moved more aggressively in this direction. At other times less so. But it has never surrendered the basic goal of reversing the New Deal someday altogether.
With the return of a Republican Congress in 1946, yet another effort was launched to change the ‘rules of the game’ between Business and Labor at the sphere of production level. That effort culminated in the passage of the anti-Labor Taft-Hartley Act of 1947. Taft-Hartley took back many strategic advantages unions and workers had prior to its passage—not least of which was the right of recently formed unions to provide jobs to workers through a closed shop union hiring hall. As a consequence of Taft-Hartley, workers in the newly formed, fast growing, and economically strategic unions in the manufacturing sector would not be permitted to look to the union for their jobs. The employer would henceforth be the source of that most critical foundation of loyalty: the hiring process.

With Taft-Hartley, unannounced strikes were now also declared illegal. Strikes of major geographical or nationwide impact could also be terminated for up to nearly 80 days by federal edict and injunction. Management rights were expanded dramatically. Federal government bureaucrats now by law were required to become involved in all collective bargaining negotiations prior to and following any strike. And occupation of corporate property by workers (i.e. sit down strikes) was strictly prohibited, solidifying prior court decisions outlawing the same.

Subsequent further revisions to the new ‘rules of the game’ were passed later in the 1950s in the form of the Landrum-Griffin Act, along with multiplying court and administrative decisions. These deepened the original intent of the earlier Tart-Hartley Act—i.e. the neutralization of union power at the point of production! With Landrum-Griffin, remaining loopholes permitting strike action previously not addressed by Taft-Hartley were disallowed. In particular sympathy strikes were no longer tolerated. Nor would workers and unions be allowed to refuse or handle products made by other workers in a dispute with their employer.

By the end of the decade of the 1950s some of the most effective means of expressing union power were thus stripped away. The back of much of union and worker solidarity was thus broken. Key social relations between corporations and workers had been fundamentally restructured. The ‘rules of the game’ significantly changed. Union membership growth, measured as a percentage of the workforce, which grew until the economy peaked in the early 1950s, thereafter began a decades long historic decline that has continued to this day. Any rise in union membership after Taft-Hartley, Landrum-Griffin, and the flood of court and NLRB decisions based on them would come from the economic growth that might occur in industries already organized. That net union growth would not result from union organizing campaigns. But as those once growth industries themselves later declined, so too would union membership begin to plummet en masse. Union and worker economic power in private industry plateaued in the early 1950s, never again to advance to any significant degree as a direct outcome of union organizing initiatives in the core sectors of construction, manufacturing or transport. The drift downward would continue until 1980, after which the drift itself became an accelerating decline due to corporate and political policies initiated under the Reagan years.

The one exception to the above union membership decline was the drive in the 1960s and 1970s to organize public sector workers (city, county, state, federal,) and, shortly thereafter, farm workers. It’s not surprising that both of these areas of the workforce were left outside the control of Taft-Hartley and Landrum-Griffin laws’ restrictions on union power. But aside from these two exceptions, Labor in its strategic base of construction, manufacturing, and transport otherwise marked time throughout the decade of the 1950s.

The 1960s: The Hiatus

The 1960s represented a hiatus of sorts for corporate forces intent on rolling back the New Deal and further restricting strikes, organizing, and union bargaining.

With the overwhelming electoral defeat of right wing Republican Party candidate, Barry Goldwater, in the 1964 elections those among the corporate elite advocating a more aggressive offensive were eclipsed for the moment by more moderate elements, now temporarily ascendant, who believed there was little to be gained at the time by unnecessarily aggravating union and worker opposition. There were windfall profits to be made from the Vietnam War, from the intensification of the Cold War, and from the Space Race with the Soviet Union. Moreover, there were rising social protest movements by minorities, students, and the emerging womens movement. To attempt to directly dismantle or even restructure the key social programs of the New Deal, or try to restrict further union rights to bargain and strike, would only risk adding the protest weight of American Labor to that of the other peripheral social groups and movements in motion at the time.

With the more aggressive wing of the corporate elite thus temporarily marginalized during the 1960s a modest extension, the ‘last hurrah’ of the New Deal occurred with the passage of the Medicare Act at mid-decade. The New Deal’s original promise of comprehensive Health Care for all proclaimed thirty years earlier, then cut short by World War II and the post-war reaction which followed, was reborn as Medicare—albeit now only in partial form as health care only for senior citizens. Medicare would be the last expression of the Roosevelt New Deal and the result of a unique confluence of historical developments at that time which would not be repeated since.

By 1970, the decision had essentially been made to extricate the US from its Vietnam quagmire. The social movements of the previous decade began to lose momentum. The US had won the Space Race by landing astronauts on the moon and had compiled a massive advantage in missiles and warheads over the decade. Thus the conditions underlying the decade-long hiatus in the corporate offensive against American workers and their unions began to dissipate.

In this environment circa 1970-71 two new developments of strategic import absent in the previous decade began to emerge. The first of these was a new wave of capitalist competition in Europe and Asia that had not heretofore impacted U.S. corporations in the post World War II period. By the late sixties the American corporate elite was finding that it actually had to compete with foreign rivals for the first time in many years.

Labor’s Last Hurrah: 1969-1971

The second new development at the close of that decade was the re-emergence of union and worker militancy. It marked a newfound willingness by unions in the strategic sectors of construction, transport and manufacturing to strike aggressively for wage and benefit gains—a development not seen since the mid 1940s.

The union bargaining and strike wave at the end of the decade was led by the construction trades unions, who achieved first year gains in wages and benefits of more than 20% as a result of a series of regional strikes in late 1969-70. Their gains overlapped with the expiration of contracts by Teamsters and west coast Longshore workers, who also struck in 1970-71 and achieved similar significant improvements in wages and benefits.

Following the successful strikes and negotiated gains in Transport, unions in basic manufacturing, in particular Auto, consequently sought to match the gains in construction and transport before them. Worker and union militancy in one sector thus immediately influenced another. ‘Pattern bargaining’ within an industry (eg. GM contract settlement influencing Ford influencing Chrysler settlements) was one thing, and bad enough from the perspective of the corporate elite. But to allow a similar development to occur between industries like Construction, Transport and Manufacturing was unacceptable! Not since 1946 had anything similar happened. It was a situation the corporate elite could not, and would not, tolerate.

While prohibiting sympathy strikes and limiting the right to strike and the scope bargaining, the Taft-Hartley and Landrum-Griffin legislation of the 1940s and 1950s did not succeed in prohibiting the strike per se. Nor did such legislation prevent the still loose but growing coordination of strikes between unions. Those laws could not effectively address the successful leapfrogging across industries and the wage and benefit gains produced in 1969-1971. It was a loophole that needed closing. With Nixon now in office the corporate elite once again closed ranks. The hiatus was over.

To help resolve the problem they turned to Nixon to check the nascent challenge from Labor. Nixon’s response was to impose wage controls on the construction unions in 1970, followed by a general 90 day freeze on all wage increases for all workers in August 1971.

Under the wage freeze workers and unions could still strike. They just couldn’t get anything if they did. That made the strike effectively meaningless. Led now by the Executive Branch of government in 1970-71, instead of Congress as in 1947 and 1959, it was a new way to restrict strikes and determine the outcome of bargaining in favor of corporations and management. Following the ‘shock event’ of the initial 90 day freeze, subsequent strict controls on union bargained wage increases were imposed and remained in place for more than two years. Negotiated average wage increases in union contracts were reduced by more than half, and in some industries like Construction more than three fourths, during 1971-73 as a consequence.

The mysterious death of militant auto union president, Walter Reuther, in a plane crash in 1970 and the stripping of militant Teamster president, Jimmy Hoffa, now incarcerated, of his position as head of the that union in 1971 helped ensure that the brief historic 1969-1971 experience of Labor strike and bargaining militancy would not be repeated again.

In contrast to the decidedly negative impact of wage controls on wages and union bargaining, nominal and totally ineffective controls on prices were also imposed but did nothing to stop the record inflation of 1972-73 that surged to double digit levels. As a result of the cuts in negotiated wage increases and the acceleration of inflation, the prior gains of workers in terms of real wages achieved during the previous three years, 1969-1971, were wiped out. Workers without unions fared even worse.

The true underlying plan and intent of the wage controls program under Nixon was summed up by Arnold Weber, who headed up the Nixon Payboard during those years, 1972-1974. Years after, in 1979, when it was all but history, Weber admitted in a Business Week magazine interview that “The idea (of Nixon’s wage-price controls) was to zap Labor, and we did!”

Following the wage freeze and controls, the corporate elite and U.S. government followed up with plans to ensure the experience of 1969-1971 would not be repeated. The first target was the construction unions who initiated the strike wave in 1969. The plan was called the ‘double breasted operation’. It was an open shop drive much like that which occurred during the 1920s in that sector. Led by the Construction Business Roundtable, which would later morph into the influential Business Roundtable interest and lobby group, the construction industry during the remainder of the decade of the 1970s was successfully de-unionized, beginning especially in the residential housing sector and outside major metropolitan areas but later extending within metropolitan areas as well. In the process what were previously region-wide contracts within the construction industry, which were once the rule, were more and more ‘balkanized’—i.e. broken up into smaller geographic area contracts that further reduced union bargaining power. By the end of the 1970s the backs of the construction trades unions were broken. They would never lead a strike wave again.

By the time the wage controls were formally discontinued in 1974 the economy was already headed into a sharp downturn. Controls on wages were no longer needed in an economy entering the steepest recession to date since the Great Depression of the thirties. Negotiated gains in wages, benefits and other conditions by unions were minimal during the recession of 1973-75, well below what would have been the limits of formal wage controls had they been continued.

If the wage controls and accelerating inflation of 1971-73 wiped out the wage and benefit gains achieved during the strike wave of 1969-1971, then the recession of 1973-75 set in motion what would become a long wage march backward. For more than three decades since 1971 there has not been anything resembling coordinated strike action across industries between unions and workers in America. Nor is it a historical coincidence that real wage gains of American workers from 1973 on halted, stagnated, and then began to decline for the next thirty years as well, despite three decades of record productivity gains by corporations over the same period! Thus three years of formal wage controls turned into three decades of informal, but no less effective, real wage stagnation and decline! A virtual thirty year pay freeze.

The cross industry bargaining and strike militancy of the 1969-71 period can thus be seen as a ‘last hurrah’ of union power at the level of the sphere of production—much like the passage of the Medicare Act a few years earlier marked the high point and ‘last hurrah’ as well of the New Deal in the sphere of social legislation.

Nixon’s ‘New Economic Program’

Nixon’s wage freeze, wage controls, and subsequent neutralization of the 1969-71 gains of workers and unions in construction, transport and manufacturing marked a return by the corporate elite to a more direct and aggressive offensive not seen since the passage of Taft-Hartley in 1947.

Up to 1970 the Executive Branch of the federal government had left the task of such offensives pretty much to corporations on a company-to-company or industry basis to implement directly at the sphere of production, or to Congress and the Courts at the legislative level. Now, however, with Nixon the Executive branch of government was fully engaged. The new phase of the Corporate Offensive that appeared initially to emerge in the early 1970s under Nixon represented a renewed consensus that set new precedents in Corporate-Government cooperation. This deepened direct coordination between corporations and government, important for our analysis, focused on three policy areas in particular—not only on restructuring labor-management relations and thereby on controlling labor costs at the level of production level, but also on trade relations and tax restructuring as well.

This broader Corporate Offensive embracing taxes, trade, as well as wages was called Nixon’s ‘New Economic Program’, or NEP. Introduced in August 1971, the NEP targeted rolling back of union wage gains resulting from the strikes and bargaining of 1969-71, as noted above.

However, a second element of the NEP was a broad initiative to cut corporate taxes. The Nixon NEP tax cuts established new precedents in tax policy that would be resurrected again by Reagan in 1981 and expanded upon even further by George W. Bush after 2000. In fact, 1969-71 marks a watershed in US tax policy history. For it is in this period that the Great American Tax Shift begins to accelerate. More and more of the overall burden of taxation in the US would henceforth shift to the working class, while lightening the load for corporations and wealthy taxpayers. The tax rate on corporations, for example, peaked in 1969 at 23% and has been declining ever since, until today it is barely 7%. Within the structure of the overall Federal Tax burden, a similar shift from the more wealthy to workers has also occurred over the same time period.

The NEP’s third set of policies involved trade relations and programs. Trade policy can be understood simply as those measures which lower costs for US-based corporations in world markets and/or raise costs for their competitors in the same markets (including the US home market). Additionally, trade policy means forcing open foreign markets on favorable terms to the US corporations previously restricted or denied them. And conversely it can mean inhibiting market entry by foreign competition in those markets in which US corporations dominate. Like the renewed direct offensive against union wages and the beginning of the great tax shift, the aggressive trade policy that has been a hallmark of the Corporate Offensive for the past twenty-five years had its initial origins as well in the Nixon NEP.

At the heart of the NEP trade policies was the decoupling of the US dollar from the gold standard. This move gave US corporations a strategic weapon with which to browbeat other nations and economies when trade disputes arose. The world was now indisputably on the dollar standard. No intermediary ‘currency’ like Gold to enable foreign central banks or corporate competitors to hide behind. They could either purchase U.S. dollars or not. The consequence of the Nixon move was to force other countries to invest more in the US as well as directly purchase more US government securities to maintain a trade balance. Buying gold was no longer an option. Buying dollars was now the only game in town. Foreign currencies now had to peg to the dollar, which permitted the US to indirectly, albeit partly, to control the value of those currencies—a tremendous advantage in maneuvering in disputes over trade and in allowing the US to export its inflation abroad.

An even more direct ‘trade’ measure announced as part of the NEP was the imposition of a 10% imports surtax, which resulted in immediate windfall gains for big manufacturers like GM, US Steel, and others in textiles, electronics, and other import sensitive industries.

The various trade related measures of the NEP were designed to provide a clear cost advantage to US companies in international markets, which they did at the time. Their direct effect was in one sweep to reduce an over-valued US dollar in world markets and make US corporations competitive once again in those markets. This was the ultimate trade objective of the NEP, the same objective all Free Trade policies of the US corporate elite since the NEP.

The NEP trade measures thus may be viewed as the historical predecessors to the aggressive trade measures undertaken later by Reagan, the development and passage of NAFTA under George Bush and Bill Clinton, the opening of imports from China, and to efforts currently underway by the US corporate elite and Bush to replicate NAFTA throughout the Americas by extending it to the Caribbean basin (CAFTA) and expanding it throughout the southern hemisphere (FTAA), and by forging in the interim multiple bilateral, country trade deals designed to outflank and drive still resistant nations into CAFTA-FTAA trade blocs dominated by the U.S.

Just as there is no ‘free lunch’, there is nothing ever free about Free Trade. Someone always pays—either the foreign capitalists or the American worker—when it comes to reducing costs and/or opening markets. All the academic theory, rationale, justifications and claims that everyone gains from Free Trade in the long run is either ideology or obfuscation covering up the fundamental reality that Free Trade, in the short run, is essentially a zero sum game regardless what the clever ‘long run’ arguments and defenses may be. And while some arguments for Free Trade may be true in a purely logical sense in the long run, the ‘long run’ may in fact be very long indeed. As the 20th century guru of the economics profession, John Maynard Keynes, has said: “In the ‘long run’ we’re all dead.”

If the decade of the 1960s can be described as a hiatus in the postwar Corporate Offensive, the early 1970s and the brief Nixon period can be understood as a kind of dress rehearsal for what would later emerge under Reagan and other Presidents after 1980 as a renewed aggressive phase of that Offensive. The NEP shows clearly the ground pioneered by Nixon in this direction. Other possibilities he may have planned that were cut by the events of the last years of his administration also reveal the historical transitional character of his term in office with regard to the current Corporate Offensive.

In his 1972 re-election campaign Nixon spoke about a ‘New American Revolution’ that would take place in his second term. The focus of this revolution would be domestic policy. While not all elements of this potential radical redirection of domestic policy were clear at the time, one proposal that was frequently raised by Nixon in his first term was his desire to impose mandatory arbitration in all union contract negotiations.

There is some evident that Nixon’s plans for a New American Revolution in his second term also intended to address the restructuring the welfare system, a further overhaul of the corporate tax system, plans to open up more trade with China, and the introduction of further business deregulation. All these would later become initiatives under Reagan, Clinton and George W. Bush. The close relationship between Nixon and Reagan in particular, both on a policy and personal level, is often overlooked.

The Interregnum: 1974-1977

But Nixon’s ‘New American Revolution’ follow up to his ‘New Economic Program’ did not happen, notwithstanding his 1972 re-election. It was abruptly cut short by his Watergate scandal, impeachment, and his ultimate resignation in 1974. The Gerald Ford caretaker Presidency that followed was consequently preoccupied with the fall of Vietnam and the steep recession of 1974-75. The election of a little known Democrat, Jimmy Carter, in 1976 further delayed any resumption of plans for a domestic New American Revolution and any renewed Corporate Offensive that may have been envisioned along such lines. By mid-decade of the 1970s the corporate offensive initiated briefly by Nixon stalled. A kind of Interregnum set in between late 1973-early 1977.

By mid-1977, however, corporate forces again began to plan a renewal of what had begun earlier in the decade but was cut short by the intervening political events of 1973-76. Organizations like the Business Council, Business Roundtable, CFR, Manufacturers Association, Chamber of Commerce, and others joined with more aggressive ‘Sun Belt’ business forces and right wing oil entrepreneurs, and once again together set about redefining new ‘rules of the game’ and launching a new phase of restructuring.

New business political action committees (PACs) and lobbying operations were set up circa 1977-78 and corporate money was funneled in amounts previously unseen or even imagined. A new aggressiveness in financing pro-business electoral candidates, instead of spreading the money more equally around between Republican and Democratic candidates as before, was adopted. A new alliance with grass roots religious organizations that were pioneering direct mailing and other fund raising techniques was forged, especially in the South, which was now targeted in particular for Corporate-Republican political initiatives. A new focus on polling, consulting, media and public relations expenditures in political campaigns was adopted. Radical right elements financed and founded dozens of conservative ‘think tanks’, whose primary task was to define a new ideology of the Right wedding the old economic arguments with new political and religious moral ideals, while simultaneously undermining in the public mind any legitimacy associated with concepts of ‘liberalism’ or the benefits of business regulation. Cultural themes and moral issues were introduced in a systematic manner onto the American political landscape, primarily as vehicles for attacking the civil rights revolution of the preceding decades and as a means for mobilizing the religious right for a host of corporate objectives at the grassroots level. A so-called ‘Committee on the Present Danger’, composed of the most powerful corporate elements and their surrogate representatives (including Ronald Reagan), was formed during the decade to directly attack Carter’s policies.

This new political equation of money, morality and media was tested out in the 1978 Congress and the final two years of the Carter Presidency.

1978-79: The Corporate Elite Cross the Rubicon

While more overt elements of a new Corporate Offensive did not begin to take shape until 1977, less obvious but no less important piecemeal changes in the ‘rules of the game’ were being implemented throughout the decade by the courts and Executive branch administrative bodies like the National Labor Relations Board (NLRB). These incremental but collectively significant developments further tightened the screws on union organizing, political action, and workers’ rights on the job, albeit still on a company by company basis. By the late 1970s the construction unions and workers had already been seriously impacted by the ‘double breasted operations’ union busting strategy, launched by the Construction Users Anti-Inflation Roundtable. Now it was the manufacturing unions turn to experience the negative impact of the NLRB and the courts over the latter half of the decade on union organizing and bargaining activities.

In response to the growing legal web restricting organizing and bargaining, the AFL-CIO, proposed comprehensive Labor Law Reform legislation to counter the growing restriction on and regulation of union activities. With a Democratic Party now in power in 1976 both in Congress and the Executive branch it appeared there would be no better time to pass general Labor Law Reform. Perhaps the New Deal itself could be reinvigorated in other ways as well—just as it was in the 1960s with the passage of progressive social legislation in the form of Medicare.

But Labor Law Reform, as well as other worker and consumer rights legislation, were resoundingly defeated in 1978 by a massive corporate lobbying campaign reflecting the newly coordinated, well-funded and aggressive Corporate attack on any legislation that in any way seemed akin to the New Deal or protective of working class interests. In terms of financing, organization, and its intensity, nothing like the 1978 anti-Labor Law Reform lobbying effort had been seen in post war memory up to that point. Leading the charge was the renamed and expanded premier corporate lobbying group, the Business Roundtable—the same business organization which earlier in the decade in 1970 as the Construction Users Anti-Inflation Roundtable had led the charge to establish ‘double breasted operations’ and the open shop in the construction industry.

Attempting to restore some of the original intent of the New Deal ‘National Labor Relations Act’ of 1936, the AFL-CIO made the Labor Law Reform bill of 1978 its central political and legislative goal during the Carter administration. When both that goal and the bill went down to humiliating defeat, it marked the first of what would become a long string of failed legislative attempts to resurrect progressive legislation in the decades to follow under Reagan and Bush.

Union efforts to resurrect the New Deal legislative tradition thus died with the defeat of Labor Law Reform. Henceforth, unions and workers would be on a constant defensive at the social-legislative level. 1978 was clearly the watershed with regard to the Corporate Offensive at that level. Thereafter, union efforts would focus on trying to prevent the further unraveling and dismantling of the New Deal tradition and its progressive laws.

If the defeat of Labor Law Reform and the renewed targeting of New Deal legislation by corporate interests marked a renewal of the Corporate Offensive ‘from the top down’—then ‘from the bottom up’ new corporate strategies at the point of production were being rolled out and tested as well after 1978. The imminent fourth Corporate Offensive in the 20th century would not only occur at the legislative level, but at the sphere of production level as well.

Earlier in the 1970s the corporate focus was on eliminating leapfrog bargaining, strikes and settlements across industries. At the end of the decade the focus would expand to breaking up within industries what was called ‘pattern bargaining’. In intra-industry wide bargaining, for example, a nationwide settlement with a company like GM or US Steel would be replicated at a Ford or a Bethlehem Steel. The test case for this occurred in 1979 at Chrysler Corporation involving the autoworkers and their union, the UAW. Chrysler would become the test model for a new corporate strategy and formula at the sphere of production for undermining intra-industry bargaining and contracts in manufacturing. It was a harbinger of things to come.

In 1979 Chrysler Corporation was facing bankruptcy due to a series of bad business decisions and a slow response to new competition from Asia. Chrysler asked for a billion dollar bailout guarantee by the U.S. government. Responding to demands by Chrysler’s bank creditors, President Carter supported Chrysler management and its banks’ insistence on major concessions by the UAW and auto workers as part of the condition for the loans. Carter leaned on the UAW to agree to concessions in exchange for the government guarantee of the bailout of the company. From this strategic settlement was born the new model that would spawn the corporate runaway shop movement of the 1980s, widespread concession bargaining by unions, and ultimately would produce what came to be known as the ‘Rustbelting of America’

What the AFL-CIO and UAW did not realize at the time was that the Chrysler bailout was not an isolated, one time event. It was the pilot program. It was the test case of how to break the back of union bargaining power in manufacturing. It would lead to the decades-long corporate practice of unrestrained outsourcing. Combined with Free Trade practices and policies at both the government and sphere of production level, it would lead to subsequent exporting of US manufacturing jobs on a massive scale.

The Chrysler model was eventually replicated elsewhere throughout manufacturing during the next two decades. Chrysler was the analog for the manufacturing sector comparable to what was already underway with the ‘double breasted’ open shop drive in the construction industry. Both would decimate union membership. Not coincidentally, UAW union membership peaked in 1979 at 1.5 million members at the time of the Chrysler settlement. It has since declined to 624,000 at the end of 2003.

The Chrysler model made effective use of the threats of the plant shutdown and the runaway shop to paralyze unions and workers with a deep fear of losing their jobs. Once that fear was sufficiently established, it then legitimized and helped promote the widespread penetration into collective bargaining and union contracts of new ‘rules of the game’ at the point of production. Increasingly common in union contracts thereafter were corporate provisions like two-tier wage systems, unrestricted outsourcing, expanded management rights language, lump sum pay bonuses in lieu of scheduled wage increases, and the steady elimination of Defined Benefit Pension plans and their replacement with Defined Contribution and Individual Pension plans based on 401Ks. All the above became staple corporate demands and objectives in contract negotiations, particularly in Manufacturing during the Reagan era and beyond. Collective bargaining increasingly focused on concessions during the new decade of the 1980s, and concession bargaining has continued to deepen and spread ever since.

While concessionary bargaining did not originate in 1979, it now became conscious corporate strategy from that point, practiced by more and more major manufacturing corporations. The Chrysler model thus marked the beginning of the decline of intra-industry bargaining within the manufacturing sector. It ushered in concessionary bargaining on a wide scale. At the point of production the new corporate strategy was simple: threaten to close down the plant and use the threat to break up industry-wide contracts, then install two-tier wage schedules, expand managements rights clauses in contracts to enable almost unlimited freedom to outsource and/or remove entire groups of workers from the bargaining unit, give workers lump sum payments instead of raises in their wage schedule, and substitute pensions with no guarantees of retirement payments for union pensions which guaranteed levels of benefits. Chrysler became the model of what the Corporate Offensive could achieve with the right combination of business-government pressure, threat, and aggressive action.

Sources critical of Labor tend to blame the leadership of the manufacturing unions as primarily responsible for allowing the decline in union bargaining power in manufacturing since Reagan. They cite the unwillingness of the leadership to directly confront the plant shutdown/runaway shop developments of the 1980s due to fear of a Reagan response similar to his destruction of the Air Traffic Controllers at the time. They note AFL-CIO leadership over-reliance on Democratic Party help, which was never delivered, instead of taking action and developing its own industry level counter-strategy. Or they point to more senior, better paid workers too willing to agree to lesser pay and benefits (two-tier wage schedules) for younger workers coming into the industries. But American workers in manufacturing and elsewhere did fight. In steel, rubber, meatpacking and elsewhere. They just did so in a very fragmented, industry by industry, and more often company by company approach. There was no coordinated effort to stop the snowball effect of the plant closures-runaway shop strategy, or the legislation and changes in tax and trade that made such corporate strategy financially attractive.

These criticisms also overlook and greatly underestimate the massive corporate effort that underlay that offensive launched during the early Reagan years to undermine the manufacturing unions in America. They assign little or no role to the Government policies that provided the incentives, or the role of the courts and NRLB in legitimizing and institutionalizing the various changes at the sphere of production level reflecting the “new rules of the game”. More than any other cause, it was the CEOs and governing boards of corporations that took the lead in destroying industry-wide bargaining agreements with their constant threats—frequently followed by action—to shut down plant after plant and move them first to the South, then to Latin America, and then elsewhere offshore.

Today outsourcing and offshoring are words the American public has become increasingly aware of as more and more white collar professional, business services, software engineering, and other tech jobs are also rapidly being transferred abroad. But outsourcing and offshoring have been devastating manufacturing jobs in America since Reagan and the early 1980s. In mid-1979 there were 21.2 million manufacturing jobs in America; as of the end of 2004 the number has declined to only 14.3 million. Just about 7 million high quality, well paid, good benefits, mostly unionized jobs have been lost in the U.S. in Manufacturing alone, nearly 3 million of which occurred under George W. Bush during his first term.

By the end of 1978, barely two years after taking office, the Carter administration was essentially played out as a force that might establish an effective defense of the New Deal and protect prior legislative gains. One of the great historic shortcomings of the Carter administration was its failure to develop any strategy whatsoever to revitalize the New Deal—as had been done, for example, in the decade of the 1960s with the passage of Medicare. The conditions certainly were there. The Democrats had control of the Congress and the Presidency. Not since 1932 had the party in 1976 a better opportunity to achieve something in the wake of Watergate, the ending of the Vietnam War, and the severe recession of 1974-75—all events on the Republican Party’s watch. Had they been able to do so, the history of the past three decades might well have been quite different. But the extraordinary weak leadership and lack of vision by Carter and other Democratic Party notables allowed a reopening for, and rigorous renewal of, a new fourth Corporate Offensive once again at the close of the decade of the 1970s.

The final political coup de grace was then delivered to the Carter administration. By late 1979, the decision had been made by the corporate elite to force Carter out. Global business competition was intensifying once again at the close of the decade and more aggressive tax and trade policies were being demanded, none of which Carter was capable of delivering.

In 1979-80 the Federal Reserve chairman, Paul Volcker, spokesperson for finance capital and the banking sector in America, adopted a policy of driving up interest rates well beyond anything justified by the general economic conditions. Volcker’s efforts had the intended result. Inflation and interest rates fed off each other in the short run, driving both to levels to 15% and more by early 1980, an election year. What quickly followed on the eve of the November elections was the sharpest drop in the economy, more than 4%, up to that point in the postwar period. Even a steeper and more rapid recession than that of 1973-75. Volcker handed Reagan his number one campaign slogan, the first ‘cue card’ for the 1980 election campaign: “Are you better off today than before the current (Carter) administration took office!”. It all but ensured Reagan’s election that year.

Both the new political equation and the elements of a new Fourth Corporate Offensive were now in place. All that remained was to put Ronald Reagan in the White House and the corporate elite to begin in earnest a new era of restructuring, a new offensive against workers and their unions at the sphere of production level, and a new legislative assault on the New Deal.

The Fourth Corporate Restructuring & Offensive, 1980-2005

The post-1980 restructuring is characterized on the Business side by the rapid unraveling of the business regulatory rules of the game established as part of the New Deal in the 1930s and wholesale deregulation of entire industries and sectors of the economy. Another hallmark has been the radical redistribution of taxes and acceleration of shifting of tax burdens from corporations and the wealthy to the American working class population. Other major elements of the restructuring have been the introduction of unprecedented financial innovations and communications technologies, the transfer offshore of much of the US manufacturing sector, the restructuring of much of the work force and jobs markets in the U.S. from traditional, permanent full time work to forms of part time, temporary, and otherwise ‘contingent’ work, the establishment of new institutions and rules for world trade, and the closer absorption of the U.S. Media into the U.S. Industrial-Military-Government complex.

On the Labor side, the restructuring after 1980 has meant the advent of corporate and government policies to contain real hourly wages, to rollback various wage and hour guarantees legislated in the 1930s, to shift rising health care costs to workers, and to transform traditional group pensions into bank-administered private plans. The restructuring and offensive has been especially characterized by an increased regulation of workers and unions in areas of organizing, political action, and strikes and a dramatic decline in union membership and bargaining density. An expansion of management rights by the courts and administrative bodies like the NLRB, the institutionalization of concession bargaining and the accelerating export of jobs to lower paid, non-union regions— in particular to Central America and Asia—are additional key characteristics at the sphere of production level.

Just as Nixon and the corporate elite in the early 1970s eliminated leapfrog bargaining and strikes between unions across industries, with even closer assistance by the Executive and Courts a decade later a fourth Corporate Offensive would effectively undermine and destroy intra-industry wide bargaining, break the back of the power of the manufacturing, construction and transport unions, radically change the character of collective bargaining strongly in favor of management for decades to come, and usher in a long period of concession bargaining by Labor in its once strategic ‘core’ industrial base.

In the 1970s the primary corporate-government means for checking union bargaining power and workers’ pay and benefit gains were the wage freeze, wage controls, the threat of compulsory arbitration, and double breasted open shop operations. At the legislative level corporate advances took the form of new corporate tax and Free Trade policies and the checking of labor law reform that might have assisted union organizing and growth.

After 1980, at the point of production the tactics used were widespread threats and plant shutdowns, runaway shops, outsourcing, offshoring, concession bargaining, and use of the courts and executive to prevent union organizing, strikes, and to otherwise undermine the growth of union membership. At the legislative level, after Reagan it was new pro-corporate tax and Free Trade policies ultimately facilitating shutdowns and offshoring, the rolling back of spending on social programs, wage and protective legislation, and privatizing the core of what remained of the Roosevelt New Deal.

In the political-electoral arena, after 1980 the new restructuring and Offensive would also be accompanied by the transformations of both the Republican and Democratic parties, albeit in different ways and forms.

The Republican would become a ‘mobilizing’ party with a base of religious branches able to field an army of grass roots volunteers to turn out voters, push state-wide initiatives, organize recall and referenda elections, and engage in other protest events. A mobilizing party with new ideological elements and a widespread communications apparatus effective at forming and manipulating public opinion. A party with a strategy aimed at maximizing institutional power and imbued with a new aggressive ‘take no hostages’ attitude toward opponents and adversaries.

In contrast, the Democratic Party would drift under some of the most ineffective leadership in its history, then turn toward its pro-corporate wing as represented by its Democratic Leadership Council (DLC). The DLC would assume party control and undertake a reformation of the Party on a moderate Republican image, and become increasingly beholden to corporate interests as it embraced the modern trappings of money-dependent electoral campaigns (i.e. polling, consultants, media time, etc.) requiring massive campaign contributions. Under the DLC the party would transform itself further from the ‘mobilizing’ party it once was under Roosevelt into a mere electoral organization with a shrinking base, no clear ideological focus, no media apparatus to deliver that focus, and increasingly unable to defend itself against grass roots attacks by its Republican opponent. One of the ironic consequences of the new Corporate Offensive is not the direct transformation of the Republican Party by corporate interests, but the indirect transformation of the Democratic Party by those same interests as well.

At the legislative level, the new Offensive would successfully gut social programs, worker protective legislation, and the minimum wage. Central elements would include a shifting of the total tax burden and an opening of the floodgates of Free Trade, as well as a transformation of the private pension system by dismantling tens of thousands of defined pension benefit plans and eventually a direct assault via privatization on the twin great achievements of the New Deal—Social Security and Medicare.

In chapters one through ten that follow the details of the Fourth Corporate Offensive—the offensive that has continued from Reagan through George W. Bush—will be discussed. That Offensive will be examined not only at the sphere of production level but at the legislative level as well. Tax policies, Free Trade legislation and practices, wage legislation and rules, health care costs and coverage, private pensions, and Social Security will be addressed in parallel with what has happened in terms of wages, unions, bargaining, benefits, and jobs at the work level. The consequences in the sphere of organization—whether in the form of the crises in the AFL-CIO or the Democratic Party—will be discussed in the concluding chapter.

The assault today on American workers’ standard of living, basic economic interests, and political rights are coming more quickly, from more directions, and are increasingly virulent and bold. During the decade of the 1990s it was at times intermittent; at other times aggressive, especially in terms of trade and job restructuring. Since 2000, however, the assault has been steady, coming from multiple directions, and gaining in momentum. For those on the receiving end—American workers and their families—it is becoming increasingly clear that something basic has changed. Something fundamental is underway. In this, the first decade of the 21st century the ‘rules of the game’ are once more in flux. The chapters that follow are about those most recent changes in the ‘rules of the game’—and what the consequence has been for 105 million American workers and their families since Reagan took office through the first term of George W. Bush.

Jack Rasmus

posted January 5, 2005
CONTENTS of the War at Home

Copyright 2004 Jack Rasmus

PREFACE

INTRODUCTION: Convergence, Crisis & Corporate Restructuring

CHAPTER 1: The Road Back to 1929

CHAPTER 2: The Great American Tax Shift

CHAPTER 3: Corporate Wage Strategies I: The Thirty Year Pay Freeze

CHAPTER 4: Corporate Wage Strategies II: Attacking the Periphery

CHAPTER 5: Free Trade and the Collapse of Manufacturing in America

CHAPTER 6: Welcome to the New World Job Order

CHAPTER 7: Jobless Recoveries and the Bush Recession

CHAPTER 8: Medical Mount St. Helens: The Health Care Crisis in America

CHAPTER 9: Pensions in the Corporate Cross-Hairs

CHAPTER 10: Stealing the Social Security Surplus

CONCLUSION: The Corporate Offensive, Democrats, and the AFL-CIO

posted January 31, 2005
“1934″ Musical Coming to San Francisco in 2009

.

posted February 15, 2005
Discount Book Offer: “THE WAR AT HOME: The Corporate Offensive From Ronald Reagan to George W. Bush”


posted January 9, 2005
‘The War at Home’

THE WAR AT HOME is a nonfiction book about the current Bush-Corporate offensive against American workers and their unions. Its ten chapters cover the current Jobs Crisis, offshoring, Free Trade and the collapse of manufacturing, declining Wages and workers’ incomes, the great American Tax Shift, attacks on Pensions and Social Security, the pending privatization of Medicare, the health care costs crisis, the transformations of the Republican and Democratic parties, the decline of union membership and bargaining power, the pending split in the AFL-CIO, and the origin and evolution of the corporate offensive from Reagan through George W. Bush.

On this page you can read the PREFACE and the TABLE OF CONTENTS and advance order the book.

posted January 9, 2005
‘Fire on Pier 32′

"Fire" represents an attempt to begin to create a new form in theater—one that melds the best traditions of American musical theater with the somewhat lost traditions of Epic theater—and integrates both with new visual arts and multimedia montage.

The play, "Fire on Pier 32," is a three act story about longshore workers in San Francisco from 1933 to the present. It is about several generations of dockworkers and their confrontation with successive employer offensives against them over the decades.

In Act I, the main protagonists of the play, two young dockworkers, Joe and Frank, experience together the great Maritime and San Francisco General Strike of 1934 in the first act of the play. They then in act two participate in a series of subsequent scenes representing major events in the history of their union, the ILWU. The concluding act three tells the story of the historic port employer lockout of workers on the west coast in 2002 and joint efforts by employers and the Bush administration to control and tame them. The Epilogue scene following act three brings events full circle in the actual burning of the old company union contracts, the ‘blue books’ on pier 32 in late fall 1933—from which the play takes its title.

The story of "Fire on Pier 32" at the most obvious level may be about the two young dockworker-protagonists, Frank and Joe, but it is also about their union, the ILWU, and about some of its most noted leaders like Harry Bridges and Henry Schmidt who also have major roles in the story. Yet, at its most fundamental level the play is a story about the meaning of Solidarity itself. Solidarity at a personal, emotional level. At the level of feeling and individual meaning. And in that sense, the play is representational of all workers in America over the past decades as they tried, not always successfully, to defend and preserve solidarity in the face of the many political, organizational, legal, cultural and technological forces at work undermining it since the high water decades of the thirties and forties.

posted January 8, 2005
‘Hold the Light’

‘Hold the Light’ is a play in 3 acts and story about a group of young communications industry workers forced out on a strike that lasts six months. The play focuses on the dynamic interaction of three sets of characters on the union side. The first is the young workers themselves, men and women all in their early twenties and many from minority backgrounds. The second is the older white Anglo leadership of their local union. The third is the International union’s representatives assigned to the local during the strike, initially to disburse strike funds but eventually to force and end to the conflict by various means.

The main protagonists of the play are the local’s President, the two stewards’ rank and file bargaining committee members, and the International Union’s representative. All three sets of characters interact and conflict in various ways throughout the play as their interests diverge and simultaneously conflict as bargaining negotiations and the strike persist. The play is about the nature of that multi-level conflict, latent initially, but which is sharpened and brought to ahead by the strike.

The First Act of ‘Hold the Light’ focuses on scenes revealing collective bargaining negotiation between the company, their lawyers, and their corporate headquarters on the one hand, and the bargaining committee, their local union’s president, and their International Union on the other. Negotiations collapse with the close of Act One, and the Second Act moves on to a series of scenes that depict the respective strategies and tactics of the company, and the workers, as each tries to get the upper hand. In the final, Third Act, the International Union breaks ranks with the local and the workers after the local’s president is mysteriously attacked by unknown assailants and hospitalized. The company and the International bring an end to the strike. The young workers lose the strike in terms of immediate economic gains, but in the process learn what a union truly is, maintain their organization, and gain an understanding far more valuable in the end.

posted January 9, 2005
Our Time

Our Time is a play in two parts. Each part is a standalone two hour production which may be staged independently of the other, or together in a single four hour performance. Our Time is about how America has changed socially, culturally, and politically from the early 1930s to the present—as viewed through a series of scenes involving American Presidents from Herbert Hoover through George W. Bush. The play employs both naturalist and non-naturalist theatrical devices, depicts the evolution of American visual art over the last 70 years on projected-overhead screens, features selections of American popular music at appropriate junctures, and uses Narrator soliloquys to the audience about our changing understanding of the nature of Time.

Our Time begins with a prologue introducing three tragic masked and robed figures who represent three un-named forces responsible for driving the changes over the period in question. All speak in verse, dance, and appear thereafter periodically throughout the play as a kid of collective Mephistofelean character. The fourteen scenes of the play are based on fourteen real occurrences that historically happened involving American Presidents from Hoover to Bush, save for one such experience that occurs in 2012. While each occurrence happened, the details of dialogue are historically unknown; Our Time revisits each occurrence and re-creates the missing or unknown dialogue.

Scenes include, for example, Roosevelt’s meeting with Joe Kennedy in the early fall of 1940. Truman meeting with General MacArthur in early 1951. A meeting between Robert and John Kennedy in November 1963. A private meeting between Lyndon Johnson and reporters in the summer of 1965. A dialogue between Nixon and John Dean in the spring of 1973. An exchange between Reagan and Gorbachev in Reykavik, Iceland. George W. Bush and his advisers in November 2000, and again in 2012.

Our Time is an unorthodox dramatic look at America: how it was, is becoming, and may well be after 70 plus years of war, crisis, and the drive for empire.

posted January 9, 2005
‘1934: The Musical’

The play, "1934: The Musical" is a two act, two hour musical production in fifteen scenes, with an ensemble cast of thirteen, on the general theme of maritime workers—longshoremen, sailors, marine engineers, and others—on the San Francisco waterfront during the Great Maritime Strike of 1934.

Derived and expanded from the play above, the full-length musical "1934" features10 original new labor songs sung in various contemporary styles (rock, jazz-fusion, hip-hop, spoken word) as well as historic-traditional (sea shanty, folk, ballad, gospel). The play includes the extensive use of a chorus of 3 singers-dancers who sing counterpoint to the cast and perform the choreography in contemporary dance styles. "1934" also employs various visual arts and multimedia integrated into the dialogue and music of the play, such as extended photo and video montage employing historic archived photos and film clips of San Francisco, its waterfront, and the strike.

“1934″ is a musical that attempts to create a new form in American theater by melding three distinct traditions: first, the rich original traditions of American musical theater; second, Epic Theater with its focus on ideas and history; and third, integrating multi-media visual arts photo and live montage.

"1934" creates an American musical theater analogue to the musical, "Les Miserables," substituting the theme of ’solidarity’ for the eighteenth century idea of ‘liberte, egalite, fraternite.’ The play is a story of the maritime workers of that city, and their struggle to survive and maintain dignity during difficult times. "1934" is about the resiliency and determination of the American spirit, about men and women who, despite great hardship and resistance to their efforts to improve their condition, were able to rise above the insurmountable forces arrayed against them in 1934. It is about the discovery of the meaning of solidarity and how that discovery enabled maritime workers and their families to survive in the great personal test of their lives that was the great San Francisco maritime strike of 1934.

posted January 9, 2005
‘Fire on Pier 32′

reviewed by Larry Shoup in the ILWU DISPATCHER, March 2004

The many-faceted play "Fire on Pier 32" takes its title from a dramatic historical event. Worker demands for an organized voice on the waterfront during the crisis of the Great Depression led longshoremen to burn their company union contract books, the infamous "blue books," on San Francisco’s Pier 32 in 1933.

This collective act of defiance was pivotal in the history of both the International Longshore and Warehouse Union (ILWU) and the larger American labor movement. The blue books were concrete representations of the slave-like conditions imposed on working people. Their burning was a mass act of rebellion that posed larger questions of the union shop, of how jobs were to be allocated, (the workers’ demand for a union-controlled hiring hall),of pay and pensions, as well as bigger social and political questions.

Longshore Workers March Down Market St.

There was no turning back for the courageous workers who organized this waterfront bonfire. Their lives were now committed to the concept of democratic industrial unionism by and for the workers, and they now survived only through solidarity and struggle, through building their union. Their direct action and the actions of others around the country during the 1930s breathed life into a near moribund labor movement, showing that the way forward was militant democratic industrial unionism, organizing all workers irrespective of skill, race, gender or status.

The history of the ILWU represents one of the purest expressions of class consciousness and class militancy in the U.S., making its past, present and future of immense interest to us all. Perhaps no union in the U.S. has a more inspirational history for advocates as working people, real democracy and social justice. "Fire on Pier 32" reviews this dramatic history in three acts, with a cast of twelve, over two-and-a-half hours, covering the ILWU story from 1933 to 2003. It is about repeated employer offensives against labor and organized, militant solidarity as the only effective union response.

The play begins with the 1934 maritime and San Francisco general strike, then covers the epic "march inland" to organize warehouse workers, the successful organizing in Hawaii, and the great strikes of 1948 and 1971, using solidarity to turn back successive employer offensives. Final scenes of Act 3 include the lockout of 2002, when the union’s solidarity and strength was tested as the ILWU had to face down both the corporate bosses and the Bush faction of the national power structure.

In "Fire" National Writers Union playwright Jack Rasmus uses the Epic and American Musical theater traditions, as well as historic photo montage, to capture the conflict, spontaneity and passion of varied situations as the ILWU leadership and the rank and file collectively made history together. By establishing context using a narrator and ILWU archive photographs projected on an overhead screen, along with longshore workers and their key leaders as central characters, Rasmus is able to educate by provoking critical thinking and raising consciousness about social, economic and political relationships. His portrayals of boss and politician scheming at secret meetings expose the totalitarian impulses and venality of those who rule the corporate capitalist system. In another scene he shows how solidarity and the union’s collective democratic power enforce safety standards and make a real difference in people’s daily lives on the job.

At the same time, "Fire" entertains, with six new songs in contemporary musical styles, performed by a chorus of three singers-dancers and the cast of actors. The lyrics and music of the play’s two theme songs, "The Song of Solidarity and "Song of the New Unionism," are particularly memorable, representing in musical form the main premise of the play. Other key songs include "The Song of Desperation," "Government Man," "The Web," and "Moving the Money Around." These songs focus on secondary themes: government always siding with the bosses, the infamous Taft-Hartley law and how the corporations play games during negotiations.

The acting is also outstanding. "Fire’s" central protagonists, Frank and Joe, are two young workers who grow and develop as they build a union that resists corporate attacks through solidarity. Their passionate portrayals of the rank and file helps us feel in our guts what it must have been like to be a worker with only his fists, courageously facing police and National Guard machine guns and tanks during the decisive battles of July 1934.

This play is a powerfully important contribution to the entire American labor movement. In "Fire" historical events and the union movement live again through art, allowing our collective history to emerge clear and true. We see the personal and social transformations that take place as workers and their leaders debate the strategy and tactics of resistance while facing the manoeuvres of the bosses and the betrayals of some corrupted leaders.

The play succeeds in giving a human face and emotion to the meaning of solidarity—born of struggle, nurtured by sacrifice and cherished forever in the hearts of those who come to know it as more than just a concept. The universality of Rasmus’ art helps us see deeper truths about ourselves and our current predicament. The result is a useable past, helping us see that our ultimate goal must be democratizing the world, confronting the corporate capitalist usurpation of our inalienable rights and emancipating all working people everywhere.

It has been said that the theater houses a nation’s soul. If this is true, it can be said that "Fire on Pier 32" is one place where the soul of American labor resides. "Fire" is now on video and DVD, get a copy and see it with your union brothers and sisters. It is wonderfully entertaining and instructive at a time when we face the Bush-Leaguing and Wal-Marting of America.



About the Reviewer
Larry Shoup grew up in a union household, his father was a member of the Machinists Union. He has had a varied work career and has been a member of both the old Retail Clerks Union (today’s UFCW) and American Federation of Teachers. He now makes his living writing and is a member of the National Writers Union, serving on its steering committee and as its delegate to the Alameda County Central Labor Council. Shoup has written three books and numerous magazine articles. He is currently working on his fourth book: "Rulers and Resisters: A People’s History of California."

posted February 10, 2005
Articles: “The Emerging ‘EPIC’ Recession"…"How to Hide a Declining Economy"…"Bailing Out Fannie Mae and Freddie Mac-Financial Crisis Phase Two"…"Is the Economic Crisis Over–Or Just Begun?"…"From Financial Crisis to Global Recession, Parts 1 and 2″… “The Trillion Dollar Income Shift”


posted July 19, 2005
Review of THE WAR AT HOME by Laurence H. Shoup

The War At Home: The Corporate Offensive From Ronald Reagan to George W. Bush
by Jack Rasmus
Kyklos Productions, San Ramon, California, 2005, 534 pp.

REVIEWED BY Laurence H. Shoup, “Z” Magazine, October 2005

The dominant institution in American society is the corporation, an instrument of aggrandizement for the few that enriches its already wealthy owners through a never ending process of commodification and privatization. The corporation’s goal is to make everything, even life itself, into a salable commodity, and it tries to turn every type of public property into private property, owned by and for the few. As a result, the earth and all of its life giving resources, from land and water to ores and oil, is being privatized into fewer and fewer hands, with dire consequences for numerous life forms worldwide, including billions of poverty stricken human beings. Current statistics illustrate how successful the corporation has been in helping the several hundred thousand families that make up the core of the corporate rich to reach a level of wealth and power beyond what any ruling class has ever known. The U.S. corporate rich, the top 1% of the population, holds nearly 40% of the country’s wealth, the top 10% over 70%, while the bottom 80%, making up the core of the working population, controls only 16%.

Not only is inequality in America grotesque, it is increasing due to an ongoing economic class war on poor and working people launched about twenty-five years ago by our nation’s dominant corporations. This class war has been very successful for the rich. As billionaire Warren Buffet recent exclaimed: “my class is clearly winning”. Working people, on the other hand, are clear losing. The corporate class war has been a disaster for the vast majority of our people.

In an important new book, THE WAR AT HOME: THE CORPORATE OFFENSIVE FROM RONALD REAGAN TO GEORGE W. BUSH, Jack Rasmus explores these key themes. Filled with facts and analysis, including 45 tables and 540 endnotes, and coming at a key historical moment, THE WAR AT HOME comprehensively illustrates the all-sided corporate attack on working people and their leading organizations conducted both historically and since 1980. In so doing, he makes a major contribution to our understanding of what has been going on, illustrating in depth how every societal institution which supposedly promotes the general welfare, from government at all levels, down through the Democratic Party and its trade union allies, has failed to protect the American working class from the disastrous consequences of unbridled corporate rule.

Rasmus uses the theme of periodic corporate offensives to good effect in reviewing the history of the last century to illustrate how we got to our present predicament. He sees four different corporate offensives since the 1890s, the latest and ongoing one dating from about 1980. In chapters which form the core of the book, Rasmus focuses on how the corporate power structure, using both top down legislation and bottom up actions at the point of production, has, over the past thirty years, been able to transfer about $9 trillion from over 100 million working class Americans to the wealthiest 5% of households. This has been done through tax cuts for the corporations and the rich (for example, the corporate tax rate was 23% in 1969 but is now only 7%), along with tax increases for workers; through ‘free trade’ and runaway shops, which has cost our country ten million jobs, seriously undermining our unions; through further reducing wages by contingent employment, reducing overtime pay and not raising the pathetically low minimum wage; through forcing workers to pay for health care or do without; and through reducing or eliminating pension benefits and stealing the Social Security surplus. Now they are even boldly attempting to privatize this program. Rasmus also suggests how to turn around the ongoing rout and disorganization of the U.S. working class, offering ‘suggested solutions’ at the end of most chapters, along with useful theoretical discussions of some key issues such as the ideology of ‘free trade’.

Rasmus also points out how American democracy itself is now threatened by the so-called ‘Patriot Act’ and the ‘War on Terror’ resulting, together with the impacts of the corporate offensive, in our nation’s most serious economic cultural and political crisis since the 1850s. Rasmus argues that part of this crisis involves the Democratic Party, which is increasingly influenced by corporate donations and lobbyists, is adrift with no clear ideology, or mobilizing approach to politics, and represents a weak ‘Republican lite’ approach overall. Largely taken over by the pro-corporate Democratic Leadership Conference (DLC) in the late 1980s, Rasmus correctly calls the Democrats an ‘organizational ally’, a ‘junior partner’, and frequent supporter of important aspects of the current Corporate Offensive. The War At Home documents key examples of this support, such as NAFTA, the 2000 trade deal with China, the sellout of health care for all in 1992-94, the theft of the Social Security surplus, corporate tax cuts, and two trillion dollars in tax cuts for the rich during George W. Bush’s first term alone. By 2004 the Democratic retreat from pro-working class economic positions had created such a vacuum that its former base had become confused and vulnerable to right wing appeals on cultural/social/religious issues. This is illustrated by 2004 poll numbers showing that core working class voters, those with a high school or less education, supported Bush over Kerry 57% to 38%.

Rasmus concludes THE WAR AT HOME by focusing on a reorganization of the AFL-CIO as the hope for a renewal of progressive class politics in America, proposing his own plan for restructuring the labor movement and its main federation. He points out that for at least thirty years the AFL-CIO’s political strategy has been characterized by “…an almost blind reliance on the electoral fortunes of the Democratic Party, to the exclusion of other forms of political and community organizing or inter-union coalition building” (p. 459).

During this same period probably several billion dollars in resources have been given by the union movement to Democratic candidates instead of organizing and educating working people for an independent fight back based on the needs of the majority. As a result, there has been no coordinated response to the Corporate Offensive, with the dire results that Rasmus documents so thoroughly. To remedy this, Rasmus proposes that to rebuild union and worker power requires a rank and file grass roots democratic movement with an effective membership base working on solidarity activities at the community and point of production level, and implementing a new, “radical transformation of the organizing process” itself (p. 470).

To successfully achieve this requires a fundamental restructuring of the AFL-CIO. At the core of the Rasmus proposal is the creation of an ‘American Workers Congress’, a new legislative body gathered from the state and local levels to set overall policy quarterly, plus two new union structures replacing the AFL-CIO. These are the ‘American Federation of Unions’ with the primary task of political action, including elections, as its main focus, and the ‘American Council of Unions’ with organizing and other activities at the point of production as its main focus.

To implement this at the grass roots level, what Rasmus calls ‘Local Mobilization Committees’, composed equally of union and community forces, would drive local solidarity activities like strike and boycott coordination, major cross-union organizing drives against companies like Wal-Mart, anti-corporate campaigns, demonstrations and actions in defense of community interests, and similar point of production focused activities. Union and community groups would have equal weight in both the membership and leadership of these committees. A new kind of cross-union and even union-community membership would evolve, producing a new layer of ’shock troops’ for labor. And whereas current Central Labor Councils would carry out the political organizing tasks of the American Federation of Unions, the Local Mobilization Committees would carry out the point of production solidarity actions and report to the American Council of Unions in the new reorganized structure. Both parallel structures would cooperate closely but essentially remain independent in carrying out their primary focus and missions, whether political or point of production.

Rasmus also weighs in on the ‘union density’ debate, suggesting that to increase density and potential power, sectoral unions would need to begin to develop. At first voluntary and in a loose federated structure, such unions would operate within the American Council of Unions to enforce coordinated bargaining, develop organizing strategy and direction, resolve union jurisdiction issues, etc.. He sees the eventual necessity, however, of one union in all of transport (trucking, longshore, railroad, airlines, etc.), one union in all of health care, in hospitality, manufacturing, and so on. Neither craft or even industrial unions are adequate to deal with global corporate forms of organization. But the process of developing sectoral unions must be evolutional and voluntary, in his view, not forced from the top down.

One limitation of THE WAR AT HOME is the failure to discuss and suggest possible solutions to one of the central dilemmas facing the left in America: how to escape the clutches of the DLC/Corporate-controlled Democratic Party. There are alternative parties (the Green Party and the Labor Party come to mind) with solid programs now struggling to be recognized as the party of, by and for the working class. An infusion of major labor support would instantly make one, or a merger of these two major players, a viable alternative. There are also those who argue that the political system, with its corrupt financing, winner take all structure, non-transparent voting machines, and partisan political supervision is fraudulent at its core and should be boycotted as not democratic enough even to participate in. A creative discussion of the entire political situation to stimulate a larger debate about what to do in this key area is lacking in the book.

Despite a few shortcomings, THE WAR AT HOME is a path breaking work which will stand as a milestone on the road to a fight back by and for working people, the vast majority of the American population. Jack Rasmus has performed a major service to the movement by starting what needs to be a great debate about our collective future. Those who do not want us to connect the dots about the profound transformation now occurring due to the economic warfare of the corporate rich hope that the majority now being marginalized into oblivion never find out about and read this book. Of course, this is the very reason that it is so important that we all should read it and spread the word about The War At Home.

Laurence H. Shoup is an Historian and author of the book, Imperial Brain Trust: The Council on Foreign Relations and U.S. Foreign Policy.

posted July 20, 2005
Review of THE WAR AT HOME by Harvey Schwartz

The War At Home: The Corporate Offensive From Ronald Reagan to George W. Bush
by Jack Rasmus
Kyklos Productions, San Ramon, California, 2005, 534 pp.

REVIEWED by Harvey Schwartz
Curator, ILWU Oral History Collection and Sam Kagel Historian
Labor Archives and Research Center, San Francisco State University

Did you like Howard Zinns, A PEOPLE’S HISTORY OF THE UNITED STATES? If so, you are going to love the new book by Jack Rasmus, THE WAR AT HOME: THE CORPORATE OFFENSIVE FROM RONALD REAGAN TO GEORGE W. BUSH. Rasmus is a former local union president and a seasoned organizer who once directed a community college labor studies program. He also holds a Ph.D. in political economy. Here he employs the tools of that exacting science with rigor and insight to analyze the victorious thrust in recent decades of corporate power into every phase of American social, political, and economic life.

Like Zinn, Rasmus sees American history as a continuous struggle between the “haves” and the “have nots.” Zinn traces the rise of elite power and the organized response of various groups of exploited people from Columbus to, in the most recent edition of his best seller, Bush II. Rasmus would not dispute that approach to the past. On the contrary, by going into serious depth in several key areas of American life since Reagan, Rasmus effectively picks up the story where Zinn leaves off.

Rasmus differs from Zinn in looking at the political and economic policies of corporate America and the resulting deleterious impact on workers and unions rather than at any specific people’s opposition movements. Consequently, his book is an excellent complement and companion to Zinn’s popular work. Rasmus seeks to pull together the various phrases of what he calls “the corporate offensive” in a readable and comprehensive account that workers, progressive activists, and other non-specialists will find useful and informative. In this I think he succeeds admirably.

THE WAR AT HOME is not driven by any conspiracy theory of history. Instead, after briefly carrying the story back to 1929, Rasmus traces ebbs and flows in a quite public corporate push that more or less parallels the ascendancy of Republican presidents since Richard Nixon.

Early on, Rasmus also points out that acknowledging any such thing as “class war” is anathema to mainstream American politicians and media opinion-makers. He then convincingly demonstrates exactly how the elites have profited since 1980 at the expense of working class families in income and wage distribution, job loss, debasement and outsourcing, federal tax, trade, labor policies, and health care and pension benefits.

The final chapter of THE WAR AT HOME focuses on the evaporation of the once vast Social Security surplus over the last twenty-five years. This inquiry is especially riveting given President George W. Bush’s crusade to privatize and essentially hamstring the Social Security program, that best known remaining legacy of Franklin D. Roosevelt’s New Deal.

Rasmus has a lot to complain about, but he does not let matters drop there. He has suggestions for dealing with the corporate offensive at the end of several of his chapters, and a real battle plan for organized labor in his lengthy conclusion. There he challenges the AFL-CIO to improve the coordination of its member unions in several key areas.

Intending to stimulate fruitful discussion within the ranks of labor itself, Rasmus holds that American unions must henceforth work together and perhaps restructure their movement at the grass roots level. Only then, he argues, can they hope to expand significantly and to recapture the kinds of industry-wide or regional-wide collective bargaining agreements that re-enforced union power in much of the United States before 1980.

All this should give you a sense of the inclusive sweep of THE WAR AT HOME. The final verdict, it seems to me, is that if you want to get beyond the “big G” hot button issues successfully exploited by various reactionary politicians in recent campaigns—God, gays, guns and the like—and find out what has really been going on, give THE WAR AT HOME a look. It has some great labor cartoons by Jim Swanson and a few simple graphs even I was able to follow. Most important, it is a sobering and path-breaking effort to “put it all in one place.” As such, it is clearly a valuable service to “the people” in what is most assuredly their time of need.

THE DISPATCHER, June 2005

posted July 20, 2005
What Reviewers Say About THE WAR AT HOME

Reviewers Comments

“Did you like Howard Zinns, A People’s History of the United States? If so, you are going to love the new book by Jack Rasmus, THE WAR AT HOME: The Corporate Offensive From Ronald Reagan to George W. Bush. Rasmus effectively picks up the story where Zinn leaves off….His book is an excellent complement and companion to Zinn’s popular work….Give THE WAR AT HOME a look. It is a sobering and path-breaking effort to ‘put it all in one place’.”

Harvey Schwartz,
Curator, ILWU Oral History Collection
Labor Archives and Research Center
San Francisco State University

“A hard-hitting, full-scale account of the corporate assault on American working people. No one seeing all the strands of that attack brought together in one place can feel anything but outrage. Rasmus’s stirring book is for labor activists, but its effect will be to create a lot more labor activists than there already are. A great job!”

David Brody,
Professor Emeritus of History
University of California, Davis

“THE WAR AT HOME is a path-breaking work which will stand as a milestone on the road to a fight back by and for working people….Jack Rasmus has performed a major service to the movement by starting what needs to be a great debate about our collective future.…we all should read it and spread the word about THE WAR AT HOME.”

Laurence H. Shoup, Ph.D. History
Author, Imperial Brain Trust: The Council
On Foreign Relations and U.S. Foreign
Policy

posted July 21, 2005
The Road Back to 1929

“THE ROAD BACK TO 1929”
copyright 2005 by Jack Rasmus
“Z” Magazine, November, 2004

For the first time since 1929, more jobs were lost than created under a sitting President. Officially, more than a million jobs disappeared under Bush from January 2001 through October 2004; unofficially, many more. Almost 3 million of the jobs lost were well paid, often unionized, manufacturing and related jobs, replaced by nearly 2 million mostly low paid service jobs—at least a third of which were part time or temporary with little or no benefits.

But the permanent loss of jobs is not the only similarity with 1929, the year that marked the beginning of the Great Depression. The percent of unionized workers today in the private sectors in the U.S. is less than 10%, below the 11% figure in 1929. And just as 1929 marked the beginning of a decline in hourly wages and incomes for working class Americans, so too have real wages and take home pay for workers steadily fallen under Bush from 2001 through 2003; a decline now accelerating in 2004.

In 1970 the richest 13,000 of all American taxpaying households had incomes approximately 100 times that of the average working American; today the richest 13,000 enjoy an income 560 times that of the average working class taxpayer—about equivalent to the share they enjoyed in 1929 on the eve of the Great Depression.

The Historic Shift in Incomes: 1970-2000

Since the 1970s there has been an enormous shift in the distribution of national income generated each year—from working class Americans who earn an hourly wage to those who make their living from profits, dividends, interest payments, stock trades, inheritance, and other forms of capital.

The richest 10% of all taxpaying households in the U.S. saw their share of total annual income rise from 33% in 1970 to 48% by 2000—a gain of 15%. Conversely, the remaining 90% of the approximately 134 million taxpayers saw their share of national income each year decline by the same 15%–from 67% to 52%.

Fifteen percent may seem like a small number, but when it is 15% of a $6.2 trillion annual U.S. economy it amounts to approximately $900 billion a year. Had the 15% shift not occurred, each of the approximately 100 million working class Americans who make their living almost exclusively from hourly wages today would be getting $9,000 more in their paychecks this year.

Even more noteworthy is that the 15% / $900 billion is not divided proportionately among the richest 10% taxpayers. The richest 90-95% (the bottom half of the richest 10%) realized no increase in their share of national income from 1973 to 2000, according to the US Census Bureau. Although their incomes rose substantially over the period, their share of the total income pie was still flat.

All of the 15% / $900 billion transferred from the 100 million working class Americans by the year 2000 went to the richest 5% of taxpayers, a group with annual incomes of $178,067 and above. Moreover, within their ranks, the top 1%, or roughly 1.3 million households with annual incomes ranging from $384,192 to $777,450, enjoyed a 47% increase in their share of national income. At the pinnacle of it all were the richest 13,000 households, who had a huge 500% increase in their share of national income.

Assuming even a conservative $300 billion in shifted incomes on average per year, the result is still $9-$10 trillion over the last three decades, 1970-2000, transferred from working class Americans to the wealthiest 5% households.

And all this before the onset of the recent Bush recession.

Accelerating the Incomes Shift: 2001-2004

The roughly 100 million taxpayers who make up the solid core of the American working class who have jobs, or who live off of pensions and social security they earned when they were working, earn no more than $76,000 a year in annual income from all sources. They are the 80% of the taxpaying households in the country with annual incomes below that figure. They own less than 6% of the total stock shares in the country and that is largely tied up in their pension plans. They earn their income almost exclusively from hourly wages, by working overtime or double jobs, or by having other family members enter the workforce to supplement the family’s household income.

Since 2001 working class families with median income of $43,000 watched as their annual income fell $1,500 over the past three years, a drop of 3.4%. Those earning less than the $43,000 median experienced an even greater decline of 6.0% since 2001.

The shift in national income since 1970 and the accelerating decline in working class family incomes since 2000 were not always the case.

A Comparison: 1947-1973

From 1947 to 1973 the median household income rose each year about 4% on average. That gain was roughly equal to the annual average 4% gain in productivity during that same period.

But from 1973 on the growth of American workers’ real incomes has been flat or declining despite the continued rise in productivity between 1973-2000 and the accelerating productivity gains from 2001-2004.

From 1973-2002 workers received only one-third of the total gains in productivity. Output per person in the U.S. is the highest in the industrialized world, in fact more than 10% higher than output per person in the next closest advanced European economy.
Nevertheless, for the past four years, 2001-2004, with productivity rising on average 4% per year—twice the yearly rate compared to the ‘boom’ years of the late 1990s—they’ve received virtually none of the gains.

As one well-known business columnist from the New York Times reported recently, “The benefits of productivity gains and economic growth are flowing to profits, not worker compensation. The fat cats are getting fatter, while workers…are watching the curtain come down on the heralded American dream”.

Some Explanations and Causes

There are several major explanations for this massive, historic shift in incomes from working class America to the rich and super-rich over the past quarter century, and the current accelerating decline in those incomes under Bush since 2001. It didn’t happen by accident or coincidence, but was the result of conscious policies, planned and implemented in the corporate boardrooms, in Congress, and in the Executive halls of government.

Looming large among the various causes are the so-called ‘Free Trade’ policies from Presidents Reagan through Bush that have resulted in the loss of five million high paid, mostly unionized jobs in the manufacturing sector since 1980 and their partial replacement with much lower paid service, part-time, and temporary work.

In addition, there’s the successful Corporate lobbying strategy aimed at holding down the minimum wage for the last quarter century. With few adjustments over the past 25 years, the minimum wage today in real terms has declined by more than 30%.

The de-unionizing of the American work force has also played a major role in holding down wages and thus workers’ incomes. The decline in union membership in the private sector to less than 10% compares to a percentage nearly twice that at the start of the Reagan years. That decline in union ‘density’ is a major reason why real hourly wages are less today than they were in 1979, and still continue to fall.

Unions as an effective force for raising hourly wages will likely weaken further, as they are being forced today in contract after contract negotiation to focus by necessity on maintaining health benefits in lieu of wage increases. In the process, they are being locked into longer and longer term contract agreements, often five and six years or more, in exchange for maintaining health benefits demanded by their members. The consequence is a ticking incomes time bomb. As inflation rises over the term of these extended contract agreements, the minimal if any negotiated increases in wage rates will mean hourly real wages in the near future will likely decline even faster than during 2001-2004.

When combined with intense political pressure to prevent any increase in the minimum wage, with the Bush administration’s current efforts to end overtime pay for millions by means of executive order, with the continuing corporate practice of exporting high pay manufacturing jobs overseas, and with the growing trend to replace full time jobs with part time and temporary employment—the continuing decline in real hourly wages in the U.S. raises serious doubts about the ability of the U.S. economy to generate incomes sufficient to sustain consumer spending and consequent job creation. A chronic, self-sustaining downward spiral of incomes may be now emerging in the U.S., with serious consequences for the US economy in general.

Coping With Collapsing Incomes: Longer Hours—Greater Debt

To offset the stagnation and decline in their hourly wages, working class families the past two decades have resorted to two alternatives. The first has been to try to protect incomes by working more hours by taking on additional part time jobs, working more overtime, or, by having spouses and other family members take jobs. Until the recent recession, Americans worked far more hours than workers in any of the other thirteen largest industrial nations. While workers in other countries reduced their hours of work significantly over the past two decades, American workers increased theirs by wide margins.

The other major solution undertaken by American workers to offset the decline of family incomes has been to assume a massive increase in personal credit and indebtedness. Americans are now $9 trillion dollars in debt, 40% of which was taken on in just the last four years. No less than $2 trillion of which is credit card debt. And the bankruptcy rate rises steadily every quarter.

Both solutions—working more hours and taking on more debt—appear to be approaching their limits, however. Family hours worked fell by 5.5%, or 173 hours a year, from 2000 to 2003 reversing the hours and income gains of the late 1990s. In addition, the rate at which spouses are entering the workforce to supplement family hours of work has declined sharply in the last decade.

In short, working more hours and going further in debt in order to stave off faster declines in family incomes than has already been occurring may be coming to an end.

Exacerbating the overall incomes shift the last two decades is the record surge in executive and management compensation. In the early 1980s the typical American CEO earned about 40 times the pay of his average employee. Today, he earns more than 400 and, in some surveys, as much as 500 times. The surge in income at the top levels of corporate management has filtered down to a lesser, but still significant, extent to second-tier management as well. Apart from executive compensation, capital incomes in general have soared the past 15 years with booms in the stock and bond markets, real estate, and foreign investment.

Turning the Tax System On Its Head: 1970-2000

But perhaps the biggest reason for the historic shift in shares of national income has been the radical re-structuring of the tax system in America the past quarter century, from Reagan to Bush. The restructuring has raised the total burden of taxation on working class families while lifting it dramatically on the rich and very rich. The historic shift in incomes described above could not have been possible without the accompanying, equally historic shift in the total tax burden in America.

It is not coincidental, for example, that the top income tax bracket in 1970 was 70% and today is only 35%. Similarly the tax rate on capital gains, from which the rich earn virtually all their income, was 28% as recently as 1987 but today is only 15%. Similar reductions in tax rates for dividends, estate taxes, and property taxes for the wealthy have also been implemented, while tax shelters have proliferated and IRS audit rates for the rich have declined.

Three decades ago the corporate income tax produced 20% of all federal revenues; today it produces only 7%. In 2000, according to IRS data, 63% of all companies in the US reported they paid no corporate tax from 1996 through 2000 on revenues totaling $2.5 trillion. And the effective tax rate for the 37% of companies that did pay some taxes in 2002 was only 12%, compared to 18% as recently as 1995.

Foreign tax shelters for companies and individuals abound. In 1983 offshore tax havens sheltered $200 billion. Today $5 trillion. Of 370,000 corporations registered in Panama, only 340 bothered to file income tax reports in the US. And according to a study by the Federal Reserve Bank of New York, U.S. deposits in the Cayman Islands tax haven amount now to more than $1 trillion and are growing by $120 billion a year.

In contrast, the payroll tax rate, which all working class Americans pay, has been raised since 1983 to the current 12.4% and the income on which it is levied has been raised year after year to nearly $90,000. Since the 100 million core working class Americans earn well less than $90,000, they pay the payroll tax on all their annual income. For millions, the payroll tax reduces their take home income more than their income tax payment. The payroll tax constitutes 40% of all federal tax revenues today, when it once accounted for only 10% of such revenues before 1980.

Politicians declared with much fanfare in 1983 that an increase in the payroll tax was necessary to save Social Security, and in 1992 Congress passed a rule to put the social security surplus created by it in a ‘lock box’. But the ‘lock box’ has been broken into every year and the $1.4 trillion surplus it generated since 1983 is gone—to pay for federal budget deficits to finance wars and tax cuts for the rich.

Now Bush, Federal Reserve Chairman, Alan Greenspan, and others are loudly telling the American worker that Social Security is in danger once again and without sufficient funds. The retirement age must be raised and benefit levels cut. Ironically, it was the same Greenspan who in 1983 headed the Presidential Commission to ‘save Social Security’, led the charge to raise the payroll tax, and assured everyone that Social Security would now be safe for a century to come once the payroll tax were raised.

As one listened to the debates in recent months between Bush and Kerry about how to pay for