Capitalist Labor Day 2009

Although I vow to stop doing this, I can’t help but tune in to the train wreck known as cable news. The nasty part of it is the split screen with one guy representing the left and another guy representing the right. The anchors don’t even try hiding it.

While it’s relatively new in the news business, the rift between left and right is still the same tiresome argument between the working class and the capitalist class. And just by mentioning that I accept that the freepers will label me a Marxist – have it it boys. Because labor significantly outnumbers the capitalists, the message from the right is increasingly convoluted. It has to be simply because they can’t blatantly come out and promote policies for lower wages, more tax shelters and more government protection of monopolies and oligopolies.

Let’s be clear: most people in elected office represent the monopolies. They don’t represent people. Ultimately, Democrats and Republicans alike, if they are in office, are defending the capitalist class. Let’s be equally clear that defending the capitalist class is not the same as defending capitalism. The latter is a system that requires an ownership class and a worker class. Our system today tilts the playing field toward one class.

This is how we’ve been raised for a generation – if we take care of the almighty corporation (which exists to give profits to capitalists) all will be fine. What’s good for Wall Street is good for Main Street. Right?

That’s why we’ve been so diligent in exporting our manufacturing base to third world countries. That’s why we’ve allowed the bottom to fall out of the wage market. And it’s been so successful that today we are approaching double-digit unemployment.

This Labor Day brings with it some slightly encouraging news. After decades of dismantling the country’s manufacturing base and thus its labor force, there are some signs of improvement. Wages appear to be up and the earnings gap for women and minorities is shrinking.

The CEO-to-worker earnings ratio is down from its record high ratio of 525:1 in 2000 to 317:1 in 2008. Translated: for every dollar a worker earns, a CEO earns $317.

With that ratio on the decline and other gaps narrowing, it appears the economy may be headed toward stability. More importantly, domestic manufacturing increased in the second quarter this year.

Great news. Not so fast.

While GDP growth is actually negative for this year (-6.4 percent in Q1 and -1 percent in Q2), productivity is rising at a 6.6 percent annual rate. Productivity is the value of output (market sales) per cost of input (wages and equipment). It is a leading indicator of income to the capitalist class.

So as our GDP shrinks and our wages are rising at a more modest rate, how are we going to buy all the goods that were produced so efficiently in the second quarter?