Squeezing money out of those with little

Saturday, November 29, 2008 - 11:00

Going to Extremes: Notes from a Divided Nation

By Barbara Ehrenreich

Granta, 2008

224 pages, $26.95

I first read Barbara Ehrenreich's books as an undergraduate women's studies student in the 1980s. She is an author of fifteen titles, many tackling feminist issues.

However, her recent bestsellers Nickel and Dimed: Undercover in Low-Wage USA and Bait and Switch: The futile pursuit of the Corporate Dream, deal with the increasing chasm between rich and poor in the USA, one of the world's wealthiest countries.

In Going to Extremes: Notes from a divided nation, Ehrenreich has put together a collection of short comment pieces on life in the US. She shines a spotlight on issues such as healthcare, social inequality, the treatment of "illegal" immigrants, housing shortages, racism, gay marriage, abortion and religion.

Unfortunately, the short length of each chapter doesn't lend itself to developing an analytical framework, so the book as a whole was a little lacking for me. However, it does work on the level of short satirical pieces that can be read easily and get to the heart of the matter very quickly.

Examples of the capitalist system privatising profits and collectivising costs are emerging widely now. Ehrenreich draws on many examples and illustrates these well.

The peaks of great wealth she describes, emerging as the valleys of poverty sank lower, were not the result of some kind of "natural forces" at play. Conscious government intervention has accelerated the reshaping of the social landscape in this way over the past decade.

In 2001 the US government gave the airlines a $20 billion post-9/11 bailout, with nothing for the ninety thousand freshly laid-off airline employees. In another upward redistribution of wealth, the administration cut taxes for the wealthiest people in the US, while cutting back on services and programs, such as financial aid, for everyone else.

Ehrenreich points out the greatest capitalist innovation of the past decades has been in the realm of squeezing money out of those who have little to spare: taking away workers' pensions and benefits to swell profits, offering easy credit on dubious terms, raising insurance premiums and refusing to insure those who might ever make a claim.

While we know CEO salaries have increased dramatically, Going to Extremes documents just how large that increase has been. Thirty years ago the CEOs of major US companies earned 80 percent more, on average, than the third-highest-paid executives. By the early part of the 21st century, however, the gap between the CEO and the third in command had ballooned up to 260 percent.

The book also outlines how differences in income are widening in other professions such as academia and the law. As a counterpoint, throughout this period low-wage workers have not seen any wage gains.

As Ehrenreich says, if the economy is growing and wages are not, the money must be going somewhere, and the obvious place to look is up. Way up, in fact.

She cites data showing that those in the bottom 10% of the income distribution have been seeing income gains of only about 1% a year, or a total of 34% between 1972 and 2001. In that same period, those in the top 1% of the income distribution saw a gain of 87% and those in the top 0.01% registered a gain of 497%!

While we in Australia might fear heading into a global economic recession, spare a thought for those in the US who lose their job as unemployment benefits last just 25 weeks in most states. Only a third of people laid-off are covered.

Ehrenreich outlines how, in their greed, the capitalists forgot the lessons Henry Ford learnt. He realised his company would prosper only if his own workers earned enough to buy Fords.

She suggests Wal-Mart, the largest private employer in the US, which has started experiencing a shortage of customers, should look no further than their own cruelly low wages.

Much of the book is written in a humorous and satirical style. In a chapter entitled "Smashing Capitalism", Ehrenreich muses that she wishes she could report that the current attack on capitalism represented a deliberate strategy on the part of the poor. But, as she points out, the current crisis is something the high rollers brought down on themselves.

Despite the humour, the sting is in the facts within each chapter. In her collection of pieces on "declining health", Ehrenreich points out that an estimated 18,000 people in the US die every year because they can't afford or can't qualify for health insurance. That's equivalent to six times the 9/11 carnage every year.

From GLW issue 777