Private Pensions in Crisis
Over the past 2 years of economic crisis the system of workplace benefits in the United States has been under attack from greedy executives as well as prevailing capitalist economics. Pensions have been devalued and many of the funds have failed. Health benefits have become increasingly more expensive, with many companies forcing workers to pay more for their healthcare or refusing to offer it at all.
Through this all, the blame for these problems has been placed squarely on the shoulders of the workers themselves. The myth of the auto worker who makes $70.00 per hour is probably the most popular example, with the capitalist press and government blaming the Unions and the workers for the inability of the Big Three automakers to compete with other companies. If only the company did not have to abide by the Union Wage and benefit scale, they claim, the companies would be free to compete with Japanese and other auto makers who built their factories in right-to-work states where they would not have to worry about unions.
After the union’s formation in the 1930s, the UAW and other CIO unions of the time were very militant and their sit down strikes set the bar for establishing unions in auto plants. However, during World War II, the Federal Government moved towards a government-planned war-time economy, and many unions were forced to accept a no strike pledge and a wage freeze to produce for the war.
Despite the wage freeze, many workers continued to agitate and strike and employers needed to find a way to placate thems. The solution employers found, with the help of the unions, was complimentary benefits, namely pensions and healthcare. Pensions were supposed to be simple. Bosses and workers both pay into a fund, and when workers reach a retirement age they receive a monthly payment from the fund, with the amount based on the number of years of service to the company.
When these plans began, there were far more workers than retirees. So, if a worker was 64 when the pension was created, and they retired at 65, they would receive a full pension despite only paying in for one years worth of benefits. This creates a shortfall, because current workers are paying in and benefits go to the current retirees. Companies promised to make up this difference with a lump sum payment sometime in the future. Instead, the Employers tried to close the gap by investing pension funds for profit and hoping that there would always be more workers than retirees, so the shortfall could be put on the back of the workers, not the company.
During this same time period, the Capitalists worked to find ways to shift production towards highly mechanized factories which needed fewer and fewer workers. This technological change led to higher profits and efficiency and less workers to pay for all of the retirees. Eventually, the capitalist system took its toll and the situation reversed. Now retirees vastly out-number the active work-force and for each person working in the auto industry, there are several retirees collecting pensions. The system is short a great deal of money, and the companies claim that they don’t have to make up the difference.
The companies that once masqueraded as benevolent patriarchs are now looking for ways to skip out on the check after years of dining at the worker’s table. Hundreds of thousands of retirees and workers are wholly dependent on these Corporate behemoths, who for years sold the lie that “we are all in this together” and of collaboration between workers and bosses for the benefit of both. Now the companies want to cut them off and destroy their retirement income as well as their access to affordable healthcare.
Putting Worker’s wealth toward the benefit of the Working Class
This privatized benefit system creates what Wobblies at the time called Corporate Feudalism. Corporate Feudalism confuses the interests of the working class with those of the employing class and workers and retirees become wholly dependent on the survival of a single corporation. Corporate failure is tied to the current and future success of working people, and the rhetoric of “we are all in this together” takes hold. Like the serfs in Feudalism, workers produce all for the company, and when they are too old to work anymore, workers are dependent on the benevolent kings of industry to care for them.
Under the capitalist system of wage labor, workers are forced to work for a wage that is far less than the value of what they produce and the Bosses keep the surplus value. This is one of the primary relationships of Capitalism. Under Feudalism, however, there was no currency. In exchange for labor, workers received food, housing, healthcare, and retirement care. Corporate Feudalism mixes these systems, with workers generating greater surplus value for their bosses in exchange for benefits instead of higher wages. If you dare leave the Industrial Plantation, however, your benefits evaporate.
With corporate managed pension funds, this situation gets even worse. Bosses use the workers’ pension money to support other anti-union enterprises and increase class oppression. In addition to the surplus value, workers turn over a portion of their wages to the Boss, who then invests it at their whim, sometimes losing money, and always to the detriment of the workers.
Many workers have greatly benefited from these programs; retirees have lived out their lives without having to work and with expansive medical coverage that is very affordable or free. But now with the system crushing under its own weight and the pyramid turning upside down, it is time to return to the alternative visions that were offered in the 1930s. Wobblies at that time had ideas for regional-based benefit pools, or pools that covered entire industries, with control of the funds resting in a democratic organization based in local communities. As a compliment to the struggle for Industrial Unionism, this would be a struggle for Industrial Pensions, a Pension that moved with you from job to job in a fund that is managed by workers and not bosses.
The goal of these funds would be to ensure that workers do not turn over one dollar more of their money than necessary to the capitalists, and to ensure that workers pension money is used to advance the cause of the working class, not the employing class. Instead, this money could be used to build schools, to make loans to construction projects that use union labor, offer low APR mortgages to union members, or to supply low cost medical treatment in our communities. The most important principle has to be that if the fund will be used for investment, then workers’ money must benefit the working class and not the employing class.
There are potential pitfalls with these models. Managing large sums of money can leads to corruption and bitter arguments. The craft business unions, such as the Carpenters and the Teamsters give us a vision of what that could look like. The answer to these problems, however, is transparency, democracy, and education. If workers will manage their own retirement funds, everyone must know what the fund is being used for, how this will benefit all involved, and most of all, have a democratic say in the process. These other funds lack these elements, and that has lead to drastic problems.
Nonetheless, as we reflect on workers struggle this May Day with the current Corporate Feudalism system collapsing under its own weight, we have an opportunity to look to the future. We can all imagine a world where all workers are able to retire, live in a home, get enough nutritious food to eat, and have access to healthcare and education. But only the destruction of the Capitalist system can ensure the end of instability in all workers’ lives.
Destroying this system of Corporate Feudalism will not, in and of itself, end the capitalist exploitation of workers, but taking back the workers’ wealth and putting it to the benefit of the working class would deal a devastating blow to the capitalist bosses who have profited off of this terrible and manipulative system for so long. We will never destroy Capitalism unless we also destroy Corporate Feudalism!
Two other interesting articles about Pensions:
This past week has been a pretty volatile one in American Politics. Democrats finally passed their Health Care reform package, and President signed it into law; according to the Vice President this is a “Big Deal”. Ok, so Democrats passed the reform that they have been trying to accomplish since the 60s. Carter couldn’t do it, Clinton Couldn’t do it, and Obama pulled it off.
That said, this reform is far from any radical reshaping of the health care system that is needed in this country. This is not the Single Payer system that would lower costs, and take the control of our very living or death away from the private sector; in fact this bill just reinforces the private sectors control of Health Care, and if anything, it should be called the Health Care Bailout of 2010. Insurance companies will now receive mandatory customers, with government subsidy for those that can’t afford to buy their inferior products. They will continue to make huge profits, while finding new ways to deny care to citizens, thereby sentencing them to death.
This is not the system that Progressives in the country wanted; its not even the system that Democrats, or President Obama campaigned on. This bill is a REPUBLICAN BILL!
With President Obama dead set on catering to the minority in both houses of government, he decided to shift the bill as far to the right as his party could take it, and call it a success. This was clearly a tactic to bring on Republican Support, since this Individual Mandate was proposed as an alternative to Single Payer in the 1990s. Then, the Republicans taught President Obama and the Democrats a lesson: Too Much is NEVER enough for the Republicans.
Having successfully shifted the entire healthcare debate to the right, so far right that Liberals were now championing the ideas that they walked away from in the 90s, do you think the Republicans were satisfied? Of course not! Now that they had shifted the debate to the right, center right wasn’t enough, they needed crazy HARD RIGHT in order to be satisfied.
Instead of starting from the bargaining point of Single Payer, and working it down to a broad Public Option, the Democrats started from the position of a weak Public Option, and traded that away for a Pro-Insurance Company, Pro-Capitalist Health Care Bill, right of center like the one signed by Mitt Romney as Governor of Massachusetts. Logically it makes sense, if you incude ideas from your opponents, then some of them will have to support this Bill, after all it includes ideas that some of them have been championing for almost 20 years now.
WRONG! Now, that moderate, center right health care bill is full blown SOCIALISM, COMMUNISM, and an AFFRONT TO GOD! Anyone who votes in favor of it will be honorarily buried in the Kremlin Wall with Stalin and Lenin, where they belong!
So, there is a lesson here for Progressives who want actual change in this country, and there is a lesson for Liberal Democrats as well. Republicans are never satisfied, because the interests that they serve, ALWAYS WANT MORE. More land, more profits, more of everything. Just doing as much as you did last year is not enough, you have to do better or you are on the CURB. The Republicans serve Capitalism efficiently, and they always demand more from their represetatives.
Progressives and Liberals, however, are all about Fell Good Compromise, moving progress a long a little bit, inching the ball forward. The truth is, however, as soon as Obama and the Democrats announced that there would be no Single Payer, there should have been an occupation of every Democratic Senator and Congress Person’s office in favor of Single Payer Health Care. When they all got together, and claimed that only the Public Option was possible, Primary candidates should have been drafted to run on the Single Payer Platform in every district of every supposedly liberal Democrat in the country.
And if the final bill was only a strong Public Option, a well organized Left Wing Movement would have called every “Liberal” who voted for this fake reform out for the fake, insurance company shill that they are.
This is what the Republicans would have done; its what they are doing now. Even though it is flatly impossible, the Republicans are swearing revenge on anyone who voted in favor of the Right Wing Healthcare bill for not being right wing enough. They are promising its repeal in November!
While progressive hang their heads, look at their shoes, and try to figure out how to live with the Right Wing Health Care Bailout of 2010, Republicans are still making noise! Sure, now that the Bill is passed, there is room for the Democrats and progressives on the local and state level to work within its framework and make it better, but better is a relative term.
Until the day comes when Democratic *legislators are looking over their shoulders for progressives, scared to make a vote for a right wing bill because they will be fired, then the debate in this country will continue its rightward shift of the past 20-30 years.
Its time for Progressive to Learn from Republicans, and never be satisfied with any Liberal piece of crap that gets passed, and just be happy that it did. Its time for the Liberal to fear the Left as much as they do the Right.
Governor Christie is riding into town on a new white horse, vowing to cut spending during the recession. According to the New York Times, how will this affect the state?
On Tuesday, he made clear that what he had in mind was a U-turn.
Upending the priorities of his Democratic predecessors, Governor Christie unveiled a budget that would hit the poor, elderly, schoolchildren, college students and inner-city residents hardest, while largely sparing the wealthy and businesses.
Great! Lets balance the budget on the backs of the working people, and give the wealth and businesses a free pass. I’m so glad that New Jersey residents voted out that slimeball, former head of Goldman Sachs governor in favor of this awesome populist who’s goal is to spare the Wealthy and the Corporations from making any sacrifice .
This is going to be a long 4 years for the residents of the Garden State, as long as you are not super rich or a major corporation. If you are one of those, then you are golden.
So, Senator Scott Brown is bringing his big, manly, regular guy who happens to be a real estate lawyer and former nude fashion model – self to Washington. He bought it for hauling lumber, and doing manly stuff, which makes him a regular guy. Except thats not what it is for at all, according to his interview in New York Times Magazine:
“It’s a regular truck.” Yes and no. As Arianna, the younger of his two daughters, told me, he originally purchased it not so he could haul lumber but so he could attach it to a trailer bearing her horse. He soon abandoned that plan. “It’s scary pulling a trailer,”
What a regular guy, you know, driving your daughter to her equestrian events on the weekends, while you are off work as a lawyer, but then getting scared from pulling a trailer? This is the manly, regular man that the GOP claims is a populist destined to set Washington straight?
Well, certainly he does other activities that the GOP would get behind, like being a fashion model, who wears expensive pink leather shorts?
Arianna told me that he showed up for his first real date with her mother, Gail Huff, a TV newscaster to whom he has been married for more than 23 years, in pink leather shorts. It’s family lore.
The pinkish color drained from his face when I asked him about it during a conversation in his campaign office just before we took off in the truck. He clarified that the shorts weren’t something that he went out and purchased — it wasn’t like that at all. “I did the couture shows, and instead of paying in cash, they paid in clothes,” he said. “And one of the things I had to wear were leather shorts. And these happened to be pink.”
As he told the story, he seemed, almost in spite of himself, to get into it. “If I wore these now,” he said, “I’d get shot. But it was the ’80s. Pastels were in. It was all pastel-y.” The shorts went with his tan at the time and a pair of white shoes that he owned, so he gave them a whirl. “Gail comes out and she’s like, ‘Those are pink shorts.’ I said: ‘Yeah, you like them? They’re great. Comfortable. Feel this leather.’ ” With this last phrase, he slowly stroked the side of one of his thighs, apparently miming the gesture he made in front of her.
He emphasized: “This isn’t cheap leather. This is, like, $750 shorts back then.”
Ok, so he’s a rich guy, who was a fashion model, he’s a lawyer, and he’s scared to pull a trailer with his truck. He wears $750.00 (circa 1980′s) leather shorts, and works for clothing instead of money. This is the populist rebuttal to the elitism of President Obama?
On one more note, his wife starred in an awesome music video from the 80s. Just watch it, its amazing.
Hawaii’s employer mandate health care system has many of its citizens covered by a reasonable healthcare system. There’s just one thing that can undermine it: National “Reform”?
It appears that Republicans and Democrats can agree on one item: spying on the American People is a good thing. The two groups voted overwhelmingly together to re-authorize the PATRIOT Act for another year, with no modifications.
I am glad that in this tough time of Partisanship, the Democrats dug deep and worked with the Republicans to advance their agenda. Good work “Liberals”.
Chris Caldwell, editor of the Weekly Standard (someone who I typically would not quote) had a thought provoking article in the Financial Times Weekend edition. In this, he outlines the problems in Washington, that Democrats and Republicans are split into two camps, summarizing neatly:
“For three decades, centrism has been a declining force in American life. Arguments over the sustainability of the postwar welfare state have split politicians into two camps – one keen on consolidating government programmes, the other keen on dismantling them. There is not much room for negotiation here.”
This is a pretty good point that many Liberals cannot seem to grasp. Although the author above wants to dismantle the post war welfare state, at least he makes no apologies for what he believes. The Republican Party is not a responsible partner in creating new government policy; Republicans want to destroy government. They want to dismantle the welfare state, and privatize social security, medicare, and all government services. There is a range as to how fast the programs should be dismantled, but there is now doubt among their caucus: their first priority is to destroy and privatize the government.
There is not much room for negotiation there. And the record of Bipartisanship of the past 8 years not stellar either. As Caldwell points out, the main accomplishments of the Bi-Partisanship of the past 8 years are the following: No Child Left Behind, the Iraq War, and the TARP Bank Bailout, all of which are terribly unpopular with the general population. One that Caldwell leaves out is the appointment of Samuel Alito to the Supreme Court, which directly led to the Citizens United election privatization of 2010. The public disapproves of this by up to 80% in a recent poll.
Bipartisanship has lead to terrible policies, but more so, bipartisanship only appears to lead to Republican Policies. Working together means doing what the Republicans want: dismantle the government, except for the Pentagon, which needs to find reasons to exist and get more funding. Not working together means providing healthcare to citizens, protecting social security, and any number of other government programs.
Its time to get past the bipartisan lie, and start to accomplish something for the base on which President Obama was elected from. It is time to use the power of the government to protect the citizens, and provide them with services, reigning in private power. If this is being Partisan, then so be it.
Apparently, the tax dodge scam of paying workers as independent contractors may be under attack by revenue deprived governments. This is a really positive sign that President Obama may do something positive for working people.
Do you have problems with credit? Why not apply for a card with a 79.9% APR? I guess that credit card reform isn’t working out so well…
I love the Republicans; they separate the whole world into simple good and evil. USA good, terrorists bad. Private Enterprise Good, Government Control and Spending Bad.
The latter is apparently only true, as long as it doesn’t piss off home state voters or campaign contributors in an election year, according to Politico.
That story almost makes me wonder, is Obama smart enough to target programs in Republican States for the cuts he is proposing in his budget? I mean, Republicans swore they were dead set against the stimulus, Governor Mark Sanford is now demanding his piece of the pie, to the tune of $300 Million for South Carolina.
And an Alabama Senator single handedly tied up the Senate in knots, just to get his handout, in the form of a multi billion dollar contract for companies in Alabama.
So, it appears that we need a new slogan for the Republicans, something to the effect of, I hate welfare for everyone else, but make sure my check keeps on coming. Or, I hate the big government in theory, but in practice, just keep the pork barrel flowing in my direction and no one elses. Is anyone surprised that the Republicans are so busy looking out for themselves, and screw everyone else?