Corporations Taking USA Back to the 19th Century

[T]he growth of on-demand jobs like Uber making life less predictable and secure for workers unleashed a small barrage of criticism from some who contend that workers get what they’re worth in the market.

A Forbes Magazine contributor, for example, writes that jobs exist only “when both employer and employee are happy with the deal being made.” So if the new jobs are low-paying and irregular, too bad.

Much the same argument was voiced in the late 19th century over alleged “freedom of contract.” Any deal between employees and workers was assumed to be fine if both sides voluntarily agreed to it.

It was an era when many workers were “happy” to toil 12-hour days in sweat shops for lack of any better alternative.

It was also a time of great wealth for a few and squalor for many. And of corruption, as the lackeys of robber barons deposited sacks of cash on the desks of pliant legislators.

Finally, after decades of labor strife and political tumult, the 20th century brought an understanding that capitalism requires minimum standards of decency and fairness — workplace safety, a minimum wage, maximum hours (and time-and-a-half for overtime), and a ban on child labor.

We also learned that capitalism needs a fair balance of power between big corporations and workers.

We achieved that through antitrust laws that reduced the capacity of giant corporations to impose their will, and labor laws that allowed workers to organize and bargain collectively.

But now we seem to be heading back to 19th century.

Corporations are shifting full-time work onto temps, free-lancers, and contract workers who fall outside the labor protections established decades ago.

The nation’s biggest corporations and Wall Street banks are larger and more potent than ever.

And labor union membership has shrunk to fewer than 7 percent of private-sector workers.

So it’s not surprising we’re once again hearing that workers are worth no more than what they can get in the market.

But as we should have learned a century ago, markets don’t exist in nature. They’re created by human beings. The real question is how they’re organized and for whose benefit.

In the late 19th century they were organized for the benefit of a few at the top.

But by the middle of the 20th century they were organized for the vast majority.

During the 30 years after the end of World War II, as the economy doubled in size, so did the wages of most Americans — along with improved hours and working conditions.

Yet since around 1980, even though the economy has doubled once again (the Great Recession notwithstanding), the wages most Americans have stagnated. And their benefits and working conditions have deteriorated.

This isn’t because most Americans are worth less. In fact, worker productivity is higher than ever.

It’s because big corporations, Wall Street, and some enormously rich individuals have gained political power to organize the market in ways that have enhanced their wealth while leaving most Americans behind….

By Robert Reich – Op Ed News –

The Eugenics Plot Behind the Minimum Wage

In his “Letter from Birmingham Jail,” Martin Luther King Jr. identifies the government as the enemy of the rights and dignity of blacks. He was locked up for marching without a permit. King cites the injustices of the police and courts in particular. And he inspired a movement to raise public consciousness against state brutality, especially as it involved fire hoses, billy clubs, and jail cells.

Less obvious, however, had been the role of a more covert means of subjugation — forms of state coercion deeply embedded in the law and history of the United States. And they were offered as policies grounded in science and the scientific management of society.

Consider the minimum wage. How much does racism have to do with it? Far more than most people realize. A careful look at its history shows that the minimum wage was originally conceived as part of a eugenics strategy — an attempt to engineer a master race through public policy designed to cleanse the citizenry of undesirables. To that end, the state would have to bring about the isolation, sterilization, and extermination of nonprivileged populations.

The eugenics movement — almost universally supported by the scholarly and popular press in the first decades of the 20th century — came about as a reaction to the dramatic demographic changes of the latter part of the 19th century. Incomes rose and lifetimes had expanded like never before in history. Such gains applied to all races and classes. Infant mortality collapsed. All of this was due to a massive expansion of markets, technology, and trade, and it changed the world. It meant a dramatic expansion of population among all groups. The great unwashed masses were living longer and reproducing faster….

The eugenics movement, as an application of the principle of the “planned society,” was deeply hostile to free markets. As The New Republic summarized in a 1916 editorial:

“Imbecility breeds imbecility as certainly as white hens breed white chickens; and under laissez-faire imbecility is given full chance to breed, and does so in fact at a rate far superior to that of able stocks.”

To counter the trends unleashed by capitalism, states and the national government began to implement policies designed to support “superior” races and classes and discourage procreation of the “inferior” ones. As explained by Edwin Black’s 2003 book
, War Against the Weak: Eugenics and America’s Campaign to Create a Master Race, the goal as regards women and children was exclusionist, but as regards nonwhites, it was essentially exterminationist. The chosen means were not firing squads and gas chambers but the more peaceful and subtle methods of sterilization, exclusion from jobs, and coercive segregation.

It was during this period and for this reason that we saw the first trial runs of the minimum wage in Massachusetts in 1912. The new law pertained only to women and children as a measure to disemploy them and other “social dependents” from the labor force. Even though the measure was small and not well enforced, it did indeed reduce employment among the targeted groups.

To understand why this wasn’t seen as a failure, take a look at the first modern discussions of the minimum wage appearing in the academic literature. Most of these writings would have been completely forgotten but for a seminal 2005 article in the Journal of Economic Perspectives by Thomas C. Leonard.

Leonard documents an alarming series of academic articles and books appearing between the 1890s and the 1920s that were remarkably explicit about a variety of legislative attempts to squeeze people out of the work force. These articles were not written by marginal figures or radicals but by the leaders of the profession, the authors of the great textbooks, and the opinion leaders who shaped public policy.

“Progressive economists, like their neoclassical critics,” Leonard explains, “believed that binding minimum wages would cause job losses. However, the progressive economists also believed that the job loss induced by minimum wages was a social benefit, as it performed the eugenic service ridding the labor force of the ‘unemployable.’”

At least the eugenicists, for all their pseudo-scientific blathering, were not naïve about the effects of wage floors. These days, you can count on media talking heads and countless politicians to proclaim how wonderful the minimum wage is for the poor. Wage floors will improve the standard of living, they say. But back in 1912, they knew better — minimum wages exclude workers — and they favored them precisely because such wage floors drive people out of the job market. People without jobs cannot prosper and are thereby discouraged from reproducing. Minimum wages were designed specifically to purify the demographic landscape of racial inferiors and to keep women at the margins of society.

The famed Fabian socialist Sidney Webb was as blunt as anyone in his 1912 article “The Economic Theory of the Minimum Wage”:

Legal Minimum Wage positively increases the productivity of the nation’s industry, by ensuring that the surplus of unemployed workmen shall be exclusively the least efficient workmen; or, to put it in another way, by ensuring that all the situations shall be filled by the most efficient operatives who are available.

The intellectual history shows that whole purpose of the minimum wage was to create unemployment among people who the elites did not believe were worthy of holding jobs.

And it gets worse….

Eugenics as an idea eventually lost favor after World War II, when it came to be associated with the Third Reich. But the labor policies to which it gave rise did not go away. They came to be promoted not as a method of exclusion and extermination but rather, however implausibly, as a positive effort to benefit the poor.

Whatever the intentions, the effects are still the same. On that the eugenicists were right. The eugenics movement, however evil its motive, understood an economic truth: the minimum wage excludes people from the job market. It takes away from marginal populations their most important power in the job market: the power to work for less. It cartelizes the labor market by allowing higher-wage groups access while excluding lower-wage groups.

King wrote of the cruelty of government in his day. That cruelty extends far back in time, and is crystallized by a wage policy that effectively makes productivity and upward mobility illegal. If we want to reject eugenic policies and the racial malice behind them, we should also repudiate the minimum wage and embrace the universal right to bargain.

By JEFFREY A. TUCKER – Foundation for Economic Education –