Category Archives: Economy

Welcome to Richistan, USA

The Guardian (UK)
July 22, 2007

The American Dream of riches for all is turning into a nightmare of inequality. But a backlash is brewing, reports Paul Harris in New York

On the surface, Mark Cain works for a time-share company. Members pay a one-off sum to join and an annual fee. They then get to book holiday time in various destinations around the globe.

But Solstice clients are not ordinary people. They are America’s super-rich and a brief glance at its operations reveal the vast and still widening gulf between them and the rest of America.

Solstice has only about 80 members. Platinum membership costs them $875,000 to join and then a $42,000 annual fee. In return they get access to 10 homes from London to California and a private yacht in the Caribbean, all fully staffed with cooks, cleaners and ‘lifestyle managers’ ready to satisfy any whim from helicopter-skiing to audiences with local celebrities. As the firm’s marketing manager, Cain knows what Solstice’s clientele want. ‘We are trying to feed and manage this insatiable appetite for luxury,’ Cain said with pride.

America’s super-rich have returned to the days of the Roaring Twenties. As the rest of the country struggles to get by, a huge bubble of multi-millionaires lives almost in a parallel world. The rich now live in their own world of private education, private health care and gated mansions. They have their own schools and their own banks. They even travel apart – creating a booming industry of private jets and yachts. Their world now has a name, thanks to a new book by Wall Street Journal reporter Robert Frank which has dubbed it ‘Richistan’. There every dream can come true. But for the American Dream itself – which promises everyone can join the elite – the emergence of Richistan is a mixed blessing. ‘We in America are heading towards ‘developing nation’ levels of inequality. We would become like Brazil. What does that say about us? What does that say about America?’ Frank said.

In 1985 there were just 13 US billionaires. Now there are more than 1,000. In 2005 the US saw 227,000 new millionaires being created. One survey showed that the wealth of all US millionaires was $30 trillion, more than the GDPs of China, Japan, Brazil, Russia and the EU combined.

The rich have now created their own economy for their needs, at a time when the average worker’s wage rises will merely match inflation and where 36 million people live below the poverty line. In Richistan sums of money are rendered almost meaningless because of their size. It also has other names. There is the ‘Platinum Triangle’ used to describe the slice of Beverly Hills where many houses go for above $10m. Then there is the Jewel Coast, used to describe the strip of Madison Avenue in Manhattan where boutique jewellery stories have sprung up to cater for the new riches’ needs. Or it exists in the MetCircle society, a Manhattan club open only to those whose net worth is at least $100m.

The reason behind the sudden wealth boom is, according to some experts, the convergence of a new technology – the internet and other computing advances – with fluid and speculative markets. It was the same in the late 19th century when the original Gilded Age of conspicuous wealth and deep poverty was spawned by railways and the industrial age. At the same time government has helped by doling out corporate tax breaks. In the Fifties the proportion of federal income from company taxes was 33 per cent, by 2003 it was just 7.4 percent. Some 82 of America’s largest companies paid no tax at all in at least one of the first three years of the administration of President George W Bush.

But who are the new rich? Some of the names are familiar, Microsoft tycoon Bill Gates and savvy stock investor Warren Buffett. But most are unknown, often springing from the secretive world of financial hedge funds. Men like James Simons, who took home compensation of $1.7bn last year. Last year the 25 top earning hedge fund bankers in the US earned an average of $570m each. The average US household income is $50,000.

It is such men – and they are usually men – who feed the outlandish luxury goods economy of Richistan. It is they who are responsible for the rebirth of the butler industry, which was all but dead in the Seventies and is now facing a shortage of trained staff. So keen is the demand that many can expect to earn a six-figure salary when they graduate from booming butler schools.

Then there is the runaway feeder-industry of luxury consumer items. The new ultra rich turn up their noses at Rolexes; the sought-after brand is Franck Muller, which sells a high-end timepiece for $736,000. Or try a Mont Blanc pen, encrusted in jewels, for $700,000. Louis Vuitton’s most exclusive handbag sells for $42,000. Only 24 were ever made and none ever touched a shelf as all were pre-sold to Richistani clients.

In places such as Manhattan and Los Angeles, restaurants and bars outdo themselves in excess. New York’s Algonquin Hotel has a $10,000 ‘martini on a rock’ (it comes with a diamond at the bottom of the glass). City eateries sell burgers for more than $50. One offers a $1,000 omelette. In Los Angeles there is a craze for Bling mineral water – at $90 a bottle.

Then there are the boats. The private yacht industry in America has been caught in an arms race of size and luxuriousness. So far, there has been a clear winner: Oracle-founder Larry Ellison’s 450ft water palace, the Rising Sun. More than 80 rooms on five storeys and a landing craft that carries a Jeep, a basketball court doubling as a helipad and a fully-equipped cinema.

Now an Oregon-based company is taking things further: private submarines. An estimated 100 or so private subs are now drifting around the world’s oceans. Then there are the rockets – several notable billionaires are now leading the way in private exploration of space. One of them is Robert Bigelow who has ploughed $500m into trying to build an inflatable space hotel. A miniature prototype model was successfully launched and tested last month. In a scene that perhaps James Bond would find familiar, armed guards now patrol the fences of Bigelow Aerospace’s headquarters wearing badges decorated with an alien as their corporate logo.

But this is not just a world of riches gone mad that the rest of America can ignore. The growth of such a large super-rich class, coupled with a deepening poverty in many communities, is starting to tear at the fabric of society. Even some of the most wealthy – like Gates and Buffett – have spoken openly of the needs to address the massive ‘inequality gap’ that they have come to exemplify. In effect, some of the very richest Americans are calling for themselves to be taxed. In a speech last month Buffett – the third richest man in the world – pointed out that his tax rate was 17.7 per cent of his income while his secretary was taxed at 30 per cent. ‘Many of the new super-rich are looking long term at the world and they see a collapsing US education system and health-care system and the disappearance of the middle class and they realise: this is bad for everybody,’ said Frank.

Defenders of low tax for the very rich point to the theory of trickledown economics – the spending power of the rich benefiting the poor. But while the super-rich have boomed, the earning power of the average and poor citizen has not nearly matched the performance of the elite. In 2005 the top one per cent of earners in the US gained 14 per cent in income in real terms, while the rest of the country gained less than one per cent. The situation is especially bad for the severely poor – those living at half the poverty level – whose numbers are at a 32-year high. The rich are getting richer but are not bringing everyone else with them. ‘If you look at the impact of the last 20 years it seems pretty clear that trickledown just does not work,’ said Paul Buchheit, economics professor at Chicago’s Harold Washington College.

There are some signs of a change in attitude. Recent huge Wall Street flotations such as the listing of private equity giants like Blackstone have created a push in Congress for taxes on the instant billionaires they have created. Scandals of excess such as Enron and WorldCom and the trial of Conrad Black have been high-profile. But few politicians, needing campaign cash from new millionaires, will get far preaching higher tax. Calls for more equality tend to have come from men like Buffett and Gates whose fortunes are so enormous that a little extra tax would make no difference. Bush has pushed to phase out taxes like the estate tax, which benefit only the rich. ‘I don’t see it changing. No matter what administration is in power,’ said Buchheit.

But many think it must change. To a large degree, the debate over the booming lives of the super-rich is an argument about the American soul. It is a country that has always worshipped wealth, where the creation of a fortune was seen as virtuous and a source of pride.

But now that huge wealth has started to squeeze the ‘middle class’ out of existence, leaving the haves and have-nots in very separate worlds. It is possible that political will may develop to address the problem or that the problem will correct itself. The notorious end of the Gilded Age came in the panic of 1893 that sank America into depression.

Frank believes the signs of a coming storm are there. ‘The trick is to spot when prosperity turns to excess,’ he said. ‘When a large amount of people make a lot money very quickly it’s a sign you are near the top of the market.’

In a world of mega-yachts, private submarines and space hotels, that peak might be close at hand. And it’s a long way down.

Billionaire’s row

· There are 7.5 million households in America worth up to $10m. A further two million are worth $10m-$100m and thousands are worth more than $100m.

· There is now a two-year waiting list for 200ft yachts. If put end to end, the boats on that list, which cost $50m each, would be 15 miles long.

· Sebonack Golf Club in the Hamptons, Long Island, charges $650,000 for membership. That doesn’t include the $12,000 annual dues, or tips for caddies.

· Google founders Sergey Brin and Larry Page have a private Boeing 767.

· John D. Rockefeller was America’s first billionaire. Adjusted for inflation, he had $14bn – less than the net worth of each of Sam Walton’s five children today. There were 13 US billionaires in 1985. Now there are more than 1,000. There are as many millionaires in North Carolina as in India.

· ‘Affluent’ is Richistani for ‘not really rich’. According to Frank, you need about $10m to be considered entry-level rich.

Zirin: The Doming of America

The Doming of America
by Dave Zirin

“You can’t throw money at the problem.”

As a former public school teacher in Washington, I heard this cliche from
countless bureaucrats. It was code for “Stop whining about ancient
textbooks and prehistoric classroom materials, because there is no money.”
Imagine my shock when the city announced it would be spending more than
$500 million on a new baseball stadium. Clearly when it comes to the needs
of billionaire sports owners, there always seems to be money available to
be thrown.

This is hardly a D.C. story. The building of stadiums has become the
substitute for anything resembling an urban policy in this country. The
stadiums are presented as a microwave-instant solution to the problems of
crumbling schools, urban decay and suburban flight.

Stadiums are sporting shrines to the dogma of trickle-down economics. In
the past 10 years, more than $16 billion of the public’s money has been
spent for stadium construction and upkeep from coast to coast. Though some
cities are beginning to resist paying the full tab, any kind of subsidy is
a fool’s investment, ending up being little more than monuments to
corporate greed: $500 million welfare hotels for America’s billionaires
built with funds that could have been spent more wisely on just about
anything else.

The era of big government may be over, but it has been replaced by the Rise
of the Domes. Reports from both the right-wing Cato Institute and the more
centrist Brookings Institution dismiss stadium funding as an utter
financial flop, yet the domes keep coming.

Our stadiums, funded on our dime, become the political province of those
owners who paid nary a penny for the privilege. In many stadiums, they have
started “faith days at the park” where evangelical Christian organizations
set up booths and Christian rock gets blared over the loudspeakers. No
separation of church and state, even when the state is footing the bill.

Then there is the force-feeding of political dogma. No freedom from that,
either. On the orders of George Steinbrenner, the New York Yankees now
string up chains along the seats to keep people standing and secured — and
not going to the concessions or bathroom — for the seventh-inning singing
of “God Bless America.”

As Neil DeMause, co-author of the book “Field of Schemes” said to me, “The
history of the stadium game is the story of how, by slowly refining their
blackmail skills, sports owners learned how to turn their industry from one
based on selling tickets to one based on extracting public subsidies. It’s
been a bit like watching a 4-year-old learn how to manipulate his parents
into buying him the new toy that he saw on TV; the question now is how long
it takes our elected officials to learn to say ‘no.’ ”

But our elected officials have been more like the children, as sports
owners tousle their hair and set the budget agendas for municipalities
around the country with a simple credo: stadiums first and people last.

In August 2005, we saw the extreme results of these kinds of priorities.
After Hurricane Katrina flattened the Gulf Coast, the Louisiana Superdome,
the largest domed structure in the Western Hemisphere, morphed into a
homeless shelter from hell, inhabited yet uninhabitable for an estimated
30,000 of New Orleans’ poorest residents.

It took Hurricane Katrina for them to actually see the inside of the
Superdome, a stadium whose ticket prices make entry restrictive. At the
time of the hurricane, game tickets cost $90, season seats went for $1,300,
and luxury boxes for eight home games ran more than $100,000 a year. But
the Katrina refugees’ tickets were courtesy of the federal and local
government’s malignant neglect.

It was only fitting, because these 30,000 people helped pay for the stadium
in the first place. The Superdome was built entirely on the public dime in
1975, as a part of efforts to create a “New New Orleans” business district.
City officials decided that building the largest domed stadium on the
planet was in everyone’s best interest. Instead, it set off a 30-year path
toward destruction for the Big Easy: a path that has seen money for the
stadium but not for levees; money for the stadium but not for shelter;
money for the stadium but not for an all-too-predictable disaster.

The tragedy of Katrina then became farce when the Superdome’s inhabitants
were finally moved: not to government housing, public shelters or even
another location in the area, but to the Houston Astrodome. Ladies and
gentlemen, we had the March of Domes.

I spoke to former Major League Baseball All-Star and “Ball Four” author Jim
Bouton about the publicly financed “doming of America, and this is what he
said:

“It’s such a misapplication of the public’s money. … You’ve got towns
turning out streetlights, they’re closing firehouses, they’re cutting back
on school supplies, they’re having classrooms in stairwells, and we’ve got
a nation full of kids who don’t have any health insurance. I mean, it’s
disgraceful. The limited things that our government does for the people
with the people’s money, to spend even a dime or a penny of it on ballparks
is just a crime.

“It’s going to be seen historically as an awful folly, and it’s starting to
be seen that way now, but historically that will go down as one of the real
crimes of American government, national and local, to allow the funneling
of people’s money directly into the pockets of a handful of very wealthy
individuals who could build these stadiums on their own if it made
financial sense. If they don’t make financial sense, then they shouldn’t be
building them.”

Bouton went on to say, “If I was a team owner today, asking for public
money, I’d be ashamed of myself. Ashamed of myself. But we’ve gone beyond
shame. There’s no such thing as shame anymore. People aren’t embarrassed to
take — to do these awful things.”

Bouton is absolutely correct. When it comes to fleecing our cities, some of
the richest people in this country have shown a complete absence of shame.
The question is whether we are going to finally stand up and impose our
priorities onto them, instead of continually taking it on the chin.

Polls show consistent majorities don’t want public funds spent on stadiums.
That means the silent majority of sports fans oppose the stadium glut as
well. We sports fans need to make ourselves heard. We may love baseball. We
may love football. We may bleed our team’s colors on game day. But that
doesn’t mean we should have to pay a billionaire millions of dollars for
the privilege to watch.

[Dave Zirin is the author of the new book “Welcome to the Terrordome:” with
an intro by Chuck D (Haymarket). You can receive his column Edge of Sports,
every week by going to http://zirin.com/edgeofsports/?p=subscribe&id=1.
Contact him at edgeofsports@gmail.com]

The Rich and the Rest of Us

The income/wealth gaps between the rich and everyone else continues to grow. A recent report from the Canadian Centre for Policy Alternatives shows that Canada’s income gap between the rich and poor is growing, largely because the lion’s share of Canada’s economic growth is going to the richest 10% of families. It’s not going to the majority, the 80% of families earning under a $100,000.

The study, The Rich and the Rest of Us: The Changing Face of Canada’s Growing Gap, looks at the earnings and after-tax incomes of Canadian families raising children under 18, comparing families in the late 1970s and those in the early 2000s. The study finds:

* Canada’s income gap is growing: In 2004, the richest 10% of families earned 82 times more than the poorest 10% – almost triple the ratio of 1976, when they earned 31 times more. In after-tax terms the gap is at a 30-year high.

* Bottom half shut out: Between 1976-79 the bottom half earned 27% of total earnings. Between 2001-04 that dropped to 20.5%, though they worked more. Up to 80% of families lost ground or stayed put compared to the previous generation, in both earnings and after-tax terms. The poorest saw real incomes drop.

* Work is not enough: All but the richest 10% of families are working more weeks and hours in the paid workforce (200 hours more on average since 1996) yet only the richest 10% saw a significant increase in their earnings – 30%.

In the February 2007 issue of Z Magazine, Jack Rasmus describes how in the USA there is a $1 trillion income shift from the working classes to the rick every year.

The most telling statistic of what it all means comes from the U.S. Department of Commerce. It states that wages and salaries as of April 2006 constituted only 45.3 percent of GDP, a decline from 50.0 percent in 2001 and 53.6 percent in 1970. Furthermore, as the U.S. government estimates, “each percentage point now equals about $132 billion.” In other words, the roughly 8.3 percent drop in labor’s share by 2005 represents an annual shift in relative income today of about $1.09 trillion. That’s $1.09 trillion that now occurs every year—and it is rising.

That $1.09 trillion shift is equivalent to every one of 108 million non-supervisory workers in the U.S. today writing out a check each year, every year, for $12,100 and signing it over to the 24 million upper-class households—about 40 percent of which would go to the wealthiest 1.4 million families.

CEOs pocket more by Jan 2 than average worker does in the entire year

Today the Canadian Centre on Policy Alternatives released Timing is Everything: Comparing the earnings of Canada’s highest-paid CEOs and the rest of us by CCPA research associate Hugh Mackenzie.

The study finds that by 9:46AM on January 2nd Canada’s 100 highest-paid CEOs will have reaped, on average, $38,010 in pay. That equals the average annual earnings of workers in Canada.

By 6:00 they will have pocketed nearly $70,000.

How does capital represent itself?

Landscapes of Capital is an ongoing attempt by Robert Goldman, Stephen Papson and Noah Kersey to write a multimedia Web-based book dedicated to studying how corporate television commercials portray a world shaped and defined by global capitalism.

Drawing on over 800 TV commercials the authors try to conceptually map the landscapes and narratives of capital, technology, and globalization as seen in corporate TV ads.

The site is organized around six themes, globalizaiton, capital, landscapes, advertising semiotics, grand narratives and speed. Each of the theme maps is linked to a bibliography, database, illustrated glossary, and index.

This is a very intriguing site, highly recommended!

“Our commodity is these children…”

Teachers at a Sacremento elementary school have voted to work 3 extra weeks this year for free (25 minutes extra per day), in an effort to raise test scores.

Rich Gibson explains why this is a wrong-headed idea:

“Our commodity is these children, and it’s every day and right now and every moment counts,”she said.

In pacified areas, people become instruments of their own oppression.

So, test scores, which measure parental income, race, subservience, and to a limited extent, nationality, measure the worth of the commodity, a child, in which the teacher invests time, and hence to be a more valuable commodity as a teacher, the logic would be that more time would mean more value, by its very nature. So, we shall see what kind of human value this piece-work investment yields. Maybe they will get a raise.

It is an interesting play on the creation of surplus value, which, at base, is this (from Ollman):

The capitalist buys the worker’s labor power, as any other commodity, and puts it to work for eight or more hours a day. However, workers can make in, say, five hours products which are the equivalent of their wages. In the remaining three or more hours an amount of wealth is produced which remains in the hands of the capitalist. The capitalists’ control over this surplus is the basis of their power over the workers and the rest of society. Marx’s labor theory of value also provides a detailed account of the struggle between capitalists and workers over the size of the surplus value, with the capitalists trying to extend the length of the working day, speed up the pace of work, etc., while the workers organize to protect themselves. Because of the competition among capitalists, workers are constantly being replaced by machinery, enabling and requiring capitalists to extract ever greater amounts of surplus value from the workers who remain.

Paradoxically, the amount of surplus value is also the source of capitalism’s greatest weakness. Because only part of their product is returned to them as wages, the workers cannot buy a large portion of the consumables that they produce. Under pressure from the constant growth of the total product, the capitalists periodically fail to find new markets to take up the slack. This leads to crises of “overproduction”, capitalism’s classic contradiction, in which people are forced to live on too little because they produce too much.

Here’s a more complete explanation from Ollman, along with a nice cartoon that sums it up.

When teachers adopt the language of the market, children as commodities, and students as they grow begin to see themselves as shoppers, not students, only those who have an interest in unreason, and inhumanity will make gains. Well, those people, and union bosses…..

The myth of capital is that the worker shows up on a job, and makes a fair exchange, money for labor. What lies behind that myth is that most people are born with no capital, while a relative few own and hold power, so the exchange is not fair at all, in that the worker will starve without work, on the one hand, and the worker will never get paid the full value of his or her labor, on the other hand. Moreover, force and violence in the form of the state will be used against workers who resist—all in the name of democracy.

The above was, after all, a democratic process, was it not? The union approved it, the teachers begged for it. The bosses and press love it.

I wonder if the kids–the commodity– got to vote on this……

best r

Concentrated Poverty in New Orleans and Other American Cities

In the The Chronicle of Higher Education issue dated August 4, 2006, Bruce Katz, who directs the Metropolitan Policy Program at the Brookings Institution, reports on the concentration of poverty and effects of “employment decentralization” in New Orleans and other American cities (many with booming economies).

The legacies of racism, segregation, and intergenerational poverty are clear:

On the very day the levees broke, the Census Bureau released a report on poverty in the nation, finding that Orleans Parish had a poverty rate of 23.2 percent, seventh highest among 290 large U.S. counties.

Yet the economic hardships were shared unequally. Although African-American residents made up 67 percent of the city’s total population, they made up 84 percent of its population below the poverty line. And those poor African-American households were highly concentrated in 47 neighborhoods of extreme poverty — that is, neighborhoods where the poverty rate topped 40 percent.

Of the 131,000 poor people in the city in 2000, nearly 50,000 (38 percent) lived in those neighborhoods of extreme poverty. That put New Orleans second among large American cities in 2000 and far above the national average in its concentration of poverty. For African-Americans, the “concentrated poverty rate” was even higher, at 43 percent. On nearly every social and economic indicator, New Orleans’s neighborhoods of high poverty lagged far behind the rest of the city and the region as a whole: Four in five children were raised in single-parent families; just 60 percent of working-age residents were part of the labor market; and only one in 12 adults held a college degree.

That isolation of poverty occurred in a region that was rapidly decentralizing. As poverty hardened over the years in the city, middle-class families (including African-American households) and jobs moved out, mostly to the surrounding parishes. Between 1970 and 2000, the city population shrank by 18 percent, while neighboring St. Tammany Parish doubled in population. Jobs followed people: New Orleans was home to two-thirds of the region’s jobs in 1970; by 2000 that share had dropped to 42 percent.

THE MATERIAL WORLD
Concentrated Poverty in New Orleans and Other American Cities

By BRUCE KATZ

It has been close to a year since Hurricane Katrina slammed into New Orleans, crippling one of the world’s most distinctive cities. As the metropolis struggles to recover, national attention has naturally focused on the significant environmental challenges bedeviling the rebuilding effort. Can the region become a paragon of high-quality, sustainable development given its vulnerable location?

But equal attention needs to be paid to the social challenges. Katrina laid bare the disparities that continue to separate Americans by race and class. Analysis by the Brookings Institution and other research centers has revealed the disparate effect that the city’s flooding had on poor, minority households and the distressed neighborhoods in which they disproportionately lived. Thus, a second overriding question: Can the city transform its poor neighborhoods into healthy ones that will attract and accommodate families with a broad range of incomes?

The challenges facing New Orleans are complicated by the sluggish nature of the rebuilding effort. According to the most recent estimate, the population of the city is 181,000, well below the pre-storm level of 463,000. Tens of thousands of evacuees have been living in the Houston area, with large additional clusters in Dallas, Atlanta, and elsewhere. So, a third question: How can we ensure that families in the Katrina diaspora have access to communities of economic vitality and educational opportunity?

To aid the recovery effort and to place New Orleans’s plight in a national context, the Brookings Institution released two reports in October 2005: “New Orleans After the Storm: Lessons From the Past, a Plan for the Future” and “Katrina’s Window: Confronting Concentrated Poverty Across America.” We are also publishing a monthly compilation of economic and social indicators that measure the pace of rebuilding efforts in the New Orleans metropolis (see Katrina Index: Tracking Variables of Post-Katrina Reconstruction). All of these publications can be found on the institution’s Web site (http://www.brookings.edu/metro).

The data paint a sobering picture. Before Hurricane Katrina struck, New Orleans was a city at once unique and typical. Its architecture; its mix of French, African, Spanish, and Caribbean cultures; its rich artistic history; and its location amid lake, river, and delta were all one of a kind. But New Orleans also provided an example of patterns of segregation by race and by income that pervade most struggling American cities.

On the very day the levees broke, the Census Bureau released a report on poverty in the nation, finding that Orleans Parish had a poverty rate of 23.2 percent, seventh highest among 290 large U.S. counties.

Yet the economic hardships were shared unequally. Although African-American residents made up 67 percent of the city’s total population, they made up 84 percent of its population below the poverty line. And those poor African-American households were highly concentrated in 47 neighborhoods of extreme poverty — that is, neighborhoods where the poverty rate topped 40 percent.

Of the 131,000 poor people in the city in 2000, nearly 50,000 (38 percent) lived in those neighborhoods of extreme poverty. That put New Orleans second among large American cities in 2000 and far above the national average in its concentration of poverty. For African-Americans, the “concentrated poverty rate” was even higher, at 43 percent. On nearly every social and economic indicator, New Orleans’s neighborhoods of high poverty lagged far behind the rest of the city and the region as a whole: Four in five children were raised in single-parent families; just 60 percent of working-age residents were part of the labor market; and only one in 12 adults held a college degree.

That isolation of poverty occurred in a region that was rapidly decentralizing. As poverty hardened over the years in the city, middle-class families (including African-American households) and jobs moved out, mostly to the surrounding parishes. Between 1970 and 2000, the city population shrank by 18 percent, while neighboring St. Tammany Parish doubled in population. Jobs followed people: New Orleans was home to two-thirds of the region’s jobs in 1970; by 2000 that share had dropped to 42 percent.

Hurricane Katrina unveiled these disparities in stark terms. African-American and poor people bore the brunt of the devastation because, for the most part, they lived in the lower-lying, more flood-prone sections of the city, such as Mid-City or the Lower Ninth Ward. Incredibly, 38 of the city’s 47 extreme-poverty census tracts were flooded. Many people in flooded areas lacked access to a car, a fact that became critical during the evacuation period.

Unfortunately, the pattern of urban concentrated poverty on the one hand and employment decentralization on the other is not unique to New Orleans. While New Orleans clearly ranked among the cities with the most geographically concentrated poor populations, many others were not far behind. Some of the cities — like Baltimore, Cleveland, and Milwaukee — are former industrial giants whose populations have suffered from severe economic restructuring over the past several decades. Others — like Fresno, Los Angeles, and Miami — have faced challenges in integrating new immigrant populations who often arrive in gateway neighborhoods with low levels of education and labor-market skills. Still others — Atlanta, Memphis, and Washington — lie at the heart of growing regions but continue to grapple with legacies of racism, segregation, and intergenerational poverty holding back their most distressed neighborhoods.

So, what to do?

Over the past several decades, scholars and policy makers have learned a lot about the negative effects of concentrated poverty and the benefits of policies designed to give low-income families greater access to housing in lower poverty neighborhoods, closer to employment and educational opportunities.

Many of those lessons have been compiled in a recent anthology, The Geography of Opportunity: Race and Housing Choice in Metropolitan America (Brookings Institution Press, 2005). The volume, edited by Xavier de Souza Briggs, a professor of sociology and urban planning at the Massachusetts Institute of Technology, focuses on four main questions: What limits housing choice, leading to an uneven “geography of opportunity” by race and class? What are the social and economic consequences of this geography? What special barriers to housing opportunity confront low-income families? And what political and policy lessons might we learn from efforts to increase housing choice?

Briggs and his authors find that the residents of poor, isolated communities face failing schools, unsafe streets, run-down housing, and few local jobs or employment networks. Other studies have revealed that residents of poor neighborhoods often pay higher prices for basic goods and services since their neighborhoods are dominated by parasitic firms like check cashers and payday lenders rather than mainstream businesses. (See, for instance, the Brookings report “The Price Is Wrong: Getting the Market Right for Working Families in Philadelphia.”) Together, these factors combine to limit opportunities and quality of life.

Yet entire cities, their suburbs, and the nation as a whole also pay a heavy price for concentration of poverty, according to research by Janet Rothenberg Pack, a professor at the Wharton School of the University of Pennsylvania. Cities are forced to pay for the higher cost of delivering health, education, police, fire, judicial, and other services in high-poverty environments, often amounting to hundreds of dollars per city resident. With higher expenses come higher taxes, harming cities in their competition for middle-class families, which are the backbone of resilient economies.

Suburbs with weak central cities also see less appreciation in housing prices and incomes, given the interdependence of economies. One study, for example, found that a 1-percent increase in city employment raises home values by $6,000 in nearby suburbs.

And the concentration of neighborhood poverty leads inexorably to the concentration of school poverty, undermining almost every other effort by the public, private, and volunteer sectors to educate the children of low-income families.

Briggs and his authors analyze the accomplishments and occasional failures of policies designed to give low-income families more housing choices. One chapter distills the lessons from the federal Moving to Opportunity demonstration, which enabled recipients of housing vouchers to move to areas of lower poverty, growing employment, and high-quality schools. Another reviews the benefits of city- and county-wide “inclusionary zoning” regimes that require builders to include a certain amount of housing for low- and moderate-income households when they build market-rate multifamily developments or town-home communities. The book also examines the promise of replacing failed public-housing enclaves with well-designed, economically integrated developments.

The bottom line is that America knows how to promote housing choice and build mixed-income communities that work economically and socially. The only question is whether we have the political will to apply the best lessons and innovations not only to the rebuilding of New Orleans but to the housing of Katrina-displaced and other low-income families throughout the country.

Bruce Katz directs the Metropolitan Policy Program at the Brookings Institution and is a visiting professor at the London School of Economics and Political Science.

http://chronicle.com
Section: The Chronicle Review
Volume 52, Issue 48, Page B15
Copyright © 2006 by The Chronicle of Higher Education

Charles Sullivan “Matewan Revisited”

[Thanks to Paul O. for the tip on this one.]

Matewan Revisited

By Charles Sullivan

The history of America is the chronicle of class struggle. The current fight is the same fight that working class people have always waged. In the past there were three distinct classes: the upper class, the middle class and the underclass. The middle class is rapidly melding with the under class, leaving us with essentially two socioeconomic classes. In essence, what remain are the rich and the poor. The chasm between rich and poor has never been wider and it is growing every year.

For reasons that must be political, those in power expend much energy and capital denying that America is a class society. Recall how Poppy Bush used to accuse his political adversaries of conducting class warfare, even as his policies, like those of his son, do great harm to working people while benefiting the wealthy. Unrestrained capitalism is the opposite of Robin Hood and it reigns supreme in America. The hypocrisy of the elder Bush’s inane pronouncement is an insult to the intelligence of every working class citizen, who knows about class divisions first hand through long experience. In essence, what we have here is a predator and prey relationship. The rich are today preying upon the poor, just as they have always done.

This relationship is portrayed clearly and accurately through an examination of labor history. One particularly poignant example occurred in the hills of West Virginia in the spring of 1920. This was the battle of Matewan that pitted the mining companies against the coal miners who were desperately trying to organize a union. Far from being atypical of the oppression and wage slavery that characterizes America to this day, the events that unfolded in the coal fields of West Virginia are emblematic of class struggle, as documented by the historical evidence. An examination of these facts reveals the insult and insensitivity of Poppy Bush’s absurd proclamations against the working poor.
Few of us today can appreciate the atrocious conditions that working people once endured. Some of the worst working conditions in the world were encountered in the coal fields of West Virginia. Thousands of men and boys (child labor was also exploited in those days) died in the mines as a result of wanton neglect on the part of the mine owners. The lives of the coal miners were of no greater worth to the mining companies than a turnip. Workers were nothing more than property that was expendable and easily replaceable in the field. The horrid conditions that prevailed in places like Matewan, West Virginia, are almost beyond imagination.

Whole towns were under the oppressive dictatorship of the coal companies, which included the political electorate. Thus the coal companies assumed the role of God not only in the coal fields of West Virginia, but all across the land. Other corporations did the same. The coal miners lived in constant fear and intimidation of their bosses and their goon squads. Their housing was owned by the company. Entire towns were in essence owned by the company. The coal miners were the slaves on whose backs great fortunes were amassed for the mining companies and the robber barons. The mine owners lived like kings, while the miners scratched out a subsistence living in utter squalor. The miners had to purchase their tools, their food and supplies from company stores, whose prices were grossly inflated. The long hours of toil in the wretched and dangerous mines were paid in company scrip. Often at the end of an eighty hour work week, owing to the irregularities that always arose in keeping the company books, the miners actually owed the mining company money.

Those who tried to organize unions were summarily fired from their jobs and evicted from their housing. Many were routinely beaten and murdered by company thugs, such as the Felts Detective Agency. These beatings and murders occurred all across the nation, and those who administered them did so with impunity. The police and the National Guard were under the employ of the mining companies. As they are today, they were called forth to protect the wealth and property of the rich from the justice demanded by the working poor. There was no law and there was no justice for working people. The only protection the workers had was the union. Despite that kind of opposition, miners joined the union by the thousands in Matewan and vicinity in a display of courage that is rarely seen today.

Matewan was different from the norm in an important way: its police chief, Sid Hatfield, a former coal miner, and its mayor, C. Testerman, were both men of courage and moral integrity who stood up to the thugs hired by the mining companies to terrorize the miners and their families. Understandably, such courage and strength of character were an aberration. Under enormous pressure from armed thugs, lesser men in other parts of the country capitulated and cooperated with the corrupt power of the mining companies. These companies were essentially all powerful

Agents of the Felts Detective Agency had been unlawfully evicting union families from their homes, setting their belongings out in the rain. Sid Hatfield and Mayor Testerman attempted to halt the evictions, but to no avail. Then on the afternoon of May 19, 1920, accompanied by a group of armed miners, Hatfield attempted to arrest the detectives including Baldwin-Felts president Thomas Felts, and brothers Albert and Lee, who carried out the evictions. Hatfield and Testerman faced their heavily armed adversaries in the street. Someone fired a shot and a fierce gun battle ensued. In less than a minute eye witnesses reported that more than a hundred shots were fired. Killed in the first volley were Al Felts and mayor Testerman. When the shooting was over, seven detectives, including Lee Felts and two miners were dead or dying in the streets of Matewan. The incident became known as the Matewan Massacre.

The episode made Sid Hatfield a folk hero to working people throughout the world. Here was a man who not only faced the armed thugs hired by the mining company, he shot it out with them in the streets of Matewan and killed two of the notorious Felts brothers. Fifteen months later, however, Sid Hatfield was gunned down in a surprise attack by agents of the Felts Detective Agency on the steps of the McDowell County courthouse. No one was ever tried, much less convicted for his assassination. The murder touched off a fierce armed insurrection by the coal miners that involved more than ten thousand men.

This is the history of class conflict in America—one episode among countless thousands. But it is a history, common as it was, that is rarely told. You will not read about it in the text books used to teach history in our schools. Why? Because events like this tell the real story about America’s long war on working class people. It reveals how our nation’s wealthiest and most influential families obtained their positions of wealth and privilege. It is the kind of history that foments outrage at the injustice that still afflicts working class people to this day. It is a history that demonstrates that ordinary people can fight back and demand justice, even against impossible odds. Better to die a free man than live a slave.

So when I hear the products of class privilege, the Bush family, for example, accusing others of fomenting class warfare it makes me shake with rage because I know the history of my country in sordid detail. I know they are spewing lies that dishonor the countless thousands of working class people who were brutally oppressed and often murdered by their employers and their hired guns. I am also reminded that the Bush family fortune has been amassed like so many other dynasties—through the brutal exploitation of working people known as wage slavery. The Bush clan has no conception about what it is like to struggle, to sacrifice and to honor and uphold justice for ordinary people. If I were a plutocrat, if this were my legacy, I would not want the world to know about it either. It is a disgrace too vile to be put into words. This is what I call America’s secret history—the history those in power do not want you to know about. So spare me the banal talk about a free and democratic society. That is not what America is about.

This secret history explains current events perfectly. Working people are still fighting the same fight against the same foes as did Sid Hatfield and those coal miners at Matewan on that fateful day in 1920. The descendants of those people continue to work the coal fields of West Virginia and they continue to die in the mines. Under burgeoning capitalism the mining companies are now permitted to write the legislation that is supposed to provide for the safety of the miners. Thus the guns of the Felts Detective Agency have been rendered, for the time being, unnecessary. Why resort to violence when legalized bribery works so well? How little things have changed. Working class people continue to be the prey of their corporate employers with little recourse to the judiciary. Unionism, as timid and ineffective as it is these days, continues to wane as corporate power increases. It is the same old drama being played out in modern times by the descendants of the original players—and, like it or not, all of us are participants.

Now the vast majority of workers are ‘at will’ employees without any kind of protection from their employers. Thus, as in the days of Matewan, if a person wants to survive they must submit themselves to the indignity of being the property of their employers. America is a nation that was built upon slave labor. Migrating from job to job is no better than migrating from one master to another. In any case, the worker is the slave of the employer. The tradition continues to this day, although with far more subtlety than in the past. Our elected officials, if calling them so is not to make a mockery of the term, are increasingly under the employ of the ruling elite. The judiciary is stocked with corporate apologists anxious to continue the tradition of fleecing the workers and lining their own pockets with wealth they neither create nor earn. The fact that Industrial slavery bears a close and disturbing resemblance to its cousin chattel slavery is no accident. Its end product is almost as tragic, as the gap between rich and poor widens exponentially. As is the custom in America, the rich have gotten to where they are by riding the poor.

The character and the courage of Sid Hatfield and those coal miners at Matewan, West Virginia, are inspiring. Following their outstanding moral example, let us not capitulate to the modern thugs of American corporatocracy—to the military industrial complex and the champions of empire that would grind us under their heel. Let us read and reread labor history—America’s history—with a sense of hope and optimism, inspired by the example of Sid Hatfield and thousands of people like him. Someone has to stand up to the thugs who have always run this country for private wealth. We must, as history demonstrates so clearly, take heart and show some courage. We must stand for justice for all, no matter the personal cost. Otherwise, we are only paying homage to high minded ideals while betraying them with our misspent lives. We must stand together, shoulder to shoulder and face the enemy.

A life lived in the pursuit of justice for all is the only kind of life worth living. It is an examined life that requires character, courage and a capacity for critical thinking that can see beyond rhetoric and the mere symbols of freedom, to the bedrock of reality. It is a life that demands substance from us. The Wobblies had it right all along. The answer to justice, to world peace, is One Big Union. An injury to one is an injury to all is as true today as it was the day the phrase was coined. We should live by this credo. Justice demands courage and even bravado. As Thoreau so eloquently stated, “A man sits as many risks as he runs.”

American history, as dismal as it often is, is also the history of class struggle against oppression. Therein lies its greatest value—its eternal hope. It is the long continued fight that has always kept America from being what it could become—a bastion of democracy and hope, bristling with peace. This is because a privileged few do not want to share the wealth of this nation with those who create it. They intend to keep it for themselves, as their predecessors did. So we must keep alive the idea of One Big Union. It represents our best hope for halting the exportation of jobs that pits worker against worker across political boundaries. To accomplish this Herculean task requires that we have the courage and the wisdom to bring back the revolutionary unionism championed by people like Eugene Debs, Mother Jones, Emma Goldman and Big Bill Haywood. Sid Hatfield and mayor Testerman have already shown us the way. Do we have the fortitude and the courage to follow their example?

Note: the author gratefully acknowledges and thanks long time union organizer Anthony Debella for providing the inspirational impetus behind this piece.

Charles Sullivan is a photographer and free lance writer residing in the eastern panhandle of West Virginia. He welcomes your comments at earthdog@highstream.net

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UNFORGIVABLE LIAR… If Woody Guthrie lived today he might write, “Some men rob you with a six gun, others with a microphone.”

from the March issue of Rock & Rap Confidential….

UNFORGIVABLE LIAR… If Woody Guthrie lived today he might write, “Some men rob you with a six gun, others with a microphone.”

In January, Bono announced his latest campaign to save the poor through capitalism–or rather, the other way around. This is Red, a marketing scam which finds the increasingly deranged U2 frontman in business with Nike, Converse, The Gap, Giorgio Armani and American Express. Red products include Converse sneakers made from “African mudcloth,” “vintage” Gap t-shirts, Armani wraparound sunglasses, and a red American Express card. The companies will donate “a portion” of their profits to fighting AIDS in Africa, the continent for whose poor Bono claims to be the spokesman. This portion is for the most part unspecified (American Express promises 1% of spending). Nor is it specified whether Bono takes a cut–presumably he would be crowing if he weren’t, as he did when U2 pimped iPods for free.

“It’s just a couple of degrees from becoming a Saturday Night Live skit,” says Noel Beasley of the UNITE/HERE textile workers union. “”It’s like if you took Bob Dylan’s ‘The Times They Are A-Changing,’ used it to pitch Rolex watches and tried to convince people that if they bought enough luxury goods they could make a revolution. It’s ludicrous on its face.”

Financial Times termed Red “the latest in a series of marketing experiments by companies worried that television advertising is losing its punch. Many of these efforts are based on the idea of using good works or services as a way to get consumer attention.” The term for this, in respectable marketing circles, is “corporate social opportunity.”

As Beasley said on Kick Out the Jams, Dave Marsh’s Sirius radio show, “This is obviously the economic wet dream of every retailer and credit card loan shark in the world, if you can pitch consumerism and credit card debt as the salvation of the planet, while garment workers and shoe workers are starving to death and literally burning to death in horrific conditions in places like Burma and Thailand.” As a member of the executive committee of the International Textile, Leather and Garment Workers Foundation, Beasley regularly monitors sweatshop and slave labor conditions around the globe, up close and in person.

Bono announced his scheme at Davos, Switzerland, where he attended the World
Economic Forum, a meeting of leaders of the world’s richest countries. According to Financial Times, he got the Red idea from Robert Rubin, one of the architects of Clintonomics.

Bono explicitly believes that only such powerful insiders can effect meaningful change. Capitalism controls everything, and therefore, only capitalist solutions can be “effective.”

In Caracas, Venezuela, the World Social Forum took place at the same time as the Davos conference. The WSF is a meeting of leaders and activists from around the globe, from poor nations as well as rich ones. It is dedicated to the proposition that social justice occurs only when people govern themselves. The World Social Forum is the sound of some of the world’s have-nots speaking for themselves, which Bono sees as counter-productive. But today, five South American nations are run by governments that believe otherwise, while the countries where schemes like Red operate, particularly Britain and the U.S., allow their populations to grow poorer and more powerless by the day.

Bono claims to be a disciple of Martin Luther King. Dr. King spoke of the “triple evils”–racism, war and poverty–as inextricably connected. He eventually concluded that opposing one of them without opposing all of them didn’t make any sense. So Dr. King risked his relationship with the LBJ administration by first attacking the war in Vietnam, then starting the Poor Peoples Campaign, which raised exactly the same issues as the World Social Forum.

Bono and his ilk want to convince good-hearted folks that there is no need for the lowly to move. As long as Bono cuddles with the mighty, poverty and AIDS in Africa are being powerfully addressed. So Bono, “spokesman for the poor,” meets with Bush and never mentions Iraq or New Orleans.

For the past several years, Bono has argued that African nations need to be relieved of their multibillion dollar debt to rich countries. Much of that debt has been erased. This has produced no tangible reduction in poverty. Bono has issued pronouncements about increased U.S. aid to Africa after every one of his meetings with George Bush and his senior officials. That increase never comes and, as detailed by an article last summer in the U2 fanzine Rolling Stone, the way what little aid there is gets dispensed makes conditions worse.

The 2007 World Social Forum will be held, fittingly enough, in Africa. An offshoot, the U.S. Social Forum, will be held next year in Atlanta, a symbolic return to the South which gave birth to Martin Luther King’s Poor People’s Campaign. Both of these massive gatherings (20,000 people are expected in Atlanta, 300,000 in Africa) will be suffused with culture, as artists from around the world speak directly with poor people, not about them from afar. The sound of a certain Irish pop star, off shilling for sweatshop syndicates and their middlemen, will be heard only faintly, if at all.

To subscribe to Rock & Rap Confidential, send $15 for one year (12 issues) to RRC, Box 341305, Los Angeles CA 90034.

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“Capitalism no longer needs democracy” and democracy doesn’t need capitalism

Writing for The American Prospect, former U.S. Labor Secretary Robert Reich, makes an important distinction between capitalism and democracy.

In “The China Path”, Reich argues that:

China shows that when it comes to economics, the dividing line among the world’s nations is no longer between communism and capitalism. Capitalism has won hands down. The real dividing line is no longer economic. It’s political. And that divide is between democracy and authoritarianism. China is a capitalist economy with an authoritarian government.

But he certainly errs by clinging to a the one-sided idea that democracy needs capitalism. Reich says that “for democracy to function there must be centers of power outside of government.” Certainly this is true, but despite the evidence he points to in China (as well as the huge wealth gap in the USA), Reich continues to hold on to the fiction that “capitalism decentralizes economic power, and thereby provides the private ground in which democracy can take root.”

How exactly is that working in the USA right now?

Take for example a study released last week by Stalling the Dream—People of color less likely to own cars, less able to escape hurricanes & poverty

The report finds that people of color are considerably more likely to be left behind in a natural disaster, since fewer of them own cars compared to whites. In addition, lower rates of car ownership put them at an economic disadvantage.

The report finds that:

Only 7% of white households, but 24% of black households and 17% of Latino (Hispanic) households owned no vehicle in 2000.
In all 11 major cities that have had five or more hurricanes in the last 100 years (Houston, Miami, Fort Lauderdale, Orlando, Jacksonville, St. Petersburg, Tampa, New York City, Providence, Boston, and New Orleans), people without cars are disproportionately people of color.
In the case of a mandatory evacuation order during a disaster, of those who say they would not evacuate immediately, 33% of Latinos, 27% of African Americans, and 23% of whites say that lack of transportation would be an obstacle preventing them from evacuating.
Evacuation planning tends to focus on traffic management for those with cars and on institutionalized people, not on non-institutionalized people without vehicles. New Orleans had only one-quarter the number of buses that would have been needed to evacuate all carless residents.
In the counties affected by Hurricanes Katrina, Rita and Wilma in 2005, only 7% of white households have no car, compared with 24% of black, 12% of Native American and 14% of Latino households.
The stereotype that black people own expensive cars is inaccurate. In fact, their median car value is half (or less) of whites, according to the Federal Reserve.
Eleven percent of African-American families and 21 percent of Latino families have missed out on medical care because of transportation issues, compared to only 2 percent of white families, according to the Children’s Health Fund.
The median net worth of white families increased about 6% after inflation from 2001 to 2004, to $136,000, while the black median stayed unchanged at $20,000, according to the Federal Reserve.
Transportation is the second biggest expense for American households, after housing, according to the Surface Transportation Policy Project.

Overall, there is a correlation between vehicle ownership and economic prosperity. Cars give access to wider choices of jobs, entrepreneurial opportunities and healthcare. Many small businesses require a vehicle, such as gardening and catering.

The report concludes that car ownership is a vital part of the American Dream. However, the solution is not simply to provide all residents with their own cars. The report suggests improvements in public transportation and disaster planning, as well as narrowing the racial wealth divide to enable more car purchases.

One of the report’s co-authors, Emma Dixon, went without electricity in her Louisiana home for a week after Hurricane Katrina. The others, Meizhu Lui and Betsy Leondar-Wright, are also co-authors of the forthcoming book The Color of Wealth: The Story Behind the US Racial Wealth Divide (New Press, 2006). All work for United for a Fair Economy.

Stalling the Dream is the third annual Martin Luther King Day report from United for a Fair Economy, following State of the Dream 2004 and 2005.

United for a Fair Economy is a national non-partisan, non-profit organization that raises awareness of the dangers of growing economic inequality.