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June 29, 2016


(1) Walmart, a Southern corporation home-based in Arkansas, is a notorious anti-union firm, and unfortunately, is also the largest employer in America with 1.4 million employees. Its expansion into the North and West has had a profound effect on the incomes of retail workers there and of workers all along the supply chain. Thus when butchers of one Texas Walmart sought to unionize, Walmart responded by eliminating the meat departments from every store in Texas and six neighboring states. Overreaction? Ask those who make policy for Walmart in Bentonville, Arkansas. (Personally, I have not spent a penny in either a Walmart or a McDonalds for 12 years because they treat their workers like dirt, but it doesn’t seem to have had much effect as they continue to be profitable.)

Wages in counties where a Walmart has been operating for eight years (per economist David Neumark) are 2.5 percent to 4.8 percent lower than those in comparable counties with Walmart outlets. Walmart, however, is in lots of counties, and in tandem with Southern manufacturers and the spread of Southern norms, it has brought Northern wages closer to Southern wages. Moody’s Analytics reported in 2008 that the wage gap between states of the industrial Midwest and those of the South – for all workers, not just those in manufacturing – was nearly $7, and that by the end of 2011, the gap had fallen to $3.34.

I do not have such gap numbers for today, but in view of the trend it is safe to say the gap has fallen further, and that at the present rate it will not be long if not already before Southern and Northern wages for all workers will be in parity. How long can aggregate demand in our economy withstand such a low-wage regime as we chug along in this underperforming economy perhaps headed for recession?

When we have such gross income inequality as we have now due to the Walmart phenomenon (and others who have piggy-backed onto their non-union and low wage and right to work travesties), how can workers otherwise participate meaningfully in ending an era of a underperforming economy since they do not have enough wherewithal to create demand in that economy? How is the economy we live in supposed to prosper with the tepid demand afforded by such a poor wage regimen?

What is particularly galling in the Walmart connection is that Walmart’s heirs have more wealth than the bottom 40% of  ALL Americans, clear proof that class warfare is afoot, a war (per billionaire Warren Buffet) “that we have won.” I like to think that war is not over, that workers and other participants in our economy will somehow and someday be awarded their fair share of our economy’s income and wealth, but the statistics I have quoted above give no reason for me to be optimistic that it’ going to happen anytime soon as conservatives vote down minimum wage increases and giant corporations manhandle their workers without statutory restraints such as enforcement of the Wagner Act, among other such legislation on the books which the NLRB is not enforcing.

(2) The Industrial Revolution in Europe (mostly in Britain) was in full swing in the first half of the 19th century and the British economy was particularly dependent upon slave-based cotton imports from the United States. The invention of the cotton gin and the creation of steam-based mills in the English Midlands (notably Manchester) provided the technological breakthrough for the rapid production of goods made from cotton. Between 1790 and 1860, our yearly production of cotton grew from 1.5 million pounds to more than 2.2 billion pounds, from less than 1 percent of the world’s cotton to two-thirds of all the cotton produced. By the beginning of the Civil War, cotton constituted 61 percent of all American exports, and the U.S. was producing 88 percent of all the cotton that Britain imported. By 1830, an astounding one out of six British employees worked in cotton factories!

Industrialists and bankers on both sides of the Atlantic were involved heavily in the “King Cotton” business. New York City, the nation’s financial center then as now, had banks who made loans to southern plantation owners based upon the collateral of slaves and mortgages on plantations, and when the harvest was poor, sometimes foreclosed on loans and became owners of slaves and plantations. It was good business, so good that the mayor of New York City on the eve of the Civil War, Fernando Wood, urged his city to secede from the Union along with the Southerners, proving that greed on Wall Street (with politicians in its pocket) is nothing new in history and that wage slavery (wage inequality) is alive and well and still with us today.

After the war began and the Northern navy blockaded Southern ports (which stopped shipment of cotton to Britain), Britain threatened to join the war as an ally with the South and its slave economy. Britain sent guns and munitions and constructed warships to run the blockade to the South. The British economy depended in no small part on shipments of cotton to the looms of Manchester, which were blockaded. There was little cotton available to the British from the South’s cotton fields following the war due to physical devastation and an end to free (slave) labor in the South, so the colonialist British began to invest more heavily in cotton fields in Egypt and elsewhere to feed their Midlands mills.

(3) Meyerson notes that, ironically, most of the largest factories that have arisen in the South in recent years belong to European and Asian firms that, in their home countries, pay high wages and are entirely and harmoniously unionized, but when they go South, they go native and pay wages and provide benefits well beneath those that such firms as General Motors and Ford offer their employees. The brutal fact is that undergirding such an institutionalized poor pay and anti-union regimen in the South is a lesson in racial politics; the prospect of biracial unions threatened not just the profits but the legitimacy of the elite’s (white) social order, and they’re not having it, even at the cost of reducing their own citizens’ pay and demand factor in their local economies.

One of the outcomes of such commercial Jim Crow conduct of the Southern elites is the following result – German average manufacturing rates of pay (per the Bureau of Labor Statistics as of the latest reporting year of 2011) were $47.38 per hour while ours were $35.53 here (one third less). Little wonder that the German middle class economy is booming while ours is in the doldrums! Aggregate demand is the final arbiter of the ongoing success of any market economy, and ours is tepid in an underperforming economy, which is in turn the result of wage and wealth inequality politicians in this country refuse to do anything about or, as in both the South and North today, actively conspire via power politics to extend!

Meyerson finally notes that never before have GOP-controlled Northern states so emulated the South’s racial suppression and anti-working-class economics. He is right to a fault, and those politicians in charge of such suppression of working-class rights both North and South will, I hope, be removed from office this fall so that we can get back into global economic competition with an end to wage and wealth inequality and a strengthened economy sure to follow.   GERALD     E


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