Mar 8, 2014
Breaking the Chains of Debt Peonage
Posted on Feb 3, 2013
By Chris Hedges
As Michael Hudson has pointed out, financialization has created a new kind of class war. The old class warfare took place between workers and bosses. Workers organized to fight for fair wages, better work hours and safety conditions in the workplace as well as adequate pensions and medical benefits. But with a country of debtors and a government that must also borrow to continue operating, Hudson says, we have changed the way class warfare works. Finance, he points out, controls state and federal policy as well as the lives of ordinary workers. It is able to dictate working conditions. The financiers, who insist that cuts be made so governments can repay loans, impose draconian austerity and long-term unemployment to, as Hudson told a Greek newspaper, “drive down wages to a degree that could not occur in the company-by-company clash between industrial employers and their workers.”
The former Federal Reserve Chairman Alan Greenspan, testifying before Congress, was quite open about the role of debt peonage in keeping workers passive. Greenspan pointed out that since 1980 labor productivity has increased by about 83 percent. Yet real wages have stagnated. Greenspan said this was because workers were too burdened with mortgage debts, college loans, auto payments and credit-card debt to risk losing a job. Household debt in the United States is around $13 trillion. This is only $2 trillion less than the country’s total yearly economic output. Greenspan was right. Miss a payment on your credit card and your interest rates jumps to 30 percent. Fail to pay your mortgage and you lose your home. Miss your health insurance payments, which have been spiraling upwards, and if you are seriously ill you go into bankruptcy, as 1 million Americans who get sick do every year. Trash your credit rating and your fragile financial edifice, built on managing debt, collapses. Since most Americans feel, on some level, as Hudson points out, that they are a step or two away from being homeless, they are deeply averse to challenging corporate power. It is not worth the risk. And the corporate state knows it. Absolute power, the philosopher Thomas Hobbes wrote, depends on fear and passivity.
The only way to break this fear and passivity is to organize workers to break the cycle of mounting debt. And the first step to achieving independence from debt—the primary form of political control by the corporate state—is to raise the minimum wage. There are other solutions—forgiving mortgage and student debt, instituting universal health care, establishing a nationwide jobs program to rebuild the country’s Third World infrastructure, and green energy—but none of this will happen until we are able to mount a sustained mass movement that discredits the corporate state. This mass movement will arise, as Nader says, when we mobilize around the minimum wage.
The lowest-grade worker at the General Electric plant that makes high-tech health care devices outside Paterson in Totowa [New Jersey]—a pay grade known as the D 04—was just raised to $14,555 a year. That is under $8 an hour. The plant’s highest-paid hourly employee, known as D 16, earns $22,000. Immelt makes over $11 million a year. This vast disparity in income, and this wage abuse, is played out in every corporation in the country. No one in Washington intends to challenge it.
Nader is right when he warns that we are not going to be assisted in this effort by established unions. Union leaders are bought off. They are comfortable. They are pulling down at least five times what rank-and-file workers make. Nader says we have to mount protests not only outside the doors of Walmarts and General Electric plants, not only outside congressional offices, but outside the doors of the AFL-CIO. There is no established institution inside or outside government that will help us. They are all broken or complicit. But there are the 30 million working poor who, if we organize to break the system of debt peonage that holds them hostage, may be willing to rise up. We are bound with many chains and shackles. We will have to break them one at a time. But once we rise up, once we are able to threaten the corporate systems that keep us supine through fear, we will unleash a torrent of energy and passion that will confirm the worst nightmares of our corporate overlords.
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