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Working In These Times

Friday, Oct 29, 2010, 11:30 am

November 2, Creative Destruction and ‘Repealing the 20th century’

BY Roger Bybee

Millionaire plastics manufacturer and Senate candidate Ron Johnson.  

Well, in a free-market capitalist system, there are always winners and losers. It's creative destruction. That just happens. It's unfortunate. But let's face it, if it weren't for that we'd still have buggy whip companies. —Senate candidate Ron Johnson (R-Wisc.)

As gutsy progressive Senator Russ Feingold (D-Wisc.) has come storming back in recent weeks despite the predicted Republican avalanche, Mr. Johnson is learning that "creative destruction" is not a good campaign slogan.

Feingold highlight's Johnson's use of "creative destruction" in a powerful new  ad featuring workers from Kimberly Paper explaining how they lost their jobs when new owner NewPaper shut down the most productive and technologically advanced paper plant in the state (as discussed here. and here).

Yet "creative destruction" is a remarkably apt term for the corporate strategies that have undermined America's productive base, wiping out 4.9 million industrial jobs and leaving more than 43,000 factories as vacant shells since 1994, when America' officially embarked on the era of "free trade" with  Mexico and China. The "destruction" side has been all too evident.

Moreover, protecting Corporate America's ability to engage in creative destruction is the central reason behind the unprecedented flow of corporate money from the Chamber of Commerce and American Crossroads flowing into this midterm election season.

Sometimes, even some FOX broadcasters will express shock at the greed-driven shutdowns of plants and destruction of communities. Reflecting on the Polaris Corp.'s move from the small Wisconsin town of Osceola to low-wage Mexico, Greta Van Susteren noted sympathetically,

It's a small town of about 2,500—515 employees, 600 families. So that means essentially that every single family lost a job. ... A company like this wiping out a town and moving to Mexico and it's already making 89 percent growth in its stock in a year is not contributing to our economy.

Hardcore rightist Steve Moore of Wall Street Journal editorial page, admitted, "That was the amazing thing about the story. [Polaris] profits were up nearly 90 percent." But he quickly added,  in a remarkably revealing (and callous) statement, "but then this company's primary mission isn't to grow the town, it's to grow their own profits."

JOB DESTRUCTION CENTRAL PART OF THE GAME

To grow those profits, CEOs have shown their creative side by shifting capital away from upgrading factories to betting on the Wall Street casino and exporting more and more productive jobs to Mexico, China, and India, among other low-wage nations.

It has proven remarkably lucrative for them, as CEOs in the top nation's top 100 firms have seen the pay gap between them and their workers rise from 45 to 1 in 1970 to astronomical proportions in 2006, reaching 1,723 to 1, as Les Leopold notes in The Looting of America.

Of course, when economist Joseph Schumpeter coined the term "creative destruction" in 1942, he had something entirely different in mind. He  envisioned a sometimes brutal transition in which capitalism's innovations destroyed outworn productions processes and products and replaced them with superior new methods and opportunities.

He didn't envision an economy where the chance for higher profits in another field meant the wanton destruction of profitable and productive facilities making goods and services that were in demand--and the resulting loss of good jobs.

But in today's America, profit-driven job destruction rules. Virtually no new middle-class opportunities are being created to make up for those being wiped out, with job growth under 1% in the last decade. 

The unemployment situation is actually far grimmer than anyone imagines, and there is little talk about its profound long-term health effects on its victims.  Former NY Times reporter and author David Cay Johnston has revealed that real joblessness is actually more than twice the official rate. He  explains, drawing on official data, that U.S. underemployment and unemployment is worse than we are generally told—around 22 percent, all told."

'REPEALING THE 20th CENTURY'

We have already returned to pre-Depression levels of inequality:

Income disparity in the US is now as bad as it was right before the Great Depression at the end of the 1920s. From 1979 to 2006, the richest 1% more than doubled their share of the total US income, from 10% to 23%. The richest 1% have an average annual income of more than $1.3 million. For the last 25 years, over 90% of the total growth in income in the US went to the top 10% earners - leaving 9% of all income [growth] to be shared by the bottom 90%.

Conservative Universty of Chicago law professor Richard Posner once proudly declared that his agenda could be characterized as "repealing the 20th century..." That also accurately describes the agenda of Ron Johnson and all the other Republican candidates, reciting in robotic fashion the need to restore economic growth by creating a smaller government--and settling for "no compromises," as GOP Minority Leader John Boehner snarled.

The mystical connection between getting out of the recession and cutting government spending is somehow never explained (or challenged much by media figures), just declared emphatically and incessantly. "Taxes cost jobs," Republican ads billboards tell us. The areas of government service to be cut are never specified, as the Republicans religiously adhere to the advice of their media guru Frank Luntz. "This campaign isn’t about specifics," Ron Johnson once declared.

Johnson was trying to conceal both his lack of knowledge and his true agenda, but he's partly right.: This electoral battle between him and Feingold—like many others across the nation—is not about details.

It's between those who seek to proceed with "creative destruction" of the U.S. productive base and the reforms for which working families successfully fought, and those who seek to protect and extend democracy and justice. At heart, this election is about whether or not we will continue to effectively repeal the economic gains of the 20th century.

Roger Bybee is a Milwaukee-based freelance writer and University of Illinois visiting professor in Labor Education. Roger's work has appeared in numerous national publications, including Z magazine, Dollars & Sense, The Progressive, Progressive Populist, Huffington Post, The American Prospect, Yes! and Foreign Policy in Focus. More of his work can be found at zcommunications.org/zspace/rogerdbybee.

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