Shared Prosperity Denied – 1880s to the early 1930s

The 50 years from the 1880s to the early 1930s saw extraordinary changes in American life.  Rapid urbanization, massive immigration and the decades-long “Great Migration” of millions of African-Americans from the South to northern cities created teeming cities.  Rapid industrialization coupled with the world’s largest railroad network made us the leading industrial power in the world.  Technological innovations such as the telephone, motion pictures, electrification of factories, cities and homes, automobiles, and the radio revolutionized how many people lived and their views of the future.

Amidst the great changes, the country seethed with discontent as powerful corporations and spectacularly wealthy people amassed unimagined wealth.  At the same time, millions of workers and farmers performed grueling work and lived in chronic fear of hard times.  Peoples’ standards of living were rising and yet massive poverty remained.  Multiple financial panics, depressions and recessions periodically threw millions into abject poverty, insecurity and misery amidst the greatest wealth the world had ever seen.

Throughout these decades, the people struggled mightily to limit the power of corporations, the wealthy and their political allies in the Republican and Democratic Parties.  They wanted a more just system that shared the wealth fairly, provided greater security in hard economic times, expanded our democratic rights at work and in the larger community, created greater opportunity for education, and reduced work hours to allow more time for family and community life.

In very human terms, people wanted an adequate income when they were unemployed, unable to work or too old to work.  We wanted their families were adequately fed, clothed and housed.  They wanted an end of abusive child labor and free compulsory quality education for their children.  They wanted a more secure, just and hopeful future free from fear of want and deprivation in the land of plenty.  They wanted the right to organize unions, rights and dignity on the job, and safe and healthy workplaces.  They wanted a greater voice in political and economic life.

The demands for economic justice were largely thwarted for decades as Corporate America dominated economic and political life throughout most of the period.  Frustrated by the two major political parties’ unwillingness to address their great grievances, many people turned to new third parties – Greenbacks, Populists, Socialists, Progressives, and Communists and other organizations advocated broad changes.  They were looking for broad alternatives needed to change a system that simultaneously produced enormous wealth and perpetuated needless misery, exploitation and hardshipploitation and hardship.

At the same time, millions of workers struggled to organized unions and create a more democratic workplace in which they earned a fair wage in safe conditions.  Lacking legal rights to form unions and massive repression from governments supporting corporations, organized labor remained weak despite widespread demands for worker justice.

The growing people’s demands for expanded economic and political justice and rights were severely undercut by deep divisions among the people.  First and foremost, widespread racism and anti-immigrant hostility harmed millions and served the “divide and conquer” strategy of corporate America.  Culture wars against women’s rights including the right to vote, prohibition, evolution and religious bigotry against Catholics and Jews deepened the splits among working people.  Last but not least, government repression of radical organizations, and unions deepened these divisions.  All of these divisions served the interests of corporate America and not the people.

Despite corporate domination and deep divisions among the people, significant people’s victories were achieved.  Federal constitutional amendments for direct election of senators, a progressive personal income tax, and women’s right to vote were won.  Banning corporate campaign contributions was a first step in weakening the corporate stranglehold on national elections.  Many state worker compensation and child labor laws were won and free compulsory education spread across many states although racism denied millions of black children equal quality education.

At the end of the 1920s, corporate America and their political allies seemed firmly in control.  Their world view that largely unregulated free enterprise without interference from government, unions or other political movements was best for the people was deeply entrenched in American life.  The people were told that an economic and social safety net was not needed.  The future was bright.  To quote President Herbert Hoover in early 1929:  “We in America today are nearer to the final triumph over poverty than ever before in the history of any land.”

Six months later, the stock market collapsed and the Great Depression began.  The people would suffer immensely and would reap the whirlwind of their inability to overcome their deep differences and win their demands for economic and political justice.  It was a truly dark period yet the seeds of fifty years of fighting for justice were growing in harsh soil and conditions.

Mid-1930s to late 1970s: Moving toward shared prosperity

Part 2 of a four-part series – Making the American Dream Real for Everyone

At the outset of the 1930s, working people were enduring records levels of unemployment, widespread homelessness, hunger and loss of farms and homes. Millions lost their life savings in the collapse of the banking system. In the midst of an unparalleled economic crisis, working people had neither an economic or social safety net, nor the right to organize unions.

Yet by the late 1930s, our grandparents’ generation had won Social Security, unemployment insurance, public assistance for poor families, the minimum wage, overtime pay, the right to organize unions in the private sector, child labor and welfare protections, housing assistance programs, bank deposit security, strong controls over the financial industries, and assistance for struggling farmers. Although people of color and women were denied many of these rights and benefits, for millions it was a dream beginning to come true.

After 50 years of bitter defeats, how did we the people achieve these historic victories in the face of the worst depression in our national history? They were the fruit of mass organizing in workplaces and communities across the country, and growing unity among working people and the unemployed. Millions began to understand that, to win a better life for working people, employed and unemployed alike, racism, religious bigotry, sexism and anti-immigrant hostility had to be overcome. The newly-won right to form unions and the militant tactic of the sitdown strike — workers occupying their workplace — in effect the “Occupy Movement” of the 1930s – were instrumental in the building of a powerful labor movement.

These worker occupations of factories and other workplaces coupled with massive community support across much of the country doubled the size of the labor movement in less than five years. Newly won power in the workplace and widespread political organizing laid the foundation for our greatest period of shared prosperity over the next 40 years.

The end of World War II ushered in more than 30 years of strong economic growth that was shared more fairly than at any time in American history. By the end of she 1970s, poor, working class and middle class families saw their incomes double after inflation. Income growth for the wealthy grew more slowly thereby narrowing income inequality. People of color and women saw their incomes continue to lag behind whites and men but the gaps were narrowing.

After World War II Corporate America counterattacked,. The Taft-Hartley Act slowed and reversed the growth of the labor movement. At the same time, the corporations and their political allies launched the Red Scare (McCarthyism) to weaken the unions, intimidate people into political passivity and stop any new initiatives to expand the reforms of the 1930s. They were largely successful. One of the first major casualties was the defeat of President Truman’s National Health Care program. The 1960s saw another wave of widespread organizing for greater economic and social justice,: Civil rights, women’s rights, ending the Viet Nam war, environmental protections, and expanded rights for people with disabilities and for gays and lesbians. A major difference between the 1930s and the 1960s was that the labor movement was no longer leading these struggles and was deeply divided.

Yet there were new people’s victories — the passage of landmark legislation for civil rights, voting rights, equal pay, clean water, clean air, environmental protection, pension protections, affordable housing and anti-poverty programs. In less than 15 years, poverty was cut in half. On the other hand, badly needed labor law reform was defeated despite a Democratic president and strong majorities in Congress.

Substantial progress was coming to end. The social upheavals of the 1960s were marked by increased racial tensions, the Viet Nam war, clashes on the issue of abortion, and the new strengths of the women’s and gay and lesbian movements. These developments, coupled with three recessions during the 1970s, sowed deep divisions among working people and their historic allies. An increasingly aggressive corporate America supporting a resurgent right wing was poised to launch a decades-long counterattack to fundamentally shift the direction of the country. By the end of the 1970s, the counterattack was taking its toll, as both labor law reform and the Equal Rights Amendment for women were defeated.

What was the corporate strategy and how was it implemented? This is the subject of Part 3 of this series.

Corporate America’s Counterattack against the People – 1970’s Forward

By the early 1970’s, Corporate America was on the defensive as strong movements for racial justice, a cleaner environment, safer consumer products, women’s rights, and worker protections successfully pressured Congress to pass major legislation. Corporate power was being limited in areas of racial, gender and age employment discrimination, polluting the environment, selling unsafe and unhealthy consumer products, and keeping workplaces needlessly unsafe and unhealthy. This was the second major wave of reform in less than 40 years that further limited the power of corporations and expanded greater economic and social justice.

These great people’s victories provoked deep discussions among Corporate America about how to reverse this loss of power and regain dominance. On August 23, 1971, Lewis Powell, an influential corporate lawyer, wrote a confidential memo to the U.S. Chamber of Commerce entitled “Attack of the American Free Enterprise System.” This influential document described an alleged systematic assault on the survival of free enterprise. Most importantly it laid out the need and strategy for Corporate America to launch a broad based long-term counterattack against their enemies.

Powell called for broad-based, long-term educational campaigns and aggressive political action to regain corporate dominance. Re-establishing the primacy of business perspectives on economic life and the central role of business in our nation was needed. He singled out the key targets as business critics from the universities, the pulpit, and the media, thought leaders in the arts and sciences and unreliable politicians. To quote Powell, “The first essential is to establish the staff of eminent scholars, writers and speakers, who will do the thinking, the analysis, the writing and the speaking. It will be essential to have staff personnel who are thoroughly familiar with the media, and how most effectively to communicate with the public.”

His strategy was clear and direct: Develop the idea machine to shift public consciousness, effectively work the media, and relentlessly attack the enemies of Corporate America. Again to quote Powell, “It is essential that spokesmen — at all levels and at every opportunity — be far more aggressive than in the past. There should not be the slightest hesitation to press vigorously in all political arenas…Nor should there be reluctance to penalize those who oppose it…The type of program described above . . . if undertaken long term and adequately staffed, would require far more generous financial support from American corporations than the Chamber has every received in the past.”

Two months after Powell wrote this secret memo, President Richard Nixon nominated him to serve on the U.S. Supreme Court. Congress confirmed him. Powell was not the only corporate advocate calling for a broad-based war of ideas and disciplined political action to regain corporate dominance. This was not conspiracy theory run amok but very thoughtful strategic thinking and planning. Did anyone listen to Powell and his ideas?

The 1970s and 1980s saw an explosion of corporate-oriented think tanks: The Heritage Foundation was founded in 1973; The Cato Institute (1974); The Manhattan Institute (1978); Citizens for Sound Economy (1984) founded by the Koch Brothers; State Policy Network (1986) which has 59 affiliated state think tanks. The long established American Enterprise Institute grew from 10 to 100 staff between 1970 and 1980. There are others.

With the idea machine well-funded, Corporate America and their intellectual and political allies unleashed a decades-long war of ideas. They triumphed with the election of Ronald Reagan, the Great Communicator, who promised a new day in America.

The message was simple and clear. Government is the enemy strangling the free enterprise system. Get government off the back of business and the people through deregulation. Cut taxes on corporations and the wealthy to spur job creation and prosperity. This came to be known as known as trickle-down economics. Cut government social programs because they weaken the people they claim to help. Privatize government whenever possible because the private sector is always more efficient than the government. Last but not least, promote free trade and export manufacturing jobs. We don’t need to make things any more. This bold approach would bring rising prosperity to our nation and the people. Trust Corporate America. They will deliver.

The late 1970s and early 1980s were a fundamental turning point in how our nation would approach issues of economic justice and fairness. Our nation embarked on a great experiment. How did it work? Part 4 next month will tell that story.

(Mark MCDermott is a member of the PSARA Execuive Board and the developer of an economic justice education program.)

Corporate America Stole Our Broadly Shared Prosperity 1980 to Today

The election of Ronald Reagan in 1980 set the stage for Corporate America’s all-out offensive to reassert their domination of our country and economy. Armed with a comprehensive political and economic strategy, a well-oiled propaganda machine, vast financial resources, a clearly articulated vision and values for America, and a resurgent right wing, the offensive began in earnest.

Relentless attacks against working people and unions, major cutbacks in critical social programs, extensive deregulation of financial industries and other key industries, large tax cuts for corporations and the wealthy, and aggressive promotion of free trade and the export of manufacturing jobs were the centerpiece of the big promises to restore widespread prosperity. At the same time, major increases in military spending were coupled with a more aggressive foreign policy. To quote a famous 1984 Reagan re-election ad: “It is morning in America again.” Unfortunately, for millions of hard-working and poor Americans, it was “Mourning in America again.”

What happened under the new corporate dominated regime? Good-bye shared prosperity. Hello stolen prosperity. No longer would Americans, poor, working class, or middle class share fairly in the growing wealth of our nation. My proof? Sometimes pictures are worth a 1000 words. Look the first graph.

During the shared prosperity of the late 1940s to the late 1970s, all income groups of families saw their average incomes double after inflation with the exception of the richest 5%. It was period in which a rising economic tide was lifting all boats. Poverty rates plummeted, income gaps between whites and people of color were narrowing and women began to gain on men.

Many challenges remained to create shared prosperity, and genuine economic opportunity and security for all Americans. However our long-term direction of the nation was producing greater opportunity and security for most Americans. Now look at the second graph.

Since the late 1970s, shared prosperity disappeared. The poorest 20% of families saw their average incomes drop by 11%, the lower middle class’s average income only rose 2% and the middle class’s rose only 10%. During the previous 3 decades the income gains income of these three groups were 116%, 100% and 111%.

The past three decades have been wonderful for the super-wealthy and corporate America. Between 1979 and 2006, the average income for the richest 11 thousand American families rose 386 percent. In 2006, their average income was $35.5 million. Tax rates for the super-wealthy were also cut. By 2010, corporate after-tax profits as a share of the total national income reached a record high while federal corporate tax rates reached the lowest point in more than 60 years. Times have never been better for Corporate America.

Today, we are still recovering from the worst recession since the 1930s. High levels of unemployment, mortgage foreclosures, poverty, and hunger and widespread economic insecurity remain serious problems. To understand the way forward to a renewed broadly shared prosperity and secure future, we must acknowledge that both Republicans and many corporate Democrats strongly supported financial deregulation which allowed Wall Street and Corporate America to collapse the economy and steal our shared prosperity.

Today, we face a crossroads in our nation’s history. The election of Mitt Romney will unleash a new wave of corporate domination and continuation of policies that advance the wealthy and powerful at the expense of the people. The re-election of Barack Obama is critical but it is far from enough. Next month we can begin to explore the long-term strategy to bring renewed economic security and opportunity for all Americans.

Learning from the past to build a brighter future

We live in difficult times. For more than three decades, working people, seniors, the poor, the young, people of color, women, immigrants and people with disabilities have faced growing threats to our economic well-being and security. Our nation is one of the wealthiest countries in the world and yet tens of millions of us live in poverty, face hunger, fear the loss of our homes or homelessness, worry about affordable quality health care, and hope that our children and grandchildren will receive a quality education. Growing old brings new fears of economic hard times even though we and our ancestors worked for generations to build the great fortunes of our great and wealthy nation. Why?

How can it be that the past three decades of increasing national wealth has resulted in greater economic insecurity and needless suffering? Our country is filled with highly profitable corporations and immensely wealthy individuals, yet we are told that our nation cannot afford to ensure that all of us can live and prosper in genuine economic security and opportunity and in harmony with a healthy environment. Really? This is a lie.

These fears and the people’s struggles to secure a better present and future are not new. Since the 1870s our ancestors and we have faced the economic and political power of corporate America and the wealthy. We have demanded justice, fairness, and economic opportunity and security. It is a relentless battle between two groups of “persons” over how we, the people, will share in our growing national wealth that we help to create. One group is flesh-and-blood human beings who successfully demanded the inalienable rights of life, liberty and the pursuit of happiness stated in our Declaration of Independence. The other group is “non-human persons” called corporations who have been granted by the U.S. Supreme Court many of the same constitutional rights of we flesh-and-blood humans.

In the next three issues of The Advocate, we will explore three periods of American economic and political history: The 1880s to the early 1930s; the early 1930s to the late 1970s; and the late 1970s to the present. We need to better understand the successes and failures of working people and their allies in each period as they worked to build a brighter future filled with growing economic security, opportunity and fairness. We need to learn these critically important lessons of history to help us develop more effective short and long-term strategies to reclaim the American Dream for all people in our nation.

These periods are filled with stories of great people’s victories and defeats. Each period saw the nation’s wealth grow over time, but the periods of the 1880s to the early 1930s and the late 1970s to today were dominated by corporate America. They were plagued by extraordinary levels of income and wealth inequality coupled with high levels of needless economic insecurity and suffering. The early 1930s through the late 1970s saw strong economic growth shared more equitably and growing economic security.

Understanding how our nation moved from a long period of economic injustice to four decades of growing economic justice and then swung back to our current period of growing economic injustice and insecurity is critical to building a better future for ourselves and future generations. These articles are intended to stimulate debate about the road back toward economic justice and a brighter future for all.

Welcome to my website

I have been a political activist for many years working on economic, racial and social justice. Since late 2011, I have been making many speeches and leading interactive economic justice workshops focused on the theme of “Making the American Dream Real for Everyone.” The audiences include many unions and labor organizations, congregations, faith-based organizations, human services providers, immigrant rights activists, students, and homeless advocates.

Many participants have asked for copies of my PowerPoints, videos and other materials and resources they can use. This website is a direct response to their ongoing requests. It provides multiple PowerPoint presentations, videos of the workshop, articles that I have written, and websites and written materials that you might find helpful. Some of the materials are focused on secular audiences and others on faith-based audiences.

This work educates, inspires and stirs working people and their allies to take action to reclaim a more just and secure economic future for everyone. It builds from the economic hard times experienced by participants and those close to them. Anchored in a long historical perspective, we explore the successful and failed struggles of the American people to ensure that economic prosperity and security is shared fairly rather than concentrated primarily among the wealthy and corporations.

You might wonder why I am doing this educational work? Part of my motivation is based on how little working people and their allies understand the role that their ancestors, individually and collectively, played in creating greater economic justice and security and broadening our democracy. Many workshop participants acknowledge that their public school educations largely ignored the critical role played by their ancestors in these great victories.

To quote George Santayana:

“Those who cannot learn from history are doomed to repeat it. Those who do not remember their past are condemned to repeat their mistakes.”

Working people today have been systematically denied a deep understanding of the potential power that they possess based on our nation’s history. Too many of us know very little about the great victories that our ancestors won and how they did it. Those victories helped created a country with greater opportunity and security for many of them to pursue their dreams and offer a brighter future to their children. At the same time, this American Dream has not been realized by millions who were denied real access to these opportunity and security due to racism, sexism, union-bashing, homophobia, anti-immigrant bigotry, other forms of intolerance and discrimination and systematic corporate attacks against their economic and political interests.

This lack of historical economic and political knowledge has a huge impact. Simply put, if we, the people, do not know that people like us have created a better country in the past, we will not think we are capable of doing so today. My work is intended to restore hope for a better future based on our own history as working people and provide opportunities to discuss how we move forward.

The great lesson of our collective history is that working people and their allies can win a long struggle to make the American Dream real for more people. We must be guided by a deeply held vision, core values of fairness, justice and unity, and a comprehensive agenda and strategy that unites our richly diverse nation. When we are disunited, we will not move forward. When we are united, we can move forward.

Again please use any of the materials on the website to move forward our collective efforts to create a more just, secure and hopeful future for all people.

Please let me know what you think of these materials and any suggestions you have for improvements and additions.