Oz
By George Szamuely
The American prisoner population – as I have had occasion to reflect on the matter this week – is rising spectacularly. This is not so surprising. Incarceration is a vital ingredient of American-style capitalism. While Washington pundits and editorial writers high-five one another about America’s apparently unstoppable economy, prisoner numbers increase at an annual rate of more than 6 percent. In 1996 the U.S. prison population was more than 1.6 million. In 1975 it had only been 380,000. In other words, in 20 years America’s prisoner population had quadrupled. In 1996, moreover, 3.9 million people were on parole or probation. This means that 5.5 million Americans were in prison or within the prison system. In mid 1998 the United States had 668 detainees per 100,000 citizens–a rate between six and 10 times higher than that in the countries of the European Union.
The other day The Washington Post ran the standard story about the European economy. There was the usual head-shaking about Europe’s high unemployment rate and the lack of something called "labor flexibility." Unemployment was 9.1 percent, the reporter bemoaned, as against America’s glorious 4.3 percent. European workers are too cosseted and overpaid: "Measures originally intended to shelter workers from the pain of layoffs have had the reverse effect of discouraging companies from hiring people." (I don’t know why newspapers bother to hire reporters anymore. They can as easily get their copy from the corporation press office.)
Suppose, however, that to the American 4.3 percent unemployed you add the nation’s prisoner population. Suddenly, the number of people not in gainful employment in the United States approaches European levels. If, in addition, you take into consideration the vast number of people employed administering this gigantic correctional apparatus, then the dark side of the so-called "Goldilocks" economy becomes apparent.
"Flexible" labor markets produce an awful lot of losers. Such losers have to be accommodated somehow. They can be placed on welfare rolls (the fate in store for women) or they can be shoved into prisons (the fate of men). In the meantime, the downwardly mobile are taught to accept their lot since they know where the bottom rung of the ladder is.
Who benefits from "flexible" labor markets? Certainly it is not American workers. They are doing much worse than workers in Europe or Japan. Recently, the International Labor Organization published a report arguing that "U.S. workers put in the longest hours on the job in industrialized nations, clocking up…the equivalent of almost two working weeks more than their counterparts in Japan where annual hours worked have been gradually declining since 1980." It turns out that in the United States the annual hours worked per person increased by 4 percent from 1980 to 1997. European workers, on the other hand, are progressively working fewer hours. U.S. workers put in an average of 2000 hours per person in 1997; French workers put in 1656 hours; German workers put in 1560 hours.
Not only do American workers work longer hours than their counterparts in Europe and Japan, they are paid less. From 1979 to 1993 the American net wage fell from $500 to $479 a week. In 1975 the hourly compensation cost of a U.S. worker in the manufacturing industry was $6.36 an hour; for a German worker it was $6.31 an hour; for an EU worker $5.03 an hour; for a Japanese worker $3 an hour. By 1997 the respective situations were very different. American workers were paid $18.24 an hour; German workers $28.28 an hour; EU workers $20.24 an hour; and Japanese workers $19.37 an hour.
As for the unemployed, it is clearly far better to be out of work in Europe and enjoying generous welfare payments and medical coverage than being employed and making starvation wages in America.
Still, if "flexible" labor markets are doing little for American workers, they are working wonders for the take-home pay of U.S. corporate chiefs. In 1996 their average pay was $5.8 million (including retirement benefits, stock-option gains and so on). This was an increase of 54 percent over the previous year.
Some years ago, in The Revolt of the Elites, the late Christopher Lasch argued–or I think he did; I don’t have the book at hand–that America’s elite had opted out of America. Through its cultural tastes, exorbitant incomes and political attitudes, it has effectively ceased to belong to America. When it bothers to think about America at all, it is only to berate fellow countrymen for their unenlightened attitudes. The American people are racist, homophobic, devoutly religious, hold retrograde views on art and smoke too much.
If Lasch was right, then America’s elite is extraordinarily ungrateful. For there has scarcely ever been an elite that was as fortunate as America’s in having such a subservient populace under it. Mainstream America is amazingly content with its lot. It would be inconceivable for Europeans to accept a system that rewards a tiny minority so handsomely while forcing everyone else every year to work harder and earn less.
America’s elite has perfected a system to make sure the American people stay in line. The more they are encouraged to abandon their traditions, tastes, prejudices and lifestyles, the more pliant they become with regard to the requirements of the economic system. They are ready to work anywhere, do anything and take as little pay as possible.
In the meantime, America’s elite embraces the ideology of free trade with almost religious fervor. It serves its interests very nicely. Corporations can switch their operations around the world. Goods from the supposedly "uncompetitive" Europeans and the imitative Japanese pour in and wipe out America’s industries. Normally, this would cause unemployment. It would do so in the United States too, were there not a mechanism in place to take care of it. High immigration levels help drive wages down. "Flexible" labor markets instill in workers a permanent fear of unemployment. High rates of incarceration make sure that the system’s losers are kept out of sight and the downwardly mobile are more than happy to take whatever miserable jobs they are offered.
The trade deficit is also taken care of. As everyone knows, the net outflow of capital must always equal net the inflow of capital. What America loses through wrecked industries is "paid" for by the capital that pours in every year buying up Treasury bonds as well as company stocks. Hence, the apparent paradox: U.S. companies move out while Wall Street is perpetually booming.
Europe’s elite looks with envy at its American counterparts. For years Europe’s employers have been trying to get workers to swallow their bitter medicine as uncomplainingly as the Americans. First Chancellor Kohl tried to force German workers to accept cuts in pensions, vacation time and health benefits. He was swiftly ejected from office. Now it is Chancellor Schroeder’s turn to take up the cause of "flexible" labor markets. He will be ousted even faster than his predecessor was. Unlike the workers of America, those of Germany do not seem to want a perpetually deteriorating way of life. They are unable to see the necessity of mass firings that serve no other purpose than to improve a company’s balance sheet and thereby raise the value of its stock. They get very unhappy when high immigration levels keep pay down. In other words, they want no part of an economic system whose raison d’etre is that people must sacrifice themselves for the sake of its smooth functioning.
Europe may not have America’s low unemployment rate. Neither does it have a miserable mass streaming in and out prison cells or welfare centers, and an even bigger mass terrified that that is where they are going to end up.
[end]
Carl Remick
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