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Sunday, 06 January 2013 15:50

How the "Fiscal Cliff" Is Making Us All Indebted Servants to Wall Street

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MARK KARLIN, EDITOR OF BUZZFLASH AT TRUTHOUT       cliff7575 Working Class Gets Pushed Off Cliff

In "The Financial War Against the Economy at Large" on Truthout, Michael Hudson of "Naked Capitalism" argues that debt has become the new tool of the oligarchy to turn workers into virtual indentured servants, or would that be indebted servants?

The tactic is to load economies (governments, companies and families) with debt, siphon off their income as debt service and then foreclose when debtors lack the means to pay. Indebting government gives creditors a lever to pry away land, public infrastructure and other property in the public domain. Indebting companies enables creditors to seize employee pension savings. And indebting labor means that it no longer is necessary to hire strikebreakers to attack union organizers and strikers.

Workers have become so deeply indebted on their home mortgages, credit cards and other bank debt that they fear to strike or even to complain about working conditions. Losing work means missing payments on their monthly bills, enabling banks to jack up interest rates to levels that used to be deemed usurious. So debt peonage and unemployment loom on top of the wage slavery that was the main focus of class warfare a century ago. And to cap matters, credit-card bank lobbyists have rewritten the bankruptcy laws to curtail debtor rights, and the referees appointed to adjudicate disputes brought by debtors and consumers are subject to veto from the banks and businesses that are mainly responsible for inflicting injury.

Mike Royko, the deceased legendary Chicago humorist of the working class, once said "If work is so wonderful, why do you have to pay people to do it?"  Or nowadays, that might be updated to mean "If work is so meaningful, why are working people paid so little that they must go into debt?"

The argument on behalf of certainly meaningful but relatively small tax cuts for the so-called middle class family earning $100,000 is to a great degree a farce. This is largely due to the end of the Payroll Tax Holiday. According to The Philadelphia Inquirer, "a worker who grosses $50,000 a year will take home $1,000 less," as a result.  Welcome to what is largely a charade of a tax cut for the true middle class.

Richard Wolff, author the featured Truthout Progressive Pick of the Week "Democracy at Work: A Cure for Capitalism", points out that individual debt increase is a key pillar to the current "fiscal cliff" framing of using a federal debt that largely grew under Bush now being the excuse, as Michael Hudson argues, for selling off national debt through privatization:

Tax favoritism for the wealthy deepens the budget deficit, forcing governments to borrow more. Paying interest on this debt diverts revenue from being spent on goods and services. This fiscal austerity shrinks markets, reducing tax revenue to the brink of default. This enables bondholders to treat the government in the same way that banks treat a bankrupt family, forcing the debtor to sell off assets – in this case the public domain as if it were the family silver, as Britain’s Prime Minister Harold MacMillan characterized Margaret Thatcher’s privatization sell-offs.

Wolff points out that with the general stagnation of wages (adjusted for inflation) over many years, buying power of the working class consumer, as a trend, is only advanced through increased debt.  It is a money-squeeze by the oligarchy, an exquisitely perverse strategy.

Indeed, it has been an Alice in Wonderland version of Ayn Randian destruction of the asset value of the public commons.

In the end, we, the people with the middle class salaries and debts are the ones going over the cliff, with the financiers at the bottom yanking our wallets from our pockets and buying off what remains of the public sector.

(Photo: Wikipedia)