Politics Is Fundamentally A Conflict Between The Sellers Of Things & The Sellers Of Labor
By David Grace (www.DavidGraceAuthor.com)
At its root, political “isms” — communism, socialism, monarchism, libertarianism, anarchism — have always been about the struggle between the people at the top and the people on the bottom, a struggle between the people who sell things versus the people who sell the labor that makes the things.
Each side has developed their own political religion whose rules seek to justify running the country in a way that benefits their side at the expense of the other.
The Feudal System
When the world operated under a feudal system, the people at the top owned the land and the people at the bottom worked the land. If you think of farms as facilities that produce food, you realize that the rich owned the facilities that produced the food and the poor, the serfs, supplied the labor that grew the food.
The Middle Class
As technology advanced, a new class emerged, people who neither provided products nor provided the labor used to make the products. The new class sat between the sellers of goods and the sellers of the labor that made the goods.
The new class was the traders and merchants who bought and sold the products, transporters who shipped the products, engineers who designed the roads and bridges that transported the products, lawyers and bankers who staffed the legal and economic system that facilitated the sale of the products, doctors, architects and craftsmen who serviced the needs of the owners of the facilities that built the products.
Now we had three major classes: the rich who owned the facilities that produced the goods, the poor who sold their raw labor to create those goods, and the independent, skilled people in the middle, the professionals and merchants, who provided the support and distribution services the rich needed both for themselves personally and for their businesses.
The rich tolerated the professional/merchant class, the middle class, even gave it grudging respect, because it provided expertise that the rich themselves both lacked and needed.
No Respect For Unskilled Workers
The rich never respected the unskilled workers who staffed their farms and factories. As far as the rich were concerned, unskilled workers were uneducated, talentless, stupid and crude. Moreover they were believed to be lazy and dishonest, ready to slack off and steal any time they were given the opportunity.
The rich always viewed the sellers of the unskilled labor that produced their goods as a necessary evil whom they deemed interchangeable and replaceable, like a standardized gear in a steam engine. They paid them as little as they could, used them until they broke, then threw them away and replaced the broken unit with a new one.
From feudal times to today, the sellers of goods viewed the serfs, the peasants, and the unskilled workers as a necessary but unwanted drain on their profits.
Every landowner’s, every manufacturer’s, every employer’s number one goal was and is to have as few workers as possible. When times get bad, the very first thing the landowner and manufacturer does is cut the number of those stupid, lazy, uneducated, and costly workers.
To the owners of the production facilities, a fair wage is the lowest pay that a person would be desperate enough and hungry enough to have to accept.
In the owners’ minds, it takes skill, intelligence, determination and capital to create, operate and grow a business whereas it takes only a strong back to wield a pick or a shovel. How could anyone compare the worth of an entrepreneur or a business owner to that of an illiterate ditch digger?
At First, America Was Different From Europe
In Europe huge tracts of land were owned by nobles. Much of the industrial revolution’s new industries were financed by the nobility. In Europe, wealth was and continued to be concentrated at the top with unskilled workers at the bottom.
But America had no nobility. In the northern states America was a country mainly of small farms and small farmers who both owned the land and also worked the land. One family was both the producer of goods and the provider of the labor that created the goods.
In the south, the land was divided into large plantations and the crops were grown and harvested by slave labor.
Because most Northern farmers were small farmers, the Northern states did not have the same social gap between rich land owners at the top and the poor laborers who harvested the crops at the bottom as was the case in Europe and in the Southern states.
The Industrialization Of America Changed Things
But as America became more industrialized, things began to change.
Toward the end of the nineteenth century and into the twentieth, huge companies began to dominate the economy. We saw the rise of Standard Oil, the Sugar Trust, the power of organizations like the Union Pacific and Southern Pacific railroads and the emergence of the “Robber Barons.”
Increasingly, hugely wealthy and powerful individuals and corporations arose which operated massively wealthy mining, manufacturing and transportation facilities staffed by swarms of unskilled and often foreign-born laborers.
Again, a rich and powerful class of people who sold things viewed the people who sold the unskilled labor that built the things as nothing more than a necessary evil. In the South, most farm labor was supplied by impoverished blacks under a share-cropper system and they were viewed as the lowest of the low.
The Rockefellers, Carnegies, Morgans and the like compared the unique talents, breeding, training, drive, education, intelligence and determination of the captains of industry with the ignorant, talentless, crude, often foreign-born laborers (or in the South, former slaves) whose jobs, they thought, could almost be performed by trained apes, and they concluded that the sellers of unskilled labor should consider themselves lucky that the mines, mills and factories were even willing to pay them enough to keep them from outright starvation.
Heck, they believed that the workers should be thankful that the mine owners allowed them to dig their coal.
The Laborers’ Viewpoint
On their side, the sellers of labor compared the hard, difficult, dirty, dangerous and unpleasant work they performed ten or twelve hours a day, six days a week, with the factory owners’ comfortable, clean and easy paper-pushing lifestyle.
The sellers of labor saw the sellers of the things their labor built as lazy beneficiaries of privilege and family wealth, people who lived a luxurious life and were paid huge amounts for easy work in comfortable circumstances.
From the workers’ point of view, the rich enjoyed wealth derived from their sweat and backbreaking labor, work so onerous that a few years in the mines or on the factory floor would destroy their bodies and by age fifty many of them would be left crippled and useless.
Where the rich compared their talent, education, ancestry and intelligence to that of the workers and found the laborers lacking, the laborers compared the pain, difficulty and unpleasantness of their work with the soft, paper-pushing jobs of the rich and found them lacking.
Each Side Created Their Own Political Religion
Each side evolved political religions designed to justify their view of themselves and their opinion of the others.
These competing political theories, the law of the jungle and share the wealth, were, of course, just excuses, covers, for the advancement of each side’s self-interest and as a justification for their hatred and disrespect of the other.
This conflict between the desires and attitudes of the people who sell things and the people who sell the labor that makes the things is the same in 2019 as it was in 1719 — the obsession of those who sell things with paying absolutely as little as possible to those who sell the labor that makes the things.
The Law Of The Jungle — To The Victor Belongs The Spoils
The sellers of things championed the idea of a society based on the law of the jungle, the survival of the fittest, to the victor belongs the spoils, where they deemed gaining wealth and power to be a contest and their attainment of that wealth and power was proof that they were the fittest and that they deserved to get and keep that money.
Today, their philosophy is called Conservatism or Libertarianism depending on how far the individual takes it.
In their view, life was a battle that they had won, and whatever you could get, you deserved to have, and anyone, including the government, that tried to take away any of your money without your consent was little more than a thief.
To the victor belongs the spoils, and in the societal conflict they viewed themselves as the victors. How dare the stupid, ignorant, lazy, talentless, crude, unskilled workers claim that they were entitled to more than the lowest amount they were desperate enough to accept in order to avoid starvation!
The sellers of things championed a view of freedom of contract where any deal not actually made at the point of a gun was, by definition, both voluntary and fair.
The Justification By The Sellers Of Things
For the sellers of things, their philosophy sought to justify becoming maximally wealthy and their disrespect of the sellers of unskilled labor:
- We’re smart, they’re stupid
- We’re highly educated, they’re barely literate
- We’re sophisticated, they’re crude
- Our talent is unique, theirs is common
- Anyone can hammer a nail. Only we can create a building.
The problem with a law of the jungle/to the victor belongs the spoils system is that it inevitably leads to a plutocracy and an impoverished lower class. Wealth and power concentrate at the top and poverty concentrates at the bottom.
This is happening in a big way in the United States today.
As one might conclude, the unskilled workers’ political philosophy was strikingly different.
Share The Wealth — Social Justice
In the workers’ view, agreeing to work for indentured-servant wages when the alternative was starvation was not a voluntary agreement at all, and was no more of a fair agreement than claiming you got a fair outcome if you put a crippled, old woman in the ring against a champion brawler.
The workers’ philosophy was that they provided the hardest, most unpleasant component in the chain of production and that they therefore deserved at least an equal share of the profits.
Their complaint was, “We build the products with our hard work while they do little and keep all the money.”
The labor sellers evolved a philosophy that justified sharing the wealth, so-called social justice, and claims of an inherent human entitlement to a minimum standard of living without reference to the individual’s abilities or efforts.
The Reaction Of The Sellers Of Labor
Eventually, the people on the bottom fought back, but that fight often proved counter-productive to their cause.
The 1789 French Revolution was such a response, but it was so extreme that it painted those on the bottom as monsters.
The Russian Revolution and its new communist government was another reaction to the vast disparity in wealth between those on the top and those on the bottom in the plutocratic societies.
Instead of promoting a policy of taxes, profit caps, and business regulation, the communists decided to do away with the makers of things altogether and have the government build and sell everything.
It was an incredibly stupid plan that ignored fundamental human nature and was bound to fail. And it did.
The Rise In The Power Of The Sellers Of Labor
In the early decades of the twentieth century the sellers of labor realized that they could not get higher pay unless they were able to increase their bargaining power. They did that by banding together in unions.
The unions forced large producers to provide fringe benefits and pay higher wages.
The unions, the labor shortage of WW II, and the post-war economic boom further increased the workers’ bargaining power, and the wages for unskilled labor increased.
In the mid-twentieth century the United States pursued a middle path with restrictions on the power of the sellers of things through regulation and taxation together with an attack on the wealth gap via graduated income taxes and a national minimum wages.
In the Mid-20th Century The Sellers Of Things Counter Attacked
The sellers of things hated paying more to unskilled laborers whom they still viewed with contempt.
In their minds, unskilled workers had never stopped being lazy, stupid, ignorant, undeserving drains on their wealth. The sellers of things never abandoned the belief that they should be able to pay the sellers of labor very little and get rid of them whenever they became old, injured or unnecessary.
The sellers of things wanted a return to unrestrained wealth for those at the top, unrestrained profits for their corporations, and a workforce so poor that the laborers would be forced to take any job at any price they offered and not complain.
In the 1970s and beyond the sellers of things increasingly strove to increase their profits by avoiding the rising costs of unskilled labor that the unions had forced on them.
They realized that they could have their products made someplace where
- There were no unions,
- There was no minimum wage,
- No obligation to provide medical care for people injured on the job,
- They could return to the days when there were no rules,
- They could pay workers the very smallest amount that they were desperate enough to have to accept in order to avoid starvation,
- Unskilled laborers would work for fifty cents an hour and be happy to have the job.
They discovered places like Taiwan, Korea, Mexico, to name a few.
As technology advanced, automation also became an ever more cost-effective way of getting rid of those pain-in-the-ass, lazy, stupid, demanding, ungrateful, ignorant and expensive workers.
The impoverishment of the working class is a huge benefit to the sellers of goods because:
- The poorer the sellers of labor are, the less bargaining power they have.
- The lower their bargaining power, the lower the wages that they can be forced to accept.
- The lower their wages, the higher the company’s profits.
This creates a feedback loop: lower wages → more poverty → more poverty →lower bargaining power → lower wages
The sellers of things evolved several allies and tools to help them achieve this goal of the impoverishment of the sellers of labor and the consequent reduction in the amount they had to pay for labor.
The Communist Bogey Man
Communism’s spectacular failures gave the sellers of things a bogey man to point to whenever the sellers of labor tried to change the legal or economic system.
“You can’t listen to them,” the rich could shout. “They want to impose that horrible communist system on us. No, we need to be free. Free of rules. Free of taxes. Free of regulations. Anything else will doom us to living under a totalitarian communist regime.”
Get The Middle Class On Your Side
The middle class, composed of professionals and small business people, never had a high opinion of unskilled laborers — stupid, lazy, crude and talentless — and were not especially concerned with their welfare.
The upper middle class had always admired the upper class which they hoped they, or their children, would join. They also had no concern for the welfare of unskilled workers.
The sellers of things were able to frighten both the middle and upper-middle classes with warnings that progressive taxes, minimum wages and corporate regulations were steps toward the dreaded, failed, toxic, socialism.
“The lazy, poor people are coming for your money,” the sellers of goods warned. “They want to take the money from hard working people so they can lie around and buy drugs and alcohol without having to work at all.”
Not only was the government in league with the lazy people who wanted to steal their hard-earned money, they warned, but the government was also out to take away their freedom.
The government was the enemy and the weaker the government, the better off everyone, except the lazy, stupid, unskilled people who didn’t want to work, would be.
The sellers of things also worked to entice the middle and upper-middle classes with the idea that they too could become rich if only the government would turn the sellers of things loose to do whatever they wanted.
Their mantra was that less government, less regulation, and less taxes on corporations and rich people would be better for everyone except the lazy, stupid people who wanted free money without work.
To this threat of a communist or socialist bogey-man society and the claim that the opposite of communism was an unregulated business class and a law of the jungle society, the sellers of things added a carrot in the form of so-called “trickle-down” economics with the claim that making rich people and big corporations richer would be good for everyone.
We still see today the claim that “freedom” means businesses being free to pay as little as workers are desperate enough to have accept, that the freedom of contract means that when a worker says “yes” to a demand of “Take this job at slave wages or starve” that the worker’s consent to that offer is voluntary consent.
We still see today the claim that “freedom” means that massively powerful corporations are free to do anything and everything they can get away with short of outright robbery at the point of a gun.
- The government is your enemy
- Making rich people richer is good for everyone
- Freedom is the most important thing and freedom means no business regulations and no minimum wage
- Getting rid of jobs that could be unionized by shipping production overseas,
- Legislation that weakens unions
- Allowing the Federal minimum wage to fall far behind inflation*
*The current federal minimum wage would need to be increased by 42% to equal what it would have been if the 1963 minimum wage had merely kept pace with inflation.
- Reducing or eliminating taxes on the rich
were remarkably successful in making the sellers of things much, much richer and making the sellers of unskilled labor much, much poorer.
It Worked — The Rich Became Much Richer & The Poor Much Poorer
Top 1% Household Wealth Vs. Median Household Wealth
In the early 1960s, the average net wealth of the households in the top 1 percent was about 125 times greater than the median wealth in the United States.
By 2004, the average net wealth of the households in the top 1 percent had grown to 190 times the median household wealth, an increase of 152%.
Top 20% Household Wealth Vs. Median Household Wealth
In the early 1960s the average household wealth of the top 20 percent of households was 15 times greater than the median household wealth.
By 2004, that had grown to 23 times more. An increase of 153%.
Top 10% Wealth Today Vs. Top 10% Wealth In 1965
After adjustment for inflation, the average wealth of the top 10% of households in 2016 was almost six and a half times (640%) greater than the average household wealth of the top 10% in 1965.
The average wealth of the bottom 10% of households in 2016 was a negative number that was over ten and a half times (1060%) greater than the negative average household wealth of the bottom 10% in 1965.
Over those 51 years the top 10% has gotten more than six times richer while the bottom 10% has gotten more than ten times poorer.
90th Percentile Income Today Vs. 90th Percentile Income in 1965
After adjustment for inflation, in 2016 the average household income of families in the 90th percentile was almost twice as much (a 92% increase) as the average household income of families in the 90th percentile in 1965.
10th Percentile Income Today Vs. 10th Percentile Income In 1965
After adjustment for inflation, in 2016 the average household income of families in the 10th percentile was only 9% greater than the average household income of families in the 10th percentile in 1965.
90th Percentile & 10th Percentile Income In 2016 Vs. 1965
Adjusted for inflation, over that 1965–2016 period the average household income of the people in the 90th percentile has grown 10 times more (increased by 92% vs. increased by 9%) than the average household income of the people in the 10th percentile has increased.
These numbers don’t take into account the massive acceleration we will see in this trend in the coming years from the Trump tax cuts.
For more wealth and income details, see my column:
The Sellers Of Goods Won
So, today the sellers of goods have vanquished the sellers of unskilled labor. But, the accelerating poverty of the sellers of labor will have to be dealt with in some way.
How Do We Deal With The Resulting Poverty?
Right now, the main tool dealing with that huge poverty of the bottom 20% is state and federal welfare programs — food stamps, Section 8 housing, Medicaid.
Almost 10% of the population qualifies for food stamps. About 20% receives Medicaid.
In the future this mass poverty can be dealt with in several different ways.
Raise The Minimum Wage?
The government could raise the pay of the unskilled workers to a level where they would no longer qualify for welfare. The sellers of things oppose this method because they would have to pay 100% of this money via higher wages which would mean lower profits and thus less wealth for them.
More Welfare Funding?
A second mechanism would be continued or increased federal welfare programs. This is politically unpopular and comes with a high overhead cost.
Top 10%’s Preferred Choice — A Universal Basic Income/Negative Income Tax
The third option that is becoming more and more popular with the top 10% is some form of Universal Basic Income cross bred with a negative income tax.
Essentially, everyone whose income was below a certain level would get a monthly check from the government designed to increase their annual net income to some set level.
Why The Top 10% Prefers A Universal Basic Income Scheme
For several reasons, this would be far more beneficial to the sellers of things than higher wages paid directly to workers:
- Higher wages would be paid 100% by the sellers of things and would decrease their profits.
- Only a portion of the cost of a UBI would be paid by the sellers of goods with the rest being paid by the middle and upper-middle class in the form of increased income taxes.
- Lower wages decrease the bargaining power of the workers which thus helps to keep wages low
A UBI Increases The Gov’t’s Power Over The Citizens
A UBI also increases the government’s power over the sellers of labor. Since the government is largely controlled by wealthy individuals and corporations, increased government power over the sellers of labor means indirect additional control over the sellers of labor by the sellers of things.
The UBI regulations could and likely eventually would provide that people charged or convicted of certain crimes or conduct would lose their UBI payments. A UBI scheme would make the recipients financially vulnerable to government control.
The actual calculation of a negative income tax payment could be drafted in a way that encouraged or excluded certain types of spending or conduct, thus giving the government the power to exercise financial control over the UBI recipients. The government would not have if the individuals were simply paid a higher minimum wage by their employers.
- If you want to understand the top 10%’s opposition to a higher minimum wage and, instead its interest in a hybrid UBI/Negative Income Tax, now you know.
- If you want to understand why the top 10% wants the bottom 10% to be as poor as possible, now you know.
- If you want to understand why the people in the top 10% want less government, less regulation and less taxes, now you know.
- If you want to understand the basic, fundamental struggle between the sellers of things (rich) and the sellers of labor (poor) now you know.
Whether it’s a feudal economy, an industrial economy, or a technological economy, whether or not you call it conservatism, libertarianism or anarchy on one side or socialism or communism on the other, these political religions are all just excuses designed to justify either the sellers of things paying the sellers of labor very little or justify the sellers of labor being paid very much.
A society that gives either side what they want becomes a plutocracy on the one hand, or a bankrupt, communist wasteland on the other.
Both of those societies are toxic for a majority of their citizens.
The structure of a prosperous, free, socially mobile, low-crime society lies in abandoning both these political religions and adopting pragmatic policies that follow neither the rules of the socialist nor conservative-libertarian political religions.
–David Grace (www.DavidGraceAuthor.com)