Middle Class Workers of the World?

One of my favorite questions is this: when the heck will the middle classes of various countries dispute the interests of moguls and political bosses rather than generally serving them?

The problem got some attention in the Financial Times in the seventh week of the Writers Guild strike, when columnist John Gapper looked for a trend at the various strikes by the writers, the stagehands, and finally the Viacom temp slaves who got mad about cuts to their health benefits.

As a journalist, Gapper is much like the "knowledge workers" whose labor politics he tries to analyze, and his piece shows how limited the white-collar critique continues to be. The main thing collective bargaining could get these media workers, Gapper says, is "outside the workplace – by providing health and pension benefits that freelance workers do not get." So labor negotiations will be most useful where they don't actually concern labor itself. Ouch!

Why does Gapper say this? Because for him, white-collar workers are too individualistic to want to bargain collectively for wages. That is because they care only about themselves, which means they focus on beating their peers rather than cooperating with them for general improvement:

Collective bargaining has a role in this world – to set standard contract terms or percentages for royalties and residuals – but individual negotiation is where the big money lies. Many technicians and writers are freelancers because it suits them: they get greater freedom to work across the industry and earn more.

Gapper's implicit "should" here is wrong. There's no reason why WGA members should ever leave salaries to individual bargaining: TV writers work in a semi-feudal system of medieval inequality and they do as well as they do only because they have long had one of the stronger unions - collective bargainers - in the country.

As a description of a certain middle-class mentality - his included - Gapper is right. Many of us seem to be primitive, pre-conscious merit fundamentalists who act as though the writer who makes $3 million a picture is a hundred times better than the one who made $30,000. Many of us thus are focused on standing out from our peers rather than rising with them and sharing the spoils - though in reality we generally shared the work.

This is not a uniform middle-class view, however. I have seen the split firsthand in the University of California, where a large majority of those faculty involved in an attempt to raise salary levels (while keeping the peer-review "step system") wanted the solution that would raise the scales for everybody. This majority knew perfectly well that therefore the "high flyers" with large "off scale" salaries would be flying a little closer to the ground formed by the regular salary scale, which was raised to be closer to their cruising altitude. Even many off-scale people - myself included - supported this, though it meant smaller raises for us. The professional school folks were already appeased with their own special higher scales - as were the economists - and finally the opposition was lead by some top administrators in the system and not by the faculty as a whole.

My experience is that the group psychology of white-collar types is like that of everybody else: they will support group advancement until it seems about to screw them. Thus the best way to destroy solidarity isto create lots of internal inequality. The fact that the WGA has held together in the face of its own grotesque pay inequalities is a tribute to the vision of leaders and members alike. Needless to say, the inequality boom in the US and UK over the last thirty years has both splintered the middle class and made the post-war practice of general development seem naive. Once many people begin to think that the best way to damage their own well-being is to work for collective betterment, there will be no more work for this betterment.

The Right understands this quite well: its success is based largely on creating higher levels of individual insecurity and fear, for these gnaw at social projects until they are dead. Liberals and leftists still often blame the duped lower-middle and white working classes for their political failures - witness the ongoing popularity of Tom Frank's dupe theory of Republican victory, which says well, all those millions of folks just voted against their own economic self-interest! But the real reason for the Right's success is that the professional center - the media- and sometimes university-based official intellectuals of the middle-class - abandoned Left social projects as having no dependable payoff for themselves.

To some extent the professional center has been right: the top 5 percent (above @ $150,000 family income in 2006) of every society gets not so much out of public services as they do from private treasures - Harvard, not UC Irvine; a borrowed Malibu Colony beach estate, not a nice chain hotel in Miami Beach. So there is always some good chunk of the middle class trying to get to the very top by adopting the views of the people already there, and in the U.S. these views are 99 percent business and 1 percent social (1 percent is the proportion of their net worth that charities try to extract annually from the wealthy).

But the bigger reason that the middle (and working) classes have lost their social projects is that the Right has a) ideologically reviled and b) functionally degraded all public operations - schools, hospitals, transportation, water delivery, food inspection, environmental protection, you name it - so that the middle and working classes alike can no longer believe that these operations will work for them. The game then becomes everyone for themselves - take your kid out of the public school rather than helping to fix it, buy a bigger car rather than taking the bus, etc. etc. The environmental damage of all this panicky self-interest is obvious. The social damage is just as great.
The cure starts with becoming aware of the vicious cycle of degraded public services and narrow self-interest that leads to "social dumping," general decline, and bad union deals. This can still be turned around.

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While we're doing this we need to realize that another realm of confidence has been under attack as well: the financial services industry. I blogged about the meltdown in August; the
Financial Times has been ahead of the American media on this, and recently published a good overview of the "shadow banking system" to sustain a wake-up call to folks who still know how to read.

It's important to remember that the financial crisis is not really about subprime mortgages. It is not really about a failure of liquidity. It is not finally about the solvency of many major banks. The crisis is about the failure of markets to determine accurate values for complex financial instruments. There has been widespread market failure in the financial sector and a corresponding failure of trust.

I mention this now because the contemporary middle class is such a devout believer in market values, market signals, market outputs, and market measures of value, but unfortunately this belief has just screwed it again. The financial crisis shows that financial values are often determined by the off-stage behavior of a small number of elites, in this case, the creators of "strucutured investment vehicles" and other novel instruments that even professional investors could not accurately value in the moment of purchase. Values were fixed by what sellers could persuade buyers into paying, where the persuasion consisted of complicated - indeed, often indecipherable - financial arguments, not to mention very good returns at the start of it all.

In cases like this, by the time the general buyer decides the real value is much lower than the value he paid - "he" meaning either the individual or the fund manager who controls lots of savings and pension money - the insiders have gotten their money out. Losses accrue to the outsiders - the late buyers, the naive buyers, the dumb buyers, the eager, greedy buyers, the desperate buyers, the buyers who worried about being shut out and thus bid too much. Markets are always a game of I say/ you say, a running sales pitch, a giant advertising campaign. The crucial thing is that they know and you don't: they, the top rung of financial professionals and their shadow helpers; you, the beleaguered salarywoman or man.

People think financial elites are upset about the "financial crisis." But let's be a little more Noir than that. These folks have destroyed confidence in the public systems that create egalitarian, general development. They have destroyed the "investor economy" alternatives for the mass middle class (the one that hasn't gotten a raise in 35 years, and whose men made 12 percent less in 2004 than they did in 1974.) They have generated a series of financial scandals over decades and haven't paid much yet (see a bit of financial history from "common man" investment manager Ben Stein).

They pick up what the middle class doesn't earn in either the real or the fianancial economies. They win at poker, and they win at roulette too. These financial folk don't bet against the house: they are the house. What's for them to be upset about??