Steve Matrazzo - Columns on economic issues

Steve Matrazzo

Columns on

economic issues

2 The Dundalk Eagle, Dundalk, MD July 19, 2012

7708 GERMAN HILL ROAD

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0:�.<4�+0:,(:,�3052,+�;6�6),:0;@&by Dr. Emma Galvan, D.D.S. & Dr. Grant F. Cylus, D.D.S.

Pharmacy FACTSPresented by

Dr. Mark Lichtman

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With RG layoffs – and bonuses – are we done yet?

Igot another one of those letters, this one stating, “I can’t figure out if you are

Communist or socialist.” We’ve been over this be-fore, but ... this time cour-tesy of Merriam-Webster (edited for space): Socialism: 1. economic and political theories advocating collec-tive or governmental own-ership and administration of the means of production and distribution. 2. (a) a system of society or group living in which there is no private property (b) a system or condition of society in which the means of production are owned and controlled by the state. Communism: 1. (a) a theory advocat-ing elimination of private property. (b) a system in which goods are owned in common and are available to all as needed. 2. (a) a totalitarian system of government in which a[n] authoritarian party controls state-owned means of production. I do not, nor have I ever, advocated such ideologies. Nor, for that matter, has any significant figure in modern American politics. So let’s drop the loaded

— and ridiculously inac-curate — pejorative hy-perbole, please, and start talking about our econom-ic system like adults. It’s especially disap-pointing that failing to blindly cheer for unbridled free-market absolutism would be called “social-ism” or “Communism” by anyone in Dundalk, and all the more so this week. It’s right there on the front page of this paper; RG Steel, even as it pur-sues bankruptcy protec-tion and lays off thousands of workers, wants to dole out $20 million worth of bonuses to top executives. We cling to the fantasy that the free market, un-adulterated by the heavy hand of government or the dreaded evil unions, is the source of all bounty, the engine of prosperity for all. Try telling that to the members of Local 9477. They’re out of work and have no idea when — or if — they’ll be back on the job, or what they might have to cede to get there. I wrote last Labor Day, “It’s not that the rich are evil and should be pun-ished for their wealth. They’re just doing the best they can for themselves

under the rules that exist .... {and they] are bound to pocket as much of their profits as they can, and to try to maximize those prof-its however they can ....” And they do. Which ex-plains not only the RG out-rage, but the massive shift in manufacturing jobs away from the U.S., bank-ing and securities industry misdeeds that caused the crash of 2008 — and, les-sons, unlearned, several recent multi-billion-dollar banking and investment scandals — the insistence on extending President Bush’s (supposedly tem-porary) tax cuts for the wealthy even as we face enormous deficits .... It wasn’t always so. During the period between the end of World War II and the election of Ronald Reagan, while there were ideological disputes as to degree, there was general agreement that the forces

of the free market, while good at producing wealth, needed guidance to assure that the society as a whole was the beneficiary, rather than the victim, of wealth creation. And there was general recognition of the role of unions as a counter to corporate power. Even Republicans courted union endorsements! And in those years, the U.S. economy boomed. Investors and executives prospered, and workers got their taste of the pie. Then came the ‘80s. Reg-ulation was evil; unions were evil; anything that stood in the way of cut-throat capitalism was evil. Republicans led the way, but many Democrats followed. It was at Bill Clinton’s urging that the Glass-Steagall Act, which put the brakes on bank buccaneering during the Great Depression, was re-pealed, leaving the door

Talk of the Town by Steve Matrazzo

We cling to the fantasy that the free market, unadulterated by the heavy hand of government or the dreaded evil unions, is the source of all bounty, the engine of prosperity for all.

open to the events of 2008. Little has changed since. The George W. Bush years were golden for the finan-cial elites, and, for all the rhetoric, President Obama has done little to change things. (Witness the mil-lions in campaign funds he’s getting from Wall Streeters.) Support for unions has been virtually abandoned. Both major parties are, images aside, essentially beholden to the forces of wealth. The result would be déjà vu to Franklin Roosevelt, who said in 1936: “Private enterprise, in-deed, became too private. It became privileged enter-prise, not free enterprise.” Today, here, in “the fre-est nation on earth,” the vast bulk of workers are sliding toward something like peonage: working hard but barely scraping by, utterly dependent on whatever goodwill their seigneurs deign to show, hoping not to be waylaid by illness or injury (since they live on the financial

razor’s edge), and with few prospects for advancement (as college tuitions drift farther out of the reach of working families). More FDR: “...[[D]emocracy is not safe if the people toler-ate the growth of private power to a point where it becomes stronger than their democratic state it-self .... [and D]emocracy is not safe if its business system does not provide employment and produce and distribute goods in such a way as to sustain an acceptable standard of living.” Our liberty and prosper-ity have been under sus-tained erosion for three decades, thanks to the idea that anything preventing the corporate and invest-ing classes from doing as they please is inherently evil — and “Communist.” And the results of that belief have now come back to spit in the faces of 2,000 of our own neighbors — 2,000 of us. Are we done yet?

Q�Opinions expressed are those of the writer and do

not represent the opinion of The Dundalk Eagle or Kim-

bel Publication Inc. You can contact Eagle editor Steve

Matrazzo via e-mail at [email protected].

2 The Dundalk Eagle, Dundalk, MD August 30, 2012


Dr. Mark Lichtman!"#"$%&'()*+#+,'-%#"..#!/'0%,%+1

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The danger of disappearing industry – and workers

Once there were 30,000. Eventu-ally, there were 2,000. Now, it

seems, there are none. The long decline — and now, apparent demise — of the Sparrows Point steel mill is undeniably a blow to this community, striking at the core of its identity, its history and its prosperity. The mill itself once provided 30,000 workers with reliable, good-paying manufacturing jobs, and thousands more prospered by extension. No more. The withering of the le-viathan began slowly in the 1970s and snowballed over time, until Bethlehem Steel passed into history, leaving successive owners to try to salvage the plant for the few thousand re-maining employees. And now, despite the best efforts of all con-cerned — ownership and management, political leaders, and workers — it seems we have seen the last of steel at the Point. As much of a tragedy as that is locally, it is also illustrative of larger trends in the U.S. econo-my, trends that threaten the broad prosperity of our people, the stability of our society, and even our na-

tional security. Trends that have been too long apparent, and yet too long ignored.

Shrinking middle class We are losing broad prosperity because we are abandoning the economic model that created it. A report last week from Pew Research generated widespread attention for its demonstration that both the incomes and net worth of the U.S. middle class have fallen signifi-cantly over the last decade — what the report called “the lost decade.” Between 2001 and 2010, inflation-adjusted house-hold incomes in the middle class fell from $72,956 to $69,487, and correspond-ing net worth figures dropped from $129,582 to $93,150. This trend has contin-ued even as the stock mar-ket has bounced back to — and beyond — its level before the 2008 crash, and U.S. Gross Domestic Prod-uct has returned to its pre-crash levels. The reason is that the benefits of that growth are concentrated at the top, with the wealthiest Amer-icans reaping the lion’s share of the gains. This represents a re-versal of the trend during

the period of this country’s greatest and most wide-spread prosperity — the 1950s and 1960s. Numerous statistical measures show that the richest Americans held a smaller percentage of na-tional wealth, and took in a smaller percentage of na-tional income, than they do today. In fact, today’s num-bers most closely resemble those of the late 1920s, just before the economic collapse that started the Great Depression, with the top one percent of earners taking in 21 percent of all income, and the wealthi-est one percent holding 35 percent of the net assets.

Myths we’ve been sold Why is this happening? It’s largely because we have been sold a package of myths that demonize workers’ rights and gov-ernment action, steering ever more wealth into the corporate and invest-ing classes and promising that, if we let them have their way, we will be re-warded with general pros-perity. That package, which has been gaining traction for over 30 years now, holds that lowering taxes on cor-porations and investors will lead to job creation,

that deregulation of mar-kets will lead to job cre-ation, that disempowering unions and cutting spend-ing on things like Social Security, Medicare and unemployment compensa-tion will lead to — you guessed it — job creation. The fact is that the top marginal rate through most of the 1950s was more than two and a half times what it is today. (Todays top rates, in fact, most closely resemble those from — once again — the late 1920s, just be-fore the start of the Great Depression.) Moreover, corporate tax relief has a recent history of failure as a job-creation tactic. In 2004, the fed-eral government enacted a “repatriation tax holiday,” sparing companies from paying taxes on money they has been stashing overseas. According to a Harvard/MIT/ University of Illinois study, 92 percent of the nearly $300 billion repa-triated under the program went not to capital invest-ment but to sharehold-ers. The Congressional Research Service reported similar findings. In fact, Hewlett-Pack-ard, the computer compa-ny, brought in $14.5 bil-lion under the plan, then


cut 14,000 U.S. jobs almost immediately thereafter. Deregulation of markets has been not just ineffec-tive but disastrous. The re-peal of the Glass-Steagall banking regulation law, for instance, was one of the factors that led directly to the 2008 crash and the as-sociated mortgage crisis, and the deregulation that allowed massive consolida-tion through mergers left us holding the bag when the miscreants were la-beled “too big to fail.” The unregulated cre-ation of new and convolut-ed financial instruments has created a financial market less geared toward productive capitalization than toward paper profits. And free trade agree-ments have removed any incentive for companies and investors to put their cash to work specifically in the U.S., given that they can move it freely almost anywhere in the world. Unions have been the whipping-boy for U.S. industrial decline for de-cades. If it weren’t for those greedy, corrupt unions and their lazy workers, the sto-ry goes, we would be more

competitive, because we wouldn’t be wasting mon-ey on frivolous labor costs.. Of course, that vision doesn’t address the fact that, during the prosperity of the 1950s, 32 percent of American workers be-longed to a union. That number has dropped to just 7 percent. So where is the competitiveness? Where is the job creation? And then there’s the fed-eral budget. We are told that our “bloated” federal budget, with its “massive” spending on entitlements ranging from assistance to the poor to Social Security, Medicare and unemploy-ment benefits, has become too big to pay for and has buried us in debt and must be pared down. In fact, a Center for Bud-get and Policy Priorities report concluded that two actions in the last decade — the wealth-favoring Bush tax cuts (remember that paltry $300 check?) and the multi-trillion-dol-lar wars in Iraq and Af-ghanistan — account for half of the projected $20 trillion national debt ex-

!"Opinions expressed are those of the writer and do

not represent the opinion of The Dundalk Eagle or Kim-

bel Publication Inc. You can contact Eagle editor Steve

Matrazzo via e-mail at [email protected].

continued on page 4


TALK: The danger of disappearing industry – and workers

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pected for 2019. But the burden of cut-ting spending falls on us. In the case of Social Secu-rity, for instance, we are told that working people may have to work longer, pay more and accept reduced benefits when we finally do retire. A similar scenario is spun for Medicare. What they don’t want to talk about is the fact that FICA taxes, which fi-nance Social Security and Medicare, are assessed on only the first $110,100 of income, which means that even those who have multi-million-dollar in-comes don’t pay a penny on anything they make over that amount. Lifting that cap, econo-mists unanimously agree, would immediately erase three quarters of the pro-jected shortfall. But no one wants to talk about that, or any of the other myths that have brought us to the point where we are witnessing the shrinkage of the rbosut consumer class that is the true driver of our economy. Why? Because our lead-ers — of both parties, rhetoric aside (Bill Clinton signed the Glass-Steagall repeal) — are beholden to, and scared of, the mon-eyed interests (think Koch brothers, Sheldon Adelson, et. al.) whose cash drives campaigns. Adelson and the Kochs are estimated to have al-ready put a combined $1 billion into “super PACs” for this year’s elections. And whether you know it or not, they’re not just trying to influence politi-cians, they’re trying to in-fluence you. Take a look at the groups behind those “issue ads” you see on television, and you’ll see them trying to sell you the myths and get you to vote in their interest.

Back to Sweden One year ago, this space featured a short mention of the economic differences between the U.S. and Swe-den, focusing on different rates of union membership — 69 percent in Sweden, 12 percent in the U.S. What else is true in Sweden? Social spending as a per-centage of their economy is far higher than ours, 27.3 percent to 16.2 percent. The top marginal tax rate is 56.74 percent, while in the U.S. it is 35 percent. The Swedish capital gains tax is 30 percent, twice the U.S. rate. And income inequality, measured by the “Gini co-efficient,” is half that of the U.S.; income is much more equally spread there. A recipe for “socialist” economic disaster, right? Sweden’s unemploy-ment rate is 7.3 percent, as opposed to our 8.2 per-cent. Its rate of industrial growth is more than 60 percent higher than ours. And its per capita GDP is $57,948, compared to $49,601 in the U.S. If there is any doubt that the promise of unfettered, undirected corporatism is a myth, one need look no further than Sweden. Plus, they make Volvos and Ericsson telephones.

Free, but unfair The other great myth we were sold was that glob-al free trade would drive prosperity for all. Events at Sparrows Point put the lie to that. If anything, free trade has created a race to the bottom in which produc-tion shifts to whatever country has the weakest regime of workers’ rights, safety and environmental regulations, the lowest wage scale — and often, the least benevolent gov-ernment. Steel from the Point couldn’t compete with steel from China because the

Chinese government al-lows its manufacturers to pollute at will, run factories without regard to worker safety and, of course, pay their employees scandal-ously low wages. In the case of China, currency manipulation, industrial espionage and patent violations are worth mentioning as well, particularly because no one seems to want to stop them from doing any of those things. After all, China is a profitable place to do business. And that’s in large mea-sure due to “free trade” agreements that actually reward those who adhere to the lowest standards, and encourage the flow of capital — including money from U.S. investors — to such countries. It’s an issue we’ll have to address eventually; how-ever, there is no great tide among our public leaders to change things, since the cash cows who fund their campaigns have a vested interest in free trade, today in China, tomorrow in ...?

Prosperity and security Perhaps not as obvious, but every bit as ominous, are the national security implications of a shrinking industrial base. Charles Faddis, a re-tired CIA officer and cur-rent president of consult-ing firm Orion Strategies, had plenty to say in an interview with The Eagle. “This is a huge issue for us, with a whole host of implications which we have really chosen to ig-nore,” he said. Referring to the indus-trial capacity that allowed the U.S. to build massive quantities of ships and air-craft during World War II, he noted that “we don’t have such a capacity to-day. And it isn’t just heavy industry. Large compo-nents of our high-tech stuff — the vast majority are coming out of East Asia.

“We traded heavy in-dustry for high-tech,” he noted, “but we don’t even have that anymore.” The result, Faddis says, is a new danger for the U.S. “Even for the most sen-sitive stuff, most of that is dependent on foreign sources — but there’s also the question of the trust-worthiness of those sourc-es. If you are supplying all those components, then you also have the ability to alter those components,” he noted. Faddis noted that Rus-sia is known to have used

cyber attacks at least twice. China, too, is a con-cern, according to Faddis. “Clearly, you’ve got guys who think like that, act like that and have a track record like that.”

A countervailing power in the forum

Simplistic and short-sighted thinking is turn-ing our leaders’ attention away from the dangers cre-ated by their own policies — the long-term economic hazard of letting manu-facturing and the jobs it provides wither away, the

growth-inhibiting lack of a healthy consumer class, the social hazard present-ed by ever more people liv-ing in economic insecurity, and the national security hazard of relying on other nations to meet our strate-gic needs. Those concerns are, in the current climate, sub-ordinated to the profit mo-tive of the corporate and investing classes. And as long as there is no countervailing power in the national forum, those dan-gers will remain with us.

Page 2 The Dundalk Eagle February 5, 2015

As the L Furnace dust clears, is this land made for you and me?Talk of the Town by Steve Matrazzo

n Opinions expressed are those of the writer and do not represent the opinion of The Dundalk Eagle or its ownership. You can contact Eagle editor Steve Matrazzo via e-mail at [email protected].

I was a bit put off by the use of John F. Kennedy’s fa-mous words about the human affinity for the sea to flog a cruise line, and — like virtually everyone else — I was horrified by the insurance ad featuring “the

boy who will never grow up.” But the Super Bowl commercial that has remained stuck in my mind since Sunday is the Jeep spot featuring the familiar American folk song “This Land is Your Land.” Familiar, yes — but perhaps not as familiar as it should be. Most people know only the first verse of Woody Guth-rie’s masterpiece. From those words alone — and those of the next two verses — one might think that the song is a straightforward celebration of the beauty of America. There are other verses, however. Guthrie varied them over time, but these words, from his first recording of the song in 1944, make the intended point:

There was a big high wall there that tried to stop me. A sign was painted, it said Private Property. But on the back side it didn’t say nothing. This land was made for you and me. •••• In the square of the city, in the shadow of a steeple, By the relief of fice, I’d seen my people. As they stood there hungry, I stood there asking, “Is this land made for you and me?”

Far from a romantic ode to a nation’s idealized glory, Guthrie’s song was a sometimes plaintive, sometimes de-fiant description of an America run by and for its wealthy elite, with the mass of common people left as little more than an afterthought — a land that might have been made for you and me, but wasn’t quite turning out that way.

t t t The L Blast Furnace — the last great symbol of the golden age of steel at Sparrows Point — was demolished and came crashing to the ground in a dark cloud of dust last week. Of course, this area’s industrial heritage — and that of the country at large — has been enduring a slower and less explosive, but nonetheless destructive, disman-tling for decades. Some lay the blame for the decline at the feet of sup-posedly greedy unions, overly zealous regulators and, of course, taxes. And they’re right. Just not in the way they think they are. In 1994, the U.S. produced just over 13 percent of the world’s steel. Add Canada, and the North American share of world steel production was over 15 percent. Throw in the free-market democracies of western Eu-rope, and the share of the world steel market supplied by Western nations was approximately over 38 percent. Including the Asian industrial democracies of Japan and South Korea brings the 1994 global steel market share supplied by modern industrial democracies to about 56 percent. Today, 20 years later, December figures from the World Steel Association show that U.S. market share has fallen to 5.5 percent, North America to 6.2 percent, western Eu-rope to 17.7 percent, and the modern industrial democra-cies overall to 28.7 percent. Half the global steel market — gone. Where did it go? China’s share of the world steel market in 1994 was

just over 13 percent. Today, China makes just over half of all steel produced in the world. And there’s exactly one reason why. “Free trade” has created a race to the bottom in which production shifts to countries with the weakest regimes of workers’ rights, safety and environmental regulations, the lowest wage scale, tax structure skewed toward business interests — and often, the least benevolent government. Steel from the Point — and from other modern democ-racies — couldn’t compete with steel from China because the Chinese government allows its manufacturers to pol-lute at will, run factories without regard to worker safety and, of course, pay their employees scandalously low wages. Such conditions are easy to maintain when the govern-ment isn’t answerable to the people and can crush dissent — literally, like, with tanks and such. In the case of China, currency manipulation, industrial espionage and patent violations are worth mentioning as well, particularly because no one seems to really want to stop them from doing any of those things. After all, China is a profitable place to do business. And that’s in large measure due to “free trade” agree-ments that create a tilted playing field and actually reward those who adhere to the lowest standards, encouraging the flow of capital — including money from U.S. investors — to such countries. It used to be that we addressed such inequities with tariffs and other policies, but in the age of free trade, we are told that the only way to compete is to move backward toward the bad old days, when American companies could treat workers without regard for their dignity or safety, pollute at will and put the burden of paying for public goods beneficial to business — everything from roads that carry their products to schools that teach their work-ers — on the common taxpayer, who, of course, should be grateful just to have a job at all. In effect, workers in developed nations are being black-mailed, and those in developing nations exploited, with the only winners being those who profit from indecent wage, safety and environmental standards. And the Tran-Pacific Partnership trade agreement — to which both the U.S. and China are parties — is still on the horizon ....

t t t As has been noted in this space before “It’s not that [businesses and the wealthy] are evil and should be pun-ished for their wealth. They’re just doing the best they can for themselves under the rules that exist .... [and they] are bound to pocket as much of their profits as they can, and to try to maximize those profits however they can ....” But such interests are not the only ones that matter, and they should not be allowed to monopolize the rule-making process. Recent headlines include reports of the inclusion of expanded limits on party donations in the end-of-year “CRomnibus” bill and a statement by the famed Koch brothers that they plan to spend as much as $1 billion on the 2016 election campaign. Less noticed was a Jan. 27 rally in Annapolis mark-ing the fifth anniversary of the U.S. Supreme Court’s infamous Citizens United decision, in which the court

essentially ruled that political spending amounts to con-stitutionally-protected speech, and that corporations have the same free-speech rights as people — and are thus free to spend unlimited amounts of money — often without their identities being public — in “independent” campaign expenditures. And they do. Enormous amounts of it, in fact — to the point where it sometimes seems that our governance at all levels is bought and paid for by corporate interests. Which is, of course, how we end up with things like trade agreements that do plenty to benefit corporations and investors while leaving working Americans in the lurch. The Annapolis rally aimed to draw attention to the pro-posed 28th Amendment the the U.S. Constitution:

SECTION 1. The sovereign right of the people to govern being essential to a free democracy, Congress and the States may regulate the expenditure of funds for political speech by any corporation, limited liability company, or other corpo-rate entity. SECTION 2. Nothing contained in this Article shall be construed to abridge the freedom of the press.

It was introduced in 2010 by U.S. Rep. Donna Edwards, who represents the Prince George’s County-based 4th District in Congress. It aims to reverse the effect of the Citizens United decision and get the ball rolling on the broader goal of lessening the impact big money can have on elections — and on the politicians who depend on such money, thus becoming beholden to those who provide it. A democracy in which the only voices that matter are those backed up with big checkbooks is no democracy at all — just as prosperity that benefits only a few is no prosperity at all.

t t t As noted in this space not long ago, “The existence of uni-versal standards, uniformly accepted and uniformly applied, is the closest thing to an objective measure by which we can sort good guys from bad. “And such rules amount to a statement of what sort of ‘good guys’ we aspire to be...... an agreed-upon definition of human decency and moral civilization .... “Do we want to be the sort of nation that regards rules of civilized action ... as unwelcome impediments or as eth-ics to be embraced and rigorously pursued? Do we regard such standards – which we ourselves have at least nominally adopted – as obstacles ... or as the yardsticks against which ‘the good guys’ are actually measured?” Then, the topic was torture, but the underlying notion applies here as well. The way our government chooses to re-gard its working citizens, and the way those citizens choose to be regarded — that is, the level of civilized decency to which we choose to adhere — is once again in play. As is Woody Guthrie’s question. Is this land made for you and me?

isisstill on the horizon ....

2 The Dundalk Eagle, Dundalk, MD March 27, 2014

What it really means if “corporations are people”“Corporations are people, my friend ....”

— Mitt Romney

As I write on Tuesday, the U.S. Supreme Court is hear-

ing arguments in Sebelius v. Hobby Lobby Inc., the highly-publicized case in which the Hobby Lobby craft-store chain (along with others) seeks to free itself from contraception-coverage requirements under the Affordable Care Act on the grounds of reli-gious objections. While, for most of the public, interest in the case turns largely on opinions about human sexuality, whether or not life be-gins at conception, or the wisdom of the ACA itself, there is — as is so often the case — a deeper and more far-reaching ques-tion before the nine jus-tices — and the nation. Is Mitt Romney right? When he spoke his fa-mous words at the Iowa State Fair in 2011, he was talking about Social Secu-rity and fiscal issues, not religion. Nonetheless, his words crystallized the often-un-spoken essence of much of the public debate on a

broad range of issues. Are corporations “peo-ple,” or do people — that is, owners — have rights extending through corpo-rations? Or more to the point, do corporations have — and should they have — the rights our Constitution and laws guarantee to people? The legal concept of in-corporation is premised on the idea that a corpora-tion not only is, but must be, an entity unto itself, existing independently of its ownership (which can, and often does, change). The reason is that with-out such separateness — known in legal parlance as the “corporate veil” — the debts and liabilities incurred by a business would be enforceable upon its owners. Would anyone start a business if he or she knew that its fall into red ink and failure might cause the demise not only of the business itself, but of the owner’s personal property — his or her house or re-tirement savings, or the children’s college fund? Would anyone — a Wall Street player trying to build a fortune or an in-dividual trying to build a nest egg — invest in a

company if doing so meant risking not only the money invested, but all of one’s personal assets? Of course not. That’s why for centuries, there has been the legal concept of a corporation — liter-ally, a “body” — that ex-ists as a legal entity sepa-rate from its proprietors or stockholders. As a brief filed by a group of corporate and criminal law professors in the Hob-by Lobby case stated:

The essence of a corpora-tion is its “separateness” from its shareholders. It is a distinct legal entity, with its own rights and obligations, different from the rights and obligations of its shareholders. This

Court has repeatedly rec-ognized this separateness. Shareholders rely on the corporation’s separate ex-istence to shield them from personal liability ....

The issue of “corporate personhood” has arisen before, most famously in the infamous Citizens United case regarding the free-speech “rights” of cor-porations. My questions now are the same as they were then: If corporations have the legal standing of “per-sons,” do they not also have the legal obligations of persons, and should they not face the same range of legal penalties when they violate laws?


When an individual is found legally respon-sible for stealing, or for the death or injury of a person, that individual is subject to imprisonment. He or she is punished by being subjected to the complete control of the state. In many cases, even the convicted person’s la-bor is directed by — and for the benefit of — the state. Do those who advocate for “corporate personhood” extend their definition to include such obligations? That is, could a corpo-ration found guilty of a criminal act (and yes, it does happen) be “impris-oned,” controlled by the state in its every action for a length of time, with the fruits of its labor accruing largely to the state — the equivalent of prison labor? Beyond Hobby Lobby it-self and a small number of like-minded companies, the bulk of American cor-porations have given this case a wide berth. The U.S. Chamber of Commerce and all those

Fortune 500 companies — so active in the Citi-zens United case, arguing against limits on corpo-rate political spending — have all declined to file briefs in this case. It’s not hard to guess why. They may not want to advance arguments that might undermine Citizens United, but they certainly don’t want to shred the centuries-old “corporate veil” that is universally understood — across the ideological spectrum — to be critical to thriving com-merce and material prog-ress. The previously quoted brief noted:

The separateness be-tween shareholders and the corporation that they own (or, in this case, own and control) is essential to promote investment, in-novation, job generation, and the orderly conduct of business.

Let’s hope the nine wise persons in the black robes don’t forget that.

nOpinions expressed are those of the writer and do not represent the opinion of The Dundalk Eagle or Kim-bel Publication Inc. You can contact Eagle editor Steve Matrazzo via e-mail at [email protected].

If corporations have the legal standing of “persons,” do they not also have the legal obligations of persons?

Send all obituary, anniversary, birthday, college graduation information and similar items, as well as Community Calendar, Church News, Rec Council News, Senior News and School News items, to [email protected]. Double-space entries and include a subject line with all items.

2 The Dundalk Eagle, Dundalk, MD May 15, 2014

Time to look the long-term unemployed in the faceSome folks’ lives roll easy as a breezeDrifting through a sum-mer night,Heading for a sunny day.But most folks’ livesOh, they stumble, Lord, they fallThrough no fault of their own ....

— Paul Simon

In journalism, “attri-bution” refers to the identification of a person, document or

other source of informa-tion reported in a news story. You know, “Gov. Smith said ...” or “According to county liquor license re-cords ...” or “Research con-ducted at the University of Blahblah has confirmed ....” In short, attribution is something that describes the origin of the informa-tion, and by extension, im-plies the context in which that information should be viewed. In social psychology, “at-tribution” has a different — but loosely related — meaning, referring to the mental process by which people explain the causes of behaviors or characteris-tics they observe in others. When we see a woman running down the street in athletic shoes and a sweat-

suit while carrying a water bottle, we attribute that to her being interested in her health and fitness — and we’re generally right. When we see another woman running down the street in high heels and a skirt while carrying a brief-case, we attribute that to her being in a hurry — and we’re generally right. We are, however, en-tirely capable of being wrong, prone to “attribu-tion error” — the tendency to give great weight to personality-based expla-nations for what we see in others while giving little or no weight to circumstance-based explanations. An obese person, for in-stance, is often assumed to be gluttonous and/or lazy — personality traits — despite the fact that in any given instance, there might well be a medical explanation — that is, a circumstantial reason — for an individual’s weight issues. Good things happen to good people, we tell our-selves. And bad things? Well, people get what they de-serve ....

t t t Nowhere is such think-ing more readily appar-

ent than in the commonly-held view of people who rely, even temporarily, on economic assistance from their government. Even as the economy continues its slow statis-tical recovery from the devastation of 2008, un-employment remains high, and disturbing numbers of those currently unem-ployed have been jobless for long periods of time. Meanwhile, Congress has failed in repeated op-portunities to extend assis-tance for the long-term un-employed, largely because, as 2012 Republican vice presidential nominee Rep. Paul Ryan put it, “we don’t want to turn the safety net into a hammock that lulls able-bodied people to lives of dependency and compla-cency.” It’s a sentiment that is easy to grasp, and easy to adopt. Just as there is a

tendency to assume that those who prosper do so because they are smarter and harder-working than everyone else, there’s a corresponding tendency to assume that those who struggle to make ends meet do so because they are lazy, dumb, immoral or otherwise unworthy. It’s called Social Darwin-ism — a perversion of the grand evolutionary model purporting to impose a “survival of the fittest” justification for greed. It was popular in the “Gilded Age” of the late 1800s, and it has been clearly on the rise in recent decades. Of course, it’s always easier to take such a dis-missive view of the misfor-tunes of others when they are anonymous, faceless — mere abstractions upon whom simple labels can be imposed. It’s a little different, of


course, when they have names, faces, and personal stories.

t t t With another unemploy-ment extension bill in the congressional pipeline, our own U.S. Rep. C.A. Dutch Ruppersberger is hoping that names, faces, and per-sonal stories may nudge some of his colleagues away from the soft Social Darwinism of Paul Ryan and toward actually pass-ing the current bill. This week, Ruppers-berger took part in the local launch of the na-tionwide “Faces of the Un-employed” project, which aims to highlight the re-al-life impact unemploy-ment is having on families across the country. People who have ex-hausted their unemploy-ment benefits are being asked to share their sto-ries and photos on par-ticipating representa-tives’ websites, including Ruppersberger’s — www.dutch.house.gov. (You can find it in the slideshow at the upper right of the home page.)

According to a press re-lease, stories will be posted outside Ruppersberger’s office so that his House col-leagues can see the faces of Marylanders affected by the loss of unemployment benefits as they walk the halls of Congress each day. The hope, of course, is that a small sliver of reality might breach the Capitol bubble and remind those inside it that their unemployed fellow citizens are not nameless, face-less abstractions they can blithely label as lazy seek-ers of the proverbial ham-mock. They are real, flesh-and-blood human beings and they are not univer-sally lazy, dumb, immoral or otherwise unworthy. Most, in fact, lost their jobs not by their own fail-ings, but by those of their own government and the forces to which it is too often beholden. Will the project have an effect? Who knows? But it sure would be nice if more people in official Washing-ton remembered that some folks’ lives stumble, and fall, through no fault of their own.


Of course, it’s always easier to take such a dismissive view of the misfortunes of others when they are anonymous, faceless — mere abstractions upon whom simple labels can be imposed.

2 The Dundalk Eagle, Dundalk, MD February 20, 2014

Running the numbers on minimum wage proposal

The proposed in-crease in Mary-land’s minimum wage is making

its way through the Gener-al Assembly, with the Sen-ate Finance Committee holding hearings on Gov. Martin O’Malley’s propos-al to bump the minimum hourly rate from $7.25 to $10.10 and tie future wage hikes to the rate of infla-tion. Solid Democratic major-ities in both houses and a recent Baltimore Sun poll showing a 69 percent rate of popular support (includ-ing majority support even in the most conservative parts of the state) make passage of the measure likely. Still, the entirely predict-able arguments against the minimum-wage hike are being pitched. Oppo-nents point to increased labor costs while ignoring the fact that studies indi-cate that increased con-sumer spending resulting from the increase would actually have the net effect of increasing business rev-enues and creating jobs. And again, we’re hear-ing how minimum-wage jobs are supposed to be the province of teenag-ers looking to earn pocket

money, not adults looking to pay the bills — despite voluminous data showing that most minimum-wage jobs are held by adults who are supporting house-holds, and that many oth-er adults hold jobs that make more than the cur-rent $7.25 minimum but far less than the proposed $10.10. (Standard starting wage at Walmart is $8 per hour.) In the midst of the de-bate comes an interesting online item from The New York Times — an expense calculator that allows one to enter data for certain categories of expenditure (housing, food, etc.) and see what the resulting balance sheet would look like for someone earning the minimum wage in any state. It can be found at www.nytimes.com/interactive/2 0 1 4 / 0 2 / 0 9 / o p i n i o n /minimum-wage.html?_r=2 I did a dry run of my own using the current minimum of $7.25, and entering the following ex-pense data: — $500 per month for housing, based on two of the cheapest “room for rent” listings in the Eagle classifieds last week. (Not an apartment; a room)

— $80 per month for utilities, which includes not only a minimal esti-mate for gas and/or elec-tric use, but the cheap-est telephone plan I could find (deeming a phone to be a practical necessity, while cable and Internet are, strictly speaking, non-essential). — $64 per month for transportation (the price of an MTA monthly pass). — $78.17 monthly for health care, the price of the lowest-cost Bronze plan for the lowest-cost pa-tient (a 21-year-old single non-smoker) with a tax credit applied. — Nothing under “loans and debts,” just to be max-imally optimistic. — $42 per week for food. That’s two bucks per meal, three meals a day to feed oneself. — $10 per week for “household essentials,” which covers everything from clothing to cleaning products to paper towels and aspirin to ward off the recurring headaches that might ostensibly come from the daily struggle of living on such a pittance. — $2500 annually in taxes – a good-faith at-tempt to account for all federal, state and local

taxation on a income of just over $15,000. — absolutely zero for “other expenses,” de-scribed on the NYT site as “nonessential items, like movie tickets, gifts, toys and other discretion-ary spending.” (Wouldn’t want our theoretical wage earner living in the lap of luxury, now, would we?) The result? Over the course of a year, the theo-retical minimum-wage earner comes out ahead by a whopping $623. Not bad, one might think, even if it does entail adhering to a minimalist lifestyle. Looked at one way, that’s a little over $10 a week one can spend on some sort of small indul-gence to make life a little more pleasant. Alternatively, stick with it and pinch pennies, and one might even see a little money accumulate on the old bank account. God forbid, however, that this imagined per-son should have any sort of financial emergency, including something as small as needing actual medical treatment; that Bronze plan, after all, is the cheapest because it has the highest deduct-


ibles and co-pays. (And, of course, these figures apply only if the worker is supporting no one else. Various studies show as many as half of all low-wage workers end up qualifying for some sort of public assistance even while they are employed, generally because they are helping support house-holds.) On the other hand, what happens when the mini-mum wage is raised to the Washington state mini-mum of $9.32 (nearly 80 cents below the proposed new minimum)? That $623 in surplus suddenly rises by over $4,000 per year. There will be extra taxes to pay, of course, and the tax credits for health coverage may not apply, but no matter how you slice it, that work-er is going to have signifi-cantly more money. And that worker is going to spend significantly more money. No more going without cable or Internet, perhaps. Maybe spending more at the grocery store, or even eating out once in

a while. Perhaps buying clothes at a regular retail store instead of a second-hand discount shop. Opponents of an in-crease in the minimum wage view the expense as money taken out of the economy. Too often, they forget that the same mon-ey will go back into the economy. Studies peg the increase in economic activity in Maryland if the proposal passes at over half a bil-lion dollars over the next three years. And remember those low-wage workers on pub-lic assistance? Raise the minimum wage to $10.10, and a lot of them become net payers of taxes, rather than public-service recipi-ents. A reminder: the claim that the proposed mini-mum wage is some sort of unprecedented burden would be false; adjusted for inflation, todays’ mini-mum wage of $7.25 is low-er than it was 50 years ago, or 40 years ago .... Why are we still debat-ing this?



Maybe this time they’ll actually vote upon it

Two years ago, the Maryland Gen-eral Assembly was set to con-

sider an increase in the state’s minimum wage. At the time, Maryland’s min-imum wage was pegged to the federally-mandated floor of $7.25 per hour. The bill being consid-ered would have raised the minimum wage in Maryland to $8.25 in 2012 and to $10 per hour by this year, then indexed it to inflation thereafter. Supporters noted that, if it had kept pace with inflation since the 1960s, the minimum wage in 2010 would have been ... $10 per hour. Too burdensome for businesses, opponents said. A higher minimum wage raises labor costs and inhibits growth. Supporters — includ-ing your humble editor — countered that what was dragging down the economy was a desperate lack of consumer demand, driven by the collapse of working-class earnings after the 2008 financial crash. Putting more cash in the pockets of work-ing people, it was argued, would boost overall eco-nomic activity and actu-ally contribute to growth. Too burdensome for businesses, opponents said. A higher minimum wage raises labor costs and inhibits growth. At least some business owners, members of an ad hoc group calling itself Maryland Business for a Fair Minimum Wage, disagreed, noting that the bill would “raise pay for

more than 300,000 Mary-land workers and inject approximately $1 billion in new consumer spend-ing into the state’s econo-my.” Too burdensome for businesses, opponents said. A higher minimum wage raises labor costs and inhibits growth. Legislators, unsurpris-ingly, like to avoid having to take positions on con-tentious issues whenever possible — especially in an election year, and es-pecially when the issues involved affect business interests that contribute heavily to political cam-paigns. Thus, not only did the minimum wage increase not pass, it didn’t even get a floor vote. A late-in-the-session referral to com-mittee put the bill in the deep freeze, and it never saw the light of day again. And two years later, the minimum wage in the U.S. — and in Maryland

— remains at $7.25 per hour. In order to have kept up with inflation over those two years, the minimum wage would have had to rise to $7.63. And that 38 cents? For a full-time worker, that’s $800 per year. Not exactly nothing. Moreoever, the current $7.25 minimum wage actually dates to 2009. Accounting for inflation since then means work-ers have fallen behind by 51 cents, which is nearly $1,250 a year. And .... If the $1.60 per hour minimum wage of 1968 had been consistently ad-justed for inflation over the last 45 years, it would be $10.58. By that measure, to-day’s minimum wage earner is in the hole by nearly $7,000 a year. We have witnessed the disappearance of the decently-paying working-

class jobs on which com-munities like Dundalk de-pended — and which, by creating massive consum-er spending, drove Ameri-can prosperity — for half a century. And with the loss of such jobs, more and more of our neighbors have come to depend on jobs that either pay minimum wage or are so low on the wage scale (quite a few $8-an-hour Walmart workers in Dundalk, for instance) that a minimum wage increase would cer-tainly bump them up as well. This year’s General As-sembly will be given a sec-ond chance to do the right thing. Senate majority leader Robert J. Garagiola of Montgomery County and Del. Aisha Braveboy of Prince George’s County are pushing legislation that would raise Mary-land’s minimum wage in three steps to $10 by 2015


Two years after legislators avoided a vote, the minimum wage remains unchanged.

and index it to the cost of living thereafter. It has the support of the Economic Policy Insti-tute (EPI), a non-partisan think tank, which issued a report last week stating that more than 536,000 workers would receive $778 million in increased wages over the phase-in period, and more than a quarter of a million Mary-land workers would see some benefit in the first year alone. Increased wages, the report said, would gener-ate nearly half a billion dollars in additional con-sumer spending and sup-port the creation of nearly 4,000 new full-time jobs as businesses expand to meet the increased de-mand made possible by the wage increase. EPI economic anaylst

David Cooper also dis-pelled the notion that a minimum wage increase would have no effect on incomes that support households, noting in a press release that “con-trary to what opponents claim, the vast majority of affected workers are not teenage part-time work-ers but individuals over 20 years old who work full-time and are contrib-uting needed income to their families.” The EPI report notes that 87 percent of affected workers in Maryland are over age 20; more than 56 percent work full time; that more than half are from households with incomes under $60,000; nearly a quarter are par-ents, and just over a third are married. The average affected worker, the report notes, earns about 39 percent of his or her family’s total income. The argument that the minimum wage is a fringe consideration, affecting no one but teenagers flipping burgers, is a myth, the report shows. And the impact of the minimum wage on work-ing-class Marylanders — expecially those in com-munities like Dundalk — is real and significant. Let’s hope that, unlike two years ago, our state legislators have the vision to see that — and the courage to vote accord-ingly.


2 The Dundalk Eagle, Dundalk, MD October 18, 2012


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A taste of the consequences of not making stuff

In August, I wrote about the decline of American manufac-turing, and how our

withering ability to make things impacts not just our economic well-being but our national security. At the time, I quoted An-napolis resident Charles Faddis, a retired CIA offi-cer and current president of consulting firm Orion Strategies, with whom I had spoken on the topic: “Not only are we at other countries’ mercy for supply — even for the most sensitive stuff, most of that is dependent on foreign sources — but there’s also the question of the trustworthiness of those sources. If you are supplying all those compo-nents, then you also have the ability to alter those components,” he noted. “You can absolutely sabotage that stuff.” Recent headlines have illustrated his point. Defense Secretary Leon Panetta last week warned that the U.S. is vulnerable to cyberattacks on major infrastructure sectors. “An aggressor nation or extremist group could use these kinds of cyber tools to gain control of critical

switches,” he said. “They could derail passenger trains, or even ... derail trains loaded with lethal chemicals. They could contaminate the water supply ... shut down the power grid ....” Panetta called for the implementation of legisla-tion like the Cyber Intelli-gence Sharing and Protec-tion Act [CISPA] to pro-mote information sharing on cybersecurity between government and private industry. Which brings us to 2nd District Rep. C.A. Dutch Rupersberger, the rank-ing Democrat on the House Intelligence Com-mittee; with his Republi-can counterpart, commit-tee chairman Mike Rogers of Michigan, he is pushing such a bill. The hope is that greater information sharing will enable both the govern-ment and private firms to more effectively ward off cyberattacks aimed at na-tional security and other government operations, infrastructure and propri-etary information. Any cybersecurity plan, however, must take into account not only software but hardware. Hostile ac-

tors don’t need to hack the software if they can control the hardware, and while CISPA purports to focus on hostile hacking, a recent report from Rup-persberger’s committee showed that the hardware at the core of our commu-nications infrastructure may be at risk, too. The report focused on two Chinese companies, Huawei and ZTE, that provide high-tech telecom-munications infrastruc-ture equipment of the sort not made in the U.S. A press release accom-panying the report note that “modern critical in-frastructure is incred-ibly connected, everything from electric power grids to banking and finance systems to natural gas, oil, and water systems to rail and shipping chan-nels. All of these entities depend on computerized control systems. The risk is high that a failure or disruption in one system could have a devastating ripple effect throughout many aspects of modern American living.” The problem is that Huawei and ZTE have disturbing ties to the Chi-

nese government, and to the Chinese army in par-ticular. And while details are, unsurprisingly, not widely publicized, China has a well-known habit of conducting aggressive cyber operations against both national security and industrial espionage targets — Ruppersberg-er, in a phone interview on Tuesday, noted that Chinese industrial espio-nage reaches even into the fertilizer industry — and both Huawei and ZTE have failed to pro-vide reliable assurances that their operations and their products won’t fur-ther such efforts. Faddis was more di-rect. “The exposure is total,” he said when we met last week. “Banking, nuclear power plants – ev-erything’s online, every-thing’s linked. They could take action to shut down entire plants, as they did with [oil company] Aram-co in Saudi Arabia. Almost nothing would work.” While there are many hostile actors, he said, China is the big threat. “This is not a ‘we are afraid this may someday happen’ situation. The


Chinese have been active and aggressive. This is a case of guys who have been caught red-handed.” So why are we having to be warned not to buy criti-cal items from China? The Intelligence Com-mittee report led off by noting “the country’s re-liance on interdependent critical infrastructure sys-tems ... and the growing dependence all consumers have on a small group of equipment providers.” Foreign providers, that is. We have, in the name of free-market capitalism and free trade, allowed much of our manufactur-ing capacity to relocate to places where it can be done more “efficiently” — that is to say, at poverty wages, with no “burden-some” regulations. Think about it; every-thing from the technol-ogy that runs our critical systems to the iPhone 5 everyone lined up to get — made in China. Ruppersberger ac-knowledged the need to

promote domestic sources in critical sectors, noting the abundance of high-tech growth along the I-95 corridor in his district and the untapped reservoir of talent that could be liber-ated with both increased focus on science and tech-nology education and im-migration policy to bring in technological talent. But for now, domestic sourcing for many criti-cal items is, as he put it, “problematic.” Faddis summed it up with a quote from Lenin: “A capitalist will sell you the rope you will hang him with, if he can make profit on it.” For now, at least; U.S. Census Bureau statis-tics on rope, cordage, and twine mills show the num-ber of ropemakers in the U.S. declining from 201 in 1997 to 145 in 2007. Made-In-China.com, a service that connects buy-ers with Chinese suppli-ers, lists 7,381 rope manu-facturers in the People’s Republic.


2 The Dundalk Eagle, Dundalk, MD September 12, 2013

Is maintaining U.S. global power worth losing your job?

As of this writ-ing, President Obama is yet to deliver his

promised address to the American people on Syria, so we don’t know how he will respond to clear resis-tance — in public opinion, in the halls of Congress and internationally — to his proposal of air strikes against Syria. Nor is it clear what ef-fect recent attempts by Russia to mediate the crisis, or Syrian leader Bashar Assad’s apparent willingness to accept such mediation, may have on the president’s position. [What does it say about the administration’s han-dling of the matter that Vladimir Putin is able to portray himself as the voice of reason, the emis-sary of peace, the knight in shining armor come to save the day? That’s right; Vladimir Putin.] Recent developments might change Obama’s thinking, or the ultimate outcome. Still, a relatively unpublicized element of the Syrian drama shows that some things never change. In this case, the un-changing thing is that the average American is little more than an easily-sacri-ficed pawn to those with power. And not just in the obvi-ous sense that, far too of-ten, our soldiers are sent to kill or be killed in the service of the agendas of those to whom the world is merely a chessboard.

t t t President Obama was at the G-20 summit — in

Russia — last week, meet-ing with other leaders of the world’s largest econo-mies; not surprisingly, he devoted significant time and effort to trying to drum up support for his proposed military reaction to Syria’s alleged use of chemical weapons. In fact, it seemed that most U.S. news coverage of the event focused al-most entirely on the Syria angle, with little notice given to the economic is-sues that were nominally the purpose of the meet-ing. However, several re-ports of Obama’s hour-long one-on-one meeting with Japanese Prime Minister Shinzo Abe had, buried deep within their descriptions of the pair’s discussions on Syria, brief mention of a topic that has gotten little attention here: the Trans-Pacific Partnership. The TPP is a Pacific Rim-oriented free trade agreement currently un-der negotiation by 11 na-tions including Japan, Mexico, Vietnam and Aus-tralia. While details of the progress of the talks have not been fully revealed — to the great consterna-tion of some members of Congress who have asked to see more — news re-ports (and a few leaked documents) indicate that the pact would further erode tariff protections for U.S. manufacturing, weaken intellectual prop-erty guarantees and al-low corporations to chal-lenge government laws and regulations in inter-national courts, ceding at least some degree of U.S.

control over its own trade policies. The overall effect of the pact is likely to be a con-tinuation of the ongoing shift of manufacturing jobs from the U.S. to Asia and Latin America. For obvious reasons, the countries that stand to benefit — including Ja-pan — are eager to see the negotiations completed. Which brings us back to last week’s friendly summit meeting in St. Petersburg and a subse-quent phone call between Obama and Abe, reported in the Wall Street Jour-nal. At the end of an article headlined “Obama, Japa-nese Prime Minister Dis-cuss Syria” devoting sev-eral paragraphs to that front-burner topic, was a single paragraph:

The White House said Mr. Obama also told Mr. Abe that he wants negotia-tions on the Trans-Pacific Partnership, or TPP, con-cluded this fall.

Of course, it’s normal for more than one subject to come up in person-to-person communications between national leaders. One doesn’t necessarily have to be connected with the other. But it’s worth noting that the negotiations have been going on for three years now, and the U.S. has been widely viewed as the slowing force. And suddenly, Presi-dent Obama told the Jap-anese prime minister that he will push to see the trade talks completed in the next few months.

At the very same meet-ing in which he asked for — and got — a statement of support from Japan. Was there a quid pro quo, either directly or via a wink-and-nod mutual understanding? Was there an agree-ment to, in essence, trade American jobs for support of Obama’s military-strike plans? We can’t know for sure, but such a thing would not be unprecedented. How common such trade-offs are is unclear, given the secrecy of diplo-matic communications. But occasionally, the curtain does get pulled back after the fact, as it was last year in a Harvard Business Review article by Clyde Prestowitz, former counselor to the Secretary of Commerce during the Reagan Administration and director of the admin-istration’s “Strike Force,” an interagency group de-voted to identifying and fighting instances of un-fair trade practices. He later served as vice chair-man of the Commission on Trade and Investment in the Asia-Pacific Region under President Clinton. In the HBR piece [see it online at blogs.hbr.org/cs/2012/03/trading_jobs_for_military_base.html], Prestowitz recalled two in-stances during his tenure in which trade concerns — that is, jobs concerns — were subordinated to foreign policy issues cen-tered on maximizing the American position in the global geopolitical game. In one case, the bone of contention was govern-ment subsidies for the


multi-nation European Airbus partnership, which was competing with U.S. aircraft manufacturers and gaining advantage with the help of its spon-soring governments. Reagan’s Secretary of State, George Schultz, put the brakes on the Strike Force’s attempts to rem-edy the situation, fearing damage to the strategical-ly-important NATO alli-ance. Prestowitz’s HBR item went on to describe a trade conflict with Japan that was swept under the rug due to national se-curity officials’ concerns about keeping U.S. mili-tary bases on Japanese territory. Moving forward to the current administration, Prestowitz noted two cas-es, involving China and South Korea, in which se-curity concerns with re-gard to North Korea were deemed more important than trade policies that would affect U.S. jobs.

t t t There was a time when trade considerations were the reason for geopolitical expansionism, the acquisi-tion of empire, the amass-ing of military might, and the development of alli-ances. Sea lanes and trade routes were attacked and defended, merchant ships were targeted, and trea-ties were signed — all to gain the advantage in the trade of gold, grain, silk,

spices, whatever. At the height of Euro-pean colonialism, nations actually chartered compa-nies for the purpose of ad-ministering parts of their empires and milking them for all they were worth. [The prime example be-ing the British East India Company.] Nations sought pow-er, and used it, in order to make their nations wealthier. Now we have the spectacle of a nation-willingly trading away its economic well-being — its manufacturing, the very thing that brought it to the forefront among na-tions in the first place — in order to gain a slightly better position on the chessboard. As a population, we do tend to take pride in American power. If any-thing, when we criticize our leaders over their ac-tions on the world stage, it’s because we think they haven’t been tough enough, because they haven’t asserted Ameri-can power sufficiently to inspire awe among all the nations of the earth. But do we want to be the “alpha” so badly that we will trade away our own economic well-being a little at a time to keep our place at the top of the geopolitical heap? And if we do, at what point will we have weak-ened our own economy to the point where we can no longer stay at the top of that heap?



A share of the bounty is a dream denied

This past week-end, the nation marked the 50th anniversary of ...

well for most, it was the anniversary of Martin Lu-ther King Jr.’s iconic “I Have a Dream” speech. That’s what most peo-ple know about that day in August 1963 when hundreds of thousands gathered on the National Mall. For many, in fact, it’s nearly all that they know about King — well, that and his murder. Among the things too often forgotten about King and the others then fight-ing for justice is that they sought something more than mere legal equality. And that their August 1963 demonstration was initiated by A. Philip Ran-dolph — president of the Brotherhood of Sleeping Car Porters and vice presi-dent of the AFL-CIO — and that he and King were joined as speakers at the march by, among others, Walter Reuther, the white president of the United Auto Workers union. And that the event was formally called “The March on Washington for Jobs and Freedom.” Jobs and Freedom. Because all concerned grasped a fundamental truth: that real liberty — for all citizens — re-quires not just legal but economic justice.

t t t Sadly, the facts say that we have failed to achieve that economic justice for the vast bulk of Ameri-cans of all races. If anything, we’ve slid backward from the days

when King and others hoped that black workers might be given the chance to do as well as white workers were doing. In fact, American work-ers across the board are faring worse than they were when King shared his dream with the nation. The median household income — not the “mean,” or mathematical average, but the income level that put a family square in the middle of the Ameri-can economy — was then $6,249. Adjusted for inflation, that would have been $44,886 in 2012. The actual median houshold income in 2012? $42,979. That’s less, right? The minimum wage — which sets the tone for the overall wage structure — was $1.25 in 1963. (Among the marchers’ demands was an increase to $2.) Adjusted for inflation, that would be $9.54 today — more than $2 higher than the actual minimum of $7.25. For someone working a 40-hour week, that’s $4,763 less than the same worker made in 1963. The same trend is vis-ible across a shorter time-span. A report last year from Pew Research noted that both the incomes and net worth of the U.S. mid-dle class fell significantly over the last decade of this century — what the report called “the lost de-cade.” Between 2001 and 2010, inflation-adjusted household incomes in the middle class fell from $72,956 to $69,487, and

corresponding net worth figures dropped from $129,582 to $93,150. Just this month, anoth-er report — this one from the Economic Policy In-stitute, based on its most recent edition of its peri-odic The State of Working America — noted the fol-lowing:

According to every ma-jor data source, the vast majority of U.S. workers —including white-collar and blue-collar work-ers and those with and without a college degree — have endured more than a decade of wage stagna-tion. Wage growth has sig-nificantly underperformed productivity growth re-gardless of occupation, gender, race/ethnicity, or education level. {Between 2007 and 2012] wages fell for the entire bottom 70 percent of the wage distribution, de-spite productivity growth of 7.7 percent. Weak wage growth pre-dates the Great Recession. Between 2000 and 2007, the median worker saw wage growth of just 2.6 per-cent, despite productivity growth of 16.0 percent .... [B]etween 2000 and 2012, wages were flat or declined for the entire bottom 60 percent of the wage distribution (despite productivity growing by nearly 25 percent over this period) .... In other words, the vast majority of wage earners have already experienced a lost decade, one where real wages were either flat or in decline.

One might think that

this could be explained by some sort of long-term contraction of the Ameri-can economy. It would certainly make sense; if there’s less to go around, then each person’s share is bound to shrink. However, the U.S. economy, measured in per capita constant dollars, has grown over 75 percent since 1963. What’s more, that trend, too, continues in the more recent time frame. Since 2000, the economy — again mea-sured in constant dollars — has grown 19 percent. What’s more, productiv-ity — the economic output of each individual worker — has grown by nearly 25 percent. That is to say, the pie has actually gotten bigger, and workers are contrib-uting to that growth more effectively than ever. Yet, instead of sharing in that growth, the vast bulk of American workers are falling behind. How can this be?

t t t The answer, of course, is that the benefits of eco-nomic growth are being concentrated at the top. One need not look at the extravagances of the ul-tra-wealthy or the appall-ing compansation pack-ages given to top CEOs by their friends on corporate boards. One statistic is enough: the famed “Gini coeffi-cient,” a statistical mea-sure of the distribution of income in a nation. Among the 34 mem-bers of the Organisation for Economic Co-opera-


tion and Development (OECD), an international organization of industrial democracies, the U.S. has a higher pre-tax Gini — that is, a higher degree of pre-tax income inequality — than all but six other nations. Once taxes are taken into account, the U.S. has a higher Gini than all but three OECD countries: Turkey, Mexico and Chile. That is, our wealth-fa-voring tax structure actu-ally worsens inequality. In fact, the CIA Fact-book’s worldwide Gini rankings put the U.S. not in the neighborhood of other prosperous democ-racies but alongside “en-lightened” countries like Cameroon and Iran. Make of that what you will.

t t t How did such a state of affairs come to be, and why does it persist? The answer lies in large measure, of course, in a government thoroughly dominated by corporate and financial interests. As more than one for-eign voice has noted — in-cluding more than one of my friends in other coun-tries — the U.S. has two major parties: the pro-business party, and the even more pro-business party. Corporate and investor interests dominate the fi-nancing of political cam-paigns. They magically provide cushy and lucra-

tive jobs to former public officials almost as soon as they leave office. Their leaders are regularly ap-pointed to government po-sitions dealing with their very own industries. (Think of two Treasury secretaries whose notions have shaped much of U.S. economic policy over the last generation: Robert Rubin, who served un-der President Clinton; and Henry Paulson, who served under George W. Bush. Both were, at the time of their respective appointments, top officers of the investment bank-ing firm Goldman Sachs — you know, the compa-ny that helped cause the 2008 crash, then paid 953 employees bonuses of at least $1 million each after receiving TARP “bailout” funds from the govern-ment in 2008.) Government — good government — has the ca-pacity to provide at least some counter to corporate power, a means for the broader public interest to become part of the eco-nomic decision-making process — with the ef-fect of allowing workers to taste their share of the economic bounty they helped create. That was a big part of what the marchers of 1963 — seeking the hand-in-hand goals of jobs and freedom — were seeking. Sadly, 50 years later, that part of the dream seems farther away than ever.


2 The Dundalk Eagle, Dundalk, MD July 25, 2013

It’s a boy, Mrs. Mountbatten-Windsor, it’s a boy

Actually, wheth-er in Britain or elsewhere, roy-als generally

don’t have surnames in the sense to which the rest of us are accustomed. They don’t need last names, of course. Nor do they need much of any-thing else. The newborn son of the Duke and Duch-ess of Cambridge will nev-er want for money or ma-terial comfort, he’ll have the finest education and health care available to mankind, and he’ll never have to send out a résumé. Most of the young heir’s future subjects seem to have little trouble with that; support in the United Kingdom for continuation of the monarchy is consis-tently strong, even in the worst times. On the other hand, those who’d like to see an end to the British monarchy point to the royal family as exemplars of a system which, however democra-tized it has become in lat-ter days, remains highly stratified, with limited op-portunity for those in the lower reaches of society to climb. In fact, a 2010 study by the Organization for Eco-nomic Co-operation and Development (OECD, an organization of 34 of the world’s developed nations, including the U.S.) found that the United Kingdom had the highest degree of correlation between par-ents’ and childrens’ in-comes among all OECD member states. That is to say, in Brit-ain, more than in any other OECD nation, one’s economic status is likely

to be strongly determined by the economic status of one’s parents. Rich kids grow up to be rich, and poor kids ... not so much. That couldn’t happen here, of course. Our Found-ing Fathers declared their independence from Britain precisely to get away from hereditary class structures and replace them with a system under which suc-cess was the product not of birth but of intelligence and hard work. And we look not only with admi-ration but with a certain commonality of pride at the rags-to-riches tales that regularly come before us. They are, we gratefully note, proof that we’re not like all the others — that here, in America, even the humblest of beginnings is no limit. The numbers, in fact, paint a different picture. While the Brits lead OECD member states in generational determinism regarding economic status, the U.S. is only marginally behind — and is far more deterministic than the bulk of other OECD states. In fact, economic sta-tus in the U.S. is about three times more likely to be determined by the economic status of one’s parents than is the case in other advanced nations like Denmark, Austria and Norway. The level of determin-ism in our socio-economic structure is, according to the OECD numbers, well over twice as strong as that in Canada, and sig-nificantly higher than in France, Australia, Japan, Germany ....

We like to tell ourselves that we live in a “classless” society, utterly without barriers to social and eco-nomic advancement, and we proudly point to the likes of the dirt-poor Abra-ham Lincoln and the pen-niless Scottish immigrant Andrew Carnegie, and to the closer-to-home tales of folks who rose from pov-erty by dint of intelligence and hard work, as proof that this is a place where, to better yourself, all you have to do is pull yourself up by your own bootstraps. The OECD numbers, and numerous other sta-tistics, on the other hand, show that, for the vast bulk of Americans, the dream of upward mobility is just that — a dream. One that, as George Carlin noted, you have to be asleep to believe.

t t t Perhaps unnoticed by many whose perusal of the headlines hasn’t gotten much past the royal baby mania is the recent release of a study showing the cor-relation between where one lives in the U.S. and one’s life expectancy. The report from the Rob-ert Wood Johnson Foun-dation notes that, even within compact metropoli-tan areas, there can be differentials of up to 25 years in life expectancy between areas only a few miles apart. A similar 2008 study by the Social Science Re-search Council’s Measure of America project reached similar conclusions, and both studies showed one factor more than any other explaining the difference:

economics. Not surprisingly, those of greater wealth tend to live longer, thanks to better-quality health care, better nutritional choices, and a host of other advan-tages great and small. Such differences go be-yond life expectancy, of course, and into virtually every area we can imagine as affecting quality of life. Those fortunate enough to be born to comfortable circumstances will get the best health care from the womb onward, the best ed-ucation (either in private schools or in public schools generously funded by their parents’ deep pockets, and then by access to the best colleges and universities), and, in fact, the best job opportunities — not just through “connections” (al-though the impact of that cannot be overstated) but through the increasingly common practice of unpaid internships as the means of entry to many profes-sions, which is fine for those whose parents can support them while they try to establish careers, but are a door slammed in the face of those who actu-ally need to pay bills. (For the record, this is a subject of growing con-troversy in journalism, as many outlets increasingly using such interns as their “farm system,” with the ef-fect of freezing out young writers of limited means.) Of course, those seek-ing to rise from the lower socio-economic strata face other roadblocks as well: lower quality of education, lower standards of health care, etc. Whatever we may think,


here in the Land of Oppor-tunity, with our laudable rags-to-riches dreams and our bootstrap ethics, the fact is that, for the vast majority of Americans, the lives they have will be the lives their parents had.

t t t And perhaps not even that. This week’s news mix also included the dismal fate of the once-great city of Detroit, and the atten-dant bad news for vast numbers of retired city employees. Police officers, school-teachers, firefighters and others — whose average annual pension payouts are about $18,000 per retiree — are set to see their pensions all but dis-appear as the city enters bankruptcy proceedings designed to deal with a mountain of public debt. There’s no denying that years of financial misman-agement by city officials is a big part of the problem, but so is the decline of the auto industry upon which Detroit was built, and the flight of the city’s more well-to-do residents to the suburbs. None of which explains why retirees who put in their years in the expecta-tion of receiving pensions they were contractually promised, and who planned their retirements on that basis, should suffer. As more than one critic has already noted, General Motors was deemed too big to fail, but the city of De-

troit, and its retirees, seem likely to be left twisting in the wind. There are countless po-tential alternatives, and plenty of room for debate over which one is best for Detroit and its people, but one can’t help but notice that whenever a govern-ment entity or a private company finds itself facing mountainous debt, always among the first targets are the recipients of supposed-ly “unsustainable” retire-ment packages. Overly generous prom-ises are often blamed, but another favorite culprit of late has been ... life expec-tancy. Both pensions and So-cial Security, we are told, were designed based on life expectancy figures that are now far out of date. People are living longer, we are told, and the money to keep paying them their expected benefits just isn’t there. The problem with that argument is that the So-cial Security Administra-tion’s own data show that since 1977, the life expec-tancy of male workers re-tiring at age 65 has risen six years for those in the top half of the country’s income distribution levels, but only 1.3 years for those in the bottom half. But, as always — in Social Security “reform,” Medicare “reform,” corpo-rate “restructuring,” and now in Detroit — it’s the little guy who is called upon to pay for the fix.


2 The Dundalk Eagle, Dundalk, MD October 24, 2013

“Grand bargain” could end up being a grand ripoff

The federal govern-ment shutdown is over. Sort of. The truth of the mat-

ter, of course, is that Con-gress and the White House did nothing more than ex-tend their own deadlines with a short-term plan that may well leave us with a feeling of déjà vu shortly after the first of the year. Naturally, they’ve as-sured us that the recent fiasco won’t be repeated. We’ve been promised “sub-stantive negotiations” and “serious leadership.” And we’re already hear-ing plenty of talk about “fis-cal responsibility” and “en-titlement reform.” It’s all part of the much-heralded “Grand Bargain,” in which Republicans agree to some measure of tax in-creases (somewhere) while Democrats agree to further spending cuts. (Yes, “further.” We’re al-ready operating under the “sequester,” remember?) Working people should prepare to be hammered. “Entitlement reform,” it must be stressed, is what politicians say to avoid say-ing “cutting Social Security and Medicare.” There’s little likelihood that significant cuts will

come from elsewhere — at least not enough to close the deficit and reduce ongo-ing national debt as quickly as “serious” people demand (without cutting sacrosanct defense spending, that is). As former House Appro-priations Committee staff director and Joint Economic Committee executive direc-tor Scott Lilly put it in a recent Center for American Progress post:

Spending for discretion-ary programs — which are what we normally think of as the government, with its 15 departments and several dozen inde-pendent agencies — has declined by 4 percent since 1988 when adjusted for inflation and population growth. Spending for So-cial Security, Medicare, and Medicaid, however, has doubled over that same timeframe.

The solution to our on-going budgetary troubles, therefore, can be reason-ably argued to depend upon achieving fiscal balance in those programs. And everyone in Wash-ington is primed to do just that — through cuts. There’s a reason those

programs seem so ripe for the chopping block. Social Security and Medicare, funded by the ever-familiar FICA tax, are “going broke,” we are regularly told. “Social Security is going to run out of money in 20 years,” Illinois Democrat-ic Sen. Dick Durbin said on Fox News Sunday this week. “The Baby Boom generation is going to blow away our future. We don’t want to see that happen.” The problem is that the “going broke” thing is large-ly a myth. The program cur-rently enjoys a surplus of more than $2 trillion, and while it would eventually be unable to pay all benefits at current levels if nothing is changed, the factors most often cited as causing the projected long-term short-fall are more about policy that about the sustainabil-ity of the retiree programs themselves. For one thing, the FICA tax that funds Social Secu-rity and Medicare is levied only on the first $113,700 of income. That is to say that a person making $50,000 per year pays 6.2 percent of that income in FICA taxes — or $3,100. A person mak-ing $113,700 pays 6.2 per-cent of that income — just

under $7,500. And JPMorgan Chase boss Jamie Dimon, with a salary of $27.5 million, pays FICA taxes of ... just under $7,500. All income over $113,700 is immune from FICA taxes. Economists universally agree that lift-ing that cap would fix the “shortfall” in Social Secu-rity and Medicare as far into the future as can be reliably projected. Moreover, the shifting of ever greater income to the top one percent of earners while average wages re-main stagnant compounds the same problem — with a smaller wage pool to tax — as does the fact that wages in the U.S. have not kept pace with the productivity gains of workers. If aver-age wages had grown along with average productivity growth during the past 30 years, as they did in the 30 years after World War II, Social Security would be surplus — again, for as far into the future as can reli-ably be projected. So the problem lies not with worker, but with those who make policy. But you can be sure where the bur-den of the fix will fall ... and on whose neck ....


t t t

One leading figure re-fusing to jump on the “en-titlement reform” band-wagon is AFL-CIO presi-dent Richard Trumka, who is taking the threat of Social Security cuts so seriously that he says the nation’s largest union group will not only refuse to support any politician who votes for cuts but will actively oppose those who do so — even his group’s longstanding allies in the Democratic Party. Yes, it’s that serious.

t t t

Federal retirement pro-grams are not at risk be-cause they are economi-cally unsustainable; they are at risk because they are an inconvenience to the forces of wealth, and making them work might just mean the Koch bothers (the billionaires behind Americans for Prosperity and Freedom-Works) wouldn’t be able to keep quite so much of the money they’ve earned by inheriting their father’s

company, and Jamie Di-mon wouldn’t be able to keep so much of the mon-ey he has earned by crash-ing the U.S. economy (to be sure, that $13 billion fine for past financial chi-canery won’t be paid out of his pocket). Ultimately, Social Se-curity and Medicare are at risk because com-mon working people are only marginally relevant to those in the halls of power, where connections and campaign contribu-tions translate into influ-ence and the health of the economy is measured in terms of the happiness of Wall Street. This state of affairs persists, however, only as long as the people al-low it, and it will change only when the vast body of the American people follow Richard Trumka’s lead and say that, rhetoric aside, no one who acts to diminish the well-being of working people can then claim to be their friend — or expect to be elected to govern them.

n Opinions expressed are those of the writer and do not represent the opinion of The Dundalk Eagle or Kim-bel Publication Inc. You can contact Eagle editor Steve Matrazzo via e-mail at [email protected].

2 The Dundalk Eagle, Dundalk, MD September 1, 2011

A few things to think about this Labor Day

The cancellation of this year’s Labor Day parade may have been noth-

ing more than a matter of bureaucratic intransigence over permits, but given the vicissitudes the American worker has endured over the past generation or so, I wouldn’t blame anyone who thought the cancel-lation to be symbolic of something larger. It’s been happening for a long time, of course. Union membership had been on the decline for decades, and the reasons why are plain to see. One obvious factor is increasing economic glo-balization, facilitated by free-trade agreements. Such agreements sound fine in principle, but they have resulted in the mass movement of manufactur-ing jobs from the U.S. to developing countries that can produce more cheaply because they have little or nothing in the way of wage and labor standards, workplace safety laws or environmental regulation. If textile manufactur-ers, steel producers, shoe-makers and electronics companies — now free of tariff and import quotas,

thanks to international trade agreements — can produce their goods more cheaply in China, you can bet that they will, taking with them jobs that once employed Americans. Unionized Americans. Then there’s the in-creasing importance of money in politics, espe-cially at the national level. For most of this nation’s history, politics was con-ducted at the local level.

Even presidential candi-dates didn’t actively cam-paign; local party opera-tives did it for them. Today, however, televi-sion is the key component of any campaign for high office, and those running for Congress, for governor-ships and for the presiden-cy need millions of dollars to mount a credible elec-tion bid. Where does that money

come from? The bulk of it, of course, comes from big donors, and that means business. Sure, unions are still large actors in the cam-paign funding stage, but they are outspent by busi-ness to the tune of 15 to one. And, of course, even if one takes the charitable view that money doesn’t buy politicians, it certainly


buys their ears, into which business interests have been whispering softly for years. Both parties, by the way; President Obama held a much-ballyhooed fundraiser targeting Wall Street bigwigs back in June. Moreover, they’ve been whispering in our ears, too. Take note the next time you see a television spot brought to you by “America’s energy produc-ers” about so-called “clean coal” or whatever they’re trying to promote, or bet-ter yet, ask yourself who funded the campaign to break the public employee unions in Wisconsin. Google “Koch broth-ers.” You may learn some-thing. And you may come to understand why, even though the Dow Jones Industrial Average is higher now than it was before the crash of 2008, unemployment remains 50 percent higher than it was then (6.1 percent in Sep-tember 2008, as opposed to

9.1 percent now). Meanwhile, pay, bonus-es ands stock options for top executives have increased, even at the companies “bailed out” by the taxpayer after the crash. And why, according to The Wall Street Journal, pay for top executives rose 11 percent last year, while bonuses increased by nearly 20 percent. And why Warren Buf-fett noted that he, one of the planet’s wealthiest people, paid a lower tax rate last year than his sec-retary did. (“The Oracle of Omaha” once said of class warfare that “there’s class warfare, all right, but it’s my class, the rich class, that’s mak-ing war, and we’re win-ning.”) It’s not that the rich are evil and should be pun-ished for their wealth. They’re just doing the best they can for themselves under the rules that exist. Who wouldn’t?

n Opinions expressed are those of the writer and do not represent the opinion of The Dundalk Eagle or Kimbel Publication Inc. You can contact Eagle editor Steve Matrazzo via e-mail at [email protected].

continued on page 29

How does the U.S. stack up among industrialized nations in union member-ship? See above. For the consquences, read within. graph from OECD data

September 1, 2011 The Dundalk Eagle, Dundalk, MD 29

Self-interest is the most natural thing in the world. And in pursuing their self-interest, the corporate and investing classes are bound to pocket as much of their profits as they can, and to try to maximize those profits however they can, including moving jobs to where they can be done most cheaply. Ultimately, that forces the American worker into the position of having to either accept Third World-style conditions or face continued job losses. Unless, of course, there’s a counterwieght. For years, there was. But that counterweight is shrinking.

Union membership has declined from over one third of the workforce in the 1950s to less than 12 percent today. For private-sector employees, the numbers are even more dire; less than 7 percent of non-gov-ernmental employees are unionized. Some would claim that’s a good thing; unions have been a drag on the U.S. economy, increasing costs in an increasingly compet-itive global marketplace. And then there’s Swe-den. A study by Michael Nor-ton of Harvard Business School and Dan Ariely of Duke University asked a cross-section of Americans

to choose between two pie charts showing wealth dis-tribution in two different countries. In one of the countries, the wealthiest 20 per-cent held 84 percent of the wealth. The next fifth held 11 percent, leaving the bottom 60 percent of the population to divvy up only 5 percent of the nation’s bounty. In the other country, the top 20 percent held 36 percent of the wealth, with the other fifths hold-ing 21 percent, 18 percent, 15 percent and 11 percent, respectively. Not surprisingly, 92 per-cent of respondents said they’d prefer to live in the country represented by

continued from page 2

TALK OF THE TOWN: A few things to think about on Labor Daythe second pie chart. Most also thought that pie was the U.S. You know where this is going, right? The first pie chart, in which 60 percent of the people get by on 5 percent of the wealth, represents the U.S. The other is Swe-den. For the record, Sweden has a union membership rate of 69 percent. And if you think that such a high rate of union membership must be a drag on their economy, note that Sweden’s per capita income is actu-ally slightly higher than ours, even according to that socialist rag The CIA World Factbook.

Ayn Rand may have thought that “creators” were the fountain of all that is good in a free soci-ety, and that workers were mere parasites, but Henry Ford understood that wealth could not be cre-ated without workers, and that prosperous workers were the key to economic growth. He even decided to pay his workers enough that they could afford to buy Ford cars, knowing that more consumers able to buy meant more profits for Ford. With all the talk today of the need to improve con-ditions for business, the role of the worker and the consumer in the economy

is being forgotten, even as the economy languishes — not because of a lack of investment capital (over $2 trillion in capital is sit-ting idle right now) or a lack of profit (note that the stock market is doing just fine), but because of a lack of consumer demand. The statements of gov-ernment and business leaders make it clear that they have no intention of doing anything to change the equation, so someone has to. That someone is the American worker. And the power of the American worker depends upon the ability to unite. Keep that in mind this Labor Day.


Future cloudy after more than a century of steel

Some, I’m sure, will object to the head-line of this week’s lead story. It has

happened every time The Eagle has had to report bad news about the Spar-rows Point steel mill. We’ve been accused of not having our facts straight, and of fomenting unwar-ranted pessimism. So when we describe the results of last week’s RG Steel bankruptcy auction as “the end of the road for steel,” there are bound to be those who don’t want to hear it. But it’s hard to see the purchase of the Point by Hilco and Environmental Liability Transfer [ELT] any other way, given the history and business mod-el of the buyers. While nothing is yet set in stone (even the pur-chase itself remains unof-ficial until the bankruptcy judge approves the sale), and USW Local 9477 head Joe Rosel continues to hold out hope for his steelmak-ing members while local political leaders pledge to take action, the fact re-mains that Hilco is in the business of salvaging and selling anything of value from idle factories, not re-

viving them, and ELT is in the business of redevelop-ing industrial properties, not restarting their former operations. Neither com-pany has hinted at any plan to alter that business model at Sparrows Point. It’s worth noting that, while a few steelmakers did express preliminary interest in bidding on the plant, the Hilco-ELT part-nership came out on top by bidding a paltry $72 mil-lion for a plant that sold for more than 11 times as much a mere four years ago. If anyone had serious interest in making steel at the Point, that was an easy bid to beat. So, while the buyers have not yet officially an-nounced their plans for the mill, it’s hard to justify any characterization but “the end of the road.” And though it pains us greatly to say so [and we still har-bor hopes of being proven wrong], we believe whole-heartedly that it would be dishonest of us, and a dis-service to the community, to describe it otherwise. To be sure, there were many who, even as the plant struggled and shrank, refused to go gen-tle into that good night,

and who raged against the dying of the light. There were, even after the death of Bethlehem Steel, companies that genuinely tried to make a go of it at the Point, and public leaders who tried to smooth the road for them. And most of all there were the workers, who held on for dear life to the steelmaking tradition, repeatedly renegotiating contracts and still pouring their toil and their souls into the plant as the shad-ows grew ever longer. And when — in what proved to be the final in-sult — the bankrupt RG Steel chose to give its top managers $20 million worth of bonuses, they held their heads up and continued to hope that a new owner would come along and do better. It seems clear now that such hopes will be unful-filled. Steel built this town. Not just its prosperity, not just its identity — but much of the actual town. From the old Sparrows Point Bungalows to Graceland Park, we are surrounded by streets named by the steel mill, full of houses

constructed by the steel mill. Rare is the resident of Greater Dundalk whose life has not been touched in some way by steel. And now, by all appear-ances, it’s gone. The post-mortems are inevitable, and they’re unlikely to produce agree-ment, even though they’re likely to focus on the same issues, and rightly so. Some will lay the blame at the feet of supposedly greedy unions, overly zeal-ous regulators and — of course — taxes. Others, including this writer, will point to the ef-fects of global trade agree-ments, which ease the flow of goods and services but do nothing to guarantee a level playing field, thereby giving the advantage to countries where decent wages, workplace safety and environmental health are given low [or no] prior-ity, and where businesses are not required to pay fair taxes to the govern-ments that help create the conditions in which they prosper. [Not to mention the similar race-to-the-bottom competition among states and localities in the U.S.]


Sure, it’s easy for for-eign-made steel to under-cut the U.S. product on price, because many in-dustrially-ambitious na-tions don’t require any de-gree of practical corporate citizenship. It used to be that we addressed such inequities with tariffs, but in the age of free trade, we are told that the only way to compete is to go back to the bad old days, when American companies could treat workers without re-gard for their dignity or safety, pollute at will and put the burden of paying for public goods beneficial to business — everything from roads that carry their products to schools that teach their workers — on the common taxpayer, who, of course, should be grateful just to have a job at all. A month ago, I asked in this space if the develop-ments at RG — layoffs, bankruptcy, management bonuses — might finally shake us from the collec-

tive fantasy that unbri-dled corporatism can be counted upon to serve the general prosperity. So what happens now? I’m sure every political leader will have a plan. If nothing else, there’s the recently-founded Spar-rows Point Partnership, as well as the recently-reactivated Task Force on Industrial Job Creation, which includes local rep-resentatives Del. John Olszewski Jr. and Dr. Mi-chael Galiazzo. There have been a few private citizens pushing their own ideas about economic develop-ment as well. Absent a change in the rules of global trade, will any of them achieve much? Only time — and the degree of courage and vision in their plans — will tell. All we can say for sure is that the loss of 2,000 jobs — good-paying jobs, at that — increases the stress on an already hard-pressed community. As I asked a month ago, are we done yet?



Again and again, workers are not part of the equation

Timing, as the old saw reminds us, is everything, and while I didn’t

get any actual letters tak-ing me to task for my sup-port of a minimum-wage increase in last week’s col-umn, I did receive a few e-mailed links to news sto-ries about a Congressional Budget Office report that came out almost imme-diately after the Feb. 20 Eagle went to press. The intention of the e-mailers, it may be as-sumed, was to point out the CBO’s projection that the proposed increase in the minimum wage to $10.10 would result in the loss of 500,000 jobs. That was the thrust of the headline of almost ev-ery news story about the report, and it was the fo-cus of virtually all of the stories themselves. Plenty of people saw (or heard) the headlines. A fair number may have even read the stories. Far fewer, I suspect, actual-ly read the CBO report, which states that “there is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment and a reduc-tion in employment of 1.0

million workers.” In other words, the CBO projects a strong likeli-hood that job losses due to a minimum wage increase could be as high as one million or next to nothing, or anywhere in between. The 500,000 figure — a fraction of one percent of the workforce — amounts to “splitting the differ-ence.” Moreover, most cover-age of the CBO report makes only passing refer-ence to the primary argu-ment for a minimum wage increase advanced many times before on this page: the boost to the overall economy that would come from the increased con-sumer spending that a higher minimum wage would generate. The report itself, how-ever, concludes that real income across the U.S. economy would rise by $2 billion if the mini-mum wage were raised to $10.10 an hour. The re-port states that “raising the minimum wage would increase demand for goods and services.” What the report does not do is directly quantify the effects of increased de-mand on employment. That’s the norm, of

course. All too often, the metrics by which econom-ic policies are evaluated perpetuate the shortsight-ed habit in business and economic circles of focus-ing on costs and neglect-ing revenue — that is to say, demand. What makes such short-sighted analysis especially appalling is that it was proven wrong a century ago — not by some ivory-tower academic economist or an out-of-touch news-paper editor, but by Hen-ry Ford, one of the most successful businessmen in history. Ford recognized that minimizing the cost of pro-duction — including the cost of labor — could go only so far in promoting the growth of a business. For all the efficiencies he introduced, and the cost savings he thus realized, what ultimately took him to the summit was his self-initiated decision to raise Ford workers’ wages — so they could afford to buy cars. That forward-thinking decision drove an over-all upswing in the U.S. wage structure, increased consumer demand, made Ford Motor Company the world’s biggest automak-

er, and made Henry Ford one of the world’s wealthi-est people. The lesson is not uni-versally lost within the business community, of course. The Gap clothing chain recently announced that it will raise its hourly pay for U.S. employees to $9 in 2014 and $10 in 2015. Meanwhile, Costco is well-known for its habit of paying high wages and still managing to outper-form its primary competi-tor, Sam’s Club. In fact, even Sam’s Club parent Walmart seemed to momentarily acknowl-edge the potential ben-efits of a minimum wage increase last week, when a Walmart spokesman reportedly said in an in-teriew with the Bloomberg business news service that Walmart was considering supporting the proposed increase because some of the retail giant’s 140 mil-lion shoppers would “now have additional income.” The same spokesman backed away from the re-port shortly after it was published, but Walmart has supported minimum wage increases before, most recently in 2005, when the company sup-ported an increase in the


minimum to $7.25, which was passed by Congress two years later. The minimum wage hasn’t increased since. Unemployment, on the other hand ....

t t t Of course, even when companies do try to take a broader view of their own interests, they are often hamstrung by the agendas of others. Such was the case in Tennessee recently, when an effort by the United Automo-bile Workers to organize a Volkswagen plant in Chattanooga failed by a mere 87 votes out of over 1,300 cast. Volkswagen welcomed the effort, seeing union-ization as a means to increase institutional cooperation between the company and its workers. Tennessee politicians, on the other hand — bankrolled by business interests hostile to unions — pulled out all the stops to defeat the effort. Some simply relied on threats, saying that state

incentives for the plant would be cut off if the unionization effort suc-ceeded. U.S. Sen. Bob Corker, on the other hand, resort-ed to outright lies, claim-ing that VW would expand its operations and build a new SUV in Chattanooga — if workers rejected the union. That was later denied by a VW executive, who said the union vote had no role in future expansion plans. As a result of the tac-tics, the UAW is pursu-ing a complaint with the National Labor Relations Board (the same agency that Corkers and others have tried to paralyze in the past — even managing to shut it down temporar-ily) seeking a fresh vote. Meawhile, in nearby South Carolina, Gov. Nik-ki Haley recently told The Greenville News, “My job is to make sure I keep kicking [unions] out.” Apparently, the ideal of freedom from government interference only runs in one direction ....


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