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The Real Wealth Creators

The Romney Doctrine

by GENE GRABINER

In May of 2012, Mitt Romney made his now famous 47% speech to a secret group of very wealthy donors. In this presentation, we see the “Romney Doctrine” in full relief. In fact, we rarely, (perhaps never), have seen a more open class analysis of our country made by a presidential candidate. In it, Romney has laid bare the fundamental contradictions in American economic life for the past 35 years. His view of the broad masses of the American middle class, working class and poor people can only be seen as one of disdain and condescension. His analysis offers rare insight into the world of the so-called “job creators,” and begs an answer to the issue, “how is wealth actually produced?”

Take my father, for example. He was a small businessman, a jobber or factor in the New York City garment industry. In the 1950’s, he employed a number of women to create innumerable sample cards of buttons and ornamental pocketbook snaps which would then be offered to various coat houses and pocketbook manufacturers for their fall and spring lines. Deals were struck, contracts signed, and my dad would put these deals together with other large manufacturers for thousands of pieces at a time, which they would deliver to the coat and pocketbook firms.

He paid the women in his shop the 1955 75¢ per hour minimum wage. He paid them for control of their life’s activity for eight hours per day. But he didn’t pay them for eight hour’s work; he paid them for working eight hours. And that’s a big difference.

What my dad paid Adelaida and her co-workers, for example, helped her to just barely reproduce her daily needs in terms of food, clothing, and rent so she would be roughly in the same shape to come to work on Tuesday, as on Monday. What she created in my dad’s shop was sold for far more than her wages, but not for more than it cost to produce. Adelaida was actually paid less than the full value of the product she produced for my dad. So, like all workers, she was a wealth creator. Without her and her co-workers in the shop, my dad would never have been a “job creator.”

This same relationship is shot throughout the world economy anywhere someone works for another for a wage, whether in a small business like my dad’s, or my uncle’s oil heating business, or in large-scale industry, like longwall bituminous coal mining.

In a unionized West Virginia underground longwall coal mine, a typical miner works for pay ranging from $24.75-$26.41 per hour. Using the higher rate, our miner receives $211.28 pay per 8-hour shift. Pretty good pay.

Working with some highly sophisticated machinery in a crew of 12 at the coal face, this miner can extract 67.63 tons of bituminous coal per hour, or 541 tons per day, (a somewhat conservative estimate). The coal is sold in the market at $59.17 per ton, (2010 prices), for a total day’s value of $32,010.97.

Clearly, the miner is not paid for 8 hour’s work or $211.28. No, he is paid for working 8 hours, during which time he creates new wealth far exceeding his wages; he creates an additional value of $31,799.69. Sure some of this pay goes for the unionized miners’ pensions and benefits, financing and paying for the longwall machine and other equipment, or for shipping coal, or for the computers and paper in the office, or for foremen’s, managers’ and executives salaries, or for stockholder dividends etc. etc.

But the point is this; apart from nature, it’s the workers who have created all the wealth. This stretches from the miners to those who build the longwall machines themselves, or who make the steel for the machine, who mine the iron for the steel, or those who cut trees for paper pulp, who make the pulp into paper, or those who stitch buttons to sample cards or paste rhinestones into sample pocketbook snaps, or teachers, nurses, firefighters, healthcare and hospital workers, office workers, cooks, servers, sales people etc. etc. So, the wealth creators come before the “job creators,” those who could do nothing without labor and all the wealth created by labor.

Speaking of wealth creators, most of Mitt Romney’s despised 47% are: active duty military, veterans who would like to be wealth creators when they return home, former wealth creators now collecting social security, current wealth creators paying payroll taxes and state income taxes, underemployed or unemployed wealth creators, or students, just yearning to become wealth creators. There are also plenty of wealth creators among the other 53% of Americans. And, contrary to Paul Ryan, wealth creators do not live off the fruits of the labor of others. They are makers, not takers. In fact, before they ever became small business people, even most small business people were once wealth creators themselves; something they should never forget.

Now, in an act of the crassest opportunism and deceit, Mitt Romney is reversing his position on everything, most significantly his 47% dictum. Regardless of his sweet talk, however, the corporate raider of Bain fame really has only one commitment— to the “job creators,” not to the wealth creators.

Yet, that very first Republican president, who today’s “Republicans” have abandoned, was well aware of the role of the wealth creators. Lincoln said:

Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed.

Labor is the superior of capital, and deserves much the higher consideration.

Gene Grabiner, PhD, SUNY Distinguished Service Professor Emeritus, has been Vice-President, Grievance Chairperson, and a Contract Negotiator for the Faculty Federation of Erie Community College, (FFECC/NYSUT), AFL-CIO.